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CHAPTER 1

INDUSTRIAL MARKETING

1.1 INDUSTRIAL MARKETING IN 21ST CENTURY

Cement was considered as an Industrial product up to late nineties. For

such belief and treatment government efforts were responsible, as the

government had put control on production and supply of Cement in the

country. Government in the mid nineties had removed the control of

production but the real impact in terms of marketing practices in the industry

emerged after 2000. The attitude towards Cement has changed and slowly

and gradually the marketers have started accepting it as a consumer product,

instead of Industrial product.The treatment of the P (product) was remaining

same as the end users had no significant difference in selecting any cement

brand.

Commercial building construction, construction of bridge and other

infrastructure monuments requires cement in bulk. Hence, the marketers of

Cement have developed strong distribution network for supply. Distribution

system has been treated as competitive advantage in the Cement Industry.

Release of licence limit as well as entry of different groups in the industry has

geared up the competition in the market.

Following changes in the Cement marketing has been observed in last five

years.

1.1.1 Attitude towards the consumers

Initially the marketers gave importance to the industrial or bulk

consumers, considering size of the order as well as future sales potentials of

the consumers but there has been a change in this attitude and every

consumer is considered valuable for the marketers. Not only this but the

demand of cement for construction at the personal level is also catered with

due care. Retail consumption of cement in the small town and cities has

increased to a great extent.

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1.1.2 Additional or supplementary product to Cement

In order to provide better strength and to cater customized needs of

construction various additives are required which are available in liquid and

powder form.Additional product like “PUTTY” is also demanded by consumers

to provide smooth & moisture free surface of walls.Distributors and dealers

provide entire range of products so they can provide one step solution to the

needs of consumers.

1.1.3 Extensive Distribution Network

Distribution system plays a very important role in cement marketing.

Well-established Distribution network can create an advantageous situation

for the marketers against the competition. Major cement players have

developed an extensive distribution network of distributors, dealers & retailers

to ensure availability upto rural areas.They also use channel of engineers and

masons to create awareness which in turn helps company to increase

customer.Cement players have adopted all possible means to ensure

extended reach in the market which includes the following.

Exclusive Dealership

Multiband Dealership

Direct Business on Net or Phone

Sub- Dealers / Retailers in the most interior parts

Toll free number for the order as well as technical support.

1.1.4 Relationship building with influencers

Nowadays influencers are the major decision makers for the retail

customer. As influencers like engineers, contractors & masons play a very

important role in selection of brand, major cement players have started giving

due importance to them. Companies conduct lot of activities like meetings,

conferences, sponsorship in events of infuencers to attract them.Companies

offer them various gifts and small give aways from time to time to be in

constant touch with them

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1.1.5 Research and development

Initially there was only one Grade of cement available in the market which

was 33 Grade. After continuous research & development companies

introduced various grades like 43 Grade & 53 Grade to provide more strength.

Various other types of cement were also introduced to satisfy different needs

of the consumers and to minimize cost and maximize production by using

other cementious materials. The major products like PPC and PSC are

commonly used for routine construction activities.

1.1.6 Advertisement and sales promotion

In today’s era advertising and sales promotion play a major role in creating

brand awareness, so major cement players have also started using this tool to

establish their brand and to create a unique identity for their product. To make

their advertising more effective they have not only used the regular channels

like news paper and television but also have taken up innovative means like

wall painting, radio jingles, organizing customized event, branding on various

gift articles. Moreover cement companies have also started hiring famous

personalities as their Brand Ambassador to promote their product. The key

element of brand ambassadors lies in their ability to use promotional

strategies that will strengthen the customer-product/service relationship and

influence a large audience to buy and consume more.

1.1.7 Technical guidance

Generally the consumers lack technical know-how about cement. The cement

companies identified this need of the consumer and started providing

technical guidance in following ways.

Team of civil engineers.

Toll free help line numbers

Mobile technical laboratories

Consumer guidance camps

On site supervision and guidance on demand

Providing mixed design as per customer needs.

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1.2 DEFINITION OF MARKETING

Marketing is the process of communicating the value of a product or service

to customers for the purpose of selling the product or service. It is a critical

business function for attracting customers.

From a societal point of view, marketing is the link between a society’s

material requirements and its economic patterns of response. Marketing

satisfies these needs and wants through exchange processes and building

long term relationships. It is the process of communicating the value of a

product or service through positioning to customers. Marketing can be looked

at as an organizational function and a set of processes for creating, delivering

and communicating value to customers, and managing customer relationships

in ways that also benefit the organisation and its shareholders. Marketing is

the science of choosing target markets through market analysis and market

segmentation, as well as understanding consumer buying behavior and

providing superior customer value.

There are five competing concepts under which organizations can choose to

operate their business; the production concept, the product concept, the

selling concept, the marketing concept, and the holistic marketing concept.

The four components of holistic marketing are relationship marketing, internal

marketing, integrated marketing, and socially responsive marketing. The set

of engagements necessary for successful marketing management includes,

capturing marketing insights, connecting with customers, building strong

brands, shaping the market offerings, delivering and communicating value,

creating long-term growth, and developing marketing strategies and plans.

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1.3 Various concepts of Marketing

1.3.1 Traditional approaches

The marketing orientation evolved from earlier orientations, namely, the

production orientation, the product orientation and the selling orientation.

Orientation Profit

driver

Western

European

timeframe

Description

Production Production

methods

until the

1950s

A firm focusing on a production

orientation specializes in producing as

much as possible of a given product or

service. Thus, this signifies a firm

exploiting economies of scale until

the minimum efficient scale is reached.

A production orientation may be

deployed when a high demand for a

product or service exists, coupled with

a good certainty that consumer tastes

will not rapidly alter (similar to the

sales orientation).

Product Quality of

the product

until the

1960s

A firm employing a product orientation

is chiefly concerned with the quality of

its own product. A firm would also

assume that as long as its product was

of a high standard, people would buy

and consume the product.

Selling Selling

methods

1950s and

1960s

A firm using a sales orientation

focuses primarily on the

selling/promotion of a particular

product, and not determining new

consumer desires as such.

Consequently, this entails simply

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selling an already existing product, and

using promotion techniques to attain

the highest sales possible.

Such an orientation may suit scenarios

in which a firm holds dead stock, or

otherwise sells a product that is in high

demand, with little likelihood of

changes in consumer tastes that would

diminish demand.

Marketing

Needs and

wants of

customers

1970s to

the present

day

The 'marketing orientation' is

perhaps the most common orientation

used in contemporary marketing. It

involves a firm essentially basing its

marketing plans around the marketing

concept, and thus supplying products

to suit new consumer tastes. As an

example, a firm would employ market

research to gauge consumer desires,

use R&D (research and development)

to develop a product attuned to the

revealed information, and then utilize

promotion techniques to ensure

persons know the product exists.

Holistic

Marketing

Everything

matters in

marketing

21st

century

The holistic marketing concept looks at

marketing as a complex activity and

acknowledges that everything matters

in marketing - and that a broad and

integrated perspective is necessary in

developing, designing and

implementing marketing programs and

activities. The four components that

characterize holistic marketing are

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relationship marketing, internal

marketing, integrated marketing, and

socially responsive marketing.

1.3.2 Contemporary approaches

Recent approaches in marketing include relationship marketing with focus on

the customer, business marketing or industrial marketing with focus on an

organization or institution and social marketing with focus on benefits to

society. New forms of marketing also use the internet and are therefore

called internet marketing or more generally e-marketing, online marketing,

"digital marketing", search engine marketing, or desktop advertising. It

attempts to perfect the segmentation strategy used in traditional marketing. It

targets its audience more precisely, and is sometimes called personalized

marketing or one-to-one marketing. Internet marketing is sometimes

considered to be broad in scope, because it not only refers to marketing on

the Internet, but also includes marketing done via e-mail, wireless media as

well as driving audience from traditional marketing methods like radio and

billboard to internet properties or landing page.

Orientation Profit

driver

Timefra

me Description

Relationship

marketing/Relations

hip management

Building

and

keeping

good

customer

relations

1960s to

present

day

Emphasis is placed on the whole

relationship between suppliers

and customers. The aim is to

provide the best possible

customer service and build

customer loyalty.

Business

marketing/

Industrial marketing

Building

and

keeping

relationship

s between

organizatio

ns

1980s to

present

day

In this context, marketing takes

place

between businesses or organizat

ions. The product focus lies

on industrial goods or capital

goods rather than

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consumer products or end

products. Different forms of

marketing activities, such as

promotion, advertising and

communication to the customer

are used.

Societal marketing Benefit to

society

1990s to

present

day

Similar characteristics to

marketing orientation but with

the added provison that there

will be a curtailment of any

harmful activities to society, in

either product, production, or

selling methods.

Branding

Brand

value

1980s to

present

day

In this context, "branding" refers

to the main company philosophy

and marketing is considered to

be an instrument of branding

philosophy.

1.4 Marketing research

Marketing research involves conducting research to support marketing

activities, and the statistical interpretation of data into information. This

information is then used by managers to plan marketing activities, gauge the

nature of a firm's marketing environment and attain information from suppliers.

Marketing researchers use statistical methods such as quantitative research,

qualitative research, hypothesis test, chi-squares test, linear regression,

correlations, frequency distributions, poisson distribution, binomial

distributions, etc. to interpret their findings and convert data into information.

The marketing research process spans a number of stages, including the

definition of a problem, development of a research plan, collection and

interpretation of data and disseminating information formally in the form of a

report. The task of marketing research is to provide management with

relevant, accurate, reliable, valid, and current information.

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A distinction should be made between marketing research and market

research. Market research pertains to research in a given market. As an

example, a firm may conduct research in a target market, after selecting a

suitable market segment. In contrast, marketing research relates to all

research conducted within marketing. Thus, market research is a subset of

marketing research.

1.5 Marketing environment

Staying ahead of the consumer is an important part of a marketer's job. It is

important to understand the "marketing environment" in order to comprehend

the consumers concerns, motivations and to adjust the product according to

the consumers needs. Marketers use the process of marketing environmental

scans, which continually acquires information on events occurring outside the

organization to identify trends, opportunities and threats to a business. The six

key elements of a marketing scan are the demographic forces, socio-cultural

forces, economic forces, regulatory forces, competitive forces, and

technological forces. Marketers must look at where the threats and

opportunities stem from in the world around the consumer to maintain a

productive and profitable business.

The market environment is a marketing term and refers to factors and forces

that affect a firm’s ability to build and maintain successful relationships with

customers. Three levels of the environment are: Micro (internal) environment -

forces within the company that affect its ability to serve its customers. Meso

environment – the industry in which a company operates and the industry’s

market(s). Macro (national) environment - larger societal forces that affect the

microenvironment.

1.6 Market segmentation

Market segmentation pertains to the division of a market of consumers into

persons with similar needs and wants. For instance, Kellogg’s chocos are

marketed to children. Musselli cornflakes are marketed to adults. Both goods

denote two products which are marketed to two distinct groups of persons,

both with similar needs, traits, and wants.

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Market segmentation allows for a better allocation of a firm's finite resources.

A firm only possesses a certain amount of resources. Accordingly, it must

make choices (and incur the related costs) in servicing specific groups of

consumers. In this way, the diversified tastes of contemporary consumers can

be served better. With growing diversity in the tastes of modern consumers,

firms are taking note of the benefit of servicing a multiplicity of new markets.

Market segmentation can be viewed as a key dynamic in interpreting and

executing a logical perspective of Strategic Marketing Planning. The

manifestation of this process is considered by many traditional thinkers to

include the following; Segmenting, Targeting and Positioning.

1.7 Types of market research

Market research, as a sub-set aspect of marketing activities, can be divided

into the following parts:

Primary research (also known as field research), which involves the

conduction and compilation of research for a specific purpose.

Secondary research (also referred to as desk research), initially

conducted for one purpose, but often used to support another purpose or

end goal.

By these definitions, an example of primary research would be market

research conducted into health foods, which is used solely to ascertain the

needs/wants of the target market for health foods. Secondary research in this

case would be research pertaining to health foods, but used by a firm wishing

to develop an unrelated product.

Primary research is often expensive to prepare, collect and interpret from data

to information. Nevertheless, while secondary research is relatively

inexpensive, it often can become outdated and outmoded, given that it is used

for a purpose other than the one for which it was intended. Primary research

can also be broken down into quantitative research and qualitative research,

which, as the terms suggest, pertain to numerical and non-numerical research

methods and techniques, respectively. The appropriateness of each mode of

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research depends on whether data can be quantified (quantitative research),

or whether subjective, non-numeric or abstract concepts are required to be

studied (qualitative research).

There also exist additional modes of marketing research, which are:

Exploratory research, pertaining to research that investigates an

assumption.

Descriptive research, which, as the term suggests, describes "what is".

Predictive research, meaning research conducted to predict a future

occurrence.

Conclusive research, for the purpose of deriving a conclusion via a

research process.

1.8 Marketing planning

The marketing planning process involves forging a plan for a firm's marketing

activities. A marketing plan can also pertain to a specific product, as well as to

an organization's overall marketing strategy. Generally speaking, an

organization's marketing planning process is derived from its overall business

strategy. Thus, when top management is devising the firm's strategic direction

or mission, the intended marketing activities are incorporated into this plan.

There are several levels of marketing objectives within an organization. The

senior management of a firm would formulate a general business strategy for

a firm. However, this general business strategy would be interpreted and

implemented in different contexts throughout the firm.

1.9 Marketing strategy

The field of marketing strategy considers the total marketing environment and

its impacts on a company or product or service. The emphasis is on "an in

depth understanding of the market environment, particularly the competitors

and customers.

A given firm may offer numerous products or services to a marketplace,

spanning numerous and sometimes wholly unrelated industries. Accordingly,

a plan is required in order to effectively manage such products. Evidently, a

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company needs to weigh up and ascertain how to utilize its finite resources.

For example, a start-up car manufacturing firm would face little success

should it attempt to rival Toyota, Maruti, Hyundai, Chevrolet, or any other

large global car maker. Moreover, a product may be reaching the end of its

life-cycle. Thus, the issue of divest, or a ceasing of production, may be made.

Each scenario requires a unique marketing strategy. Listed below are some

prominent marketing strategy models.

A marketing strategy differs from a marketing tactic in that a strategy looks at

the longer term view of the products, goods, or services being marketed. A

tactic refers to a shorter term view. Therefore, the mailing of a sales letter or

mass SMS would be a tactic, but a campaign of several sales letters, mass

SMS or telephone calls would be a strategy.

1.10 Buying behavior

A marketing firm must ascertain the nature of customers' buying behavior if it

is to market its product properly. In order to entice and persuade a consumer

to buy a product, marketers try to determine the behavioral process of how a

given product is purchased. Buying behavior is usually split into two prime

strands, whether selling to the consumer, known as business-to-consumer

(B2C), or to another business, known as business-to-business (B2B).

1.10.1 B2C buying behavior

This mode of behavior concerns consumers and their purchase of a given

product. For example, if one imagines a pair of sneakers, the desire for a pair

of sneakers would be followed by an information search on available

types/brands. This may include perusing media outlets, but most commonly

consists of information gathered from family and friends. If the information

search is insufficient, the consumer may search for alternative means to

satisfy the need/want. In this case, this may mean buying leather shoes,

sandals, etc. The purchase decision is then made, in which the consumer

actually buys the product. Following this stage, a post-purchase evaluation is

often conducted, comprising an appraisal of the value/utility brought by the

purchase of the sneakers. If the value/utility is high, then a repeat purchase

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may be made. This could then develop into consumer loyalty to the firm

producing the sneakers.

1.10.2 B2B buying behavior

Relates to organizational / industrial buying behavior. Business buy either

wholesale from other businesses or directly from the manufacturer in

contracts or agreements. B2B marketing involves one business marketing a

product or service to another business. B2C and B2B behavior are not precise

terms, as similarities and differences exist, with some key differences listed

below:

In a straight re-buy, the fourth, fifth and sixth stages are omitted. In a modified

re-buy scenario, the fifth and sixth stages are precluded. In a new buy, all

stages are conducted.

1.11 EFFORTS TOWARDS SUSTAINABLE INDUSTRY

Cement industry is one of the vital sectors for economic development

in a country. The total utilization of cement in a year is used as ·an indicator of

economic growth. It is a necessary constituent of Infrastructure development

and a key raw material for construction industry.

1.11.1 Evolution

India is the second largest producer of cement with a production

capacity of 360 million tonnes as of now, next only to China. The industry has

continuously improved on its performance and stood as the second best in the

world with lowest energy consumption and C02 emissions.

Continued increase in domestic demand due to the rise in population

thereby leading to the continued demand for various basic amenities like

housing; the rise in population is pushing the Government to spend heavily on

the infrastructure developments to meet the ever increasing demand, and

India's continued economic growth have fuelled the growth of the cement

industry.

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During the industry's 96 years of journey since 1914, it has grown from

a mere one lakh tonnes to a mammoth 262.91 million tonnes. The industry

had seen major technological changes leading to a total evolution of the

manufacturing practices and also calling for huge investments.

Basically, it is an energy-intensive industry coupled with massive

consumption of natural minerals like lime and gypsum. The intense energy

requirements call for huge consumption of natural fossil fuels like coal, and

petrol. Realizing this, the industry continuously made huge investments in

research and development to upgrade manufacturing practices and to make

the process as most energy efficient.

Considering the huge consumption of minerals and fossil fuels, the

manufacturing process emits huge amount of carbon dioxide (C02) which is

one of the major constituents of green house gas emissions. Realising this

aspect and the harm it is going to create to Mother Nature, the industry has

taken various initiatives to reduce emissions.

Similarly looking into the nature of the product that is dusty, the

quantum of emissions and the extent of health hazard these emissions can

have on the nearby living habitats, the industry has continuously adopted

various pollution control technologies to curb these hazard and to improve the

conditions of people living nearby.

Thus, towards sustainable development the industry has taken various

initiatives and some of the notable developments are in process development:

The cement industry has seen four major changes in the manufacturing

process.

1.11.1.1 Wet process

Raw materials are prepared and mixed with the aid of water (30-40 per

cent) and fed into the upper end of the kiln as slurry. The process is

particularly useful when the raw materials contain a significant amount of

moisture as quarried. This process has the advantage of uniform feed

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blending, but requires more energy than the other types of kilns, since the

water must be evaporated during the process.

1.11.1.2 Semi-wet process

The raw materials prepared by wet processing are first mechanically

dewatered, preferably with filter presses, and then fed in the form of nodules

to a drying unit. This makes it less energy-intensive when compared with the

wet process.

1.11.1.3 Semi-dry process: In this process, nodules or pellets (about 12 per

cent water) formed from raw meal with the aid of water are used. As there is

less water moisture content is less, it is more energy-efficient than semi-wet

process. However, this technology lost its edge due to high initial cost and

certain performance-related issues.

1.11.1.4 Dry process

A long kiln similar to that used in the wet process can also be used for

a dry process. This process consumes significantly less energy and can often

handle particulate emission problems more easily.

Moreover, there are dry processing techniques far superior to the dry

kiln which already consumes less energy than the wet process.

1.11.2 Energy conservation

The industry has taken up various energy conservation initiatives

throughout the manufacturing process. Some of the notable initiatives are:

improving the grinding techniques; modifications in the Kiln firing system; up-

gradation of pre-heaters from 4 stage to 6 to 7 stage; changes in the clinker

grinding system, operating the manufacturing processes in closed circuit

system, and waste heat recovery systems thereby utilising the waste heat

gases being liberated from kiln / cooler.

Improvement of clinker factor: This is one of the major areas in which

the cement industry has carried out extensive research and development to

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ensure that the cement manufacturing process can absorb various other

waste materials thereby reducing the utilisation of clinker and the utilization of

natural resources like limestone, gypsum into the manufacturing process. The

efforts have yielded rich dividends in the form of flyash which is a waste by

product of the coal based power industry and the slag which is a waste by

product of steel industry.

Today the manufacturing process absorbs huge quantities of these

industrial wastes. Otherwise, it can create enormous damage to the

environment and to those habitats.

Based on the type of the industrial waste being absorbed into the

cement production, they can be classified into three types:

Ordinary Portland cement (OPC):

This is the traditional cement and popularly known as grey cement. It

has a clinker factor of 95 per cent with gypsum Consumption of 5 per cent.

Thus, this is the type of Cement which consumes highest amount of natural

resources energy and emits major C02 emissions.

Portland pozzolona cement (PPC):

This absorbs the fly ash which is the waste out of thermal power

stations; it has a clinker factor of 60 per cent with 35 per cent max Flyash

consumption and gypsum consumption of 5 per cent. Thus cement consumes

much lower amount of natural resources, energy and emits much lower CO2

emissions.

Portland slag cement (PSC):

This absorbs the slag which is the waste out of steel plants. It has a

clinker factor of 40 percent with 55 percent max slag consumption and

gypsum consumption of 5 percent. This is type of cement consumes lowest

amount of natural resources; energy arid emits lowest C02 emission.Thus the

industry's research and development efforts have resulted in the conservation

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of raw materials, reduce energy consumption and lower C02 emissions

towards sustainable development.

1.12 Alternative raw material:

The industry is continuously striving to explore and enhance the

utilisation of various alternative raw materials like marble slurry; shale and red

ocher, which will conserve the utilization of natural resources.

1.12.1 Alternative fuel:

This is one of the major areas which the industry is trying to exploit its

true potential. The industry is trying to pioneer the art of co-processing cement

kilns. Co-processing refers to the usage of waste materials in industrial

process as alternative fuels to recover energy from them. Cement kilns

operate at high temperatures and the materials flowing inside the kiln face

long residence periods with considerable turbulence. These conditions make

desirable attributes for safe thermal destruction of industrial waste.

The practice of co-processing respects the hierarchy of waste

management. It undertakes waste management only after the options of

reduce, reuse and recycle are exhausted. It avoids the options of resources

destruction by way of incineration and contaminant by way of land filling both

of which do not promote sustainable development. Co-processing ranks

higher on the waste disposal hierarchy and eliminates the need for land filling

and un-controlled incineration. The cement kiln process offers substantial

opportunity to re-iron resources such as silica; alumina, calcium and that

invariably form components of wastes. Co-processing of waste materials not

only maintains the ecological balance, but also conserves precious natural

resources that are otherwise utilised in the manufacture of cement.

1.12.2 Atmospheric emission:

Among the pollution problems associated with the cement industry, air

pollution is undoubtedly the most significant one. Making one tonne of cement

requires the grinding of about 2 tonnes of raw materials, intermediate

products and solid fuels to a dust-like fineness. Furthermore, even with heat

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saving methods, about 100-110 kg of coal equivalent with a flame

temperature of over 1500 degree centigrade is needed per tonne of cement.

Depending on the process employed and the degree of sophistication of a

cement plant the manufacture of one kg of cement gives rise to between 6

and 14 m3 of exhaust air and gas. These quantities of air and gas have to be

cleaned before being discharged into the atmosphere

Besides these process emissions, various transfer points and fugitive

dust emissions make the whole manufacturing process complicated and

serious in the dust emissions aspect. Realising the intensity of these dust

emissions and their impact on the environment, the industry has adopted

various dust controlling measures like installation of bag filters, bag houses,

electrostatic precipitators and dust suppression systems to address the issue.

In addition to these, the industry is now adopting the latest systems like

continuous emissions monitoring systems (CEMs) for continuous tracking of

various emissions and to take immediate corrective and preventive actions.

Improvements in mining area: One of the major activities in the cement

industry is mining which involves blasting activity which generates huge

amount of vibrations, noise and dust emissions.

The dust emissions aspect becomes more aggressive due to the

movement of heavy load vehicles for transportation of the mined materials.

Knowing the impact of these activities on the nearby habitats, the industry is

adopting various latest mining technologies to reduce the impact of vibrations,

noise and dust emissions. Similarly the industry is adopting latest material

handling techniques thereby reducing / avoiding the movement of vehicles

and thus reducing & eliminating the fugitive emissions.

Improvements in transportation mix: One of the major activities of the

industry is distribution. Knowing the amount of the fossil fuel consumption and

the respective C02 emissions, the industry is continuously adopting mass

transportation options like sea and rail wherever possible.

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Promotion of renewable energy: The industry is also continuously

exploring the possibility of utilizing various renewable energy options like

wind, solar and hydro, to replace the traditional energy thereby reducing their

carbon footprint on account of using the traditional energy. Thus, with various

initiatives, the Industry is continuously striving to improve its efficiency to

move towards sustainable development.