International Journal of Civil Engineering and Technology (IJCIET)

Volume 8, Issue 5, May 2017, pp.1056–1063, Article ID: IJCIET_08_05_113

Available online at http://www.iaeme.com/IJCIET/issues.asp?JType=IJCIET&VType=8&IType=5
ISSN Print: 0976-6308 and ISSN Online: 0976-6316

© IAEME Publication Scopus Indexed

INNOVATIVE STRATEGY FOR LAUNCH OF

NEW BRAND OF CEMENT: A CASE STUDY
Dr. A. Shameem
Professor, AMET Business School, AMET University, Kanathur, Chennai, India
AMET University Kanathur, Chennai, India.

ABSTRACT
The cement production in India exceeds the demand which has converted it into a
buyer’s market. This makes it all the more important for cement manufacturing
companies to develop innovative marketing strategies to penetrate into the market.
This research paper is a case study which includes two additional plants started by
two competing companies in the already sluggish cement market. Thus strategies
developed by them should ensure companies are able to penetrate deep into the
market well beyond the immediate vicinity so as sell the additional output. To achieve
this end, the Jaypee Group created a fresh marketing team and a fresh methodology,
probably never tried before. This is a case which resembles the red ocean strategy,
where the new company’s marketing team came into direct competition with owner’s
existing company as well as the competitors. The existing company was already
enjoying the lion share in the market. The new company’s product came into a greater
demand and jointly the two companies gave a tough time to the competitors. Later,
both the marketing teams were merged and a product with new brand name was
launched. This is a success story of a marketing strategy and which is presented in the
form of a case study by the author.
Key words: Penetrate, Marketing Strategy, Marketing Team, Competition.
Cite this Article: Dr. A. Shameem, Innovative strategy for launch of New brand of
cement: A case study. International Journal of Civil Engineering and Technology,
8(5), 2017, pp. 1056–1063.
http://www.iaeme.com/IJCIET/issues.asp?JType=IJCIET&VType=8&IType=5

1. INTRODUCTION
Cement has always been seen as an essential component of infrastructure development,
particularly in line with the Government’s focus on infrastructure and housing programs
which help in bringing socioeconomic growth and development in country. Cement is the
second most consumed material on the planet (World Business Council for Sustainable
Development 2002) and India ranks only second behind China, as the largest manufacture of
cement, ahead of the United States and Japan. This sector also acts as a significant contributor
to the revenue collected by both the Central and State Governments through levy of excise
and sales taxes.

http://www.iaeme.com/IJCIET/index.asp 1056 editor@iaeme.com

 Innovative strategy for launch of New brand of Cement: A case study

Sale of cement in India is done under two broad categories which include trade sale
and non-trade sale. Trade sale is done through dealer network in the market place with prices
being fixed by the company from time to time in line with the prevailing market price and
volume of cement stock available at that point of time in the market. As trade sale accounts
for nearly 60% - 70% of the total sale of a company through dealership network, it makes it
mandatory for a company to ensure continuous monitoring and offer the best of service. As a
result price of cement under trade segment is very volatile and fluctuates frequently
depending upon various factors and may not necessary be that one price prevails in entire
territory.
On the other hand the non-trade sale is done mainly through institutional buyers,
builders, contractors and Government and Semi-Government departments wherein prices are
generally fixed in advance for either a long-term or medium-term contract for a
predetermined quantity of cement. As the sale through this arrangement is only about 30% -
40% of the total sale and is also on contract basis not much is to be spent on sales promotion
unlike in the case of trade sale. Statistics shows the installed capacities of all the cement
plants in the country in FY 16-17 was approximately 411.7 million tonnes as against the
average consumption of 280 million tonnes.
As cement plants are located all over the country, predominantly in places rich with lime
deposits, it may so happen that a territory receives cement from different locations. Cement
supplies are made through a combination of road and rail. However rail may not be available
in all places resulting in misbalance of supplies. Such varying and complex parameters
contribute to frequent fluctuations in cement prices. Cement companies maintain cement
godowns in different parts to ensure that supplies are made from the closest godown.
At times the cement stocked at different geographical locations act as a hurdle in
increasing the price for cement lying far away in a godown from the manufacturing spot as
some other company may be having its factory closer to the market which helps it to bring
down the price. Thus, irrespective of the distance of a market from its factory, companies are
forced to sell cement in all market at the same price consequently leading to a reduction in
revenue.
The demand of cement is also seasonal. The seasonality in cement is so strong that in the
low demand monsoon season, the companies are often forced to cut down production up to
40% of their capacity. In the low demand seasons the production reduces drastically and the
godowns fill up to the brim. Very often a lot of cement gets damaged due to over stacking or
due to the moisture during rains. Since the godowns are filled to the brim companies also find
it difficult to follow First in First Out system of dispatch from godowns during this season.
The cement prices in the last 5 years period have been more or less stable in spite of an
increase in the material cost many folds thereby leading to a reduced sale realization in
relation to the production cost ratio. This gives a greater blow to cement companies which are
not financially very strong.
Although cement prices are not under the control of Government now i.e., there is no levy
on cement, yet under various political circumstances the Government has been putting
pressure on cement companies to reduce prices. The cement companies’ Balance Sheets have
been bleeding and some of them are compelled to sell their plants to financially affluent
companies.
To add further to the woes of cement companies, the Competition Commission of India
implemented very stringent rules to prevent cartelisation among manufacturers and today
even a price understanding to avoid drifting of the companies to red is not possible. Also
availing loan facility had become difficult on account of the new guidelines of Reserve Bank
of India. This further compounded the problems confronted by cement industries. All this

http://www.iaeme.com/IJCIET/index.asp 1057 editor@iaeme.com

 Dr. A. Shameem

resulted in the last five years seeing a significant dip in infrastructure development furthering
the miseries of Indian cement companies. When Jaypee Group launched ‘Tiger Cement’ the
cement market scenario was no different.
The Government of India, until 1982 did not allow cement companies to sell cement in
open market since there was a shortage of cement in the country. In the year 1982, on 28th
February, for the first time partial decontrol on cement sale was announced and companies
were allowed to fix prices in non-trade sale. By the year 1988 the control from cement was
fully lifted by the Government and cement companies were allowed to fix prices of cement.
Alongside Government also started issuing licences to start new green field cement
projects more liberally. With the result, the installed capacity for cement production in the
country rose from 34.39 MTPA in 1982 to 105.25 MTPA in 1996. The two newly stared
Jaypee Bela plant at Rewa and Prism Cement Limited at Mankahari Village, Satna (both at
Madhya Pradesh) in 1996 were ready to supply the market of central India. It was a big
challenge for Jaypee Cement to sell additional quantity of 1.7 million tonnes in an already
saturated market. Under such adverse circumstance, marketing team had to take on new
challenges.
Brainstorming at the company brought forth an innovative idea which was experimented
and proved successful which is being presented in the form of a case study. This refers to a
case of a company launching a new brand in its own existing and prime market where it was
already selling under a different brand name which was enjoying premium position with the
name becoming a house hold name in the market place.

2. ABOUT JAYPEE GROUP

The Jaypee Group with its flagship company called M/s Jaiprakash Industries Limited is a
Group having business interest in Civil Construction, Infrastructure, Hydro power, Thermal
power, Hospitality, Express way, Fertilizer, Education and Cement with a turnover of over Rs
20,000 crores (Jaypee website).
Jaypee’s cement divisions under Jaypee Group had already had a one million tonnes
cement plant in Rewa district in Madhya Pradesh and were marketing its cement under the
brand name of Super Plus since 1991. The company had added an additional capacity of 1.5
million tonnes in the 1992. This expansion in capacity was however absorbed by its existing
market in the three States viz. Uttar Pradesh, Madhya Pradesh and Bihar. Moreover Jaypee
Cement had become one of the most sought after brand in the market. The market potential of
Madhya Pradesh at that point of time during the year 1992 was approximately 3 lac tonnes
and in Central Eastern UP, it was approximately 4.3 lac tonnes.

3. LAUNCH OF BELA PLANT

In the year 1992 Jaypee Group set up another cement plant - Jaypee Bela Plant just 3 kms
away from the existing plant i.e. Jaypee Rewa plant, which had a capacity of 2.5 million
tonnes. During 1992 there was a glut in the cement demand and it was difficult to sell. This
problem was further aggravated by the challenge to sell additional quantity produced by the
new plant. The dealer network was jittery, prices were going down, freights were increasing;
royalty was going up, coal prices, interest rates, salaries and all other input costs were also
going up AND....the cement prices were coming down. It was therefore a big challenge to
launch the produce from new the plant in the existing market, where the existing plant itself
was finding it difficult to operate at a profitable proposition.
During the same period another cement company by the name of Prism Cement was set
up very close to Jaypee Rewa plant to serve the same market i.e. Uttar Pradesh, Madhya

http://www.iaeme.com/IJCIET/index.asp 1058 editor@iaeme.com

 Innovative strategy for launch of New brand of Cement: A case study

Pradesh and Bihar. This made the management of Jaypee Cement to wonder whether they
had to start extending their reach into secondary and tertiary markets. However realizing that
it would be difficult for Prism Cement affect its dominant position it decided against it.
Historical data showed that the average annual industrial growth in Uttar Pradesh, Madhya
Pradesh and Bihar states registered in the last few years, was approximately 5% and with the
Government next Five Year Plan emphasis on infrastructure development it was felt that
company should do well. The management also gave serious thought in adopting Blue Ocean
Strategy for marketing Bela Cement by adding distinctive features in the product so as to
avoid competition. However this was later dropped that because no additional distinctive
factor could be added.
The competition from the other big brands like ACC, Satna Cement, Maihar Cement and
Diamond Cement all under the banner of Birla Group was increasing day by day as all these
plants are located within a distance of 200 kms with each company focussing on increasing
the market share in the primary marketing zone so as to maximize the realisation/profitability.
It was a judicious call taken by Bela Cement us to enter in the existing market with a
different brand name as a new entity with parallel network and with a different set of officers
who were field level personnel upgraded to the managerial level.
A leading advertising firm in Delhi which was appointed to do a thumping launch of
Jaypee Bela Cement coined a name - “TIGER” Cement. They chose to use the word tiger as
White Tiger was first sighted only in the jungle of Rewa. This was followed with a teaser ad
for it launch.
Rewa team and Bela teams of Jaypee Cement started working parallel in UP, MP and
Bihar markets with Bela team being referred to as the “Tiger” team. The designs of
hoardings, dealer boards, etc. were all very different from the ones used for promoting Rewa
Cement. The packaging was also remarkable different carrying the Tiger’s face. Inspire of the
challenges faced a new set of business associates, parallel to the existing network of Rewa
Cement and competitors, a highly motivated team with zeal to convert impossible to possible
did wonders to achieve this miracle and in an about three months appointed 150 dealers in
MP and 290 dealers in the state of UP. These dealers were appointed in the existing markets
of Eastern UP and MP. Appointing dealers in far off markets of Western UP and Bihar would
have meant incurring additional freight cost thus reducing profitability of the company.
The second challenge was to appoint a parallel network of Sales Promoters and Clearing
and Forwarding Agents (C&F Agents). While it was not that difficult to appoint a new dealer
network, appointing a parallel network of agents was a herculean task because as most of
them were keen to be agents even for the Bela cement even though they were convinced that
Rewa and Bela Cement would not compete with each other. Many even threatened to leave
dealership of Rewa Cement and move on to Prism Cement. They were made to understand
that only Rewa and Bela agents should work together as co-partners rather than competing
with each other. They were made to understand that one and one would make a force of
eleven and both working in the same market share from the existing brands. The
communication to the agents was based on the conviction with respect to the strength of the
product and services. A further step taken in this direction was the Chairman meeting of the
agents and striking an emotional chord. Agents were also encouraged to recommend names of
competent parties in their respective markets to be considered for Bela Cement Sales
Promoter ship. This worked as expected and Rewa Cement sales promoters thereafter stopped
claiming their right for Bela Sales Promoter ship.
Although the company did achieve its objective of creating a separate network of Dealers
and Sales Promoters, Bela sales team continued encountering hurdles from Rewa network

http://www.iaeme.com/IJCIET/index.asp 1059 editor@iaeme.com

 Dr. A. Shameem

and at times from Rewa sales team as well. This was however anticipated for which a
calculated risk was taken by the management.
With the setting up of a separate network of dealers, sales promoters, exclusive godowns,
field force, publicity budget for travelling expenses, Bela cement was positioned to take off as
a new company facing the challenges in winning a reasonable market share at reasonable
price.

Sale (in tonnes) in UP – Before and After Launch of Tiger

120000

100000

80000

60000 REWA (tonnes)

40000 BELA (tonnes)

20000

An example of dedicated hard and sincere working of the entire chain of marketing team
was witnessed on next two years and Tiger Cement started cutting into its competitors’
market share without disturbing market share of Rewa cement. In three years’ time the full
capacity of Bela plant i.e. 1.7 million tonnes was absorbed in the market along with 2.5
million tonnes of Rewa plant. The following table shows clearly the share of market that Bela
plant snatched from competitors. It was one of the most talked about and revered strategies
that Bela plant had adopted in such a competitive scenario.
Jaypee Bela plant was launched during 1996. Market share before and after the launch
of Bela Cement is projected) Over a period of time the demand of cement in market grew and
Jaypee Cement started setting up plant after plant, as indicated in foregoing paragraphs, all
over the country and in a short span of time the group emerged as third largest cement
producer in the country. Having achieved this fete which got completely stabilized over a
period of three years, the necessity was felt to cut down on the cost incurred, especially
related to marketing which was two times the normal expenditure since both Rewa and Tiger
plants were operating as two independent units. The company also had its share of complaints
from field personnel’s of both Rewa as well as Bela plants about poaching into each other’s
network.

http://www.iaeme.com/IJCIET/index.asp 1060 editor@iaeme.com

 Innovative strategy for launch of New brand of Cement: A case study

4. MARKET SHARE OF JAYPEE CEMENT & COMPETITORS IN UP:

BEFORE AND AFTER LAUNCH OF TIGER

While senior management was endeavouring to address such issues from time to time,
they were also aware of the fact that at junior officer level, there was brewing a feeling of
discontentment. Some of them were also harbouring a similar feeling of partiality in
treatment.
This was a lesson to the management where they had failed to fully anticipate the brewing
of jealousy from other teams rather than a healthy competition. However having achieved the
main objective of successfully launching Tiger Cement, the company had to merge the two
teams (Reva and Bela teams) into one in order to reduce overheads. They therefore decided to
merge the two companies’ officers, in phased manner. Starting from the States Head up to
lowermost level, in almost less than a year’s time, the exercise was completed which had only
one State head for both the plants, one area manager for one area and one officer for a
particular District. As a consequence the two separate networks of Dealers of the two plants
was being controlled by the same officer which meant that an officer was given responsibility
of selling cement from the two plants in the same territory which was allocated to him
initially for a single plant. This action by the management brought about the much desired
result. The cold war among officers ceased, the network’s apprehensions removed, and
accounting became simpler with monitoring becoming easier. To sum it up, the cost to the
company, to run two parallel networks, reduced considerably.
The addition of new capacities in a Satna cluster later on mainly by Maiher cement and
introduction of Suraksha brand cement by ACC also tempted the company to take similar
action. Actually for quite some time they also were planning to introduce a brand meme for
their cement and were waiting for the opportune moment. And moment when they decided to
merge Rewa with Bela plants was found most appropriate to launch a new brand name. It was
decided to do away with Jaypee Rewa and Tiger brands and instead replaced them with a
common brand which we called Buniyad Cement which was officially launched in the year
2002, withdrawing the Super Plus and Tiger brands.

http://www.iaeme.com/IJCIET/index.asp 1061 editor@iaeme.com

 Dr. A. Shameem

Buniyad cement later on became the most popular brand in UP, MP and Bihar. The brand
was so popular among consumers in the three states that without Buniyad cement in shop, it
was difficult for a cement dealer to survive.
While one can say that life of Tiger cement was only 6 years and company wasted much
money on its launch and in creation of a parallel sales team, in the prevailing situation at that
time, this experiment did give the company the expected results and pride and reputation in
the market. The expenditure incurred on launch of Tiger Cement was actually an investment
which was confirmed when Buniyad cement reached new heights.

5. CONCLUDING REMARKS
Jaypee Bela cement plant had studied the situation well before going ahead with the decision
of launching Tiger cement in the existing market of Rewa cement. While a clear Road map
was drawn in advance, which was based on the ultimate objective of acquiring additional
market share in the already over supplied market, cannot be denied had an element of risk
involved.
All said and done, Tiger cement did create a history in Central India market. The two
plants of Jaypee Group from the district of Rewa in Madhya Pradesh (MP) are enjoying lion
share in MP and Bihar and along with its Uttar Pradesh market share is enjoying 25% market
share.

REFERENCES
[1] CARE, Cement Industry: Better Fortunes Ahead, Cement Industry CARE Ratings,
Mumbai, 2007.
[2] Cement Manufacturers’ Association (2007, 2006, 2005), Indian Cement Industry- At a
Glance (Various Years), New Delhi.
[3] Cement Manufacturers’ Association (1964), 50 Years- The Cement Industry in India 1914
-1964, New Delhi.
[4] Gadhok, K.D., 85 Years of Cement Industry (1914-1999), National Council for Cement
and Building Materials (NCB), New Delhi, 2000.
[5] ICRA, The Indian Cement Industry, Industry Comment, Sector Analysis, Credit Rating
Agency of India Limited, New Delhi, 2006.
[6] Dr. A. Selva Rani, K. Punitha A Study on Employee Engagement in Chettinad Cement
Corporation Limited, Puliyur, Karur. International Journal of Management (IJM), 6(1),
2015, pp. 646-655.
[7] Dr. R. Khader Mohideen, A. Sophia Alphonse, A Study on Employees’ Perception on
Human Resource Management Practices in Cement Industries Special Reference to
Madras Cements Limited (Ramco), Ariyalur. International Journal of Management (IJM),
6(1), 2015, pp. 594-602.
[8] Ch. Eka Sai Kumar and V. Raju, A Study on Replacement of Cement with Rice Husk Ash.
International Journal of Civil Engineering and Technology, 8(1), 2017, pp. 723–727.
[9] J. Anne Mary, An Experimental Investigation on Copper Slag as Replacement of Fine
Aggregate in Concrete. International Journal of Civil Engineering and Technology, 7(6),
2016, pp.282–289.
[10] Sarathy, R. Partha and S. M. Chakravarty./, Indian Cement Industry- Emerging Trends,
Cement Manufactures’ Association of India (CMA), New Delhi, 1998.

http://www.iaeme.com/IJCIET/index.asp 1062 editor@iaeme.com

 Innovative strategy for launch of New brand of Cement: A case study

WEBSITES
[1] Lafarge (2004), All About Cement, http:// www.lafarge.com/wps/portal/4_3_5_1
Histoire#edito Encart Vide 0000000000 009572.

[2] India Brand Equity Foundation (IBEF) -www.ibef.

http://www.iaeme.com/IJCIET/index.asp 1063 editor@iaeme.com