Indian cement manufacturers are in the process of building strong brands. A few experts from the media and the cement industry share their views on the journey of brand building, and where Indian cement industry is headed.
Pick up any book on marketing management, and you will have your fill of success stories on brand building. With so many products vying for the attention of potential customers, it’s the strong brands that stand out from the clutter.
By definition, a brand is a product, service, or concept that is publicly distinguished from other products, services, or concepts so that it can be easily communicated and marketed. A brand name is the name of the distinctive product, service, or concept. Branding is the process of creating and disseminating the brand name. Branding can be applied to an entire corporate identity, as well as to individual product and service names. When the journey of brand building starts, it is usually with the name of the corporate, but as the business matures, the brand gets a distinct name and identity. So what is going in the field of branding in the Indian cement industry?
We turned to Yogi Vashishta, who has been associated with many corporates at the leadership level in the brand creating and building process, for the right answers. As he observes while commenting on the recent acquisitions of some cement plant assets, "brands didn’t feature much for what value they brought to the business." Vashishta’s comments are appropriate for the assets which have been sold recently by companies like Reliance Cement and in the past L&T. These transactions in the cement industry domain could have leveraged the brand value, considering that these are valued corporate brands in India. But the cement industry has not been considering brands as an asset.
During these mergers, acquisitions, and buyouts in the cement industry, better value realisation in a few of these transactions has been mainly due to operational efficiencies and higher productivity of the assets under consideration. Brands didn’t feature much for what value they brought to the business.
Vashishta makes another striking observation. Though the sector spends copious amounts on advertising, Indian cement companies have really not been able to leverage the potential of their brands.
It is a misconception that money can build a brand. Ashok Jain, a cement industry veteran, says, "Money alone does not build a strong cement brand. It needs a different type of sales and marketing team and a different mindset in the top management team. We must realise that creating a brand is an expensive and long drawn affair."
The exercise of brand building can bring in many intangibles to the organisation. As Vashishta puts it, "Brand-driven companies will be strongly consumer-knowledge and understanding driven. Who will the brand serve most, what will the brand promise be, how will it back that promise up in each and every act, where will it spend most of its R&D efforts – these are some of the tough questions brand-building corporates will have to answer. The marketing team will be forced to understand the needs of the customer." He says that a brand represents the entire organisation’s commitment and efforts to get the all-important competitive advantage. It is a promise that the entire organisation has to fulfil in all its functions.
And why don’t huge cement conglomerates also diversify into the business of marketing construction material like sand and bricks? If a few of these entities can develop enduring cement brands, the exercise (co-branding) can do wonders for their product portfolio.
Jain says that an individual home builder is generally not knowledgeable about cement. A brand gives him the trust and confidence about the quality and consistency of the cement he uses for building his house. The more a market is individual home-builder oriented, the higher is the relevance of cement branding. It’s likely that standalone cement brands will start gaining traction in the years to come. Many corporates have already started moving away from their individual corporate names to different product names for their flagship brands.
Regarding brand messages, very few companies have coined different strategies. As Rahul Akkara, VP (Strategy and Brand), JSW Cement puts it, most cement companies use ‘strength’ as a key message delivery, unlike FMCG companies where there are different levers like taste, design, and packaging. One has to understand that FMCG is an impulsive category while the commodity is need based. May be for a layman, the strength of a particular cement is an easy parameter to understand than durability, which is a pure engineering term. It is high time we look at some other property of cement which is beyond strength, as a brand message. There has been some movement in this direction. Companies like ACC and JSW, and more recently, UltraTech, have been developing different messages. UltraTech, in its recent advertisement, exhorts customers to ‘Build Beautiful.’
However, though cement appears to be a simple product, it has its own limitations while creating a brand. As Jain puts it, cement’s performance is not visible for a long time, unlike wall putty or waterproofing compound. It’s not a product which you can touch and feel.
On how brands get destroyed, Jain says launching a brand with a big budget for advertising and promotion, will by itself not ensure that a brand is built. The branding philosophy should be followed through. The brand management team should be prepared and trained. Necessary actions on the logistics front or in the development of a quality network required to support the brand or customer service should be taken. In some cases, quality claims are not consistent with what is delivered. After some time, the management and sales team come under sales pressure and start taking actions which hurt the brand and its positioning and ultimately destroys the brand.
Out of the Box, the CEMEX way!
At this juncture it would be pertinent to take a look at how global cement majors handle their brands.
Pankaj Ghemawat, a professor at New York University’s Stern School of Business, has studied CEMEX, a multinational cement company at Mexico from close quarters. He observes that cement is generally considered a commodity business that is supposed to afford little scope for engaging with customers in a distinctive way, but CEMEX has focused hard on differentiating itself.
It developed a distinctive bagged cement business, for example, offered time-based delivery guarantees, and established Construrama, a network of construction materials outlets that is now the largest such network in the world. None of these was an obvious customer need; waiting to be fulfilled. Rather, imagination was required to identify and exploit these opportunities, that is, the CEMEX way! Since similar conditions exist in our country, domestic players can follow a few of the examples set by this Mexican cement major.
CEMEX has taken another notable initiative. It has expanded its innovative Assisted Self Construction Program (Programa Integral de Autoconstruccion Asistida or PiAC), designed to benefit local communities. Through the PiAC program, CEMEX supports families with the training and technical assistance required to construct their own homes.
It’s not that Indian cement companies are not trying to develop their brands. Companies like ACC and Ambuja have done remarkable work in this area. ACC had a separate division in the past for promotion of cement called ‘Concrete Association of India’, which extensively carried out work on various applications of cement, supported by booklets in simple language, which the civil engineering community still remembers. In the recent past, Ambuja had conducted a number of workshops with practicals on ‘Concrete Mix Design’ where company experts used to share the methods of designing concrete as per codal practice, which nobody else in the past had done. Not to undermine the success earned by ‘Concreto’ a brand created by erstwhile Lafarge was a very successful one. In the east it has been a leading brand for good number of years. The story of earlier L & T is not too different. In the institutional market where it is difficult to get premium, L & T as a brand could get because of consistent quality of product.
In the present scenario, every cement company has a customer service cell which normally works under the marketing department. But there is a need to look into whether the customer service function under marketing supervision is really effective and able to do the job it is supposed to carry out. Ideally, customer service in the cement industry has to be a separate vertical, and not part of the marketing function.
In conclusion, we would say that going forward, cement brands will be built in a unique way in our subcontinent. The developed world had a different story. As long as individual house builders make up a significant portion of the market, creation of a cement brand makes a strong business case.