1. A REPORT ON MARKETING STRATEGIES
FOLLOWED BY AMBUJA CEMENTS
Submitted by: HARSHAD NITIN LUNAVAT
SECTION: B
ROLL NO: 2011089
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2. PRODUCT MIX:
Cement industry does not have a large product mix and same applies for
Ambuja Cements. The product mix can be classified on the basis of the
types of cement available.
Types of cement
Produced at Ambuja Cements are:
Mortar Cement
Portland Pozzolano cement (PPC) - PPC is manufactured by
blending a mixture of ordinary portland cement and pozzolana materials
such as fly ash, in proportions not less than 15 per cent and not over 35 per
cent by weight of cement. The Portland Pozzolana Cement is ideally suited
for the following construction viz. Hydraulic structures, Mass concreting
works.
Ordinary Portland cement (OPC) (GRADE-43, GRADE-53, GRADE-
33)
 The 43 grade OPC is the most popular general-purpose cement in
the country today. The production of 43 grade OPC is nearly 50%
of the total production of cement in the country.
 The 43 grade OPC can be used for following
applications:
 General Civil Engineering construction work
 RCC works(preferably where grade of concrete is up to
M-30)
 Precast items such as blocks, tiles, pipes etc
 Asbestos products such as sheets and pipes
 Non-structural works such as plastering, flooring etc.
White Cement
PPC is manufactured by blending a mixture of ordinary portland cement
and pozzolana materials such as fly ash, in proportions not less than 15 per
cent and not over 35 per cent by weight of cement. It is sold in packets of
different quantities:
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OPC contains a mixture of portland clinker and gypsum ground to a very
fine powder.
About 75% of all the cement produced goes into ready-mix concrete, which
is used for buildings, bridges, sidewalks, walls and all types of structures.
The rest is used for building materials such as concrete blocks, pipes and
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3. pre-cast slabs in road building and repairs and other nation building
applications.
The Group's principal activity is to manufacture and market cement and
clinker for both domestic and export markets. Nowadays cement
manufacturing companies also provide ready mix concrete for construction
sites.
PROBLEMS IN PRODUCT MIX
High Production Costs- Due to requirement of commodities like Coal
for production and high consumption of fuel required. Major raw
materials used include Lime, Clinker, Gypsum
Low or less product differentiation- Product differentiation between
two brands is next to impossible.
High Transportation cost- Due to the bulky nature of product and
sensitivity to external factors like rain or humidity we need to transport
it in the right possible way. Once bagged cement becomes a
perishable commodity. Accounts for approximately 25% of the total
costs.
High competition- There are 370 companies operating in the
organised sector in India. With the top 5 players accounting for 40%
of market share.
BRAND NAME STRATEGY
The company and its product is named after the place where its first
manufacturing plant was set up .i.e. Ambuja Nagar in Gujarat. Due to
limited products they are named under the product family name of Ambuja
Cements. The company was initially named Gujarat Ambuja Ltd. which was
changed after Holcim bought 46% stake in Gujarat Ambuja Ltd. The only
way the products in the product line can be differentiated through is the
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4. different grades the cements have and the different types of cement i.e
PPC, OPC, white cement, sanla as mentioned earlier.
PACKAGING
Woven sacs are the most cost effective packaging. There are various types
of bags made out of PP/ HDPE and with or without lamination. Apart from it
there are Jumbo bags which are used to pack bulk quanitities. Off late
Woven fabric which is the first stage of Woven sacks, is a preferred
medium for bale wrapping and rain protection in the form of Tarpaulin.
Visual appeal is not a major concern. Thus, it does not require any
specialized designing of product package to attract customers as other
products do. The major concern is ease of transportation, storage,
minimizing pilferage. The package of Ambuja cement is yellow in colour
with woven ends and has hooks so that the porters find it easy to load and
unload without hampering the main package. lt also has its trademark logo
of a macho holding building which highlights the message “GIANT
COMPRESSIVE STRENGTH”. The package should not allow entry of
water as cement hardens when it comes in contact with water. The sac
should be lightweight as the product itself is bulky.
Cement is an intermediate product -- it either goes to a builder, or a
concrete manufacturer, or small contractors for repairs and renovations.
Even today the most preferred medium is bags, and this trend will continue.
Only the dimensions will change.
PLACE: DISTRIBUTION CHANNELS
INVOLVED
They have a nationwide reach with strong
footprints in the West, North and East India.
Their cement plants cover strategic locations in
all these regions. A wide dealer network of over
26000 dealers and retailers nurtured on
empowered partnership enables Ambuja
cement to reach even the tiniest village.
The concept of a two-tier distribution chain comprising of manufacturers
and dealers functions very well. It is a perfect and simple set-up, in the
sense that manufacturers sale cement to dealers. From there on, the onus
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5. is on the dealers who established contact with builders, government and
institutional buyers, and sold to retailers.
Company invariably hires c & f agents or transport cements to own or
government warehouses either via roadway or railways. In case of exports,
cement reaches the nearest port via roadways or railways and is then
transferred to the importing country.
Domestically, from c & f agents or warehouses the cement is transported to
the dealers/distributors and in turn to sub dealers who finally sell it to the
end users. There may or may not be physical ownership of goods. In the
second case, dealers and sub dealers take order from buyers and place it
to the companies, co ordinate and monitor the timely dispatch of said
orders, transportation of goods and final delivery. Distributor network in
cement industry is highly dominating and companies are compelled to hire
as they do not really have that rapport and touch with the end consumer of
their product. Apart, from this, the distributors have storage facilities as well
which help control well in the entire supply chain as they are the ones who
bring orders and therefore are directly responsible for the business that a
manufacturer would do.
However, with the mushrooming of large plants engaging in cut-throat
competition to grab a bite of the market pie, Indian cement companies are
now beginning to adopt innovative strategies that have revolutionized the
way cement is sold in India. What was predominantly sold in bags is now
being sold in bulk, albeit in different quantities. Also, with a view to adding
value to their products, manufacturers have now started selling concrete
instead of cement.
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6. PRICING
On studying the prices across 6 different districts of Maharashtra a slight
variation in Prices were observed which can be observed through the
following table.
DISTRICT PRICE in Rs/50 kg
Pune 279
Nagpur 289
Solapur 284
Ahmed Nagar 276
Mumbai 276
Aurangabad 282
This variation in prices can be observed all over India. The major factors
contributing towards the variation in prices are the regional transportation
costs, the variations in regional supply and demand, difference in the
intensity of competition amongst local retailers and distributors.
Apart from this the prices keep on varying throughout the year depending
upon the demand and supply dynamics, the costs of raw material used and
other factors.
DISCOUNTS:
The company does provide discount in case of bulk purchases. The profit
margins are already low in cement industry thus discounting is not
practiced in case of small quantities.
Ambuja Cements is a premium brand having an edge when it comes to
cost because of their transportation system they have minimized costs and
thus, have a price advantage.
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7. PROMOTION
ROLE OF SALES PERSONAL IN PROMOTION
The major customer base which buys cement in India even today is the
household owner. Though the end customer the purchase is influenced by
opinion leaders viz. contractors, masons, architects, etc. Thus, to attract
them Gujarat Ambuja cements sales teams organize seminars for
contractors and masons.
They also interact with retailers and distributors who are the channel
members representing the company to the end customer. They act as the
connecting link. They also act as a channel between the company and
contractors. The retailers or distributors play an important part in
influencing the end customer.
USE OF ADVERTISEMENTS IN PROMOTION
Ambuja cements are the pioneer of branding in cement industry. Ambuja
Cements is one of the companies that realized the potential of brand as a
differentiator. Even in the eighties, Ambuja cements started its activities for
building the brand. According to Superbrands report, Ambuja cements are
the first cement brand to start advertising on television.
It also uses outdoors for advertising to enhance
the brand recall. These activities include
hoardings during major festivals like Ganesh
festival in Maharashtra, wall paintings and
boards at retail stores.
A television commercial (TVC) for Ambuja Cement, created by Grey
Worldwide, revolves around the story of a wall that doesn‟t break,
seasoned with an emotional (almost humanitarian) twist.
The TVC opens on a shot of the caretaker of an orphanage introducing the
children to a Mr Choksi. She tells them that Choksi is going to build a hotel
on the site of the orphanage. At this point, a little boy says to Choksi, “Sir,
par last time...,” But he is shushed by an older boy. The following morning,
the heartless Choksi arrives with bulldozer in tow. At his signal, the
bulldozer delivers a powerful blow on the building, but is unable to bring it
down. The little boy tries to explain again, but is stopped midway again by
the elder one.
Choksi tries his best, but is not able to demolish the orphanage. As he
wonders about the strength of the building, the little boy says, “Arre sir, last
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8. time bhi yeh deewar nahin tooti thi (Sir, even last time, this wall could not
be broken down).” As a disappointed Choksi leaves with his men, the
children and their caretaker start dancing in joy, and the voiceover
concludes, “Ambuja Cement. Yeh Deewaar Nahin Tootegi.”
Apart from this Ambuja cements also come up with merchandises often
wherein the masons, contractors are gifted with caps, keychains, t-shirts
with the logo of Ambuja cement to enhance the brand recall.
Ambuja has been harping on its „giant
compressive strength‟ proposition; the
brand even created the visual of a „giant‟
and then a broken hammer. Perhaps its
most memorable ad was the one involving
two estranged brothers trying to break
down the wall that runs between their
houses (Bhai Bhai, featuring Boman Irani,
which was released six years ago). After
that humorous attempt, came some ads which presented the brand in a
sentimental vein (the Dadi ad), a move that Vivek Deshpande, Ambuja
Cement‟s vice-president for brand and promotions, agrees was rather
disastrous, so much so that the Bhai Bhai ad was recalled. “Our new ad is
a correction of this,” he says, adding that the brand will now strike a
balance between emotion and humour.
SALES PROMOTION SCHEMES:
The sales promotion schemes are not directly implemented for the end
user but channel members are the one who benefit from sales promotions.
Gujarat Ambuja Cements has an „I can Initiative‟ which gives an individual
an opportunity in its sales team to come up with its own idea. Apart from
this they also felicitate the best performers. They provide performance
based incentives.
Gujarat Ambuja Cements has worked out an equity-incentive scheme for its
retailers.
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9. Under the plan, a retailer who sells a minimum of 200 tonnes (equivalent to
4,000 bags) will be eligible for 30 shares of the blue-chip cement maker.
Once the minimum target is achieved, he is entitled to three shares for
every additional 20 tonnes sold. The scheme will be valid till May 31, 2000.
Thus, sales of 300 tonnes of cement will fetch a GACL stockist 45 shares
of Gujarat Ambuja, which will shoot up to 300 shares (cash equivalent of
Rs 1.04 lakh at Tuesday's prices) once sales touch 2,000 tonnes.
The scheme will be a novel route to cement the fortunes of the stockists
with that of the company and will help Gujarat Ambuja leverage on the
inherent strength of its stock.
On an average, stockists sell around 300-400 tonnes a month, and with this
new scheme they will be tempted to push Ambuja cement. Cement retailers
generally hawk various cement brandsavailable, and the new arrangement,
analysts say, is a ploy to usher in greater loyalty for the Ambuja brand.
The company is, however, not creating any new shares for rewarding the
retailers. Instead, they are given the option by the dealers to convert their
cash incentives into equivalent number of shares in GACL.
"Instead of giving cash incentives, retailers are given the option to own
shares in the company. The understanding is between the dealer and the
retailer and the company is no way involved in the share purchases," said a
company official.
Besides, Gujarat Ambuja has also launched a host of other performance-
linked incentive schemes for its retailers which include gold coins and
foreign trips. Also on offer are insurance covers upto Rs 5 lakh for personal
accidents and scholarships for their children.
The company has worked out a mechanism under which one particular
scheme can be availed of in combination with other available schemes as
well.
For enjoying a 10-day trip to the US or a12-day vacation to Europe or 160
grams of gold, GACL stockists will have to meet a sales target of 2,000
tonnes. The same tonnage sales will also entitle the dealer to a six-day trip
(for two) to Singapore or Bangkok.
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10. To win gold coins, the retailer will have to sell a minimum 100 tonnes upon
which he becomes entitled to 8 grams of the yellow metal. Thereafter, the
retailer can win two grams of gold for every 25 tonnes of cement sold.
Retailers can also avail of a combination of two incentive offerings
depending on his sales performance. A retailer selling 400 tonnes of
cement, for instance, can both enjoy a vacation to Goa and win 16 grams
of gold. The combination may be altered to suit the retailers' wishes.
The scheme is an innovative incentive to retailers, and has the effect of
tying the retailer closely to the company.
PUBLIC RELATIONS ACTIVITIES
They have a website GRIHA-SHILPI which assists customers by assisting
in different aspects of building a home. It also provides a list of contractors
and their contact numbers across different districts in India. They also help
provide expert help wherein experts visit the construction site to guide you
and even test the concrete slabs. The link for the website is
http://www.ambujagrihashilpi.com/GrihaShilpi.php
They have a corporate social responsibility cell “The Ambuja Cement
Foundation” which has been at the forefront of environmental and social
activities. It operates near the companies manufacturing plants. The
Ambuja Cement Foundation is the Corporate Social Responsibility wing of
Ambuja Cements Ltd. that works with the rural communities surrounding
Ambuja‟s manufacturing sites. The Foundation is engaged in a variety of
people-centric, integrated rural development projects.
Website: http://www.ambujacementfoundation.org/
Facebook page: http://www.facebook.com/pages/Ambuja-Cement-
Foundation/107287509345492
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