A PROJECT REPORT ON

Marketing research and For Aggregate products

MASTER OF MANAGEMENT STUDIES (MMS) UNIVERSITY OF MUMBAI
SUBMITTED TO MARATHA MANDIRS BABASAHEB GAWDE INSTITUTE OF MANAGEMENT STUDIES MUMBAI CENTRAL

SUBMITTED BY ALFIE ALBERT SALDANHA

DECLARATION

ACKNOWLEDEGEMENT

Contents
Sr.no 1 2 3 4 5 6 7 8 9 10 11 Topic Executive Summery Objectives of Project Literature Review Lafarge: General information Product line information Project Design Observations and findings Data analysis Limitations Annexure Conclusion Bibliography Page no.

Chapter 1: Executive Summary

Title of the project: Customer Segmentation & Price mapping Study for aggregates market in Mumbai Name of the company: Lafarge Aggregates & concrete India Private Limited.

Mentor Name: Mr. Sachin Patil. Summary of Project: This project is an attempt to decipher the market potential for products widely used in the construction & building material space in a different format of consumption. These products known collectively as Aggregates in global terminology assume a formidable significance due to a huge demand for it in an ever growing sector Construction Industry, here in India as also because some of the natural alternative to these products become increasingly difficult to procure due to environmental regulations imposed on them. We are talking of Sand & Coarse stones of specific dimensions called popularly in the local Mumbai market as Reti & Khadi -1 number & Khadi -2 number. Our products are 0/4mm Fine Aggregate for Reti , 4/10mm Coarse Aggregate for Khadi-1 number & 10/20 Coarse Aggregate for Khadi-2 number For the first time an organized player like Lafarge plans to entering into the aggregate market & this project aims understand customers purchasing pattern of aggregates & identify key parameters which influence customer buying decision while purchasing aggregates segment wise & geographic location wise. For this study segments are defined based on Lafarge segment definition terminology

Civil contractor ( Residential/commercial) Infrastructure Contractor (Road, Bridges, Water supply, Drainage, Metro Rail, Other mention)

Commercial ready mix manufacturer

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Commercial asphalt manufacturer Paving / precast manufacturer Builder Captive ready Mix Player

Lafarge is currently doing trading business in the aggregate market in Mumbai since year 2009 with average sales of around 35,000 to 40,000 tons per month. In last three years it has developed up solid customer base across segments & has made inroads into unstructured aggregate market in Mumbai. It has developed its sales team, technical team & logistic team . Lafarge will be starting its first aggregate Greenfield project in Badlapur. Lafarge aggregate division decided to conduct study to do customer segmentation & price mapping across segments & geography wise which will be a divisive tool for Lafarge aggregate sales team to sales aggregate from Badlapur plant. So I did customer segmentation and a price mapping study to assist them understand the current market scenario. My main aim of the project is to understand customers current pain areas and assist Lafarge to provide better service in those areas. I had to prepare this plan by performing the market research on given product line in selected region. So this project will give you the brief idea about the marketing research and IMC plan for aggregate market. I have discussed following points through my project: 1) I am giving the basic information about Aggregates, product line, there features and market research plan.

2) Then I am discussing about project design .Then I designed the research process with the sample size of 71 builders and civil contractors from south mumbai. Then I am discussing about observation and findings about the project. 3) In the data analysis part, I have shown actual analytical results of data secured from research process and the graphical representation. 4) In the final part, I have discussed about the Limitation of the project. I have tried my level best to put best efforts to take out maximum data from the given region, and to use that data for the preparation of my recommendation. I am sure this will help Lafarge in future.

Chapter 2: Objectives of Project

Objectives of summer placement:

1) To do market research on Aggregate product mainly 10mm, 20mm and crushed sand Our main objective is to study the market position of above

mentioned Aggregate products in Mumbai market. For this I have select south Mumbai as my sample region. 2) To understand the current pain areas of the customers.-The objective of the project was to understand the current pain areas of the customers and the issues faced by them in the current market from their existing suppliers. To understand the purchasing patterns of aggregates: The objective was met by identifying key parameters which influence customer buying decisions while purchasing aggregates. To identify the gap between customer needs and marketing offerings: The objective of the study was to identify and analyze satisfaction level of customers across parameters by identifying the loop holes. To capture the usage patterns across segment and geographic location: This objective is met by doing a complete customer mapping of aggregate users and also understanding demand of aggregates segment wise. 3) To create awareness in the minds of the customers: One of our other objectives of this research program was to create awareness in the minds of customers about Lafarge and its new plant at Badlapur. 4) To understand customers perspective about the brand: During the research we also tried to understand the customer perspective about Lafarge and what values do they associate with Lafarge To analyze the data collected: The objective was to collect and analyze the required data to guide Lafarge to devise sales plan for Badlapur project. To develop Customer Data : This objective will be used after operation of the badlapur plant.

Chapter 3: Literature review Lafarge: General information

Introduction About Lafarge Global Lafarge was founded in 1833 by Joseph-Auguste Pavin de Lafarge in Le Teil, to exploit the limestone quarry in Mont Saint-Victor between Le Teil and Viviers. In 1864 Lafarge signed its first international contract for the delivery of 110,000 tonnes of lime to the Suez Canal construction project. It developed calcium aluminate cements. It was also an early pioneer in the production of white Portland cement, still made at the company's original Le Teil plant. In 1919, a public company was formed, named "Socit anonyme des chaux et ciments de Lafarge et du Teil." In 1980, it joined with the cement company Coppe to become SA Lafarge Coppe. Lafarge purchased a plant from the National Gypsum Company in early-1987. Ten years later, it bought Redland plc, a leading British quarry operator. In 2001, Lafarge, then the world's second largest cement manufacturer, acquired Blue Circle Industries (BCI), which at the time was the world's sixth largest cement manufacturer, to become the world leader in cement manufacturing. In 2006, Lafarge North America shareholders accepted a $3 billion tender offer from Lafarge Group which gave the parent company full control over the North American business,

[ removing LNA from the New York Stock Exchange. Previously the Group had owned 53% of LNA shares In December 2007, Lafarge announced the purchase of the Orascom Cement Group, an Egyptian based cement producer with operations across Africa and the Middle East, from Orascom Construction Industries (OCI). On May 15, 2008 Lafarge acquired Larsen & Turbo Ready Mix-Concrete (RMC) business in India for $349 million. About Lafarge Aggregates & Concrete India (P) Ltd. In line with its strategy to develop its Aggregates & Concrete business in emerging markets, Lafarge went on with the acquisition of L&T Concrete for an enterprise value of INR 14.8 billion (USD 349 million). Lafarge acquired through L&T Concrete 66 highly efficient concrete plants located across India, in key markets such as Delhi, Kolkata, Mumbai and Bangalore, with total estimated volumes of 4.1Mm3 in 2008 and a market share of approximately 25%. The acquisition will be accretive to Lafarge earnings per share from 2009. With this acquisition, Lafarge established itself as the leader in the Indian ready-mix concrete market. The ready mix concrete market is still in an early stage of its development in India, but offers strong growth and value creation potential. The Indian construction market is developing to meet significant demand for new housing, urbanization and infrastructure. This acquisition was an important step in Lafarge's strategy to develop its Aggregates & Concrete business in emerging markets. It is with a planning provide the Group with an excellent platform to develop further its Aggregates & Concrete business in the fast-growing Indian market, along with a very experienced team. India offers strong potential for introducing innovative products. Lafarge boasts the world's leading research facility in building materials and has developed innovative, value-added concrete products over the last ten years which contribute to improving construction methods and working conditions on building sites. One of Lafarge's key strategic focuses today is innovation in concrete, which translates into an

[ accelerated roll-out of value-added concrete products in both developed and emerging markets. Lafarge is also aiming to offer the Indian market its most advanced and value creative solutions for construction.

Chapter 4 Product Line Information

In this summer, our main aim is to prepare plan for the aggregate products of Lafarge

Chapter 5: Project Design

During summer internship, we concentrated mainly on 3 products: 1) 10 mm 2) 20mm

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3) crushed sand/river sand So for this we focused on getting the Current market condition of aggregates. For getting the information from all available sectors of Mumbai and analyzing it in a effective manner. 1) Defining the type of questionnaire: We designed the questionnaire in two parts A) Open Ended B) Close Ended The close ended questions included satisfaction levels of their current source of supply , areas of supply , the no suppliers , their comfort level with the current material being supplied to them in terms of price, quality, payment terms, delivery, customer management and documentation. We also included questions which helped us study the factors that drive them to purchase aggregates. The open ended questions mainly consisted of questions regarding Lafarge and their awareness of an organized player like Lafarge getting into this unorganized market. During the study we also briefed the customers about Lafarge and the company coming up with a green field aggregate crusher in badlapur and noted their valuable comments on the same. 2) We used database for interviewing customers from Projects today database Lafarge Sales Team inputs Real estate websites Personally visiting key locations & identifying ongoing projects

3) Methodology

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During Study we tried to cover all the above said segments by interviewing players from each segments.

To cover players spread across whole metropolitan Mumbai area we divided it in 4 regions 1. Central Mumbai 2. Western Mumbai 3. South Mumbai

4) In total I interviewed fifty five customers across all segments spread across entire south Mumbai area to know their viewpoint regarding aggregate consumption, pricing, source and satisfaction level and river sand consumption, pricing and satisfaction level

Out of total sample size of 55 players we interviewed and got 55 responses (as some players are lying in more than one customer segment) Ready mix concrete Road contractors

Builders

Civil Contractors

Chapter 6: Observations and Findings

Observations and Findings:

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For getting the appropriate information regarding the market, I conduct the market research in south Mumbai region.

We prepared the set of questions regarding his current source of materials, quantity demanded, no. suppliers, current satisfaction from suppliers and purchase drivers.

While asking the questions I observed, whether he was aware about all the product features, by asking some extra questions.

We observed the content of questions should be easy that it would be easily understand by builders.

We observed that currently customers are happy by keeping multiple suppliers to maintain the security of supply.

We found that in south Mumbai due to the space constraints most of the builders are ordering as and when required.

Most of the customers are happy with the current suppliers and the way things are working out for them.

During this research, we also observed that most the customers are still not aware of their pain areas.

We observed that most of the customers have given information in a appropriate manner.

When asked about the satisfaction levels with the current materials being supplied to them, the following were the findings.

1. Price

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Depending upon the market demand & supply of materials there were frequent variations in prices. These variations never altered their demand for materials as the projects had to be completed in the stipulated time frame. On the other hand buyers have this thing in mind that Lafarge being in International giant entered in Indian market will not be of great help as the overhead cost(of Lafarge) in running the business with a proper streamlined system will eventually be increase players cost. Some of the players are ready to deal with Lafarge if there prices are competitive enough compared to other suppliers. Those already dealing with Lafarge in aggregates or RMC have given mixed response, some are happy with the cost and some are not.

2. Quality The Shape, Size, geology and consistency of quality was of utmost importance to all the players. But they tend to compromise on that which we realize when ask to give the ratings about it. Lot of builders and contractors compromise on it to complete the project as times the main constraint. Though the first purchase driver while buying the material is Quality, a lot of them tend to compromise. A lot of big Builders have brought it to my notice that quality material is unavailable or it is not as per their standards. E.g. If ordered for 10mm metal, they get the material which is between 1015mm. This is due to the improper or insufficient quality parameters and standards observed by the suppliers which ultimately affects the end product.

3. Payment Terms. Payment terms was important for some as they had this mutual understanding with the suppliers, lot of them are not ready to do business with other players such as Lafarge

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because of this factor. Though the term is between 30-60days, the transactions never take place never on the mentioned time frame. Some of the builders and contractors have faced a tough time and they have had gone through the situations when they were suffered due to Lafarges payment term policies and that is why they do not want to deal with us in future.

4. Delivery Most of the players were satisfied with the delivery schedule and the quantity ordered as per requirements. Delivery truck size and security supply was of least importance to them. Their dealings with the sales representatives were proactively dealt with and their technical as well as commercial issues regarding quality were also resolved. When asked about Lafarge some of them(between kurla & mulund) had problems with delivery, they mentioned about Bhandup plant which is at a reasonable distance from their projects and still they faced this problem, when told them about Badlapur plant they were not sure whether to deal with us because of their past experiences.

5. Documentation None of the players faced any problem about documentation as they emphasized on proper challan, royalty slips, and invoices. This was the case when they dealt with suppliers other than Lafarge. When asked about us, some were happy and some who have dealt and who are currently dealing with Lafarge have problem of Batch sheet which is the essential part along with the material delivered.

Some more Facts when asked about the priority of Purchase drivers.

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1. The most important factor that drives the players to purchase the aggregates was consistent quality. 2. Other than quality, price & payment terms were also crucial. 3. In some cases Supplier relationship came out to be the utmost factor as trading with the same suppliers was consistently happening since decades. 4. Other than the problem of shortage of river sand, no project suffered in the last 12months due to lack of supply of aggregates. 5. The decision making authority for finalization of aggregate supplies rested on the site quality in-charge and in some cases the decision maker was either the purchase manager or the project manager in the head office of the said company. 6. Lafarge was well known to most if the players as the worlds leader in manufacturing of RMC. 7. Small scale builders were unaware of Lafarges presence in the market and most of them know Lafarge as a RMC giant and not an aggregate supplier.
8. There was a mixed response in the market when asked about their opinion on

Lafarge entering into Aggregate business. Some were happy that now the process of buying and dealing the suppliers will be streamlined as there are lot of Local quarry owners in the market who are adamant on their stand and are not flexible. Some say Lafarge should not enter this unorganized industry as this trend doesnt suit the Indian market of construction and real estate. 9. The green field aggregate project in Badlapur seemed vague to many due to various reasons. 10. The very first reason was the distance of the plant and the perception about the aggregate material coming from Badlapur.

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11. Engineering characteristics of aggregates are directly dependent on the geological composition and mode of origin of the sediments or rock being mined, badlapur is not a favourable option as per their perception.
12. The transport of aggregate from a quarry or other source to the point of use is

essential.
13. The location of the site access point was critical and was sited to many and

badlapur was an inefficient option in the transportation of aggregates. 14. Purchasing aggregates from Lafarge would be a comfortable option for those who have previously dealt with or dealing with the company in some way or the other. Players who are unaware of the presence of Lafarge have no idea of its reliability and efficiency and would not really be comfortable in purchasing aggregates from Lafarge.

Target Products: 10 mm,20 mm. Crushed sand.

We collect the information in following Sequence:

What kind of activities the company is into. Collect the information regarding the current source of suppliers and the quantity demanded.

Reasons: Why they keep multiple suppliers.

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Collect information about the current price of material. Take the ratings of their current suppliers related to price, quality, delivery, customer management, Documentation.

Then we took the ratings of the purchase drivers. Then the awareness of Lafarge.

Chapter 7: Data Analysis

We did the Processing on the available data with the following parameter:

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1) Total Sample Size 55 Shopkeeper in a area of Dadar to churchgate. 2) % of Preferences = No. of times particular choice Total no of responses 4) Average= No. of points No. of responses We found the above mentioned findings with the use following Pie chart. This pie chart represent the composition of the sample size What kind of activity the company was into:

3%

8%

45%

civil contractors builders rmc infra

44%

The current source of supply :

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32% Directly Indirectly 68%

From the above pie diagram we infer that 80% of the companies prefer to deal through an agent or a broker,and just 20% deal directly with the crush owners.

25 20 15 The current areas of supply: 10 5 0 civil contractors directly civil contractors indirectly builders indirectly builders directly 10 22 11 2 RMC indirectly 6 Infra indirectly 20 Series1

Current Area of supply:

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7% 11% 1% 6% 3% others turbhe uran tansa wada 72% not known

In the above pie diagram we can see that the major part is occupied by companies who dont know ,but this also includes the people whose supply keeps on fluctuating depending upon the prices followed by uran, turbhe, wada and others which includes vashi, borivili, pargaon.

No of suppliers prefered by companies:

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The major part of the above pie daigram is occupied by the companies who prefere more than 1 supplier, when asked questions about the reasons for keeping more than 1 supplier the common answer was for the security of supply.

Company satisfaction from the current suppliers:

On the basis of price:

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When asked about their satisfaction level about price, we can see that on a scale of 5, 4.4 is an average rating for current price and 3.5 for the price satisfaction. When asked questions on the same lot of companies were not happy with the price variation but were helpless on the same.

On the basis of Quality:

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From this we can find that, techincal support is one of the area with least rating and even the companies who have given top ratings in this area are the ones who receive it only at the start of the project, variation of size is one of the other concerns for the companies followed by shape and colour.

On the basis of payment terms:

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From this we can find that, most of the companies are happy with their current payment terms and days which is between 30 days to 45 days.

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On the basis of delivery:

From the above we can find that, the companies are not facing much of an issue in getting their deliveries on time only in some case where the trucks have got late due to traffic jams, rest the quantity ordered , and requirement have alsmost perfect ratings.

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On the basis of customer management:

From the above we can observe that most of the companies are happy with their current customer management, they are directly in contact with their suppliers.

On the basis of Documentations:

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From the above we can see that weighment slip is not received by the companies but it is not a matter of concern for the companies because alsmost everyone is taking material on measurement so they do not accept a weighment slip, in other cases where the royalty slip is received by the companies only when its asked.

The main purchase drivers in aggregates:

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From this we can observe that, the above are the main purchase drivers which have got the highest ratings during the research.

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The purchase drivers with lest importance:

From this we can observe that most of the companies are not giving much importance to the operating standards of the suppliers as the rating is very low, followed by core fleet, plant capacity and supplier reputation.

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Has the project suffered in past 12 months due to supply of aggregates:

From the above we can notice that just the 2% i.e from a sample size of 55 only 1 company has suffered due to the shortage of supply that was because the government had closed down a few quarries, rest of them have never had a issues from the supply of aggregates but there have been stoppages in the work which was mainly due to the shortage of river sands supply.

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The major decision makers in the company:

From this we can find that,in most of the companies purchase department is the major decision maker, even if this is the case in most of the cases the site quality incharge and the project managers play an important role in the decision making process.

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Awareness about Lafarge:

From this we can find that, out of the total sample size 58% people were aware of Lafarge but then the main reason of concern for the company is that even if this 58% people are aware of Lafarge they just have a very rough idea of Lafarges business that is because some of them have seen Lafarges RMC trucks on the road but not a good awareness of the company, but in most of the cases this people are not the decision makers.

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Would they be comfortable in purchasing Aggregates from Lafarge:

From this we can find that, 64% people are ready to deal with Lafarge but it depends on a lot of things was one of the common answer, and the people who do not want to deal with Lafarge are the people who have good relation with their current suppliers.

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Recommendations:
From above analytical graph, we can easily point out that, Lafarge needs to improvise on the following points:

Chapter 7 - Limitations

Chapter 8: Annexure
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Chapter 9: Conclusion

Chapter 10: Bibliography

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