Description
It explains the Presentation on RMC readymix marketing plan. Covers everything for a marketing plan. Segmentation, marketing, target, positioning, financials, competition etc.
TAPMI
Marketing Plan for RMC Readymix India
SUBMITTED BY:
GROUP: 13 – M1 Abhilash K Barath V Mrunmayi Gadre Nirav J Vora Veneet Keshar Vijeth P.R.
Table of Contents
Executive Summary PART 1 – Market and Consumer Profile
1. Company Introduction 2. Situation Analysis a. Products offered by RMC Readymix India b. Industry Analysis c. SWOT Analysis d. Competitive Forces e. Porter’s Force Field Analysis f. Customer Analysis g. Critical Points & Keys to Success 3. Marketing Environment for consumer behavior analysis
PART 2 – Marketing Strategy
1. 2. 3. 4. Marketing Objective Segmentation and Targeting Positioning Marketing Mix
PART 3 – Financials and Forecasts
1. Sales and Expense forecast
PART 4 – Review and Control
PART 5 – Contingency Plan
Executive Summary
Ready-mix concrete (RMC) is a type of concrete that is manufactured in a factory or batching plant, according to a set recipe, and then delivered to a worksite, by truck mounted transit mixers. This results in a precise mixture, allowing specialty concrete mixtures to be developed and implemented on construction sites. The first ready-mix factory was built in the 1930s, but the industry did not begin to expand significantly until the 1960s, and it has continued to grow since then. RMC Readymix (India) Limited is a joint venture company between the RMC Group p.l.c. of UK and Hatchways Investment Limited - a Rajan Raheja Group enterprise. The company aims to promote the concept and develop the use of ready mixed concrete all over India by setting up strategically located batching plants, built to the highest international standards. The company has set up its plant in the Udupi district in 2007 and currently is the only RMC player in the region. Of the complete concrete industry, RMC Readymix has 35% market share in the Udupi district with the majority being held by the local site mixers. The objective of the company at this point of time is to increase its sales and to capture market share by penetrating into the market and also by expanding into newer markets in the surrounding areas. This marketing plan aims to provide insights into how the company can use the available market opportunities to expand into the ready mix concrete market with specific reference to the Udupi district. The main areas that the plan suggests is to increase relationships with end customers like Manipal Press by forming tie ups with them and also by targeting public works departments by public sector projects in the surrounding areas. In addition to this, the plan also suggests to increase their marketing budget in order to advertise and to increase the product and brand awareness.
Marketing Plan Part 1: Market and Consumer Profile
Basic Company Information
RMC Readymix (India) Limited is a joint venture company between the RMC Group p.l.c. of UK and Hathway Investment Limited - a Rajan Raheja Group enterprise. RMC Group p.l.c. is an international company operating in 30 countries. By annual turnover, the Group is the world’s 4th largest heavy building materials company, focused principally on aggregates - sand, gravel, rock - ready mixed concrete and cement. The company was established with its Headquarter in Mumbai. The company aims to promote the concept and develop the use of ready mixed concrete all over India by setting up strategically located batching plants, built to the highest international standards. Operations of RMC Readymix (India) Limited began in India by setting up three state-of-the-art batching plants at Taloja & Mahape in Navi Mumbai and Bandra, Mumbai. Ready mixed concrete is a new idea for the construction industry in India. RMC Readymix (India) Limited is the vehicle, which brings to doorsteps, ready mixed concrete produced to the highest international quality standards. A venture of Hathway Investments Pvt. Ltd., RMC Readymix (India) Pvt. Limited began commercial production in 1996. Under the guidance of RMC UK, the world's largest producer of ready mixed concrete, RMC India broke new ground when it set up India's first Ready Mixed Concrete plant using the world's best machinery, quality assurance & quality control systems. As well as fully qualified engineers instead of semi-skilled staff as was the practice prevalent in the industry at that time. RMC made a conscious decision from the outset to introduce the best available international technology when entering the Indian market. While it may have been easier to opt for a low-cost, low-tech solution, all plants were imported from Europe at a considerable cost, (largely due to prevailing import tariffs) to ensure a high standard of technological hardware. A major reason for this was the company’s goal to establish a quality differentiation in this potentially huge market. In addition, this approach, adopted in part by several competitors, has the effect of increasing barriers to entry, thus encouraging only the more serious players with a long-term commitment to this embryo sector.
The 10 years that RMC has spent in the manufacture and marketing of Ready Mixed Concrete, have helped reinforce and sharpen certain traits that the Company has become known and respected for such as setting benchmarks in Best Practices, Quality Assurance and Customer Service or driving up standards in Health, Safety and
Environmental Protection, plus a high degree of integrity, transparency and courtesy. It has been only 2 years since they have started operating in the Udupi district. They provide ready mix concrete, sand and gravel products to a variety of customers, including but not limited to, contractors, subcontractors, individuals and owners of both private and public construction projects.
The business strategy that is followed has the below primary objectives: Closely monitor the demand and evaluate the cost-effectiveness and timing of their operating hours; Manage their fixed asset base to minimize ongoing fixed costs while maintaining sufficient capacity to meet the demands of their customers and remain adequately prepared; Seek to obtain cost savings through minimizing overtime, seeking optimum pricing of raw materials purchased from third parties, renegotiating minimum royalty levels at certain leased properties, maintaining staff count at appropriate levels, eliminating or reducing costs in numerous areas of their operations; Improve their competitiveness in certain market segments — particularly the public infrastructure segment; Increase market intelligence and awareness to be sensitive to potential opportunities that may result from the strengths or weaknesses of competitors in the market, including attractive divestiture or acquisition opportunities
Situation Analysis
Product
RMC’s provides ready mix concrete to its customers based on their requirements. RMC is preferred to on-site concrete mixing because of the precision of the mixture and reduced worksite confusion. It site facilitates speedy construction through programmed delivery at site and mechanized operation with consequent economy. It also decreases labour, site supervising cost and project time, resulting in supervising savings. Proper control and economy in use of raw material results in saving of natural resources. It assures consistent quality through accurate computerized control of aggregates and water as per mix designs. It minimizes cement wastage due to bulk handling and there is no dust problem and therefore, pollution-free. However there are some disadvantages of RMC too, like double handling, which results in additional cost and losses in weight, requirement of godowns for storage of cement and large area at site for storage of raw materials. Aggregates get mixed and impurities creep in because of wind, weather and mishandling at site. Improper mixing at site, as there is ineffective control and intangible cost associate associated with unorganized preparation at site are other drawbacks of RMC. There are always possibilities of manipulation; manual error and mischief as concreting are done at the mercy of gangs, who manipulate the concrete mixes and water cement ratio.
Raw Material Expenses
10% 10% 3% 2% Cement Sand 75% Aggregates Chemicals Water
From the raw material perspective, cement is the most expensive and important raw material used in the production of ready mix concrete. So to ensure that there is no blockages in production, RMC Readymix purchases cement from multiple suppliers and this helps them to build strong relationships. them Below chart shows the breakup of expenses for every Rs 100 spent on RMC. If we look at the position of the product on the BCG matrix, we find that in the Mangalore region, it is positioned as a Cash Cow whereas in the Udupi district where the company has just entered, it is positioned as a Star. Also given that there is very little competition currently in the Udupi/Manipal market, there is a huge potential for the company to turn this Star into a Cash Cow if the right strat strategy is followed.
Udupi District
Mangalore
Also this is evident from the below graph which shows the trend in sales of RMC by RMC Readymix Indian in the Udupi district (which includes the forecasted sales)
Sales
120000 100000 80000 60000 40000 20000 0 104000 90000 75000 62000 Sales
2007-08
2008-09
2009-10
2010-11
Industry Analysis
Ready mix concrete industry in India is still in its infancy but it is an emerging sector. The first ready-mix factory, which was built in the 1930s, remained in a standstill position till 1960s, but continued to grow since then. The leading ready-mix concrete supplier worldwide is the Mexican concrete and cement company Cemex, and their main competitor is France-based Lafarge.
Where in developed countries, nearly 70 per cent of cement consumption is in the form of ready mix concrete and 25 per cent in the form of recast, in India, ready mix concrete accounts for less than 5 per cent and as much as 82 per cent of cement consumption is in the form of site-mixed concrete. There are several reasons for this. In early 70s both pricing and distribution of cement was controlled due to shortage of supply. Ready mix concrete technology could not be implemented as investors felt that Ready mix concrete plant will starve due to non-availability of cement. The levy of additional taxes & duties on RMC, entry tax, excise duty also contributed to the slow development of the concept. The growth of RMC is predominantly driven by demand from the metro cities. In cities like Mumbai, the mandatory use of RMC is in construction of flyovers provided the requisite impetus to growth, according to an ICRA analysis. RMC is particularly useful when the building activity is located in congested sites where little space is available for siting the mixer and for stock piling of aggregates. The use of RMC is also advantageous when only small quantities of concrete are required or when concrete is to be placed only at intervals. Even as the concept of ready-mix concrete (RMC) is still catching up in the country, cement majors are keenly focusing on entering the new area in a big way. Anticipating huge potential for the product, cement majors, including Associated Cement Companies, Grasim, L&T, India Cements, Priyadarshini Cements, Chettinad Cement and Madras Cements, are foraying into the RMC business and the share of RMC is expected to go up from present levels of around 5 per cent of the total cement production to the global average of 70%. The teething troubles has been overcome by the RMC Industry and at present there are over 37 RMC plants delivering over one lakh cubic meters of mixed concrete every month. RMC plants are working in Delhi area also. Envisaging higher demand, the 16.4-million tonne cement major; ACC is planning to beef up its existing RMC infrastructure of 11 units with two new RMC units - one at Noida and the other in Mumbai, during the current year. During the last fiscal, Madras Cements set up two RMC plants near Chennai, with a capacity of approximately 9 lakh cubic meters, while Chettinad Cements installed an RMC facility near Coimbatore. For growth of the industry, government bodies, private builders, architects/engineers, contractors, and individuals required to be made fully aware about the advantages of using ready mix concrete, government bodies/consultants needs to include ready mix concrete as mandatory in their specification for execution, government specifications for CPWD and PWD jobs should include Ready mix concrete as a mandatory item. Apart from this, tax breaks are required for the growth of RMC and developers/contractors needs to be discouraged from piling up materials like metal, sand etc. on roads/foot paths.
SWOT Analysis of RMC Readymix Ltd
Strengths ? RMC Readymix has a well established brand and reputation. ? The Readymix concrete supplied is of the highest quality. ? RMC Readymix provides a unique flexibility of providing tailor made concrete suited for different applications. ? RMC Readymix is well known for its on time and prompt delivery ? RMC Readymix has a highly trained and qualified employee set. ? It provides excellent Customer service ? Opportunities ? Tie ups with possible customers like Manipal Press can allow for future sales. ? Expanding into newer areas like northern part of Udupi. ? With decrease in free land, local site mixing is becoming difficult giving an opportunity for the growth of RMC Weaknesses ? Lack of promotions as there are limited competitors in Manipal. Due to this they are not taking the opportunity of acquiring new business. ? RMC Readymix at the moment does not have a well defined marketing strategy.
? Threats ? Threat from local contractors who at times prefer local site mixing for concrete. ? Threat from laborers who try to object use of RMC
Competitive Forces
In India, market share of RMC is abysmally low when compared to developed nations. Initially, ready mix concrete was used only in metro cities. However, in the last few years it has spread to second- and thirdlevel cities. Slowly, the concept is catching up and people are realizing the advantages of using ready mix concrete. The major players who operate in the RMC business include RMC Readymix India, L&T (which has been acquired by Lafarge), UltraTech, ACC etc. The industry on the whole is highly competitive.
The ability to compete in the market depends largely on the below factors
roximity of the customers’ job sites to the ready mix concrete plant locations, the plant operating costs and the prevailing ready mix concrete prices in each market Price is the primary competitive factor among suppliers for small or simple jobs, principally in residential construction, while timeliness of delivery and consistency of quality and service as well as price are the principal competitive factors among suppliers for large or complex jobs. RMC Readymix’s competitors range from small, owner-operated private companies to subsidiaries or operating units of large, vertically integrated cement manufacturing and concrete products companies. The main competitors in the Mangalore region include L&T, UltraTech and a local company called Lancy. The below chart shows the market share of RMC Readymix in the Mangalore region. As it can be seen clearly, it is the leader in terms of market share.
Market Share in Mangalore
7% 8% RMC Readymix India UltraTech 25% 60% Lancy constructions and Others L&T (Lafarge)
While in Udupi district, RMC Readymix is the only branded player and hence occupies almost 35% of the complete concrete market. The majority is still held by local site mixing with a smaller percentage being held by the local contractors who have their own ready mix concrete captive plants. One of the local contractors is CCCL builders. Local site mixing is a major competitor especially for local contractors as it helps them to save money. Also laborers tend to be against use of RMC as otherwise it would lead to a loss of income for them.
The below pie chart shows the market share distribution i the Udupi region. in
Market Share in Udupi district
35% 45% RMC Readymix India Local Contractors Local Sitemix
20%
Porter’s Force Field Analysis
Industry competition The RMC and cement industry is one of the most competitive industries in the country with many different players fighting for the same pie. High growth prospects make it attractive for new players to enter in the industry. Many smaller players that are focused on a particular region have a better hang of the distribution channel, making it easier to succeed, albeit in a limited way. Bargaining power of buyers When we look at the buyer's power, we look at the influence they have on the prices of the product. In hen influence this industry, the buyers are developers and contractors and they as such do not wield much power in the pricing of the products. However, government with its policies plays an important role in regulating pricing. Bargaining power of suppliers The RMC industry depends upon several raw materials like cement, sand, aggregates and chemicals. The chemicals cement and chemical industry are again very competitive and fragmented. The chemicals used in the the industry are largely a commodity. The suppliers have very low bargaining power and the companies in the RMC industry can switch from their suppliers without incurring a very high cost.
Threat of substitutes Till quite recently, local site mixing was preferred as it was cheaper and at the same time provided employment. However, in recent times, the advances made in the field of technology, can prove to be a threat to the local concrete mixing industry as now the ready mix concrete is much better in terms of quality. This has lead to an increase in the usage of RMC even though at present, the only close substitute it has the local site mixed concrete. Barriers to entry The RMC industry is one of the not as easily accessible as some other industries for an entrepreneur in India. The capital requirement for the industry is comparatively high. However, creating brand awareness is the key for long-term survival. Also, quality regulations by the government may put some hindrance for establishing new manufacturing operations.
Business practices ? Due to the number of competitors, it will be hard to make customers switch.
Manufacturing & Marketing ? The marketing campaign to make this brand popular requires more promotional expenditures than its current expenditure. ? Close proximity to raw materials required.
? Given the wide array of brands it becomes a challenge for RMC Readymix India to stand out
Customer Analysis
RMC Readymix mainly targets concrete subcontractors, prime contractors, home builders, commercial & industrial developers. Also there is a heavy dependence on repeat customers. Management and dedicated sales personnel at each location have been responsible for developing and maintaining successful long term relationships. The main customers of RMC Readymix in the Udupi district are as below: Saipradha Developers Ballal Constructions Premier Builders
Shamthan Builders Swaroopa Engineers Udaya Shetty Projects Vineet Amin These customers contribute to a majority of the sales and almost in equal amounts. Also the RMC bought is used for different purposes i.e. for construction of apartments, residencies, commercial buildings, institutions, public works etc. Below is a pie chart which shows the distribution.
Other, 25% apartments, 60 % Commercial Buildings, 20% Public Works, 5% Residencies, 15 %
The residential sector of the construction market has historically been a key contributor to the business. As can be seen, majority of the RMC is bought for apartment construction. There is a significant contribution towards commercial building construction which includes buildings for institutes like TAPMI.
Critical Points & Keys to Success
India’s bureaucratic environment: - With the traditional hierarchical approach to working, the rigid Indian administration poses a number of challenges. This includes extensive procedural formalities, lack of continuity, fluctuations in taxation levels, acquisition of land for development etc. Importance of training: - Training and development activities were essential to attract the right employees. Success lay in providing focused training, development and balanced discussion to develop more improved ways of conducting their business. High quality and customer service: - A major part of RMC Readymix India has been due to the high quality and customer service it provides. This has formed one of the main differentiating factors for the company.
Timely Delivery: - Ensuring that the concrete reaches on time is a major factor for ensuring the success of the company. RMC Readymix has been able to live up to this for a long time and has thus been a major factor for their success. Other than this, there are some factors that affect the market and RMC Readymix’s plant construction decisions:Expected production demand for the plant; Expected types of projects the plant will service; and The desired location of the plant.
Marketing Plan Part 2: Marketing Strategy
Marketing Environment
Marketing Environment for Consumer Behavior Analysis
The test markets selected included the towns of Manipal and Udupi. The population in this area is approximately 20 lakhs with a literacy rate of 80%. This is important as with the increasing number of educated people, there is a tendency for increase in demand for quality products.
Consumer Behavior
To analyze the consumer behavior with respect to RMC, interviews were taken with the major customers (as mentioned above). This data was collected from the Udupi-Manipal region.
Some of the main findings from these interviews are as below: Reason for choosing RMC over site mix: The contractors and builders tend to prefer RMC mainly due to the below reasons: o o o o Better quality concrete is produced Time required is greatly reduced. Elimination of storage space for basic materials at site. Reduction of costs as labor costs will be reduced
Reason they prefer RMC Readymix over the competitors: The main reasons why the customers prefer RMC Readymix were as follows: o o o o Assured of a high quality product Assured of timely delivery Company has a good reputation Excellent customer service
o
Highly technical and efficient workforce
Why RMC Readymix is preferred
10% 8% 30% 7% 45% High Quality Timely Delivery Reputation Customer Service Workforce
The above pie chart shows that quality, timely delivery & customer service are major differentiating factors for RMC Readymix giving it its competitive advantage.
Marketing Objective
Being the case of a B2B business and the product being a commodity product, the objectives of the marketing plan are strategically centered on the following criteria: To create strong consumer awareness towards the product. To establish a wide brand recognition through the capture of market shares by penetration and expansion into new areas. On the Ansoff growth matrix, the strategy of RMC Readymix would fall into the quadrants of Market Penetration and Market Development as shown below.
Marketing Mix
Target Market & Segmentation Strategy
SEGMENTATION VARIABLES AND BREAKDOWNS FOR RMC READYMIX INDIA VARIABLES BREAKDOWNS
MAIN DIMENSIONS
Region
Udupi district including Manipal as well as expansion to the north of Manipal towards Murdeshwar. General contractors, subcontractors, public works department, design engineers, architects, homebuilders, commercial and industry property developers. Non-user, regular user None, medium, strong
Occupation User status Loyalty status
Based on the analysis done, we believe that the company should target the segment mentioned above. This includes developers and organizations of all income levels. With regard to occupation, the target customers are professional developers and organizations like the government. This segment is similar to the ones already being targeted by the competitors. Also in addition, they should also target the end customers (who are finally getting the residence built) as they can direct the contractor to get the product if they believe in the strengths and benefits of the same. Also in addition to the existing area, we believe that the company should look to expand to the north part of the district towards Murdeshwar. This area has lots of opportunities especially in Murdeshwar where a majority of the construction is done by R. N. Shetty.
Positioning Strategy
Being a commodity product, differentiation would not be in terms of price but would rather be based on the attributes of the product. The most important attribute(s) that can be linked to RMC Readymix is seen from the survey as the quality of the product and the excellent customer service. Hence based on this, we believe that the company should position itself on the quality front. The aim would be to position itself in the mind of the customers as a high quality product. Product quality is also important here as the competition from local site mixing is high and the quality can be used to gain advantage over this.
The 4P Strategy
Product Given that this is a commodity product, no differentiation can be done by changing the physical attributes of the product. The area where RMC Readymix can focus on with regard to the product would be on creating the perceived differentiation based on its superior product quality and excellent customer service.
Pricing When compared to its competitors, RMC Readymix charges a slightly higher price. But we believe this should be continued as this will help to showcase that this is a high quality product and hence a premium is being charged for the same.
Distribution Channels Given that the ready mix concrete should be made available to the customer within 4 to 5 hours, the only channel that is currently being used includes the direct channel. In this case distributors cannot be used as the order needs to be placed directly at the office from where the supply would then be made.
Product
No physical distribution Percieved differentiation based on product quality
Price
Continue to charger a higher price than competitors due to the better quality provided
Place Direct distribution channel
Promotion Strategy Given the commodity nature of the product, most of the promotional activities would be different than when compared to products like chips, chocolates etc. In this case, more focus should be given on creating relationships and awareness among the customers and end customers. Some strategies which we believe RMC can follow include:
End customer education Tie Ups
Seminars On site visits Loyalty discounts
Ads
Promotions
Booklets through mail
Advertisements:Being a B2B business, advertisements should be used to attract developers. But as the interest of the normal public would be less, the advertisement should also include the benefits of RMC over site mix. This will help to ensure that it gets the attention of the end customers as well. This would help in case they plan to get residences built for themselves in which case they can get the contractor to use RMC. Hence we would suggest advertising through the local dailies and also through billboards.
Tie ups with end customers With some of the end customers being large corporations like Manipal Press, it would be a good idea to form relationships with them. There are a number of projects lined up for these end customers and by having these relationships built; they would be able to get them to get their developers to use RMC than site mixing. Also in case of expansion, they can form tie ups with new developers like R. N. Shetty which will help to increase their market share in the area and also allow them to get the first entrant’s advantage.
End- customer education Most of the end customers do not know about RMC and its advantages and disadvantages. Given that RMC Readymix wants to penetrate more into the residence segment as well, it is important for them to educate these end customers on the benefits they can get by using RMC over the local site mixes. This can be done through advertisements/pamphlets. Also one more area where they need to focus is that given that the free area available to do site mixing is reducing with the increasing population, they should stress on the fact that this would not be required if RMC is used. Also with a large proportion of the population being educated, they should focus on the quality aspect as people would tend to be more quality conscious.
Seminars in engineering colleges By giving these seminars in colleges, RMC Readymix will be able to educate the students especially the civil engineering students in the benefits/advantages of RMC. This would help them in the long term.
On-site visits Trained personnel, technicians and managers can regularly visit potential construction areas to promote the brand and to acquire deals. Given that a large part of the market is held by RMC Readymix in this district, the aim would be to only promote the advantages of RMC over local mixes.
Allowances and discounts: Loyal and repeat customers can be provided discounts to ensure that they remain customers in the long term as well.
Booklets through direct mail RMC Readymix India should prepare booklets containing information on the company, the product and its advantages over the local site mixes, its pricing etc and this should be sent to the major developers and customers. This would help to promote the brand as well as help to educate the end customers.
Marketing Plan Part 3: Financials & Forecasts
The objective of the company is to increase its sales to 137540 cubic meters by 2012. The current trend as well as the future sales are indicated in the below chart.
Sales in cubic meters
2012 2011 2010 Year 2009 2008 2007 0 20000 40000 60000 80000 Sales 100000 120000 140000 160000
The current expense breakdown is as below:
Expense breakdown
10% 2%
Raw Materials 23% 45% Salaries Maintainance transportation Marketing 20%
In order to achieve its sales forecasts and its objectives of capturing the market share by market penetration and market expansion, the plan suggests to increate the marketing expenditure by 3% i.e. to increase the spending from the current 2% to 5%. Based on the same, we have created 2 financial statements – the first one (titled – Current Financials) shows the breakdown of the expenses and the profits the company would earn by continuing with the existing marketing budget. The second one (titled – Future Financials) highlights the profits with the increase in marketing budget to 5%. In this the company would be able to increase its sales to a better value and would also be getting a higher profit when compared to the existing profile.
Current Financials
Year Sales (in Cu Meters) Growth % Sales (in INR) N Profit margin N Profit Growth% N Profit Before TAX Total Cost Cost Break Down Raw Materials Salary Transportation Depreciation & Maint Marketing Diff In Any 83421000 36270000 18135000 39897000 3627000 0 100912500 121095000 43875000 52650000 21937500 26325000 48262500 4387500 0 57915000 5265000 0 139932000 60840000 30420000 66924000 6084000 0 160921800 69966000 34983000 76962600 6996600 0 185060070 80460900 40230450 88506990 8046090 0 2007 62000 2008 2009 2010 2011 119600 0.15 388700000 7% 27209000 0.15 38870000 349830000 2012 137540 0.15 447005000 7% 31290350 0.15 44700500 402304500 75000 90000 104000 0.209677419 0.2 0.155555556 201500000 243750000 292500000 338000000 7% 14105000 7% 17062500 0.209677419 24375000 7% 7%
20475000 23660000 0.2 0.155555556 29250000 33800000 304200000
20150000 181350000
219375000 263250000
Future Financials
Year Sales (in Cu Meters) Growth % Sales (in INR) N Profit margin N Profit Growth% N Profit Before TAX Total Cost 2008 75000 0.209677419 201500000 243750000 7.0% 14105000 20150000 181350000 7.0% 2007 62000 2009 90000 0.2 292500000 6.0% 2010 106200 0.18 345150000 6.5% 2011 127440 0.2 414180000 7.0% 28992600 29.23% 41418000 372762000 2012 159300 0.25 517725000 7.0% 36240750 25.00% 51772500 465952500
17062500 17550000 22434750 20.97% 2.86% 27.83% 24375000 25071428.57 32049642.86 219375000 267428571.4 313100357.1
Cost Break Down Raw Materials Salary Transportation Depreciation & Maint Marketing Diff In Any Change in N Profit % Change in Profit 83421000 36270000 18135000 39897000 3627000 0 0 0% 100912500 120342857.1 140895160.7 43875000 50811428.57 59489067.86 21937500 26742857.14 31310035.71 48262500 56160000 65751075 4387500 13371428.57 15655017.86 0 0 0% 0 -2925000 -14% 0 -1225250 -5% 167742900 70824780 37276200 78280020 18638100 0 1783600 7% 209678625 88530975 46595250 97850025 23297625 0 4950400 16%
SP VAT (12.5%)
3250 3656
Raw Materials Salary Transportation Maintenance Marketing
45% 19% 10% 21% 5%
Marketing Plan Part 4: Review and Control
To ensure that the current recession does not hit the business of RMC Readymix India in the Udupi district, the company should look to have a constant vigil over the entire project. The progress can be monitored on a monthly, quarterly, half yearly and annual basis. The focus of the review should be: Sales Volume Revenue from Sales Expenses incurred in the time period Feedback from customers and developers Change in the strategies of the competitors
Marketing Plan Part 5: Contingency Plan
These contingency plans are not damage control plans. This is mainly related to anticipating possible threats in the market and taking proactive steps to respond to them. This is aimed to prevent being hit by a crisis or some other changes or fluctuations. Given that Readymix concrete is a substitute for local site mixes, the company should be ready to face stiff resistance and protests from the labor unions especially in the new areas where it plans to expand to. There is also a chance of other players in the RMC business like Ultratech plan to enter the market as the growth opportunities are large. Hence to ensure that they are not affected by this, RMC Readymix should look to build their brand image in this initial period itself. Also they should look to establish a strong supply chain network and also building strong relationships with the end customers like Manipal Press, R. N. Shetty etc. this would help to increase the entry barriers for the new players who plan to enter the Udupi district market.
doc_125549233.pdf
It explains the Presentation on RMC readymix marketing plan. Covers everything for a marketing plan. Segmentation, marketing, target, positioning, financials, competition etc.
TAPMI
Marketing Plan for RMC Readymix India
SUBMITTED BY:
GROUP: 13 – M1 Abhilash K Barath V Mrunmayi Gadre Nirav J Vora Veneet Keshar Vijeth P.R.
Table of Contents
Executive Summary PART 1 – Market and Consumer Profile
1. Company Introduction 2. Situation Analysis a. Products offered by RMC Readymix India b. Industry Analysis c. SWOT Analysis d. Competitive Forces e. Porter’s Force Field Analysis f. Customer Analysis g. Critical Points & Keys to Success 3. Marketing Environment for consumer behavior analysis
PART 2 – Marketing Strategy
1. 2. 3. 4. Marketing Objective Segmentation and Targeting Positioning Marketing Mix
PART 3 – Financials and Forecasts
1. Sales and Expense forecast
PART 4 – Review and Control
PART 5 – Contingency Plan
Executive Summary
Ready-mix concrete (RMC) is a type of concrete that is manufactured in a factory or batching plant, according to a set recipe, and then delivered to a worksite, by truck mounted transit mixers. This results in a precise mixture, allowing specialty concrete mixtures to be developed and implemented on construction sites. The first ready-mix factory was built in the 1930s, but the industry did not begin to expand significantly until the 1960s, and it has continued to grow since then. RMC Readymix (India) Limited is a joint venture company between the RMC Group p.l.c. of UK and Hatchways Investment Limited - a Rajan Raheja Group enterprise. The company aims to promote the concept and develop the use of ready mixed concrete all over India by setting up strategically located batching plants, built to the highest international standards. The company has set up its plant in the Udupi district in 2007 and currently is the only RMC player in the region. Of the complete concrete industry, RMC Readymix has 35% market share in the Udupi district with the majority being held by the local site mixers. The objective of the company at this point of time is to increase its sales and to capture market share by penetrating into the market and also by expanding into newer markets in the surrounding areas. This marketing plan aims to provide insights into how the company can use the available market opportunities to expand into the ready mix concrete market with specific reference to the Udupi district. The main areas that the plan suggests is to increase relationships with end customers like Manipal Press by forming tie ups with them and also by targeting public works departments by public sector projects in the surrounding areas. In addition to this, the plan also suggests to increase their marketing budget in order to advertise and to increase the product and brand awareness.
Marketing Plan Part 1: Market and Consumer Profile
Basic Company Information
RMC Readymix (India) Limited is a joint venture company between the RMC Group p.l.c. of UK and Hathway Investment Limited - a Rajan Raheja Group enterprise. RMC Group p.l.c. is an international company operating in 30 countries. By annual turnover, the Group is the world’s 4th largest heavy building materials company, focused principally on aggregates - sand, gravel, rock - ready mixed concrete and cement. The company was established with its Headquarter in Mumbai. The company aims to promote the concept and develop the use of ready mixed concrete all over India by setting up strategically located batching plants, built to the highest international standards. Operations of RMC Readymix (India) Limited began in India by setting up three state-of-the-art batching plants at Taloja & Mahape in Navi Mumbai and Bandra, Mumbai. Ready mixed concrete is a new idea for the construction industry in India. RMC Readymix (India) Limited is the vehicle, which brings to doorsteps, ready mixed concrete produced to the highest international quality standards. A venture of Hathway Investments Pvt. Ltd., RMC Readymix (India) Pvt. Limited began commercial production in 1996. Under the guidance of RMC UK, the world's largest producer of ready mixed concrete, RMC India broke new ground when it set up India's first Ready Mixed Concrete plant using the world's best machinery, quality assurance & quality control systems. As well as fully qualified engineers instead of semi-skilled staff as was the practice prevalent in the industry at that time. RMC made a conscious decision from the outset to introduce the best available international technology when entering the Indian market. While it may have been easier to opt for a low-cost, low-tech solution, all plants were imported from Europe at a considerable cost, (largely due to prevailing import tariffs) to ensure a high standard of technological hardware. A major reason for this was the company’s goal to establish a quality differentiation in this potentially huge market. In addition, this approach, adopted in part by several competitors, has the effect of increasing barriers to entry, thus encouraging only the more serious players with a long-term commitment to this embryo sector.
The 10 years that RMC has spent in the manufacture and marketing of Ready Mixed Concrete, have helped reinforce and sharpen certain traits that the Company has become known and respected for such as setting benchmarks in Best Practices, Quality Assurance and Customer Service or driving up standards in Health, Safety and
Environmental Protection, plus a high degree of integrity, transparency and courtesy. It has been only 2 years since they have started operating in the Udupi district. They provide ready mix concrete, sand and gravel products to a variety of customers, including but not limited to, contractors, subcontractors, individuals and owners of both private and public construction projects.
The business strategy that is followed has the below primary objectives: Closely monitor the demand and evaluate the cost-effectiveness and timing of their operating hours; Manage their fixed asset base to minimize ongoing fixed costs while maintaining sufficient capacity to meet the demands of their customers and remain adequately prepared; Seek to obtain cost savings through minimizing overtime, seeking optimum pricing of raw materials purchased from third parties, renegotiating minimum royalty levels at certain leased properties, maintaining staff count at appropriate levels, eliminating or reducing costs in numerous areas of their operations; Improve their competitiveness in certain market segments — particularly the public infrastructure segment; Increase market intelligence and awareness to be sensitive to potential opportunities that may result from the strengths or weaknesses of competitors in the market, including attractive divestiture or acquisition opportunities
Situation Analysis
Product
RMC’s provides ready mix concrete to its customers based on their requirements. RMC is preferred to on-site concrete mixing because of the precision of the mixture and reduced worksite confusion. It site facilitates speedy construction through programmed delivery at site and mechanized operation with consequent economy. It also decreases labour, site supervising cost and project time, resulting in supervising savings. Proper control and economy in use of raw material results in saving of natural resources. It assures consistent quality through accurate computerized control of aggregates and water as per mix designs. It minimizes cement wastage due to bulk handling and there is no dust problem and therefore, pollution-free. However there are some disadvantages of RMC too, like double handling, which results in additional cost and losses in weight, requirement of godowns for storage of cement and large area at site for storage of raw materials. Aggregates get mixed and impurities creep in because of wind, weather and mishandling at site. Improper mixing at site, as there is ineffective control and intangible cost associate associated with unorganized preparation at site are other drawbacks of RMC. There are always possibilities of manipulation; manual error and mischief as concreting are done at the mercy of gangs, who manipulate the concrete mixes and water cement ratio.
Raw Material Expenses
10% 10% 3% 2% Cement Sand 75% Aggregates Chemicals Water
From the raw material perspective, cement is the most expensive and important raw material used in the production of ready mix concrete. So to ensure that there is no blockages in production, RMC Readymix purchases cement from multiple suppliers and this helps them to build strong relationships. them Below chart shows the breakup of expenses for every Rs 100 spent on RMC. If we look at the position of the product on the BCG matrix, we find that in the Mangalore region, it is positioned as a Cash Cow whereas in the Udupi district where the company has just entered, it is positioned as a Star. Also given that there is very little competition currently in the Udupi/Manipal market, there is a huge potential for the company to turn this Star into a Cash Cow if the right strat strategy is followed.
Udupi District
Mangalore
Also this is evident from the below graph which shows the trend in sales of RMC by RMC Readymix Indian in the Udupi district (which includes the forecasted sales)
Sales
120000 100000 80000 60000 40000 20000 0 104000 90000 75000 62000 Sales
2007-08
2008-09
2009-10
2010-11
Industry Analysis
Ready mix concrete industry in India is still in its infancy but it is an emerging sector. The first ready-mix factory, which was built in the 1930s, remained in a standstill position till 1960s, but continued to grow since then. The leading ready-mix concrete supplier worldwide is the Mexican concrete and cement company Cemex, and their main competitor is France-based Lafarge.
Where in developed countries, nearly 70 per cent of cement consumption is in the form of ready mix concrete and 25 per cent in the form of recast, in India, ready mix concrete accounts for less than 5 per cent and as much as 82 per cent of cement consumption is in the form of site-mixed concrete. There are several reasons for this. In early 70s both pricing and distribution of cement was controlled due to shortage of supply. Ready mix concrete technology could not be implemented as investors felt that Ready mix concrete plant will starve due to non-availability of cement. The levy of additional taxes & duties on RMC, entry tax, excise duty also contributed to the slow development of the concept. The growth of RMC is predominantly driven by demand from the metro cities. In cities like Mumbai, the mandatory use of RMC is in construction of flyovers provided the requisite impetus to growth, according to an ICRA analysis. RMC is particularly useful when the building activity is located in congested sites where little space is available for siting the mixer and for stock piling of aggregates. The use of RMC is also advantageous when only small quantities of concrete are required or when concrete is to be placed only at intervals. Even as the concept of ready-mix concrete (RMC) is still catching up in the country, cement majors are keenly focusing on entering the new area in a big way. Anticipating huge potential for the product, cement majors, including Associated Cement Companies, Grasim, L&T, India Cements, Priyadarshini Cements, Chettinad Cement and Madras Cements, are foraying into the RMC business and the share of RMC is expected to go up from present levels of around 5 per cent of the total cement production to the global average of 70%. The teething troubles has been overcome by the RMC Industry and at present there are over 37 RMC plants delivering over one lakh cubic meters of mixed concrete every month. RMC plants are working in Delhi area also. Envisaging higher demand, the 16.4-million tonne cement major; ACC is planning to beef up its existing RMC infrastructure of 11 units with two new RMC units - one at Noida and the other in Mumbai, during the current year. During the last fiscal, Madras Cements set up two RMC plants near Chennai, with a capacity of approximately 9 lakh cubic meters, while Chettinad Cements installed an RMC facility near Coimbatore. For growth of the industry, government bodies, private builders, architects/engineers, contractors, and individuals required to be made fully aware about the advantages of using ready mix concrete, government bodies/consultants needs to include ready mix concrete as mandatory in their specification for execution, government specifications for CPWD and PWD jobs should include Ready mix concrete as a mandatory item. Apart from this, tax breaks are required for the growth of RMC and developers/contractors needs to be discouraged from piling up materials like metal, sand etc. on roads/foot paths.
SWOT Analysis of RMC Readymix Ltd
Strengths ? RMC Readymix has a well established brand and reputation. ? The Readymix concrete supplied is of the highest quality. ? RMC Readymix provides a unique flexibility of providing tailor made concrete suited for different applications. ? RMC Readymix is well known for its on time and prompt delivery ? RMC Readymix has a highly trained and qualified employee set. ? It provides excellent Customer service ? Opportunities ? Tie ups with possible customers like Manipal Press can allow for future sales. ? Expanding into newer areas like northern part of Udupi. ? With decrease in free land, local site mixing is becoming difficult giving an opportunity for the growth of RMC Weaknesses ? Lack of promotions as there are limited competitors in Manipal. Due to this they are not taking the opportunity of acquiring new business. ? RMC Readymix at the moment does not have a well defined marketing strategy.
? Threats ? Threat from local contractors who at times prefer local site mixing for concrete. ? Threat from laborers who try to object use of RMC
Competitive Forces
In India, market share of RMC is abysmally low when compared to developed nations. Initially, ready mix concrete was used only in metro cities. However, in the last few years it has spread to second- and thirdlevel cities. Slowly, the concept is catching up and people are realizing the advantages of using ready mix concrete. The major players who operate in the RMC business include RMC Readymix India, L&T (which has been acquired by Lafarge), UltraTech, ACC etc. The industry on the whole is highly competitive.
The ability to compete in the market depends largely on the below factors
roximity of the customers’ job sites to the ready mix concrete plant locations, the plant operating costs and the prevailing ready mix concrete prices in each market Price is the primary competitive factor among suppliers for small or simple jobs, principally in residential construction, while timeliness of delivery and consistency of quality and service as well as price are the principal competitive factors among suppliers for large or complex jobs. RMC Readymix’s competitors range from small, owner-operated private companies to subsidiaries or operating units of large, vertically integrated cement manufacturing and concrete products companies. The main competitors in the Mangalore region include L&T, UltraTech and a local company called Lancy. The below chart shows the market share of RMC Readymix in the Mangalore region. As it can be seen clearly, it is the leader in terms of market share.Market Share in Mangalore
7% 8% RMC Readymix India UltraTech 25% 60% Lancy constructions and Others L&T (Lafarge)
While in Udupi district, RMC Readymix is the only branded player and hence occupies almost 35% of the complete concrete market. The majority is still held by local site mixing with a smaller percentage being held by the local contractors who have their own ready mix concrete captive plants. One of the local contractors is CCCL builders. Local site mixing is a major competitor especially for local contractors as it helps them to save money. Also laborers tend to be against use of RMC as otherwise it would lead to a loss of income for them.
The below pie chart shows the market share distribution i the Udupi region. in
Market Share in Udupi district
35% 45% RMC Readymix India Local Contractors Local Sitemix
20%
Porter’s Force Field Analysis
Industry competition The RMC and cement industry is one of the most competitive industries in the country with many different players fighting for the same pie. High growth prospects make it attractive for new players to enter in the industry. Many smaller players that are focused on a particular region have a better hang of the distribution channel, making it easier to succeed, albeit in a limited way. Bargaining power of buyers When we look at the buyer's power, we look at the influence they have on the prices of the product. In hen influence this industry, the buyers are developers and contractors and they as such do not wield much power in the pricing of the products. However, government with its policies plays an important role in regulating pricing. Bargaining power of suppliers The RMC industry depends upon several raw materials like cement, sand, aggregates and chemicals. The chemicals cement and chemical industry are again very competitive and fragmented. The chemicals used in the the industry are largely a commodity. The suppliers have very low bargaining power and the companies in the RMC industry can switch from their suppliers without incurring a very high cost.
Threat of substitutes Till quite recently, local site mixing was preferred as it was cheaper and at the same time provided employment. However, in recent times, the advances made in the field of technology, can prove to be a threat to the local concrete mixing industry as now the ready mix concrete is much better in terms of quality. This has lead to an increase in the usage of RMC even though at present, the only close substitute it has the local site mixed concrete. Barriers to entry The RMC industry is one of the not as easily accessible as some other industries for an entrepreneur in India. The capital requirement for the industry is comparatively high. However, creating brand awareness is the key for long-term survival. Also, quality regulations by the government may put some hindrance for establishing new manufacturing operations.
Business practices ? Due to the number of competitors, it will be hard to make customers switch.
Manufacturing & Marketing ? The marketing campaign to make this brand popular requires more promotional expenditures than its current expenditure. ? Close proximity to raw materials required.
? Given the wide array of brands it becomes a challenge for RMC Readymix India to stand out
Customer Analysis
RMC Readymix mainly targets concrete subcontractors, prime contractors, home builders, commercial & industrial developers. Also there is a heavy dependence on repeat customers. Management and dedicated sales personnel at each location have been responsible for developing and maintaining successful long term relationships. The main customers of RMC Readymix in the Udupi district are as below: Saipradha Developers Ballal Constructions Premier Builders
Shamthan Builders Swaroopa Engineers Udaya Shetty Projects Vineet Amin These customers contribute to a majority of the sales and almost in equal amounts. Also the RMC bought is used for different purposes i.e. for construction of apartments, residencies, commercial buildings, institutions, public works etc. Below is a pie chart which shows the distribution.
Other, 25% apartments, 60 % Commercial Buildings, 20% Public Works, 5% Residencies, 15 %
The residential sector of the construction market has historically been a key contributor to the business. As can be seen, majority of the RMC is bought for apartment construction. There is a significant contribution towards commercial building construction which includes buildings for institutes like TAPMI.
Critical Points & Keys to Success
India’s bureaucratic environment: - With the traditional hierarchical approach to working, the rigid Indian administration poses a number of challenges. This includes extensive procedural formalities, lack of continuity, fluctuations in taxation levels, acquisition of land for development etc. Importance of training: - Training and development activities were essential to attract the right employees. Success lay in providing focused training, development and balanced discussion to develop more improved ways of conducting their business. High quality and customer service: - A major part of RMC Readymix India has been due to the high quality and customer service it provides. This has formed one of the main differentiating factors for the company.
Timely Delivery: - Ensuring that the concrete reaches on time is a major factor for ensuring the success of the company. RMC Readymix has been able to live up to this for a long time and has thus been a major factor for their success. Other than this, there are some factors that affect the market and RMC Readymix’s plant construction decisions:Expected production demand for the plant; Expected types of projects the plant will service; and The desired location of the plant.
Marketing Plan Part 2: Marketing Strategy
Marketing Environment
Marketing Environment for Consumer Behavior Analysis
The test markets selected included the towns of Manipal and Udupi. The population in this area is approximately 20 lakhs with a literacy rate of 80%. This is important as with the increasing number of educated people, there is a tendency for increase in demand for quality products.
Consumer Behavior
To analyze the consumer behavior with respect to RMC, interviews were taken with the major customers (as mentioned above). This data was collected from the Udupi-Manipal region.
Some of the main findings from these interviews are as below: Reason for choosing RMC over site mix: The contractors and builders tend to prefer RMC mainly due to the below reasons: o o o o Better quality concrete is produced Time required is greatly reduced. Elimination of storage space for basic materials at site. Reduction of costs as labor costs will be reduced
Reason they prefer RMC Readymix over the competitors: The main reasons why the customers prefer RMC Readymix were as follows: o o o o Assured of a high quality product Assured of timely delivery Company has a good reputation Excellent customer service
o
Highly technical and efficient workforce
Why RMC Readymix is preferred
10% 8% 30% 7% 45% High Quality Timely Delivery Reputation Customer Service Workforce
The above pie chart shows that quality, timely delivery & customer service are major differentiating factors for RMC Readymix giving it its competitive advantage.
Marketing Objective
Being the case of a B2B business and the product being a commodity product, the objectives of the marketing plan are strategically centered on the following criteria: To create strong consumer awareness towards the product. To establish a wide brand recognition through the capture of market shares by penetration and expansion into new areas. On the Ansoff growth matrix, the strategy of RMC Readymix would fall into the quadrants of Market Penetration and Market Development as shown below.
Marketing Mix
Target Market & Segmentation Strategy
SEGMENTATION VARIABLES AND BREAKDOWNS FOR RMC READYMIX INDIA VARIABLES BREAKDOWNS
MAIN DIMENSIONS
Region
Udupi district including Manipal as well as expansion to the north of Manipal towards Murdeshwar. General contractors, subcontractors, public works department, design engineers, architects, homebuilders, commercial and industry property developers. Non-user, regular user None, medium, strong
Occupation User status Loyalty status
Based on the analysis done, we believe that the company should target the segment mentioned above. This includes developers and organizations of all income levels. With regard to occupation, the target customers are professional developers and organizations like the government. This segment is similar to the ones already being targeted by the competitors. Also in addition, they should also target the end customers (who are finally getting the residence built) as they can direct the contractor to get the product if they believe in the strengths and benefits of the same. Also in addition to the existing area, we believe that the company should look to expand to the north part of the district towards Murdeshwar. This area has lots of opportunities especially in Murdeshwar where a majority of the construction is done by R. N. Shetty.
Positioning Strategy
Being a commodity product, differentiation would not be in terms of price but would rather be based on the attributes of the product. The most important attribute(s) that can be linked to RMC Readymix is seen from the survey as the quality of the product and the excellent customer service. Hence based on this, we believe that the company should position itself on the quality front. The aim would be to position itself in the mind of the customers as a high quality product. Product quality is also important here as the competition from local site mixing is high and the quality can be used to gain advantage over this.
The 4P Strategy
Product Given that this is a commodity product, no differentiation can be done by changing the physical attributes of the product. The area where RMC Readymix can focus on with regard to the product would be on creating the perceived differentiation based on its superior product quality and excellent customer service.
Pricing When compared to its competitors, RMC Readymix charges a slightly higher price. But we believe this should be continued as this will help to showcase that this is a high quality product and hence a premium is being charged for the same.
Distribution Channels Given that the ready mix concrete should be made available to the customer within 4 to 5 hours, the only channel that is currently being used includes the direct channel. In this case distributors cannot be used as the order needs to be placed directly at the office from where the supply would then be made.
Product
No physical distribution Percieved differentiation based on product quality
Price
Continue to charger a higher price than competitors due to the better quality provided
Place Direct distribution channel
Promotion Strategy Given the commodity nature of the product, most of the promotional activities would be different than when compared to products like chips, chocolates etc. In this case, more focus should be given on creating relationships and awareness among the customers and end customers. Some strategies which we believe RMC can follow include:
End customer education Tie Ups
Seminars On site visits Loyalty discounts
Ads
Promotions
Booklets through mail
Advertisements:Being a B2B business, advertisements should be used to attract developers. But as the interest of the normal public would be less, the advertisement should also include the benefits of RMC over site mix. This will help to ensure that it gets the attention of the end customers as well. This would help in case they plan to get residences built for themselves in which case they can get the contractor to use RMC. Hence we would suggest advertising through the local dailies and also through billboards.
Tie ups with end customers With some of the end customers being large corporations like Manipal Press, it would be a good idea to form relationships with them. There are a number of projects lined up for these end customers and by having these relationships built; they would be able to get them to get their developers to use RMC than site mixing. Also in case of expansion, they can form tie ups with new developers like R. N. Shetty which will help to increase their market share in the area and also allow them to get the first entrant’s advantage.
End- customer education Most of the end customers do not know about RMC and its advantages and disadvantages. Given that RMC Readymix wants to penetrate more into the residence segment as well, it is important for them to educate these end customers on the benefits they can get by using RMC over the local site mixes. This can be done through advertisements/pamphlets. Also one more area where they need to focus is that given that the free area available to do site mixing is reducing with the increasing population, they should stress on the fact that this would not be required if RMC is used. Also with a large proportion of the population being educated, they should focus on the quality aspect as people would tend to be more quality conscious.
Seminars in engineering colleges By giving these seminars in colleges, RMC Readymix will be able to educate the students especially the civil engineering students in the benefits/advantages of RMC. This would help them in the long term.
On-site visits Trained personnel, technicians and managers can regularly visit potential construction areas to promote the brand and to acquire deals. Given that a large part of the market is held by RMC Readymix in this district, the aim would be to only promote the advantages of RMC over local mixes.
Allowances and discounts: Loyal and repeat customers can be provided discounts to ensure that they remain customers in the long term as well.
Booklets through direct mail RMC Readymix India should prepare booklets containing information on the company, the product and its advantages over the local site mixes, its pricing etc and this should be sent to the major developers and customers. This would help to promote the brand as well as help to educate the end customers.
Marketing Plan Part 3: Financials & Forecasts
The objective of the company is to increase its sales to 137540 cubic meters by 2012. The current trend as well as the future sales are indicated in the below chart.
Sales in cubic meters
2012 2011 2010 Year 2009 2008 2007 0 20000 40000 60000 80000 Sales 100000 120000 140000 160000
The current expense breakdown is as below:
Expense breakdown
10% 2%
Raw Materials 23% 45% Salaries Maintainance transportation Marketing 20%
In order to achieve its sales forecasts and its objectives of capturing the market share by market penetration and market expansion, the plan suggests to increate the marketing expenditure by 3% i.e. to increase the spending from the current 2% to 5%. Based on the same, we have created 2 financial statements – the first one (titled – Current Financials) shows the breakdown of the expenses and the profits the company would earn by continuing with the existing marketing budget. The second one (titled – Future Financials) highlights the profits with the increase in marketing budget to 5%. In this the company would be able to increase its sales to a better value and would also be getting a higher profit when compared to the existing profile.
Current Financials
Year Sales (in Cu Meters) Growth % Sales (in INR) N Profit margin N Profit Growth% N Profit Before TAX Total Cost Cost Break Down Raw Materials Salary Transportation Depreciation & Maint Marketing Diff In Any 83421000 36270000 18135000 39897000 3627000 0 100912500 121095000 43875000 52650000 21937500 26325000 48262500 4387500 0 57915000 5265000 0 139932000 60840000 30420000 66924000 6084000 0 160921800 69966000 34983000 76962600 6996600 0 185060070 80460900 40230450 88506990 8046090 0 2007 62000 2008 2009 2010 2011 119600 0.15 388700000 7% 27209000 0.15 38870000 349830000 2012 137540 0.15 447005000 7% 31290350 0.15 44700500 402304500 75000 90000 104000 0.209677419 0.2 0.155555556 201500000 243750000 292500000 338000000 7% 14105000 7% 17062500 0.209677419 24375000 7% 7%
20475000 23660000 0.2 0.155555556 29250000 33800000 304200000
20150000 181350000
219375000 263250000
Future Financials
Year Sales (in Cu Meters) Growth % Sales (in INR) N Profit margin N Profit Growth% N Profit Before TAX Total Cost 2008 75000 0.209677419 201500000 243750000 7.0% 14105000 20150000 181350000 7.0% 2007 62000 2009 90000 0.2 292500000 6.0% 2010 106200 0.18 345150000 6.5% 2011 127440 0.2 414180000 7.0% 28992600 29.23% 41418000 372762000 2012 159300 0.25 517725000 7.0% 36240750 25.00% 51772500 465952500
17062500 17550000 22434750 20.97% 2.86% 27.83% 24375000 25071428.57 32049642.86 219375000 267428571.4 313100357.1
Cost Break Down Raw Materials Salary Transportation Depreciation & Maint Marketing Diff In Any Change in N Profit % Change in Profit 83421000 36270000 18135000 39897000 3627000 0 0 0% 100912500 120342857.1 140895160.7 43875000 50811428.57 59489067.86 21937500 26742857.14 31310035.71 48262500 56160000 65751075 4387500 13371428.57 15655017.86 0 0 0% 0 -2925000 -14% 0 -1225250 -5% 167742900 70824780 37276200 78280020 18638100 0 1783600 7% 209678625 88530975 46595250 97850025 23297625 0 4950400 16%
SP VAT (12.5%)
3250 3656
Raw Materials Salary Transportation Maintenance Marketing
45% 19% 10% 21% 5%
Marketing Plan Part 4: Review and Control
To ensure that the current recession does not hit the business of RMC Readymix India in the Udupi district, the company should look to have a constant vigil over the entire project. The progress can be monitored on a monthly, quarterly, half yearly and annual basis. The focus of the review should be: Sales Volume Revenue from Sales Expenses incurred in the time period Feedback from customers and developers Change in the strategies of the competitors
Marketing Plan Part 5: Contingency Plan
These contingency plans are not damage control plans. This is mainly related to anticipating possible threats in the market and taking proactive steps to respond to them. This is aimed to prevent being hit by a crisis or some other changes or fluctuations. Given that Readymix concrete is a substitute for local site mixes, the company should be ready to face stiff resistance and protests from the labor unions especially in the new areas where it plans to expand to. There is also a chance of other players in the RMC business like Ultratech plan to enter the market as the growth opportunities are large. Hence to ensure that they are not affected by this, RMC Readymix should look to build their brand image in this initial period itself. Also they should look to establish a strong supply chain network and also building strong relationships with the end customers like Manipal Press, R. N. Shetty etc. this would help to increase the entry barriers for the new players who plan to enter the Udupi district market.
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