Marketing Analysis of Ambuja Cement: Strategies and Audit

This report provides a comprehensive marketing analysis of Ambuja Cement Ltd., examining its background in the cement industry, market positioning, and unique selling proposition. It includes a detailed marketing audit using SWOT and PESTLE analyses to assess internal and external factors, market attractiveness, and potential for growth. The report explores the company's strengths, such as its strong dealer network and financial backing, alongside weaknesses like high transportation costs and competition. Opportunities like GST benefits and industry growth are discussed, as are threats like high production costs and competition. The report also analyzes the political, economic, social, technological, and environmental factors influencing the company, offering insights into its market strategy and competitive landscape. The report concludes with a discussion of new marketing mix actions to address gaps between the current strategy and the external environment.

Marketing
Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1. Background of industry, market positioning as well as present unique selling proposition1
2. Marketing audit, including both internal and external factors and whether there is the
potential for market growth....................................................................................................2
3. Critically defend new marketing mix actions to achieve gaps between company's present
marketing strategy and external environment........................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Marketing is an essential function performed by each and every organization to promote
their goods and services within a targeted market. Marketing management is a process of
reaching customers by different ways of advertising, sales and promotion. It helps to share ideas
related to products with customers in order to increase their sales and profit. In this present
assignment, Ambuja cement Ltd. will be chosen. It is a company which produces cement and
was earlier named as Gujarat Ambuja cement Ltd. Organisation has its revenue of around
76,378.1 million. Company’s shares are traded on National and Bombay stock exchange. This
report will include Background of cement industry, market positioning as well as present unique
selling proposition. Furthermore, it will also include Marketing audit, including both internal and
external factors and company’s potential for market growth will be described briefly.
MAIN BODY
1. Background of industry, market positioning as well as present unique selling proposition
Background: Cement industry is placed as one of the largest industries of the world. It
has capacity to generate employment and it has contributed in development. Cement is essential
for construction purpose. It is the second most consumed material across world. It comes next to
steel for construction purpose. Cement is low at value but it is high at bulk. In 1914, India has
entered into cement industry. Indian cement industry produces the best quality concrete and
placed as the second largest quality producer across world after China. It produces different
varieties of cement with around 300 million tonnes of production capacity. Private sector covers
around 98% of total Indian industry and remaining 2% is with public sector.
Market positioning: Ambuja cement was established in 1986 which was initially named
as Gujarat Ambuja Cements Ltd. Organisation has total cement capacity of around 18.4 million.
It has higher technology plant which is very efficient in producing cement. It earns the highest
profit in India among entire Indian cement industry. It ranked on 3rd position in India among
cement industry. Main basic objective of company is to manufacture the best quality cement for
its customers. For the same, it has been awarded by prime minister of India. Cement industry are
considered to be the biggest polluter of environment. But, Ambuja cement believes in protection
of environment. Among the top 12 players in cement industry, this company is placed on 3rd
number in terms of production capacity and it contributes 13% among overall production of
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Indian filling industry. Organisation believes in covering major key locations in the entire
country. Four captive ports are established by company to distribute properly across the nation.
Ambuja cements Ltd. Believes in developing its business by way of reaching maximum
wholesalers and retailers. End consumer can be targeted through distributors ( Market
positioning of Ambuja cement,2011)
Unique selling proposition: To increase the sales of company, it has covered 48000
wholesalers and retailers. It has got capacity of 29 million tons in the complete year. Ambuja
cement Ltd. has 5 manufacturing units and 8 grinding units in entire nation. Sales targets are
given to such allocator so that company can achieve its sales objectives. It has got the capacity of
29 million tons in the complete year (Trautman and Ford, 2018).
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Illustration 1: Market positioning of Ambuja
cement
(Source: Market positioning of Ambuja
cement,2011)

2. Marketing audit including both internal and external factors, the overall market attractiveness
and identifying whether there is the potential for market growth
Market audit is conducted when company plans to check its potential for market growth.
To conduct the same firm has to make systematic evaluation of both the internal and external
factors. Market audit should cover all the major areas by doing study on strengths and weakness
of company. It is carried to know that what opportunities will be found and threats will be faced
by business (Karatum, 2017). So, research is being conducted on internal and external factors by
doing SWOT and PESTLE analysis to know whether there is potential for market growth.
SWOT ANALYSIS
Strengths
Ambuja cement Ltd. is one of the major growing companies in cement industry.
Strengths are those factors which help institution in growing more and these are the reason
behind survival of a company in the market. Every company has some strengths which helps it in
achieving its goals and objectives (Husaini, Kusumawati and Mawardi, 2017). Below are the
strengths of cited company.
Strong dealer network: Company has very strong network of its dealer which has
increased its sales to a great extent. Targets for sales and different awards are given by company
on achievement of the same to Wholesalers and retailers. This policy encourages distributors for
achieving their targets (Oedl-Wieser, 2017).
Strong financial backing: Ambuja cements is excellent at finance as its revenue
increases every year. Which makes it easy for organisation to expand its business and achieve its
goals and objectives. Ambuja cement has its shares listed on national and Bombay stock
exchange. It helps the company in growing higher by raising finance from public.
Low cost: Ambuja has the lowest cost of manufacturing among all the companies of
cement industry. This is the biggest strength which helps it in expanding its business and allows
organisation in knowing that whether it has potential for growing in market or not. Lower cost
among all the rivalries makes it easy for taking pricing decisions (Sale, Mesak and Inman, 2017).
Weaknesses
Every company has some disadvantages which stop it from becoming more successful.
But it is the duty of managers and leaders to analyse weaknesses of organisation and work on
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them. An establishment can achieve objectives and goals only by way of converting its weakness
in to strengths. Following are the weaknesses of Ambuja cement Ltd.
High transport cost: Cement is low at value but it is high at bulk. It takes high
transportation charges to send it from one place to another place. So company needs to check the
location and its infrastructure facilities before planning any new branch or unit.
Licensing: Ambuja cements needs to have license before starting any new mines. In
India, as per the Mines act, 1952 every new establishment is required to take license before
starting mining process. It is a time taking process which makes the company dependant on
taking license before starting its venture.
High competition: There are many companies in cement industry who has high quality
product at reasonable prices. So, Ambuja cement Ltd. has to make such policies related to
advertising, sales so that it can give tough competition to its competitors such as Ultratech
cement, wonder cement (Czernin, 2018).
Low at product diversification: Ambuja cement does not have various products for
diversifying its market. So it makes the lowest possibility for the company to expand its share in
market.
Opportunities
Ambuja cement Ltd. has many opportunities which it can grab and develop its business.
Here are some of them which are listed below.
GST benefits: Cement industry got many benefits of GST because government has
provided many relief by declining tax rate from 25% to 18%. Company can enjoy such taxation
benefits and expand its business by opening new ventures (SWOT analysis, 2016).
High growth in cement industry: In the world, India places on second position in terms
of cement production. So cement industry is the most growing industry in India. So, Ambuja
cement can expand its business at higher speed by grabbing the demand in the market.
Mergers and acquisition: Company has excellent financial resources. High demand in
the market of cement can make it expand its business by mergers at global level. It will result in
high growth and increase profits of company. It will increase exports at global level. .
Technological advances: Government has hired new technology from Japan which is
environmental friendly and highly efficient. The plant capacity has been increased with the help
of technology. In cement industry, from mining to final production everything is completely
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dependent on technology (Belghali and Bennafla, 2018). Many changes are being made in the
field of energy conservation. This will result in technological up gradation of Ambuja cement
Company. Adaptation of higher technology by company will make it easy to expand and grow.
Threats
High competition: It is the biggest threat in this present world to face strong competition.
As many companies are there in the market, it is tough to sale product at higher prices. This
result in limited market share in the cement industry (Charter, 2017).
Higher cost of production: Many raw materials are required to make final cement for
sale. Price of such product is very high because of increasing import and excise duty along with
that high mining cost is also included which results in higher cost of production.
New distribution channels: Ambuja cement works on the policy of making distributor at
every possible location and they reach to end consumer through retailers and wholesalers. But it
is very difficult to develop new wholesalers and making them understand about the entire work
system. It is the duty of the company to provide maximum possible benefits to their distributors
by way of giving different offers.
PESTLE ANALYSIS
Political
Government participation: Indian government plays very important role in cement
industry. As it is the biggest consumer of cement in the nation. Cement has high relation with
GDP of country. Price of cement is majorly depend on raw material like railway tariff, coal rates,
freights etc. So government provide lots of benefits like release from electric duty etc.
Political stability: In India, political stability is better than other developing countries.
So, it is easy for cement industry to make plan and procedures in a stable nation. Political
changes makes it difficult for company to take pricing related decisions.
Economic
High per capita income: In India, per capita income is increasing day by day. This will
give boom to cement industry by way of improving housing development. More consumption of
cement will increase its demand at higher rate. This will grow the business of Ambuja Cement
Company and it will also contribute to the GDP of nation.
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Liberalization: In India, complete foreign direct investment is permitted in cement
industry. Lafarge cement was the first foreign company to enter in Indian market. FDI will help
in growing cement industry at higher rate than other sectors (Stehr and Struve, 2017).
Social
Job opportunities: Cement industry is growing rapidly, Ambuja cement Ltd. has
established in year 1986 and it is providing jobs to people who are unemployed. Employed
people contribute more to the country and it will help in overall development of the nation.
Employed people earns money and change their standard of living along with that they majorly
focus on job security.
Standard of living: Due to growth in per capita of country, standard of living will also be
growing. This will increase the demand of cement because people will definitely grow living by
way of making their houses better. Thus, it will result in growing of the cement industry. Ambuja
Cement Company has always focused on best quality cement so that customers can have good
life by making strong constructions.
Technology
The plant capacity has been increased with the help of technology. In cement industry,
from mining to final production everything is completely dependent on technology. Many
changes are being made in the field of energy conservation. This will result in technological up
gradation of Ambuja cement Company. Adaptation of higher technology by company will make
it easy to expand and grow. Government has hired new technology from Japan which is
environmental friendly and highly efficient (Ebrahimi, Rafiei and Torbati, 2017).
Environmental
Easing environment norms: Cement industry is one of the sectors which contributes at
high rate towards pollution. Ambuja cement has acquired environment clearance from the
ministry of environment. As per ISO 14000, company should not carry such operations which
affect environment and harm it. Organisation should take such steps that improve environment
regularly. Ambuja cement has got awards for controlling pollution and taking effective steps for
declining it.
Legal
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In India, to develop cement industry, Indian policy and promotions are being established.
This department is majorly established for many industries like rubber, light machine tools,
cement, etc. It checks foreign direct investment along with ensuring growth of FDI inflow in the
nation. Many rules and regulations are formed to establish cement industry
Porter's five forces model for Ambuja Cement Company
It will help in knowing the competition in cement industry. Below are the five factors
which are defined in brief.
Bargaining power of supplier: Cement industry have fewer choices in terms of buying
coal and electricity because government of India controls the excessive supply of coal.
Transportation sector has also been controlled by government. The fewer choices of suppliers
will result in making the supplier more powerful. Thus, the bargaining power of supplier will be
very high. Ambuja cement has fewer choices for buying coal and fuel as raw material for
cement. Hence, it is difficult for company to grow more easily as it is tough to buy raw material
at reasonable prices.
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Illustration 2: PESTLE Analysis, 2017
(Source:PESTLE Analysis, 2017 )

Power of buyers: Cement industry is the second most growing sector in India. There are
many buyers of cement in order to improve their standard of living or in construction of
industries. Importance of individual buyer to Ambuja cement, is known by number of buyers
company has As per the recent study, Cement industry is identifying many changes in purchase
quantity. Now the share of purchase in retail has been grown as in comparison to bulk. This all
result in growing bargaining power of manufacturers. This has the overall impact of making the
bargaining power of buyers at low level.
Threats to substitutes: It is very low because cement industry dost not have much higher
substitutes. It has substitutes like wooden and steel but they too are not direct. Ambuja cement
has very less substitute so it can grow more without planning much for competition with
substitute products (Sumathy and Paramasivan, 2017). It will be easy for Ambuja cement to take
pricing decisions because there are very fewer substitutes on which customers can switch. So
threat to cement sector is very low (Porter's Five force Model, 2017).
Threats to new entrants: To open a business under this industry, person needs to take
license as per Mining act, 1952. It is a complex procedure to obtain license from government.
Along with that huge capital is required to be invested which is not possible for every person to
make higher investments. However, it is to get technology and manpower supply under this
industry. Ambuja cement has less threat of new entrants and substitute products. So company has
high barrier to enter in to cement industry.
Inter firm- Rivalry: It is not easy to make entry in cement industry, but it is more
difficult to do exit from this sector. So no firm will easily exit from this industry which results in
high competition among all the firms. Cement plants have high storage cost and increasing
mining cost will make it more rigid to make new entrants. Every aspect related to high cost and
large number of players will create high competition among the establishment. High competitive
firms generally earns low returns because the cost of competing is relatively higher.
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3. Critically defining new marketing mix actions to achieve gaps between company’s present
marketing strategy and external environment
Marketing mix
It is that process of actions which is used by company to promote brand and its product in
the market. It is all about placing the right product of the company at right time and at the right
place. Ambuja cement is following the marketing mix strategy in order to achieve its targeted
goals and objectives.
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Illustration 3: Porter's Five force Model
(Source:Porter's Five force Model, 2017 )

Product: Ambuja cement is a manufacturing company of cement and clinkers. It has
special cement for rooftops construction. High quality cement is provided by Ambuja Cement
Company which helped in development of nation. Various types of construction materials are
provided by the company in order to make big projects such as Dams, flyovers and bridges.
Many big organisation in cement industry such as Ultratech cement etc. comes under the
competitor list of Ambuja cement in terms of product quality and pricing. Company has faced
many difficulties but has never compromised in giving quality product to its customers. Products
of Ambuja cement helped the establishment in achieving its goals.
Price: Pricing of products is carried after considering all the factors such as price of raw
material, pricing policies of competitor firms etc. cement industry has the most demanding
product. Prices fluctuate majorly when raw material and transportation charges get increased or
decreased. Ambuja cement provides discount on bulk purchases and different gifts and offers are
given to wholesalers and retailers to promote sales of the company (Ivenne and Dewi, 2017).
Place: Company has it’s headquarter in Mumbai, India. But the brand has reached at
every place. Ambuja cement adopted the policy of reaching its consumers through supply chain
of wholesaler and distributor. Company has tried to cover maximum places so that it can reach
consumers at every place. Organisation has 4 bulk terminals of cement and 4 captive ports which
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Illustration 3 : 7 P's of marketing
(Source: 7 P's of marketing,2017)

supplies to consumers to meet their demands. Company believes in slow growth rather than fast
expansion. It helps the brand in creating a base which is loyal and gives profit in the future. This
has resulted in increasing value of shares of company at stock exchanges.
Promotion: Ambuja cement has high promotional strategies through use of
advertisement. It has made some attractive tag lines which leave a great impact on listener and
viewers. Wrestler Khali has done advertisement of Ambuja cement which resulted in attracting
many consumers. Ambuja cement has taken many initiatives by taking participation in events
and campaigns so that better relations with customers can be developed. Marathons and Make in
India involvement has helped in promotion of brand and increase in sales of the enterprise.
People: It considers targeted customers and people who are already connected with
company which includes employees, shareholders and customers. Ambuja Cement has the
strategy to reach its customers through wholesalers and retailers. Employees are also trained in
such a way so that they can respond to the quarry of consumers, deliver superior services to the
clients, etc. Talented employees are the secret advantage for organisation over their competitor.
Process: It is that system which ensures that products are being manufactured and are
reached to final consumer. Ambuja cement has a systematic process of distribution through
developing new distributors (7 P's of marketing, 2017).
Physical evidence: Marketing managers are responsible for establishing a physical
evidence of the product in the market. Ambuja cement has made such promotions by the way of
different media that when a person thinks of cement, brand name of Ambuja should strike in
their mind.
CONCLUSION
From the above report, it has been concluded that marketing management is a process of
reaching customers through different mediums of advertising, sales and promotion. To determine
whether the company is potential for market growth, it has to make analysis of internal and
external environment. In addition to this, report has also summarised that marketing mix is an
important technique that helps a company to plan, design and sell their products in their targeted
market. Furthermore, SWOT analysis has been described briefly to determine the strengths and
weaknesses of enterprise.
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Online
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marketing-mix---from-4-p-s-to-7-p-s>.
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analysis-ambuja-cements/>.
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