Making The Bottom Count, Step by Step
Post a Powerful Marketing Campaign Launched last year, Lafarge has given itself a Strong Foothold in rural areas of Bihar & W. Bengal
On a road trip from Asansol to Burdwan district, West Bengal, where I went to meet some of Lafarge’s local dealers, it was particularly interesting to observe the old India coexisting with the new. We crossed the construction site of the state of the art Shrishthinagar township in Asansol. In fact, an airport is also slated to come up on the Asansol-Durgapur highway, which should spur a flood of corporate investments. But as you move further on and approach Burdwan, you find more of the standalone houses of yore, which, despite their uninspiring surroundings, are nicely built. While the city is home to a university by its name, it hasn’t been blessed with the kind of industrial presence that Durgapur and Asansol can boast of. And as you move further to the rural belt, you come across even simpler structures with a number of huts, tin/red tile roofs, and single room houses. However, a welcome sign is the sight of some pucca houses dotting the landscape.
In that sense, it’s a microcosm of the kind of development that a large part of India still awaits. Working groups set up for rural & urban housing for the 11th Five Year Plan project India’s housing shortage at 73.96 million units, out of which 47.43 million units are short in rural India alone.
Naturally, rural India has acquired a special significance for the cement industry too, as it now contributes some 40% of the volume. The management of French cement giant Lafarge has shown particular aggression in this space, and also introduced a massive outreach campaign last year. Currently, they are getting some 33% of their revenue from rural markets, and have managed to double their rural turnover in the past five years.
A number of learnings emerge from Lafarge’s expedition in rural India. Research into rural markets within Burdwan district and our interactions with sub-dealers revealed where they can afford it; rural customers are in fact very particular about every raw material that goes into their house, since it is a once in a life time investment. Also, they are far more involved in every decision as compared to the time starved urban consumers. One sub-dealer, Babu Lal Pal from Rathtala, Kanchannagar, said that “people building their houses somewhere upward of 600 sq. ft. prefer branded cement.” When the area is lesser and housing is extremely basic, they are okay with unbranded products. In the branded category, Lafarge claims that its premium pricing and quality positioning has actually worked in its favour. Raakesh Jain, AVP-Marketing, Lafarge India, comments to 4Ps B&M, “We do not follow a differential pricing strategy for urban and rural markets. End users in the rural market are ready to pay a premium but they need to be convinced on the same.”
Advertising has been extremely important for Lafarge’s expansion drive. The use of Indian cricket team captain M. S. Dhoni as brand ambassador has made a phenomenal difference to brand awareness & appeal. Also, the company had to convince the main influencers. While masons are declining in importance in favour of architects and contractors, they still are sought after. Competitors have been providing them incentives like scratch card schemes. Lafarge has instead been on a relentless information dissemination drive, educating dealers, masons and end customers about home building and also on why the right cement is important, through a number of camps.
On a road trip from Asansol to Burdwan district, West Bengal, where I went to meet some of Lafarge’s local dealers, it was particularly interesting to observe the old India coexisting with the new. We crossed the construction site of the state of the art Shrishthinagar township in Asansol. In fact, an airport is also slated to come up on the Asansol-Durgapur highway, which should spur a flood of corporate investments. But as you move further on and approach Burdwan, you find more of the standalone houses of yore, which, despite their uninspiring surroundings, are nicely built. While the city is home to a university by its name, it hasn’t been blessed with the kind of industrial presence that Durgapur and Asansol can boast of. And as you move further to the rural belt, you come across even simpler structures with a number of huts, tin/red tile roofs, and single room houses. However, a welcome sign is the sight of some pucca houses dotting the landscape.
In that sense, it’s a microcosm of the kind of development that a large part of India still awaits. Working groups set up for rural & urban housing for the 11th Five Year Plan project India’s housing shortage at 73.96 million units, out of which 47.43 million units are short in rural India alone.
Naturally, rural India has acquired a special significance for the cement industry too, as it now contributes some 40% of the volume. The management of French cement giant Lafarge has shown particular aggression in this space, and also introduced a massive outreach campaign last year. Currently, they are getting some 33% of their revenue from rural markets, and have managed to double their rural turnover in the past five years.
A number of learnings emerge from Lafarge’s expedition in rural India. Research into rural markets within Burdwan district and our interactions with sub-dealers revealed where they can afford it; rural customers are in fact very particular about every raw material that goes into their house, since it is a once in a life time investment. Also, they are far more involved in every decision as compared to the time starved urban consumers. One sub-dealer, Babu Lal Pal from Rathtala, Kanchannagar, said that “people building their houses somewhere upward of 600 sq. ft. prefer branded cement.” When the area is lesser and housing is extremely basic, they are okay with unbranded products. In the branded category, Lafarge claims that its premium pricing and quality positioning has actually worked in its favour. Raakesh Jain, AVP-Marketing, Lafarge India, comments to 4Ps B&M, “We do not follow a differential pricing strategy for urban and rural markets. End users in the rural market are ready to pay a premium but they need to be convinced on the same.”
Advertising has been extremely important for Lafarge’s expansion drive. The use of Indian cricket team captain M. S. Dhoni as brand ambassador has made a phenomenal difference to brand awareness & appeal. Also, the company had to convince the main influencers. While masons are declining in importance in favour of architects and contractors, they still are sought after. Competitors have been providing them incentives like scratch card schemes. Lafarge has instead been on a relentless information dissemination drive, educating dealers, masons and end customers about home building and also on why the right cement is important, through a number of camps.
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Source : IIPM Editorial, 2011.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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