IJIRCM
Volume 8,
(May, 2014)
(ISSN 2250-3404)
Market penetration strategy for ACC in Delhi/NCR- A SWOT analysis
approach
*Dr. Amit Kumar Srivastava
**Nitesh Kumar
Abstract
ACC Limited is India’s foremost manufacturer of cement and ready mix concrete with a
countrywide network of factories and marketing offices. Established in 1936, ACC has been
a pioneer and trend-setter in cement and concrete technology. ACC’s brand name is
synonymous with cement and enjoys a high level of equity in the Indian market. Among the
first companies in India to include commitment to environment protection as a corporate
objective, ACC has won several prizes and accolades for environment friendly measures
taken at its plants and mines. The company has also been felicitated for its acts of good
corporate citizenship. Working with ACC limited was great experience for me I have learnt a
lot in acc I come to know about the cement company. The feedback given to me on each
step of my work was really knowledgeable. The project focuses on collecting information
from sites about various brands presence like construction wise, area wise, cluster wise, &
findings about the brand presence in the market and to find out their impact on the market.
*Professor & Director, KIPM, GIDA, Gorakhpur
**Research Scholar, Mewar University, Chottorgarh, Rajsthan
Introduction
Today it is fashionable to talk about the new economy. We hear that the business are
operating in globalize economy; things are moving at a nanosecond pace our market are
characterized by hyper competition and disruptive technologies are challenging every
business and so business must adopt to empower consumer.
To become successful in such a competitive environment the business organizations have to
be customer oriented. Customers need and want must be taken care of.” Built customer and
not only products”. Customer must be delighted. This information about the market could
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be collected by the way of proper market survey. Rom the market survey we get the feed
about the good or services of the organization .For this purpose the said project work is
undertaken.
The project was carried out for knowing prevailing market condition of ACC Cement in
Nangloi & Najafgarh Region .The second objective of the project was to study the sales
promotion activities undertaken by ACC and its other competitors. There are few major
market players in cement industry in this region. They are Binani Cement Limited, Ultratech,
ACC, Ambuja, Shree Ultra ,apart from these there are few local brands selling in the market.
The information about the market was gathered by visiting retailers in the market. Interview
of retailers was taken depending upon their accessibility. While doing the project attempt
was made to collect maximum information about the marker. Number of retailers were
visited to get the actual picture of the market. Most of the time was spent in traveling for
one retailer were reluctant to give the information , as they do not want to disclose their
business details. Visits to such retailers were loss of time, money and energy. After
collecting the derailed information about the market analysis is done. In the analysis, the
observations recorded during the project were carefully analyzed and the results are
prepared. The findings and result of the project work are given at the later stage in the
report.
The Indian cement industry with a total capacity of about 190 m tonnes in financial year2008 is the second largest market after China. Despite the fact that the Indian cement
industry has clocked production of more than 100 m tonnes for the last five years,
registering an average growth of nearly 9%, the per capita consumption of around 150 kgs
compares poorly with the world average of over 260 kgs and more than 450 kgs in China.
This, more than anything underlines the tremendous scope for growth in the Indian cement
industry in the long term .Although consolidation has taken place in the Indian cement
industry with the top five players controlling almost 50% of the capacity, the balance
capacity still remains pretty fragmented .Cement, being a bulk commodity, is a freight
intensive industry and transporting cement over long distances can prove to be
uneconomical. This has resulted in cement being largely a regional play with the industry
divided into five main regions viz. north, south, west, east and the central region.
While the southern region always had excess capacity in the past owing to abundant
availability of limestone, the western and northern region are the most lucrative markets on
account of higher income levels. However, with capacity addition taking place at a slower
rate as compared to growth in demand, the demand supply parity has been restored to
some extent in the Southern region for the medium term. Considering the pace at which
infrastructural activity is taking place in different regions, the players have lined up
expansion plans accordingly.
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Volume 8,
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Despite the growth of the Indian cement industry, India’s per capita production of 115
kilograms per year lags the world average of over 250 kgs and China’s production of more
than 450 kgs per person. Clearly there remains room for tremendous growth in the industry
in India. But if India is to reach its potential, the free hand of the market must be left
unfettered. For this to happen, the Indian government must make sure that foreign
companies that have a history of price fixing and market collusion receive appropriate
regulation. If market shares get fixed, India will be the loser and the gap between India and
China will only grow in the race to become the next economic superpower.
MAJOR PLAYER’S OF THE INDUSTRY
o
o
o
o
o
o
Associated Cement Company Ltd. (ACC),
Grasim Industries Ltd.,
Ambuja Cements Ltd.,
UltraTech Cement Ltd.,
J.K. Cement Limited,
Madras Cements Ltd.,
Jaypee Group.
Binani Cement Limited
Prism Cement Limited
o
o
o
OBJECTIVE
This project was undertaken for two main objectives was -To carry out market survey for
knowing prevailing market condition of ACC Ltd In Nangloi & Najafgarh region and to make
market penetration strategy for ACC cement in these two regions. The second objective
was- To study the sales and promotion activities undertaken by ACC cement and other
player in the market.
To attain these two objectives various other sub objective are needed to be achieved. These
are listed below.
 To analyze the market share of ACC Ltd.
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To know the customers preference for the brands of cement.
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To know the preference of retailer for sorting different brands of cement.
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To understand the effectiveness of various sales promotion activities of cement.
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To know preference of retailers for different gift and incentives.
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To analyze the sales promotion activities of various brands.
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To analyze the frequency of visits of marketing representative of various companies
Thus it attempt to find ways to increase market share, to increase customer satisfaction and
thus increase the business prospects
SCOPE
1. The study has been done for the Cement so more or less it helps in understanding the
consumer preference towards the cement market.
2. The study can help in analyzing certain weak point, improving on which a company can
overcome the low sales of its cement but only in Nangloi & Najafgarh region
FACTOR’S RESPONSIBLE FOR THE GROWTH OF THE SECTOR
Technological change
Continuous technological upgrading and assimilation of latest technology has been going on
in the cement industry. Presently, 93 per cent of the total capacity in the industry is based
on modern and environment-friendly dry process technology and only 7 per cent of the
capacity is based on old wet and semi-dry process technology. There is tremendous scope
for waste heat recovery in cement plants and thereby reduction in emission level.
New Investments
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Shree Cements will invest almost US$ 244.12 million this year, of which half will be
invested towards setting up two grinding units at Rajasthan and Uttarakhand to
augment its capacity. The other half will be towards the two power plants in Bangur.
ACC Ltd will spend US$ 575 million on capacity expansion in 2009 and 2010. ACC is
expanding capacity by a third to 30 MT by 2010.
Binani Cement has signed a memorandum of understanding with the Gujarat
government to set up a 2.5 MTPA greenfield cement plant in Gujarat at a cost of US$
169.40 million. Binani Cement has also initiated talks with a few foreign institutional
investors (FIIs) to raise US$ 307.99 million for its new projects.
Bheema Cements Ltd is planning to invest US$ 116.42 million in setting up a new
manufacturing line of 1.5 MT capacity at its plant in Andhra Pradesh.
Mergers and Acquistions (M&As)
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A growing and robust economy was noteworthy in terms of the total number of mergers
and acquisitions (M&A) in India 2007, with the cement sector contributing to 7 per cent to
the total deal value.
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Holcim strengthened its position in India by increasing its holding in Ambuja Cement
from 22 per cent to 56 per cent through various open market transactions with an
open offer for a total investment of US$ 1.8 billion. Moreover, it also increased its
stake in ACC Cement with US$ 486 million, being the single largest acquirer in the
cement sector.
Leading foreign funds like Fidelity, ABN Amro, HSBC, Nomura Asset Management
Fund and Emerging Market Fund have together bought around 7.5 per cent in India's
third-largest cement firm, India Cements (ICL), for US$ 124.91 million.
Cimpor, the Portugese cement maker, paid US$ 68.10 million for Grasim Industries'
53.63 per cent stake in Shree Digvijay Cement.
CRH Plc, the world's second biggest maker and distributor of building materials,
acquired a 50 per cent stake in My Home Industries Ltd for almost US$ 372.64
million.
Vicat SA, a French cement maker acquired a 6.67 per cent stake in Hyderabad-based
Sagar Cement for US$ 14.35 million.
Government Initiatives
Government initiatives in the infrastructure sector, coupled with the housing sector boom
and urban development, continue being the main drivers of growth for the Indian cement
industry.
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Increased infrastructure spending has been a key focus area over the last five years
indicating good times ahead for cement manufacturers.
The government has increased budgetary allocation for roads under National
Highways Development Project (NHDP).
Appointing a coal regulator is looked upon as a positive move as it will facilitate
timely and proper allocation of coal (a key raw material) blocks to the core sectors,
cement being one of them.
Keeping in mind the global meltdown which is impacting the cement companies in India, the
government reimposed the counter-veiling duty (CVD) and special CVD on imported cement
in January. This is likely to provide a level playing field to domestic companies.
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RESEARCH METHODOLOGY
The research methodology is the way systematically solve the systematically solve the
research problems. The main objective of the product was to know the market condition of
ACC Cement and to study the sales promotion activities undertaken by various cement
companies. For this, right at the beginning the research plan was prepared. This includes all
the detail of how to go about research work of ACC Cement. RESEARCH PLAN Definition of
research problem The research problem can be defined as follows
1. `What are the cement being used by various customer in the region of
Nangloi & Najafgarh and what are their expectation from the cement.
2. What the market trend is of cement and brand awareness of ACC Cement.
DATA COLLECTION The descriptive nature of research necessitates collection of primary
data from retailers through market survey, personal interview technique was used and
interview were conducted through structured questionnaire the question were asked in
prearranged manner. The market research was conducted over a period of 45 days. Data
was tabulated, analyzed and suggestion and recommendation were given.
RESEARCH INSTRUMENTATS The Research instrument chosen for conducting the survey
was structured questionnaire was pre[pared as show as in the annexure. The questionnaire
includes open ended as well as close ended question, few open ended question were
included to obtain the perception of the retailers.
RESEARCH DESIGN
The purpose of methodology section in the report making is to describe the research
Process that is followed while doing the main part. The research design plays a pivotal Role
in the quality and content of the data in making of any project report. The type of Research
design chosen is seen to have a bearing on all the aspects of report writing.
The research design undertaken for the study was an EXPLORATORY one. The reasons for
using an exploratory research method were to obtain qualitative data and also since the
nature of study is as such that it required the exploration of various aspects within and
outside the company.
In order to carry out a well researched analysis efforts were taken to collect enough
information from the respondents. For this purpose various primary and secondary sources
were used. This would however include the research design, the sampling procedure, and
the data collection method. This section is perhaps difficult to write as it would also involve
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some technical terms and may be much of the audience will nor be able to understand the
terminology used.
SAMPLING UNITS
Sampling unit may be a geographical one, such as state, district, village etc. The researcher
will have to decide one or more of such units that he has to select for his study.
In our research study dealers and retailers of cement in Nangloi & Najafgarh region are
sampling unit.
SIZE OF SAMPLE
“This refers to the number of items to be selected from the universe to constitute a sample”
In our research sample size is 100.
SAMPLE PLAN
A sampling technique was chosen for the study was Random Sampling Technique. This is
the most common method of selecting the sample. This is because the retailers are localized
in different part of the marker a group of retailers are chosen are random from large group.
It gives all retailers in a group and equal chance of being selected for the purpose of the
survey. SAMPLE SIZE Out of nearly 150 retailers in cement market Nangloi & Najafgarh and
its region around randomly 60% of total population was considered as the sample size.
CONTACT METHOD
Both personal and telephonic interview methods were used for conducting the market
survey. Personal interview had the benefit one to one communication between the
researcher and the respondent. If the respondent is having any doubt or queries in their
mind, they can get their doubts clarified from the researcher on the spot and so superior of
data was collected from the survey was collected from the survey. Tele – interview was
conducted with the structured questionnaire. Tele-interview was less costly and less time
consuming but the data could not be collected in detail from the respondents. Also any
doubt or queries of respondent could not be clarified.
ANALYSIS AND INFORMATION
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Detailed information was collected for the project marker survey for retail marketing and
sales promotion activities of ACC Cement for the area of Nangloi & Najafgarh market. The
information was collected by visiting the retailers of cement present in Nangloi & Najafgarh
market. The interview of retailer taken in a friendly atmosphere so as to encourage them to
give right information, without any hesitation. Because of some inherent limitation of
telephonic interview, the method of personal interview was mostly used.
ANALYSIS
The analysis of the collection information was made in scientific manner. Different manner
rank was given to each alternative of particular questions, in the questionnaire. A particular
rank was given in the following manner, Rank- 5 For the most favorable alternative Rank- 4
For the moderately favorable alternative Rank- 3 For unfavorable alternative Rank- 2 For
most unfavorable alternative Rank- 1 Unfavorable To come at the conclusion, total of each
alternative of all the sample size retailers was made. Thus the “sum of an alternative”
having highest score considered to be most favorable. In this manner, result is prepared for
various important parameters of the survey. With the help of results so obtained, the
findings are recorded in the form of graphs. The market of cement Changes as the area
changes. The demand for particular cement for particular cement is much less. This is
because of the crazier Trend of particular market. Thus the demand for the cement is not
that price sensitive. Price is not the criterion for selection of rejection of particular brand is
adapted on the type of application of cement and the brand name in market. Thus the
awareness among the customers about the particular cement plays a vital role. The major
types of customers are the builders and masons. The individual customers are there, but
their demand is not more. The customers are ready to give slightly high price, but he wants
quality cement, thus he is quality conscious. The customer perceives quality of cement as
good quality because of effective marketing. So effective marketing is necessary.
SWOT ANALYSIS OF ACC LIMITED
SWOT-analysis is done to understand the external and internal environment of the
organization. SWOT, which is acronym for strength, weakness, opportunity and threats is
also known by TOWS-analysis. Though such an analysis, is strength and weakness exist
within an organization can be matched with the opportunity and threats operating in
environment , so that an effective strategy can be formulated. An effective organizational
strategy, therefore, is one that capitalizes on the opportunity through the use of strength
and neutralizes the threats by minimizing the impact of weakness. Below is the SWOTanalysis of ACC Ltd. in cement market
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STRENGTH
 Brand awareness is huge for ACC cement .
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ACC is having 14 cement plants all over India whereas its competitors are far behind
in this aspect, its biggest competitor Ambuja is just having 5 plants all over India .
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Cement grade is good and people are satisfied.
ACC is the oldest company in cement industry since 1936.So being the oldest
company in the industry has its biggest strength as people consider it to me more
reliable and some way or other they heard about this company.
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It has a good brand image in Cement.
“Dhalai karne ke liye” people ask for ACC.
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Very superior quality cement as compared to others .
ACC has advantage that if use it for construction then there would be less cracks in
wall and spider web wont be there and it is also good for mason hands.
ACC HELP creates brand awareness among its end users about ACC cement which is
good method for local marketing.
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WEAKNESS
 Great need of strategic way for promotion and advertisement for both dealers and
customers.
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Not an easy task to overtake Ambuja.
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Price and margins is not match with dealers and retailers expectation respectively.
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Guaranty given by company is from the date of manufacturing which is not
acceptable for the dealers and retailers.
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Take large time in the replacement of Cement.
Acc has got a lowest share of sales in the direct sales segment.
Acc has a large share in the IHB market which may be giving us high returns but also
makes us prone to high fluctuations
ACC’s direct sales are 3mnt of the total cement sales volumes of ACC which is
comparatively low to that of even the market standards.
High trade sales help us in tapping the high no of channel partners and also the
loyalty from them.
ACC can easily adapt to the fluctuating market prices as no high periodic contracts
are available.
As we are largely dependent on IHB segment a rise in inflation or any economic
changes will directly and immediately encircle our sales strategies.
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OPPORTUNITY
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In Nangloi region if Shri Ram cement cal sell then ACC can also sell.
No of the medium class people is growing .
Demand for cement is growing in this region
Institutional market like corporate and government offices, school society complexes
are growing in large scale, which will increase the requirement.
THREATS
 Cheep priced brand are grabbing rapidly a large chunk of lower income customer
base.
 Other brands like Ambuja provide maximum profit to the both customer as well as to
the retailers.
 It was found from my survey that Ambuja maximum market share is due to brand
loyalty.
 Dealers expect more margin and gift to sell of the ACC cement.
CONCLUSION
To attain the objective of the project detailed information was collected from the market of
Nangloi & Najafgarh. The market research has revealed many facts and figures about the
cement scenario in the market prevailing. In the market, ACC cement is well known brand of
cement. This is the result of the good quality of the ACC cement along with their effective
marketing efforts in the past, which covers the whole market customers of ACC cement are
highly satisfied with the use of it, as they do not face any problem after using it. There are
many major players in the market but the major competition for ACC in Najafgarh is with
Ambuja & Ultratech and in nangloi region majors competitors are Shree Ultra & Birla
Chetak.
The market survey undertaken shows that effective marketing efforts play a vital role in
creating the goodwill for the brand. The distribution channel of cement industry must be
well designed and made effective this ensures timely availability of cement to customers.
Good marketing creates good image i.e. brand building. ACC is having good image among
customers but they need to polish it time to time to increase brand recall value
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