Role of ethics in marketing
As noted by (Kotler and Armstrong, 2010:629): “Good ethics is a cornerstone of sustainable marketing. In the long run, unethical marketing harms customers and society as a whole. Further …the sustainable marketing goals of long – term customer and business welfare can be achieved only through ethical marketing conduct”.
DiPiazza, 2009 as cited by Kotler and Armstrong, 2010:632, concluded that: “Ethics require a total corporate commitment … I see ethics as a mission – critical issue … deeply imbedded in who we are and what we do. It’s just as important as our product development cycle or our distribution system …It’s about creating a culture based on integrity and respect …”.
Any company have to embrace, communicate and practise the fundamental ethical values that will improve consumer confidence in the integrity of the marketing exchange system. These basic values are intentionally aspirational and include honesty, responsibility, fairness, respect, openness and citizenship.
Tanga Cement Company Ltd has worked out a philosophy of socially responsible and ethical behaviour rather than on the free market and legal system to decide on ethical issues. The company has Code of Conduct to govern all its activities, internal relations and interactions with all company stakeholders in accordance with its ethical values.
TCCL conformity with its Code of Conduct is taken as the ultimate responsibility of the Top Management Team, with daily monitoring delegated to line management team. This code of conduct is supplemented by the company’s responsibility philosophy as well as its employment practices, occupational health and safety controls.
TCCL’s Code of Conduct commits it to the highest standards of integrity, conduct and ethics in its dealings with all parties concerned, including its all its stakeholders (directors, managers, employees, customers, suppliers, competitors, investors, shareholders and the public in general). Company’s top management team, line management team, personnel officers together with company staffs are expected to fulfils their ethical obligations in such a way that the business is run strictly according to fair commercial competitive practices.
TCCL is creating values to all its customers within ethically responsible actions. Therefore, under the sustainable marketing concept, TCCL is looking beyond what is legal and allowable and develop cement within standards for long – term consumer’s welfares.
: PRODUCTS POSITIONS FOR MAXIMUM COMPETITIVE ADVANTAGE
As noted by Kotler and Armstrong, 2010:233, “product’s position is the way the product is defined by consumers on important attributes – the place the product occupies in consumers’ minds relative to competing products.
Trout, 2005 concluded that: “Products are created in the factory, but brands are created in the mind of consumers”. In generic view, a product’s position is the complex set of perceptions, impressions, and feelings that consumers have for the product compared with competing products. Brand’s positioning must serve the needs and preferences of a well – defined target markets. As noted by (Arora, 2011): “Marketers want to position their brands on the key benefits that they offer relative to competing brands”.
Tanga Cement Company Ltd (TCCL) full positions its brand (SIMBA) within four positions in pursuing the market and attaining right competitive advantages over its competitors:
Simba brand is the guide for concrete brick and block making
Tanga Cement concrete is one of the most durable building materials. It provides superior fire resistance compared with wooden construction, can gain strength over time. Structures made of concrete can have a long service life. The ingredients of Tanga Cement concrete are combined to give the products its lower cost. The hardened concrete makes products with more strength, durability, and suitable appearance in fresh state workability and cohesiveness.
Simba brand is the guide for concreting
Tanga cement provides sufficient attention in selecting concrete materials, mix proportions, placing, and compaction, finishing, and curing of concrete. This results into strong, durable, look good, and meets the require strength and last a lifetime.
Simba brand is the guide for plastering
Tanga sand – cement is used extensively in building work as a decorative and protective coating for concrete, masonry walls and concrete ceilings. The mixes have good workability which is easy to work on.
Simba brand is the guide to bricklaying
Bedding Mortar binds bricks and blocks together to give strength and stability to a wall. Freshly mixed mortar must be soft and flexible (good workability mix), so that it spreads easily and makes good contact, without becoming too harsh mix during the bedding process.
: SIMBA BRANDING STRATEGY AND COMPANY DECISIONS
A brand represents everything that a product or service means to consumers and is the major enduring asset of the company, outlasting the company’s specific products and facilities. In today’s competitive markets, it seems to be impossible to find something unbranded. As noted by (Thakare, 2009): “Brands make for extremely powerful assets that require be carefully developing and managing. The value of a successful brand is more than the sum of all other tangible assets of a company”.
Stewart, 2009 as cited by (Kotler and Keller, 2009:254) concluded that: “If Quaker Oats business were to split, I will give you the land and bricks and mortar, and I would keep the brands and trademarks, and I would fare better than you”. Also a former CEO of McDonald's agrees: "If every asset we own, every building, and every piece of equipment were destroyed in a terrible disaster, we would be able to borrow all the money to replace it very quickly because of the value of our brand...The brand is more valuable than the totality of all these assets." (Kotler & Armstrong, 2008:230)
Tanga Cement Company Ltd incorporates its brand name (SIMBA) so as to acquire positive differential effects from consumers on its products. Its brand name has strong among consumers in Tanzania and is valuable asset for the company. The following below is a key strategy that TCCL take to build and manage its SIMBA brand:
According to (Tanga Cement Company Ltd, 2011), Tanga Cement manufacturing facilities are ISO 9001:2000 certified and have stringent quality management system, which ensure the cement quality is strictly controlled at every stage of its manufacturing process. These controls guarantee a high level of product consistency.
The company has extended its current brand (SIMBA) to new and modified products so as to save high advertising costs and acquire instant recognition and faster acceptance. SIMBA brand have extended into two products: Simba 32.5 HARAKA and Simba 42.5 HARAKA.
Simba 32.5 HARAKA with CEM II / B – M 32.5R is specially blended with good quality control monitoring systems, high quality cement engineered for use in all structural, building and particularly useful in marine and hydraulic construction. It reduces the heats of hydration in mass concrete and the permeability of concrete in water retaining structures
Simba 42.5 HARAKA with CEM II / A – M 42.5N is designed with high strength as per class 42.5N specifications requirements. It’s suitable for high strength performing works, i.e. bridges, roadsin structural works as well as for soil stabilization, high strength pavement blocks, and roof tiles.
In building its brand name, Tanga Cement Co., Ltd makes critical decisions on positioning its brand among its competitors; local manufacturers - Tanzania Portland Cement Co., Ltd and Mbeya Cement Company Ltd competitions from dumped and cheap imported cement from China, Pakistan, India and Egypt.
The company SIMBA brand builds strong consumer beliefs and values. It involves crucial management decisions in a continuous process so as to build an everlasting customer relationship with values to consumers and profits to the company.
Through advertising, SIMBA brand have managed to capture the minds of customers as the guide for concrete brick and block making, concreting, plastering, and bricklaying purposes. Advertising serves as a medium to communicate and help develop a brand’s image (perception) in consumers mind. Though Advertising is not the only serving medium, it is essential to build consumers awareness towards product’s existence as well as its attributes
Through company staffs by personal brand experience by word of mouth and help customers to know the brand values through a wide range of its attributes.
Also by using periodic brand audit to evaluate its brand’s strengths and weaknesses so as to counteract the competitor’s threats of capturing the minds of its reputable customers.
Therefore, all market analysts agree that, branding involves creating a perception in consumer’s mind. SIMBA brand powerful attributes enjoys a high level of customer brand awareness and loyalty. This is helping TCCL to build strong and profitable customer relationships. The changing nature of market competitions in cement industry in Tanzania is forcing TCCL to take crucial decisions in the process of building and managing its SIMBA brand against the changing customer’s preferences and threats of its competitors.
: EXTERNAL FACTORS AND CONSUMER PERCEPTIONS ON PRICE
According to (Kotler and Armstrong, 2010:335) pricing decisions are subject to a complex range of company, environmental, competitive forces, and consumer’s perceptions on the product’s value. The company adjusts its prices to reflect changes in costs and demand and to account for variations in consumers and situations. As noted by Panera Bread Company’s CEO, Shaich, R. as cited in by Kotler and Armstrong, 2010:314, “Give people something of value, and they will happily pay for it”. The challenge is to harvest the customer value the company creates.
Tanga Cement Company Ltd consider a number of external factors in setting the price of cement as price plays a key role in creating customer value and building a long and everlasting customer’s relationships. Also TCCL view its customer perceptions on its products as the key to its pricing strategy so as to satisfy the needs and expectations of its consumers.
According to (KnowThis LLC, 2011): “External factors are a number of influencing factors which are not controlled by the company but will impact pricing decisions. Understanding these factors requires the marketer conduct research to monitor what is happening in each market the company serves since the effect of these factors can vary by market.”
Nature of the market and demand
Before setting prices, TCCL understand the relationship between price and demand for the company’s product. The company operates in monopolistic market with intense competitions from local manufacturers (Tanzania Portland Cement Co., Ltd and Mbeya Cement Company Ltd) and influx of dumped and cheap imported cement from China, Pakistan and India. The change in price influence target market demand for cement in Tanzania. TCCL prices depend on market demand so as to compete with local and imported cement and also on whether its competitors’ prices stay constant or change with the company’s own prices.
Competitors’ strategies and prices
Tanzania local cement market is dominated by TPCC followed by TCCL and MCCL, these companies engage in stiff competitions with each other and also with imported cement especially from China, India, and Pakistan. Tanga Cement pricing include an evaluation of its competitors’ offerings in terms of customer value. Consumers perceive its products as less value relative to Twiga Cement, therefore it charge a lower price compared to its main rival – Twiga Cement. In highly competitive cement industry, Tanga Cement responds quickly to competitors’ price adjustments thus reducing the effect of such changes.
This factor also has strong impact on TCCL’s pricing strategies. As cited by (Kotler and Armstrong, 2010:329), “Economic factors such as boom or recession, inflation, and interest rates affect pricing decisions because they affect both consumer perceptions of the product’s price and value and the costs of producing a product”
On the case of TCCL, economic recessions and inflations which are currently affecting Tanzanians have affected its prices. The widespread drop in spending due to significant decline in economic activity across the country have led to low productions, investment spending, households spending and decline of TCCL business profits. The high inflations in our country have resulted in the general price level rises of cement. This is due to decrease in real value of money and other monetary items over time.
On the case of resellers, as noted by (Nagle and Hogan, 2007): “Firms within the marketer’s channels of distribution also must be considered when determining price. Distribution partners expect to receive financial compensation for their efforts, which usually means they will receive a percentage of the final selling price”. Tanga Cement Co., Ltd sat prices that give resellers a fair profit which help them to sell its products very effectively. This price margin between what they pay to TCCL to acquire the cement and the price they charge their customers is sufficient for them to cover their costs and also earn a desired profit.
Also government actions have influenced the price of cement from TCCL. Currently the country is facing power shortage, high inflations, poor infrastructures, and poor policy on imported cement. The company is facing high production cost due to the use of back – up generators as a result of low supply of electricity, high distributions costs through roads due to reduction of rail services from TRL, and poor Tanzania government policy in cement industry by removing suspended duties on imported cement which resulted to un- competitive prices in the market.
Customers value perceptions
Possibly the most obvious external factors that influence price settings are the expectations of customers. Tanga Cement set its product’s price after understanding how its consumers perceive the product. In Tanzania, customers value Tanga cement as one of best brand in construction and making of concrete products together with Twiga cement. Customers value the Simba brand in its quality; hence they buy the product to obtain the benefits of using that product. By using customer – oriented pricing methods, Tanga Cement set price that delivers both value to the customer and profits to the company.