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Cement branding has evolved blurring the limits of commoditised selling. From product centric to customer centric, from dry commercials to humorous TVCs, from stagnant frames to animated 3D frames; and from general concepts to niche concepts like ?build sustainable? to ?build beautiful?, branding has come a long way, to an extent story telling. Indian Cement Review tracks some of the innovative trends in the market.

Cement brands have been a cause of intrigue over the last 50 years, for the marketing and advertising gurus in India. Arguments rage over if cement is a pure-play commodity, or is it a branded FMCG, or the reality lies somewhere in the middle, such that cement is a branded commodity. The truth may be that cement is different things in different market segment. For example, it is seen as a commodity by the large institutional buyers. The retailers perceive it as a branded commodity, while the individual home-builder looks at it as a fully branded FMCG. Obviously, therefore, as long as individual home building segment remains the dominant one, brand – play will continue to be a major part of the marketing strategy of any large cement company.

Have you ever imagined a construction site where handsome men with six packs carrying cement bags and designer-clad divas mixing it and pouring the concrete mix into the reinforcement? Unthinkable, right! However, that is what Ultratech?s one of the TV commercial dared to portray. Nothing far from truth; and too irrational, one may think. But this stunningly innovative commercial, is quite successful more than one way. First, despite its failure to make a ?rational connect? with a consumer, it very well taps into the collective consciousness of ?beauty? which everyone harbours deep in one?s heart. The beautiful architectural form at back and the punch line ?Build Beautiful? never fails to connect the viewer. The matter of fact, who will not like to live or own a ?beautiful? house!

Second, branding based on the different characteristics of a product is nothing new in the market. The early 90s cement campaigns reflected the ideological battle (war of grade of cement) in the cement market – the south based Madras Cements and ACC which were vociferously campaigning for PPC, (and the property that they upheld was durability) especially fly ash and slag based cement on one side and rest of cement companies advocating OPC spearheading its campaign with strength as the major criteria of quality cement, on the other. The success of creatives is based on strength (Ambuja Cements? is a case in point). However in the long run, even though ACC entered the TV commercials late, it successfully created concepts of trust / and enduring relation.

However, some of the recent cement TV commercials have cut through the clutter. The ?Build Beautiful? concept breaks those limits and brings in aesthetics, not into the product, but into the end product, the structure. Then, cement, a grey powder which never been associated with ?aesthetics? becomes an integral part in the creation of ?beauty?. So the obvious text what this commercial tries to convince is so simple – to create your beautiful home / office / structure, buys this brand of cement! This signifies a marked shift the brands conceptualised and positioned.

According to O P Puranmalka, Managing Director, UltraTech Cement the company has taken the next leap in its brand evolution with the concept of ?Build Beautiful.? He says, ?UltraTech Cement has transcended from being a cement manufacturer to a 360o building material destination providing a host of products from foundation to finish. ?In our quest for brand evolution, we have now taken the next leap with our new positioning ?Build Beautiful.? The brand has evolved to partner with engineers and architects in their quest to make style statements with their structures and to build a beautiful new India.?

Vivek Agrawal, Chief Marketing Officer, UltraTech Cement Ltd, explains the concept further. ?An engineer trusts in UltraTech Cement to realise his vision of a beautiful structure. And so does a home builder planning to build his beautiful abode. UltraTech Cement takes pride in building this trust in the engineer and the home builder and helps them realise their dream of creating structures that reflect their style and personality. This is what we intend to convey through our new campaign ?Build Beautiful.?

Tarun Chauhan, Management Advisor, Wonder Cement encapsulates this when he speaks about brand – ?Brands are built on telling stories.?

Brand it ?premium?
What is the whole concept of creating a premium brand? Does it add any additional value to the customer? What are the challenges in creating a ?premium? brand? Or is it just a marketing gimmick to clear the stock?
Ashutosh Rampal, Senior General Manager, Shree Cement had this to say. ?Cement is a brand and a commodity at the same time, only weightages to these factors changes depending upon the market pressures and opportunities. A brand is a premium in one geography, and a mass brand in another. A lot of companies attempt creation of a premium brand, only some do it more effectively.? He adds, ?The trick is in the execution and not in the boardroom. Premium brand creation comes from the steadfastness of the MD/Marketing Head to hold the price under all circumstances in spite of commodity pressures. Of course the MD/ Marketing Head must inspire his team to produce the best quality cement, deliver in time and maintain high level of service orientation and consumer support. But the cement industry will always have underpinnings of pressure of stock due to continuous production by the kiln and the need to create cash flows to run the plant.? ?

According to M Ravinder Reddy, Director Marketing, Bharathi Cement, creating a premium brand is a herculean task as there would be resistance from consumers and industry initially to accept it. Reddy says, ?The major challenge of a premium brand is the price. The price of a premium brand is always at a higher side. Nevertheless, customer would be willing to pay higher price provided, we guarantee value for money.? He adds, Initially, in 2009, we highlighted robotic quality control, German technology and tamper proof packing for our brand. Superior quality guaranteed is the USP that is being highlighted for Bharathi Cement now, in the premium brand. Says Vishal Sood, Senior Vice President – Sales and Marketing, Orient Cement. ?Consumer appreciates quality and value additions and is willing to pay a premium. We are able to effectively communicate the value proposition and deliver quality consistently, followed by proper services. Our premium brand Birla A1 enjoys good equity amongst their stakeholders. The brand differentiation is being created by us through the ?Trisul strategy; first, by ensuring the quality of our product consistently. This helps the consistency in positive user experience. Second, communicating the quality through various medium of advertising and finally having a ?connect? with stakeholders. We also listen to voice of our customers on a regular basis and make necessary improvements. For example, we have improved the quality of our packaging in the last two years based on the inputs received from our stakeholders. V P Sharma, Managing Director, ABG Cement had this to say. ?A sub-brand will draw from the parent brand which in itself needs to portray certain premium cues. However, if the market perception for the parent brand is far from premium then creation process of a premium brand has to be mutually exclusive from the current brand.? ?

Customer centric
One of the marked shift in the marketing space from the early 2000 is that the commercials and campaigns have become more customer centric than product centric. Says Sharma, ?Advertisements are a manifestation of the marketing process imbibed within the organisation and our attempt will be to create customer centric rather than product centric communication.? This has opened a new chapter where campaigns has become more of ?experiential? in a qualitative, at the same time, tangible way.?

According Puranmalka brands are becoming more aspirational and experiential. Consumers no longer care about only product attributes. They look at what a brand stands for – something bigger than product benefits. He says, ?UltraTech brand is built around the attributes of ?modernity?, ?quality? and ?technological superiority.? Strength and durability are hygiene factors. UltraTech?s imagery, strengthened by the engineer in the yellow helmet, reinforces the aura of knowledge and specialisation. This trend is confirmed by Ashutosh Rampal, Senior General Manager, Shree Cement. For him transition from visual to experiential is evident across brands to reckon with in the cement industry. The touch points are the product quality, swift delivery, fresh bags, technical support to build user confidence, easy to understand sales accounts and supportive management, all of these leading to a complete experience for the dealer first, then the experience percolates down to the consumer leading to re-buying for strong brands and dissonance for brands that give unpalatable consumer experience.? Rampal adds, ?The best way to build a brand is to bring together all your departments and tell them the customer strategies, and let each department be a part of this belief that this is how the brand experience has to reach its consumers. It is basically creating or achieving a ?wow-factor? from the consumer.? ?

Consumer will not take you seriously if you are not there during his pain points. Your relationship with the consumer cannot be merely transactional but you have to be involved with him, emphasises Chauhan. No wonder, most of the players are focusing more on bridging the existing gap between them and their customers through an efficient communication process. ?For fruitful communication we focus on both at macro and micro level and have designed an education platform around that. On macro level we started using various channels like news and entertainment, national as well as regional channels like Aaj Tak and Times Now. Our micro approach was to educate the consumer at the grass root level where we organise a series of meetings at various levels with influencers, architects engineers, consultants, dealers all across on pan India basis for throughout the year,? says Rahul Akkara, Chief Marketing Officer, JSW Cement. ?

Even CSR activities help in cementing this bond with customers. Says Rajesh Sarada, Vice President (National Head) – Marketing, Reliance Cement, ?CSR plays a very important role in building the image as a corporate brand. Even though we are a powerful corporate brand, we do lot of activities around our cement plants. We have taken steps to do programs on water conservation, employment generation, health, education etc. The programs are done by our own team and sometimes with recognised NGOs. We get connected with local issues and emphasise that we are there with them. This helps us to have more penetration of our brand.? ?

Consumer behaviour impacts
Consumer behaviour will be the focal point for any brand to strengthen its presence, irrespective of the industry it represents. Earlier, consumers considered functional attributes like strength and durability in their decision to buy cement. Also, masons and contractors used to be the key decision makers behind deciding which cement to buy. But the scenario is slowly changing and an individual home builder is taking interest in deciding which cement is used in building his home. The young in India want to build beautiful homes, and not just another durable home which will last for centuries. Says Agrawal of Ultratech, ?What every engineer, architect or a home builder dreams of today is to build something they are proud of. They want to create structures that are beautiful and have a stamp of their style! They want creative freedom, and their intent is to make the world around them a more beautiful place. An engineer wants to help every home builder create his own unique abode where he finds happiness and comfort. In short, every building is an engineer?s style statement!??

Rampal says, ?Buying patterns actually guide the business patterns and distribution network design for cement companies. Retail consumer buys because of the trust factor and institutions buys on price from the choice of trusted brands. The trust is inherent in the both these transactions – first one being emotive and the second one being rational. The creative teams develop the brief accordingly. ?

Advantage social media
According to Sharma of ABG Cement going forward, social media will be very useful for branding. Sharma says, ?Brand building starts from within a company, inside-out. It grows as a ?ripple effect? of its interface with all touch-points, intentional or otherwise. Therefore, brands that capitalise on every engagement to generate positive incremental towards itself are on the optimum trajectory of brand building. In our evolving category, brand building is mostly associated with sporadic bursts of top-of-the line media advertising, hygiene in-shop presence and periodic dealer engagement programs. A recent need for building digital presence has been felt with changing consumer habits and most brands are investing in it now. Creatively, the trend is to have a lead campaign and adapt the same across media for building reach and saliency. However, with tech-adoption rate amongst consumers changing, creative message will be developed medium specific.?

Says Akkara of JSW Cement, ?Today?s consumer is more connected to digital media and it is really powerful medium; that is why we have Facebook pages specifically for architects and engineers, and also for home buyers.?

No more ?one-size-fits-all? solutions
There is no ?one-size-fits-all? solution. As a cement brand, it is critical for advertising and communication to cut across every socio-economic profile, from a highly educated home builder to the least qualified but skilled mason. There is also an intricate network of engineers, architects, builders and contractors. Each group has its own objective and aspirations.

Cement being a commodity; it is very important to build a strong brand image. Here, brand plays a the role of a differentiating factor. Branding speaks volumes about the quality of a product. It builds credibility, and a brand with higher recall will have a competitive edge. As the competition space has drastically changed with the entry of global players in the cement industry, innovative branding and marketing exercises has become an imperative. Many major cement companies have started aligning their selling strategies with branding campaigns and celebrity endorsements with a clear cut objective of, not only differentiating the product, but rather creating different sets of values. They too have realised that in order to retain customer loyalty, they need to create their distinct brand identity.

Even though, cement branding per se still harps on either physical properties of cement, or abstract concepts like ?trust? or ?building relation,? there are players coming out with innovative concepts.

More focus is to create an ?emotional bond? with the customer, irrespective of application areas. Again, the idea is to creatively make use of ?the collective.?

Going forward
The future of branding in the cement industry is in a state of transition and will focus on processes that are unique and stringently monitored to ensure better quality, create service oriented logistics and build consumer centric teams. The urgency to brand from the top management needs to percolate down to head of marketing and his team for it to become the soul of the organisation. The cross-functional teams across the world have built powerful cement brands this way. The branding process evolves based on unique consumer needs and buying formats. According to Agrawal of Ultratech increased use of ready mix concretes, value added products and convenience of customers – these attributes will be a big part in the future of India?s construction landscape. Brand building will, surely, reflect this change.

Sharma of ABG sums it up. The cement market is steadily moving towards bulk as compared to bags, casing point being the matured markets. In light of it, the brand building efforts will gravitate towards the B2B domain from B2C. The key differentiators will be the ?solutions approach? to different segments of projects. More so, brand building efforts will be more in the digital sphere as consumers (both business and trade partners) will be ?online? with company?s efforts to reach out to them. Social media will be very useful for branding, going forward.

TV commercials and promotional campaigns in the cement industry have become more customer centric than product centric.

?An engineer trusts in UltraTech Cement to realise his vision of a beautiful structure.?

The 3Cs in building a brand
For a brand to get established three things are required – Consistency, Commitment and Customer Service. Some time strength property can vary though it passes IS requirements – sometimes it t is lower than usual. This means the engineer using the cement has to change the proportions to get required strength in concrete. In short standard deviation of strength needs to be minimum. The quality offered month after month and year after year needs to be uniform. It gives ease of work to users especially project managers of mega projects. – So Consistency of product is a must. Commitment in business is reflected in your deliveries, documentation, commercial schemes, visits of company officers, advertisements etc. It shows the seriousness in doing business. The body language should be such that you are going to be there for long time and you are not fly by night operator. Case of Mumbai Pune Expressway project it was L & T maintaining the stocks indirectly and the company never allowed any single day to stop the work for want of cement. In infra projects, one has to book inventory carrying cost. L & T did it successfully. When there was a price rise, for big project like Mumbai Pune Expressway, L & T supplied 1800 tonne at the same old rate without violating CMA directive..This is commitment.

Customer Service means what more technical inputs you can give to the user so that he uses your product to its best. Many a times the product is very good but the customer is unaware of its usage and goes on making bad publicity.

As told by Sanjay Ladiwala,
Chairman of Cement stockiest and dealers Association, Mumbai.

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Price hikes, drop in input costs help cement industry to post positive margins: Care Ratings

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Region-wise,the southern region comprises 35% of the total cement capacity, followed by thenorthern, eastern, western and central region comprising 20%, 18%, 14% and 13%of the capacity, respectively.

The cement industry is expected to post positive margins on decent price hikes over the months, falling raw material prices and marked drop in overall production costs, said an analysis of Care Ratings.

Wholesale and retail prices of cement have increased 11.9% and 12.4%, respectively, in the current financial year. As whole prices have remained elevated in most of the markets in the months of FY20, against the corresponding period of the previous year.

Similarly, electricity and fuel cost have declined 11.9% during 9M FY20 due to drop in crude oil prices. Logistics costs, the biggest cost for cement industry, has also dropped 7.7% (selling and distribution) as the Railways extended the benefit of exemption from busy season surcharge. Moreover, the cost of raw materials, too, declined 5.1% given the price of limestone had fallen 11.3% in the same aforementioned period, the analysis said.

According to Care Ratings, though the overall sales revenue has increased only 1.3%, against 16% growth in the year-ago period, the overall expenditure has declined 3.2% which has benefited the industry largely given the moderation in sales.

Even though FY20 has been subdued in terms of production and demand, the fall in cost of production has still supported the cement industry by clocking in positive margins, the rating agency said.

Cement demand is closely linked to the overall economic growth, particularly the housing and infrastructure sector. The cement sector will be seeing a sharp growth in volumes mainly due to increasing demand from affordable housing and other government infrastructure projects like roads, metros, airports, irrigation.

The government’s newly introduced National Infrastructure Pipeline (NIP), with its target of becoming a $5-trillion economy by 2025, is a detailed road map focused on economic revival through infrastructure development.

The NIP covers a gamut of sectors; rural and urban infrastructure and entails investments of Rs.102 lakh crore to be undertaken by the central government, state governments and the private sector. Of the total projects of the NIP, 42% are under implementation while 19% are under development, 31% are at the conceptual stage and 8% are yet to be classified.

The sectors that will be of focus will be roads, railways, power (renewable and conventional), irrigation and urban infrastructure. These sectors together account for 79% of the proposed investments in six years to 2025. Given the government’s thrust on infrastructure creation, it is likely to benefit the cement industry going forward.

Similarly, the Pradhan Mantri Awaas Yojana, aimed at providing affordable housing, will be a strong driver to lift cement demand. Prices have started correcting Q4 FY20 onwards due to revival in demand of the commodity, the agency said in its analysis.

Industry’s sales revenue has grown at a CAGR of 7.3% during FY15-19 but has grown only 1.3% in the current financial year. Tepid demand throughout the country in the first half of the year has led to the contraction of sales revenue. Fall in the total expenditure of cement firms had aided in improving the operating profit and net profit margins of the industry (OPM was 15.2 during 9M FY19 and NPM was 3.1 during 9M FY19). Interest coverage ratio, too, has improved on an overall basis (ICR was 3.3 during 9M FY19).

According to Cement Manufacturers Association, India accounts for over 8% of the overall global installed capacity. Region-wise, the southern region comprises 35% of the total cement capacity, followed by the northern, eastern, western and central region comprising 20%, 18%, 14% and 13% of the capacity, respectively.

Installed capacity of domestic cement makers has increased at a CAGR of 4.9% during FY16-20. Manufacturers have been able to maintain a capacity utilisation rate above 65% in the past quinquennium. In the current financial year due to the prolonged rains in many parts of the country, the capacity utilisation rate has fallen from 70% during FY19 to 66% currently (YTD).

Source:moneycontrol.com

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Wonder Cement shows journey of cement with new campaign

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The campaign also marks Wonder Cement being the first ever cement brand to enter the world of IGTV…

ETBrandEquity

Cement manufacturing company Wonder Cement, has announced the launch of a digital campaign ‘Har Raah Mein Wonder Hai’. The campaign has been designed specifically to run on platforms such as Instagram, Facebook and YouTube.

#HarRaahMeinWonderHai is a one-minute video, designed and conceptualised by its digital media partner Triature Digital Marketing and Technologies Pvt Ltd. The entire journey of the cement brand from leaving the factory, going through various weather conditions and witnessing the beauty of nature and wonders through the way until it reaches the destination i.e., to the consumer is very intriguing and the brand has tried to showcase the same with the film.

Sanjay Joshi, executive director, Wonder Cement, said, "Cement as a product poses a unique marketing challenge. Most consumers will build their homes once and therefore buy cement once in a lifetime. It is critical for a cement company to connect with their consumers emotionally. As a part of our communication strategy, it is our endeavor to reach out to a large audience of this country through digital. Wonder Cement always a pioneer in digital, with the launch of our IGTV campaign #HarRahMeinWonderHai, is the first brand in the cement category to venture into this space. Through this campaign, we have captured the emotional journey of a cement bag through its own perspective and depicted what it takes to lay the foundation of one’s dreams and turn them into reality."

The story begins with a family performing the bhoomi poojan of their new plot. It is the place where they are investing their life-long earnings; and planning to build a dream house for the family and children. The family believes in the tradition of having a ‘perfect shuruaat’ (perfect beginning) for their future dream house. The video later highlights the process of construction and in sequence it is emphasising the value of ‘Perfect Shuruaat’ through the eyes of a cement bag.

Tarun Singh Chauhan, management advisor and brand consultant, Wonder Cement, said, "Our objective with this campaign was to show that the cement produced at the Wonder Cement plant speaks for itself, its quality, trust and most of all perfection. The only way this was possible was to take the perspective of a cement bag and showing its journey of perfection from beginning till the end."

According to the company, the campaign also marks Wonder Cement being the first ever cement brand to enter the world of IGTV. No other brand in this category has created content specific to the platform.

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In spite of company’s optimism, demand weakness in cement is seen in the 4% y-o-y drop in sales volume. (Reuters)

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Cost cuts and better realizations save? the ?day ?for ?UltraTech Cement, Updated: 27 Jan 2020, Vatsala Kamat from Live Mint

Lower cost of energy and logistics helped Ebitda per tonne rise by about 29% in Q3
Premiumization of acquired brands, synergistic?operations hold promise for future profit growth Topics

UltraTech Cement
India’s largest cement producer UltraTech Cement Ltd turned out a bittersweet show in the December quarter. A sharp drop in fuel costs and higher realizations helped drive profit growth. But the inherent demand weakness was evident in the sales volumes drop during the quarter.

Better realizations during the December quarter, in spite of the 4% year-on-year volume decline, minimized the pain. Net stand-alone revenue fell by 2.6% to ?9,981.8 crore.

But as pointed out earlier, lower costs on most fronts helped profitability. The chart alongside shows the sharp drop in energy costs led by lower petcoke prices, lower fuel consumption and higher use of green power. Logistics costs, too, fell due to lower railway freight charges and synergies from the acquired assets. These savings helped offset the increase in raw material costs.

The upshot: Q3 Ebitda (earnings before interest, tax, depreciation and amortization) of about ?990 per tonne was 29% higher from a year ago. The jump in profit on a per tonne basis was more or less along expected lines, given the increase in realizations. "Besides, the reduction in net debt by about ?2,000 crore is a key positive," said Binod Modi, analyst at Reliance Securities Ltd.

Graphic by Santosh Sharma/Mint
What also impressed analysts is the nimble-footed integration of the recently merged cement assets of Nathdwara and Century, which was a concern on the Street.

Kunal Shah, analyst (institutional equities) at Yes Securities (India) Ltd, said: "The company has proved its ability of asset integration. Century’s cement assets were ramped up to 79% capacity utilization in December, even as they operated Nathdwara generating an Ebitda of ?1,500 per tonne."

Looks like the demand weakness mirrored in weak sales during the quarter was masked by the deft integration and synergies derived from these acquired assets. This drove UltraTech’s stock up by 2.6% to ?4,643 after the Q3 results were declared on Friday.

Brand transition from Century to UltraTech, which is 55% complete, is likely to touch 80% by September 2020. A report by Jefferies India Pvt. Ltd highlights that the Ebitda per tonne for premium brands is about ?5-10 higher per bag than the average (A cement bag weighs 50kg). Of course, with competition increasing in the arena, it remains to be seen how brand premiumization in the cement industry will pan out. UltraTech Cement scores well among peers here.

However, there are road bumps ahead for the cement sector and for UltraTech. Falling gross domestic product growth, fiscal slippages and lower budgetary allocation to infrastructure sector are making industry houses jittery on growth. Although UltraTech’s management is confident that cement demand is looking up, sustainability and pricing power remains a worry for the near term.

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