Analysis of Environmental Return on Investment (eROI) in Energy Industry as Water Treatment Company Marketing Strategy

Water is essential to the operations of many industries, including gas processing plants and fertilizer manufacturers. As a result, international water treatment firms confront formidable market competition due to the growing demand. The pandemic had a significant detrimental effect on Ecolab, and in 2020, the firm reported its first-ever negative profit. Environmental Return on Investment (eROI) is one of their marketing campaigns to resolve these issues by delivering value to customers. However, the marketing campaign still does not have a positive profit impact on Ecolab. The study was carried out utilizing the qualitative research approach, which involved gathering data from direct observation, in-depth interviews with respondents, data from internal papers, and other reports used as references. The findings demonstrated that eROI is still a powerful marketing strategy that fits business resources and market demand. The total activities and executions are still not working as a whole; hence, the marketing campaign had less impact on the organization. Ecolab should leverage eROI in their marketing campaign to deliver both value to customers and profit impact to the company. The company should also bring backbone activities such as technical training, supply chain alignment, and marketing support deployment. 

Introduction

Water is one of the most important factors in the world becoming more of a serious concern in the energy industry. Water is not only consumed by living beings; it is heavily required as a cooling media, a process fluid in most big operating industry companies. Fertilizer and gas processing plants heavily rely on water as their cooling fluids. Thus, water treatment companies worldwide face real challenges in overcoming water quality issues to minimize water consumption while keeping the minimum effect on plant performance. Many industries are affected by COVID-19 by raising chemical raw material costs and lower consumer demand.

As one of the biggest water treatment service companies, Ecolab was seriously impacted by COVID-19. In 2020, Ecolab closed with negative profit for the first time in the company’s history. Up until 2023, the profit of Ecolab will still be lower compared to 2017 despite the higher revenue. Due to this issue, Ecolab is developing and deploying a marketing strategy to gain more profit.

As a water service company, Ecolab heavily relies on chemicals as its main revenue source. Starting in 2020, chemical prices all over the world have risen significantly. For example, crude oil prices increased by around 75% (Diwan, 2020), and caustic rose by around 20% (Procurement Resource, 2023). Adding to that information, global container freight costs are also reaching an all-time historic level high (The Economist, 2021).

Ecolab is a global leader in water, hygiene, and energy technologies and services that protect people and vital resources. Ecolab needs to regain its profit from the pre-COVID-19 pandemic to be the leader. One of the ways to achieve that is by applying their value-based selling marketing strategy, which is instructed by their CEO and called eROI, to deliver value and gain more profit for Ecolab.

Ecolab’s commitment to sustainability is evident in how they approach environment return on investment (eROI), which measures the financial return on investment from a sustainability perspective adopted from S-ROI or Sustainable Return on Investment (Williams, 2010). eROI is a tool that enables companies to measure the economic benefits of sustainability projects and the environmental and social benefits. Ecolab has been implementing eROI across its operations to drive sustainability and cost savings while improving the value it provides to customers.

Ecolab has most of Southeast Asia and Indonesia’s specialty chemical market share. Ecolab was one of the early water service companies to enter the Indonesian market. However, the recent market has changed quite a bit as local competitors and other big companies invest in Indonesia. As a Company that implements a differentiation business level strategy, eROI is one of their ways to capture the market with different value added to the customer.

Ecolab proposes a value-added marketing strategy to drive its profitability and top-line revenue. All business heads, district managers, and service engineers are all targeted to implement eROI for the customers. The chain connection between Ecolab’s business units needs to be solid for successful delivery and the result of this marketing strategy.

Delivering eROI to customers is one of the biggest challenges in adapting this marketing strategy to fit into the market. With the aggressive pricing from local players, implementing this marketing strategy must have an accurate strategy with both internal and external views.

In the end, eROI is one of the marketing ways to be different from the rest of the competitors. It will also benefit the customers from water cost savings and environmental and overall energy consumption. The challenge is how effectively eROI can be implemented in specific customer segments, such as fertilizer and gas processing plants, to overcome Ecolab’s depleting profits.

The business issue is that although Ecolab has a value-based marketing strategy called eROI (Environmental Return on Investment), they still struggle with declining profit from raw material increases and aggressive pricing from local players. The business issue specifically focuses on the Indonesian market’s fertilizer and gas process customer segment.

According to the company’s annual report, its revenue has grown yearly except for 2020, when COVID-19 struck. Conversely, their profit still has not regained its initial volume before COVID-19. This caused their stock (NYSE: ECL) price to drop from around $230/share to around $140/share or down around 40%. Despite increasing revenue, the declining profit is not favorable for the shareholders, as shown by its stock price movement. Ecolab needs to find a way to overcome these challenges by cutting down costs and finding the right marketing strategy to gain more profit.

eROI is developed to gain more continuity and drive Ecolab’s top-line and bottom-line profitability by delivering value-based sales to their customers. eROI’s marketing strategy tries to convince the customer that their business in Ecolab is not considered a cost but rather an investment. By enveloping a value-based mindset to the customer, eROI will drive more profit as customers will pay more for the service they get from Ecolab.

The depleting profit percentage is also experienced by all business segments in Ecolab from Global Industrial, Global Institutional, and Global Healthcare, as shown in Fig. 1. Global Institutional profit reached the lowest point in 2020 due to their customers also suffering from COVID-19 conditions where Industrial and Healthcare businesses generated higher profitability. As one of the strategies for stable growth, eROI is a value-driven marketing strategy developed by Ecolab to achieve stable profitability growth across all segments.

Fig. 1. Segmentation analysis.

eROI has been developed and deployed since 2020, according to Ecolab’s internal data. By adopting eROI, Ecolab should have growth and positive profitability. eROI adoption internally is not that difficult as Ecolab has all the resources it needs. However, fitting eROI to a specific market is the real challenge of how the business unit needs to find a way to make eROI applicable to specific customer segments—in this case, Fertilizer and Gas Processing segments.

Overall, Ecolab will not enter the segments where local players dominate. Local/Commodity players already have their market in chemicals primarily for Primary and Waster Water Treatment. But for the specific applications including Cooling and Boiler Systems Ecolab.

Literature Review

Environmental Return on Investment (eROI)

eROI, more commonly known as S-ROI or Sustainable Return on Investment, is used by Ecolab (Breabăn, 2021). S-ROI has a more robust perspective on calculating and considering investment than the classical return on investment. S-ROI not only focused on tangible assets directly affecting cash but also considered environmental long-term benefits S-ROI is also an improvement compared to LCA/LCCA or Life Cycle Analysis that only focuses on direct cash impact (Breabăn, 2021).

Furthermore, Kotler (2002) also added several categories in case companies want to employ a differentiation strategy, which is categorized into the following aspects: product differentiation, personnel differentiation, distribution differentiation, and image differentiation. This combination can lead companies to differentiate themselves from competitors and help improve their profitability due to the high-profit margins generated by offering exceptional products.

S-ROI is one kind of improvement compared to the traditional LCA/LCCA commonly used to determine the economic impact of project/procurement. The traditional methods have some drawbacks (Breabăn, 2021), such as (1) an inability to accurately quantify the noncash benefits and costs accruing to both the organization in question and to society as a whole resulting from a specific investment and (2) failure to incorporate the element of risk and uncertainty adequately.

A key feature of S-ROI is that it converts to dollar terms (monetizes) the relevant social and environmental impacts of a project yet still provides the equivalent of traditional financial metrics referred to as—Financial Return on Investment (FROI). FROI accounts for internal (i.e., accruing to the organization) cash costs and benefits only, while S-ROI accounts for all internal and external costs and benefits. Fig. 2 illustrates how traditional financial models differ from S-ROI.

Fig. 2. Targeting.

Ecolab further developed S-ROI with a similar concept with modifications to fit their customers’ needs and changed the name to eROI. Business outcomes are the primary goal of the customers, operational drivers are the tangible assets that directly affect the economic sector, and environmental effect is the additional intangible factor that considers the environmental aspect.

Value-Based Marketing Strategy

The concept of value bridges marketing and economics into one framework that is useful for developing strategies and setting prices (Arrazola, 2014). From a marketing standpoint, value can be defined as the set of benefits perceived by the customer. Value is the relationship between the sum of all the perceived/desired benefits in relations to the relative cost (Dahlstrom & Crosno, 2021). Value is the force that drives sales and market share and provides the customer with a strong incentive to purchase in relation to the price and effort invested in obtaining it. Consumers only buy products that have value for them.

Value is the relationship between the sum of all the perceived benefits and the price and effort required to obtain the product. Value is the force that drives sales and market share and provides the customer with a strong incentive to make a purchase (Arrazola, 2014).

Based on (Eggert, 2018), there is a value paradox that includes value-in-use and value-in-exchange; value-in-use understands how something is valued based on its utilization. For example, water in the industry is valued as a cooling fluid, which is valued as one of their functions. In other terms, value-in-exchange is how something is valued compared to other resources. For example, if there is water scarcity, then water could be valuable compared to other resources. The terminologies are further elaborated by (Eggert, 2018) with the exchange view of marketing where both provider and customers appreciate the value.

Research Methodology

Research design is the framework of research methods and techniques a researcher chooses to study. This research uses qualitative research methodology that focuses on analyzing internal and external conditions where the inputs are then compared with the existing conditions of the firm.

The collection method of the research consists of primary data and secondary data. The primary data used qualitative interviews, and the secondary data used the company’s documents. The data collection steps include setting the boundaries for the study and collecting information through unstructured or semi-structured observations, interviews, and documents (Creswell, 2014).

Interviewees are generally based on Internal and External. Internal interviewees that are serves in Table I are from high management, which heavily influenced Ecolab’s eROI program development and deployment. This will collect their idea on how eROI should be implemented. Table II serves lists of external interviewees. External interviewees are from high-level decision makers to get their idea on how they picture the eROI program on their business, and the last one is from the customer executor level on how the implementation could be possible based on their perspective.

Table I. Respondents From Internal

Code	Position
TS	Director of Marketing—Southeast Asia
WMS	District Manager—Chemical
AN	Area Manager—Chemical

Table II. Respondents from Customers

Code	Position	Industry
KH	General Manager Technology	Ammonia
SH	General Manager Technology	Methanol
FA	Senior Process Engineer	Fertilizer
PN	Senior Process Engineer	Ammonium Nitrate

The interview result is analyzed with content analysis to organize and elicit meaning from the data collected and draw realistic conclusions. This is how the data analysis process evolved from content analysis. To comprehend the main idea of the interviewee, this research data analysis used a broad surface structure (a manifest analysis). Four distinct main stages are described in this paper: decontextualization, recontextualization, categorization, and compilation (Bengtsson, 2016).

The additional data is secondary data, which is needed to determine the organization’s revenue. The data is based on the organization document, which consists of a few data sets as below:

1. Internal company documents,

2. Revenue and margin of the current set of customers.

Analyses

Primary Data Results

After conducting interviews with company employees and customers, the results are obtained, and the data are processed by selecting the keywords that appear in the answers to each question and categorizing them accordingly so the general idea of interview result could generated from the main category from manifest analysis. Table III presents the primary data results for each interview question.

Table III. Primary Data Results

Question	Main Category	Internal	External
How important is environmental sustainability to your business?	Revenue	5 results	2 results
	Compliance	2 results	7 results
	Reputation	–	1 result
What is your environmental sustainability goal?	Revenue	5 results	2 results
	Compliance	4 results	6 results
	Stakeholder engagement	1 result	–
What do you think of a water services company’s offering on environmental return?	Quality	1 result	3 results
	Cost	3 results	3 results
	Environmental sustainability	4 results	1 result
	Compliance	1 result	1 result
What is the aspect that you are looking for the most in a water treatment company?	Company’s capabilities	3 results	2 results
	Process optimization	5 results	–
	Comparable profit	2 results	1 result
	Capex	1 result	–
	Compliance	–	4 results
	Reputation	–	1 result
Are you aware of Ecolab’s environmental return on investment (eROI) program?	Program adoption	6 results	–
	Aware	2 results	–
	Not aware	–	4 results
How much value do you place on Ecolab’s eROI program when evaluating their products and services?	Company’s capabilities	5 results	–
	Emission reduction	2 results	1 result
	Process efficiency	–	1 result
	Company image	–	2 results
	Value offered	–	1 result
How much more would you be willing to pay for Ecolab’s products and services if they had a positive environmental impact?	Contract engagement	2 results	1 result
	eROI offering	1 result	–
	Trade-off value	1 result	2 results
	Price increase	1 result	–
	One-time charge	–	1 result
	Sharing benefit	–	1 result
	Total production cost reduction	–	1 result
Are you considering switching to a competitor that offers similar products and services but with a lower benefit for environmental impact?	Consistent value provided	1 result	–
	Business relationship	1 result	–
	Market trend	1 result	–
	eROI concept dependent	1 result	–
	Environmental impact	1 result	1 result
	Compliance related	–	1 result
	Trade-off value	–	3 results
	Company’s capabilities	–	1 result
What do you think about valuing eROI from a commercial perspective?	Established eROI business	2 results	–
	Trade-off value	1 result	–
	Process of Purchasing	1 result	–
	Customer readiness	2 results	–
	Environmental related	1 result	1 result
	Type of offering	–	1 result
	Trade-off value	–	2 results
How do you think the implementation of eROI is in daily operation?	Engineers capabilities	3 results	1 result
	Planning	1 result	–
	Financial recording	2 results	1 result
	Legal and Agreement	–	3 results

Secondary Data Results

To demonstrate the impact of eROI on a particular business unit, secondary data will only be limited to Ecolab customers who are based in Indonesia and customers of the Heavy Division - Chemical District. The list of customers that participated in this study is shown in Table IV The customer segments come from the petrochemicals, air separations, and fertilizers industries. There are seven customers for fertilizers, three for air separation, and seven for petrochemicals. The result is that the average GM for customers who have adopted eROI is higher than that of customers who haven’t. In contrast, the sales number for eROI customers is still lower for the top 14 sales generation in the Chemical District.

Table IV. Secondary Data Results

Parameter	Value
Average GM for eROI customer	63%
Average GM from non-eROI customer	57%
Total sales for eROI customer	$1,750,186.0
Total sales for non-eROI customer	$2,746,373.0

VRIO Analysis

A tool for strategy, the VRIO framework helps to pinpoint the resources and competencies that provide a company with a sustained competitive advantage. Businesses usually have access to a variety of resources and expertise. These resources could be personal, organizational, financial, physical, or technological, for example. The VRIO study can be used to evaluate the internal resources and capabilities of a company in terms of their quality and usefulness (Sridharan, 2017).

The VRIO analysis shown in the Table V which show that Ecolab have two competitive advantage that comes from technology and network of supply chains. While international network affiliates and direct sales method are also valuable they are easier to duplicate by competitors.

Table V. VRIO Results

	V	R	I	O	Competitive Advantage
Strength 1: The best in-class technology for digitalization and integrated platform	x	x	x	x	Competitive Advantage
Strength 2: Network of supply chains, which includes warehouses, production plant, and engineer that can deliver services to costumer remote sites.	x	x	x	x	Competitive Advantage
Strength 3: International network of affiliates and fulfillment networks that expand international market reach and product availability.	x	x	–	–	Competitive Parity
Strength 4: Direct sales method takes the middleman of the purchase experience and avoids unnecessary product markups for the end consumer.	x	–	–	–	Competitive Parity

STP Analysis

This article uses the segmentation framework advocated by Bonoma for business-to-business specific purposes (Hollensen, 2010). The STP analysis is based on firm condition where it start from Macro to Micro is segmentation analysis that is shown in Fig. 1.

EII has a specific customer segment that has unique needs and specialties. Differentiated marketing serves each customer segment with a marketing mix built specially to serve specific segments’ desires and needs.

Once the segmentation process gives a clear picture of the market and the target marketing strategy has been selected, the positioning approach can be developed that is displayed in Fig. 2. The next one is positioning analysis that is drawn on Fig. 3. Positioning analysis is based on the segmentation analysis and targeting analysis. Based on the two previous analysis then positioning analysis give the overall picture how the firm is positioned on the chart compared to other competitors on the market.

Fig. 3. Positioning analysis.

Porter 5 Forces Analysis

Business environmental analysis is required to explore possibilities of multiple factors from external aspects, such as the competitiveness of industries. One of the common tools to use is Porter’s 5 Forces, which gives a framework for analyzing a company’s external condition and gives overall pictures of where the balance of power is in a certain sector and how this affects product/service profitability (Porter, 2008). Porter’s 5 Forces analyzes the factors of competition, the potential of new entrants, suppliers, customers, and the threat of substitutes, which are addressed in Table VI.

Table VI. Porter’s 5 Forces Analysis

Force	Category	Description
Competition in industry	High	Competition in industry, specifically in Indonesia, is very high and intense. Both local and multinational companies have a tight balance in the market share.
Potential of new entrants	Medium	New entrants in the water treatment industry are at a medium level, which is dominated by local competitors that sell commodities and chemicals. However, specialty chemicals’ new entrants are relatively difficult as they require heavy RnD processes and infrastructure.
Power of supplier	Medium	Commodity Chemicals could be sold by various distributors with very minimal requirements as the product is the same. This leads to low power of supplier. However, specialty chemicals have very different conditions where very specific products for specific chemical applications. In some cases, only specialty products are applicable, thus making the power of the supplier high.
Power of customers	Medium	In normal applications where there’s no technical issue, customers tend to seek the lowest cost possible. But this eventually led to long-term damage to the system that required higher costs to make up. When a higher technical concern is confirmed, then the customer has a tight choice to choose the best-suited chemicals in the market, thus making the power of customers medium related to the condition.
Threat of substitute	Low	A sustained water treatment industry company is a company that has a high specialty chemical and high technical services level. Only a few companies could provide both of the world in the water treatment industry.

Competitor Analysis

To compare a company’s strengths and weaknesses to those of its competitors, competitiveness analysis involves analyzing their strengths and weaknesses. For Nalco Water, a market leader in water treatment and process optimization solutions, we can examine several of its principal competitors that is listed in Table VII.

Table VII. Competitor Analysis

Force	Description
Brand A	• Domination of Municipal and Desalination market
	• Financing
	• Patent of various membranes and engineering products
	• Strong facilities for mobile water treatment and plant facilities engineering
Brand B	• Domination of coagulants, flocculants, and biocides
	• Strong facilities for their production chemical facilities
	• Competitive price
	• One of the suppliers to Ecolab
Brand C	• Domination of Reverse Osmosis Chemical
	• Really focused on RnD and spent a lot of chemical development
	• Unique and innovative chemical products
	• Strong attachment with Asia Region as the only global water treatment company from East Asia
Brand D	• Domination of cellulose and paper, oil and gas market
	• Specific target market
	• Really strong on developing new renewable energy sector chemical
	• Big financing background

Customer Analysis

An extensive interview was conducted, involving respondents from the internal company as the supply side and customers as the demand side. This interview aimed to gather comprehensive information regarding the factors influencing customers in selecting a particular company as their water treatment vendor, their concerns regarding environmental impact, and their ideas regarding the eROI program.

The cognitive analysis covered the idea of what customer perceived of water treatment companies from their perspective; this is critical to determine what are the key approaches for the marketing strategy to suit their need.

1. Capabilities and quality: Customers rely on these companies to provide clean, safe, and high-quality water.

2. Cost efficiency: Water treatment companies with advanced capabilities can help customers reduce operational costs while maintaining water quality.

3. Emission reduction: Customers are increasingly concerned about the environmental impact of water treatment processes. Customers may choose companies that prioritize environmentally responsible practices.

Behavioral analysis of customers is a crucial aspect of marketing and business strategy. It involves studying and understanding how customers behave, interact with products or services, and make purchasing decisions.

1. Value trade offering: Value trade-offs give buyers the ability to assess and rank various product features and traits, enabling them to navigate a complicated market.

2. One-time charge: Customers can readily grasp the complete cost with a single upfront payment without having to worry about ongoing bills or complicated pricing systems.

3. Sharing benefit: Benefits that are shared are frequently linked to ideas like the sharing economy and cooperative consumption.

Analysis of the customer environment is an essential part of market research and strategy planning. It entails a methodical investigation of the forces and external elements that may have an effect on a company’s clients. This study gives crucial information on how customers behave, what they want, and what they need in relation to their larger environment.

1. Compliance: Customers can feel secure knowing that the products they buy or the services they use are safe and of a specific standard when firms abide by regulatory requirements, lowering the possibility of harm or dissatisfaction.

2. Company image and reputation: The way a firm is perceived in the marketplace has a big impact on how customers feel. Positive revenue impact is one of the advantages of having a positive corporate image.

3. Environmental sustainability: Environmental sustainability, which is in line with consumers’ beliefs and ideals, is, first and foremost, a reflection of a strong commitment to moral and responsible consumption.

SWOT Analysis

The acronym SWOT analysis derives from the four components of this analytical approach, namely strengths, weaknesses, opportunities, and threats. It is employed as a strategic planning tool to assess a company’s comparative position compared to its competitors (Teoliet al., 2023). This approach highlights the significance of both internal and external aspects in formulating effective techniques for ideation and problem-solving. To examine the problem of the company’s poor profitability and develop a strategy to address it, a SWOT analysis was performed. This analysis involved assessing both external and internal elements, and the findings are summarized in Table VIII.

Table VIII. SWOT Matrix

Strength	Weakness
1. Advanced technology in digitalization	1. Relatively no new chemical deployment in the past 5 years
2. Strong global supply chain	2. Big gap in the company’s direction on business and customer awareness
3. Big production facilities locally and globally
4. Strong international reputation	3. Heavily divided by market segment on internal organization
5. Strong partnership with other US companies
	4. Prefer global size company, while local private companies also play a dominant role in Indonesia
6. Market leader for water treatment chemicals in Indonesia and globally
7. Big RnD activities and support	5. A small amount of sales distributor
Opportunity	Threat
1. Indonesia’s growing economy	1. Floating commodity prices on raw material
2. Stricter regulation by Indonesia’s ministry regarding water usage and discharge.
	2. Disrupted supply chain due to global conflicts and post covid
3. Deeper concern about CO2 emission and overall energy efficiency	3. Tight customer budget post covid for capital expenditure
4. Customers’ awareness of compliance	4. The growing rate of local competitors
5. Customer’s requirement for a higher-quality chemical supply	5. The higher pace of other global water treatment companies of new chemical development
6. Customers demand higher efficiency output with better water treatment
	6. More new entrants to the Indonesia water treatment market

Results and Discussion

Selecting Strategy by TOWS Matrix

The TOWS Matrix, alternatively referred to as the TOWS Analysis, is a strategic planning instrument utilized by businesses to discern strategic alternatives by examining the interplay between their internal strengths and weaknesses, as well as external opportunities and threats (Wheihrich, 1982). The concept being discussed is an expansion of the SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis to formulate practical plans through the alignment of internal and external forces. The TOWS Matrix is a valuable framework for analyzing an organization’s internal strengths and weaknesses, as well as external opportunities and threats. By utilizing this matrix, organizations may identify strategies to capitalize on their strengths, minimize their weaknesses, seize opportunities, and effectively address potential threats.

The initial findings of the research indicate that Ecolab has a shortcoming in profitability while simultaneously sustaining sales growth. This has the potential to negatively affect the company in the long run, as it may lead to a decrease in shareholders’ perception over time.

Based on the study, particularly the findings from the customer analysis, customers are not solely focused on selecting the lowest price when choosing water treatment suppliers. Instead, they prioritize suppliers that offer benefits such as environmental effects and overall production cost reduction. Therefore, it is recommended that Ecolab adopts a differentiation strategy to enhance its market share and profitability. This can be achieved by capitalizing on the fact that Ecolab is the leader in both technology and market size.

The selection of appropriate methods to address the business issue of poor profitability is informed by the TOWS matrix shown in Table IX and the study findings. The strategies that have been chosen are (1) enhancing benefit sharing marketing strategy and (2) focusing on developing an environmental focus marketing strategy.

Table IX. SWOT Matrix

	Strength (S)	Weakness (W)
Opportunity (O)	S-O strategies:	W-O strategies:
	SO1: (S1 | O6)	WO1: (W2,W3 | O5, O6)
	Develop digital water treatment tools for efficiency	Enhance engineer’s level technical capabilities and company marketing direction training
	SO2: (S2,S3 | O1,O2)	WO2: (W4,W5 | O1, O2)
	Deploy water treatment campaign to national and international expo	Increase collaboration across divisions to develop the same general knowledge of water treatment market demand.
	SO3: (S5,S6 | O3,O4) Develop environmental impact marketing strategy
Threat (T)	S-T strategies:	W-T strategies:
	ST1: (S2,S3 | T1, T2)	WT1: (W2 | T5)
	Source more raw material suppliers and lock on medium-term contracts.	Focus on developing new chemical applications that fit global demand for water efficiency.
	ST2: (S1,S7 | T3, T4)	WT2: (W5 | T6)
	Deploy value-based marketing strategy and benefit-sharing	Build strong chemical agents/distributors for local and commodities businesses.
	ST3: (S5,S7 | T5, T6)
	Enforce proprietary technologies’ intellectual protections

These two strategies could be adopted by the current eROI program as they have strong similarities with the adjustment of how eROI could potentially gain more benefits and also be effective in the implementation to customers.

Research Evaluation on eROI Marketing Strategy

The evaluation covers the research question about the business strategy with eROI and how to implement eROI. The evaluation is based on analysis conducted in this research, mainly from customer analysis, which is the primary data. Secondary data already confirm that customers who adopted eROI delivered higher margins compared to customers who haven’t adopted the eROI program. Below is the evaluation of the eROI concept and Ecolab Business Strategy:

How to Communicate the eROI

Customer analysis and interviews show that there is over-expectation by Ecolab management, which implies that eROI is already being recognized by most of the global chemical customer segments. The interview results tell that customers do not yet know the eROI concept by Ecolab.

Creating Value

Value captures the outcomes Ecolab brings to the customer – covering the business outcomes, operational drivers, and environmental impact our customers need and user experiences they love.

Communicating Value

Communicating value means measuring and demonstrating Ecolab’s impact on customers.

Capturing Value

Capturing value means ensuring Ecolab receives a fair share of the value that is created. Ecolab’s strategy relies on innovation and expertise. To keep innovation and expertise relevant, it requires constant investment.

How to Market eROI

Quantifying is one of the challenges of using the eROI concept, as not all parameters have a tangible impact. But as the concept is the total value delivered, Ecolab needs to approach quantifying the potential value. The proposed strategy is to Categorize the value by its types and level of urgency as follows:

1. Value by its type

a) Restorative: A situation where a system or process is losing profitability. Solution: Correct the problem and reduce the current cost. The customer has very strong task motives to make a change.

b) Opportunistic: Takes advantage of an opportunity for customers to achieve new performance levels with typically increased efficiency or increased profits.

c) Preventive: Allows customers to avoid problems that could put them at a competitive disadvantage.

2. Value by its level of urgency

a) How much?

b) How soon?

c) How sure?

How to Propose eROI

Proposing eROI is the next item that is proposed by this research based on customer analysis, interview, and marketing mix analysis. Target market and offering types are two items that are proposed by this research.

The target market is the focal point of any effective marketing strategy. It represents a specific group of individuals or businesses a company intends to reach with its products or services. Understanding the target market is crucial for tailoring marketing efforts. This involves the marketing mix analysis used in this research. Based on this research, we must emphasize micro to macro marketing based on Ecolab’s competitive advantage and firm characteristics. Not all customers need to be marketed by eROI. The time consumed and effort will not justify the overall benefit.

Offering types need to consider several important items from a customer’s point of view, such as preferences, legal, pricing, and duration. Based on the interview results, customers preferred trade-off value contracts, one-time charges, and shared benefits. Ecolab needs to find what suits Ecolab’s and customers’ legal points of view to find what works best for eROI to work in the long term.

How to Implement and Evaluate eROI

The strategy of eROI implementation is also critical to ensure customer confidence in acceptance of the eROI program. Based on interview results, there are also some different understandings of eROI implementation. Ecolab management tends to focus on quantification, such as process, engineers’ capability, and value, while customers tend to focus on legal and contractual terms.

To support this, communication of eROI needs to be clear, as proposed in eROI communication previously, where customers are aware of what is being offered and agree with the value and terms. Ecolab needs to make multiple templates of contractual arrangements based on customers’ needs to allow eROI delivery to increase over time.

Conclusion

Ecolab profit has recently declined despite having decent performance on sales performances. This is due to the high cost of raw materials, tight customer budgets, and growing competitors in Indonesia. Based on the analysis conducted by this research, Ecolab has several competitive advantages that could overcome the negative growth of profitability by utilizing eROI as a shared value and environmental marketing strategy. Customers in the fertilizer and gas processing segment indicate that demand for environmental impact and process efficiency is significant and more important than the prices of chemicals. With the proposed and evaluated eROI strategy, Ecolab could leverage its resources and gain profitability growth with current market conditions.

eROI is still fit for Ecolab’s current market condition and firm characteristics. eROI has proven to give Ecolab more profitability than the conventional sales approach. However, the communication built is not yet very effective in informing customer that Ecolab has tools to cover their needs. Based on the analysis of this research, there are communication, value categorization, and how to propose eROI to increase the implementation of the eROI concept to customers.

Ecolab should employ the concept of eROI (Environmental Return on Investment) to effectively leverage its competitive advantage while mitigating the negative impact of price rivalry on profitability and market share. The proposed marketing approach centers around the concept of shared value and strongly emphasizes environmental effects. Based on the available company data, it can be observed that Ecolab has already derived benefits from its marketing strategy. However, the company continues to face challenges in terms of targeting and delivery, resulting in a negative growth in profitability despite implementing an appropriate marketing plan. This research also evaluates and proposes the utilization of the eROI marketing approach. Furthermore, establishing a robust supply chain, investing in research and development, and managing human resources are crucial factors for enhancing profitability in Indonesia’s Fertilizer and Gas Processing Segment.

The author would like to express their deepest gratitude to their supervisors, Widhyawan Prawiraatmadja, M.A., Ph.D., and Ilma Aulia Zaim, S.Ds., M.S.M., Ph.D for their invaluable guidance and support throughout the research process. The author would also like to thank PT. Ecolab International Indonesia and the respondents for their interest and contribution so this research can be completed accordingly.

Conflict of Interest

Conflict of Interest: The author declares that there is no conflict of interest between the author and PT Ecolab International Indonesia, which is the subject company of this research.