Case Study: Positioning a Brand in the Cement Industry

November 27, 2012 The Industry Indian cement Industry is a Rs. 130,000 crores industry. It has consistently grown at approximately 8 - 10% per annum. In fact, the cement industry growth is a fair indicator of the GDP growth. Incidentally, India is the second largest producer of cement in the world, second only to China. 40% of cement is consumed by the infrastructure projects. The balance gets consumed by the housing / builders segment and gets distributed through the retail trade. Masons, Engineers and contractors are the major influencers when it comes to cement purchases. The Company Madras Cements Limited is the flagship company of Ramco Group. It is amongst the top ten cement companies in India. There are approximately 50 cement companies in India producing over 100 brands of cement from 150 cement plants spread all over the country. This is apart from the myriad mini cement plants that are available. This clearly makes the industry very crowded and fragmented. Cement being a commodity, the prices are constantly under pressure and so are the margins. The companys plants are located in Tamil Nadu, Andhra Pradesh, Karnataka and West Bengal. Consequently, all the southern markets as well as West Bengal, Orissa are very important markets for the company. The company is very keen on participating in the growth of Maharashtra as well. The Brand Madras Cements launched its brand Ramco Super grade in 1998 as blended cement. Today, it has become the single largest selling brand of blended cement in South India. From a capacity of approximately 2.5 million ton per annum in 1997, Madras Cements today has a capacity of 12 million ton per annum.

The Focus The brands concentration has been primarily in the retail segment. The brand is perhaps better represented in the rural markets than it is in the urban markets. The major input costs of cement is power, fuel etc. Therefore, any change in oil prices or Rupee Dollar parity or power situation or Railway policies has a major impact on cement costs. Madras Cements has consistently invested in modern technology and machinery which helps to keep the costs down as well as maintain the eco balance. Today, a 50kg bag of cement is sold at an average price of Rs.300/bag that is Rs 6 per Kg. This is the reason one finds Madras Cements emphasizing more on Below The Line Activities. Mass media TV / Press - is frightfully expensive and it is very difficult to sustain such campaigns consistently over a period of time. Therefore, the constant challenge is how do to differentiate the brand from the rest of the pack, at the most economical cost. Thanks to the demand supply fluctuations, prices come under constant pressure. Therefore, the challenge is to maintain prices at the premium end like Ultratech has been able to do. The Questions Study the category, consumer, competition and communication. Is the companys branding on the right track? Does it need any tinkering or wholesale changes? Substantiate your answers. Stick to branding related issues only for now.