VP Marketing, KJS Cement
In today´s ongoing period of flat cement demand and sluggish growth, one often wonders if it is worth spending on brand building initiatives. Ashutosh Rampal, VP-Marketing, KJS Cement Ltd, Maihar, an expert in this field, talks to ICR on the merits of branding and ways to do it effectively. Excerpts from the interview.
How important is branding in cement industry?
Branding is very important in today´s market where customers are brand conscious. Initially it requires some investment, but the pay offs are good. A branded product draws a premium of Rs 30-40 per bag more than other generic products on the shelf.
What are some of the most powerful means of marketing and branding?
The inherent objective of a branding exercise is the creation of strong trust in the psyche of the customers. So the channel or the means resorted to for branding must be able to do that. Today, there are several options available for mass communication such as televisions, press, outdoor hoardings, etc. But they have limited utility in developing a strong one-to-one relationship. We focus more on word-of-mouth publicity or what is also termed as referral system. If products and services are good then the word spreads faster than paid advertising. We find this form of viral marketing very potent.
Do masons´ meet help to develop such one-to-one relationship?
Masons´ meet are usually conducted to help building confidence of the user and then convert him into a person who will recommend the brand. Most companies use the platform for propaganda. To use this model effectively, the meet should be focused on adding value to the work done by masons and helping him to strengthen his identity. Such meets provide wonderful results and help in building a strong relation provided these are done the right way.
Do you feel environment-friendly products appeal to customers?
No. I don´t think that green cement is a factor that matters to customers. Yes, the production of Portland Pozzolana Cement in itself reduces pollution as it uses flyash, which is an environmentally hazardous material, thereby earning the carbon credits. But the awareness of this amongst retail consumers is negligible.
So, what do they consider while picking up a product?
When buying cement, the customer expects the product to last long. Strength is very important. Once assured of the quality, the customers are ready to pay premium. If you go for a cheaper brand then that assurance is lost. They pick branded, A-category products that gives them peace of mind even if the costs are higher.
So price is not a factor?
No, not at all. In a country where even middle-class people buy Android phones, there should be no doubt about how brand conscious we are. If the brand is reputed then the customers are ready to shell out a premium. They know that they are buying a product for a longer life and trouble-free operation. Cement and steel are no different. Time has come to transcend from the commoditised selling to brand selling.
Does celebrity endorsement add value to the product?
Yes, certainly. For example: Celebrities like Amitabh Bachchan, MS Dhoni and Sachin Tendulkar evoke feelings of comfort, reliability, dependability of long-term performance. When a product is endorsed by a celebrity like him, the customers naturally associate his characteristic to the product. But while selecting a celebrity, it must be kept in mind that the celebrity must not be involved in any kind of controversy. When a celebrity gets a bad publicity, the brand represented by him/her also gets affected to some extent.
What would you suggest to small companies with tighter budgets trying to build a brand?
There is a a minimum threshold point below which the budget is not effective. If I have a small budget [of around Rs 10 crore], then I will spend approx. 40-50 per cent on interacting with masons, around 30-40 per cent on outdoor advertising and around 20 per cent on television advertisements.
On the other hand, if I have a moderate budget [of Rs 25 crore], then I can explore more options. One can engage in close quarter sale promotions and bonding with dealers and building customised solutions to tap the market. Bigger budget allows marketers to offer technical services to customers, which is also a good branding exercise.
How soon can one start realise RoI in branding?
It takes about two years for the investments to start paying off. In a well executed campaign, we see that the impact is felt within a year. The impact is seen in terms of a) Willingness of customers to pay a premium, b) Stability of sales and c) Comfort that customers feel when they have bought your brand. All this starts reflecting in our market research quite early.
It is for the company to notice these subtle changes even in the middle of hardcore figures like sales, collections, despatches and RoI.
What are the factors that you look at while crafting a brand building campaign?
We first have to look at the psychographic matrix that guides customers to pick up a product in a particular geographical area. Not all customers in all regions buy the product in the same way. For example: In Delhi, people want a product that is easily available and reasonably reliable. They like to make a call and order the material to the site overnight. Availability is the deciding factor here, so logistics efficiency alone can make your brand in metros. On the other hand, in Uttar Pradesh, customers prefer a well reputed product that has high visibility in the market. Brand plays an important role, price is not a big factor. This need become even more acute in Bihar, where the price gap between the A category and the B Category product is around Rs 40 to 50 per bag. Institutional segment on the other hand is totally different, where most customer decisions are driven by price tag which matters a lot to customers here. Brand value is of lesser importance.We study each market in detail and then come up with a common thread that can run coherence in base our campaign. After all, you cannot communicate different things at different places. The campaign has to be uniform and yet must appeal to all geographies in the mind space of common sense and to your heart.
What were some of the non traditional ways in which you have marketed your product?
We have marketed our products in rural haats and mandis. Village panchayats are also an ideal platform to showcase a brand. Apart from that, we have explored regional newspapers as they are cost effective and focused. Visual displays and banners on moving vans too give phenomenal results, if used judiciously.
There are many small companies that do not believe in branding and adopt to different modes of sales promotions. What is your opinion on this?
Cement companies are of two types: One, those who do not believe in branding and like to push their product in the market on price. They spend less on advertisements and more on promotional and network development activities. And then there are others that want to create a brand identity and want to do business on a premium price. They understand that even though they might be a 2.5 mtpa plant today, yet they they must build a brand to reach 10 mtpa. They are not just building value for brand but are also building enterprise value for the entire company. But I firmly believe, that this vision always comes from the Board of Directors, and at KJS Cement our Managing Director, Pawan Ahluwalia´s vision is very highly focussed. He always presses upon building enterprise value through brand creation. His passion for marketing has guided us to assimilate the 2.5 mtpa capacity and move on to start work for another 2.5 mpta clinkerisation line at Maihar with split grinding units in UP, Bihar and Odisha to become 5 mtpa company shortly.
Every company wants to move up the brand ladder, but it also faces pressures of maintaining cash flows, getting money from the market, etc. In such situations, branding exercise gets sidelined. It is very important to stay focused in such situations and have patience. One must realise that branding pays, and pays well and it is worth the efforts.
Branding is like building character. It takes long term effort and is tested over a period of time.