Rahul Akkara, VP (Strategy and Brand), JSW Cement Ltd.
JSW is mainly into the production of steel, and generates slag as a by-product, a key material for cement. Rahul Akkra explains his strategy behind building up the JSW brand, and the difference that a strong brand can make to the bottom-line of a cement manufacturer.
If cement is a commodity, why is branding relevant?
Though cement is still in the space of a commodity, the consumer wants to understand which cement bag is going in his/her home. Today, consumers are very evolved in the decision-making process. Years ago, it was left to the mason to decide which cement would come inside homes. The result would be that the mason would buy a cheap cement and the owner of the house would see cracks in his walls in a few years. That trend is changing now. Hence it becomes important to ensure that the brand recall is high.
What difference does a strong brand make to the bottom-line of a cement company in India? What difference does it make to producers outside India?
A strong brand, be it in cement or any other commodity, helps to create a pull at the point of sale, and helps achieve higher realisations. Better the brand recall, better the pull and better are the chances of getting an improved price realisation for your cement bag. In a market which is so price sensitive, high brand recall for the brand helps to sustain the prices and improves margins.
Do companies plan differently for corporate branding and product branding in the cement industry?
Most cement brands work on a single brand architecture, so when you advertise at a corporate level, its rub-off also comes on the product. Having a multi-brand architecture would also result in more investments.
What are the most interesting brand messages in the Indian cement industry? How have these been conveyed? Can you compare these messages with FMCG brands?
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 commodity is need based.
Isn’t product quality associated with branding? Can you quote any examples of brands failing or succeeding due to product quality?
Take the case of PSC Cement. Till two years back, no one knew about this new category in cement. People were used to buying OPC and PPC Cement. We were the only company in southern India to make PSC Cement; there was a need to educate the consumer on using this cement. We took the initiative and developed a communication strategy that informed the consumer to wait and buy the right cement. The result — it helped us to create a 6 per cent share for PSC Cement in the market, and in that 6 per cent, we today have more than a 95 per cent share. PSC Cement is superior to OPC and PPC, and all it needed was a good communication strategy to be put in place.
Broadly speaking, what are the time and costs involved in creating and establishing a new brand for an all-India player or for a regional player?
Creating a brand is not an overnight process. It requires focus, sustained work and resources. A brand is an investment, and how much investment does one need to put in cannot be determined; it would largely depend on what is the vision that one has for the brand.
What do you think of premium cement brands? What do they promise to deliver over and above normal cement? Can you give some good examples of value creation through premium branding?
The difference between premium brands and normal brands is the value proposition and the service that one gives to consumers. The consumer is ready to pay an extra price for the brand where he gets a better value for the money spent. This would be by way of not just a superior product offering, but also by way of good pre- and post-sales service which would be a mix of a technical and sales service support system.
Is the introduction of PPC and PSC a challenge or an opportunity for the cement industry?
Today PPC accounts for almost 65 per cent of the market, while PSC is about 7 per cent in India and around 60 per cent all over the world.
It is very important that we use more of PSC and blended cement as natural resources are getting depleted on account of use of limestone and water. PSC uses slag as a raw material and requires less water for curing as compared to PPC and OPC. Also PSC Cement is a green cement, as the CO2 emission is less as compared to PPC and OPC.
How common are brand transitions in India? Are they connected with M & A activity? Or are there exceptions?
There have been quite a few acquisitions of late in the cement industry. However, these acquisitions have only been for assets and not for the brand. Establishing a brand takes a lot of time, money and resources. (Good) brands help organisations to achieve higher market capitalisation. Hence the transition of the brand as far as the cement space is concerned is very rare.
How are brand strategies and packaging strategies implemented in associated product categories like white cement, wall putty, waterproofing compounds, etc? Is there any learning inherent for the cement industry?
There are different kinds of packaging like paper and HDPE bags which are predominantly used in the cement sector. Of late, with an intent to launch premium products in the market, many companies have gone about experimenting on packaging as well. One such introduction is the use of Uflex packing for cement. Uflex packing gives you the liberty to do graphic and 11-colour printing as against HDPE or where you do four- and six-colour prints. Uflex is also very expensive in terms of cost per bag, so if the organisation is pretty confident of getting the price premiums for its product packed in Uflex packaging, it should go ahead and do it.
Can you help our readers on brands and distribution strategies as seen in the cement industry vis-à-vis other building materials like paints, tiles, plumbing materials, plywood, reinforcement steel, etc?
Compared to paints, the distribution strategy of cement is a little different. Unlike paints where the material is dispatched from the factory godowns to the dealers, in cement, the distribution is from the factory to the dump, and subsequently the dealer and the sub-dealer.
How relevant will cement brands be in India after, say, 20 years?
Very relevant. In the next 20 years, the consumer buying pattern is going to witness a sea change. I also see a strong possibility of cement getting retailed online in a big way. RMCs are going to be the way forward.