Vinayak M Koneri, Sr. Vice President-Sales and Marketing, Bagalkot Cement & Industries.
Bagalkot Cement & Industries belongs to Kanoria Group, which had acquired the cement division of Bagalkot Udyog in 2007. Bagalkot Cement & Industries, with over five decades of experience in cement manufacturing, had started its operations with a 300 tpd wet process kiln in Bagalkot. In 1982 the capacity was increased to a 1000 tpd dry process kiln. Currently the plant produces 1200 tpd of clinker and 400,000 tpa of cement.
Bagalkot Cement manufactures OPC 43, PSC and PPC grades of cement and has supplied its products to renowned projects such as Koyna Dam, Almatti Dam, Taj Exotica Hotel in Goa, Suvarna Soudha in Belgaum, etc. It is a leading brand in Karnataka, Goa and Southern Maharashtra. ICR interacts with Vinayak Koneri to know how the company is poised to tap the projected infrastructural growth in the state.
What is the thought process that drives your media plans?
Marketing function is all about two major tasks – Message creation and Message dissemination. Media planning supports message dissemination. It decides how your message is going to reach your audience and influence them.
Our Media planning is a three-step process, which consists of:
a) Defining media objectives
b) Planning and implementing a media strategy for the objectives, and
c) Evaluating the effectiveness of the media plan.
How is your marketing team organised?
The team structure consists of a General Manager (Marketing) with three deputy general managers and six area sales managers. These sales managers look after around 30 sales offices in various states. As a Sr Vice President-Sales and Marketing, I look after the functioning of entire team.
Brief us about the strength of your dealer network.
Our network currently has about 10,000 dealers. Most of our dealers are on an average associated with us for 20-25 years. Many of them are the second or third generation in their family to be associated with us. I think that speaks a lot about the strength of our network.
Which is a better strategy, distributing through few large dealers, or routing it via an extensive network of small dealer outlets?
Routing it through an extensive network of small dealers network is a better strategy. There are several reasons for this such as:
- Product visibility is better with wide small dealer network
- Small dealers are more loyal to the brand
- Profitability and realisation can be improved
- Better market share can be tapped, and
- Consumer service and awareness is improved.
Are you planning to expand your network further?
We have our distribution network spread out primarily in Karnataka, in parts of Maharashtra, Kerala and Goa. In the past we were not able to meet the huge demand from our network. So, now we have gone ahead with our capacity expansion drive. The cement kiln No. 4 at the plant has started production now (since 14 July 2014). This adds another 500 tpd to our supply capacity. We have a target of producing and supplying 1.5 million tonnes of cement per year by the end of year 2017. And with this goal in mind we are taking steps to expand our market. We are looking at Mysore, Bangalore region for further network expansion.
What is the segment-wise break-up of revenue from distribution channels?
About 70 per cent of our cement is sold through the trade segment, while the remaining 30 per cent is consumed by project works in the non-trade segment.
How do you reach construction professionals at different levels, ranging from civil engineers and consultants to contractors and masons?
To create brand awareness and build brand loyalty, we arrange seminars for civil engineers, consultants, contractors and masons from time to time. The dealers/retailers act as an intermediate link between us and the end customer. They also have a big influence on the end customer. They are our channel partners. They help us build our brand position in local areas. We conduct educational seminars for the dealers and retailers to keep informing them about the product.
We arrange for knowledge sharing opportunities where engineers and architects can learn from each other and from our experts too. For example recently we had organised a technical workshop at Hubli, or had shared a technical presentation for builders and engineers at Karnataka.
Such efforts offer a great platform for networking and network strengthening. It also creates a community bonding between the builders, engineers and us. We treat them as our associates and not as our customers. These technical interactions help us to understand their needs better and in the process they too become aware of what we have to offer.
Now we are planning to celebrate Engineers Day at Goa along with the Engineers Association in the state. We have also started with a Mason Club, where we review performance of masons and give them awards, etc.
Does one have to opt for different branding strategies to appeal to professionals at different levels in construction business?
Yes, one has to have different approaches while communicating with professionals at different levels. We keep that in mind while selecting a media channel, the place where we put in our advertisements and the content of the message. For example, we have made two types of video presentations. One is focused towards high-end professionals, structural and civil engineers where we showcase the technical attributes of our product. The other video is targeted towards masons highlighting the projects done using our brand and the applications where our product can be used.
Quality perception of cement varies from customer to customer. How do you factor this in your marketing plans?
Quality is the most important factor in cement industry. Different people have different perception of quality in this industry. Some of them consider the colour as a parameter for quality, some have grade of the cement as a parameter for quality. We need to educate people that both are equally important but they cant be the only parameter to judge the quality. We conduct seminars for the dealers/retailers and masons who are intermediaries in this industry and educate them the important parameters that actually determine the quality of cement.
Other than price and quality, what other factors influence buying decisions?
Other than price and quality the service quality is the main factor, which influences the customer to stay loyal to your brand and influence the buying decisions.
How is the brand recognition of Bagalkot cement in the market?
In our region we are among the top three brands in the market. One is, customers identify our products with high quality, and secondly, they are aware about the renowned structures that are built using our cement. It incorporates trust in their mind about our brand. We have our own fleet of more than a hundred vehicles and our plants are strategically located close to the market. This gives us a small cost advantage that we pass on to our clients, which adds to the drive towards our brand.
What are the challenges that you foresee in the market?
Major challenge for the cement industry today is the rising input costs. Prices of raw materials like limestone and coal have increased and are still on upward trend. Freight cost has been rising significantly over last two years. We are trying to improve our brand value by various marketing and branding exercises, which will in long run allow us to charge a premium for our product.
What are your current marketing plans/initiatives for promoting your products?
The company and its product both are named after the place where its manufacturing plant was set up, in Bagalkot at Karnataka. Its gives a sense of "our brand" to the local population, which is the main market segment for the company.
The main customer for our industry is the common household owner. To create brand awareness and build brand loyalty, we organise seminars for these groups from time to time.
Recently there was an outcry from builders against the cement price hike. What are your views?
It is sad that when cement companies are going through tough time no such organisation comes forward to support them. You must be aware that in last few years the cost of power, coal and diesel has gone up drastically. But if you look at the cement price trend for last five years, you will understand the prices have remained almost stagnant.
It is very difficult for cement manufacturers to continue selling products at the same price when the input costs have multiplied several times. Of course I dont blame them (builders and allied associations). They have to take care of business at their end too. But to me it seems that the cement industry is not left with any other option than to increase the prices and the current hike is not unjustified.
The sluggish demand in the past had forced companies to cut down their prices significantly. Andhra was badly hit then, where prices had gone down as low as Rs 80 per bag. But we cannot continue selling at these prices. Today the prices are only bouncing back to their original levels.
Now with the new government in power and a slew of infrastructure projects lined up, we expect a growth in demand. This we hope will help the industry to bounce back and would in the long term lead to better pricing in favour of consumers too.
What are you doing to participate in forthcoming infrastructure projects?
We have recently appointed the Karnataka State Small Industries Development Corporation (Government of Karnataka Undertaking) as our cement distributor. With this, our cement will be made available to all the government projects in the state. That gives us a lot of mileage. This is one of the latest initiatives taken by us to tap the demand growth.