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The Marketing Strategy of Jaypee Cement

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Published: Mon, 5 Dec 2016

The intent of this research is to evaluate the practice of strategy making procedures in the Jaypee cement industry. During the marketing of cement, which is seeing a highly competitive scenario and cut throat marketing situation, it is very important for a company to know its position/standing in the market and the bulk consumers with respect to product volume and sales of its various cement grades.  The concept of strategy making process has been contemplated throughout its history and it continues to be a subject of great interest today. In the current scenario as the trends are changing in the world, companies are going to adopt the quality standards for their products to gain customer interest and their satisfaction. Quality is playing a very important role in the strategy making of a specific product or a service of a company. Due to the diversity of its nature and its various implications, it’s very difficult to define a strategy. If we have a look from a particular product’s point of view, marketing and the strategy making is the most important thing. Company can get a good market share if their marketing strategy is effective.

Mihaela Kelemen, (2003) states that, at the outset, quality was associated primarily with the operations function. This is not surprising given that the very first quality control techniques were developed by the manufacturing sector. More recently, however, it’s relevance to the other organisational functions has become more apparent and recognized as crucial to the successful functioning of the organisation as a whole. Quality programmes started by the most of the companies have a strong association with the strategic change because many companies adopt quality management procedures when they face some kind of crisis or due to the pressure from the customers, competitors or governmental regulations. For the efficient quality management there is a need of strategic management skills as well. Strategic management is normally done at the top level of the organisation which provides the supervision for all aspects of the operational management. The beginning of quality management as a standard is normally traced back to the systematic efforts made by the manufacturing sector in the twentieth century.

Research Aim:

The purpose of the research is to get to know the Market Realities, Brand Awareness and find out the opportunities on which company can able to sustain & plan to grow over the long period of time. Company is consistently losing its credibility and lacking competitiveness in the Delhi & Ghaziabad market and it is plunge into the orientation of the market. 

Objectives:

The main objective is to find out the market realities and the Dealers & Stockist perception regarding the Jaypee cements. Unknown hidden facts which are not yet exposed to the Jaypee cements. 

To find out the Brand Awareness of Jaypee Cement among the various Dealers & Stockist. 

To find out if the strategies of the company match with those of others and quality level equivalent to the market standard And to analyze the various different incentives schemes offered by other companies to push their product in the Delhi & Ghaziabad market and with the analysis, company can understand market potential & future growth.

 

Research Questions:

Does an effective strategy making process can help the organisation in creating a competitive advantage?

To what extent the brand awareness can help the organisation in terms of productivity?

Which promotional methods can be integrated with their businesses plan in order to maximize their market share?

Sources of Data Collection:

The first hand information collected directly from anywhere (in statistical language population) is being called and the primary data. In other words we can say the raw data which has not under gone from any classification or study is called the primary data. And secondary is the data which has already being used or classified or some statistical techniques are being applied on it is called secondary data. The sources of primary data are individual collection from population, direct interviews, and questioners etc. While secondary data can be taken from research articles, journals, internet and governments sources etc.

Secondary Data: 

Secondary data are collected from those data’s which are collected by someone else or are existed earlier by some researchers in the same fields. These data helps to carry out further research.

Primary Data

The acquisition of primary data will be done by carrying out the questionnaire session by which the above research questions will be answered which involves the management of Jaypee Cement.

Introduction to Brand:

What is brand?

Unique and identifiable symbols, association, name/trademark which serves to differentiate competing products or services. Or in simple term we can say

“A goods or services offered from a known source”.

Both a physical and emotional trigger to create a relationship between consumers and the product/service.

Brand = Product + Packaging + Added values

The added values may be:

Quality

Image

Price

Function

 

Brand Awareness:

The proportion of target customers that recall a brand. Realisation by a consumer of the existence and availability of a particular product. Brand awareness is a common measure of marketing communications effectiveness. Unaided awareness is spontaneous aided or prompted awareness is when the name is recognised among others that are listed or identified. 

When a new brand enters a category or creates a “new to the market” offering, it needs to create brand awareness. This would depend on whether the product is a consumable or a durable. The involvement level in a specific category also matters on how a brand would want to create awareness.

The “high-utility” solution has to be conveyed to the target segment, which probably was using traditional substitutes.

A typical brand personality need not be built at least before the benefit is sold to the consumer and hence all promotional efforts should be directed at conveying the benefit and creating a brand association with the category itself (as it is a pioneering brand in the category). This objective would be achieved by advertising, “reminder purchase” posters at the point of sale and perhaps conveying the superiority of the offering through the different routes. 

A strong “feature-back up” in the offering, leading to a possible word-of-mouth from users of the brand, will be effective after the initial advertising awareness created by the brand. 

Market Realities:

“Just because you can market doesn’t mean that you have automatically found a real market.”

“Just because you have identified a real market, doesn’t mean that you can market effectively to it.” 

An Organization should not only focus upon the demand and supply of the product but should have crud knowledge about market realities. Organization should always try to look inside the market facts which are effecting the company’s position in the market. Organization should always go beyond and look for the actual things rather concentrating on materialistic things. 

Analyzing the market behaviour and its past trends will definitely help the Organization in a big way to plan a strategy for a future. Organizations should also know their intermediaries (supply chain) perception regarding their brand and its values. Companies should try to prevail their edge over other competitors and work on it to be consistent performer in its field. 

Just identifying the target market can’t be enough, identifying the markets needs according to product also plays major role behind the success and failure of any product life cycle and Organization. Market Realities can’t be defined in few words because of its vast approach towards the different sector & different areas of economies. 

Companies should try to find out the loopholes of their business which are letting down their performance. It is important for them to give best possible solution and to come out from it. 

Growth Planning: 

When people talk about organizational growth, it is usually in positive terms. After all, wouldn’t any Organization benefit from a bigger budget, more staff, expanded quarters, new programs, or broader outreach. If small is beautiful, isn’t big more beautiful? 

In point of fact, growth typically is desirable, and the failure to grow may well lead to a decline in relevance and effectiveness. But not always, when growth is not carefully planned and managed, bigger is not necessarily better, and more may turn out to be less. 

However attractive organizational growth might appear to be, it makes no sense for a non-profit to expand in ways that jeopardize its financial health or that compromise program quality. Before the leaders of a non-profit contemplate any type of change, they must be willing to play devil’s advocate, acknowledging that there may be good reasons for preserving the status quo. 

The fact is that organizational growth is almost never easy it inevitably requires staff to take on new responsibilities, assume heavier workloads, or operate in unfamiliar settings. Ironically, the very attributes that drive growth can sometimes lead to organizational dysfunction later on. 

For the success of a plan there has to be consistency between the target laid down in the plan & the financial resources available for the purpose. When the target specified a plan are higher, longer resources will be needed to achieve those targets? Planning needs to be done in such a way that it should complement the target and actual expected growth.

 

CHAPTER 2

Literature Review:

Indian Cement Industry at a Glance:

Cement being the a major construction material, at present, the industry is at the crossroads after continuously building up a huge capacity year after year since 1980’s, reaching now the landmark of 157 million tonnes.  Cement plant are continuously keeping abreast with the latest in modernization of technology, achieving thereby substantial state of the art capacity and thus emerged as the leading cement producing country in the world, next to China. The fast track growth, however, led to a demand growth during the last couple of years. 

Inarguably, the lowest per capita cement consumption in the world -India at 110 kg against the world average of 260 kg, and expected rapid development of the infrastructure in the country calls for a quantum jump in annual growth in cement industry, But faced with the heavy pressure from the rising inputs cost s, taxes and duties, the industry has a limited option at its disposal for cost control. 

The Indian economies witnessed a real GDP growth of 11.5% in the year 2008-09, the highest in the 15 year and more than double the growth in the previous years. Next to china, the Indian economy is the second fastest growing economy after China in the world. A good monsoon all over the country resulted in an impressive agricultural growth at over 9 % during the year. Industrial production recorded 6.9% against 5.8 %. Fore reserves are touching all time high of around 141 billion $ .the cement industry in contrast witnessed a growth of 5.5 % against 8.7 % in the previous year. The month of February clocked a double digit growth of over 10 % which pushed the growth for entire year. 

Initially estimated growth for the year at 8-9% could not be achieved as many infrastructure projects did not pick up the pace in implementation during the year. Besides, transport bottlenecks due to the non availability of required number of wagon for the movements of clinker from the mother units of grinding units and cement to major consuming centres, coupled with the shortage of trucks due to the restriction on their carrying capacity, experienced in major cement producing states- Chhattisgarh, Madhya Pradesh, Rajasthan etc, mainly hampered the growth of the cement demand. 

Outlook: Cement Industry.

 

The continuation on housing, especially rural housing and the roads and highways projects-Golden Quadrilateral, North-South-East-West Corridors and PMGSY (Pradhan Mantri Gram Sadak Yojna) pilot projects with required pace in implementation is expected to provide boost to cement consumption. Likewise, the momentum being imparted to construction of seaports, airports and other infrastructure projects is expected to accelerate the growth in cement demand. The revised priorities of the new government and implementation of the common minimum programme augur well for the cement industry. The cement industry is poised to witness a sustained growth of 8-9% Pa. in the next couple of years. 

Production: 

Cement Production during the last year under the review was 117.50 Mn.T maintaining a growth of 5.52% over the previous year’s 111.35 MT. However; this was 2.50 MT. short of the target of 120.00 Mn.T. Fixed by the ministry of commerce and Industry.

 

Increase in Input Costs of Cement:

During the year 2008-09, there have been increase in the cost of inputs for cement manufacture comprising wages; cost of coal, power, etc, which together amounted to Rs.5 to 6/- per bag.

 

Cement Prices:

 

After VAT coming into the effect, prices gone up directly to 7/8 % across the country. Compared to the increase in prices of other construction materials, cement prices have hardly increased over the past seven years. The wholesale Price index (WPI) of cement is far below the WPI for all commodities. In fact, over the last seven years, while the index for the other construction materials increased by 12 % to 50% and all commodities by 38 %; cement index increase was only 10%. 

Further investment by cement industry would depend upon the growth in cement consumption, which mainly depends on the growth in infrastructure and other construction activity and realization. With more thrust being given by the government to the infrastructure development, consumption of cement is likely to register a growth of 8-9% in the coming years. 

MAJOR CEMENT INDUSTRIES:

Gujarat Ambuja Cement: 

Gujarat Ambuja Cements Was set up in 1986. In the last decade the company has grown tenfold with the commencement of commercial production at its 2mn ton plant in Chandrapur, Maharashtra, and Ambuja will become India’s 3rd largest cement company with a capacity of 12.5 Mn tons.

Its plants are some of the most efficient in the world. With environment protection measures that are on par with the finest in the developed world. The company’s most distinctive attribute, however, is its approach to the business. Ambuja follows a unique home-grown philosophy of giving people the authority to set their own targets, and the freedom to achieve their goals. This simple vision has created an environment where there are no limits to excellence, no limits to efficiency and has proved to be a powerful engine of growth for the company.  As a result, Ambuja is the most profitable cement company in India, and the lowest cost producer of cement in the world.

 Achievements: 

In essence, cement is a simple business. Unlike other industries it does not suffer rapid technological obsolescence or shifting consumer trends. Therefore, it constantly attracts new investments which results in surplus capacity. This means only the very efficient players can prosper. Our people recognize this and their effort to constantly raise efficiency have not only raised the bar at Ambuja but across the industry as well. The pollution levels at all our cement plants are even lower than the rigorous Swiss standards of 100 mg/NM3. The air is so clean that a rose garden flourishes right next to the main plant.

Ambuja has received the highest quality award – the National Quality Award. The only cement company to do so. It’s also the first to receive the ISO 9002 quality certification. 

 

It has einvented cement transportation. Almost 90% of cement in India travels by rail or road and in bags. Our people realized that the only way to speed up transportation was a completely different approach. The result: a bulk transporting system via the sea making us the first company to introduce the concept of bulk cement movement by sea in India.

Management Policy: 

When we started out, we approached the cement business with an open mind. Some things struck us immediately. To compete with the older, established players who had already written off their plant cost, it was important to have the lowest capital cost per ton of cement. Our plants would have to be set up in record time. Our capacity utilization would have to be above 100%. And our power consumption would have to set a record low. Given this line of thinking, empowerment was not just a fashionable term; it was the only way to achieve our goals.  

If costs had to be controlled, it seemed absurd for engineers to check back with their seniors for every little decision. The time lost would be far more expensive than any errors they would make. It was the same with controlling power consumption who better than the engineers to suggest ways to cut costs. They knew the plants inside out. It made sense to listen to them. 

UltraTech Cement Limited:

UltraTech Cement Limited, Makers of premier cement, is a subsidiary of Grasim Industries Ltd., the flagship company of the Aditya Birla Group. The group is the eleventh largest cement manufacturer in the world and number one in India. Its basket of products includes ordinary Portland cement, Portland blast furnace slag cement, Portland Pozzolana cement and Grey Portland cement. It also exports clinker and cement. 

UltraTech has five integrated plants, five grinding units, and three terminals – two in India and one in Sri Lanka. All the plants have ISO 9001 certification. Most of the plants have also been certified for ISO 14001 and OSHAS 18001. 

UltraTech is the country’s largest exporter of cement clinker. The company exports over 2.5 million tons per annum, which is about 30 per cent of the country’s total clinker exports. The export market comprises of countries around the Indian Ocean, Africa, Europe and the Middle East. Export is a thrust area in the company’s strategy for growth. 

The cement division of L&T was demerged in 2004 after Grasim made the 30 per cent open offer for equity shares, gaining control over the new company, christened UltraTech. Besides the long term strategic value in the wake of rising demand for cement, with the growth of housing and infrastructure sectors in the country, the acquisition brings significant synergy gains to the parent company, Narmada Cement Company Limited, a subsidiary, was amalgamated with UltraTech in May 2006. 

As part of the eighth biggest cement manufacturer in the world, UltraTech Cement has five integrated plants, five grinding units as well as three terminals of its own (one overseas, in Colombo, Sri Lanka).  

Jaiprakash Associates Limited (JAL) 

Jaiprakash Associates Limited (JAL) formerly Jaypee Cement Limited is the well diversified conglomerate JAYPEE GROUP, It’s cement division has 3 modern, computerized process control cement plants of 5.0 Million tonnes of aggregate per annum capacity near Rewa in Madhya Pradesh, India – the single largest cement complex at one location in India from where more than 3, 00,000 bags are dispatched in about 1000 trucks per day. 

Holderbank Management & Consulting Ltd., Switzerland and Holtec Consulting (P) Ltd. have been the engineering consultants for setting up of all the 3 plants. World class equipment suppliers were chosen for mechanical and electrical equipments as well as instrumentation and control systems. The construction and erection of equipment of the plants was undertaken by the construction wing of the Group. Jaypee Rewa Plant has 2 units with an aggregate capacity of 2.5 million tonnes per annum. Unit-I of 1 million tonne capacity was commissioned in 1986 and Unit-II of 1.5 million tonne capacity was commissioned in 1991.

Jaypee Bela Plant of 1.9 million ton capacity was commissioned in 1996. A blending unit, first of its kind in the country, having a capacity of 6, 00000 ton per annum was set up in Sadva Khurd, Distt. Allahabad, (U.P.) in December 2001. A grinding unit with a capacity of one million tonne is being set up at Tanda, Distt. Faizabad, (U.P.) and expected to be commissioned in July, 2004. Through optimization measures, the total capacity of Jaypee Cement is now under enhancement to over 6.5 million tons per annum. 

In each of the plants, the equipment, instrumentation and control systems were state-of-the-art when set up. The successive units incorporated improved measures for facilitating easy operation, timely and proper maintenance, higher energy conservation and better pollution control. All the 3 plants have received the ISO 9002 certification from the world renowned accrediting agency BVQI.  

Mining operations at Jaypee Cement receive utmost attention. For optimal utilization of the limestone reserves and input of right quality limestone to the plants, Jaypee Cement has Computer Aided Deposit Evaluation (CADE), Quarry Scheduling and Optimization (QSO) packages as well as a computerized on-line bulk analyzer. The plants have 100% power backup through a bank of diesel generating sets. A 27 MW capacity coal based captive thermal plant started functioning from August 2003, which has helped the Cement Complex to reduce substantially its expenditure on power. Work on the second 27 MW coal based captive thermal plant has been completed. 

Jaypee Cement Complex is consistently producing world class cement of OPC grades 33, 43, 53, IRST-40, the all popular special blends of Pozzolana cement such as ‘Buniyad’ and ‘Buland’, and Superplus PPC – all surpassing applicable BIS standards and would shortly be introducing Low Alkali cement also. 

Buland Cement – the only blended cement having a 28 day compressive strength of 55 MPA certified by IITs, Roorkee & Delhi, is today known for its Engineering Quality, Strength and durable Construction and has in a very short time become a leading brand in the markets of M.P., Bihar, Western U.P. and Delhi.

While Jaypee Cement is a major player in its natural marketing zones of Uttar Pradesh, Madhya Pradesh and Bihar. Jaypee Cement also markets cement in parts of North India, West Bengal and North East. Consistently Jaypee Cement has been the highest exporter of clinker and cement to Nepal. Cement distribution and sales accounting are totally computerized. Computers and VSATs have been installed at 110 dumps, 5 Regional marketing offices (RMOs), all the plants and the corporate office to ensure seamless connectivity for voice and data on 24/7 basis. A wide network of more than 3, 000 stockists are catered to by these dumps. 

Through diligent and continuous efforts, large water reservoirs spread over 33 hectares, with capacity in excess of 20 million cubic meters, have been created in the mining area where mining has been completed, which has helped significantly to improve the depleting water table in surrounding areas. Dense green belts have been developed in the plants, town-ships and the mines. In all about 4, 00000 samplings have been planted and are being nurtured. This has indeed converted the Jaypee Cement Complex into a green city. Ever conscious of its social responsibilities and obligations, Jaypee Cement has been regularly organizing medical camps. In addition, Animal Care camps and training programmes on Animal Husbandry have also been organized regularly. As part of the Jaypee Corporate Strategy, lot of emphasis is being laid in the field of education by way of organizing Bal-wadis and Adult Education classes in the villages surrounding the plants. 

Facts & Figures: 

It has the Capacity of 7.0 million tons per annum which makes this the single largest cement complex at one location in India. 

All the 3 plants have received the ISO 9002 certification from the world renowned accrediting agency BVQI. 

A wide range of World class cement of OPC grades 33,43,53,IRST – 40, the all special blends of Pozzolana cement such as Buniyad, Buland & Superplus PPC all surpassing applicable BIS standard shortly introducing Low Alkali cement. 

Buland Cement the only blended cement having a 28 days compressive strength of 55 Mpa certified by IIT’s Roorkee & Delhi. Buland cement today is known for its engineering quality, strength & durable construction and enjoys market leadership status in all the markets where it is being sold. 

A large network of 110 dumps catering to more than 3000 stockists spread across UP, Uttaranchal, MP, Bihar, Jharkhand, West Bengal, North East and Delhi Consistently the largest exporter of cement & clinker from India to Nepal during the last 5 years. 

Jaypee Cement being used in the construction of large dams and hydro electric power projects like the Tehri Dam, Uttaranchal, Dul hasti and Baglihar projects in J&K, Indira Sagar dam, M.P., Teesta-V project in Sikkim and Tala project in Bhutan. 

List of prestigious clients include NTPC, NHPC, GAIL, IOC, NFL, Indian Railways, L&T, Gammon, HCC, Som Datt Builders, IRCON, UPSBC, Sahara Group, Hindalco to name a few. 

It is used in the creation of large multi-location technical cells to support & educate our consumers on uses of cement in various types of construction. 

It is awarded by the ‘National Safety Award’ by the National Safety Council of India for developing and implementing very effective management systems and procedures and attaining very high performance levels in occupational safety and health. 

INDUSTRY PROFILE: 

Cement Sector

The Cement industry has come a long way since the first bag of cement was packed in the year 1914 at porbandar. A mere 945 MT were produced in that year throughout India. 

Broadly speaking the progress of cement industry falls into 5 phases 

The 1st phase began from 1947 till 1980 during which period government exercised strict control over the entire industry through various policies and legislation. The cement industry experienced the price and distribution control during this period. The phase from 1980 to 1989 makes 

The 2nd phase is of partial decontrol. 

The 3rd phase from 1989 to 1992 can be considered as the beginning of progress in cement industry. When they could function free from price and distribution controls, but still remained regime of controlled economic decision making. 

The 4th phase started from 1993 onwards when the industry was freed from all price distribution & licensing controls. However, still it has to face the pangs of transitional period of structural reform process. 

The 5th and decisive period commenced from 1995 onwards when free market condition enabled. The industry to work within the reformed economic system. 

Cement Production during the year under the review was 117.50 Mn.T maintaining a growth of 5.52% over the previous year’s 111.35 MT. 

The industry is registering a steady annual growth rate of about 8 to 10% which is more or less commensurate with the growth rate of demand. The performance of the Indian Cement Industry at the national level is by and large satisfactory, narrowing down the supply demand gap. 

The cement industry has undertaken comprehensive modernization and is equipped with the state of the art technology employs work force of around 150,000 and also contributes in every substantial manner by the way of excise duty every year.

 

COMPANY PROFILE:

Jaiprakash Associates Limited 

History:

Jaiprakash Associates Limited is a premier organization in India having commenced its activities -in 1972, when a group of engineers got together in a partnership firm known as Jaiprakash associates. 

Seven years of rapid growth led to its conversion into a private limited company in 1979. Further growth continued. As part of diversification, a new company was launched in 1983 to setup modern cement plant for producing cement with one million tons annual Capacity In august 1986, the construction. Company and the cement company were amalgamated into Jaiprakash Associates limited (JAL). 

JAL is now engaged in following fields of business 

construction division-for engineering construction activities

cement division- for manufacture and marketing of cement

hydro-power division- for developing hydro-electric projects on turnkey basis

hotel division- for constructing and managing hotels

information technology- for software development and innovation

 

CORPORATE STRATEGY:

Any corporate strategy needs to be dynamic and vibrant, responsive to the changing economic scenario, and flexible enough to absorb environmental and fiscal fluctuations. It must harness the inherent strengths of available human resources and materials have the capacity to learn from success and, more than anything else, ensure growth with a human face. 

This has always been the guiding philosophy at Jaiprakash industries, and will continue to be so in the future 

DIVERSE FIELDS OF EXCELLENCE: 

Civil Engineering:

Jaiprakash associates ltd. is the flagship company of the group and acknowledge leader in construction of river valley, Hydro power projects on turnkey basis and has been in the business for more than three decades. The company has had the unique distinction of executing simultaneously 13 hydro power projects spread over six states and the neighbouring country of BHUTAN for the generation of 10,290MW of Power. It has the experience and the expertise to successfully complete such projects in challenging terrain under severe and adverse condition.  

Most of the Hydro Power Projects of the company are located in Himalayas, which throw up major geographical surprises including ruptured, squeezing rock condition and water bodies frequently making the task that much more challenging and tuff. The company has executed around 127 Km of tunneling work in, mostly in Himalayan range. 

Major Highlights

1450 MW Sardar Sarovar project Gujarat.

1000MW Indra Sagar power house.

Baglihar Hydro electric Project.

160 Km 6 Lane express highway between GREATER NOIDA and AGRA

520MW Omkareshwar Hydro Electric Project in MP on River Narmada.

1000MW Karachaam-Wangtoo hydroelectric Project in Himachal Pradesh.

Tehri Dam, world’s third tallest rock fill Dam in the world.

 

Private Hydro Power: 

The Group is amongst the first to enter in the field of Hydro Power generation in the private sector after the Government of India opened up hydro Power development to private sector in 1992. The group is operating 300 MW Baspa II Hydro Project in Himachal Pradesh which is producing more Than 1200 Million units of clean & green energy annually. 

The group is currently implementing the 400 MW Vishnu prayag in Uttaranchal. And 1000MW Karcham -Wang too in Himachal Pradesh on BOO (Build Own Operate) basis, both these projects environmental friendly, Run on river projects and are under execution by JAL on EPC (From The earlier Prime contracting agency Basis status). 

From the year 2010, Jaypee group three indepe


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