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1、Detail Marketing and Sales Plan Development Study(Ethanolamines,Alkoxylates,DMF,Acetone&Choline Chloride),Revised proposal to:,September 7,2007,Contents,Our Approach and Deliverables,Background and Objectives,Organizing the Work,Why Kline?,SABICs SP SBU is currently building the Saudi Kayan(SK)ethan
2、olamines and ethoxylates business.,Other product streams proposed at SABICs SK(Jubail)are DMF,Acetone and Choline Chloride.,Ethanolamines,ethoxylates and derivatives have diverse markets and applications.,Alkoxylates include(PEGs,alkyl phenol&alcohol ethoxylates),Specialties require higher levels of
3、 customer service and the price realization is higher as well.,SABIC needs to build a comprehensive go-to-market strategy for all the planned products.,Data for Sales plan development Current and future potentialIdentify major customers and provide insights to gain share of supplyPricing terms and t
4、ypical contractSales plan and outline sales budget,Product segments(example)MonoethanolamineDiethanolamineTri ethanolamines,EuropeAsia Middle East,Cosmetics,surfactantsPlasticizers,Rubber chem.Gas scrubbingAgrochemicals,Herbicide Sequestering agent,Suppliers,Domestic Channels,local agents,Trade inte
5、rmediaries,End User,Target Market Scope,Overall Objectives*,Market data and dynamicsPESTLE analysis Key suppliers and critical insights Market entry options(pros&cons)and recommendationNetback analysis(on country basis),Customer supportCustomer service requirementsOutline Human/System support requir
6、edIntroduction:Customer relations management,Identify target marketsIdentify target markets:Europe,Middle East and Asia,(*as per RFP),Kline based on its prior experience will identify select countries for creating detailed sales plan.,Klines Global understanding,Key target countries(target markets)f
7、rom Europe,Middle East and Asia,Klineexperience,Sales&Mkt plan,All key countries which form potential market for SABIC in terms of volumes and profitability will be assessed in the three regionsCoverage will ensure that about 80%of the market(volume-wise)will be covered,Kline has in-depth global und
8、erstanding for all product streams e.g.Acetone,Kline has the experience to offer an in-depth analysis of ethanolamines and its derivatives.,By 2010,worldwide production capacity is likely to have increased from around 1.3 million Ton to 1.8 million Ton.New capacity:EU(+205,000 T),USA(80,000),Saudi A
9、rabia(100,000 T)and Asia(100,000 T).World demand at a projected growth rate of 4.2%(2010:1.55 million Ton to 1.7 million Ton)Therefore by 2010,projections are:excess capacity in EU,balanced position in the USA and shortage in Asia and the rest of the world,Specialty chemicals(ethanolamine)has a larg
10、e regional outlook e.g.US market,USA is surplus in Ethanolamines,with an estimated installed total capacity of 650,000 tons,total estimated demand and captive use of 560,000 tons implies a capacity utilization rate of 86%The ethanolamine market in USA has been characterized by strong demand growth:F
11、or DEA,triggered by use in the production of glyphosate herbicides,which are used in a process to allow genetically modified crops to resist such herbicides.For TEA,specifically driven by the use in the cement sector and by the producers of fabric softeners.For MEA,following a US Regulation,effectiv
12、e 1 January 2005,prohibiting the use of alternative metal based products for wood treatment,causing an additional estimated demand of MEA of 80,000 tons.As a consequence,the worldwide price level of ethanolamines is high because of high demand.,Kline keeps track of tariff and non tariff barriers imp
13、osed in global trade scenario.,The current excess of capacity in the USA is expected to continue at least in the short term because domestic demand,although growing,will not absorb the spare capacity that will become operational again.Over a longer timeframe up to 2010,excess capacity is expected to
14、 disappear,reducing the incentive for US producers to export.However there will be substantial shortages in Asia.This is illustrated by the fact that Dow Chemical has formed a joint-venture with Petronas,called Optimal,and has installed 75,000 tons capacity in Malaysia,dedicated to serve the Asian e
15、thanolamines marketThe spare capacity of 90,000 tons is exported out of US,which is much higher than the volume of exports from the US to the EU 41,000 tons(period 2004-05)European Union has imposed a definitive anti-dumping duty on imports of ethanolamines(i.e.monoethanolamine(MEA),diethanolamine(D
16、EA)and triethanolamine(TEA)originating in the USThe dumping margins observed during 2005-2006 were 13.4%for INEOS and 28.3%for Dow Chemical,The program will try to address several core issues(1).,What is the near and long term market position for MEA,DEA,TEA,Ethoxylates,Acetone,DMF and Choline chlor
17、ide in Europe,Asia,Middle East?Do Americas form an attractive proposition for SABIC?What are the key supply locations in Europe,Middle East and Asia to be targeted,given the market growth outlook vs.barriers to trade(issues such as tariff/legislative barriers)?What are various product segments/sub s
18、egments and key applications across the product value chain,underlying market drivers and competing substitutes?Within the attractive countries,who are the major customers?And what are the typical terms of trade to be addressed in order to garner market share from their current suppliers?What are th
19、e typical sales channels in select countries?,Who are major suppliers in selected regions and what is their current production and future plans,thereby posing a competitive challenge to SABICs entry?What are the Critical support systems required by SABIC to compete in Specialty arena,given multiple
20、grades/applications?What is the overall profitability for the product segments and given“Cost to serve”?What are the netbacks to SABIC Can SABIC compete?What type of sales organization is required by SABIC and what budget can support a successful venture?What are the typical contractual terms used?C
21、an they be improved to garner market share?,The program will try to address several core issues(2).,Ethanolamine MonoethanolaminesDiethanolamineTriethanolamineEthoxylatesAlcohol EthoxylatesNonyl Phenol EthoxylatesPolyethylene GlycolDimethylformamide(DMF)AcetoneCholine ChlorideA separate report will
22、be made and submitted to SABIC for each product,The program will address these core issues for all the products(and product sub segments).,Contents,Our Approach and Deliverables,Background and Objectives,Organizing the Work,Why Kline?,Klines approachBuilds on global understanding of the ethanolamine
23、,alkoxylates,Acetone,DMF and Choline chloride value chains from raw materials to end-use products and marketsProvides regional insights/flavor both from past reports and physical presence,specially as specialty chemicals primarily have a regional outlook(unlike commodities)in terms of supply demand,
24、applications and prices dynamicsLeverages insights for customer service,gained through decades of Klines customer relationship/value management studies conducted across specialty chemicals in various geographiesUtilizes a mix of field interviews,desk research and analysis Facilitates ongoing collabo
25、ration with and between the key SABIC stakeholders to ensure alignmentHas a clear path to action and results,Our approach integrates our unique mix of domain,functional and geographical expertise.,The information gathered in this program will also provide key data for SP SBU R&T analysis.,We underst
26、and that SABICs pre-feasibility study for ethanolamines and ethoxylates is not sufficiently detailed in its assessment of SABICs competitive position,basis for differentiation or target market focusWe have submitted a separate proposal to you on“SP SBU R&T requirements”for Ethanolamines and Alkoxyla
27、tesThis proposal on Detail Marketing and Sales Plan Development Study for Ethanolamines,Alkoxylates,DMF,Acetone and Choline Chloride will cover a few of the critical gaps for developing SP SBU R&T,in terms of:Customer support requirements by product/gradeTarget markets,customers and grades by region
28、Market entry options(pros and cons),with recommendationsThus,a single window processing of the above initiative can benefit in terms of Clarity and specificity of the information Efficiency in timeline for delivery(opportunity to prioritize information gathering as needed),Stage,Objectives,For targe
29、t markets:Potential in 2010-2020Broad level Prospect profile(database):business,consumption,grades,Suppliers,packaging&logistics,Product allocation among key countriesPricing Typical sales contract,For target marketsPESTLE analysis:Competitors:current&future capacities,operating rate vs.profitabilit
30、yGrade profitabilityTrade flow(2010-15)SABIC competitiveness(delivered cash cost)Market entry optionsBy product value assessment(if applicable),Competitor profile&market entry strategy,Introductory meeting,1,4,Prioritize and align program modules with SABIC teamUnderstand current channel set up of S
31、ABIC internationally,which can be leveraged Understand product slate and preliminary production cost estimates,For target marketsCustomer support assessmentSales planPre-marketing tasks List of resources:to develop capabilities for customer support,Market profile:future forecast,3,Customer support a
32、nd sales plan,5,For each product Kline will follow a five stage program,each with clear objectives.,NOTE:The program will be carried out in parallel for more than one product to obtain cost benefit,Rationale for market selected,2,Rationale for addressing key markets including:EUROPEMiddle East Asia,
33、Objective from RFP is spread over five stages above,with clear objectives,Objective,Introductory meeting,1,Key Tasks,Initiate project,review available SABIC documentation and hold discussions with key SABIC managersPrioritize and align program modules with SABIC teamUnderstand current channel set up
34、 of SABIC internationally,which can be leveraged towards later part of study Understand planned production setup and preliminary estimates of production costUnderstand the likely specifications of products produced,Prioritize and align program modules;gain understanding of SABIC global footprint and
35、 planned production facility,Stage 1:Introductory meeting and alignment.,Deliverables,Refined work and communications planSABIC global presence and marketing set-up(which can be leveraged)Planned production capabilities(specifications,grade,economics),Objective,Rationale for market selected,2,Key Ta
36、sks,From Kline database and global research suggest key consuming centers and supply centers:Europe,Asia and Middle EastReview databases to update country demand supply scenarios and forecast supply additions and demand projections(2010-2015)Identify key barriers to trade antidumping laws,tariff and
37、 non tariffAssess why are these preferred regions:Logistics SWOT analysis Discuss assumptions,validate and finalize with SABIC team,Validate the rationale for markets selected:Europe,Middle East and Asia,Stage 2:Rationale for markets selected.,Deliverables,Provide Rationale for select regions for SA
38、BIC(2010 2020)based on:Barriers to tradePresence of strong competitorsTariff barriersLegislative barriersMaturity of marketSubstitutionExpensive supply chain Growth outlook Market growth outlook(2010 2015)Net import of product(2010)Minimal price discounting vs.markers such as ICIS pricingLogisticall
39、y attractive(i.e.low cost to deliver product to marketLack strong competition,All Key countries that are critical for SABIC in terms of volumes and profitability will be assessed,Europe,Asia and Middle East regions are likely target markets for the products from SABIC.,High,Moderate,Low,Barriers to
40、trade,-2.5,5.0,0,2.5,Growth Outlook(%),Note:Bubbles proportional to market size,High Attractiveness,Moderate Attractiveness,Low Attractiveness,Market attractiveness matrix Region/country prioritization,B,C,A,D,Product,Barriers to tradePresence of strong competitorsTariff barriersLegislative barriers
41、Maturity of marketSubstitutionExpensive supply chainGrowth outlook Market growth outlook(2010 2015)Net import of product(2010)Minimal price discounting vs.markers such as ICIS pricingLogistically attractive(i.e.low cost to deliver product to market)Lack strong competition,Validate rationale with SAB
42、IC based on:,Objective,Market profile:future forecast,3,Key tasks:For target markets,Initiate market research leveraging Klines existing database,along with a mix of primary and secondary researchAssess product/grade/application wise:Demand-supply scenario,make forecast for the same post 2010,throug
43、h 2015 till 2020Identify major customers in select markets and provide details that would enable SABIC garner market shareIdentify pricing mechanism and references used in the industry Based on historical pricing trends and related attributes develop a likely price scenario and reference price relat
44、ionshipStudy a typical sales contract accepted in the industry,Product allocation(per grade per region per country)and critical success factors to garner market share with key customers,Stage 3(tasks):Assess SABICs market positioning.,Deliverables on next slide,Product allocation(grade and specifica
45、tions)per region,per select country for(with clear assumptions behind the forecast model)2010,2015,&2020 For select(target country)Identify major customers(Contacts info of key customers)Provide inputs in terms of overall business,end-produce profile,consumption of key grades and specificationsMajor
46、 supplier to key customersTypical packaging&logistics,and customer support requirementsProduct Pricing mechanisms Pricing mechanism Reliable price referencesPricing history and forecast scenario(2000 2020)in select markets per product Detail assumptions used aboveDetail a typical sales contract,Stag
47、e 3(deliverables):Assess SABICs market positioning.,Objective,Market profile:future forecast,3,Deliverables:For target markets,Product allocation(per grade per region per country)and critical success factors to garner market share with key customers,Objective,Competitor profile&market entry options,
48、4,Key Tasks:For target markets,Profile key suppliers and assess future plans in terms of their current product(grades),technology,capacity addition plans(announced/likely)Through demand forecast and capacity build up assess likely trade scenario in 2015,2020 thereby impacting SABIC competitive posit
49、ioning in the key consumption/demand centersAssess average operating margins(global averages)For key target markets develop market entry options,evaluating all key elements for SABICs sustained competitivenessCompute a typical netback from the geography(country-wise)(price less cost to serve,to asse
50、ss competitiveness of SABIC),Market needs and entry options,Stage 4(tasks):Assessing SABICs market positioning and defining market entry strategy.,Deliverables on next slide,Objective,Deliverables:For key target markets,Profile key suppliers/competitors in select regions detailing:Current capacities
