Acknowledgements

Behind every achievement lies an unfathomable sea of gratitude to those who have extended their support and without whom it ever has come into existence.I would like to take this opportunity to thank my project guide, Dr. Mohd. Asive Khan for their guidance and motivation without whom the successful completion of this project would not have been possible. Therefore constant support has been me an overall learning experience.Furthermore I would like to thank all other team members whose valuable inputs have helped me gain a better understanding of the project and the organization.

TABLE OF CONTENTS:

INTRODUCTION……………………………................

Company Profile…………………………………...............

Industry Analysis…………………………………………

Detailed project report………………………………….

Product Mix…………………………………………

Place/distribution mix………………………………….

Promotion Mix………………………………………...

Research methodology……………………………..

Limitations & Disclamer…………………………

Conclusion………………………………………………

Introduction

I carried out my project on “Price positioning & market share of Jaypee cement along with the analysis of promotional tools used by the company in the Allahabad & adjoining markets.”

I started off my training with a preparation of a questionnaire for dealer’s survey after gathering all the information about the company profile, product & location of the markets in Allahabad & adjoining regions.

Complete information about the company & the product helped me a lot to satisfy the queries raised by the respondents & to culminate the primary study in the most efficient way. I contacted over 70 respondents (both exclusive & multibrand) which comprised mostly dealers along with few wholesalers & consignees.

As my product was cement , my survey’s prime objective was to find out the standing of Jaypee cement in the market in terms of price , market capture & the attitude/behavior of the customers/dealers towards the company which is formed & sustained by assessing the service level of the company.

Jaypee cement complies with IS: 8112-1989 for 43 grade ordinary Portland cement & surpasses IS: 1489-1991, the laid down BIS standards for Fly ash based PPC cement.

Prime Features of Jaypee Cement are: High compressive strength & high rate of strength gain. Superfine particles of cement provide immaculate finish to the

structure. Cement provides unsegregated concrete of better integrity. Impermeable concrete for durable structure. Resistance under aggressive environment even in coastal areas. Resistance to corrosive attack on steel reinforcement. Resistance to time leaching. Low heat of hydration – crackles construction leads to

reduction of shrinkage & swelling.

Modules of elasticity are high especially at later stages. Improved bondage of concrete to steel.

ORGANISATION: JAIPRAKSH ASSOCIATES LIMITED

OBJECTIVE : To find out the standing of Jaypee cement in the market in terms of price, market capture & the attitude/behavior of the customers/dealers towards the company.

METHODOLOGY: Primary research through personal interviews of dealers/wholesalers etc, market survey & questionnaires.

RESPONDENTS : Cement dealers/ wholesalers/ consignees of Allahabad & adjoining markets.

SAMPLE PLAN :

Universe All cement shops of Allahabad & suburbs.

Frame Exclusive & multiple brand dealers

Sample Size 75 respondents.

Sampling Method Random

Contact Method Personal interviews, survey, questionnaire

COMPANY PROFILE

Indradhanush of Jaypee Group: Source - Primary

JAYPEE GROUP

The Jaypee Group is a Rs.10,000 crore well diversified infrastructural industrial conglomerate in India. Over the decades it has maintained its salience with leadership in its chosen line of businesses:

It has the following Strategic Business Units (SBU’s)

Engineering and ConstructionCementPowerHospitalityReal EstateExpressways and Highways

Company/Organizational Profile

Transforming challenges into opportunities has been the hallmark of the Jaypee Group, ever since its inception four decades ago. The Group is a diversified infrastructure conglomerate and has a formidable presence in Engineering & Construction along with interests in the Power, Cement and Hospitality. The infrastructure conglomerate has also expanded into Real Estate & Expressways.

ENGINEERING & CONSTRUCTIONThe Engineering and Construction wing of the Group is an acknowledged leader in the construction of multi-purpose River Valley and Hydropower projects. It has the unique distinction of having simultaneously executed 13 Hydropower projects spread across 6 states and the neighboring country Bhutan for generating 10,290 MW power.

The Group has been assigned “CR1” grade by ICRA Ltd. indicating very “strong contract execution capacity with best prospects of timely completion of projects, without cost overruns for projects with average value of Rs. 2500 crore.” It is the only Group in India, which pre-qualifies on its own for the bidding of various projects that are awarded in the country.

A leader in Engineering and Construction of Hydropower projects in India, the Group has the largest market share in the Indian Hydropower, E&C and EPC sector having participated in 54% of Hydropower projects developed in 10th 5-Year Plan in different capacities.

JAL is the only integrated solution provider for Hydropower projects in the country with a track record of strong project implementation in different capacities and has participated in projects that have added over 8840 MW of Hydroelectricity to the National grid between 2002 to 2009. (AN UNPARALLEL FEATURE IN INDIAN POWER SECTOR)

The Group also has the distinction of executing three out of five Hydropower projects contracted on an EPC basis in the country till March 2009. Two of these, 300 MW Chamera - II and 520 MW Omkareshwar, have been completed ahead of schedule.

The 900 MW Baglihar (Stage-I and II) Hydroelectric project in Jammu & Kashmir, has been set up in the challenging environment of the State with 22

million cubic meters of concrete, has been the largest EPC project executed in the country in Hydropower sector, so far.

The key non-EPC projects completed across India are -

1450 MW Sardar Sarovar Project, the largest water resource project in India,

1000 MW Tehri Dam, Asia's highest rockfill dam.,

1000 MW Indira Sagar Power House, second largest surface power house in the country.

1500 MW Nathpa Jhakri Power House, the largest underground power house in the country.

The in-house Design and Consultancy Company, Jaypee Ventures Pvt. Ltd. (JVPL), gives JAL a competitive edge over its rivals. The design and engineering arm has been awarded “CT1” grade by ICRA with CIDC (The Construction Industry Development Council). This is the highest rating assigned to consultants in the field of Engineering.

POWERThe Group with its operational projects of 300 MW Baspa-II (Himachal Pradesh) and 400 MW Vishnuprayag (Uttarakhand) is India’s largest private sector Hydropower producer.

Besides this, 1000 MW Karcham Wangtoo project (Himachal Pradesh) is under advanced stage of implementation. In addition, with 3200 MW projects (2700 MW Lower Siang & 500 MW Hirong ) coming up in Arunachal Pradesh and 720 MW (270 MW Umngot and 450 MW Kynshi Stage –II) in Meghalaya, the Group will have total Hydropower generation capacity of over 5600 MW by 2019.

After having established a strong presence in the Hydropower sector the Group has initiated its entry into Thermal Power Generation, Power Transmission and also forayed into Wind Power.

The Group is in the process of implementing 2 x 660 MW pit head based Nigrie Thermal Power plant in district Singrauli of M.P. and 5x 250 MW Thermal Power plant at Bina M.P. JAL has been awarded LOIs for 1980 MW (3 x 660

MW) Karchana Thermal Power Project and 3300 MW (5 x 660 MW) Bara Thermal Power project in UP. Besides this, 49 MW of Wind Power plant is operational in Maharashtra and Gujarat.

The Group is also implementing a Transmission system associated with 1000 MW Karcham Wangtoo Hydro-electric project. The Transmission project will consist of a 217 km long transmission line between Wangtoo in Himachal Pradesh and Abdullapur in Haryana.

CEMENTJaypee Group is the 3rd largest cement producer in the country. The group produces special blend of Portland Pozzolana Cement under the brand name ‘Jaypee Cement’ (PPC). Its cement division currently operates modern, computerized process control cement plants with an aggregate capacity of 19.1 MnTPA. The company is in the midst of capacity expansion of its cement business in Northern, Southern, Central, Eastern and Western parts of the country and is slated to be 33.55 MnTPA cement producer by FY12 with Captive Thermal Power plants totaling 702 MW.

HOSPITALITYThe Group owns and operates 4 Five Star Hotels, two in New Delhi and one each in Agra and Mussoorie with a total capacity of 644 rooms. Another state-of-the-art resort and SPA is being set up in collaboration with SIX SENSES at Greater Noida.

REAL ESTATE AND EXPRESSWAYSThe Group is a pioneer in the development of India’s first golf centric Real Estate. Jaypee Greens - a world class fully integrated complex consists of an 18 hole Greg Norman Golf Course. Stretching over 452 acres, it also includes residences, commercial spaces, corporate park, entertainment and nature in abundance.

The Group is constructing 165 km long 6 lane Yamuna Expressway project from Noida to Agra and ribbon development on 6175 acres at five or more locations along the expressway for commercial, industrial, institutional, residential and amusement purposes, will also be undertaken as an integral part of the project. In addition to this, 1047 km long 8 lane Ganga Expressway from Greater Noida to Ballia (Eastern Uttar Pradesh) will also be developed by the Group which will be the largest private sector infrastructure project in India.

Education“People of resources must contribute towards making a better tomorrow for all”. Shri Jaiprakash Gaur ji, Founder Chairman of the Group firmly believes that quality education on an affordable basis is the biggest service which, as a corporate citizen, we can provide. Education is the cornerstone to economic development and the strength of 1 billion Indians can be channelized by education alone to build India into a developed nation.

The Group currently provides education across all spectrum of the learning curve through 17 schools, 3 ITI's, 2 colleges and 3 universities catering to over 20,000 students. The Jaypee education system plans to take the vision of service to society through quality education to another plane by expanding its infrastructure to provide education to a universe of 200,000 students in less than a decade from now.

SOCIAL COMMITMENTSThe Group has always believed in “growth with a human face” and to fulfill its obligations it has set up Jaiprakash Sewa Sansthan (JSS), a ‘not-for-profit trust’ which primarily serves the objectives of socio – economic development, reducing the pain and distress in society.

For over 4 decades now, Jaypee Group has supported the socio-economic development of the local environment in which it operates and ensured that the economically and educationally challenged strata around the work surroundings are also benefited from the Group’s growth by providing education, medical and other facilities for local development.

The Group also undertakes Comprehensive Rural Development Programme (CRDP) which covers a wide range of projects such as free medical camps, health check-ups for village school children, literacy campaigns like Balwadi’s for young boys and girls, safe drinking water supply, creating huge water reservoirs in different villages, self employment which includes tailoring classes for women and animal husbandry. Some other important activities undertaken include the renovation of old temples, other schools and hospital buildings in the adjoining adopted villages.

ENVIRONMENT“Every time we borrow from nature, we return it with interest.”

We at Jaypee believe that harmony between the man and his environment is the prime essence of healthy life and living. The sustenance of our ecological balance is therefore of paramount importance.

Efforts are made to conserve ecological balance without any harm done to the local flora and fauna. The Group has also taken green initiatives, afforestation drives, resources conservation, water conservation, air quality control and noise pollution control and created a “green oasis’’ amidst the limestone belt at the cement complex in Rewa.

Last but not the least, “as a Group we remain committed to strategic business development in infrastructure, as the key to nation building in the 21st century. We aim for perfection in everything we undertake and we have a commitment to excel. It is the determination to transform every challenge into opportunity; to seize every opportunity to ensure growth and grow with human face; that drives us”.

Entrepreneur of the year Award given by Ernest & Young

JAYPEE GROUP HAS A SBU FORM OF STRUCTURE:

© 2008 Prentice Hall, Inc. All rights reserved. 1–13

Levels of StrategyLevels of Strategy

CORPORATE LEVEL

CEMENT POWER TOWNSHIP

S

MRKTG OPS

STRENGTHExisting strong market grip.Brand Awareness due to effective marking communication.Superior Quality & high PUVEffective dealer networkMarket leader & trend setter

Finance

PRESENTATION OF JAYPEE GROUP’S SBU STRUCTURE IN THE FORM OF BCG MATRIX :

CATEGORY DESCRIPTION SBU

Question MarksHigh Market Growth ,Low Market Share

JPSK Sports Pvt. Ltd.Hospitality , Integrated townships, Expressways

Stars High Market Growth, High Market Share

Civil Engineering,Power

Cash Cows Low Market Growth , High Market share

Cement

Dogs Low Market Growth ,Low Market Share

Information Technology

© 2008 Prentice Hall, Inc. All rights reserved. 1–14

BCG ModelBCG Model

Probable BCG Matrix for Jaypee Group

Dogs

Information Technology

Cows

Cement

Question Marks

JPSK Sports Pvt. Ltd.

Hospitality,

Integrated townships,

Express ways

Stars

Civil Engineering,

Power

INDUSTRY ANALYSIS

CEMENT

An Overview

Cement is one of the core industries which plays a vital role in the growth and expansion of a nation. It is basically a mixture of compounds, consisting mainly of silicates and aluminates of calcium, formed out of calcium oxide, silica, aluminum oxide and iron oxide. The demand for cement depends primarily on the pace of activities in the business, financial, real estate and infrastructure sectors of the economy. Cement is considered preferred building material and is used worldwide for all construction works such as housing and industrial construction, as well as for creation of infrastructures like ports, roads, power plants, etc. Indian cement industry is globally competitive because the industry has witnessed healthy trends such as cost control and continuous technology upgradation.

The Indian cement industry is extremely energy intensive and is the third largest user of coal in the country. It is modern and uses latest technology, which is among the best in the world. Also, the industry has tremendous potential for development as limestone of excellent quality is found almost throughout the country.

Capacity clusters due to high cost of transportation of raw material

Cement and its raw materials namely coal and limestone, are all bulky items that make transportation difficult and uneconomical. Given this, cement plants are located close to both, sources of raw materials and markets. Most of limestone deposits in India are located in Madhya Pradesh, Rajasthan, Andhra Pradesh, Maharashtra and Gujarat, leading to concentration of cement units in these states. This has resulted in ‘clusters’. There are eight such clusters in the country and account for

81% of the cement capacity. There is a trade-off between proximity to markets and proximity to raw materials due to which some cement plants have been set up near big markets despite lack of raw materials.

The Indian cement industry has made significant progress upgrading and assimilating the latest technology. At present, more than 95% of the total capacity in the industry is based on modern, environment-friendly and energy efficient dry process technology

Current Scenario

The Indian cement industry is the second largest producer of quality cement. Indian Cement Industry is engaged in the production of several varieties of cement such as Ordinary Portland Cement (OPC), Portland Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement (PBFS), Oil Well Cement, Rapid Hardening Portland Cement, Sulphate Resisting Portland Cement, White Cement, etc. They are produced strictly as per the Bureau of Indian Standards (BIS) specifications and their quality is comparable with the best in the world.

The Indian cement industry is the second largest in the world. It comprises of 140 large and more than 365 mini cement plants. The industry's capacity at the beginning of the year 2009-10 was 217.80 million tonnes. During 2008-09, total cement consumption in India stood at 178 million tonnes while exports of cement and clinker amounted to around 3 million tonnes.The industry occupies an important place in the national economy because of its strong linkages to other sectors such as construction, transportation, coal and power. The cement industry is also one of the major contributors to the exchequer by way of indirect taxes.

Cement production during April to January 2009-10 was 130.67 million tonnes as compared to 115.52 million tonnes during the same period for the year 2008-09. Despatches were estimated at 129.97 million tonnes during April to January 2009-10 whereas during the same period for the year 2008-09,it stood at 115.07 million tonnes.

Over the last few years, the Indian cement industry witnessed strong growth, with demand reporting a compounded annual growth rate (CAGR) of 9.3% and capacity addition a CAGR of 5.6% between 2004-05 and 2008-09. The main factors prompting this growth in demand

include the real estate boom during 2004-08, increased investments in infrastructure by both the private sector and Government, and higher Governmental spending under various social programmes. With demand growth being buoyant and capacity addition limited, the industry posted capacity utilisation levels of around 93% during the last five years. Improved prices in conjunction with volume growth led to the domestic cement industry reporting robust growth in turnover and profitability during the period 2005-09.

Consumption Growth during 2008-09

Even during the economic slowdown in 2008-09, growth in cement demand remained at a healthy 8.4%. In the current fiscal (2009-10) cement consumption has shot up, reporting, on an average, 12.5% growth in consumption during the first eight months with the growth being aided by strong infrastructure spending, especially from the govt sector. The trends in all-India consumption and the growth in consumption in the major cement-consuming States over the last five years are presented in below table:

Growth in Cement Demand

Figures in Million Tonnes

2008-09 Apr-Nov 09

Domestic Consumption 178 100

Year-on-Year Growth (%) 8.4 12.5

Source: Cement Manufacturers Association (CMA), ICRA Research

Key Drivers of Cement Industry

Buoyant real estate market Increase in infrastructure spending Various governmental programmes like National Rural

Employment Guarantee Low-cost housing in urban and rural areas under schemes like

Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and Indira Aawas Yojana

Technological Advancements

Modernization and technology up-gradation is a continuous process for any growing industry and is equally true for the cement industry. At present, the quality of cement and building materials produced in India meets international standards and benchmarks and can compete in international markets. The productivity parameters are now nearing the theoretical bests and alternate means. Substantial technological improvements have been brought about and today, the industry can legitimately be proud of its state-of-the-art technology and processes incorporated in most of its cement plants. This technology up gradation is resulting in increased capacity, reduction in cost of production of cement.

Continuous technological upgrading and assimilation of latest technology has been going on in the cement industry. Presently 93 per cent of the total capacity in the industry is based on modern and environment-friendly dry process technology and only 7 per cent of the capacity is based on old wet and semi-dry process technology. There is tremendous scope for waste heat recovery in cement plants and thereby reduction in emission level. One project for co-generation of power utilizing waste heat in an Indian cement plant is being implemented with Japanese assistance under Green Aid Plan. The induction of advanced technology has helped the industry immensely to conserve energy and fuel and to save materials substantially.

India is also producing different varieties of cement like Ordinary Portland Cement (OPC), Portland Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement (PBFS), Oil Well Cement, Rapid Hardening Portland Cement, Sulphate Resisting Portland Cement, White Cement etc. Production of these varieties of cement conform to the BIS Specifications. Also, some cement plants have set up dedicated jetties for promoting bulk transportation and export.

Future Outlook

Growth in domestic cement demand is expected to remain strong, given the revival in the housing markets, continued Government spending on the rural sector, and the gradual increase in the number of infrastructure projects being executed by the private sector. Thus, the trend in demand growth seen during the last five years is expected to continue over the

medium term. Also, with Government targeting an over 8% GDP growth rate, cement demand should grow at 8-10% over the next few years.

The industry may be expected to add another 130-135 million tonnes of cement capacity in phases over the next four years, that is, during the period 2009-10 to 2012-13.

Major Players

Ultratech Cement Century Cements Madras Cements ACC Gujarat Ambuja Cement Limited Grasim Industries India Cements Limited Jaiprakash Associates and JK Cements. Holcim Lafarge Heidelberg Cemex Italcementi

Statistics

Cement Production & Despatches (P)

DescriptionJan-10

Dec-09 Jan-092009-10 2008-09

(Apr-Jan)

Cement Production

Cement Despatches

14.54

164.53

14.03

14.26

12.67

12.66

130.67

129.97

115.52

115.07

Source: Cement Manufacturers’ Association

Policy Initiatives:

Total Decontrol (1989)

In the year 1989, total decontrol of the cement industry was announced. By decontrolling thecement industry, the government relaxed the forces of demand and supply. In the next two years,the industry enjoyed a boom in sales and profits. By 1992, the pace of overall economic liberalization had peaked; ironically, however, the economy slipped into recession taking theCement industry down with it. For 1992-93, the industry remained stagnant with no addition to existing capacity

FDI Policy: the cement sector has been gradually liberalized. 100 per cent FDI is now permitted in the cement industry.

The Planning Commission for the formulation of X Five Year Plan constituted a 'Working Group on Cement Industry' for the development of cement industry. The Working Group has identified following thrust areas for improving demand for cement;

i. Further push to housing development programmes; ii. Promotion of concrete Highways and roads; and

iii. Use of ready-mix concrete in large infrastructure projects.

Further, in order to improve global competitiveness of the Indian Cement Industry, the Department of Industrial Policy & Promotion commissioned a study on the global competitiveness of the Indian Industry through an organization of international reputeKPMG Consultancy Pvt. Ltd. The report submitted by the organization has made several recommendations for making the Indian Cement Industry more competitive in the international market. The recommendations are under consideration.

Cement industry has been decontrolled from price and distribution on 1st March 1989 and de-licensed on 25th July 1991. However, the performance of the industry and prices of cement are monitored

regularly. Being a key infrastructure industry, the constraints faced by the industry are reviewed in the Infrastructure Coordination Committee meetings held in the Cabinet Secretariat under the Chairmanship of Secretary (Coordination). The Committee on Infrastructure also reviews its performance

GOVERNMENT CONTROLS

The prices that primarily control the price of cement are coal, power tariffs, railway, freight, royalty and cess on limestone. Interestingly, government controls all of these prices.

TAX STRUCTUREThe Indian Cement industry is one of the highest taxed one. At the price level of Rs. 200 per bag, total tax burden, as a percentage of ex-factory realization works out to 45%. The cement industry has been continuously representing to the Government for more rational tax regime. The Central Government in its budget presented on 28th February 2007, for the first time, announced a dual excise duty structure for cement industry. Excise duty was increased to Rs. 600 per MT on cement with Retail Sale Price (RSP) exceeding Rs. 190. per bag and Rs. 350 per MT for cement with RSP of Rs.190 per bag and below as against specific excise duty of Rs. 400 per MT so far. This dual structure not only enhanced taxation burden further on the industry but also complicated its effective implementation. Government, however, having realized difficulty of the industry and the consequent burden to the consumer, has subsequently revised the structure w.e.f. 31st May 2007. It has now levied an advalorem duty of 12% on cement with. RSP exceeding Rs. 190 per bag while retaining specific duty of Rs. 350 per MT on cement sold Rs. 190 per bag and below.

COMPITITION ANALYSIS

Major domestic players

ACC Limited

ACC Limited is the oldest and the largest cement manufacturer in the country. The company has a total consolidated capacity in the region of 19 MT (million tonnes) and commands a near 12 per cent industry capacity share. With 14 plants and a 9,000 strong dealer network, ACC is one of the few companies to have a pan-India presence. It is particularly strong in the northern and eastern regions. Gujarat Ambuja (GACL), one of the leading players in the industry, in consortium with Switzerland's Holcim, has acquired over 34 per cent stake in the company.

Gujarat Ambuja Cements Ltd.

Gujarat Ambuja Cements Ltd was set up in 1986 with the commencement of commercial production at its 2 million tonne plant in Chandrapur, Maharashtra. The group has clinker manufacturing facilities at Himachal Pradesh, Gujarat, Maharashtra, Chhattisgarh, Punjab and Rajasthan. The company has a strong foothold in the northern and western markets. Gujarat Ambuja is India's largest cement exporter and one of the most cost efficient firms.

Ultratech Cement Limited

Ultratech (ULT), an Aditya Birla Group Company and a 51 per cent subsidiary of Grasim, has a consolidated capacity of 17 MT, thus making it the second largest cement producer in the country. The company has presence in western, eastern and southern regions. It has 5 integrated plants, 5 grinding units, and 4 terminals – three in India and one in Sri Lanka. It exports over 3 MT per annum, which is about 30 per cent of the country's total exports (cement and clinker).

India Cements

India Cements is a southern player with an installed capacity of about 9 MTPA. The company is the largest producer of cement in the South and a leading exporter. The company has access to huge limestone resources and plans to expand capacity by de-bottlenecking and optimization of existing plants as well as by acquisitions. The company has 7 plants out of which 3 are in Tamilnadu and 4 in Andhra Pradesh. The company caters to all major markets in South India and Maharashtra. The company’s product portfolio comprises of Ordinary Portland Cement (OPC) and Pozzolona Portland Cement (PPC) in the ratio of 53.4 per cent and 46.6 per cent. However, the company is increasing its focus on blended cements.

FY’2006 (‘000 tonnes)

CompanyInstalled Capacity

Production

ACC 18,640 17,902

Gujarat Ambuja 14,860 15,094

Ultratech 17,000 13,707

Grasim 14,115 14,649

India Cements 8,810 8,434

JK Group 6,680 6,174

Jaypee Group 6,531 6,316

Century Textiles

6,300 6,636

Madras Cements

5,470 4,550

Birla Corp. 5,113 5,150

Lafarge 5,000 4,573

Source: ICRA

Major international Players

Holcim: Swiss cement major Holcim has picked up 14.8 per cent of the promoters' stake in Gujarat Ambuja Cements (GACL). In January 2006, Holderind Investments (Holcim Mauritius), an indirect, wholly-owned subsidiary of Holcim, acquired 200 million equity shares of GACL at a price of US$ 2.28 per share from the promoters. Earlier, Holcim had entered into a strategic alliance with GACL, and acquired a 67 per cent controlling stake in Ambuja Cement India. Through this holding company, Holcim acquired a majority in Ambuja Cement Eastern and a substantial stake in ACC. Holcim's acquisition has led to the emergence of two major groups in the Indian cement industry, the Holcim-ACC-Gujarat Ambuja Cements combine (capacity of 33.5 mt) and the Aditya Birla group through Grasim Industries and Ultratech Cement (combined capacity of 31.1 mt).

Lafarge: The French cement major has acquired the cement plants of Raymond and Tisco in the recent past, and has an installed capacity of 5 mtpa.

Its current cement operation comprises a modern split location cement facility located at Sonadih (District Raipur, Chhattisgarh) and at Jojobera (District Singhbhum, Jharkhand) and an integrated cement facility located at Arasmeta (District Janjgir-Champa, Chhattisgarh). It has an extensive dealer network in the eastern states of West Bengal, Jharkhand, Bihar, North-Eastern States and Chhattisgarh. Its products are available in parts of Orissa, Madhya Pradesh and Vidarbha (Maharashtra). It uses India as a base to export high quality clinker and cement to Bangladesh and Nepal.

Italcementi: Italy based Italcementi has acquired a stake in the K.K. Birla promoted Zuari Industries' cement plant in Andhra Pradesh, with a capacity of 3.4 mtpa.

Heidelberg: Heidelberg Cement too has entered into an equal joint-venture agreement with S P Lohia Group controlled Indo-Rama Cement. Heidelberg Cement is expected to take a 50 per cent controlling stake in Indo-Rama's grinding plant of 0.75 mtpa at Raigad in Maharashtra. Heidelberg is also taking over Mysore Cement of S K Birla group at a consideration of US$ 93 million.

Mergers and Acquisitions

The booming demand for cement, both in India and abroad, has attracted global majors to India. In 2005-06, four of the top-5 cement companies in the world have entered India through mergers, acquisitions, joint ventures or Greenfield projects. These include France's Lafarge, Holcim from Switzerland, Italy's Italcementi and Germany's Heidelberg Cements. While Lafarge is investing over US$ 500 million in India to expand capacities by six million tones, Italcementi will invest US$ 174 million over the next two years in various Greenfield and acquisition projects.

The Indian cement industry has also witnessed a flurry of mergers and acquisitions within the domestic players, bringing smaller players under the umbrella of larger companies, and larger companies coming under the umbrella of global players like Holcim and Heidelberg.

The consolidation of cement companies has led to the top 5 cement companies dominating cement production in India. Major M&As:

Gujarat Ambuja picking up 14% in ACC Grasim acquiring cement business of L & T forming Ultratech Holcim taking minority stake in GACL and 67% stake in ACC Heidelberg Cement acquiring 50% in Indorama Cement

Global players Indian players

Company

Co. acquired

/stake

Year of

acquisition

Company

Co. acquired

/stake

Year of

acquisition

Holicam

ACC (34%)Ambuja Group

20052006

Gujarat Ambuja

DLF CementModi Cement

20001998

(23%)

Lafarge

Tisco’s cement unitRaymond’s cement unit

19992001

Grasim

Indian RayonShri DigvijayDharni cement

199919991998

Italcementi

Zuari cement (50:50 JV)

2001Ultratech

Narmada cement

1999

Heidelberg Cement

Indorama (50:50)Mysore Cement (51%)

20052006

India Cements

Raasi CementShree Vishnu CementVishakai cement Yerraguntla Cement

1999199919981998

Source: Care Research

Big companies dominate cement manufacturing

ACC as the largest player with a capacity of 18.64 mtpa. UltraTech CemCo Ltd. now occupies the second slot with a

capacity of 17 mtpa (which includes 1.5 mtpa of subsidiary Narmada Cement).

The Gujarat Ambuja group has emerged as the third largest player with a capacity of 15 mtpa.

Grasim ranks fourth with a capacity of 14 mtpa. Other leading players include India Cements, Jaypee group,

Century Textiles, Madras Cements, Lafarge, and Birla Corp

Capacity Million Tonnes (MT)

Company FY07

ACC 19

Gujarat Ambuja 15

Ultratech 17

Grasim 14

Total 65

Industry 160

% of Industry 40%

Source: Equity master

MARKET SHARE OF MAJOR COMPANIES OVER THE YEARS:

Over the years the relative share of major players has remained more or less same. In FY07, ACC acquired the highest market followed by GACL, Grasim and Ultratech. However, Ultratech has lost its second position in FY02 and slipped to fourth place in FY07.

Company Name 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

ACC 12.75% 13.24% 13.57% 13.25% 12.71% 12.00%Guj. Ambuja Cement 9.65% 10.70% 11.28% 11.54% 10.71% 10.63%Grasim Ltd 10.00% 10.54% 10.70% 10.49% 10.40% 9.90%Ultra Tech Cem Co Ltd 11.60% 10.81% 10.42% 10.31% 9.73% 9.46%India Cement Ltd 6.16% 5.20% 5.43% 5.19% 5.99% 5.66%Jaypee 4.17% 4.21% 4.02% 4.33% 4.48% 4.57%Century Textile Ltd 5.05% 4.70% 4.65% 4.84% 4.71% 4.36%J K Group 4.82% 4.53% 4.49% 4.60% 4.38% 4.19%Madras Cement 3.02% 3.08% 3.02% 2.92% 3.23% 3.50%Biral Corpn. Ltd 4.05% 4.10% 4.08% 4.00% 3.66% 3.40%Lafarge 3.77% 3.35% 3.21% 3.50% 3.25% 3.02%Others 24.96% 25.53% 25.13% 25.02% 26.75% 29.31%Total 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Source:www.rrfinance.com

REFLECTION OF THE INDUSTRY THROUGH MICHAEL PORTER’s FIVE FORCES MODEL

Supply The demand-supply situation is tightly balanced with the latter being marginally higher than the former.

Demand Housing sector acts as the principal growth driver for cement. However, in recent times, industrial and infrastructure sector have also emerged as demand drivers for cement.

Barriers to entry

High capital costs and long gestation periods. Access to limestone reserves (principal raw material for the manufacture of cement) also acts as a significant entry barrier.

Bargaining power of suppliers

Licensing of coal and limestone reserves, supply of power from the state grid and availability of railways for transport are all controlled by a single entity, which is the government. However, nowadays producers are relying more on captive power, but the shortage of coal and volatile fuel prices remain a concern.

Bargaining power of customers

Cement is a commodity business and sales volumes mostly depend upon the distribution reach of the company. However, things are changing and few brands

have started commanding a premium on account of better quality perception.

Competition Due to large number of players in the industry and very little brand differentiation to speak of, the competition is intense with players resorting to expanding reach and achieving pan India presence.

SWOT ANALYSIS OF THE CEMENT INDUSTRY:

STRENGTHS High Entry Barriers

WEAKNESS Dependence on government. Increasing dependence on imported

coalOPPORTUNITIES Growth from newer products - Ready

to mix concrete Growing Economy

THREATS Rising input cost,intrest rate,substitut

GROWTH & OPERATION TRENDS:

Over the last few years, the Indian cement industry witnessed strong growth, with demand reporting a compounded annual growth rate (CAGR) of 9.3% and capacity addition a CAGR of 5.6% between 2004-05 and 2008-09. The main factors prompting this growth in demand include the real estate boom during 2004- 08, increased investments in infrastructure by both the private sector and Government, and higher Governmental spending under various social programmes. With demand growth being buoyant and capacity addition limited, the industry posted capacity utilization levels of around 93% during the last five years along with shortfalls in supply, thereby increasing the pricing power available to the industry. Improved prices in conjunction with volume growth led to the domestic cement industry reporting robust growth in turnover and profitability during the period 2005-09

Strong consumption growth driven by secular growth across sectors:

The Indian cement industry reported a strong CAGR of 9.3% during the period 2004-05 to 2008-09. Even during the economic slowdown in 2008-09, growth in cement demand remained at a healthy 8.4%. In the current fiscal (2009-10) cement consumption has shot up, reporting, on an average, 12.5% growth in consumption during the first eight months with the growth being aided by strong infrastructure spending, especially from the govt sector. The trends in all-India consumption and the growth in consumption in the major cement-consuming States over the last five years are presented in Table 1 and Chart 1.

Table showing growth in cement demand over years(All India):

In million tonnes

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Apr- Nov 09

Domestic Consumption

99 108 114 123 136 149 164 178 100*

Year-on-Year Growth (%)

9.7 8.7 5.8 8.1 10.1 9.9 10.1 8.4 12.5

Source: CMA, ICRA RESEARCH

Capacity additions to impact utilisation levels over the medium term :

Trend in cement capacity utilisation (All India):

Source: CMA, ICRA RESEARCH

Tabular Representation of the above chart:

In million tones

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Apr-Nov 09

Domestic Consumption

99 108 114 123 136 149 164 178 100*

Year-on-Year Growth (%)

9.7 8.7 5.8 8.1 10.1 9.9 10.1 8.4 12.5*

Export 5 7 9 10 9 9 5 3 3* Capacity for the year

130 137 144 154 153 158 176 201 125*

Year-on-Year Growth (%)

14 5 6 6 0 3 11 15 16.5*

Surplus/(Deficit)

26 22 22 20 9 0 7 20 22

Capacity Utilisation (%)

80 84 85 87 94 100 96 90 83

Almost all the major players in the Indian cement industry announced capacity expansion programmes 2005-06 onwards, being encouraged by the improving economic outlook, buoyant demand conditions, strong industry profitability, and anticipated supply constraints. Such announcements continued all the way till mid-2008-09 when the economic conditions started deteriorating. The expansion projects have now started coming on stream (the gestation period being of 24-36 months), and as in March 2009, the country had an installed capacity of around 209 million tonnes, of which around 43 million qtonnes were added during the last two years alone. A part of the capacity addition over the last two years also came from debottlenecking of existing capacities and increase in the share of blended cement. According to ICRA’s estimates, the industry may be expected to add another 130-135 million tonnes of cement capacity in phases over the next four years, that is, during the period 2009-10 to 2012-13. Of the announced capacity additions, region-wise, SR is expected to account for almost 42% (highest share) of the additions proposed, followed by NR (around 29%). Capacity addition in WR and ER, which is expected to be 17% and 12% of the total announced additions respectively, has been constrained primarily by the lack of availability of limestone reserves in these regions. Of the total capacities announced, almost 63% are scheduled for commissioning in 2009-10 and 2010-11, which means capacity additions, would get bunched up during this period. Going forward, ICRA expects the pace of capacity addition to slow down in 2011-12, which should stabilize capacity utilisation levels that year onwards. However, should cement manufacturers continue with capacity additions, recovery in utilisation may get delayed. Charts 3 to 6 bring out the distribution of the scheduled capacity additions over various time periods and regions, taking into account the announcements made by the various industry players so far.

Chart 3 – All India Quarterly capacity addition

Source: CMA, ICRA Research

Chart-4: All India Yearly capacity Addition:

Source: CMA, ICRA Research

Chart-5: Region Wise Capacity Distribution

Source: CMA, ICRA Researc

Chart-6: All India effective capacity addition

Source: CMA, ICRA Research

As Charts 4 and 6 show, a significant part of the announced capacities is scheduled for completion in 2009-10 and 2010-11. The impact of the resulting increase in supply has already started showing up in the capacity utilisation levels, which declined to around 80% in November 2009 (83% for April-November 2009) from around 90% during 2008-09 and 96% during 2007-08. The inventory in the system (cement plus clinker) has also seen a build-up (Chart 8), rising to 74% of monthly dispatches in November 2009 from 36% in March 2009.

Source: CMA, ICRA Research

Chart-8: Inventory Levels as % of monthly dispatch

Source: CMA, ICRA Research

PAST SCENARIO:

The cement story was in the limelight over the past few fiscals owing to the fact that the demand grew at a faster pace compared to supply and therefore, cement prices remained firm. The need to build up infrastructure to sustain a 9% GDP growth, also kept investors keen on the sector.

Prior to FY04, the sector was looming in the darkness. However, the turnaround post FY04 prices marched northwards leading to significant improvement in the companies’ profitability owing to strong increase in demand with no major capacity additions taking place. With the increased cash flows companies started cleaning their balance sheets and lined up huge expansion plans to cater to increasing demand for the commodity and witness higher realisations.

However, ultimately cement is a commodity and has to pass through the cyclicality. The cement industry is highly cyclical in nature and depends largely on the economic growth of the country. There is a high degree of correlation between the GDP growth and the growth in cement consumption. Hence, if the GDP growth slows down, so should the demand for cement.

So will the sector continue to be in limelight?If the Indian policy makers have to put the country on a high GDP growth trajectory, sizeable investments in infrastructure will have to be made, thus boosting the demand for cement. With the government going in for 25% concretization of roads, six-laning 6,500 km Golden quadrilateral and selected National highways, four-laning and widening of roads, constructing new rural roads, capacity addition of major ports, additional 70,000 MW generation of power capacity, upgrading and modernising of railways and ports, improving irrigation facilities etc is likely to translate into higher demand for cement. However, how will the investments be funded remains a question?

The growth of the economy is reflection of the growth of various sectors. Having said that, the slowdown of IT/ITES industry, slower housing loan off take with hardening of interest rates and an overall slowdown in employment is likely to have an impact on the cement sector. The cooling off of the growth in the housing sector, one of the major growth drivers of the cement industry - accounting for over 50% of the demand

for cement, is expected to turn the tide in terms of the demand for cement.

Nonetheless, rather than the demand for cement, what worries us is the reverse trend of the all time high realisations once the announced capacities come on stream. It is not the demand that where the problem is, it is the supply side concerns.

How have things moved?

To understand the same let’s take a look at the sector fundamentals. The industry capacity has grown by merely 6.4% in past 12 years from 78 MT in FY95 to almost 165 MT in FY07. While the consumption during the same period reported growth of almost 9% and production grew at a tad lower rate of 8.5%. Thus, demand growing at a faster pace compared to supply led to firm prices.

Cement being a cyclical industry goes through phases of ups and downs, and accordingly, companies’ realisations are affected. The surplus position had resulted in significant pressure on price realisations in the past. The cyclical trough in the late-1990s had a severe impact on the industry financials and many companies were referred to the BIFR.

However, the favorable pricing scenario witnessed by the sector post FY04 has resulted into increased profitability for the cement companies irrespective of their scale and efficiency in operations. The things were never so good for the Indian cement industry in the past. With cement prices having ruled firm on the back of a favorable demand-supply scenario (up by almost 20%+ during CY06 / FY07 owing to waning

Source: Cement Manufacturers' Association

demand supply gap), cement manufacturers benefited significantly. Floods that hit the western parts of the country in mid- 2005, 2006 and 2007 hardly had any impact on the sector’s growth on account of robust demand that grew at the rate of around 10% YoY. Besides the higher realisations, few companies have also managed to lower costs, by improving operational efficiencies.

The hike in prices is not only the result of demand supply mismatch but also owing to consolidation in the industry. Consolidation of capacities over the years has seen UltraTech, Grasim, and Ambuja Cements emerge as the leading players apart from ACC. In FY08, the top 4 companies account for 40% of the total industry capacity. The booming sector has also witnessed top 4 MNC’s foraying into the Indian markets through acquisition of stake, companies and setting up greenfield project.

In the budget (2007-08), the government in order to rationalise prices and contain inflation had hiked excise duty on a deferential basis, rationalised import duty and reduced countervailing duty to nil. The moves were not expected to have significant impact on the sector as being a bulk commodity transporting across regions is a problem and hike in excise duty is generally passed on.

However, if we look at the chart, it highlights, the moves even though not resulting in reduction in prices, have resulted in price stabilization during July to November 2007. Now one may argue that monsoon period is a slack season. However, the year before even in monsoon season prices continued to march northwards. The prices again started inching upwards post November 2007 till December 2007 with consumption exceeding supply and no major capacity addition. Thus, movement of price reflects demand supply situation.

The hike in price on year-on year basis in January 2008 works out to 10%. This highlights that the hike in prices has moderated, which earlier reported growth of 15% to 30%, with the capacity built up and imports on a miniscule basis.

What to expect?

Though it is debated time and again whether the domestic economy is strong and is unlikely to face the impact of slowing down of major economies across the globe, the fact remains that India is no more insulated to global trends. The slowdown may not have severe impact on the growth of the economy immediately but the investments required to fund the huge capex plans, necessary to give a further fillip to the growth of the economy, might get impacted. This may result in the economy growing at a slower rate than expected, in turn impacting the current robust growth of the cement sector.

GOVERNING BODY

CEMENT MANUFACTURERS’ ASSOCIATION

Cement Manufacturers' Association (CMA), the apex body of cement manufacturers in India was established in 1961. It is a unique body in as much as it has both the private and public sector cement companies as its members. It is a registered body under the Societies Registration Act. Its registered office is in New Delhi, Corporate Office in Noida and a Branch Office in Mumbai. CMA hopes to open a Branch Office in Hyderabad shortly.

MAIN OBJECTIVES To promote the growth of the cement industry. To protect the consumer interests. To identify newer applications of cement usage. To establish contacts with similar bodies abroad for exchange of information, data, publications

etc.

MISSION

CMA acts as a bridge between Indian cement Industry and the Government. It closely works with government, various Regulators on policy issues, enhancing efficiency, competitiveness, growth and development opportunities for Indian cement industry. As a representative organization of cement industry, CMA articulates the genuine, legitimate needs and interests of the cement industry. Its mission

is to impact the policy and legislative environment so as to foster balanced economic, industrial and social development in the cement industry.

•  Core competencies

    -  Forum for continuous government-industry interface for evolving a shared vision-on cement industry issues.

    -   Specialized Think Tank and Committees to address the present and futuristic issues and challenges with          respect to the cement industry.

    -   Database to provide information to general public, industry and government.

Services Provided by CMA To Government

CMA plays a significant role in projecting the cement industry to the Government and in coordinating various activities in respect of formulation of Government policies for the cement industry through its continuous dialogues and interactions.

Represents on all major policy making bodies concerned with cement.

Supplies desired information to all concerned Ministries like Commerce, Railways, Coal, and Planning Commission.

Supplies material for replies to Parliament Questions. Helps in preparation of important Government documents

concerning cement like Five Year Plans, Special Reports whenever needed etc.

Submits to the Ministry of Industry Weekly Reports on Infrastructure (Coal, Railways, and Power) for Cabinet Secretariat meetings.

Submits information to Department of Industrial Policy and Promotion (DIPP) on various aspects whenever called for.

To Industry

CMA identifies and strengthens industry’s role in the economic development of the country.

Provides up-to-date statistical data/information to the industry and other agencies.

Interacts for Industry's problems with the Government and co-ordinates various activities with bodies like NCB, FICCI, ASSOCHAM, CII, CAPEXIL, etc.

Focuses infrastructural problems (Rail, Coal, Power, etc) and suggests suitable measures for their solution through representations and meetings with concerned authorities from time to time.

To Consumers

Creates awareness and supports industry efforts on quality, environment, consumer protection and similar other issues.

CMA disseminates technical information on various cements produced and their use and also recommends the right variety of cement for different applications.

Provides technical advice on concrete roads. Creates awareness about eco-friendly packaging

ORGANISATIONAL STRUCTURE OF CMA:

DETAILED STUDY/ RESEARCH PROJECT

PRODUCT MIX

Jaypee cement complies with IS: 8112-1989 for 43 grade ordinary Portland cement & surpasses IS: 1489-1991, the laid down BIS standards for Fly ash based PPC cement.

Prime Features of Jaypee Cement are: High compressive strength & high rate of strength gain.

Superfine particles of cement provide immaculate finish to the structure.

Cement provides unsegregated concrete of better integrity. Impermeable concrete for durable structure. Resistance under aggressive environment even in coastal areas. Resistance to corrosive attack on steel reinforcement. Resistance to time leaching. Low heat of hydration – crackles construction leads to

reduction of shrinkage & swelling. Modules of elasticity are high especially at later stages.

Improved bondage of concrete to steel.

ORGANISATION: JAIPRAKSH ASSOCIATES LIMITED

OBJECTIVE : To find out the standing of Jaypee cement in the market in terms of price, market capture & the attitude/behavior of the customers/dealers towards the company.

METHODOLOGY: Primary research through personal interviews of dealers/wholesalers etc, market survey & questionnaires.

RESPONDENTS : Cement dealers/ wholesalers/ consignees of Allahabad & adjoining markets.

SAMPLE PLAN :

Universe All cement shops of Allahabad & suburbs.

Frame Exclusive & multiple brand dealers

Sample Size 75 respondents.

Sampling Method Random

Contact Method Personal interviews, survey, questionnaire

QUESTIONAIRE PREPARED:

JAIPRAKASH ASSOCIATES LIMITED

Jaypee Rewa Bhawan 45/21, Muir Road, Allahabad -2110002(U.P.) Ph : 0532-2266002 , 0532-2266003 , 0532-2266013

DEALER’S QUESTIONAIRE

1 Dealer’s Name : _______________________________________________

2 Address : _______________________________________________

________________________________________________ ________________________________________________

3 Contact No. ____________________________

4 Contact Person’s Name ___________________________________

5 Are you a authorized Dealer / Wholesaler: YES or NO

6 Are you a retailer or wholesaler? _______________________ 7 Do you deal in exclusive brand or multiple brands? _____________________

8 Which all brands do you sell ________________________________________________________________________

________________________________________________________________________

9.COMPANY’S NAME

WSP RSP Profit Margin

ACC

JAYPEE

PRISM

MAIHER

OTHERS

10.COMPANY’S NAME

DEMAND/MONTH ORDER QUANTITY/MONTH

LEAD TIME/ORDER

ACC

JAYPEE

PRISM

MAIHER

OTHERS

11.Reason why do you sell a particular cement brand:

COMPANY Availability

Technical Support

Schemes Provided

Profitability

Timeliness in order fulfillment

Customer’s Demand

Rel’ship

Value for money

ACC JAYPEE PRISM MAIHER OTHERS

12. How do you rate the communication of price by different companies?

COMPANY Clear Ambiguous No Clarity Not Fixed

ACCJAYPEEPRISMMAIHEROTHERS

13. When do you receive the bills from the companies?

COMPANY Frequency Comments/Remarks

ACCJAYPEEPRISMMAIHEROTHERS

14. How do you rate the company in terms of redressal of grievances?

COMPANY Excellent Good Not Satisfactory

Comments/Remarks

ACCJAYPEEPRISMMAIHEROTHERS

15 Does the promotions made by the company influence customer demand : YES/NO : ____________________________________________

16. Do you get the information of the company’s schemes correctly & timely?

YES / NO: ______________________________________________________ ______________________________________________________

17. Highlight the important schemes provided by the other companies & you want JAYPEE to provide the same

________________________________________________________________________

18. Which is the most preferred brand by the consumers. ACCJAYPEEPRISMMAIHEROTHERS _______________

Reason: ___________________________________________________________

19. Customer’s perception & attitude for the company: ________________________________________________________________________

________________________________________________________________________

20. Do you think JAYPEE cement is a value for money: YES / NO

21. Are you satisfied: YES / NO

22. Scope of Improvement for the company:

________________________________________________________________________

(To be filled by the surveyor)

A. Whether the promotional physical evidences were displayed in an appealing & adequate manner.

i. Not Displayedii. Adequate but not Appealingiii. Appealing but not adequateiv. Perfect

B. Was the dealer board in place? a. YES b. NO

C. Was the authorized dealer certificate in place?

a. YES b. NO

BACKGROUND

The major purpose of marketing is to satisfy human needs by delivering products of various types to buyers when and where they want them and at a reasonable cost.

The “when and where” is the function of Distribution

Provide the product or service offered to target customer segments in the most convenient way at the most economic cost to the supplier.

You have a product

• With good performance qualities• With a competitive consumer price

The Marketing System

Manufacturers and producers

Marketing intermediariesSales Promoters Dealers, StockiestWholesalersRetailers/Consignees

End users

Consumer Industrial-institutional

Facilitatingorganizations

FinancialTransportationAdvertisingOther

Agriculture and raw materials suppliers

• With a distinctive brand image (effectively communicated to a clearly defined target group)

• And have thus built a reasonable consumer franchise• But is that all….• What about trade?

The above discussion clearly states the importance of distribution channel for any business, in our case the channel comprises of the sales promoter, dealers, stockiest, wholesalers, retailers, consignees & the customers.It is therefore imperative to build & sustain cohesive relation with the members of the distribution channel because it is them only who bridge the gap between the JAYPEE CEMENT & the END USER.

DISTRIBUTION PURPOSE- Reaching selected target groups.- Realizing certain turnover & profit goals.

Distribution or Place mix

JP

Cement

CONSUMER

DISTRIBUTION

This survey was conducted keeping in mind the following secondary objectives also:

General & specific problems of dealers Ways to cater them in a better way Finding out the area of negligence Accessing the service level & ways of service of other

companies Scope for improvement

WHY TAKE THE TRADE INTO ACCOUNT?

BECAUSE: You can’t get your product reach to the

consumer without passing it through trade

As there are so many competitors the trade can reject or neglect your product, giving preference to the competitor’s brand

Trade Structure of cement companies in Allahabad: 4*10=40 transactionsNote: Dealers/WS/Retailers are multibrand

Here the dealers/retailers can switch to the other competitive brand anytime:THEREFORE: You have to know the trade & the

trade structureAdapt each element of the marketing mix

also to the needs of the trade

JAYPEE’s DISTRIBUTION CHANNEL:

As cement is a bulky product which involves a lot of freight charges therefore it is always advisable to have a dump house or a small plant near the market which reduces the freight charges.Therefore Jaypee cements one plant & one Dump point in the Allahabad region. They are:

SADHWA PLANTGHOORPUR DUMP

There are two more dumps which are maintained by the sales promoters:They are:SITA & CO. DUMPKRISHNA AGENCIES

Diagrammatic representation of JAYPEE’s distribution channel:

The above diagram illustrates the company’s distribution channel.It says that if any dealer places an order hen he can receive the order either from the company’s dump or sales promoters dump.

Wholesaler1

Consignee (Type 1)

dealer1

dealer1

Wholesaler 1

Consignee(Type 1)

SADHWA & GHOORPUR or Sales promoter’ dump office

WEAKNESS• Unsatisfied dealers• Malpractices practiced by the dealers.• Late intimation of schemes.• Price fluctuations.• Price communication• Billing• Less promotional aids given to dealersDiary, calendar, key chains, T-shirts

Whereas, a wholesaler can get his order either from the dealer or directly from any of the dump.Similarly can get his order either from his consigner (dealer/WS) or directly from any of the dump.The freight charges are borne by the order placer.

DEALER MOTIVATION/EXPECTATION:

Part of family- Good understanding- Clear communication- Dealer training - Factory visit- Dealer meets- Display aids- Merchandising- Schemes: - training prog., contests

If the above expectations of the dealers are met by Jaypee Cement then the dealers are supposed to fulfill the following roles in there part:

DEALERS ROLE/COMPANY’S EXPECTATIONS:

• Delivery• Market coverage• Local promotion/activity• Credit/financing consumer• Intermediate financer• Source of feedback• Marketer-consumer interface• Service support: pre/during/post sale• Consumer complaints• Fulfillment of Targets• Warehousing• Risk Bearing• Market Information• Reducing Freight charges by ordering in bulk.

DATA ANALYSIS

After covering the 75 respondents in Allahabad & adjoining districts which included mostly the dealers, some wholesalers & some retailers/consignees the following analysis was possible:

Table-1 (No. of dealers of different brands in the market surveyed)

COMPANY No. of dealers surveyed

JAYPEE 40PRISM 38BIRLA 10MYCEM 5ACC 3MAIHER 3

Selection of dealers/respondents was random from the list provided to me by the Honorable Regional Manager (Mktg) Mr.C.K. Vashishtha.Clearly Jaypee & Prism are ruling the Allahabad market. Here the noteworthy point is that the respondents contacted were comprised of both who were dealing in exclusive brand as well as multiple brands.

Chart-1 No. of dealers covered in the market:

0

5

10

15

20

25

30

35

40

45

JAYPEE PRISM BIRLA MYCEM ACC MAIHER

Table-(No. of non dealers covered)

COMPANY No. of non dealers coveredJAYPEE 13PRISM 10BIRLA 2MYCEM 3ACC 2MAIHER 3

Some of the non dealers are purposely covered so that a fair idea can be taken out of the distribution channel & the functioning, problems of each member individually & rest are as a result of any authorized dealer selling some other brand as well without taking the dealership of that brand.

To access the market share of Jaypee cement in the Allahabad & adjoining market a close analysis of the quantity sold of different cement brands in the Allahabad & adjoining markets is very essential.Therefore the following table gives a fair idea of the number of dealers selling different quantities of cement.

Table 2Company No. of dealers who sell the following MT of cement/month

0-100 100-200 200-300 300-500 500&above

JAYPEE 15 17 10 6 5PRISM 28 10 4 4 2BIRLA 6 3 3 0 0MYCEM 4 3 1 0 0ACC 2 2 1 0 0MAIHER 2 1 3 0 0

Though there is a cut throat competition regarding the number of dealers between Jaypee & Prism Champion, but the table reveals that the volume of Jaypee cement reaching to the customers is much more than Prism as the maximum number of dealers of Prism are selling small quantity of cement unlike Jaypee’s dealers who are scattered in all quantity ranges.The following graph will give a more clear picture of the market share of the different companies.

Chart-2 (No. of dealers selling different quantities of cement)

0

5

10

15

20

25

30

0-100 100-200 200-300 300-500 500&above

Quantity sold

No

. o

f d

eale

rs

Company

JAYPEE

PRISM

BIRLA

MYCEM

ACC

MAIHER

These statistics gave the absolute figure but the real picture can be drawn when the relative comparison is possible. Therefore percentage representation of data is given below:

Table-3 (% of dealer selling particular quantity of cement)Company %. of dealers who sell the following MT of cement/month

0-100 100-200 200-300 300-500 500&above

JAYPEE 28% 32% 19% 12% 10%PRISM 58% 21% 8% 8% 4%BIRLA 50% 25% 25% 0 0MYCEM 50% 37% 12% 0 0ACC 40% 40% 20% 0 0MAIHER 33% 17% 50% 0 0

Though there is a cut throat competition regarding the number of dealers between Jaypee & Prism Champion, but the table reveals that the volume of Jaypee cement reaching to the customers is much more than Prism as the maximum number of dealers of Prism are selling small quantity of cement unlike Jaypee’s dealers who are scattered in all quantity ranges

Chart-3 (% of dealer selling particular quantity of cement)

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0-100 100-200 200-300 300-500 500&above

Quantity sold

% o

f d

eale

rs

Company

JAYPEE

PRISM

BIRLA

MYCEM

ACC

MAIHER

Obviously Prism has more dealers than Jaypee in the 0-100 & 100-200 segments but the volume of sale of Jaypee is much higher as it dominates every competitor in the large quantity range(s).

Volume of PRISM < Volume of JAYPEE

Coming on to the price positioning of different cement brands operating in Allahabad & adjoining regions, a fair idea was made by me while surveying the market but we can have the exact picture of the prices of different cement brands by having a look of the following table & chart.

Table-4 Price per cement bag of different brandsCompany Price/50k.g. bag

JAYPEE 243PRISM 240BIRLA 237MYCEM 238ACC 260MAIHER 237

Here the noteworthy point is these prices are the prices at which a dealer gets the bag from the company after deducting the target discount (only if

the target is fulfilled. In case the target is not fulfilled by the dealers he will get the bag at the following prices.Table-5Company Price/50k.g. bag

JAYPEE 250PRISM 245BIRLA 243MYCEM 244ACC 265MAIHER 243

This table shows that Target discount is a great motivator for the dealers as the difference in the cost of a cement bag has increased significantly if they don’t achieve the target on time.Chart-4 Price at which a dealer receives a cement bag (in case he achieves the target)

0 50 100 150 200 250 300

Company

JAYPEE

PRISM

BIRLA

MYCEM

ACC

MAIHER

Pri

ce/b

ag f

or

dea

lers

Series2

Series1

Clearly price/bag is the most for ACC cement followed by Jaypee, Prism, Mycem, Maiher & Birla goldBut the noteworthy point is that the market share of Jaypee is way ahead of ACC.After surveying the market I can culminate that Jaypee is the Price setter for brands like Prism, Mycem, Maiher & Birla. Any change in the price of Jaypee makes the other brands to alter there prices to sustain in the competition.

Chart-5 Price/bag in case the target is not met

0 50 100 150 200 250 300

Company

JAYPEE

PRISM

BIRLA

MYCEM

ACC

MAIHERP

rice

/bag

All the above discussion is good to add to somebody’s knowledge. But the question here arises is how a company can price its product higher than the competitors & that too in an oligopolistic market structure.

THE BIG QUESTION:

WHY IS JAYPEE CEMENT PRICED MORE THAN THE COMPETITIVE BRANDS?

Here is the answer for this:

Jaypee knows that it has captured the market in Allahabad & adjoining areas & has a huge demand for its product & is carrying out the legacy forward. Therefore the pricing method adopted by the company is PERCIEVED-VALUE PRICING. Perceived value is made of several elements such as the customer’s image of the product performance, the channel deliverables, the warranty quality, customer support & softer attributed such as the company’s/dealer’s reputation, worthiness & esteem. To enhance & sustain this perceived value Jaypee has used the promotion aspect of the marketing mix in a very promising style.

According to a classic study conducted by FARRIS & REIBSTEIN who examined the relationships among relative price, relative quality & relative advertising for 227 businesses & found the following:

Brands with average relative quality but high relative advertising budgets were able to charge a premium prices. Consumers were willing to pay higher prices for well known products than for less known products.

Brands with high relative quality & high relative advertising obtained the highest prices. Conversely, brands with low quality & low advertising charged the lowest prices.

The positive relationship between high prices & high advertising held most strongly in the later stages of the product life cycle for market leaders.

JAYPEE CEMENT prices a bag of cement as Rs 250(Excluding the target discount), in spite of the fact that Prism’s price for the same quantity cement bag is Rs 243. This is because when a prospective customer walks into a dealer’s shop & asks him why he should pay Rs 250/bag instead of Rs243, the dealer may give this answer:

Rs 243 is the price which the competitor is offeringRs 10 is the price premium for Jaypee’s superior durabilityRs 14 is the price premium for Jaypee’s superior reliability & SASRs 10 is the price premium for Jaypee’s superiorcompressive strength

Rs 277 is the normal price for Jaypee’s superior value- 10% discount

Rs 250 Final Price

How Does a Consumer feel after listening to all these arguments?

This brings a new concept of CONSUMER SURPLOUS

Consumer surplus is the buyer’s willingness to pay for a good minus the amount the buyer actually pays for

.The area shaded in the figure is the consumer surplous (ABC) the existing customers when the price is P1 & quantity is Q1.The market demand curve depicts the various quantities that buyers would be willing and able to purchase at different prices

WHAT IF THE PRICE OF JAYPEE CEMENTS DROPS?

Here when the price has come down to P2 then the surplous for the existing customers has increased by BDEC & the new customers who are enticed by the price decrease are also getting a surplous i.e. CEF.The quantity of cement purchased has also increased from Q1 to Q2 & hence resulting into expansion of market share.

COMPETITORS PRICING:

The competitors of JAYPEE cements follow the GOING RATE PRICING or FOLLOW THE MARKET LEADER.Competitors like PRISM, MAIHER etc alter there prices when Jaypee changes the price to sustain their market share rather than when their own

demand or cost change. It is a very popular method of pricing especially when the costs are difficult to measure or competitive response is uncertain, his method reflects the industry’s collective wisdom.

PROMOTIONAL PRICING/DISCOUNTS OFFERED BY THE COMPANIES:

Cement companies in the Allahabad market provide two types of discounts to the dealers:

TARGET DISCOUNT: This discount is given to the dealers when the target of the dealer is fulfilled.

CASH DISCOUNT: This discount is given to the dealers when they make advance payment for their order.

A Close Analysis of the Promotional Pricing used by the companies:

JAYPEE PRISM OTHERS(ACC, MAIHER)

Target discount:Rs3/bag(no matter what is the target given to the dealer)

Target discount(if the tgt is up to 60 tons/month : Rs 2/bag& if the tgt is over 100 tons : Rs 3/bag

ACC: Target discount: Rs3/bagMaiher: Target discount: Rs 3/bag

Cash discount: Rs 4/bag if the payment is made in advance or on the same day & Rs 3 If paid within next three days of receiving order

Cash discount: Rs 4/bag : if the payment is made in advance

ACC: Rs 4/bag : if the payment is made in advance

Maiher: Rs 4/bag: if the payment is made in advance.

Apart from these discounts there are some promotional pricing techniques by the JAYPEE:

JAYPEE CEMENTS

Exclusive discount: If a dealer deals exclusively in Jaypee then a extra discount of Rs 1.5/bag is given.

Jaypee Anmol Pariwar: If a dealer sells 250 tons or more in a month then he becomes the member of JAP & is entitled for an additional discount of Rs 1/bag & free holydays to foreign countries.

Figure 1JAYPEE ANMOL PARIWAR MEMBERS IN A FREE VISIT TO KAHMANDO

Jaypee Diamond club: If a dealer sells 750 tons or more in a month then he becomes a member of Jaypee Diamond club & is entitled for an additional discount of Rs 2/bag.

LEAD TIME TAKEN BY THE COMPANIES:

Table-6 Time taken by companies in servicing order

LEAD TIME TAKEN BY THE COMPANIES

COMPANY NO. OF DEALERS

1 DAY2-3 DAYS 4-5 DAYS 1 Week

Total no.of dealers surveyed

JAYPEE 10 22 6 2 40PRISM 7 17 10 4 38BIRLA 1 5 3 1 10MYCEM 1 3 1 0 5ACC 2 1 0 0 3MAIHER 1 2 0 0 3

Chart-6 Time taken by companies in servicing order

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But these statistics are absolute therefore comparison is hard o make. Therefore a relative statistics is required to facilitate comparison which is covered in the next page.

COMPANY %. OF DEALERS

1 DAY2-3 DAYS

4-5 DAYS 1 Week

JAYPEE 25% 55% 15% 5%PRISM 18.40% 44.7% 26% 10.50%BIRLA 10% 50% 33.30% 10%MYCEM 20% 60% 20% 0%ACC 66.60% 33.30% 0% 0%MAIHER 33.30% 66.60% 0% 0%

Chart-7 (dealers expressed in %)

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As we can observe from the above table & graph that the percentage of dealers serviced by Jaypee in providing timely order is more than that of Prism who is the major competitor in the Allahabad & adjoining markets.But of course a lot of improvement in servicing orders is to be done where the service is slow & takes 4 days to a week in delivering order.This condition is minutely prevalent in areas like Sorao, Harbhanpur etc.

COMMUNICATION OF PRICE BY DIFFERENT COMPANIES:

Table-8COMPANY NO. OF DEALERS

CLEAR AMBIGUOUS NO CLARITYNOT FIXED

JAYPEE 7 13 10 10PRISM 15 10 5 8BIRLA 4 1 1 4MYCEM 2 0 0 3ACC 2 0 0 1MAIHER 1 0 1 1

Note: Not fixed means sometimes the communication of price is clear & sometimes it is ambiguous.

Chart-8

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CLEAR AMBIGUOUS NO CLARITY NOT FIXED

Communication of price

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MYCEM

ACC

MAIHER

As it is very clear that the price communication by Prism is is clearer than that of Jaypee, but the picture will be transparent when we have a percentage representation of the number of dealers.

Table-9 Communication of price by the companiesCOMPANY %. OF DEALERS

CLEAR AMBIGUOUS NO CLARITYNOT FIXED

JAYPEE 17% 32% 25% 25%PRISM 40% 26% 13% 21%BIRLA 40% 10% 10% 40%MYCEM 40% 0 0 60%ACC 67% 0 0 33%MAIHER 33% 0 33% 33%

Chart-9 Communication of price by different companies

0%

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ACC

MAIHER

As we can see from the above graph & table that Jaypee has to improve its communication of prices as it is running far behind Prism & other competitors.Due to ambiguity in prices dealers sale gets affected in an adverse manner as he doesn’t know that at what price he has bought the cement therefore the sale gets delayed. On the other hand he wholesaler & retailer (who don’ get the order directly from the company) remains unaffected & the sale continues.

If there are so many flaws in the service of the company then why does a dealer send a particular brand?

Table-10 No. of dealers why selling a particular brand COMPANY Availabili

tyTechnical Support

Schemes Provided

Profitability

Timeliness in order fullfillment

CustomerDemand/Brand awarenes

Rel’ship

BIRLA 2 4 2 2 0 0 0 JAYPEE 5 0 0 7 4 20 4 PRISM 3 5 2 15 1 10 2 MAIHER 1 2 1 1 ACC 0 0 0 2 0 1 0

Chart-10 Reason why number of dealers sell a particular brand:

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BIRLA JAYPEE PRISM MAIHER ACC

As it is clear from the table & he chart that maximum number of Jaypee’s dealer sell it because of the customer demand which is a result of efficient promotion mix. Had this been a normal distribution, this would have been more appreciable.But the exact picture will come out when the no. of dealers are expressed in percentage form.

,Table-11 % of dealers why selling a particular brand

COMPANY Availability

Technical Support

Schemes Provided

Profitability

Timeliness in order fullfillment

CustomerDemand/Brand awarenes

Rel’ship

BIRLA 20% 40% 20% 20% 0 0 0 JAYPEE 12% 0 0 18% 10% 50% 10% PRISM 8% 13% 5% 40% 4% 29% 4% MAIHER 20% 40% 0 20% 0 20% 0 ACC 0 0 0 67% 0 33% 0

Chart-11 % of dealers why selling a particular brand

0%10%20%30%40%50%60%70%80%

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BIRLA JAYPEE PRISM MAIHER ACC

It is clear from the table & the chart that maximum number of Jaypee’s dealer sells it because of the customer demand which is a result of efficient promotion mix. Had this been a normal distribution, this would have been more appreciable. As we can see in the graph that Prism’s profitability is more than Jaypee which is a huge incentive for the dealers to promote Prism in the market. Even if we consider the technical support area, Prism leaves Jaypee behind.Therefore we can culminate that to be an undisputed market leader Jaypee has to lay more emphasis the service & profitability aspect of the dealers.

DEALER’s COMPLAINTS/ SCOPE FOR IMPROVEMENT

Earlier we have discussed the importance of dealers & distribution channels. If Jaypee wishes to sustain its market share without appeasing the dealers, well that’s a tough job.As cement is kind of product which requires a lot of technical knowledge to buy, which buyers generally don’t have therefore a dealer can influence a buyers decision making process by a great extent.Therefore the company should look forward in welcoming dealer’s suggestion & complaints.

Table-12 No. of dealer showing area of complaintAREAS OF IMPROVEMENT NO. of Dealers

Scheme communication 32

Price Fluctuation 24Promotional Aids 10Malpractices 9Frequent Meetings 9Timely Billing 19Availability in peak season 4Profitability 19Frequent officer's visit 6

Chart-12 No. of dealer showing area of complaint

05

101520253035

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As we can see that the dealers have a long list of grievances & clear/timely scheme communication being the major one

Table-13 % of dealers suggesting areas to improve.AREAS OF IMPROVEMENT %. of Dealers

Scheme communication 80%Price Fluctuation 60%Promotional Aids 25%Malpractices 24%Frequent Meetings 24%Timely Billing 50%Availability in peak season 10%Profitability 48%Frequent officer's visit 15%

Chart-13 % of dealers suggesting areas to improve

00.10.20.30.40.50.60.70.80.9

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As we can see dealers have a huge satisfaction regarding the service level of the companies especially regarding scheme communication which is maximum followed by price fluctuation without intimation or intimating at a very short notice.

Dealers has a complaint from the company regarding being ignorant for them & promoting the wholesalers & eventually reducing their profitability.After the complaint for frequent meetings, Jaypee for the first time introduced a concept of Consumer Meeting which will be discussed further.

Note: Malpractices include the following :

Underweight bags for the consignees. Selling pratapgarh’s, chakghaat, M.P.’s cement in the Allahabad

market. Duplicity etc.

In spite of the above stated complains if we want to know that which is the most preferred brand for the customers in the Allahabad & adjoining markets then the following is the answer:

Table:14 No. of dealers revealing the customer’s preference (out of 75):

COMPANY NO. of dealers

JAYPEE 46

PRISM 29MYCEM 0ACC 0MAIHER 0

Chart:14 .NO of dealers revealing the customer’s preference(out of 75)

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JAYPEE PRISM MYCEM ACC MAIHER

Out of 75 respondents surveyed 46 finds JAYPEE as the most preferred brand whereas 29 says that Prism Champion is the most preferred brands by the customers, which clearly states Jaypee’s superiority over prism.

JAYPEE has a huge market share in Allahabad which is to an extent dedicated to Jaypee’s brand image which is a result of efficient promotion mix & marketing campaigns.Let’s analyze closely how is Jaypee’s promotion mix is helping the company to capture the market.

PROMOTION MIX

Products in the cement industry are so undifferentiated & homogeneous. This feature actually increases the importance of promotion for any company in the cement industry.For a fact Jaypee has got an edge over other competitors in terms of its promotion, advertising, brand image & PUV (Perceived user value).

Here are some of the promotional strategies which have made JAYPEE cement the market leader for Allahabad & adjoining markets.

JAYPEE CEMENT – “ANDAR SE SOLID”

New campaign looks to redefine the concept of solidity and trust with an emotional connect that the Jaypee Group has come to be known for

“Andar se Solid” as the tagline to consolidate the brand’s core values of Trust, Resilience & Stability and the brand’s core promise of superior strength, durability and withstanding the test of time

Campaign would reinforce and further build on the brand’s virtues of strength, endurance and fortitude – values that shall propel Jaypee Cement to a capacity of 25 million tones by 2010 and then 35 million tones per annum by 2011

Jaypee Cement is India’s 3rd largest cement player and To communicate the company’s leadership stature and premium positioning, an aggressive multimedia campaign has been drawn up

  This new campaign looks to redefine the concept of solidity and trust with an emotional connect that has come to be associated with all Jaypee Group campaigns. Sachin and Jaypee Cement are a perfect fit as they stand for similar values of inner strength, trustworthiness, endurance and everlasting performance. These values have spurred both to set new benchmarks and made good the dreams and aspirations of all those who believe in Sachin Tendulkar & Jaypee Cement.

The new campaign showcases the brand’s core values of stability and resilience as well as the promise of endurance and unyielding performance.  The essence of the campaign lies in the analogy between Sachin and Jaypee Cement – deriving their iconic stature unblemished reputation from their inner strength, grit and indomitable spirit.  The campaign captures Sachin in a manner like never before – as one who has withstood the tests of time and challenges.

Jaypee’s brand image, PUV & market value has undergone an upward thrust after Sachin Tendulkar’s brand endorsement.Cricket is a religion in India & Sachin is treated as the God of cricket.He is a global face & if he is associated with a brand then obviously the brand’s awareness among the prospects & customers increases.

PROMOTIONS @ Local Level:

If we talk about the promotional strategies at the local level which includes promotion or publicity of the brand JAYPEE in any form which include promotional aids given by the company to the dealers, meetings conducted at the local level, ways of mass media advertising, physical evidences etc. These methods of promotion help to create & sustain

brand awareness among the prospects & consumers & eventually help in boosting the sales of the company.

Table-15 (% of dealers)

Promotional Aids displayed by the dealersPercentage of dealers

Not displayedAdequate but not appealing

Appealing but not adequate Perfect

JAYPEE 46% 11% 27% 16%PRISM 41% 31% 17% 10%BIRLA 19% 28% 39% 11%MYCEM 38% 23% 31% 8%ACC 16% 43% 21% 20%MAIHER 29% 23% 37% 10%

Note: Promotional aids displayed in the shops include stationary, calenders, T-shirts for the labors etc.

As the statistics speak here, we can derive that Jaypee is lagging far behind than other brands in providing promotional aids to the dealers which is a great source of in shop publicity of the company.Unlike Jaypee, other brands are providing the promotional aids to the dealers which then become the responsibility of the dealers to display in an appealing manner.

Chart 15: ( % of dealers)

0%

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bt nt adeqate Perfect

% o

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Here we can observe that the paraphernalia of in shop publicity least provided by Jaypee as the % of dealers not displaying the promotional aids is highest of Jaypee.This is a region of improvement.

LOCAL MEETINGS:

Masson/Counter meets:

These meetings are done for the architects or local massons by the company as they can influence a customers buying decision process to a great extent.

Contractor meets:

These meetings are targeted to address the contactors of any construction process. This meeting targets the cognitive route of decision making of the contractors by rationalizing the attributes of Jaypee Cements.

IHB Meets:

This type of meeting has been conducted for the first time by Allahabad R.M.O. These meetings are targeted to address the Individual house builders who are building their own house or property. This meeting targets the cognitive as well as peripheral route of comsumer decision making process.

Jaypee Nirman Mitra mobile van to give technical support to IHB, contractors. This is a mobile way of publicity & advertising showing the concerment by the company for the prospects & customers & builds a positive image of the company.

BANNERS & HOARDINGS:

There is has been a revolution in the promotion of Jaypee cements through the medium of banners & hordings.Be it Railway station, road crossings, traffic police booths or whatever Jaypee cement is everywhere.The presence Jaypee’s promotional paraphernalia are far more than any other competitor.

a. At road crossing b. On traffic police stand

c. At Allahabad railway station

These banners makes the prospect aware as well as influence the peripheral route of decision making by associating with the emotions of Safe Traveling, fear & concernment by the company.

PHYSICAL EVIDENCE

This method of promotion includes the items given to the dealers to boost their morale as well as to increase the market awareness of the brand.

a. Dealer’s price board b. Shops painted in Jaypee theme

c. Dealer’s certificate

d. JAP membership certificate

Figure 2 JAP MEMBERS IN NEPAL

e. Shield given to encourage dealers which is displayed in the shop.

ACCOLADES GIVEN FOR ENCOURAGEMENT BY JAYPEE:

Tractor painted by Jaypee cement to load orders which is a mobile form of publicity for the company helps in creating brand awareness.

Dealer board provided to all cement dealers/wholesalers & retailers which create sustain & increases market awareness for the product.

Competitor Brands:

No other competitor is as good as Jaypee in terms of marketing competition. In the Allahabad market the awareness about the brand JAYPEE is unbeatable. Some of pictures obtained in the primary research are pasted here which describes the techniques used by the competitive brand for their promotion mix.

Figure 3 ACC TARGET achievement meet

Figure 4 ACC Retailer’s BOARD

Figure 5 DEALER"S CERTIFICATE

Figure 6 Print Advertisement of Acc in TOI on 12 MAY 2010. This may be a very persuasive Ad for the personal house builders as it is rationalizing the high price of Acc cement by targetting the peripheral route of decision making of the consumers.

Figure 7 Dealer shop's wall painted

Figure 8 CERTIFICATE GIVEN TO DEALER for good performance

Figure 9 DEALER's CERTIFICATE OF BIRLA

Figure 10 DEALER's CERTIFICATE OF MAIHER

Figure 11 DEALER BOARD

Figure 12 AUTHORISED DEALER's CERTIFICATE

Figure 13 WALL PAINTING@ Railway Station

A BIG QUESTION:

If efficient marketing communication has been a big factor for JAYPEE’s market share by using Sachin Tendulkar for the brand endorsement who shares the same nature as of Jaypee cement of being strong, trustworthy & consistent, then why did BINANI fail to grab a market share equivalent to Jaypee after using the very consistent & trustworthy brand ambassador like Amitabh Bachhan whose greatness is no short of Sachin Tendulkar?

There may be several reasons for the above question but if we talk in the perspective of Marketing Communication then I have the following arguments:

Binani Cement is one of the mid-sized cement brands in the highly competitive Indian cement industry. Binani cements belong to to Braj Binani group. The group ventured into cement manufacturing in 1997. Binani Cements is now a 1900 crore company with significant presence in states like Rajasthan, Delhi, Punjab, Haryana and Gujarat. The company also has presence in foreign countries like Middle East and China.

Indian cement marketers have long been trying to brand this commodity. Binani is one such player who has taken up branding in a serious manner. The brand is relying on the celebrity power to build its equity. Binani Cement used the cricketing master Sunil Gavaskar to promote its brand during the launch phase in 1997. After a long period of silence, the brand began to invest heavily in brand promotion from 2007.

The brand chose the ever green Amitabh Bachchan as the brand ambassador in 2007. There was lot of buzz during the time big B was chosen to endorse a cement brand.

Binani Cement started using Big B in the television commercials in a dignified manner. This is one of those brands that tried to make use of Bachchan's charisma to the brand's advantage. The ads were laden with subtle humor and according to the reports, Binani cement's sales surged during these campaigns.

The brand did a smart move by taking advantage of the fact that both the brand and the brand ambassador name starts with B. The cement brand began to call itself Big B. While the brand gains by the association, there were many critics who argued that now Big B will be associated with cement rather than celebrity.

Binani cement has the tagline “Sadiyon Ke liye" which means “for centuries ".

Although the ads featuring Bachchan was well made, I felt that it lacked a punch. The brand lacked a powerful message. I would even say that the brand is not able to convey its brand manthra to the consumers. That may be the reason why those ads did not stick with the consumers.When trying to brand a commodity, the brand should stand for something significant. It should be either strength, quality, trust, heritage, etc. Although Binani Cement has a good tagline, the emphasis was not there on any significant USP. The brand could have done much better if it had

focused on a key strength of the brand and used the celebrity to emphasis that strength. For example Gujarat Ambuja has owned the USP of Strength, Ultratech is taking the positioning as Engineers Choice & JAYPEE USP of strength & reliability “ANDAR SE SOLID”. So when comparing with these competitors, Binani Cement does not have a clarity in its positioning. It seems that it is trying to derive some strength through association with a celebrity. Such a celebrity dependent positioning strategy is not advisable for the brand. Ideally Binani could have identified its strength and used celebrity to highlight that strength.

SWOT Analysis of JAYPEE Cements for Allahabad & adjoining markets:

THREATS Competitor’s edge over the service levelNew marketing communication strategies of the competitors.New promotional schemes of the competitors.Increased dealer’s share of profit given by the competitor.Unsatisfied dealers of the company.

OPPORTUNITYUpcoming infrastructure & housing boom i iin the city & suburbs. for e.g. malls , omaxe city etcPublic worksCompetitor’ market share by increasing the service level & pleasing the dealers.Government grants for the rural infrastructure development.

WEAKNESSUnsatisfied dealersMalpractices practiced by the dealers.Late intimation of schemes.Price fluctuations.Price communicationBillingLess promotional aids given to dealersDiary, calendar, key chains, T-shirts

STRENGTHExisting strong market grip.Brand Awareness due to effective marking communication.Superior Quality & high PUVEffective dealer networkMarket leader & trend setter

CONCLUSIONS:

Allahabad has a very big cement market. I surveyed the Allahabad & adjoining cement markets which helped me a lot to gather enough primary data for the successful execution of my project.Some of the important conclusions which can be drawn from the primary information collected are:

Definitely Jaypee & Prism have a cut throat competition regarding the number of dealers but the volume of market covered is more of Jaypee because most of the dealers of Prism sell small quantity of cement unlike Jaypee’s dealers who are scattered in all quantity ranges.

Price of ACC is the highest followed by Jaypee & then Prism but ACC doesn’t have a big market share in the Allahabad market, it is only Jaypee & Prism which are ruling the market.

Marketing Communication tools adopted by JAYPEE has got an anytime edge over the competitors marketing communication techniques but promotional aids like T-shirts, calendars etc are given seldom by JAYPEE unlike other competitors which are giving these very frequently.

Jaypee has better Perceived User Value than its competitors in the eyes of the customers & than has become possible because of the effective promotion mix of the company.

FINDINGS & RECOMMENDATIONS:

Findings:

1. Dealers in the city are unsatisfied regarding :

1. Ambiguity in Price communication2. Ambiguity in Scheme communication.3. Uncertainity in availing the scheme benefits.4. Underweight bags provided by the dealers to consignees.5. Selling outside’s (Pratapgarh, Reeva, Chaakghaat) cement in

Allahabad.6. Less promotional aids given to dealers.7. Ignorant attitude of the company officials for the dealers &

preference to wholesalers.8. Frequent Price fluctuations.9. Delay in Billing10.Less frequent visits of the company officials.

Recommendations:

1. More prior intimation should be given before any change in rate(s).

2. Scheme communication should be clear & authentic.3. Benefits of the schemes should be given within lesser time.4. Checks & frequent visit of the dealer’s shop so that he may be

satisfied as well as malpractice in underweight delivery to the consignees should be checked.

5. There should be some kind of differentiation in the packing between the Allahabad cement bags from the outside cement bags

6. More of stationary, calendars, t-shirt should be given at regular intervals to the dealers.

7. Dealers should feel that they are being given priority.8. More of meetings like IHB, Masson meets, Contractors meet,

Mistry meets & market surveys should be encouraged.9. Timely Billing of the orders.10.Continuous interaction with the dealers.11.Welcoming dealer’s complaints, suggestions for improvement.

LIMITATIONS

Though the present study aimed to achieve the above-mentioned

objectives in full earnest and accuracy, it was hampered due to

certain limitations. Some of the limitations of this study may be

summarized as follows: -

Getting accurate responses from the respondents due to their inherent problems were difficult. Some were biased & were reluctant to cooperate.

Since I did not have the privilege to work on a large scale, so many findings and recommendations may not be as much in tune with their ground realities as may be considered desirable.

The survey conducted was on the basis of random sampling method which is not a hundred percent error-free method.

Disclaimer

This report is for informational purposes only and contains information, opinion, material obtained from reliable sources. Efforts have been made to avoid errors and omissions and are not to be construed as an advice oran offer to act on views expressed therein or related financial instruments. The author shall not be responsible and/or liable to anyone for any direct or consequential use of the contents thereof. Reproduction of the contents of this report in any form or by any means without prior written permission of the author is prohibited.