We prefer to work with large network of small dealers
To promote our product, we have a two-prong strategy, one is the push from the dealers and the other is to create pull from the market. The push is about dealer management and providing him with the right tools and incentives to sell our product, while the pull is created through various advertisement campaigns, road shows, rural penetration, and providing technical services, says Rajesh Sarada, Head - Marketing, Reliance Cement Company. Excerpts from the interview...
How do you perceive cement as an industry heading to?
The Indian cement industry is directly linked with the country´s infrastructure sector and thus its growth is paramount in determining the development of the country. With a current production capacity of around 366 million tonne (mt), India is the second largest producer of cement in the world and fuelled by growth in the infrastructure sector, the capacity is expected to increase to around 550 mt by FY2020.
India has a lot of potential for growth in the infrastructure and construction segment and cement sector is expected to largely benefit from this. Some of the recent major government initiatives such as development of 100 smart cities are expected to provide a major boost to the sector.
Expecting such developments in the country and aided by favorable government policies, Reliance Cement is all set to cater to the nation building.
What is the thought process behind the preparation of your media plan?
The thought process is primarily to achieve our marketing objectives. The marketing objectives could be brand positioning, increase market share, create brand awareness, visibility, etc. It is here where the role of integrated marketing communication becomes inevitable. I think, for an effective media plan, it is imperative to understand the consumer psyche, populate brand awareness (since we are a new incumbent), reinforce it, thereby resulting in Intention to Purchase (ITP). Market is very dynamic and hence the media plan has to also factor in market competitiveness, current trends, competitor spends and media mix, etc. Based on these parameters, we design our media and marketing plan.
What are the challenges that you foresee in the market and how have you factored them in your marketing strategy?
Cement is a typical industry that is cyclical as well as seasonal. In a whole year, there are ups and downs, depending on peak and non-peak seasons like during monsoon the demand falls and in summer the demand picks up. Customer and geographical segmentation is the key to ensure continuous sales during the peak and non-peak seasons.
The other challenge could be development of channel network. Other than looking at the existing channel of different cement companies, we are also developing our own channel.
Soaring raw material prices have forced cement price to rise higher. How can one entice consumers to shell out extra for your product?
Cost and price are different things and industry cannot simply pass on the cost increase to the customers. Cost is determined by the manufacturing and logistic costs, while the pricing is determined by the market. The price depends on various parameters such as market demand, growth rate, number of players in the market, level of consolidation, etc. So the raw material price increase doesn´t mean that I will be able to pass on to the cost to the consumer.
Customer will never pay anything extra unless he finds value in the product. At the end of the day, what I need to convey to the customer is the value he is getting for his money. Value could be in terms of product quality, packaging, services and several other factors.
Which is a better strategy, distributing through few large dealers, or routing it via an extensive network of small dealer outlets?
Both have their pros and cons. Distribution through large dealers can result in quick sales, however, the control over the market is compromised. Also, few large dealers can be catered by a small sales team. Whereas, distribution through extensive network of small dealers will give a better control over the market and pricing. However, to build a large network, it would take a fairly large sales team to develop and maintain the network, which will add on to the sales and marketing expenses.
Cement is seen more as a commodity than as a specialised product. In such scenario, how do you create brand differentiation and stand apart from the rest?
Cement is a branded commodity, I would say. In the market, there are brands which charge a premium of Rs 20-50 per bag. There are even smaller mini brands which sell cement at about Rs 70-80 lesser than the larger players. Brand plays an important role in the entire decision making process by the consumer (individual home builder). Any individual home builder is probably building the home for the first time and is investing his lifetime savings.
Brand differentiation is created through proper positioning of our product in the consumer´s mind. This is done through various advertisement campaigns (TV, Print, Radio Outdoor and Social), road shows, regular customer meets, site visits and technical services.
How do you reach construction professionals at different levels, ranging from civil engineers and consultants to contractors and masons?
We call them as influencers. There are influencers at different levels. One is the mason, who is actually doing the construction activity at the site. Then there are contractors, engineers and architects as we go up the ladder. We regularly meet the masons and make them aware of our product features and provide them with technical advices for using our product. We also help them in enhancing their skills and make them aware of the latest and best construction practices. We have a separate technical services team which meet the influencers on regular basis to conduct such activities.
We also organise conferences and seminars to engage with the engineers and architects and invite prominent personalities in the construction field to share the best practices and latest development in construction world.
Quality perception of cement varies from customer to customer. How do you factor this in your marketing plans?
Cement industry typically operates in B2B model rather than B2C. Hence, conventionally push is being given more thrust rather than pull; but we at Reliance Cement try to do things the other way round. Through our effective IMC, we are creating pull among our target segment and trying to influence their psychological perception as well. The perception of every brand is different with different customers. So, where do I place my cement in his mind is all about the positioning. The objective of any campaign is to position our product in way that it is differentiated from the rest of the products. Through these campaigns, we demonstrate the unique features of our product and services that we offer like our On-Site Expert services.
Please share segment-wise break-up of revenue from your products.
We have started our operations just about seven months back. Currently, about 90 per cent of our cement is sold in the trade segment. We have more than 2,200 authorised dealers and more than 4,000 retail outlets. We are mainly present in Central and Eastern UP, Madhya Pradesh, Bihar, Jharkhand, parts of West Bengal, and Vidarbha region in Maharashtra. Our plants are located in MP, UP, Maharashtra and West Bengal. We are now present in almost 30-35 per cent of all India market.
Apart from price and quality, which other factors influence buying decisions?
All marketing attributes work in tandem; you can´t have only price and or quality as driving force. You need to have positive brand equity which comes through good brand image and its deliverables in the form of product performance, technical and after-sales services, delivery time, etc.
What are your current marketing plans / initiatives for promoting your products?
To promote our product, we have a two-prong strategy, one is the push from the dealers and the other is to create pull from the market. The push is about dealer management and providing him with the right tools and incentives to sell our product, while the pull is created through various advertisement campaigns (TV, Print, Radio Outdoor and Social), road shows, rural penetration through participation in melas, haats, etc., and providing technical services.