Differentiation through service: A perspective from the commodity chemicals sector

This article examines the role of service as a differentiating factor in the marketing of commodity chemicals. The commodity chemicals sector is characterised by high volume products that are fundamentally undifferentiable by product characteristics, made to an industrial standard often produced with a technology that is common amongst competing producers, with high exit cost due as a result of extensive capital investment. In addition many segments of the market exhibit excess supply over demand. The research, based on an empirical study of companies in the sector and their supply chain relationships, suggests that service and relationship management are key strategies used by companies to escape the commodity trap and gain competitive advantage. The results of the study are discussed in the context of the services marketing continuum and using the servitisation model. The implications of the findings are that, if firms in this sector wish to break out of the commodity trap of blind allegiance to cost leadership as a generic strategy, then they must seek methods of differentiation. The article concludes that a servitisation strategy placed in the context of relationship management can be a means of creating differentiation advantage in a traditionally cost orientated sector.