Cost Cutting Versus Product Innovation

The nowadays market situation puts pressure on the prices of the commodity products. In what extent is this applicable to the commodity products in the science

Online PR News – 04-April-2009 – – Geleen - The Netherlands

Current market situation puts high pressure on prices of commodity products. Standardised plastic compounds and products mainly discriminate on price, creating the awareness and the need of customised, less price sensitive compound solutions. Cost cutting is the first logical step trying to keep the business profitable.

However, the strategic decision to invest in product innovations and/or tailor made modifications will offer new business opportunities. Take for example polystyrene: its applicability is limited for microwave and hot fill food applications because of its limited thermal performance. Nowadays mainly PP is used for this application, despite the superior processing, thermoforming and application performance of PS over PP. A recent development enables the applicability of PS in microwave applications, keeping the benefits of polystyrene.

Despite the extreme price competitive and low margin market conditions in the food packaging market, several companies are investing in this new PS solution, because the total cost of ownership will bring benefits for the improved PS for both supplier and end-user. Even for (low margin) commodity products, investing in customised solutions or opportunities to expand the functionality of existing commodity polymers offers new profitable sales potential on the longer term.

Ofcourse the short term cost cutting need is understandable and for some companies a must. However, being prepared for the future with new product will also be an important asset. And like for the above mentioned example, the investments and time-to-market can be defined within reasonable limits.

Companies like Polyscope offer products which enable various opportunities to extend the functionality and applicability of (commodity) plastics.

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Peter Flippo
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