Marketing Plan of Maple Leaf Cement

Muhammad Abrar Naeem

ID # 081134-061

Date: 25-11-08

Marketing Plan of Maple Leaf Cement

Company Introduction

The Kohinoor Maple Leaf is a reputable and leading manufacturer of textiles and cement. KMLG comprises of Kohinoor Textile Mills Limited (KTML) and Maple Leaf Cement Factory Limited (MLCF). Both companies are incorporated in Pakistan and are listed on three stock exchanges if the country.Maple Leaf Cement is the third largest cement factory in Pakistan. It was setup in 1956 as a joint collaboration between the West Pakistan Industrial Development Corporation and the government of Canada. It is strategically located at Daudkhel (District Mianwali), which is an area rich in raw materials required for the production of cement. Kohinoor acquired the ownership and management of maple Leaf Cement under the privatization policy of the government of Pakistan in 1992. Presently Kohinoor Textile Mills is the holding company for Maple Leaf Cement.

(Source: Internet)

ENVIRONMENTAL ANALYSIS

A. The Marketing Environment

Competitive Forces

There are almost 27 cement Manufacturers in the market , some of them are Askari Cement , Bestway Cement , Cherat Cement , Dandot Cement ,Dewan Hattar Cement , DG Khan Cement , Fauji Cement , Fecto Cement , Gharibwal Cement , Kohat Cement , Lucky Cement , Mustehkum Cement , Pakistan Cement , Pioneer Cement , Zaman Cement , Rohri Cement , Al-Abbas Cement , Attock Cement, Dewan Cement , Javedan Cement , Thatta cement , Zeal Pak Cement . (Source: Internet)The major competitors of Maple Leaf Cement are Lucky Cement, Askari Cement, Bestway Cement, DG Cement and Pioneer Cement. The Strength of Lucky Cement is its largest capacity and better coverage because of its two plants; one is Pezu and the other in Karachi. It is the largest manufacturer and exporter in Pakistan. It is the only competitor of Maple Leaf in terms of production capacity. Low quality is its major weakness and it has not many product types as compare to maple leaf cement and cannot cover the maximum market. Askari cement has most coverage in the Punjab and NWFP; it is only available in the northern part of Pakistan. Bestway Cement has latest technologies for its quality assurance and most of its product is exported to India. It has fewer products as compare to maple leaf cement. DG cement has maximum market at southern Punjab and northern sindh and is mostly used in these areas. It has also very few products. The

competitors are trying to compete in the market by increasing their production capacity, and Lucky Cement is the main competitor in terms of Production Capacity.As we change the marketing mix, or increase the marketing mix, our major competitors will also try to compete with us. There will be effect on the price, if we change the price of our product, the competitors will also change their prices according to us. Maple leaf has a strong brand name due to its quality products, so there is no problem in the promotion and place for the market mix.

Economic Forces

Pakistan, with a population of about 16 million people has undergone a remarkable macro economic growth during the last few years but the main and the core problems of the economy are still unsolved. Inflation is one of the core problems. The inflation in the year 2008 has recorded to be the highest according to the Federal Bureau of Statistic. In April 2008, the Pakistan inflation accelerated at its fast pace and the inflation is still increasing. The consumers are mostly pessimistic about the economic conditions of the country as the economy is going in downward direction these days. As the prices of the cement of all competitors remain almost the same with a very minor difference, so the consumers will prefer for the quality of the products.Market for cement in Pakistan exists in two main dimensions:

1. Product type2. Geographic area

Product Type:

Since cement is a specialized product, it requires sophisticated infrastructure and production location. So most of the cement industries are located near the mountain areas which are rich in clay, iron and mineral capacity.

Geographic area:

Geographic location also doesn’t affects a lot considering the flexibility of demand. For example if DG Cement increases the price of its product and Maple Leaf Cement in Daudkhel will also increase its price to match the DG’s Cement. This is due to the cartel of all the cement manufacturers in Pakistan. Thus the customers have no choice at all to switch between the two brands. It is also expected that when the prices stagnate and profitability becomes a function of volume, location advantage and proximity to markets will become the extremely important factors. At present the freight charges are 20 % of the retail prices. The Cement plants are located very close to each other and they are tapping the same market. In order to expand their markets, their freight expenses will also increase. These days due to the economical crisis the demand for the product has lowered down. And due to high inflation and unstable environment of the country the people are not willing to invest in the country, so there is low demand for our product.

(Source: Company Source)

Political Forces

The present situation regarding the political stability is not satisfactory in our country. This political instability has been in process since the attack of 9/11; 2001.This political instability has affected the business badly. According to the survey conducted by IRI (International Republican Institute), 52 % of the people expected that the things would get better after the recent elections. But there are many factors that are prevailing up till now and are the cause of unrest. The political stability in Pakistan is at unrest. Due to this, the cement factories along with the Maple Leaf are facing huge problems regarding the investments they have made. Although the market share improved a little bit after the resignation of Pervaiz Musharraf on 18th of August but still there are many factors that are forcing the share index to slope in the downward direction. The day after day terrorist attacks and the suicidal bombing has caused the unrest in the country as well. It has created a sense of insecurity among the people of Pakistan which has badly affected to the manufacturing companies. The incident of rocket firing on the grid station in Mianwali caused a great damage .The factories located in that area have to shut down their production for the time being or to generate their own power just like Maple Leaf is doing. It is the duty of the political forces to stabilize the condition of Pakistan, to minimize the risk of the investors. Till now the new government has failed to secure the conditions of the country.

(Source: Internet)

Legal and Regulatory Forces

The newly elected government has changed some legal and regulatory issues including formal and informal rules under which the firms operate. The tax policies have been revised. General Sales Tax is enhanced from 15 % to 16 % including Sales Tax on services under the Provisional Sales Tax Ordinance. Due to the increase in the general rates of the sales tax, the rates of sales tax on natural gas has been increased from 24 % to 25 %, natural gas is the main raw material for the Cement manufacturing. Duty on the cement exports has also been increased from Rs.750 to Rs.900 per metric ton on all types of cement products. The government has also put special excise duty of 1 %. Duty on the services such as goods insurance, fire insurance, theft insurance provided by bank companies or non bank companies has also been enhanced from 5 % to 10 %. This increase in taxes will badly affect the production cost of each bag, thus decreasing the profit. Along with the increase in taxes, there is increase in the prices of the electricity and the natural gas which are also affecting the production cost of our product.

(Source: Company Source)

Technological Forces

With the changing technologies, the production cost is reducing; the product is getting better quality wise. Competitors like DG Cement, Lucky Cement and many other competitors are using the latest technology. Maple Leaf has an old plant and has realized the impact of changing the technology, as it is cost more for the production; they are also shifting towards the new and latest technology. By upgrading the equipments of the

plants, the production of the plant can be increased, the production cost can be decreased and the time required for the production can also be increased and the capacity can be increased. As the technology advances, new methods of production will be introduced. Due to the increases in the prices of raw materials like natural gas, prices of electricity and fuel, we have to adopt the new technology to cut down our costs other wise our product will face difficulties in competing with the competitors. By adopting the new technologies the quality of our products will surely be increased.

Socio-Cultural Forces

The people of Pakistan are getting health conscious day by day. They are getting aware of their duties in order to maintain the healthy environment. Further more the government is also taking several steps to educate people that how it is important for the people to live in the healthy environment .The industries located in the city are causing pollution to the environment. The government is discouraging the operations of the industries located with in the cities by charging them with the environmental charges. But still there are many industries that are running inside the city and discharging poisonous gases and chemicals. By the passage of time, people are getting aware and are discouraging such activities and demanding for the clean and unpolluted environment. The government is restricting the industries to minimize the pollution. So, changes are required in plant to remove the pollution creating methods of production and introduce new technologies which are environment friendly. This will increase in the cost of production of our product which is already high due to electricity charges, natural gas charges and taxes. The general attitude of society is positive towards our industry as the location of the plant is located out of the city and is located far away from Mianwali. So there is very less concern about the pollution in the environment. When the consumers use our products, they feel assurance of high quality of the product and high strength of our product. The environmental and the health related groups can come in between our operations forcing us to minimize the air pollution, water pollution etc. These have to be removed by making the process more environmental friendly. The water should not be polluted, instead there should be a water treatment plant that should treat the water and remove all the contaminations of the water. There should be less removal of air pollution as it can affect the people living near the plant location. There should be proper safety for the employees working in the plant so that their health might not be at risk.

B. Target Market

Identification

Maple Leaf is sold as a premium brand in the local and international market. People regardless of their demographic characteristics acknowledge its superior quality and brand image and they are loyal to the brand. It is also known to many of the peoples by the name of pattay wala cement. Because in cement industry, there are two things that affect the target market, those are brand image and availability of the product. As the

price of the cement products remains almost the same with very minor difference , so the consumers are not segmented into sex , age , income group , occupation , education , ethnic background and family life cycle etc . Consumers all over the country prefer the brand image and its availability. Our product is used by every consumer who is brand loyal, who knows its strengths like high quality product and strength. Our product has the majority of target market in Northern area of Pakistan. As we have to pay a lot for the transportation charges because the plant is located away for the cities. So it is mainly distributed in the northern areas of Pakistan. If it has to be available in the south of the country, it will cost a lot more for transportation and it is badly effect the cost of the product and the time duration to reach the south of country is very long. It can affect the product quality due to the moisture in the climate of southern area. And the product quality is our main strength, so we have to focus on the northern area only. Earthquake Rehabilitation has increased the demand of the cement products in the northern areas as well as the announcement of large dams. There is dense market in the northern part of Pakistan and less transportation charges are applied as the plant location lies in the centre of the north area of the country.The attitude of the consumers is extremely positive towards our product. They are brand loyal due to the high quality of the product and the brand image of our products. The life styles of the people of Pakistan are continuously changing and they are searching for a better life style and good quality products. Our products are according to the needs of the people. We are providing them the premium product, although we are charging more than our competitors and we are adding value to our products. Maple Leaf has a market share of about 9 to 10 percent. Majority of our products are available in the northern area of Pakistan. The usage rate of our products is very high among the brand loyal, among those who need good quality and strength of the product, by paying a minor increase in price, the consumers are given with the high standards of quality which is our main strength.

Need Analysis

The demand for the cement was increasing at the rate of 13 % per year in the last few years. But due to the economical crisis and the increase in the inflation and political instability during this year, the demand for cement has been reduced to about 5 to 7 &% per year. The government is trying to overcome the economical problems and the demand for cement will again increase up to 13 % by next year. As the cement industry is in growth stage, so it is expected that the demand for cement in Pakistan will continue nearly at 13 % for the next three or four years. After that period there will be an expected steady demand of 7 % per year.We are fully meeting the needs of the local market and in the upper part of the country. The southern area cannot be covered due to the heavy transportation charges and long distance that can badly affect the product quality. We are producing more than our demands. Due to the recent conditions of the country, the demand for the cement has lowered down a lot.Our competitors are offering their products with 3 to 4 % less in price but their product quality is not comparable to Maple Leaf. Also their brand image is not very strong which their weakness is. And they are unable to switch our consumers to their products due to

very low difference in the price and the main difference in the quality of our and their products.In the near future, when the market will reach the maturity stage, the competition will increase. Then we will have to cut down the production cost of our product and provide the products at a lower price with better quality .In the distant future , the demand for the cement is remain at steady 6 to 7 % and at that stage there will be a lot competition among the competitors. We will have to expand the market for our products at the cost of transportation charges, so we have to cut down our production cost by implementing better technologies which are energy efficient and optimum use of natural resources and eliminate the costly process.

(Source: Company Source)

C. Marketing Objectives and Performance

Marketing Objectives

Our marketing objective is to market different types of consistently high quality cement, according to the demanding requirements of the construction industry. Our strategy is to become competitive in the market through the quality and efficient operations.These objectives are in line with the changes which are happening in the environment. As the fuel natural gas prices have gone up , Maple Leaf is installing a waste heat recovery plant to recover the energy loses and to minimize the production cost and to increase the effectiveness of the natural resources. The waste heat recovery plant will be operational in 2010 and it will also capable of producing approximately 15 MW of electric power. This will be helpful in cutting down the cost of electricity to some extent. The production of the plant will not be affected in case of load shedding. New technology is being introduced which will decrease the cost of our products. By decreasing the cost of products, we will be able to compete more in the market, by having efficient operations and high product quality.

Performance Analysis

In terms of sales volumes, Maple Leaf has a production capacity of 11,700 ton per day of Ordinary Portland Cement OPC, 500 ton per day of White Cement, 1000 ton per day of Sulphate Resistant Cement SRC, 1000 ton per day of Low Alkali and 1000 ton per days of Oil Well Cement. The only competitor in terms of production capacity is Lucky Cement which is producing 12,500 ton per day or Ordinary Portland Cement. The market share of Maple Leaf Cement is 12.55 % in local market and about 11 % in the export market.

(Source: Company Website)

During the period of 1st quarter July-September 2008, the sales volume achieved was 749,492 metric tons grey cement, 18,664 metric tons white cement which is more than the corresponding period sales. Despite the sales volumes increased a lot, there was a pre-tax loss of Rs.213.179 million during the period of July-September 2008. For the corresponding period last year, the pre-tax loss amounted to Rs.45.618 million. The increase in the loss is due to the high production cost due to high prices of electricity, furnace oil, natural gas, due to high inflation, due to rapid depreciation in the exchange rate which affected the increase in price of imported items and the mounted interest values. The production of all the competitors has increased as compare to the last year 2007, but their profitability has decreased significantly due to increase in the production cost of their products. Maple Leaf suffers more loss due to their major market in the northern areas only. Their export share was very low due to high transportation charges from the plant site to Karachi. Therefore other competitors were ahead of Maple Leaf who was situated in the south area, as it was easy for them to export their products easily.To keep our performance going up again , we have to cut down the production cost , which can only be done by utilizing efficient use of resources available , use reciprocal

methods with are cheaper and lower in cost , we have to reduce the expenses to over come the losses and to meet the marketing objective. Although our objective is fulfilled by providing the consumers with high quality products but it is partially fulfilled. We have to focus on the efficient process.The performance of the industry is not declining as the industry is in growth stage. Only the pace of growth has slowed down due to some financial and economical problems in the country. Once these problems have been solved, the industry will start again to grow at the rate of 12 to 13 % per year. The industry growth has slowed down due to the high production prices , due to the increase in the oil prices all over the world , but as the prices have dropped down to the lowest level , we hope that the production costs will also come to a low level with time.First of all we have to ensure that we always deliver high quality products to our valuable customers, secondly we have to expand the market to gain more market share locally and through export. And there should be consistency in our production, so that there is no gap of even one day in the market. If on any day there is no production, we will be out of the market. So for that case we have two warehouses, one in Lahore and the other in Karachi. When the plant is on scheduled shut down for maintenance, there should be enough products in the ware house to meet the demands of the market in those days.The performance of the industry is increasing overall as the industry is still in the growth stage. There is a lot more space in the market to be covered. Despite the economical crisis in Pakistan, the industry is not declining, only the pace of the industry has slowed down due to increase in the production cost.

STRENGTHS AND WEAKNESSES

Strengths

The company is situated in Daudkhel, district Mianwali. This location is rich in raw materials that are required by the cement industries for the production of cement. The production of the cement in maple Leaf is completely automated. The company has imported machinery from Denmark. It has helped in producing the good quality cement with much efficiency. The company is importing Waste Heat Recovery Plant from Denmark which will cut down the power expenses. Maple leaf is the only company which produces 5 different types of cement products. It has created a nich market by the only manufacturer of Oil Well Cement in Pakistan. It is one of the pioneer cement industries in Pakistan, which was established in 1956. This long time has helped the company in making the loyalty of the customers. Maple Leaf has a very strong brand image, that’s why they have the advantage of charging more to their customers than the other cement manufacturers. The price of Maple Leaf Cement is high in the local market as well as the international market due to its strong brand name. Maple Leaf is an ISO certified company, they have obtained ISO 9001 – 9 making it reliable producer for the quality products in the international markets.

Strength 1:

The major strength of Maple Leaf is its strong brand name. It has a huge reputation of producing high quality cement. This is why they are charging their product at higher price than any other competitor’s products. The people of Pakistan are their brand loyal and are not going to switch to any other brand for a relatively low cost. This is the main benefit of their strong brand name. Any consumer who has used their product for one time, he is not willing to buy any other product. They have a very strong brand name and the consumers go for their brand name. Due to this strength, their sales volumes are

increasing continuously despite the fact that they are charging the highest price among the competitors in the market.

Strength 2:

The second main strength of Maple Leaf is their Product line. They are producing 5 different product lines of cement in which they have created a nich market in producing Oil Well Cement which is produced by no other cement manufacturer in Pakistan. This has given them the competitive advantage over the competitors. This has created a good brand image in the market; customers have choices to select their desired product line from the same brand name. More over their production capacity is highest among the competitors. The only competitor in terms of production capacity is Lucky cement but they have not enough product lines to compete with Maple Leaf. This long range of product line of cement has allowed the customers of different segments to meet their needs under the same brand name.

Their product line is given below:

Product Line Properties Price per bag(Rs.)Ordinary Portland Cement

(OPC)It is also know as grey cement. It is most commonly used and is used in construction.

380

White Cement It is also a main product. It is used for the finishing of building.

450

Low Alkali Maple Leaf has created a niche market for this product. It is used in the construction of underground basements, construction of bridges, flyovers and underpasses in order to prevent the structure from water also known as seam.

430

Sulphate Resistance Cement (SRC)

It has the same properties like Low Alkali Cement, but has a different chemical formula. It has more quantity of alkali.

415

Oil Well Cement It is used for oil wells as suggested by the name. Maple Leaf is the only manufacturer of Oil Well Cement.

360

Clinker It is one of the main raw materials for the cement manufacturing but it is also used as a consumer product, major used in construction projects.

-

Hydrated Lime It is also a raw material for the cement manufacturing but also used as consumer product. It is also known as choona.

-

The prices of Clinker and Hydrated Lime are not constant and vary depending upon the dealing and bargaining power of the customer.

(Source: Company Website)

Weaknesses

The Cement Plant of Maple Leaf is located in a remote area . That’s why they face problems in hiring highly skilled employees for the plant in spite of a good salary package. And they also have to pay hardship allowance to their employees which increase their expenses. As the company has been established in 1956, there fore the technology being used for the production is quite old. I.e. the production of cement through wet process is old and it costs high and less profit. This is the reason that they are facing more production cost per bag as compare to their competitors. The cost of transportation is also a main factor that reduces the profit of the company. The location of the plant limits the ability of the company to distribute its product all over Pakistan. They have been short of transportation; they have not enough trucks to distribute their products in the local market. And the company has borrowed a lot of loans and these loans are increasing the debt burden over Maple Leaf.

Weakness 1:

The major weakness of Maple Leaf is their plant location. They are located in a remote area which is about 50 to 60 km away form Mianwali City. There is no major city located near by. This causes difficulties for the company to hire good and highly skilled employees for their plant, as they don’t want to stay there for a long period of time. Even they are heavily paid along with the hardship allowances but still they are unable to stop skilled employees at their place. Due to their remote location, they have to bear more transportation charges to distribute their products to the local markets as well as for export. This increases their production cost and reduces their profits. As the employees need activities for entertainment, they can’t find these activities in the housing society built adjacent to the plant. Therefore the employees do not prefer to live there permanently.

Weakness 2:

The second major weakness is their high production cost. This reduces their profitability although their sales volume is increasing. Firstly they are using old technology, which costs more for the production of each bag. Now they are changing their process from wet process to dry process and they are also importing heat recovery plant to recover the wasted energy and convert it into useful energy again. This will be very helpful in overcoming their weakness and will also be helpful in generating 15 MW of electric power. It will cut down the production cost which will increase their profitability.

(Source: Company Source)

OPPORTUNITIES AND THREATS

Opportunities

The demand of cement outside Pakistan is increasing rapidly. It is a great opportunity for Maple Leaf to explore and grab those markets. The demand for the local market will also increase when the construction of Bhasha Dam will start. There will be very high demand for the next 4 5 years until the Dam has been completed .The conversion from wet process plants to dry process plants and shifting from coal based production to waste heat production will cut down the company’s expense and increase the profitability of the company. There are only two cement manufacturers who have received the BIS certification. This is a golden opportunity for Maple Leaf to capture the Indian market with very less competition.

Opportunity 1:

The major opportunity is the increase in demand of cement in the local market as well as international market. When the construction of Bhasha Dam will begin, there will be a huge demand of cement in the local market. Only those manufacturers will be able to grab those markets those have high production capacities. This will be a golden opportunity for the Maple Leaf to capture that market. As the plant is also located near the dam, so it will be easier to transport the products to the site location. Maple Leaf has to solve their transportation weakness in order to deliver their product quickly and on time.

Opportunity 2:

Second opportunity is the conversion from coal based production to waste heat production. The plant of waste heat recovery is being imported from Denmark, which will be installed and start working in 2010. So the production cost per bag will be reduced significantly. The oil prices all over the world have also lowered down, so the transportation charges have also decreased. So this is a great opportunity for Maple Leaf to expand the market and cover the southern area of the country. This will increase their market share as well as increase in the profitability of the company. The company will have to capture that market where its products are not available. They should also

overcome the weakness of lack of trucks. This will help them in distributing their products easily and with low cost.

Threats

The increasing prices of furnace oil and rocketing increase in the price of coal has been badly affecting the company’s profitability. The company is highly vulnerable to price competition as it is facing the higher cost of production per bag as compare to other competitors. The terrorist’s attacks and suicidal attacks have caused unrest in the country. This has caused the sense of insecurity in the citizens of Pakistan. These activities are proving to be hazardous for the manufacturing companies as well. The incident of rocket firing in the Mianwali Grid Station also caused a great damage and the production was badly affected.

Threat 1:

The major threat for Maple Leaf Cement is the increase in the prices of furnace oil and coal. As Maple Leaf are using coal based production, so their production cost per bag is badly affect with the increase in the prices. Therefore the company is converting from coal based production to waste heat recovery production plant in which there will be a significant decrease in the production cost per bag. And the company will be able to compete in the new markets where its products are not competitive due to higher production cost per bag.

Threat 2:

The second threat is the attacks of terrorists and the suicidal attacks are creating unrest in the country. These attacks are creating a fear in the mind of the people and there are not ready to invest in the country. This is also affecting the cement manufacturing industry. The attack at the Grid Station Mianwali also affected the production of cement industries as the power supply was cut of for some time. The company is importing a waste heat recovery plant that will produce 15 MW of electric power, which will be used in case of any threat so that the production will remain uninterrupted. The company will come up with a new product line that will bear the impact of bomb blast in the construction material, thus minimizing the damage due to the blasts.

Matching strengths to opportunities / converting weaknesses and threats

The strengths of company are its brand name and its product line which is also covering a niche market as well. These strengths can be used to cover the opportunities like covering those market areas where the products are not fully available. Like in south area of the country, we have to make our distribution channel stronger and expand the market to cover all the areas of our local market. In international market, Maple Leaf Cement has a very strong brand name. This strength can be used to increase the exports in the international market and the market share in the international market can be increased. Maple Leaf has covered niche market by

producing Oil Well Cement. This market can be increased by exporting the Oil Well Cement to the Middle East where there is a huge demand for this product line.The first weakness is its remote location and the second one is its high production cost per bag. The first weakness causes the problem of distributing the products to the markets which are far from the plant location. Because it causes an increase in the transportation charges which will increase the production cost per bag and directly increase in price of their product. So this weakness can be converted into strength by cutting down the other expenses. The company is importing waste hear recovery plant which will cut down the expenses and the company will be able to distribute their products to more markets and their local market share can be increased. This can also increase the exports to international market as the transportation charges will not affect the price of the products. This weakness can also be eliminated by solving the problem of trucks which are used for transportation of goods.The threat of higher production cost per bag can be reduced and can be converted into opportunity by changing the old method of production from coal based production to waste heat recovery and using the latest technologies. This is decrease in the price of production per bag and the profitability will increase and the price of product will be able to compete in the market. In this way it will be able to gain more market share in the local market. The thread of terrorists and suicidal bombing can be overcome by introducing a new product line which has much stronger strength than the ordinary cement. This is absorb the impact of bomb blast and will reduce the damage on the buildings and construction material .Thus this thread will be converted into a competitive edge over the competitors and will produce a niche market for that product line.

MARKETING OBJECTIVES

First marketing objective is to consistently market different types of high quality cement products. To provide consistently products in the market, it is necessary to make sure that some stock of the product is always available in the warehouses so that in case of any big market order, the order can be fulfilled with out any problem. This consistency can only be achieved when the production process is totally interrupted and in case of any problem, the backup is always available. The raw material for the production of cement should always be available; there must not be interruption at any time.This objective can become an opportunity when there is a sudden increase in the demand of cement in the local market. As this will happen in the next coming years when the construction of Bhasha Dam will start, there will be a sudden increase in the demand of cement products and this will be the opportunity for Maple Leaf to convert it into its strength by start its production at its full capacity.This objective can be converted in to threat if the transportation problem is not solved and the company hasn’t enough trucks to deliver their products to the location where there is need of a heavy demand. The oil prices will also play an important role in the transportation charges.Second objective is to compete the market with quality products and efficient process. To provide the quality products, it is necessary to use the best and the latest technologies in

the production process of the product. The process can be made efficient by optimum usage of resources available and by decreasing the unnecessary expenditures which lead to the higher production cost of the product. When the product is of high quality and is made through efficient process then it will be of low price with good quality. This will be the main strength of our product if we can provide the high quality product with comparatively low price. This objective will convert the weakness of Maple Leaf of high production cost of products into strength, when the process will be efficient and use that technology which is less expensive and having a good quality.These both objectives are consistent with the organization’s goal and mission. The mission of Kohinoor Maple Leaf Group is to put the customers first, flexible to the customer’s needs, give them the highest quality, and deliver them the results. These goals are achieved with the marketing objectives, when the product produced will be of high quality and produced through a efficient process, and there will be consistency in the production of high quality cement product, it will cost less and increase the profitability of the company, satisfy the need of the customers and will be delivered to the customer what he needs.

MARKETING STRATEGIES

Target Markets

Target Market 1:

First target market of Maple Leaf is the local market, northern area of the country. The demand for the local market was increasing at a rate of 13 % capacity growth rate. This rate has been lowered down due to economic crisis but this capacity will continue to increase at the rate of 12 to 13 % for the next few years. As there is increase in the housing demand, about 40 % of the cement produced is used in the housing projects in Pakistan. Currently there is a demand of about 0.5 million houses per year but only 0.3 million houses are build each year. So there is more room for the consumption of cement products in the housing sector. The government development plans will also help the demand of cement to grow. About one third consumption of cement is used by the government development projects. The construction of Dams will generate a lot of demand for the cement in case the construction activities of dams start. Bhasha Dam will generate the maximum demand as it is a RCC Concrete Dam whereas other dams being earth fill / rock fill dams will require less cement for their constructions. There is a big project of General Headquarter GHQ under construction in Islamabad. It is a project of about 5 to 7 years and it has increased the demand of cement in the local market. Although the construction has been stopped until the condition of country gets better, there is still a lot of demand of cement in the near future in the local market. There will be a growth of cement industry at about 13 % for the next few years. The major competitors in the local market for Maple Leaf are Lucky Cement, Bestway Cement and

DG Khan Cement. (Source: Company Source)

Target Market 2:

Second target market of Maple Leaf is the international market. In international market, the main consumers are Afghanistan, India and the Middle East. As Maple Leaf has a brand image in the local market and in the international market as well, it is the second target market for the company. The company has its brand image for its quality products. In international market, the demand for cement products is very high; they are using the cement products in bulk quantity. The competitors for the international market are mainly Lucky Cement and the Bestway Cement. Due to the good brand image in the international market, Maple Leaf is selling their products at higher price as compare to their competitors.

Marketing Mix

Marketing Mix 1 to meet the needs of Target Market 1

Marketing Mix 1 is used to meet the demands of the local market in the country. The product is packed in paper bags. It is a standard 50 kg packing. The quality of the paper bag being used is much better than many of the competitors which are giving Maple Leaf a competitive edge over its competitors. As they are giving their product in only one size, so the price of there product ranges in between Rs.350 to Rs.450 depending upon the demand of cement. As Maple Leaf is covering the northern area of the country, therefore they are targeting the upper part of the country with their products. The reason for this is their location of the plant which is located near Mianwali. They have distributed their products in the market by two different channels, i.e. Zero Level and 1 Level. In zero level they handle the customers directly. This is the case when the customer wants to order a large quantity for the products such as shopping malls and other mega construction projects. In 1 level, they are distributing their products through a distributor. There distributors act as a intermediary in between the company and the customers. Through this channel, those all local customers are covered who do not have high demand of product and cannot contact directly to the company.Promotion is done by communication channels. They are using media, using print media such as newspapers and internet to reach their customers. Secondly they are using the word of mouth. The company claims that word of mouth is their most effective and efficient means of communication. Distributors are given commission of Rs.7 per bag. When dealing with the customers directly, they are given discounts directly depending upon their orders. The higher the order, the greater the discount will be. When dealing through distributors, they are given discount in the price of the products depending on the quantity. They are given favor in terms of payment mode depending upon the relationship between the company and the distributor. They are also giving awards to the distributors in the form of certificates depending on the performance.

Local market is selected as a target market because the cement industry is still growing at about 13 % per year. And our selected target market is the north zone of the country. Most of the growth in production capacity is taking place in the north zone of country. Maple leaf has a strong brand name in the market and also the largest producer of Ordinary Portland Cement. This competitive edge has helped the company to sustain and compete in the market even with higher prices.

Marketing Mix 2 to meet the needs of Target Market 2

Marketing Mix 2 is used to meet the demands of the International market. The cement products are available in the packing of Poly propylene bags. The reason for using these bags is to increase the life of the cement. They have the sizes of 25 kg, 40 kg and 50 kg depending upon the order. A logo of Maple Leaf and the brand name is used on these bags. The company is planning to label the cement exported in India in Hindi, as it is the demand of the customers in the Indian market.They are distributing their products directly to their customers. They are using Zero level for their customers. They get the order form the international market, and deliver their products directly to them. Promotion is also given to the international customers depending upon the size of the order. The bigger the order will be, the greater will be the discount .The product is dispatched from the plant location, sent to the warehouse located in Karachi. From there it is boarded on the ship and sent to the customer’s destination. Promotion is given through the communication channels. It is given through media through public relations. In media, the promotion is given through internet. Public Relation is widely being used for exports to the international market. This is mostly done by conducting seminars. Seminars and Conferences are frequently carried out by the company in other countries like Middle East, Canada, India, in order to present and market their products to their prospective customers.

MARKETING IMPLEMENTATION

Marketing Organization

The marketing unit can be organized by increasing the existing market and expanding the market in the south zone of the country. They have to lower down their production cost to compete in the markets of south zone in the country. Due to the high production cost, the company is unable to compete in the south zone. The decision making unit has to make sure that they increase the market share in the north zone and expand their market in the south zone where Karachi is the main market in that area. Depending on the organization’s structure and the environment, the first line and middle managers can be empowered to make decisions. If the demand for the product is increasing rapidly in the market then the company has to increase the production to capture the maximum market share. They have to increase the sale in the north area of country by advertising in more areas. The target for the exports for year 2009 and 2010 are set to be 9.99 million and 10 million ton respectively.

Activities, responsibility and timetable for completion

Product Activities Person Responsible Target Completion Date

Outsourcing Needs

1. Increase the sales volumes

Sales Manager 2009 Advertising agencies

2. Decrease the production cost

Production Manager 2010 Importing new process plant from Denmark

3. Eliminate the problem of trucks for transportation

Transportation Incharge

2009 Buy more trucks for transportation

Alignment with others

In order to complete these activities with in the due time , the organization is motivating the employees by rewarding the with overtime salary , already paying much better salary then the other industries. They are providing free of cost accommodation to their employees in their housing society adjacent to the plant in Iskandarabad. The organization is providing the employees with any incentives like low cost education, free transportation , annual leaves with salary . The organization is also ensuring that there are enough resources to complete these activities. And no problem will come for the interruption of these activities.

EVALUATION AND CONTROL

Performance standards and financial controls

Product Activities Budget Performance Standards

Possible Corrective Action

1. Advertisement 20 million Big billboards on construction areas and celebrities in advertisements

Print media

2. Import new process plant

100 to 150 million Waste heat recovery plant that reduces the production cost

Efficient use of resources

3. Buy new trucks for transportation

50 million Transportation for long distance routes

Increase trucks for transportation needs

Monitoring Procedures

Although Maple Leaf Cement has a very strong brand name, there is no need to advertise in the electronic media, as most of the consumers are aware of our products. The only advertisement needed is in those areas where we have not captured market and in those areas where our market share is very low. These activities are continuously monitored by the persons who are responsible for it . A new plant is being imported to ensure the cut down in the price of production. A marketing audit will be performed to ensure that the budget allocated for the activities are being used in the right direction and not wasted by the responsible people. This is increase the trust of share holders and investors in our company and will be very helpful to our company in terms of finances. This trust will create a loyalty for our customers and consumers towards our brand and our products. In audits, our advertisement revenues will be monitored. Our all finances will be monitored which will be used in the growth of the company to ensure that the finances are utilized in the right direction.

REFERENCES

Some of the Book References used are:

Annual report 2007, Maple Leaf Cement Factory Limited, Kohinoor Maple Leaf Group

1st quarter report , July – September 2008 , Maple Leaf Cement Factory Limited, Kohinoor Maple Leaf Group

Prospectus, Public subscription on 18 & 19 July 2002, Maple Leaf Cement Factory,Kohinoor Maple Leaf Group, Puma Art Publishers

Tax Memorandum 2008, A.F. Ferguson & CO

Some of the Electronic References are:

www.kmlg.comwww.dgcement.com/www.pioneercement.com/www.bestwaycement.com/www.luckycement.com/www.iptu.co.uk/content/pakistan_employment_law.aspwww.defence.pk/forums/economy-developmentwww.iht.com/articles/ap/2008/07/29/business/AS-Pakistan-Interest-Rates.phpwww.pakistan.gov.pkwww.probertencyclopaedia.comwww.thepost.com.pkwww.pwc.com/pk