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NAVIGATING
THE PRODUCT
MINDSET
HOUSEHOLD CHEMICALS
INDUSTRY REPORT
INTRODUCTION
UL has launched a global study, Navigating the Product Mindset, that features               PRODUCT STUDY KEY

marketplace trends, statistical data, differing stakeholders, varied geographies, diverse
industries and a technical panel of UL experts. This report presents the key findings
related to the household chemicals industry. It is based on 2,430 quantitative
interviews with manufacturers and consumers across a range of significant export            Quantitative data:
                                                                                            blue indicates
and import markets — China, Germany, India and the United States.
                                                                                            manufacturers.


Navigating the Product Mindset and its additional industry reports seek to better
understand market forces; drivers of decisions; findings related to safety, performance,
sustainability and innovation; and the motivations behind these views.                      Quantitative data:
                                                                                            green indicates
                                                                                            consumers.
To read the full study, go to ul.com/productmindset.

                                                                                                  U.S.

                                                                                                  CHINA

                                                                                                  INDIA

                                                                                                  GERMANY
                                                                                            Flags indicate specific
                                                                                            geographic results.




HOUSEHOLD CHEMICALS                                                                                                   2
Manufacturer findings




Household chemicals     3
Findings Snapshot
•	 Household chemical manufacturers express confidence in their job performance
   related to product safety, product innovation, sustainability and reliability.
   Only 2% of manufacturers feel that their company is behind the curve regarding
   product innovation.

•	 Rising costs are the biggest supply chain challenge. Consistent product quality
   is the supply chain consideration with which manufacturers are most satisfied.

•	 Product reliability has the largest impact on household chemical
   manufacturers’ ability to successfully compete in the marketplace today.
   In the future, manufacturers believe product innovation will be their
   most important consideration.

•	 Manufacturers believe they are responsible for ensuring product safety, not
   government agencies, consumer agencies or retailers. They also feel that it is
   their job to communicate key product safety information to consumers.

•	 Household chemical manufacturers agree consumers are becoming more
   empowered and commanding greater influence across the supply chain.

•	 More than 40% of household chemical manufacturers agree there is a direct
   relationship between product quality and country of origin.

•	 Today, 68% of manufacturers consider environmentally friendly products profitable or
   somewhat profitable. Notably, Chinese and Indian household chemical manufacturers
   are the most optimistic about environmentally sound products being profitable, while
   U.S. manufacturers demonstrate the largest concern in this area.




HOUSEHOLD CHEMICALS                                                                       4
HOUSEHOLD CHEMICAL manufacturers are confident IN their performance
 In general, manufacturers consistently rank their company performance higher than that of their industry. Household
 chemical manufacturers rank themselves highest in terms of being ahead of the curve in product safety, innovation
 and reliability. They are least confident regarding their performance in product and operational sustainability.

                        Company                                   Industry

                 60% At or ahead of                         45% At or ahead of
INNOVATION
  PRODUCT




                        the curve                                 the curve
                 38% At the curve                           44% At the curve
                 2%     Behind the                          11% Behind the
                        curve                                     curve



                        Company                                   Industry

                 60% At or ahead of                         50% At or ahead of
PRODUCT




                        the curve                                 the curve
 Safety




                 38% At the curve                           43% At the curve
                 2%     Behind the                          7%    Behind the
                        curve                                     curve



                        Company                                   Industry
sustainability




                 42% At or ahead of                         38% At or ahead of
   PRODUCT




                        the curve                                 the curve
                 51% At the curve                           54% At the curve
                 7%     Behind the                          8%    Behind the
                        curve                                     curve



                        Company                                   Industry
sustainability
 OPERATIONAL




                 38% At or ahead of                         36% At or ahead of
                        the curve                                 the curve
                 53% At the curve                           54% At the curve
                 9%     Behind the                          10% Behind the
                        curve                                     curve


                        Company                                   Industry

                 62% At or ahead of                         49% At or ahead of
reliability
 PRODUCT




                        the curve                                 the curve
                 34% At the curve                           47% At the curve
                 4%     Behind the                          4%    Behind the
                        curve                                     curve




  HOUSEHOLD CHEMICALS                                                                                            5
Rising Costs ARE the largest supply chain challenge for HOUSEHOLD CHEMICAL
manufacturers
Rising costs are the most significant supply chain challenge for household chemical manufacturers.
This issue points to the continuing challenges of profitability.



Biggest Supply Chain Challenges

                                 Rising costs/Price fluctuation          17%

                                  Availability of raw materials        11%

                                               Timely delivery         11%

                                                       Quality    6%

                                                  Competition     4%




Biggest Supply Chain Challenges: GEOGRAPHIC DETAILS

Interestingly, rising costs are particularly a concern among Chinese and U.S. manufacturers, while German
manufacturers note timely delivery as their more significant supply chain issue.
Rising costs/Price fluctuation                                    Availability of raw materials

                    24%                                                            16%

                   20%                                                            12%

             11%                                                              8%

            10%                                                               8%


Timely delivery                                                   Quality

                      29%                                                    7%

            7%                                                               6%

         6%                                                                  6%

       1%                                                                    4%


Competition

         6%

         6%

       2%

       2%


HOUSEHOLD CHEMICALS                                                                                         6
Manufacturers are most satisfied with quality and on-time delivery
Household chemicals manufacturers feel most confident in their ability to manage consistent product
quality and on-time delivery. They ranked these as the two best-performing aspects of their supply chain.

Manufacturer Supply Chain Satisfaction

                                          Consistent product quality                                    84%

                                            On-time product delivery                              73%
                                       Ability to manage risk in an
                                increasingly complex marketplace                        53%

                                                      Managing costs               48%
                                     Reducing redundancy in your
                                         company’s supply chain                   45%




Manufacturer Supply Chain Satisfaction: GEOGRAPHIC Details

Chinese household chemicals manufacturers tend to be most satisfied with the performance of their
supply chain, while U.S. manufacturers consistently express the lowest levels of satisfaction.
Consistent product quality                                             On-time product delivery

                                                         91%                                                               84%

                                                       87%                                                           74%

                                                      83%                                                       68%

                                                73%                                                            63%

Ability to manage risk in an increasingly
complex marketplace                                                    Managing costs

                                          62%                                                            53%

                                         59%                                                            51%

                                   50%                                                                  49%

                             40%                                                                  38%


Reducing redundancy in your company’s supply chain

                                   52%

                              44%

                              44%

                          38%




HOUSEHOLD CHEMICALS                                                                                                              7
Product Reliability and Safety are priority considerations for HOUSEHOLD
CHEMICAL manufacturerS
Product reliability and product safety are the top considerations that impact manufacturers’ abilities
to effectively compete in the marketplace. Notably less significant is outsourcing to developing countries
to contain manufacturing costs, even though rising costs are a key supply chain challenge.

Top considerations impacting MANUFACTURERS’ ability TO COMPETE

                                                Product reliability                           91%

                                                   Product safety                            90%

                                               Product innovation                       82%

                                        Operational sustainability                     80%

                        Using environmentally friendly packaging                      77%

                                  Designing sustainable products                      77%

                                                 Speed to market                     75%

              Outsourcing to developing countries to contain costs       47%




Product Reliability is the Key Factor in Manufacturer Success
When asked to select only one key factor, household chemical manufacturers chose reliability as the single most
significant consideration related to their business success. This suggests the essential importance of a product
working as expected to this segment.

Most important consideration impacting manufacturers’ ability to compete

     Outsourcing to developing countries 2%
Using environmentally friendly packaging 4%
              Operational sustainability 8%


                       Speed to market 8%                                                   26% Product reliability




         Designing sustainable products 12%
                                                                                            21% Product innovation




                                                                                            19% Product safety




HOUSEHOLD CHEMICALS                                                                                                   8
Manufacturers feel it is their job to communicate product safety
information to consumers
Household chemical manufacturers identify themselves as the primary stakeholder responsible
for providing and communicating safety information to consumers.

Who is responsible for communicating key product safety information to consumers?




    84%                            28%                           20%                              19%
    AGREE                          AGREE                         AGREE                            AGREE



   Manufacturers                    Retailers                   Government                    Independent safety
                                                                                                 organizations




88                    % of HOUSEHOLD CHEMICAL
                        manufacturers agree product
                        safety is becoming more important.




HOUSEHOLD CHEMICALS                                                                                                9
For Household chemical Manufacturers, Innovation Leads Tomorrow
Forecasting a few years into the future, product innovation is of key importance and product reliability
remains significant to household chemical manufacturers.



Future Consideration Most Important in Impacting Your Company’s Ability to Compete

     Outsourcing to developing countries 5%
                        Speed to market 5%
Using environmentally friendly packaging 6%

                                                                                           31% Product innovation
               Operational sustainability 8%



                            Product safety 11%


                                                                                           21% Product reliability
         Designing sustainable products 13%




Future Consideration Most Important in Impacting Your Company’s Ability to Compete:
GEOGRAPHIC DETAILS
It is notable that German household chemical manufacturers are more concerned with product safety than
are manufacturers in China, Germany and the U.S. Additionally, product innovation seem to be prioritized
higher by German and Chinese manufacturers relative to their U.S. and Indian counterparts.


Product innovation                                           Product safety

                            40%                                               18%

                           36%
                                             90%                       10%
                                                                                               157%
                     27%                      MORE                    8%                       MORE

               21%                                                    7%




HOUSEHOLD CHEMICALS                                                                                                  10
Manufacturers Are Responsible for Product Safety
Manufacturers see themselves as responsible for ensuring the safety of household chemical products.
While other stakeholders are seen as contributing to product safety, the onus clearly lies with the
manufacturer. Additionally, manufacturers are more likely to hold those manufacturers that assemble
the final product versus those that create ingredients as primarily accountable for safety.

most responsible for product safety

                 Manufacturers that assemble final products                     65%

                                      Government agencies        10%

        Companies that manufacture components/ingredients        10%

                    Independent safety testing organizations    4%

                                         Consumer agencies      4%

                                       Distributors/retailers   4%




HOUSEHOLD CHEMICALS                                                                                   11
HOUSEHOLD CHEMICAL manufacturers agree consumers are becoming
more empowereD
Consumers are increasingly gaining influence and effectively getting their voices heard across the global
supply chain. Manufacturers clearly see consumers commanding greater power and becoming more informed.

Manufacturers Strongly Agree




      82%                                  81%                       79%                                    77%
      AGREE                               AGREE                      AGREE                                  AGREE



Consumers are requesting            Consumers are becoming       Consumer confidence                  Consumers are demanding
 more safety information             more aware and better        in product safety is                more eco-friendly products
    about products                  educated about products            increasing                        at the same cost as
                                           in general                                                 non-eco-friendly products




MANUFACTURERS Believe THEIR OWN Claims are the Most Valuable
Manufacturers of household chemicals express a strong degree of confidence in their own endorsements
and rank them as the most valuable type of claim. They consider claims made by consumers as the next
most valuable type of endorsement. Building materials, food and high-tech manufacturers all selected
consumer claims as the most important.

Most valuable party making a claim about your product

                                                   Self-claims                                  86%

                                                   Consumers                                   84%

                    Independent safety certification companies                            79%

     Independent companies regarding performance verification                             78%

                                        Government agencies                               77%

                                                     Retailers                           74%




HOUSEHOLD CHEMICALS                                                                                                            12
Manufacturers agree that country of origin has a strong impact on
product quality
Manufacturers believe there is a relationship between raw materials, chemical compounds and formulated
products and the importance of the country of origin. Chemical manufacturers in the U.S. do not perceive these
issues to be as impactful, while those in India place greater importance on the source country of chemical
compounds and raw materials.

Impacting Product Quality




                            46%                                 44%                                    40%
                           AGREE                                AGREE                                  AGREE



                       Country of origin of                 Country of origin of                  Country of origin of
                         raw materials                     chemical compounds                    formulated products




Nearly half of HOUSEHOLD CHEMICAL manufacturers will increase sourcing
from other countries over the next five years
Additionally, for the vast majority of manufacturers, these new countries will be in addition to their current
roster rather than replacing existing sources.


Agree over the next five years you will source more from
more countries                                                        Agree these countries will be in addition to your current sources

                                    58%                                                                                          100%

                                   56%                                                                                       93%

                            43%                                                                                          85%

                        36%                                                                                            82%




HOUSEHOLD CHEMICALS                                                                                                                       13
An Environmental Orientation Can Be Profitable
Today, 68% of household chemical manufacturers consider environmentally friendly products profitable
or somewhat profitable. Additionally, 27% of these manufacturers believe that this area will hold a promise
of profitability in the future.

                                                  Profitable            28%

                                      Somewhat profitable                      40%

                 Not profitable today, but may be over time             27%

                    Not profitable and do not expect profits   5%
                                       in the next few years




AN ENVIRONMENTAL ORIENTATION CAN BE PROFITABLE: GEOGRAPHIC Details

Notably, Chinese and Indian household chemical manufacturers are the most positive about environmentally
sound products being profitable, while U.S. manufacturers have the largest concerns in this area.


Profitable                                                          Somewhat profitable

                         35%                                                                       47%

                       32%                                                                     40%

                  25%                                                                        37%

                21%                                                                         36%


Not profitable today, but may be over time                          Not profitable and do not expect profit in the next few years

                      29%                                                          15%

                   27%                                                        5%

                   26%                                                    1%

                  24%                                                    0%




HOUSEHOLD CHEMICALS                                                                                                                 14
CONSUMER findings




Household chemicals   15
Findings Snapshot
•	 Consumers feel that the safety of household chemical products has improved
   slightly over the past two years.

•	 The primary safety concerns for household chemicals relate to long-term exposure
   and skin irritation.

•	 Product safety and product performance are priorities for consumers and considered
   the most important types of information when evaluating a household chemical
   product such as household cleaners. Additionally, 64% of consumers find it difficult
   to locate product safety information about these products.

•	 On average, 48% of consumers across all geographies state they are always or usually
   aware of the country of origin for household chemical products. Additionally, 33% of
   consumers believe the country of origin of household chemical products will become
   more important over the next five years.

•	 On average, 65% of consumers feel that it is more important to know the origin of a
   household chemical product’s materials versus where the product was assembled.

•	 They also think that the product quality of household chemical products is better
   in developed markets than in emerging countries.

•	 Consumers believe manufacturers can do a better job. They perceive that
   manufacturers do not take adequate steps to ensure environmentally friendly
   manufacturing procedures are followed or conduct thorough testing before
   releasing products into the marketplace.




HOUSEHOLD CHEMICALS                                                                       16
Consumers view HOUSEHOLD CHEMICALS as slightly improving in terms
of safety over the past few years
Consumers in all geographies see household cleaning products as stable or improving in terms
of safety. Those in the U.S. see the most improvement.




                                                 Household chemicals


                                         U.S.
                                      INDIA

                                  GERMANY
                                      CHINA

                                                   Better
                                                   Worse




SAFETY AND PERFORMANCE ARE PRIORITIES FOR CONSUMERS
When asked about household cleaners as an example of a household chemical product, consumers
consider product safety and product performance the most critical and valuable types of information
when evaluating a product.

Most Important Types of Information When Evaluating A Product

                                     Product safety                    37%

                              Product performance                  31%

                            Environmentally friendly        11%




HOUSEHOLD CHEMICALS                                                                                   17
Consumer safety concerns: LONG-TERM EXPOSURE AND SKIN IRRITATION
With regard to household cleaning products, consumers are most concerned about long-term exposure
issues and skin irritation. Chinese and U.S. consumers are primarily concerned about the former, while
German and Indian consumers are more worried about the latter.


BIGGEST CONSUMER SAFETY CONCERNS ABOUT HOUSEHOLD CHEMICALS

                                       Long-term exposure            26%

                                             Skin irritation         25%

         Interaction with other household cleaning products    12%

Packaging safety mechanisms to keep out of children’s reach    11%

                                                    Fumes      10%




HOUSEHOLD CHEMICALS                                                                                      18
It is hard for consumers to find product information on HOUSEHOLD
CLEANING PRODUCTS
In general, consumers do not think that product information on either safety or performance is readily available.




64
Product performance information about household cleaners was considered the most difficult for consumers to
find relative to related information for insulation, fresh meat and fish, and cell phones.


                    % of consumers find household
                      cleaning product safety
                      information difficult to locate.


58                  % of consumers find household
                      cleaning product performance/
                      quality information hard to find.

Consumers perceive product quality as better in developed vs. emerging markets
Consumers in both developed and emerging nations feel that developed countries produce higher-quality household
cleaning products. Consumers in India and China rate these products higher from developed countries than they do
those made in their own. In the U.S. and Germany, consumers perceive the emerging markets as delivering lower-




38
quality products.



                    % higher from developed to
                      emerging countries.




HOUSEHOLD CHEMICALS                                                                                                 19
Awareness of Country of Origin
On average, 48% of consumers across all geographies state they are always or usually aware of the
country household cleaning products are manufactured in. Additionally, 33% consumers also believe
the country household cleaning products are manufactured in will become more important in the
next five years. This is a lower percentage relative to the importance of country of origin over the next
five years than those for food, high-tech and building materials products.

Usually or Always aware of which                              Country where a product is
country a household chemical                                  manufactured will become more
product was manufactured in                                   important to you

                                     66%                                             40%

                                     65%                                           36%

                   33%                                                             35%

                28%                                                          23%




Importance of Country of Origin and ingredients to consumers
On average, 37% of consumers think it is important to know the country of origin for each ingredient in a cleaning
product. They also feel that when comparing parts/ingredients to where the product was assembled, it is more
important to know where the ingredients come from. This is particularly true for American and Chinese consumers.

Importance of knowing the country                             IMPORTANCE OF KNOWING WHERE THE PARTS COME
of origin for each individual                                 FROM VS. WHERE A PRODUCT WAS ASSEMBLED
part/component of the product

                               54%                                 74%                                           26%

                         43%                                       72%                                           28%

                27%                                                64%                                           36%

             22%                                                   50%                                           50%


                                                                COUNTRY OF ORIGIN FOR A PRODUCT’S PARTS/ingredients
                                                                THE COUNTRY WHERE IT WAS ASSEMBLED/PACKAGED




HOUSEHOLD CHEMICALS                                                                                                    20
73
Consumers believe HOUSEHOLD CHEMICAL MANUFACTURERS can do a better job


                  % do not believe HOUSEHOLD CHEMICAL
                    manufacturers have taken adequate
                    steps to ensure environmentally
                    friendly manufacturing procedures
                    are followed.



69                % do not think HOUSEHOLD CHEMICAL
                    manufacturers conduct thorough
                    product testing before introducing
                    new products to market.



66                % feel THAT HOUSEHOLD CHEMICAL
                    manufacturers are not
                    making better products today
                    than FIVE years ago.




HOUSEHOLD CHEMICALS                                                      21
NAVIGATING
THE PRODUCT
MINDSET



in the News
Navigating the Product Mindset has been recently featured in Time magazine,
The New York Times, Fortune and Forbes, among other notable publications.




To read the full study, go to ul.com/productmindset.




HOUSEHOLD CHEMICALS                                                           22
methodology
In Spring 2011, UL employed an independent research
firm, ORC International, to conduct a global
quantitative survey among 1,235 consumers and 1,195
manufacturers across four countries: China, Germany,
India and the United States. To meet the objectives
of the survey, manufacturers across the high-tech, food,
household chemicals and building materials sectors
were interviewed by phone and consumers were interviewed
through an online survey. Manufacturers were director-
level and above and specialized in management, research
and development, marketing and sales, quality control,
product management, or design. Consumers were a
representative mix of age, gender, education and income.
Data tabulations among subgroups have been tested for
statistical significance at the 90% and 95% confidence
levels. A technical panel was used to provide additional
insights, and Product Mindset considerations were selected
based on importance and overall significance of the data.




HOUSEHOLD CHEMICALS                                          23
further
information
For more information about this study:
Visit:	 www.ul.com/productmindset
Email: 	productmindset@ul.com
Call: 	 +1 847.664.2226




UL and the UL logo are trademarks of Underwriters Laboratories Inc. © 2012

The Household Chemicals Industry Report cannot be copied, reproduced, distributed
or displayed without UL’s express written permission. V.9.



Household chemicals                                                                 24

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UL Product Mindset Industry Report Household Chemicals

  • 2. INTRODUCTION UL has launched a global study, Navigating the Product Mindset, that features PRODUCT STUDY KEY marketplace trends, statistical data, differing stakeholders, varied geographies, diverse industries and a technical panel of UL experts. This report presents the key findings related to the household chemicals industry. It is based on 2,430 quantitative interviews with manufacturers and consumers across a range of significant export Quantitative data: blue indicates and import markets — China, Germany, India and the United States. manufacturers. Navigating the Product Mindset and its additional industry reports seek to better understand market forces; drivers of decisions; findings related to safety, performance, sustainability and innovation; and the motivations behind these views. Quantitative data: green indicates consumers. To read the full study, go to ul.com/productmindset. U.S. CHINA INDIA GERMANY Flags indicate specific geographic results. HOUSEHOLD CHEMICALS 2
  • 4. Findings Snapshot • Household chemical manufacturers express confidence in their job performance related to product safety, product innovation, sustainability and reliability. Only 2% of manufacturers feel that their company is behind the curve regarding product innovation. • Rising costs are the biggest supply chain challenge. Consistent product quality is the supply chain consideration with which manufacturers are most satisfied. • Product reliability has the largest impact on household chemical manufacturers’ ability to successfully compete in the marketplace today. In the future, manufacturers believe product innovation will be their most important consideration. • Manufacturers believe they are responsible for ensuring product safety, not government agencies, consumer agencies or retailers. They also feel that it is their job to communicate key product safety information to consumers. • Household chemical manufacturers agree consumers are becoming more empowered and commanding greater influence across the supply chain. • More than 40% of household chemical manufacturers agree there is a direct relationship between product quality and country of origin. • Today, 68% of manufacturers consider environmentally friendly products profitable or somewhat profitable. Notably, Chinese and Indian household chemical manufacturers are the most optimistic about environmentally sound products being profitable, while U.S. manufacturers demonstrate the largest concern in this area. HOUSEHOLD CHEMICALS 4
  • 5. HOUSEHOLD CHEMICAL manufacturers are confident IN their performance In general, manufacturers consistently rank their company performance higher than that of their industry. Household chemical manufacturers rank themselves highest in terms of being ahead of the curve in product safety, innovation and reliability. They are least confident regarding their performance in product and operational sustainability. Company Industry 60% At or ahead of 45% At or ahead of INNOVATION PRODUCT the curve the curve 38% At the curve 44% At the curve 2% Behind the 11% Behind the curve curve Company Industry 60% At or ahead of 50% At or ahead of PRODUCT the curve the curve Safety 38% At the curve 43% At the curve 2% Behind the 7% Behind the curve curve Company Industry sustainability 42% At or ahead of 38% At or ahead of PRODUCT the curve the curve 51% At the curve 54% At the curve 7% Behind the 8% Behind the curve curve Company Industry sustainability OPERATIONAL 38% At or ahead of 36% At or ahead of the curve the curve 53% At the curve 54% At the curve 9% Behind the 10% Behind the curve curve Company Industry 62% At or ahead of 49% At or ahead of reliability PRODUCT the curve the curve 34% At the curve 47% At the curve 4% Behind the 4% Behind the curve curve HOUSEHOLD CHEMICALS 5
  • 6. Rising Costs ARE the largest supply chain challenge for HOUSEHOLD CHEMICAL manufacturers Rising costs are the most significant supply chain challenge for household chemical manufacturers. This issue points to the continuing challenges of profitability. Biggest Supply Chain Challenges Rising costs/Price fluctuation 17% Availability of raw materials 11% Timely delivery 11% Quality 6% Competition 4% Biggest Supply Chain Challenges: GEOGRAPHIC DETAILS Interestingly, rising costs are particularly a concern among Chinese and U.S. manufacturers, while German manufacturers note timely delivery as their more significant supply chain issue. Rising costs/Price fluctuation Availability of raw materials 24% 16% 20% 12% 11% 8% 10% 8% Timely delivery Quality 29% 7% 7% 6% 6% 6% 1% 4% Competition 6% 6% 2% 2% HOUSEHOLD CHEMICALS 6
  • 7. Manufacturers are most satisfied with quality and on-time delivery Household chemicals manufacturers feel most confident in their ability to manage consistent product quality and on-time delivery. They ranked these as the two best-performing aspects of their supply chain. Manufacturer Supply Chain Satisfaction Consistent product quality 84% On-time product delivery 73% Ability to manage risk in an increasingly complex marketplace 53% Managing costs 48% Reducing redundancy in your company’s supply chain 45% Manufacturer Supply Chain Satisfaction: GEOGRAPHIC Details Chinese household chemicals manufacturers tend to be most satisfied with the performance of their supply chain, while U.S. manufacturers consistently express the lowest levels of satisfaction. Consistent product quality On-time product delivery 91% 84% 87% 74% 83% 68% 73% 63% Ability to manage risk in an increasingly complex marketplace Managing costs 62% 53% 59% 51% 50% 49% 40% 38% Reducing redundancy in your company’s supply chain 52% 44% 44% 38% HOUSEHOLD CHEMICALS 7
  • 8. Product Reliability and Safety are priority considerations for HOUSEHOLD CHEMICAL manufacturerS Product reliability and product safety are the top considerations that impact manufacturers’ abilities to effectively compete in the marketplace. Notably less significant is outsourcing to developing countries to contain manufacturing costs, even though rising costs are a key supply chain challenge. Top considerations impacting MANUFACTURERS’ ability TO COMPETE Product reliability 91% Product safety 90% Product innovation 82% Operational sustainability 80% Using environmentally friendly packaging 77% Designing sustainable products 77% Speed to market 75% Outsourcing to developing countries to contain costs 47% Product Reliability is the Key Factor in Manufacturer Success When asked to select only one key factor, household chemical manufacturers chose reliability as the single most significant consideration related to their business success. This suggests the essential importance of a product working as expected to this segment. Most important consideration impacting manufacturers’ ability to compete Outsourcing to developing countries 2% Using environmentally friendly packaging 4% Operational sustainability 8% Speed to market 8% 26% Product reliability Designing sustainable products 12% 21% Product innovation 19% Product safety HOUSEHOLD CHEMICALS 8
  • 9. Manufacturers feel it is their job to communicate product safety information to consumers Household chemical manufacturers identify themselves as the primary stakeholder responsible for providing and communicating safety information to consumers. Who is responsible for communicating key product safety information to consumers? 84% 28% 20% 19% AGREE AGREE AGREE AGREE Manufacturers Retailers Government Independent safety organizations 88 % of HOUSEHOLD CHEMICAL manufacturers agree product safety is becoming more important. HOUSEHOLD CHEMICALS 9
  • 10. For Household chemical Manufacturers, Innovation Leads Tomorrow Forecasting a few years into the future, product innovation is of key importance and product reliability remains significant to household chemical manufacturers. Future Consideration Most Important in Impacting Your Company’s Ability to Compete Outsourcing to developing countries 5% Speed to market 5% Using environmentally friendly packaging 6% 31% Product innovation Operational sustainability 8% Product safety 11% 21% Product reliability Designing sustainable products 13% Future Consideration Most Important in Impacting Your Company’s Ability to Compete: GEOGRAPHIC DETAILS It is notable that German household chemical manufacturers are more concerned with product safety than are manufacturers in China, Germany and the U.S. Additionally, product innovation seem to be prioritized higher by German and Chinese manufacturers relative to their U.S. and Indian counterparts. Product innovation Product safety 40% 18% 36% 90% 10% 157% 27% MORE 8% MORE 21% 7% HOUSEHOLD CHEMICALS 10
  • 11. Manufacturers Are Responsible for Product Safety Manufacturers see themselves as responsible for ensuring the safety of household chemical products. While other stakeholders are seen as contributing to product safety, the onus clearly lies with the manufacturer. Additionally, manufacturers are more likely to hold those manufacturers that assemble the final product versus those that create ingredients as primarily accountable for safety. most responsible for product safety Manufacturers that assemble final products 65% Government agencies 10% Companies that manufacture components/ingredients 10% Independent safety testing organizations 4% Consumer agencies 4% Distributors/retailers 4% HOUSEHOLD CHEMICALS 11
  • 12. HOUSEHOLD CHEMICAL manufacturers agree consumers are becoming more empowereD Consumers are increasingly gaining influence and effectively getting their voices heard across the global supply chain. Manufacturers clearly see consumers commanding greater power and becoming more informed. Manufacturers Strongly Agree 82% 81% 79% 77% AGREE AGREE AGREE AGREE Consumers are requesting Consumers are becoming Consumer confidence Consumers are demanding more safety information more aware and better in product safety is more eco-friendly products about products educated about products increasing at the same cost as in general non-eco-friendly products MANUFACTURERS Believe THEIR OWN Claims are the Most Valuable Manufacturers of household chemicals express a strong degree of confidence in their own endorsements and rank them as the most valuable type of claim. They consider claims made by consumers as the next most valuable type of endorsement. Building materials, food and high-tech manufacturers all selected consumer claims as the most important. Most valuable party making a claim about your product Self-claims 86% Consumers 84% Independent safety certification companies 79% Independent companies regarding performance verification 78% Government agencies 77% Retailers 74% HOUSEHOLD CHEMICALS 12
  • 13. Manufacturers agree that country of origin has a strong impact on product quality Manufacturers believe there is a relationship between raw materials, chemical compounds and formulated products and the importance of the country of origin. Chemical manufacturers in the U.S. do not perceive these issues to be as impactful, while those in India place greater importance on the source country of chemical compounds and raw materials. Impacting Product Quality 46% 44% 40% AGREE AGREE AGREE Country of origin of Country of origin of Country of origin of raw materials chemical compounds formulated products Nearly half of HOUSEHOLD CHEMICAL manufacturers will increase sourcing from other countries over the next five years Additionally, for the vast majority of manufacturers, these new countries will be in addition to their current roster rather than replacing existing sources. Agree over the next five years you will source more from more countries Agree these countries will be in addition to your current sources 58% 100% 56% 93% 43% 85% 36% 82% HOUSEHOLD CHEMICALS 13
  • 14. An Environmental Orientation Can Be Profitable Today, 68% of household chemical manufacturers consider environmentally friendly products profitable or somewhat profitable. Additionally, 27% of these manufacturers believe that this area will hold a promise of profitability in the future. Profitable 28% Somewhat profitable 40% Not profitable today, but may be over time 27% Not profitable and do not expect profits 5% in the next few years AN ENVIRONMENTAL ORIENTATION CAN BE PROFITABLE: GEOGRAPHIC Details Notably, Chinese and Indian household chemical manufacturers are the most positive about environmentally sound products being profitable, while U.S. manufacturers have the largest concerns in this area. Profitable Somewhat profitable 35% 47% 32% 40% 25% 37% 21% 36% Not profitable today, but may be over time Not profitable and do not expect profit in the next few years 29% 15% 27% 5% 26% 1% 24% 0% HOUSEHOLD CHEMICALS 14
  • 16. Findings Snapshot • Consumers feel that the safety of household chemical products has improved slightly over the past two years. • The primary safety concerns for household chemicals relate to long-term exposure and skin irritation. • Product safety and product performance are priorities for consumers and considered the most important types of information when evaluating a household chemical product such as household cleaners. Additionally, 64% of consumers find it difficult to locate product safety information about these products. • On average, 48% of consumers across all geographies state they are always or usually aware of the country of origin for household chemical products. Additionally, 33% of consumers believe the country of origin of household chemical products will become more important over the next five years. • On average, 65% of consumers feel that it is more important to know the origin of a household chemical product’s materials versus where the product was assembled. • They also think that the product quality of household chemical products is better in developed markets than in emerging countries. • Consumers believe manufacturers can do a better job. They perceive that manufacturers do not take adequate steps to ensure environmentally friendly manufacturing procedures are followed or conduct thorough testing before releasing products into the marketplace. HOUSEHOLD CHEMICALS 16
  • 17. Consumers view HOUSEHOLD CHEMICALS as slightly improving in terms of safety over the past few years Consumers in all geographies see household cleaning products as stable or improving in terms of safety. Those in the U.S. see the most improvement. Household chemicals U.S. INDIA GERMANY CHINA Better Worse SAFETY AND PERFORMANCE ARE PRIORITIES FOR CONSUMERS When asked about household cleaners as an example of a household chemical product, consumers consider product safety and product performance the most critical and valuable types of information when evaluating a product. Most Important Types of Information When Evaluating A Product Product safety 37% Product performance 31% Environmentally friendly 11% HOUSEHOLD CHEMICALS 17
  • 18. Consumer safety concerns: LONG-TERM EXPOSURE AND SKIN IRRITATION With regard to household cleaning products, consumers are most concerned about long-term exposure issues and skin irritation. Chinese and U.S. consumers are primarily concerned about the former, while German and Indian consumers are more worried about the latter. BIGGEST CONSUMER SAFETY CONCERNS ABOUT HOUSEHOLD CHEMICALS Long-term exposure 26% Skin irritation 25% Interaction with other household cleaning products 12% Packaging safety mechanisms to keep out of children’s reach 11% Fumes 10% HOUSEHOLD CHEMICALS 18
  • 19. It is hard for consumers to find product information on HOUSEHOLD CLEANING PRODUCTS In general, consumers do not think that product information on either safety or performance is readily available. 64 Product performance information about household cleaners was considered the most difficult for consumers to find relative to related information for insulation, fresh meat and fish, and cell phones. % of consumers find household cleaning product safety information difficult to locate. 58 % of consumers find household cleaning product performance/ quality information hard to find. Consumers perceive product quality as better in developed vs. emerging markets Consumers in both developed and emerging nations feel that developed countries produce higher-quality household cleaning products. Consumers in India and China rate these products higher from developed countries than they do those made in their own. In the U.S. and Germany, consumers perceive the emerging markets as delivering lower- 38 quality products. % higher from developed to emerging countries. HOUSEHOLD CHEMICALS 19
  • 20. Awareness of Country of Origin On average, 48% of consumers across all geographies state they are always or usually aware of the country household cleaning products are manufactured in. Additionally, 33% consumers also believe the country household cleaning products are manufactured in will become more important in the next five years. This is a lower percentage relative to the importance of country of origin over the next five years than those for food, high-tech and building materials products. Usually or Always aware of which Country where a product is country a household chemical manufactured will become more product was manufactured in important to you 66% 40% 65% 36% 33% 35% 28% 23% Importance of Country of Origin and ingredients to consumers On average, 37% of consumers think it is important to know the country of origin for each ingredient in a cleaning product. They also feel that when comparing parts/ingredients to where the product was assembled, it is more important to know where the ingredients come from. This is particularly true for American and Chinese consumers. Importance of knowing the country IMPORTANCE OF KNOWING WHERE THE PARTS COME of origin for each individual FROM VS. WHERE A PRODUCT WAS ASSEMBLED part/component of the product 54% 74% 26% 43% 72% 28% 27% 64% 36% 22% 50% 50% COUNTRY OF ORIGIN FOR A PRODUCT’S PARTS/ingredients THE COUNTRY WHERE IT WAS ASSEMBLED/PACKAGED HOUSEHOLD CHEMICALS 20
  • 21. 73 Consumers believe HOUSEHOLD CHEMICAL MANUFACTURERS can do a better job % do not believe HOUSEHOLD CHEMICAL manufacturers have taken adequate steps to ensure environmentally friendly manufacturing procedures are followed. 69 % do not think HOUSEHOLD CHEMICAL manufacturers conduct thorough product testing before introducing new products to market. 66 % feel THAT HOUSEHOLD CHEMICAL manufacturers are not making better products today than FIVE years ago. HOUSEHOLD CHEMICALS 21
  • 22. NAVIGATING THE PRODUCT MINDSET in the News Navigating the Product Mindset has been recently featured in Time magazine, The New York Times, Fortune and Forbes, among other notable publications. To read the full study, go to ul.com/productmindset. HOUSEHOLD CHEMICALS 22
  • 23. methodology In Spring 2011, UL employed an independent research firm, ORC International, to conduct a global quantitative survey among 1,235 consumers and 1,195 manufacturers across four countries: China, Germany, India and the United States. To meet the objectives of the survey, manufacturers across the high-tech, food, household chemicals and building materials sectors were interviewed by phone and consumers were interviewed through an online survey. Manufacturers were director- level and above and specialized in management, research and development, marketing and sales, quality control, product management, or design. Consumers were a representative mix of age, gender, education and income. Data tabulations among subgroups have been tested for statistical significance at the 90% and 95% confidence levels. A technical panel was used to provide additional insights, and Product Mindset considerations were selected based on importance and overall significance of the data. HOUSEHOLD CHEMICALS 23
  • 24. further information For more information about this study: Visit: www.ul.com/productmindset Email: productmindset@ul.com Call: +1 847.664.2226 UL and the UL logo are trademarks of Underwriters Laboratories Inc. © 2012 The Household Chemicals Industry Report cannot be copied, reproduced, distributed or displayed without UL’s express written permission. V.9. Household chemicals 24