Process

Turn the confused buyer into an educated consumer.

Published

3 years ago

October 14, 2021

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CV Rajesh, Assistant Vice President (Marketing Support) Chettinad Cement.

Chettinad Cement, established in 1962, is one of the leading manufacturers of cement and construction materials in south India. Under its Builders Choice brand name, Chettinad Cement offers an extensive range of bagged products that includes ordinary Portland cements and blended cements to suit most building and construction applications. CV Rajesh, Assistant Vice President (Marketing Support), gives an insight into the philosophy behind the successful brand building practice at Chettinad cement. Excerpts from the interview.

What is the thought process that goes into the preparation of your media plan?

Cement industry today is highly competitive, with supply far exceeding the demand. This highlights the need of having a pull created from the market as any amount of push strategy may not really yield the desired results. The media vehicles used thus should be highly structured, cost-effective and allow the desired spread and penetration. Choosing the right media mix will help the brand reach the target mass.

What are the challenges you see in the market?

In terms of sales, low demand vis-a-vis heavy supply accompanied with more new players and capacity additions is the stiffest challenge. The economic growth has been sluggish over the last few years and cement being part of the core industry depends a lot on the economic growth. To deal with this, one has to know the pulse of the market very well and must be attentive to any fluctuations in the market. Marketing strategy based on keen observations plays a pivotal role in the challenging scenario. Not only should the strategy be practical and based on solid ground level facts, it should be well aligned with the market scenario and must be structured to allow flexibility to change. Markets are dynamic and so should be the strategy. A contingency plan (Plan B) has also become the order of the day, as predicting market trends is very challenging.

Soaring raw material prices have forced cement prices up. How can one entice consumers to shell out extra for the product?

Enticing really does not happen since today`s consumer has limitless options to choose from in terms of both price and product type. He or she has a whole world of products to choose from let alone the substitutes for them. In-fact, the wide range available, often leaves the consumer confused. The buying process gets delayed as the consumer has to put in efforts for understanding the pros and cons of each option. The best way to approach is to first properly understand the need of the consumer and the utility of the product. One must investigate how the attributes of the product will provide for the need of the consumer. This understanding will help you in developing your own USP. Once that is done, you can initiate a transparent and focused campaign. The USP can be precisely communicated and strongly emphasised in few words. This will turn the confused buyer into an educated consumer. Once he or she understands that there is value for money and his or her need is met, the product gets sold at your price.

Which is a better strategy, distributing through few large dealers or routing via an extensive network of small dealer outlets?

It really depends on the dynamics of your marketing process. The whole-sale route will make your product available to several outlets in a short period. However, there is a risk of being too dependent on few big consumers. It is like having too many eggs in one basket. If something goes wrong in your relationship with the dealer and the company swings, the product movement through that channel will come to a halt. In the case of retail marketing, your market base is quite wide and the risk is well spread-out. One or two hiccups with any of the retailers will not have a huge impact on the business. However, developing an extensive dealer network is a highly time-consuming process.

The network building process will have cycles of selecting, working with, and eliminating non-productive collaborations. The cycle will repeat with every new dealer. In short, if you have sufficient time, adequate field force and temperament, then retail marketing is a good option. Otherwise, the wholesale route is more productive.

Cement is seen more as a commodity than as a specialised product. In such a scenario, how do you create brand differentiation and stand apart from the rest?

In our earlier days of field sales, we were told that cement is an engineering product and is in the transition stage and so is being sold as a commodity. But the transition is getting longer. The real advantage of cement is that it has no substitute.

This turns the situation in to a cakewalk for identifying, advertising and selling a product. However, the current market scenario of excess supply has turned it into a commodity product. As described earlier we follow the customer-oriented approach. The brand is positioned in the right slot of price, made available across all places and is delivered as a quality product backed-up with right promotion.

This makes the consumers appreciate the product and gives them confidence about getting value for their money. This is not a one-time exercise, but is done repeatedly to suit the changing marketing trend. While the widely acknowledged 4 P strategy is applicable more for products than for commodities, cement industry generally follows it.

How do you reach construction professionals ranging from civil engineers and consultants to contractors and masons at different levels?

Contact meets are conducted for all sets of influencers like architects, engineers, contractors and masons. The field force tries and keeps a good association with them even after the meet. Technical seminars and presentations are also done in the various meets conducted under the aegis of associations.

Advertisements in related periodicals, monthly magazines, etc, are given to improve brand retention. We also participate in important exhibitions related to our industry. We have developed a unique data bank which is effectively used to strengthen the bonding.

Quality perception of cement varies from customer to customer. How do you factor this in your marketing plans?

Quality of the product is mainly assigned to the various physical properties of the cement like one-day strength setting-time, etc. We have identified USP of our products and are using the tagline: 5 Stars Cement Ã» for strength and durability.

The five stars representing Quality, Strength, Durability, Colour and Service, constitute the key variants that promises the desired deliverables to the customer. We, in all our campaigns, highlight this tagline, which has been well appreciated by the customer since each of these elements are very important and are offered with utmost precision.

Other than price and quality, which other factors influence buying decisions?

Availability of the product at the nearest counter plays a vital role in the buying decision. The preference of the technical expert is another contributor to the decision- making process as purchase of cement is a technical process and one usually relies on the opinion of the influencer. Promotion channels like outdoor publicity improve the brand recall and help the product to be listed in the consideration set of the consumer.

What are your current marketing plans / initiatives for promoting your products?

We have split our entire activity into two verticals branding and market support. The former addresses the masses in general and the latter specifically caters to the trade. In branding, we advertise both through the stationary and mobile media.

We have gone in depth on formulating the marketing plan for each state. The state plan is then bifurcated to regional and zonal levels and initiatives are tailor-made to suit the branding desire of the local market so as to get the best mileage and have the product placed in the right slot. We firmly believe that the brand equity thus created shall be consistent and must be in line with the corporate plan.

Process

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

Published

3 years ago

October 21, 2021

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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

Process

Wonder Cement shows journey of cement with new campaign

Published

3 years ago

October 21, 2021

admin

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.

Process

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

Published

3 years ago

October 21, 2021

admin

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.