Sample marketing plan of cement company

MBA640 Project 4 Transcript

You're part of the marketing department at Cemex, a global provider of building materials. Your team has been called to a meeting at the Monterrey, Mexico headquarters with members of several other departments, and Cemex's CEO, Oswaldo Villalobos. "I just reviewed last quarter’s sales figures," Villalobos says, "and I'm not happy. Profits are down in North America."

Villalobos continues: "I've called this meeting because I'd like you to form a cross-functional business development team to focus on expanding our US operations. We know that spending on infrastructure is increasing," he says.

Villalobos is referring to a large infrastructure package recently signed by the new US administration. Your team was just discussing the news over coffee yesterday morning.

The plan includes funding for bridges, roads, and sewage systems. There's no question that US infrastructure spending will be up in the coming years.

"We're well-positioned to grab a bigger market share of the cement business," Villalobos says. "Cemex has mothballed capacity that we should tap into."

Villalobos looks at your group: "Report back to me in four weeks with a detailed marketing plan for this expansion. Include the steps to implement the plan along with the control measures to ensure that our forecasted sales targets are met."

1 Introduction to Business to Business (B2B) Marketing

As you learned in Project 3, one of the most important functional areas in business is marketing. Companies such as Airbus, Peugeot, GM, Burger King, and Tata have a passion for understanding their customers and satisfying their customers' needs in "well-defined target markets" (Kotler & Armstrong, 2014, p. 4). Marketing is a managerial and social function through which companies and customers create and exchange value. The authors define marketing as the "process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return" (p.5).

B2B Buying Decisions

When it comes to business buying behavior, business customers and their suppliers explore different avenues to manage relationships and enhance efficiency and effectiveness. Closer relationships are partially driven by purchasing alliances, supply chain management, and early supplier involvement. Fostering the right relationship with businesses is crucial for any holistic marketing plan. Vertical coordination between the sellers and their business customers allows them to go beyond simple transactions to engage in activities that create value for both parties. Trust and knowledge are key to the success of business-to-business (B2B) relationships. B2B relationships are impacted by supply, complexity of supply, availability of alternatives, and supply market dynamism (Kotler & Keller, 2015).

Strategic Alliances

An emerging theme in organizational systems in the twenty-first century is an increased use of long-term global strategic alliances. Organizations form these alliances in an effort to secure commercial advantage and eliminate waste from their distribution channels. Choosing the right partners for global strategic alliances is crucial for success, but it can be a complex process. Organizations should identify and define the criteria for partner-selection prior to forging the alliance (Wu, Shih, & Shan, 2009). Cemex may consider forming strategic alliances to expand its US operations. These alliances can be with other producers or with distribution companies; a good example is the alliance between Nissan (a Japanese auto company) and Renault (a French auto company), with Carlos Ghosn serving as chairman and CEO of the alliance.

To carry out this assignment, your marketing team needs to understand Cemex's customers, how to acquire market knowledge (through primary and secondary research), and how to turn that knowledge into products that are needed and wanted by a group of customers. You must also be able to invent market offerings that not only create value for the customer, but also create profitability for Cemex in a socially responsible and ethical way.

As you will recall from Project 3, there are two types of market research: primary and secondary research. Both types of research are necessary when creating a marketing plan.

Now that you have read the introduction to B2B marketing, continue to the next step, where you will begin to learn about the components of a marketing plan.

2 Understand the Components of a Marketing Plan

The marketing team's marketing knowledge and data acquisition skills are crucial to the success of this project. You will collect and analyze the information necessary to develop a marketing plan for Cemex in the United States. The marketing plan is a written document that outlines the marketing program, along with the promotional budget allocation over the planning period. In other words, your marketing plan details what is needed to implement your marketing program and achieve its goals. When developing your marketing plan, you should first review vision and mission statements and then research Cemex's vision and mission statements.

It is important to note that a marketing plan is not the same as a business plan. While the marketing plan is part of the business plan, business plans typically also include additional information such as financial strategies, operations, risk management, and human resources. Use this marketing plan template to help you create your marketing plan.

Now that you understand the components of a marketing plan, continue to the next step, where you will learn about Cemex and the cement industry.

3 Learn About Cemex and the Cement Industry

As a part of the preparation necessary to complete your business-to-business marketing plan, you will need to do in-depth research on Cemex, its operations, global reach, and product range. Start by reading Cemex and Cement Industry Background, and be sure to consider the following questions while you do additional web research:

· Where are the company's production facilities located?

· What is Cemex's annual turnover in dollars and what is its annual production in tons?

· How does Cemex differentiate its offering in a market where cement is a commodity?

· Are there differences in product quality?

· Who are the major global and US customers?

· What benefits does Cemex offer to its customers?

Describe these benefits and tie them to your value proposition. A value proposition is essentially the promise that is made to the customer. The value proposition should be included in your report. Who are the major global and US competitors?

Cemex and Cement Industry Background

Cemex

Cemex, the world's fifth biggest cement manufacturer, is a Mexico-based multinational company that was founded in in 1906. The company has a total capacity of 87 million tons, and 56 production facilities worldwide (Global Cement, 2017a). In 2016, Cemex had a worldwide workforce of 41,357 employees, and net sales of $13.4 billion (a 3 percent decrease over 2015). Also, Cemex's 2016 operating EBITDA (earnings before interest, tax, depreciation, and amortization) as percentage of net sales was 20.5 percent versus 18.8 percent in 2015 (Cemex, 2017).

In 1994, Cemex entered the US market with the acquisition of Lafarge's Balcones plant in Texas, which is close to the Mexican border (Global Cement, 2017b). This was followed by other major acquisitions, and today Cemex owns 11 plants, 43 terminals, and 270 ready-mix concrete plants across the United States (Cemex USA, 2017).

US Cement Industry

The US cement industry is third largest in the world, with an estimated active and mothballed capacity of more than 113 Mt/year, behind China (more than 1400Mt/year) and India (more than 230Mt/year). In the United States, 40 percent of cement production, and about 50 percent of production capacity, is controlled by four major multinational companies; namely Lafarge, Cemex, Holcim, and HeidelbergCement (Global Cement, 2017a).

An increasing number of limestone discoveries in the east, as well as the ability to efficiently move freight along the Mississippi River system in the midwest have led to the rapid creation of a cement industry in the United States. Today, much of the cement (25 percent) industry is still concentrated in this area. In the early 1900s, the introduction of the rotary kiln helped US cement production take off. The Association of American Portland Cement Manufacturers (AAPCM) was established in 1902 to safeguard the interests of the industry. In 1916, the AAPCM was renamed the Portland Cement Association, or PCA (Global Cement, 2017a).

References

Cemex. (2017). Investor center: 2016 Q4 report. Retrieved from www.cemex.com

Cemex USA. (2017). About us. Retrieved on March 12, 2017 from www.cemexusa.com

Global Cement. (2017a). Cement in the USA. Retrieved on March 12, 2017 from http://www.globalcement.com/magazine/articles/698-cement-in-the-usa

Global Cement. (2017b). The top 100 global cement companies and global per capita capacity trends. Retrieved on March 12, 2017 from http://www.globalcement.com/magazine/articles/964-preview-the-top-100-global-cement-companies-and-global-per-capita-capacity-trends

The first step in developing a marketing strategy involves segmenting, targeting, and positioning (STP).

Segmenting refers to breaking the US cement market down into homogenous groups. Targeting refers to selecting the customer groups(s) that you will focus your marketing efforts on. The appropriate segmentation variable is dependent on the needs and wants of customers. These decisions are directly tied to your value proposition and require extensive marketing research on the customers. Once the segmentation variable is determined and the target markets selected, you need to develop the positioning strategy, which refers to the way you want the customer to view the product relative to the competition.

Describe the market research you would conduct to analyze and segment the US cement market. Explain how you would select your target cement markets, and explain the process of positioning Cemex's cement products relative to the competition.

Develop your Cemex marketing strategy based on your STP strategy. Remember that these decisions are interdependent, and are part of a whole. Follow the sequence outlined in the marketing plan template.

First you will want to consider Cemex's product or brand strategy. Describe the needs/wants of your target cement customer(s), and how you intend to position Cemex versus the competition. Present a detailed description of the different types of cement that you intend to sell in the US market, including their attributes, features, and quality level, along with the brand names, intended packaging, logo, and supplemental products. As you make these branding strategy decisions, it is imperative that you stay focused on the customer. Remember that Cemex's customers do not buy features; they buy benefits, both tangible and intangible. It is also critical to understand the customer: Think about who makes the cement purchase and who influences that decision, etc.

Next, you will want to think about pricing strategy. Pricing is very strategic as it is the only marketing mix variable that generates income. As a marketing team, you need to decide on your price objectives and strategies. Think about pricing tactics like discounts and incentives. You need to decide whether your pricing strategy should be skimming, premium, or market penetration given the nature of the cement products, your customers, and your major competition. Profit margins and the breakeven analysis will also need to be considered. As you determine your final price points, you'll need to consider the perceived value of your cement products. Describe how you would go about making these decisions, and the major issues involved.

Then you will need to consider Cemex's distribution and supply chain strategy. Remember, cement is a heavy and bulky product, and there are a lot of issues involved in delivering it to the final user. These strategic decisions deal with how customers purchase cement. Will you market the cement directly to your customers or through distributors/wholesalers (intermediaries)? Will you follow an exclusive, selective, or intensive distribution? Distribution decisions focus on marketing channels, as well as the physical distribution of the cement. Explain the criteria you would use to make these distribution and supply chain strategy decisions.

Finally, you should consider your integrated marketing communications and promotion strategy, which is often the most visible element of a marketing strategy. Cemex's communication strategy involves developing an integrative mix of a number of different tools at your disposal, while keeping in mind the needs and characteristics of the target cement market(s). These tools may include a mix of traditional communication elements such as advertising, personal selling, sales promotion, and publicity/public relations. It is essential that your promotion objectives are clearly defined, and that a holistic and integrated marketing communication approach is used.

Milestone 6: Prepare a four-page report outlining your marketing strategy.

It's almost time to start crunching the numbers that will further justify your overall strategic goals. You will do this in the next step.