AMBUJA CEMENTS MARKETING STRATEGY

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AMBUJA CEMENTS MARKETING STRATEGY

  1. 1. A REPORT ON MARKETING STRATEGIES FOLLOWED BY AMBUJA CEMENTS Submitted by: HARSHAD NITIN LUNAVAT SECTION: B ROLL NO: 2011089 1
  2. 2. PRODUCT MIX:Cement industry does not have a large product mix and same applies forAmbuja Cements. The product mix can be classified on the basis of thetypes of cement available.Types of cementProduced at Ambuja Cements are: Mortar Cement Portland Pozzolano cement (PPC) - PPC is manufactured byblending a mixture of ordinary portland cement and pozzolana materialssuch as fly ash, in proportions not less than 15 per cent and not over 35 percent by weight of cement. The Portland Pozzolana Cement is ideally suitedfor the following construction viz. Hydraulic structures, Mass concretingworks. Ordinary Portland cement (OPC) (GRADE-43, GRADE-53, GRADE- 33)  The 43 grade OPC is the most popular general-purpose cement in the country today. The production of 43 grade OPC is nearly 50% of the total production of cement in the country.  The 43 grade OPC can be used for following applications:  General Civil Engineering construction work  RCC works(preferably where grade of concrete is up to M-30)  Precast items such as blocks, tiles, pipes etc  Asbestos products such as sheets and pipes  Non-structural works such as plastering, flooring etc. White CementPPC is manufactured by blending a mixture of ordinary portland cementand pozzolana materials such as fly ash, in proportions not less than 15 percent and not over 35 per cent by weight of cement. It is sold in packets ofdifferent quantities: 1.OPC contains a mixture of portland clinker and gypsum ground to a veryfine powder.About 75% of all the cement produced goes into ready-mix concrete, whichis used for buildings, bridges, sidewalks, walls and all types of structures.The rest is used for building materials such as concrete blocks, pipes and 2
  3. 3. pre-cast slabs in road building and repairs and other nation buildingapplications.The Groups principal activity is to manufacture and market cement andclinker for both domestic and export markets. Nowadays cementmanufacturing companies also provide ready mix concrete for constructionsites.PROBLEMS IN PRODUCT MIX High Production Costs- Due to requirement of commodities like Coal for production and high consumption of fuel required. Major raw materials used include Lime, Clinker, Gypsum Low or less product differentiation- Product differentiation between two brands is next to impossible. High Transportation cost- Due to the bulky nature of product and sensitivity to external factors like rain or humidity we need to transport it in the right possible way. Once bagged cement becomes a perishable commodity. Accounts for approximately 25% of the total costs. High competition- There are 370 companies operating in the organised sector in India. With the top 5 players accounting for 40% of market share.BRAND NAME STRATEGYThe company and its product is named after the place where its firstmanufacturing plant was set up .i.e. Ambuja Nagar in Gujarat. Due tolimited products they are named under the product family name of AmbujaCements. The company was initially named Gujarat Ambuja Ltd. which waschanged after Holcim bought 46% stake in Gujarat Ambuja Ltd. The onlyway the products in the product line can be differentiated through is the 3
  4. 4. different grades the cements have and the different types of cement i.ePPC, OPC, white cement, sanla as mentioned earlier.PACKAGINGWoven sacs are the most cost effective packaging. There are various typesof bags made out of PP/ HDPE and with or without lamination. Apart from itthere are Jumbo bags which are used to pack bulk quanitities. Off lateWoven fabric which is the first stage of Woven sacks, is a preferredmedium for bale wrapping and rain protection in the form of Tarpaulin.Visual appeal is not a major concern. Thus, it does not require anyspecialized designing of product package to attract customers as otherproducts do. The major concern is ease of transportation, storage,minimizing pilferage. The package of Ambuja cement is yellow in colourwith woven ends and has hooks so that the porters find it easy to load andunload without hampering the main package. lt also has its trademark logoof a macho holding building which highlights the message “GIANTCOMPRESSIVE STRENGTH”. The package should not allow entry ofwater as cement hardens when it comes in contact with water. The sacshould be lightweight as the product itself is bulky.Cement is an intermediate product -- it either goes to a builder, or aconcrete manufacturer, or small contractors for repairs and renovations.Even today the most preferred medium is bags, and this trend will continue.Only the dimensions will change. PLACE: DISTRIBUTION CHANNELS INVOLVED They have a nationwide reach with strong footprints in the West, North and East India. Their cement plants cover strategic locations in all these regions. A wide dealer network of over 26000 dealers and retailers nurtured on empowered partnership enables Ambuja cement to reach even the tiniest village.The concept of a two-tier distribution chain comprising of manufacturersand dealers functions very well. It is a perfect and simple set-up, in thesense that manufacturers sale cement to dealers. From there on, the onus 4
  5. 5. is on the dealers who established contact with builders, government andinstitutional buyers, and sold to retailers.Company invariably hires c & f agents or transport cements to own orgovernment warehouses either via roadway or railways. In case of exports,cement reaches the nearest port via roadways or railways and is thentransferred to the importing country.Domestically, from c & f agents or warehouses the cement is transported tothe dealers/distributors and in turn to sub dealers who finally sell it to theend users. There may or may not be physical ownership of goods. In thesecond case, dealers and sub dealers take order from buyers and place itto the companies, co ordinate and monitor the timely dispatch of saidorders, transportation of goods and final delivery. Distributor network incement industry is highly dominating and companies are compelled to hireas they do not really have that rapport and touch with the end consumer oftheir product. Apart, from this, the distributors have storage facilities as wellwhich help control well in the entire supply chain as they are the ones whobring orders and therefore are directly responsible for the business that amanufacturer would do.However, with the mushrooming of large plants engaging in cut-throatcompetition to grab a bite of the market pie, Indian cement companies arenow beginning to adopt innovative strategies that have revolutionized theway cement is sold in India. What was predominantly sold in bags is nowbeing sold in bulk, albeit in different quantities. Also, with a view to addingvalue to their products, manufacturers have now started selling concreteinstead of cement. 5
  6. 6. PRICINGOn studying the prices across 6 different districts of Maharashtra a slightvariation in Prices were observed which can be observed through thefollowing table. DISTRICT PRICE in Rs/50 kg Pune 279 Nagpur 289 Solapur 284 Ahmed Nagar 276 Mumbai 276 Aurangabad 282This variation in prices can be observed all over India. The major factorscontributing towards the variation in prices are the regional transportationcosts, the variations in regional supply and demand, difference in theintensity of competition amongst local retailers and distributors.Apart from this the prices keep on varying throughout the year dependingupon the demand and supply dynamics, the costs of raw material used andother factors.DISCOUNTS:The company does provide discount in case of bulk purchases. The profitmargins are already low in cement industry thus discounting is notpracticed in case of small quantities.Ambuja Cements is a premium brand having an edge when it comes tocost because of their transportation system they have minimized costs andthus, have a price advantage. 6
  7. 7. PROMOTIONROLE OF SALES PERSONAL IN PROMOTIONThe major customer base which buys cement in India even today is thehousehold owner. Though the end customer the purchase is influenced byopinion leaders viz. contractors, masons, architects, etc. Thus, to attractthem Gujarat Ambuja cements sales teams organize seminars forcontractors and masons.They also interact with retailers and distributors who are the channelmembers representing the company to the end customer. They act as theconnecting link. They also act as a channel between the company andcontractors. The retailers or distributors play an important part ininfluencing the end customer.USE OF ADVERTISEMENTS IN PROMOTIONAmbuja cements are the pioneer of branding in cement industry. AmbujaCements is one of the companies that realized the potential of brand as adifferentiator. Even in the eighties, Ambuja cements started its activities forbuilding the brand. According to Superbrands report, Ambuja cements arethe first cement brand to start advertising on television. It also uses outdoors for advertising to enhance the brand recall. These activities include hoardings during major festivals like Ganesh festival in Maharashtra, wall paintings and boards at retail stores.A television commercial (TVC) for Ambuja Cement, created by GreyWorldwide, revolves around the story of a wall that doesn‟t break,seasoned with an emotional (almost humanitarian) twist.The TVC opens on a shot of the caretaker of an orphanage introducing thechildren to a Mr Choksi. She tells them that Choksi is going to build a hotelon the site of the orphanage. At this point, a little boy says to Choksi, “Sir,par last time...,” But he is shushed by an older boy. The following morning,the heartless Choksi arrives with bulldozer in tow. At his signal, thebulldozer delivers a powerful blow on the building, but is unable to bring itdown. The little boy tries to explain again, but is stopped midway again bythe elder one.Choksi tries his best, but is not able to demolish the orphanage. As hewonders about the strength of the building, the little boy says, “Arre sir, last 7
  8. 8. time bhi yeh deewar nahin tooti thi (Sir, even last time, this wall could notbe broken down).” As a disappointed Choksi leaves with his men, thechildren and their caretaker start dancing in joy, and the voiceoverconcludes, “Ambuja Cement. Yeh Deewaar Nahin Tootegi.”Apart from this Ambuja cements also come up with merchandises oftenwherein the masons, contractors are gifted with caps, keychains, t-shirtswith the logo of Ambuja cement to enhance the brand recall. Ambuja has been harping on its „giant compressive strength‟ proposition; the brand even created the visual of a „giant‟ and then a broken hammer. Perhaps its most memorable ad was the one involving two estranged brothers trying to break down the wall that runs between their houses (Bhai Bhai, featuring Boman Irani, which was released six years ago). Afterthat humorous attempt, came some ads which presented the brand in asentimental vein (the Dadi ad), a move that Vivek Deshpande, AmbujaCement‟s vice-president for brand and promotions, agrees was ratherdisastrous, so much so that the Bhai Bhai ad was recalled. “Our new ad isa correction of this,” he says, adding that the brand will now strike abalance between emotion and humour. SALES PROMOTION SCHEMES:The sales promotion schemes are not directly implemented for the enduser but channel members are the one who benefit from sales promotions.Gujarat Ambuja Cements has an „I can Initiative‟ which gives an individualan opportunity in its sales team to come up with its own idea. Apart fromthis they also felicitate the best performers. They provide performancebased incentives.Gujarat Ambuja Cements has worked out an equity-incentive scheme for itsretailers. 8
  9. 9. Under the plan, a retailer who sells a minimum of 200 tonnes (equivalent to4,000 bags) will be eligible for 30 shares of the blue-chip cement maker.Once the minimum target is achieved, he is entitled to three shares forevery additional 20 tonnes sold. The scheme will be valid till May 31, 2000.Thus, sales of 300 tonnes of cement will fetch a GACL stockist 45 sharesof Gujarat Ambuja, which will shoot up to 300 shares (cash equivalent ofRs 1.04 lakh at Tuesdays prices) once sales touch 2,000 tonnes.The scheme will be a novel route to cement the fortunes of the stockistswith that of the company and will help Gujarat Ambuja leverage on theinherent strength of its stock.On an average, stockists sell around 300-400 tonnes a month, and with thisnew scheme they will be tempted to push Ambuja cement. Cement retailersgenerally hawk various cement brandsavailable, and the new arrangement,analysts say, is a ploy to usher in greater loyalty for the Ambuja brand.The company is, however, not creating any new shares for rewarding theretailers. Instead, they are given the option by the dealers to convert theircash incentives into equivalent number of shares in GACL."Instead of giving cash incentives, retailers are given the option to ownshares in the company. The understanding is between the dealer and theretailer and the company is no way involved in the share purchases," said acompany official.Besides, Gujarat Ambuja has also launched a host of other performance-linked incentive schemes for its retailers which include gold coins andforeign trips. Also on offer are insurance covers upto Rs 5 lakh for personalaccidents and scholarships for their children.The company has worked out a mechanism under which one particularscheme can be availed of in combination with other available schemes aswell.For enjoying a 10-day trip to the US or a12-day vacation to Europe or 160grams of gold, GACL stockists will have to meet a sales target of 2,000tonnes. The same tonnage sales will also entitle the dealer to a six-day trip(for two) to Singapore or Bangkok. 9
  10. 10. To win gold coins, the retailer will have to sell a minimum 100 tonnes uponwhich he becomes entitled to 8 grams of the yellow metal. Thereafter, theretailer can win two grams of gold for every 25 tonnes of cement sold.Retailers can also avail of a combination of two incentive offeringsdepending on his sales performance. A retailer selling 400 tonnes ofcement, for instance, can both enjoy a vacation to Goa and win 16 gramsof gold. The combination may be altered to suit the retailers wishes.The scheme is an innovative incentive to retailers, and has the effect oftying the retailer closely to the company.PUBLIC RELATIONS ACTIVITIESThey have a website GRIHA-SHILPI which assists customers by assistingin different aspects of building a home. It also provides a list of contractorsand their contact numbers across different districts in India. They also helpprovide expert help wherein experts visit the construction site to guide youand even test the concrete slabs. The link for the website ishttp://www.ambujagrihashilpi.com/GrihaShilpi.phpThey have a corporate social responsibility cell “The Ambuja CementFoundation” which has been at the forefront of environmental and socialactivities. It operates near the companies manufacturing plants. TheAmbuja Cement Foundation is the Corporate Social Responsibility wing ofAmbuja Cements Ltd. that works with the rural communities surroundingAmbuja‟s manufacturing sites. The Foundation is engaged in a variety ofpeople-centric, integrated rural development projects.Website: http://www.ambujacementfoundation.org/Facebook page: http://www.facebook.com/pages/Ambuja-Cement-Foundation/107287509345492 10

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