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AASIGNMENT OF MARKETING STRATEGIES
PREPARED BY: AAMIR HAYAT
STUDENT OF GRADUATE SCHOOL OF MANAGEMENT INTERNATIOMAL ISLAMIC UNVERSITY ISLAMABAD
In relation to our task I have visited the office of AHMAD FAROOQ manager marketing of Askari Cement Limited Wah. (Office is situated at AWT Plaza, Sadar Rawalpindi)
MARKETING ASSIGNMENT My basic question was what is marketing? To what extent it is important for organizations? Marketing in cement industry? How people are doing marketing now days? He starts saying that marketing is nothing but the use of your mind. You can do any thing which you want to do by using your mind. There are no hard and fast rules for marketing. Marketing is all about to provide awareness to people and to persuade them to buy your product and care for your customer to make them a satisfied and happy customer. All marketing activities depend upon objective of the organization. What an organization wants to achieve is the base of all marketing activities. All activities, after when the goods are produced to selling these goods to ultimate consumers and getting feedback from them are included in marketing. Improvement of products by using this feedback is also included in marketing. Then he said that they are producing three different kinds of cement which are Grey cement White cement Selphate resistance cement Grey cement is mostly used for normal construction. White cement is used for tile work on floor or on walls. Selphate resistance cement is used in bases of the buildings to neglect the effect of salinity. He told me that there are four large units are working is area (Near Rawalpindi) which are Askari cement Fuji cement Fecto cement Best way cement And one small unit of Dewan group, Dewan cement. He told that these companies use different polices. For instance he told that when ever these companies decide to penetrate in new market, Askari cement use the policy of hitting borders of that market and then to penetrate towards centre. While Fuji and Fecto target centre of the market first and then spread towards borders of the market. 2
Then he told me that cement is mostly sold to these channels Distributors Petty buyers Government institutions Mega projects Transporters cum distributors
Distributors purchase cement from company and then distribute or sell to ultimate consumers. Petty buyers mean small purchasers of cement. Government institutions like CDA purchase cement in large quantities for construction of various projects. Some times central or provincial governments’ starts mega projects like construction of dams which is also big users of cement. Transporter cum distributors means transport and distributor together which purchase in small quantities. He said that dealer’s network play very important role in selling a product and to create a good reputation by providing timely supplies to consumers. He told that they give a specified area to every dealer in which he has the sole authority to sell the product. They give target to every dealer to sell a specific quantity of product. Dealers pay certain amount as security to company after which they can buy cement from the company. Some cement companies retain documents of vehicles as security. He also told that satisfaction of dealers is also very important for creation of good word of mouth. He also said that dealer are the representatives of the company if they remain dissatisfy they will harm the reputation of company.
Dealers are running their own business. They are concerned with their own profits. If company gives them sufficient commission they remain satisfied. There are some other ways which companies can use to remain in contact with their dealers, these
MARKETING ASSIGNMENT ways are to give special gifts, remain in continuous contact with them, and invite them to special dinners and offering them special family tours. He told that some companies and dealers have problems in collections. But Askari cement has the policy to sell only on cash. There is no credit sale in Askri cement. This according to him is a very difficult way of selling in this society. But they at least do not have any problems of collections. Cement has a normal life of 28 days after which it starts spoiling. Because of this short life time dealers sell the cement on first in first out method (FIFO). So cement does not remain unsold for longer period. However if we are able to protect cement from humidity and water its life can be increased up to 6 months. He told that price of cement is not same in all regions like fast moving consumer goods (FMCG). (For instance Pepsi has same price in all areas of Pakistan). Price of cement will be less in local areas because of low transportation cost while price in other areas which are far away production area will be slightly higher because of high transportation cost and more freight duties. Now a day’s price of cement varies around RS. 360. He told me that they recently decided not to sell in Lahore in large quantities because of slightly higher price of their product which make it nonprofit able for them to sell in that area. But they does not stop all the supplies to Lahore, they are supplying in small quantities to remain in market. He told that sale of cement is largely depend upon season. Winter season is off season for cement industry in hilly areas like abotabad, mansehra etc. Because of heavy rains and cold weather people stop construction activities in these areas. According to him December, January and February are peak off season in this area. Another reason for reduced demand is humidity which destroys cement very quickly. During this season they shift their efforts to sell more in areas of Punjab and Sindh. When winter season pass away they again start selling in these areas. He said that most people show confidence in local brands. This is because of less delivery time and direct contact with producer. In these areas local brand will be the price setter while others brands will be the price followers. Local brand sell at some lower price then others because of lower transportation cost and low or no excise duties. He said that some brands lead the market price vise i.e. having higher price, some lead market sale vise i.e. having maximum sale. While some lead in both i.e. having higher price and maximum sale. After this he talked about consumption pattern of cement. He said that 60% to 70% of cement produced used in domestic market while 30% to 40% is exported to different countries. He said that Pakistani cement has very good reputation internationally and this is because of availability of good raw material in Pakistan.
MARKETING ASSIGNMENT Pakistan is currently exporting cement to India, Afghanistan, Middle East countries, some African countries, Ireland and England. He said that export to India will come to an end in 2009 because new Indian units start production at the end of 2009. He said that brand image is very important. Some time people got very high imagination about any brand and start showing confidence in that brand which become the basis of success for the company. Bag color is also very important factor. Most if the people in Pakistan are illiterate they purchase cement by looking at bag color that is why bag color is very important. He told that some years ago Dewan Cement (previously Sadi Cement) changes the bag design but people stop purchasing their cement. He also told that his own company once decides to change bag design but after survey management left the plain incomplete because people were not ready to accept new design. According to survey design of FUJI Cement is most popular in public because of its commando type design. He told that we change color and design by launching new brand but we can not do all this with already recognized brand. At the end I ask some questions. First I ask which cement company is doing most effecting marketing in present times. He replied that some years ago a company named Pakistan Cement came into existence. Their marketing put us in hardships at that time. They approach every shop keeper in cities as well as in villages. Create dealers, give them gifts, and make frequent contact with them even before launching of product in market. They offer commission up to 16 rupees while other companies were giving 4 to 5 rupees commission. Through this way they disturb the whole market and within 3 month they were in high ranked brands. But their dealers start charging higher prices to increase their profit, this practice break the confidence of their brand and now they rank in lower brands. He also said that now D.G. KHAN Cement has strong marketing team. Then I asked what they had done at that time? He told that we react quickly, increase our contact with dealers, invite them to dinners with company officials and give them different. Company decided to double their quota of cement to retain them with company. He also told that our marketing team visit different areas to make dealers satisfied and also increase the speed for booking and delivery.
Then I ask about present marketing trends.
MARKETING ASSIGNMENT He said that cement companies does not advertise on television or radio even most of the companies does not advertise in newspapers. He told that we mainly focus on dealer’s network and advertising through personal relationships. Then I ask. I have studied in newspaper that two new companies from China and Dubai are interested to install plant in Pakistan, what will be the effect of this new investment? He told that market is fully packed there is no future for new companies in Pakistan. He also told that these companies will never invest and these are only rumors. When I asked about taxes and duties he replied that sale tax is 16% (recently increased from 15%) while excise duty is increased from 750 to 900. and there is 1% special sale duty on cement industry. Then I ask about ethics in marketing? He said that one must be fair and truthful in marketing practices because unethical and unfair means can provide short time benefits but in long run people will lost the confidence in product and once people lose confidence it will be proved very harmful for the company. Customer is the only person for whom company is producing all the products if customer becomes annoyed all products of the company remain unsold and it earns nothing but loss. Mobile cellular companies for instance are using unfair means for promoting there services At the end I ask about presence of cartel in cement industry? He accepted that there is cartel in cement industry but at the same time he said that it is not active. Owners of the cement industries decide certain price to protect small cement unit. If the price is not fixed by industries small units will die only in 2 to 3 years.
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