An article about " Marketing In Building Materials Industry "

MarketingIn Building Materials Industry

In building trade launching of new product was not frequent as in other sectors e.g. Fast Moving Consumer Goods (FMCG) and Industrial products in the early part of the last century. However, for the past three decades the number of new products being launched is on the increase; because of the technological revolution in raw materials and changein consumer tastes. Some example are UPVC pipes, medium Density, fiber Density, Fiber Boards, RIBCON, copper pipes in plumbing, fibers such as Recron 3S. The importance of adopting innovative marketing techniques is being realized increasingly by the building material manufacturers.

Unfortunately not much literature or Indian cases are available from which some guidance. Most of the marketing literature available in the country has been on FMCG. A Little bit of write-up exists on Industrial products. But in the building materials area it is as good as nothing. The reasons are not difficult to guess. For a long time there existed a number of factors in the country, which did not force the manufacturers and the suppliers to feel the need for marketing. First and the foremost is that at the beginning of last century, there was practically no middle class.

There were a few rich and the rest were poor with low or no purchasing power. The middle class which was 3 percent of the population in 1900 had reached 20% by the year 2000. Most of the materials used in construction were local materials except for steel and cement. Both steel and cement as indigenously manufactured products appeared on the scene around 1920s. Throughout the four decades of independence, steel and cement were in severe shortage.

Hence, there distribution was placed under control. An ordinary consumer had to move form pillar to post to get a few bags of cement or a few bundles of steel. Even for urgent defence requirement one had to beg quotas and releases from controller of cement and joint plant committee. Cement marketing association of India and some bigger companies did issue some advertisements and distributed some technical literature amount professional before 50s. This activity was curtailed after the introduction of controls.

SAIL and TISCO did issue some advertisements but they were more in terms of messages of patriotism and their participation in social issues. In fact, I remember TISCO signature statement in those days were "We also make Steel." As the price was fixed by the Government on considerations other than the cost of production there was little enthusiasm to improve the products. Cement companies did not go beyond manufacture of 33 grade, the technology imported in thirties. Steel had very little of new products.

In fact steel companies concentrated in hiving of activities such as rolling, etc. to small companies to minimize the problem of managing labour and the militant unions. The rest of the building materials manufacturers also followed suit. I remember it was almost impossible to get a decent sanitary fitting other than drab pale yellow earthenware closets and basins.

The local materials suppliers were small players and scientific marketing was beyond their comprehension. In the wake of opening of the Indian market to global players, new challenges will emerge. The question is whether the indigenous players will throw down the gauntlet and fight or throw in the towel and make hasty retreat. The challenges could be import of more advanced manufactured materials or setting up wholly owned subsidiaries,

manufacture more sophisticated materials under license and sell.

In both the cases the loss will be to the local entrepreneurs. Construction though a service sector, is arge market. One ADB estimate projects $ 1 million as the investment requirement of power and highway sector for India and China. In the housing too there is a shortage of 40 million units and if we take that around 15% of it in the category of high and middle income group, housing market for the building materials is large. Then there is repair and renewal market.

Service sector is different from manufacturing, because it demands quality, better service and more unique customerisation (variability to suit a customer) Value addition and unique packaging for one self is what a customer looks for unlike standardised assembly line approach.

In housing the customer has added requirement of long life, durability, ease of maintenance and repair. The customer perception is that house is built forever. Nothing which is incorporated is of the "Use and Throw" variety. On what doctrine shall the building material manufacturer devise his marketing strategy? The oft quoted Marketing Mantra by which the marketing executives swear is the "4 P's" which is attributed to the famous marketing duo Jerry Me Carthy and Phillips Kotler, Viz.,

Product Price Place Promotion (Channel) This Mantra has withstood the advances in marketing science for over 3 decades when it was first enunciated.

Recently a new mantra has gained popularity attributed to Prof. R.Lauterborn of University of California and it goes by the name 4 Cs., Viz., Customer wants (study) Convenience to buy Cost to satisfy Communication Again some studies done in service

sector abroad indicated that a service industry has better chance to prosper if it Fulfills the customer needs fully Technology savvy Develop an active service of value, quality and service of sales and It is self powered.

To me all these later statements are attempts to put old wine in a new bottle. What they bring out is that customer is the king. Find out his requirement, taste, purse and the value for money he expects. Catch his eyes and attention by whatever media he looks at. But my 3 decades of experience in the industry mainly as a user makes me believe that many entrepreneurs miss these gut sense parameters. The first and the foremost is to identify who is your customer.

I shall illustrate with an example borne out of my experience. After the end of control regime on cement, I had suggested to some business executives of the companies, in one of those glittering cocktail parties which they host for architects and engineers that there is vast market outside the usual places like DGS & D, Government Departments, architects and that the market comprises of Individual home builders which has remained under exploited.

But it took us good 3 years to make one company devote a part of the time and budget to this market. Once it tasted success, it is now going whole hog to customer with holding one day awareness programme offering technical advice, lab facility, etc. Now, some of the other companies have also followed suit. Market research in this area comes naturally to MNCs. First Newsflash I heard about Lafarge, a MNC entering the market in East India was the opening of a state of the art display show room for the Indian show room equipped with material necessary to guide him in building a house for himself.

They also came up with a web display. The other important point is the channel and promotion. What is the channel and where is it. Many building material manufacturers think that technical journals are the channels of promotion. Some may make an occasional foray into the newspapers. We always thought the best channels of promotion for the materials are the mastery and humble mason (Plumber, etc). But when we say this, not many are the takers. In the mid seventies a new company in Faridabad, I think came up for the manufacture of UPVC pipes which was to be promoted as cheaper, easier to lay and neater alternative to GI pipes.

This pipe was to be joined with an adhesive. The company, I found, was not clear about the accessories and how they will be joined to the pipe. A top executive contacted me and explained the virtues of the new product and its extensive use abroad. I asked him about the Indian experience in which he was circumspect. I found his main purpose was to find ways and means of getting in to the approved list of the department. I told him that one could look into that aspect if he undertakes to lay the pipe in a few of the residential quarters of a get a fair report from the users. The executive declined to take this suggestion with the plea that they are manufacturers and not a contracting firm.

There ended our meeting. A couple of years later I got adverse reports of cracks and leaks at the joints with the accessories from else where. On investigation it was found that main causes were installation byuntrained plumber, use of improper tools and methods and lack of supervision. The acceptance of UPVC pipe as an alternative was, in my opinion, was delayed by a decade by this misadventure. The company, of course, has vanished. The importance of mason as a channel of communication was experimented by a well known cement company in whose efforts we were associated. Now I am told fortnightly masons meet in many districts have become common with many cement companies vying with one another

and luring them with Gifts. Initially, when it was started we had the dual purpose, namely to educate him and to motivate him. The first set of gifts was a set of good tools. We now go on to another important requirement "technologically savvy". In our service we have seen many instances of failure due to lack of appreciation of this quality. Many Indian manufacturers pay scant respect to research. They believe that the money spent on it is a waste. The amount of money spent on research in India is less than I %; even in big companies; except In some pharmaceuticals. An Indian entrepreneur, basically hailing from trader class, believes in going abroad scouting for products which he thinks has the potential, gets into technical collaboration; to get technical know how; purchases second hand machinery either from him or somewhere else and comes into the market.

Many of these products have to be conditioned to our climate and usage. But that is time consumingand involves expenditure. He would rather experiment and learn at the expense of some hapless customer. In building industry, such customers abound in Government departments. In one instance laminated prefabricated doors and windows were introduced which in the summer heat of the north, warped within months. In another instance a water proofing membrane used in between the basement and superstructure melted and caused slight displacement of the superstructure. The case of ultraviolet rays affecting the Pv C pipes is well known. Plywood doors in which layers are glued with Urea, peeling off after some time is also well known. It pays to have user trials, observing the performance for at least two years and carrying out research for adoption to our needs. If a product does not perform initially it has slim chances of a success at second introduction.

Price: What price the customer is willing to pay is also an important area, which requires proper esearch One has to probe into the

psychological bent of mind of the customer. The price; a customer is willing to pay is derivative of complex concoction of value, status associated with the product, etc. An example is the introduction copper pipe for plumbing, which is fairly common in western countries. But here, in India, it has failed to take off even though it is relatively easy to install and maintain. It is slightly costly but it has the right status to compensate.

There are also some very successful stories in new building products. One of them is the plastic Water storage tanks, introduced by "SYNTEX". The product did not exist in 1960s. Now it has wiped out its competitive rivals like asbestos cement tank, ferro cement tanks, brick tanks, etc.

It was the first to introduce it and has maintained its leadership. In fact, it has become a generic name for the water storage tank. As it boasts, made out of selected materials, subject to stringent quality control to give total reliability; has ushered in a whole new era of convenience and 1005 hygienic water storage. In my opinion, the leadership has not come out of chance; but by a well formulated strategy based on the 4P's stated elsewhere.

Maybe the owner's saw the importance of application of professional management and hired the right type of professionals.

Some of the building materials do not have separate identity but ride on a product that is common in use. To this category I attribute many construction chemicals in the market. They exist as admixtures to concrete, mortar, etc. In fact many of them find their use mainly because of the wrong practices of artisans.

A plasticisizer is recommended to prevent mason using more water than required and weakening the concrete or to facilitate the pumping of concrete. How should they be marketed?

I was on an assignment in the northern part of Karnataka and I found majority of the engineers were not aware of the products and their use. A few who were associated with large constructions like irrigation structures, etc. knew about them. So what strategy a company, which is dealing in chemicals, has to adopt if it wants to familiarize the products and increase its spread? A question that has come in mind.

Summing up, it appears that appreciation of basic principles of marketing, viz. 4Ps has not been properly internalized by many Indian manufacturers and sellers of building products. May be there is a need for greater use of professional management techniques if they have to survivecompetition in a liberalized economy.