Cement Industry in BD

Cement in Bangladesh Cement sector is the largest increase sector in Bangladesh. There are 70+ cement factory in Bangladesh and daily production capacity is 16.687 Million MT. Its growth daily. Unique Cement Industries Ltd. : Unique cement industries ltd established in the year 2002. The factory is built with modern machinery imported from Germany and China with production capacity of 1800 M/T per day. Unique cement industries ltd. has ISO 9001:2000 Certificate. They have two brands of cement in the local market namely "FRESH" and "MEGHNACEM". Holcim (Bangladesh) Ltd. : Holcim (Bangladesh) Ltd started its operation in this country with of the acquisition of the-then Hyundai cement. Subsequently it acquired United Cement and Saiham Cement. Holcim (Bangladesh) Ltd is affiliated with the Holcim Group worldwide and is one the largest multinational cement producers in the world with manufacturing in over 70 countries. The group has a produrtion capacity of mor than 120 million tones of cement per year. MTC Cement Industries Ltd. : MTC Cement Industries Ltd established with the tehnical co-operation of CITIC engineering of PRC in year of 1998 is situated on the embankment of the river Meghna. There is a two unit cement plant with capacity of 1200 MT per day. TIGER BRAND Cement started its commercial voyage on july 2001. Currently MTC is on an expansion program in pagla with a small 150 MT per day capacity cement grinding plant. Lafarge Surma Cement Ltd. : Lafarge/cement mills is setting up the only modern, integrated cement manufacturing plan known as Lafarge Surma Cement Ltd. in Bangladesh at Chattak under Sunamgonj district. The majority of Lafarge Surma Cement Ltd. Shareholding (60%) is held by a 50/50 joint venture company bewteen Lafarge and cementos molins. Founded in 1833, Lafarge operates in 75 countries, employing 77,000 people. In 2002, the group generated annual sales of Euro 14.6 billion and globally holdstop ranking positions in Cement, Aggregates & Concrete, Roofing and Gypsum. Cementos Molins is a renowned spanish cement company with an annual revenue of Euro 485 million and net profit of Euro 70 million. Operating in Spain, Argentina, Uruguay and Mexico, it produces Portland and Calcium-Aluminate cement, Concrete and Precast concrete, Aggregates and Special purpose mortars. Lafarge Surma Cement Ltd. will extract and procss the basic raw materials like limestone and shale from its from its own quarry in Meghalaya, India. A 17 km crossborder belt conveyor will be installed to link the quarry with the cement plant for transportation of raw materials. 1

A massive land filling and site development has been completed on the 90 acre plant site. The construction and erection is also. The plant will initially produce 1.2 millions tons of cement per year. Premier Cement Mills Ltd : Started its production in March, 2004, Premier is the second largest cement manufacturer in Bangladesh. With a total installed cement capacity of almost a million tons per year at Muktarpul, Munshiganj, the Company is recognized as a leading cement producer with abundant supply of raw materials, low production cost and an energy efficient operation. The Company currently employs 216 persons and has an extensive distribution system throughout the country. Its transportation subsidiary, with three prominent transport companies in Bangladesh, operate a large fleet of trucks to distribute cement products in bags almost anywhere in the country. The Company was founded in 2001 as the private cement producer in Bangladesh, with a factory in Muktarpul, Munshiganj. The Company started production in March, 2004 with Unit 1, which had an installed capacity of 730,000 tons of cement per year, and would be followed by Unit 2, also at 730,000 tons of cement per year, by the mid of 2005. The factory is equipped with world-class European technology built in Denmark and Germany. Within the span of first 5 months, the company has achieved the ISO 90002001 certification from TUV, with highly skilled employees.

Industry Overview: Growth & Present Scenario of Cement Industry in Bangladesh 2

The cement industry of Bangladesh is a rapidly developing sector of the economy. Over the years, the amount of construction projects have followed an increasing trend as the urban growth rate has boosted all across the country in places like Chittagong, Bogra, Mongla and others in addition to the expanding capital city, Dhaka.

Currently, domestic production is unable to meet the complete demand for cement. Approximately 60% of the demand is met by the local cement industry while the rest is imported. According to the Banglapedia, per capita consumption of cement in the country (38 kg) is fairly low compared to India (89 kg), Indonesia (127kg), Malaysia (582 kg) and Thailand (642 kg). Cement has not traditionally been a major product for the country due to low availability of required natural resources to produce it. In addition to that, in less developed regions cement was not a required raw material for construction of buildings. Over the years, however, cement emerged as a substitute to traditional construction materials and by the mid-1980s, with an increase in hefty infrastructure projects, accelerated rate of urbanization and increased construction of multistoried buildings, there was a sharp increase in its demand. One intriguing aspect of this industry is the reliance on the import of clinker. Except Lafarge Surma Cement Ltd., a multinational cement manufacturing company, all cement manufacturers go through the expensive of importing clinker which involves high freight cost, import duties and other handling charges. Hence, this is a scope for other companies to minimize costs by producing the raw material locally and increasing their competitive performance. Situation Analysis: SWOT Internal Factors An examination of the interviews that we took revealed that most companies are satisfied with the quality of the finished product. In this intensely competitive market with over seventy companies are trying to outdo one another, high quality of product is not just a strength – it is a necessity. In addition to that, each of the firms assessed has strong financial backup with little or no long term liabilities. Strong links with the distributors is also one common strength among the firms. Over reliance on limestone may be a weakness for the local firms 3

When it comes to weakness, it is difficult to get out the actual information from managers as they are reluctant to give such an internal insight into the company. As we can see, they mentioned “uneven competition” as a weakness because some of the companies have to pay VAT while others do not. However, external study suggests that other weaknesses may include: heavy reliance on limestone-based cement and inadequate investment in research and development which could have improved future competitiveness. External Factors High tax rate on imported cement is an opportunity for local producers. They can better compete in the market by selling at a lower price. In addition to that, there are high freight costs involved with import of cement which can be avoided by most of the local manufacturers. However, as mentioned before, most local firms still rely on imported clinker, which reduces the advantage they had over foreign firms in terms of cost. Reduction in global prices of cement has become a threat for the industry. In addition to that, high cost of carriage and raw materials make profit maximizing a big challenge. Moreover, the slow progress in terms of infrastructural development also poses problems for some companies. Weak road linkages result in delayed distribution and inaccessibility of certain regions. Competitiveness Analyzed from Different Perspectives Human Resource Early discontinuation of schooling results in deficiency of skilled workers available. Managers say that while it is easy to find people willing to work, there is still a deficiency in the availability of skills required for working in this sector. They believe that the government should set up more training institutions in order to meet the local demand for skilled labour. However, the question must be asked – how are such training institutions expected to succeed? The major problem behind the deficiency in skills is discontinuation of education at very early stages. While providing a special training program may interest them, the government will face a dilemma in terms of pricing. Charging a cost based price will result in a very low response, while a subsidized price may generate excessive demand. When it comes to building a co-operative and sustainable work culture, there 4

aren’t many challenges to be faced. According to the managers, the employees have a positive attitude and mindset in general. However, if further improvement is to occur, the workforce will need training on modern management methods. Access to Finance The cement manufacturers we analyzed have a fairly easy access to finance mainly because of goodwill. The tough competitiveness in the banking sector itself creates a an opportunity for the firms to gain better offers and become more accessible to long and short term loans of differing proportions. However, as we know there are over seventy firms competing within the market, this cannot be true for all firms. Many small manufacturing companies are operating within the market, and their access to finance will surely not be as easy as those that have established themselves as a known brand.

Demand and Supply When it comes to supply, the main raw material is limestone. Many firms import this from India while others get local supplies. The interviewees reckon that the local suppliers should be given better training on producing higher quality limestone and more research and development should be carried out in this sector so no company has to go for import of limestone. The demand for cement is somewhat stable, according to the managers and the growth rate is more or less average. To improve this condition, they urge the government to provide subsidies and greater consistency in the Annual Development Program. Competitive Scenario Meghna Cement Mills Ltd. It is generally agreed that the present scenario is extremely competitive. With multinational companies as well as local companies trying to grab a bigger slice of this growing market with extensive advertising that try to attract, inform and persuade the viewers – this is one of the most emulous industries of the country. Naturally, there are questions asked of fair play. Some companies have complained that a handful of firms are gaining unfair advantage by avoiding tax. The competitive scenario maybe improved by ensuring proper collection of taxes. We can also see that there is a scope for production of clinkers locally, which has a growing demand as well. Therefore, investment in this particular part of the industry will also increase 5

the competitiveness. When it comes to globalization, most firms mention the high freight costs as a big hindrance for the development of the industry. It makes imports more expensive (which is a good thing in case of finished products, but a problem in case of raw materials) and also export of locally manufactured cement less price-competitive in the international market. Low global prices of cement also deter firms from vying for export deals. The cement industry of Bangladesh is one of the fastest growing, intensely competitive sectors of the economy. With plenty of scope to invest in R&D, and plenty of scope to utilize the advent of new technology, this is a sector that is bound to get more competitive. While existing firms suggest that this is a nearly saturated industry and new entrants are not encouraged, with the increasing urbanization all across the country and an escalating rate of construction of high rise buildings, this opinion may be questioned. Our group is extremely grateful to have had this opportunity to explore one of the most vibrant business sectors of Bangladesh, as it was an insightful learning experience. Last but not the least; we would like to thank all the interviewees who took valuable time off their busy schedule to help us out in our survey.

History of CEMEX Cement Bangladesh Ltd. 1999 In November, 1999, CEMEX made its inception in Bangladesh 2000 Started sales and distribution activity in May 2000 by importing finished goods from Indonesia. Sales and distribution was limited at that time. On April 2000, ground breaking ceremony of local plant and started construction of own manufacturing unit. 2001 On 21 April, started own manufacturing and started sales of own manufactured product instead of import of finished product.

CEMEX International

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CEMEX is a global building materials company that provides high quality products and reliable service to customers and communities throughout the Americas, Europe, Africa, the Middle East, and Asia. Their operations network produces, distributes, and markets cement, ready-mix concrete, aggregates, and related building materials in more than 50 countries, and maintain trade relationships with more than 100 nations. This company was founded in Mexico in 1906, and grown from a local player to one of the top global companies in our industry, with close to 47,000 employees worldwide. CEMEX has a rich history of improving the well-being of those it serves through its efforts to pursue innovative industry solutions and efficiency advancements and to promote a sustainable future.

CEMEX Cement Bangladesh Ltd. In the year 2000, CEMEX has expanded its operations in Bangladesh. Built with the most advanced state of the art European FLS technology, the CEMEX plant in Mahmudnagar, Bandar, Narayanganj has a production capacity of 550,000 MT. CEMEX Cement Bangladesh Ltd. has earned a well reputed respect for its finest quality and service, exceeding customers expectations. The company is certified with ISO 9001 Quality Management System (QMS) and ISO 14001 Environment Management System (EMS), complying with quality and environmental standards and ensuring strict adherence to CEMEX global standards. Currently CEMEX Cement Bangladesh Ltd. is producing CEMEX brand Portland Composite Cement (PCC).CEMEX Cement Bangladesh Ltd. is highly committed to maintain the consistency of the product quality at any cost

Cares CEMEX Bangladesh as in all other countries CEMEX operates in and has affiliates, is committed to protecting its personnel, communities and the environment. CEMEX worldwide constantly seeks newer and more effective ways of improving quality of life and preserving the environment. 7

Marketing Our mission is to support the CEMEX strategy by differentiating our products and services from our competitors’, defining our value-added offerings, and identifying the mechanisms to fulfill our promises in each of our markets. To make this possible, we collaborate together with other areas to develop innovative products that meet our customers’ needs while minimizing environmental impact and we design the customer support and services that strengthen the overall experience and build customer loyalty.

Challenge We must keep abreast of our customers’ evolving needs, new building trends, and sustainability innovations, and use this information to collaborate with Research and Development to devise solutions that will enable us to maintain our leadership position. In order to do so, we must stay abreast of our customers’ evolving needs, new building trends and sustainability innovations. To ensure that the CEMEX customer experience is consistent throughout the business, we develop tools and training for our sales force team. We also design customer loyalty programs that help us build enduring relationships with our customers.

Be part of the challenge

As collaboration with different functional areas and corporate offices is pivotal to our work, great communication and teamwork skills are essential to a marketing team member’s success. A good understanding of branding, 8

marketing principles and product development, as well as strong projectmanagement abilities, are also beneficial. This area offers a great opportunity to explore breakthrough solutions that make our world better.

Situation Analysis/ SWOT analysis

Strengths The cement industry has many strengths to be considered. Cement is, literally, the building block of the construction industry. Almost every building constructed relies on cement for its foundation. The cement business is a $10 billion industry, measured by annual cement shipments. There is also a strong reputation behind the cement industry. Cement is a solid material and consumers rarely have complaints about the product. Regional distribution plants have also made cement widely available to any type of buyer.

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Market share leadership Hand tied to infrastructure growth

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International diversification

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Balanced sales: as a result of the incorporation of RMC, Cemex’s sales are balanced between its subsidiaries based in the Bangladesh and the rest of the world.

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International diversification: Cemex’s operations are geographically diversified, having a direct presence in most of its main markets. World-class cement producer: Cemex is an international leading producer of cement and ready-mix concrete. In addition, since the acquisition of RMC Cemex is one of the world’s largest traders of cement and clinker. Vertical integration: Cemex owns a full-scale network of mining facilities, inland and Maritime terminals as well as distribution centers.

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Weaknesses The cement industry is not without its drawbacks. The cement industry relies on construction jobs to create a profit. But the cement industry heavily relies on weather. About two-thirds of cement production takes place between May and October. Cement producers often use the winter months to produce and stockpile cement, to meet demand. Another weakness is the cost of transport; the cost of transporting cement is high and this keeps cement from being profitable over long distances. In other words, shipping cement costs more than the profit from selling it. • •

Debt in USD, Income in foreign currency US$ denominated debt: a large portion of Cemex’s total debt is US$-denominated and since Cemex do not generate enough US$denominated revenues to meet all of its US$- denominated obligations, currency exchange variations could have a negative impact on Cemex’s financial performance

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Dependency on weather conditions: Cemex’s sales suffer a strong decline in periods of cold weather in Bangladesh during the rainy season

Opportunities The cement industry has opportunities as well. One such opportunity is the cement industry's efficiency. The cement industry has recently streamlined its production efforts, using dry manufacturing instead of wet, which is heavier and more timeconsuming. • •

Innovation Takeovers

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High expansion rate in Bangladesh market

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Cost synergies: Cemex estimates significant savings as a result of cost synergies resulting from the RMC acquisition.

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Long-term growth markets: Cemex’s strategy is primarily focused on markets with high potential for long-term expansion

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Cemex – Ready Mix USA joint venture: Cemex has the opportunity to consolidate its presence in the Southeastern region of the US through Ready Mix USA’s local management team and focus on customers.

Threats The natures of the economy have uncovered a number of threats to the cement industry. The cement industry greatly relies on construction. The current economy has lessened the number of construction jobs, which in turn hurts the cement industry. •

Politic changes

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Political instability: political instability in certain countries could have a negative impact on Cemex’s local operations

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Competition against major players: Cemex competes in its main markets with other world-class players such as Holcim and Lafarge

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Rising costs of basic inputs: increments in the price of energy (primarily electricity and natural gas) have a direct negative impact on output and distribution costs

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Risks associated to RMC integration: the incorporation of the RMC Group is the first integration of an international player into the structure of Cemex, which has to simultaneously coordinate new operations on a global scale mainly focused on ready-mix and aggregates, whereas cement has traditionally been Cemex’s core product.

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Global recession: in an international recessionary environment Cemex’s sales will be negatively impacted in its key markets

MARKETING OBJECTIVES

First marketing objective is to consistently market different types of high quality cement products. To provide consistently products in the market, it is necessary to make sure that some stock of the product is always available in the warehouses so that in case of any big market order, the order can be fulfilled with out any problem. This consistency can only be achieved when the production process is totally interrupted and in case of any problem, the backup is always available. The raw material for the production of cement should always be available; there must not be interruption at any time. This objective can become an opportunity when there is a sudden increase in the demand of cement in the local market.

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This objective can be converted in to threat if the transportation problem is not solved and the company hasn’t enough trucks to deliver their products to the location where there is need of a heavy demand. The oil prices will also play an important role in the transportation charges. Second objective is to compete the market with quality products and efficient process. To provide the quality products, it is necessary to use the best and the latest technologies in the production process of the product. The process can be made efficient by optimum usage of resources available and by decreasing the unnecessary expenditures which lead to the higher production cost of the product. When the product is of high quality and is made through efficient process then it will be of low price with good quality. This will be the main strength of product if we can provide the high quality product with comparatively low price. This objective will convert the weakness of Cemex of high production cost of products into strength, when the process will be efficient and use that technology which is less expensive and having a good quality. These both objectives are consistent with the organization’s goal and mission. The mission of Cemex Cement Bangladesh Limited is to put the customers first, flexible to the customer’s needs, give them the highest quality, and deliver them the results. These goals are achieved with the marketing objectives, when the product produced will be of high quality and produced through a efficient process, and there will be consistency in the production of high quality cement product, it will cost less and increase the profitability of the company, satisfy the need of the customers and will be delivered to the customer what he needs.

COMPETITIVE ADVANTAGES

Leading position in attractive Bangladesh‘s grey cement market. 12

Cemex cement manufactures have consistently operated at the highest levels of capacity utilization among Bangladesh’s five divisions. We believe this reflects the strong demand in Bangladesh for cement products relative to supply. Further, based on capacity expansions announced by cement manufacturers, we expect cement plants in Bangladesh to continue to operate at high utilization levels and anticipate continued strong demand for our grey cement products in the near and medium-term. We believe that we are well positioned to take advantage of this demand, as the largest grey cement manufacturer in Bangladesh. Proximity and access to large reserves of high quality limestone We have access to large reserves of limestone for both our grey and white cement operations, which we believe are sufficient to sustain our operations well into the future. Based on independent geological surveys of different mines during 2008 to 2010, we believe that our limestone reserves are sufficient to support our current and planned capacity for approximately 40 years for both grey and white cement. (Put in risk - assuming we are able to renew our existing leases upon their expiry) As one of the first cement producers in Bangladesh, we were able to choose our limestone reserves in an area with high quality limestone resources. In addition to allowing us to produce white cement, which requires high quality limestone, it also provides us with a cost advantage, as we are not required to purchase sweeteners to improve the quality of limestone. Further, our manufacturing plants are in close proximity to our limestone reserves, resulting in lower transportation costs. Finally, our mines that supply our white cement plant at Bangladesh also have a supply of white clay, an important additive necessary for white cement production. Quality of products and strong brand name We believe that brand name and reputation are important to retail purchasers of cement in Bangladesh. We have built a strong reputation among cement purchasers by consistently providing high quality products. We believe that there is strong customer awareness of our brands, Cemex Cement (Titan), for grey cement in our principal market in Bangladesh, and Cemex White (Sparta), for white cement across Bangladesh. Further, we believe that our brand name and our reputation for consistently supplying high quality products provide us with a competitive advantage in ensuring that cement dealers carry our products. Extensive marketing and distribution network 13

We have a wide distribution network for grey cement in Bangladesh. We also have a strong all-Bangladesh distribution network for white cement. Our distribution network for grey cement products consists of 44 feeder depots serviced by seven regional sales offices in Dhaka, Narayangong, Rajshahi, Sylhet, Rangpur, Khulna and Chitagong. Our white cement network comprises 20 feeder depots serviced by 13 regional sales offices in Dhaka, Narayangong, RajshahiSylhet, Rangpur, Khulna and Chitagong. In addition, we have more than 1,000 retail stores that stock our grey and white cement products, as well as 15 sales promoters and four handling agents. We believe that the extent of this network, and our relationships with our dealers, enables us to market and distribute our cement widely and efficiently. Experience and technical know-how We have 10years of experience in the Bangladesh cement industry, which we believe provides us with the skills to maximize production efficiency, expand production capacity quickly and reduce costs. Over the years, we believe that we have developed long-term customer relationships and a strong reputation for quality. In addition, we have a proven track record of upgrading and modernizing our production capabilities efficiently, having increased our production capacity at Cemex (Titan)by more than 80%, from 1.54 million tons in 2009 to 2.8 million tons as of September 30, 2010. Further, we have a stable and experienced middle and senior level management team, many of whom have been working in our cement operations for more than 20 years. Our Cemex (Titan, Sprata) manufacturing facility was chosen by the World Bank and the Danish International Development Agency as one of the four training centers in Bangladesh to serve as the “Regional Training Center” for Bangladesh. There are only four regional training centers for the cement industry in Bangladesh, and we believe our operation of the training center provides us with access to state of art training aids, live working models, and technical expertise developed by well known national and international cement producers. Cemex Cement’s strategic plan focuses on making the company one of the 20 largest cement producers in the world by 2012. To achieve this ambitious goal, Cemex Cement is investing in expanding its businesses in Brazil and overseas, on the alert to the possibilities of mergers, acquisitions, green field projects and brown field, aiming to expand geographically, to become more competitive and generate value for all its stakeholders. 14

In Brazil, the goal is to maintain a national presence – nowadays, the business units are concentrated in regions of greatest demand – and to double up the production, with investments in both organic growth and in deployment or acquisition of new plants. In Argentina, the goal is to continue as the market leader. For its overseas operations, the intention is to maintain the strategy of operating in emerging countries, primarily in Africa and Latin America, and grow through acquisitions. The acquisition of approximately 33% of Cimpor, achieved in 2010, proves this planning; even though it has strong participation in Portugal and Spain, 67% of the Portuguese cement company’s assets are in emerging markets. In line with its strategic objectives, the Company plans to grow in a consistent and sustainable manner, implementing the best practices in processes, green initiatives, policies on health and safety, risk management and technology, inter alia, as well as remain in the select list of operations with the lowest emissions of greenhouse gases (GHGs).

Target Market

A target market is a group of customers that the business has decided to aim its marketing efforts and ultimately its merchandise. A well-defined target market is the first element to a marketing strategy. The target market and the marketing mix variables of product, place(distribution), promotion and price are the four elements of a marketing mix strategy that determine the success of a product in the marketplace. Strategies for Reaching Target Markets Marketers have outlined four basic strategies to satisfy target markets: undifferentiated marketing or mass marketing, differentiated marketing, concentrated marketing, and micromarketing/ niche marketing.

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Mass marketing is a market coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer. It is type of marketing (or attempting to sell through persuasion) of a product to a wide audience. The idea is to broadcast a message that will reach the largest number of people possible. Traditionally mass marketing has focused on radio, television and newspapers as the medium used to reach this broad audience. For sales teams, one way to reach out to target markets is through direct marketing. This is done by buying consumer database based on the segmentation profiles you have defined. These database usually comes with consumer contacts (e.g. email, mobile no., home no., etc.). Caution is recommended when undertaking direct marketing efforts — check the targeted country's direct marketing laws. The Psychology of Target Marketing A principal concept in target marketing is that those who are targeted show a strong affinity or brand loyalty to that particular brand. Target Marketing allows the marketer / sales team to customize their message to the targeted group of consumers in a more focused manner. Research has shown that racial similarity, role congruence, labeling intensity of ethnic identification, shared knowledge and ethnic salience all promote positive effects on the target market. Research has generally shown that target marketing strategies are constructed from consumer inferences of similarities between some aspects of the advertisement (e.g., source pictured, language used, lifestyle represented) and characteristics of the consumer (e.g. reality or desire of having the represented style). Consumers are persuaded by the characteristics in the advertisement and those of the consumer. CHOOSING A TARGET MARKET

Market target simply means choosing ones target market. It needs to be clarified at the outset that market targeting is not synonymous with market segmentation. Segmentation is actually the prelude to target market 16

selection. One has to carry out several tasks besides segmentation before choosing the target market. Through, segmentation, a firm divides the market into many segments. But all these segments need not form its target market. Target market signifies only those segments that it wants to adopt as its market. A selection is thus involved in it. In choosing the target market, a firm basically carries out an evaluation of the various segments and selects those segments that are most appropriate to it. In the previous paragraph, we mentioned that to be of practical use, the segments must be relevant, accessible, sizable and profitable. The evaluation of the different segments has to be actually based on these criteria and only on the basis of such an evaluation should the target segments be selected. The firm must assess the sales and profit potential of each; examine the worth of each segment from its viewpoint “whether the segment is relevant to the firm, whether it is sizable, accessible, attractive and profitable. It must examine alternative possibilities” whether the whole market has to be chosen for tapping, or only a few segments have to be chosen, and if so, which ones. It may look for segments that are relatively less satisfied by the current offers in the market from competing brands. It must look at each segment as a distinct marketing opportunity. It must also evaluate its resources and choose the segments that match its resources. The points below explain the process of choosing the target market. • •

Choosing the target market is related to, but not synonymous with, market segmentation. Segmentation is the means or the tool; choosing the target market is the purpose.

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Segmentation can also be viewed as the prelude to target market selection.

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Choosing the target market usually follows multi-level segmentation using different bases.

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Choosing the target market involves several other tasks in addition to segmentation.

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Looking at each segment as a distinct marketing opportunity.

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Evaluating the worth of each segment (sales/profit potential).

-Evaluating whether the segment is: -Distinguishable 17

-Measurable -Sizable -Accessible -Growing -Profitable -Compatible with the firm’s -Resources • •

Examining whether it is better to choose the whole market, or only a few segments, and deciding which ones should be chosen. Looking for segments, which are relatively less satisfied by the current offers in the market from competing brands

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Checking out if the firm has the differential advantage/distinctive capability for serving the selected segments

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Evaluating the firm’s resources and checking whether it is possible to put in the marketing programs required for capturing the spotted segments with those resources.

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Finally selecting those segments that are most appropriate for the firm.

Competitor’s Analysis There are many competitors of Cemex Cement. Among them are both the established local brands and also some multinational brands. The companies which are the competitor’s of Cemex Cement are mainly those companies which are on the higher rating scale of Cemex Cement like Shah Cement, Heidelberg Cement, Meghna Cement Mills ( Bashundhara Group), Holcim BD ltd, Seven Circle, Unique Cement Industries, M.I. Cement Factory and Akij Surma. Be it in terms of brand image, product quality or sales, each of these companies have their own distinctive feature for which they are positioned in a higher rank than Cemex Cement. Thus Cemex Cement sees these companies as their competitors as they are constantly fighting with these companies to reach their desired position in the market. However the cement companies which are just below Cemex Cement in ranking are also viewed as competitors and the company always keeps a look out for these companies’ activities. It is so because these companies can take the position of Cemex Cement any day. Thus both the cement companies performing better than Cemex Cement and the ones performing at the same level as Cemex Cement are the competitor’s of the company. Current Scenario of Cemex Cement & the other cement companies As per the Ranking of the Cement Companies (shown above) it can be seen that Cemex Cement is on the tenth position among the top ten cement 18

companies (both local and foreign) in the Cement Industry of Bangladesh. Although varied in ranking but almost all the top cement companies more or less follows a similar structure in terms of their functional activities; in order to survive in the industry. To have an in-depth idea of this existing phenomenon, the current activities of Cemex Cement in different areas and that of the overall cement industry has been discussed below in details. PRODUCT OFFERINGS: Cement Industry Before 2002, all the cement companies of the country used to produce Ordinary Portland cement which was mostly clinker based. However, since 2002, all the cement companies have brought differentiation in their product and are now involved in making Composite Cement. Holcim Bangladesh was the first company to launch this type of cement in the market. PRODUCT OFFERINGS: Cemex Cement Mills Ltd Like other Cement companies, CEMEX CEMENT is involved in the manufacturing of Ordinary Portland cement and the Portland Composite cement. However, they make the Portland Pozzolana Cement for exporting. This type of cement is similar to the Portland Composite Cement only with some difference in the composition the overall cement. PRODUCTION CAPACITY: Cement Industry Currently, 31 cement companies are operating in Bangladesh. The present and the upcoming production capacities of the running cement companies (as per the data of August 2010) are given in fig.4.4.From the given figures, we can see that Shah Cement which is the top Cement Company in the industry, both among the local and foreign companies has the highest production capacity which amounts to 2,700,000.00 in MT/year and their upcoming capacity is also the highest among upcoming production capacities of other companies which is 1,800,000.00 MT/year. Their project is an on-going project. Premier Cement has the third highest production capacity as per this year 2010 which amounts to 1,200,000.00 MT/year similar to the capacity of Lafarge Cement and Akij Cement. TECHNOLOGICAL IMPACT: Cement Industry There are mainly three matters which are taken into consideration while assessing the Technological Impact of the Cement companies in Bangladesh. These are: 1. The Technology used to make the product 2. The origin of the equipments/ machineries which are used to make the products

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3. Other Technological aspects of a company related to IT which mainly includes the software used by the country and their accessibility and presence via internet. Till the year 2002, Ordinary Portland Cement (which is only clinker based) was produced all over the country by all companies using the American Standard Method (ASTM). From the year 2002 onwards, differentiation was brought to the type of cements produced in the country by using the European Standard Method (ESTM) through which composite cement consisting of various composition and layers were manufactured. Today all the cement companies of the country uses the European Standard Method to manufacture their products. Usually the standard of Portland cement varies from country to country and thus, there is no universal international standard. As a result, all over the world cement companies in each countries uses the same method (either ASTM or ESTM). Moving on, out of the top ten companies on the cement industry of Bangladesh Premier Cement, Cemex and Heidelberg Cement uses the European Machineries and European Technologies to manufacture their products. Apart from these companies, the remaining companies uses the machineries and technologies adapted from the Asian regions such as China, Japan etc. It should be mentioned here that cement companies who have their own power generation plant are self sufficient. These plants run on gas and problem arises as there is a scarce supply of gas which interrupts the smooth operation of the plants. This is a problem faced by all the cement companies of the country. The shortage of power supply is also another factor which interrupts the smooth flow of operation of the companies. Lastly, the application of information technology varies from one cement company to another. Companies use different programs and software to carry out the various tasks of their organization. As this is a confidential issue, thus much information could not be obtained regarding the various programs, software and applications used in each of the cement companies. The other important side of technology related to the availability of information and accessibility of a company through internet varies greatly from one company to the other. Information about almost all the cement companies of the country is available on the online yellow pages of Bangladesh. However, the website and the webpage of these companies are not of the same standard. Cement companies like Heidelberg, Holcim, Shah, Lafarge and Seven Circles have their own individual webpage where detailed information about the company can be easily found via internet. TECHNOLOGICAL IMPACT: Cemex Cement Mills Ltd. Just like other cement countries of the country, Cemex Cement Mills uses the European Standard Method to manufacture their products. The company has an added advantage over most other cement companies they are one of those companies besides CEMEX and Heidelberg Cement who possess European equipments and uses the European technology to make their 20

products. The specifications of the equipment technologies used by CEMEX CEMENT have been discussed above. The IT department of CEMEX CEMENT is responsible for organizing and managing the various software and programs used by the employees of the company. All the employees of CEMEX CEMENT (referring to the Dhaka and the Chittagong branch) are well acquainted with the basic computer skills, however most of the employees of the corporate office of CEMEX CEMENT are trained to use and apply sophisticated and modern software required for their work areas. Like other companies, Cemex Cement is also enlisted on the online yellow pages of Bangladesh. The company has their own website and the address is www.cemexbangladesh.com

Marketing Mix

Product 1.

Cemex Cement provides a low construction material- a type of cement which contains fly ash.

2.

Cement making starts with purely organic materials delicately extracted from the earth, refined, mixed with other all-natural materials, heated, and then milled.

3.

Each stage of our proven process employs technologically advanced systems and is conducted with respect for our natural environment.

Pricing

1. Focus on bundle pricing strategies: for example - monthly retainer;

annual retainer; all services bundled for a set rate; certain services bundled together for better pricing – e.g. employee problem prevention, wrongful dismissal and severance proposals/packages. 2. Prices/billings compared and analyzed annually against top three competitors in the cement industry in Bangladesh.

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3. Costs analyzed monthly – cost containment and reduction a key strategy for competitive pricing Promotion 1. Advertising programs: local newspapers, local radio, local magazines, business trade journals 2. Personal selling: Sales and Marketing staff; face-to-face 3. Direct marketing campaigns to targeted and existing clients;

including permission-based email marketing. 4. Website: search engine optimized;

http://www.cemexbangladesh.com 5. Newsletter: hot topics in Financial Express

Place or Distribution 1. 2.

Order taking assistance issuing by fax, internet and mobile phone Checking delivery status at the factory

3.

Direct sales to business clients (this is also an advantage – you are close to your customers and will better understand their changing needs) – keep in regular contact.

4.

There are around 70 distribution centers across Bangladesh to distribute Cemex Cement.

MARKETING IMPLEMENTATION

The marketing unit can be organized by increasing the existing market and expanding the market in the south zone of the country. They have to lower down their production cost to compete in the markets of south zone in the country. Due to the high production cost, the company is unable to compete in the south zone. The decision making unit has to make sure that they 22

increase the market share in the north zone and expand their market in the south zone where Karachi is the main market in that area. Depending on the organization’s structure and the environment, the first line and middle managers can be empowered to make decisions. If the demand for the product is increasing rapidly in the market then the company has to increase the production to capture the maximum market share. They have to increase the sale in the north area of country by advertising in more areas.

ADVERTISE TO THE TERGET CUSTOMER

Strategy Although cement is said to be a low-involvement category, the brand awareness in this category is very high. Major brands like Hyndui, Akizand some strong regional brands have been fighting for mind space. "Brand awareness is the category driver. We wanted to be different and were constantly on the look out for high visibility media. We found that cricket has a great following in our country and we wanted to explore the possibility of associating with this sport. "Starting with in-Bangladesh branding, we moved on to be the co-sponsor to the Bang-Aus series held in Bangladesh. This turned out to be a great success for both the Bangladesh team as well as us. To further strengthen the bonding with the channel partners, over 400 of them were taken to witness the match. It was a glorious and unforgetful experience of visiting Bangladesh. This was an event by itself." Branded channels

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Surging ahead of competition, the cement business brought in a new concept in cement marketing — Cemex Building Solutions, a one-stop shop for all construction needs. "This is a unique concept and was tested in Buet which is one of the fastest-growing cities in construction in the country today," . "Advocating our Plan, Build and Support" philosophy, it seeks to enhance the shopping experience of customers and strengthen existing trade partnerships, by upgrading the service proposition. It offers a wide spectrum of end-to-end home building solutions, high quality construction materials and allied value-added services. As a business model, CemexBuilding Solutions offers home building solutions from planning to completion. Basically, every customer who walks in to , CemexBuilding Solutions outlet receives guidance on construction-related issues as well as value-added services like SAP, usage of budget software to estimate costs involved for construction, paper clearance procedures, etc. The customer gets a ready reckoner of information on how to choose and buy quality construction materials. With the BUET success and with key learning points, the company intends to open many more outlets across the country.

Measuring effectiveness Once the goals are well defined we need to measure the effectiveness of all such initiatives that are undertaken from time to time.We are research-savvy in our approach. We go into minute details to find out the cause and effect, keeping the larger picture in mind. This is true right from the selection of the brand name UltraTech to ad campaign testing, media effectiveness and so on. Regular Brand Health Monitoring studies are undertaken to understand various critical issues like awareness, usage pattern, equity indices, psychoeconomic mix of the target group (TG), etc. Recently we initiated and completed a customer satisfaction survey to understand the expectations of customers and benchmark with the best in the industry. Of course there are some insights, which we need to address internally, but overall we are happy with the outcome. The results are very encouraging and you would be glad to know we are steering ahead of competition. CemexConcrete: While the economy is growing, timely completion of infrastructure projects has become more challenging. With emerging technologies, one no longer 24

has to maintain huge stocks of cement and allied products, create chaotic environment and increase costs; ready-made concrete is the answer. The company forayed into the ready mix concrete about eight years back. With its first plant commissioned in Dhaka, Cemexready mix concrete was sold as a brand, 'CemexReady Mix'. True to its tagline 'concrete on call', the company was able to capture the imagination of customers and service them round the clock. The concept was new then,It was more of concept selling than a product. We had to tailor-make our communication around issues in comparison with the site mixed concrete, quality consistency, concrete testing facility, ease of handling, technology, etc. In a very short time CemexReady Mix Concrete became a generic name. The success of the brand led to the opening of a few more plants in Narayangonj itself and expansion to other Divisional pan-Bangladesh. With the transition of Cemex Plus to Cemex (Titan, Sprata)Cement, even CemexReady Mix Concrete was rechristened Cemex Concrete'. Keeping in tune with the latest technology, Cemex Concrete offers speciality concrete likeCemexFibrecon, a fibre reinforced concrete, Cemex Free flow, Cemexcolorcon, Cemex stainless, a corrosion resistant concrete, and CemexThermocon. This wide array of choices will help customers choose the right type of concrete that suits their construction needs. Cemex Cement has 11 integrated plants, seven split grinding units and five bulk terminals. UltraTech is Bangladesh's largest exporter of cement and clinker. The total cement capacity of the Cemex is 15million tpa.

REFERENCES Some of the Book References used are: • • •

Annual report 2010, Cemex Cement Limited 1st quarter report , July – September 2010 , Prospectus of Cemex Cement Industry Bangladesh,

•

Contemporary Business by Louise E. Boone and David L. Kurtz

•

Lecture of our respected teacher

Some of the Electronic References are: www.cemex.com www.wikipedia.com 25

www.scribd.com www.bangladeshrealestates.com www.bdtradeinfo.com www.thefinancialexpress-bd.com

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