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Market Audit and Competitive Market Analysis of SHAH Cement in Philippines
Market Audit and Competitive Market Analysis of SHAH Cement in Philippines
Market Audit and Competitive Market Analysis of SHAH Cement in Philippines
Submitted to: Dr. Md. Ridhwanul Haq Assistant Professor; School of Business North South University Submitted By:
Md. Ashraful Islam; Sultan Mahmud Sarkar; M. Tanim Hasan; Mosabbir Alam; Taskin Fatema; Tahmina Matin; ID: 111 0693 090 ID: 091 0476 060 ID: 101 0360 090 ID: 101 0462 090 ID: 101 0433 090 ID: 101 0491 060
Executive Summary:
The report conducted here is based on feasibility study of exporting Bangladesh Manufactured Shaha Cement to Philippines. We have gone through all the processes involved to establish a new brand in a new market. We have analyzed the Cultural aspects of Philippines. In which we have tried to compare our products relative advantage, compatibility, complexity and others as required. We have found that though there were complexities we have enough strength to survive & grow in Philippines market. We have studied the competitors in Philippines. In most of the specifications we found our product will be preferred by the consumers of Philippines if we can communicate properly taking help from the agencies. Though distribution of cement will be a bit expensive when compared with Bangladesh, but we will be able to make it smooth with the transportation agency & taking help from our local distributors. We are going to use the best Medias available in the market so that we can reach the consumers fast & effectively. All through our study we have tried to understand the market & the competitors. We found in our favor & hope we will be able to grow as we demanded.
Introduction:
The marketing audit is a fundamental part of the marketing planning process. It is conducted not only at the beginning of the process, but also at a series of points during the implementation of the plan. The marketing audit considers both internal and external influences on marketing planning, as well as a review of the plan itself.
cements, ordering and logistical assistance to ensure timely delivery to the customers, plus documentation, demonstrations and training relating to the properties and appropriate use of Shah Cement.
Relative Advantage:
At the hydration period Limestone accelerates the reaction of C3A, which results in early setting and early strength developed in the concrete and mortar. Due to this behavior, the following advantages are evident at construction site - Shah Cement enhances the work progress with respect to concrete strength development - Shah Cement better performs in the earthquake zone In the mortar work (Brick/Plastering), the surface of the plaster turns smoother when compared to PCC cement The concrete becomes more durable due to less porosity in concrete that is made of Shah Cement The hydration heat is less, resulting in less thermal crack and hair crack in the surface Mortar remains rich because Shah Cement requires less remixing with water Easy to apply, comparatively minimal effort required
Compatibility:
Cement is made by crushing and grinding calcium carbonate, silica (sand), alumina and iron ore in appropriate proportions and heating the resulting mixture in a kiln to approximately 1,500C. In the more modern dry process used by around 88% of Lafarges plants, the ore mixture enters the kiln dry, as opposed to the older process in which it is mixed with water. Each process produces clinker, which is then finely ground with gypsum to make cement powder. A breakdown of the production cost of cement (before distribution and administrative costs) is approximately: energy 31%, raw materials and consumables 29%, labor, maintenance and other production costs 28%, and depreciation 12%. Raw materials for making cement (calcium carbonate, silica, alumina, and iron ore) are usually present in limestone, chalk, marl, shale and clay, and are available in most countries. Cement plants are normally built close to large deposits of these raw materials. For most of our cement plants, we obtain these materials from nearby land that we either own or over which we hold long-term quarrying rights. The quantity of proven and permitted reserves at our cement plants is believed to be adequate to operate the plans at their current levels for their planned service life. Where technically available and economically viable, we may substitute ground blast furnace slag, pozzolan or fly ash for certain raw materials when making cement, or mix slag, pozzolan or fly ash with cement at the end of the process. Ground blast furnace slag is a by-product of steel manufacturing, and fly ash is a product of burning coal in electric utility plants. Whether and how they are used depends on the physical and chemical characteristics of the slag or ash and on the physical and chemical properties required of the cement being produced. These materials help lower our capital costs per ton of cement produced. Their use is
environmentally friendly since it increases cement supplies by recycling postindustrial material that would otherwise be used as landfill.
Complexity:
Cement prices in Philippines are market driven and volatile.
Prices vary from zone to zone and customers are invoiced at the specified rate for consignee's location Even though, Cement companies try to create Product differentiation, market share is highly dependent upon Price and hence, Cost control in Production as well as Logistics is very important
Prices include taxes & freight hence realization calculation is complex Most payments are on-account type and not linked to invoices Complex system of discounts and incentives Strong syndicate / union presence (Cement Manufacturing Association of Philippines) Consignments of both road and rail sometimes needed to be reallocated / rerouted Incentives and associated credit/debit generation Delivery tracking Accounting for damaged cement (bags) Transporter Billing on retrospective basis
Trialability:
As Shah Cement is already exporting in various countries (India) in the world. We are planning to send to the testing authority at Philippines very soon and after words we well send our products to the mass Pilipino market.
Observability:
B. Major problems and resistances to product acceptance based on the preceding evaluation.
One of the major problems of the Philippines is the brand loyalty of the consumers. The consumers in the Philippines market are very brand loyal. For a new entrant in the market it is going to be a problem. Another potential resistance that we might face is the syndication of locality. There is a strong syndicate present in the Philippines market. No new brand is allowed to enter in the market without entering first in the syndicate. So, naturally presumed we are going to face some resistance from the market.
The Market
Geographic Location: The square kilometers, respectively. They, together with the cluster of the Visayan Islands that separate them, represent the three principal regions of the archipelago that are identified by the three stars on the Philippine flag. Topographically, the Philippines is broken up by the sea, which gives it one of the longest coastlines of any nation in the world. Most Filipinos live on or near the coast, where they can easily supplement their diet from approximately 2,000 species of fish. Philippine archipelago lies in Southeast Asia in a position that has led to its becoming a cultural crossroads, a place where Malays, Chinese, Spaniards, Americans, and others have interacted to forge that unique cultural and racial blend known to the world as Filipino. The archipelago numbers some 7,100 islands and the nation claims an exclusive economic zone (EEZ) of 200 nautical miles from its shores. The Philippines occupies an area that stretches for 1,850 kilometers from about the fifth to the twentieth parallels north latitude. The total land area is almost 300,000 square kilometers. Only approximately 1,000 of its islands are populated, and fewer than one-half of these are larger than 2.5 square kilometers. Eleven islands make up 94 percent of the Philippine landmass, and two of these--Luzon and Mindanao--measure 105,000 and 95,000 kilometers, respectively. They, together with the cluster of the Visayan Islands that separate them, represent the three principal regions of the archipelago that are identified by the three stars on the Philippine flag. Topographically, the Philippines is broken up by the sea, which gives it one of the longest coastlines of any nation in the world. Most Filipinos live on or near the coast, where they can easily supplement their diet from approximately 2,000 species of fish. Off the coast of eastern Mindanao is the Philippine Trough, which descends to a depth of 10,430 meters. The Philippines is part of a western Pacific arc system that is characterized by active volcanoes. Among the most notable peaks are Mount Mayon near Legaspi, Taal Volcano south of Manila, and Mount Apo on Mindanao. All of the Philippines islands are prone to earthquakes. The northern Luzon highlands, or
Cordillera Central, rise to between 2,500 and 2,750 meters, and, together with the Sierra Madre in the northeastern portion of Luzon and the mountains of Mindanao, boast rain forests that provide refuge for numerous upland tribal groups. The rain forests also offer prime habitat for more than 500 species of birds, including the Philippine eagle (or monkey-eating eagle), some 800 species of orchids, and some 8,500 species of flowering plants.
The country's most extensive river systems are the Pulangi (Rio Grande), which flows into the Mindanao River; the Agusan, in Mindanao which flows north into the Mindanao Sea; the Cagayan in northern Luzon; and the Pampanga, which flows south from eastCentral Luzon into Manila Bay. Laguna de Bay, southeast of Manila Bay, is the largest freshwater lake in the Philippines. Several rivers have been harnessed for hydroelectric power.
Product-use patters
Philippines consumers are aggregately more unfavorable towards marketing practices in comparison to transitional countries and less unfavorable in comparison to developed ones. The marketing sentiment scale showed evidence of divergent, convergent and predictive validity. The results from the structural equation paths provided evidence that associations do exist between attitudes toward marketing, satisfaction and government regulation variables. The study also revealed that there were no significant differences in attitude towards government regulation with respect to various demographics variables.
Shopping Habits:
Brand loyalty is consumer preference to buy a particular brand of cement in Philippines. It occurs because consumer perceived that the brand offer image or level of quality at the right price. perceived. Consumers subconsciously exercise a great deal of selectivity as to which aspects of the environment of which stimuli they perceive. A person may give importance to some things ignore others and may turn away from still others. Their previous experience as it affects their expectations and their motives at the particular time. For consumers, purchase intention and purchase satisfaction are related to price perception in their mind. Perceived value of our Cement should match with the perceived to value of the cement. The consumers of Philippines subconsciously exercise a great deal of selectivity as to which aspect of environment or which stimulating they
a low margin. So transportation cost will be bearded by them and they will also deliver to the Retailers.
Sales Promotions:
Newspaper Advertising Promotional Campaigns Wall paintings Signboards and light boxes Customized Accessories Events Sponsorships Television Internet Radio
Magazine
Pricing Strategy
Customary Markups:
The pricing of cement of various companies are very close to one another. (refer to figures Market price in Manila & outside of Manila). There are a number of components which are taken into consideration while price fixations of cement bags are carried out. The components are discussed below. Cost of the raw materials and production of the cement. To start with, the cost of producing the cement itself is taken into account. This includes the cost of importing raw materials, cost of production and the cost of packaging all inclusive of other fixed costs consisting of inventories and human resource required for production. The market demand also plays a dominant role in the price fixation of cement. The supply of the raw materials and supply of cement by other companies in the market in addition to the market demand of the product also determines the final price of the product. When the demand of their product is high, the price of their product is also increases and vice versa. Seasonal demand of the product. The other important factor which has an effect on the changing price of the product is that of the seasonal demand of the product in the market. There are mainly three dominant seasons in terms of demand of cement in the cement industry. They are as follows: Peak Season: January to April/ May, Dull Season: June to September, Off Season: October to December In the cement industry, January to April which sometimes also stretches till May is considered as the peak season when the demand of cement in the market is very high. As per the climate of Philippines, there is little or no rainfall in the country.
The time for starting work of constructing buildings and other infrastructural development projects during this season. As the demand of cement is high during this time, as a result the price of the products of Shah Cement is also higher than that compared to the rest of the year. This is also true for other cement companies operating in the country. The month of June to September is considered as the dull season in cement industry when the overall sale of cement is quite low compared to that of the peak season. This is the time of the year when rainfall is most evident in the country. Rather than constructing buildings, this time of the year is mostly used for curing. Curing is one of the most important steps in concrete construction. Curing mainly increases the strength and durability of concrete to a great extent. The concrete hardens as a result of hydration which is a result of the chemical reaction between cement and water. However, hydration occurs only if water is available and the temperature of the concrete stay within a suitable range. The rainfall in this dull season helps the concrete surface to stay moist naturally and allows the hydration process to take place. The Off season for the cement industry usually starts from October and ends in December. During this time the sale of the cement is normally the lowest or almost close to nil. This is also the time just before the peak season. From past observations, it has been seen that usually the other materials related to cement (mainly referring to the other building materials) are not available during this time of the year. This is also another prevailing reason for this period of the year to be regarded as the dull season. Taking this situation into consideration, the price of the cement of almost all companies in Philippines is usually the lowest compared to that with the other two seasons due to the fall in market demand and sales. Price of competitors product currently, 20 cement companies are operating in the cement industry of Philippines who are producing similar products. Due to the presence of homogeneous products in the market, price war is a sensitive issue in this industry which exists from time to time in the cement market. Another component which is taken into consideration while fixing the price of cement bags is done by observing the price of the competitors products.
Competitor's product(s):
Brand Name:
The following major competitors are available in Philippines: 1. Holcim Cement Philippines 2. Lafarge Cement Philippines 3. Cemex Philippines 4. Apo Cement Corporation 5. Republic Cement Competition 6. Taihieiyo Cement inc.
7. Iligan Cement Corporation 8. Lloyds Cement Corporation 9. Richfield Industrial Corporation 10.Mandanao Portland Cement Corporation 11.Northern Cement Corporation 12.Pacific Cement Philippines 13.Solid Cement Corporation
Competitor Features:
Particulars Cement Cement over clinker ratio 1.29 L.O.I. (max) 4.5 5.0 4.7 4.5 1.23 1.28 1.27 HOLCIM Lafarge Cemex Shah
4.5 3.5 .
22mpa
19mpa
Compressive Strength (28 days) 38mpa 48mpa Bending Strength (03 days) mpa Bending Strength (28 days) 6.9 mpa 6.0mpa 3.8mpa
40mpa
40mpa
4.0 mpa
3.8mpa
4.2
6.2mpa
5.9 mpa
Competitor's Prices:
Brand HOLCIM Philippines Lafarge Philippines Cemex Philippines Shah Cement Price in USD $5.60 $5.70 $5.55 $5.55
Magazine
Regulations to follow:
The Bureau of Trade Regulation of Philippines is committed to develop responsible consumer sector. We have to follow the following regulations to enter the market: 1. We have to abide by fair trade law
2. Operate within International Standard safety Regulations 3. Labour Law of Philippines 4. Health regulation of Philippines 5. Internal Tax & VAT regulation 6. Environment policy of Philippines 7. Tariff Regulations of Philippines 8. Philippines customs Act
Source of Information:
Appendixes