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2011
Marketing Plan for Cold Bitumen in India




                               ABHIK TUSHAR DAS 20104001
                               SANDEEP PRASAD 20104005
                               VISHAL SHUKLA 20104009
                               EMBA10’
                               11/2/2011
EMBA10: B2B Marketing; Group-8 Project Report




Contents:

1. Historical Glance

    a. Company perspective
    b. Business perspective

2. Situational Analysis

    a.   Overview of Global business of Bitumen
    b.   Competitor Analysis
    c.   SWOT analysis of Market
    d.   PESTEL Analysis
    e.   Porter’s 5-forces analysis

3. Marketing Strategy

    a.   Segmentation of the Market
    b.   Demand Analysis
    c.   4P’s
    d.   Product Strategy
    e.   Pricing Strategy
    f.   Promotion Strategy
    g.   Customer Relationship Management (CRM)


4. Sales Strategy

    a.   Channel Strategy
    b.   Sales Force Management
    c.   Supply Chain Management (SCM)
    d.   E-Commerce

5. Marketing Budget

    a.   Cost-Benefit Analysis
    b.   Balance Score Card
    c.   Value-chain-analysis
    d.   ANSOFF Matrix

6. Key Assumptions

    a. Limitations of study
    b. Homogenous demand in Market

7. Bibliography




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Executive Summary:

Bitumen is the essence of Infrastructure development, roads being the lifeline of an economy. The
demand of Bitumen was of 4.1 MMTPA as against a supply of 3.7 MMTPA due to the emphasis by
National Governments to induct infrastructure development as constituent of long term plans.
India has focussed on Infrastructure development through building of road network in its Eleventh
Five-Year Plan (2007–2012) where projects like Golden Quadrilateral, NHDP (National Highway
Development Project), Bharat Nirman and PMGSY (Pradhan Mantri Gram Sadak Yojana) have been
envisaged. The Union Budget for 2011-12 proposed an allocation of ` 214000 crore for
infrastructure sector, which is 23.3% higher than previous year and amounts to 48.5% of the Gross
Budgetary support to plan expenditure. This provides business houses with an immense potential
for growth and hence major players can leverage their marketing expertise to procure, brand and
distribute Bitumen. The study involves developing a Marketing Plan for Company India for creating
a marketing channel involving Government agencies, Infrastructure companies and contractors.

Company Bitumen in India also supplies ready to use instant road repair premix under brand name
Company MAC PR (Micro-surfacing using Cold Bitumen Emulsions). This allows road to be opened
to traffic within 10-15 minutes and imparts good strength to repaired area. Company Bitumen
product differentiation rests in basic product knowledge, understanding of its complete chemistry,
Quality Control and the technology around it along with its performance on the ground, backed by
global Company bitumen expertise. Company India is more of a solution provider, supplying tailor-
made, fit-for-application and treatment of road products based on customer needs. Company
typically works with the contractor, design and supervision consultant and the owner of airport
runways/ major highways and even with rural roads to provide the most suitable and best product
suited to their application, product needs and local conditions.

The cold in-place recycling (CIPR) is a process where the existing bituminous pavement is recycled
without application of heat. In CIPR process the scarified material from the existing pavement is
crushed to the required gradation and binder in cold form (emulsion or cutback or foamed
bitumen) is added. Externally acquired Reclaimed Bituminous Pavement (RBP) or fresh aggregates
are also added depending on the requirement. The material is mixed in-situ, compacted, and left
for curing. During this process additive like, cement, quick lime, fly ash is also used.




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    1. Situational Analysis:

    a. Overview of Global business of Bitumen

        Naturally occurring bitumen has been around for many thousands of years; a recording of a
bituminous substance is found in the Bible. From the late nineteenth century onwards demand for
bitumen has been increasing, Company began major bitumen production in the UK in 1920 with
the opening of the Company Haven refinery. Company Bitumen operates for more than 85 years
with global experience and local knowledge and offers dedicated account management, seeking to
provide cost-effective bitumen solutions to meet business needs - be it industrial, professional,
trade or domestic consumption. Also known as Asphalt, bitumen is a sticky, black and highly
viscous liquid or semi-solid that is present in most crude petroleum and in some natural deposits, it
is a substance classed as a pitch, and is used in road construction, where it is used as the glue or
binder mixed with aggregate particles to create asphalt concrete. Its other main uses are for
bituminous waterproofing products, including production of roofing felt and for sealing flat roofs.
Global asphalt producers such as BP Plc, Exxon Mobil Corporation, Petroleos de Venezuela SA,
Royal Dutch Company plc, Akzo Nobel, Anglo American, Atlas Roofing Corporation, Aggregate
Industries Limited, CEMEX UK Operations Limited, CertainTeed Corporation, Colas Denmark A/S,
CRH PLC, Dehtochema, GAF Materials Corporation, Hanson, Husky, Lafarge SA, Nynas AB, Oldcastle
Materials, Inc., Owens Corning, Paramo, SemGroup Corporation, Sinopec, and Skanska AB.

        World demand for asphalt is forecast to expand 2.1 percent annually from a weak 2008
base to 108 million metric tons in 2013, equivalent to 655 million barrels of primary asphalt. The
world’s most developed asphalt markets (North America, Western Europe and Japan) will post
moderate gains in demand. In China and India, growth in demand will remain well above the world
average, although gains will decelerate. For the rest of the Asia/Pacific region, gains will be about
average but will outpace the mature West European and North American markets. In Latin America
and the Africa/Mideast region, decelerating growth in road building activity and construction
spending will lead to reduced opportunities for asphalt. Paving products accounted for more than
80 percent of total asphalt demand the remaining 20 percent is attributed to water-proofing
products.

    b. SWOT analysis of Bitumen Market


                Strength: Inelastic                           Weakness: Low product
                Demand (universal)                               differentiation

                                                     SWOT

             Opportunities: Growing                            Threats: Monopolies
             Markets (India & China)                         (National Oil Companies)


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         Strengths: Demand for Bitumen as a product is universal in nature due to unavailability of
product substitutes as a Road Paving Medium. Apart from construction of cement roads which is
costlier than Asphalt, no other medium is used for road construction. This leads to an inelastic
market demand wherein consumption volumes are seldom affected by economic imbalances. Most
infrastructure development projects are funded by Sovereign National Governments or
international funding agencies like World Bank and hence market demand is stable.

       Weakness: As a product, Bitumen is differentiated by its grades determined by
“Penetration Test”. Penetration @ (25°C; 0.1 mm 100 gm, 5 sec) BIS 1203:
   1. 30 to40 milli-meter
    2. 60 to 70 milli-meter
    3. 80 to 100 milli-meter

As Bitumen is a residual by-product of Petroleum Refining, it is available in all the refineries across
the globe. Bitumen when processed further develops properties which can be graded based on its
softness. Specifications of materials and road are governed by BIS, IRC.

        Opportunities: Asian economy has been growing at a stealthy pace, India and China being
its economic drivers. The economic growth is supplemented by a need for infrastructure growth
and hence the enormous market potential for the product. The Chinese government rolled out a
series of stimulus packages to boost domestic demand in both infrastructure investment and
consumption in a bid to bolster economic growth.

China Road Projects                                  Indian Road Projects

Region Kilometres Open to traffic (kms)              Region Kilometres Open to traffic (kms)

            1. Northeast China: Liaoning, Jilin,         1. Golden Quadrilateral - Connecting
               Heilongjiang 6,127 kms                       Delhi-Kolkata-Chennai-Mumbai 5,846
            2. North China: Beijing, Tianjin,               Kms
               Hebei, Shanxi, Henan, Inner               2. North-South and East-West Corridors
               Mongolia 10,257 kms                          connecting Kashmir to Kanyakumari
            3. Northwest China: Xinjiang,                   including Salem to Cochin Spur and
               Qinghai, Gansu, Ningxia, Shaanxi             Silchar to Porbandar 7,300 Kms
               6,496 kms                                 3. 4-laning of (NHDP Phase- III)
            4. Southwest China: Chongqing,                  accelerated      road      development
               Yunnan, Guizhou, Sichuan, Tibet              programme for the North Eastern
               7,929 kms                                    region 10,000 km
            5. Central China: Jiangxi, Anhui,            4. 2-laning with paved shoulders of
               Hunan, Hubei 10,103 kms                      National Highways under NHDP Phase-
            6. South     China:    Guangdong,               IV 20,000 km
               Guangxi, Fujian, Hainan 7,056             5. 6-laning of GQ and some other selected
               kms                                          stretches under NHDP Phase-V 6,500
            7. East China: Shanghai, Zhejiang,              km
               Jiangsu, Shandong 2,309 kms               6. Development of express ways under
                                                            NHDP Phase-VI 1,000 km
                                                         7. Development of ring roads, bypasses,
                                                            grade separators, service roads, etc.
                                                            under NHDP Phase-VII

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      Threats: In the Indian scenario, refining of petroleum products were controlled by state
owned Public Sector Undertakings (PSU) till late 1900’s. However post liberalization, the sector was
opened up for private participation and thereafter during 1998-2002, the Administered Pricing
Mechanism (APM) was finally dismantled allowing a fair remuneration for private marketers.
Though private Oil and Gas majors have made significant investments in Oil Marketing the
dominance of National Oil Companies still gives the PSU’s an advantage in the market.

Country             Annual Tonage
                                BIT. Emulsion                           Bitumen              Percentage
USA                 3,166,000                        26,000,000                      12.2%
France              1,200,000                        2,800,000                       42.9%
Spain               440,000                          1,600,000                       27.5%
Germany             168,000                          2,780,000                       6.0%
Japan               334,996                          4,418,000                       7.6%
Sweden              69,000                           492,000                         14.0%
Australia           80,000                           607,000                         13.2%
Austria             21,000                           386,000                         5.4%
Brazil              420,000                          1,330,000                       31.6%
South Africa        120,000                          300,000                         40.0%
Mexico              45,000                           266,360                         16.9%
Saudi Arabia        12,000                           89,000                          13.5%
Turkey              20,000                           600,000                         3.3%
Romania             30,000                           200,000                         15.0%
India               30,000                           2,500,000                       1.2%


Ex-Refinery prices exclusive of taxes (Rs. /Metric tonne) Applicable from: November 01, 2011

BITUMEN                                               GRADES
                                                      VG-10        VG-30        VG-40
PORT REF(Mumbai/Manglore/Kochi)                       33660        34460        36830
KOYALI                                                33660        34460        36830
MATHURA                                               34860        35660        38030
PANIPAT                                               35160        35960        38330
PORT REF (Haldia/Vizag/Chennai)                       33760        34560        36930
BARAUNI                                               34790        35590
BITUMEN (PACKED)
PORT REF(Mumbai/Manglore/Kochi)                       36660        37460        39830
KOYALI                                                36660        37460        39830
MATHURA                                               37860        38660        41030
PANIPAT                                               38160        38960        41330
PORT REF (Haldia/Vizag/Chennai)                       36760        37560        39930




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    c. Political, Economic, Social, and Technological, Environmental and Legal analysis (PESTEL)

Factors which influence business decisions:




      Political factors: Thrust by Central Govt. on development of roads. Many State
       Governments also giving thrust on road developments
      Economic factors: The GDP is planned to grow at rate of 7-8% in future. The
       interest rates are increasing; Government has allowed Private Sector Participation.
       There is huge requirement of funds. Government is trying to generate resources by
       innovative methods. The Rupee has weakened.
      Social factors: The citizen of the country has started realizing benefits of good
       roads. Even roads are canvassed for votes. There will be pressure from the citizens
       for good quality roads
      Technological factors: Automated Plants for value added bituminous products.
       Refineries updating technology of Bitumen Production.SAP being used by Oil
       Companies Customers using advanced technology.
      Environmental factors: The Bitumen market will expand and the demand of value
       added Bitumen will grow. Quality Bituminous products will be available. The market
       for generic product may continue. The customers will demand quality and services
       and will prefer from using value added Bitumen
      Legal factors: Contract enforcement, legal recourse, appellate body, civil rules.




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   d. Porter’s 5-forces analysis




                                                     Supplier
                                                    Bargaining
                                                      Power




                        Threat of                                           Threat of
                                                   Competitive
                       Substitute                                          New Market
                                                     Rivalary
                         Product                                             Entrant




                                                    Customer
                                                    Bargaining
                                                      Power




        Applying Michael Porter’s 5-forces Model to the Cold Bitumen Markets in India, we can
analyse the following points;

               SUPPLIER BARGAINING POWER
           a.   Supplier concentration: Low
           b.   Importance of volume to supplier: High
           c.   Differentiation of inputs: Low
           d.   Impact of inputs on cost or differentiation: Low
           e.   Switching costs of firms in the industry: Low
           f.   Presence of substitute inputs: Low
           g.   Threat of forward integration: High
           h.   Cost relative to total purchases in industry: Low




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              BUYER BARGAINING POWER

          a.   Bargaining leverage: High
          b.   Buyer volume: High
          c.   Buyer information: High
          d.   Brand identity: High
          e.   Price sensitivity: High
          f.   Threat of backward integration: Low
          g.   Product differentiation: High
          h.   Buyer concentration vs. Industry: Low
          i.   Substitutes available: High
          j.   Buyers' incentives: High

              THREAT OF NEW ENTRANTS

          a.   Absolute cost advantages: Low
          b.   Proprietary learning curve: High
          c.   Access to inputs: Low
          d.   Asset specificity: Medium-High
          e.   Government policy: Low-Medium
          f.   Economies of scale: Medium-High
          g.   Capital requirements: Medium-High
          h.   Brand identity: High
          i.   Switching costs: Low
          j.   Access to distribution: Low
          k.   Expected retaliation: High
          l.   Proprietary products: High

              THREAT OF PRODUCT SUBSTITUTES

          a. Switching costs: Low
          b. Buyer inclination to substitute: High
          c. Price-performance trade-off of substitutes: High



              DEGREE OF RIVALRY

          a.   Exit barriers: Medium-High
          b.   Industry concentration: High
          c.   Fixed costs/Value added: High
          d.   Industry growth: Medium-High
          e.   Product differences: High
          f.   Switching costs: Low
          g.   Brand identity: Low-Medium
          h.   Diversity of rivals: Low-Medium


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       Summarizing Michael Porter’s 5-Forces model of pure competition in seeking to develop an
edge over rival firms by understanding the industry context in which the firm operates we observe
that;

            a. Supplier bargaining power is low on account of low concentration ratio of suppliers
               as Bitumen is a residual product of Petroleum refining and is thus available across
               different suppliers.

            b. Buyer bargaining power is high as Bitumen as an end product is used for Paving
               Roads where purchase tenders are floated by large infrastructure contractors or
               Government agencies and the volumes traded are high with long term purchase
               agreement.



            c. Threat of New Entrant is high as Bitumen handling involves moderate fixed
               investments where the business switching cost is high. As Bitumen is classified as a
               Class-C Petroleum Product with Flash point >95 degree Celsius; petroleum storage
               license is not necessary from The Petroleum and Explosives Safety Organisation
               (PESO).

            d. Threat of Product Substitutes is high as Cold Bitumen as a product for Road Paving
               can be substitutable with Conventional Bitumen which is a low cost affair. Also
               there is low product differentiation within Bitumen as a product.



            e. The Degree of Rivalry in the Bitumen Market is high as the market concentration is
               low owing to large number of players in the market. Low entry barriers, low
               technological complexity and high bargaining power of the buyer have contributed
               to the high market dynamics.



2. Marketing Strategy:


            a. Segmentation of the Market

        Whereas earlier roads were built with the primary aim of moving passenger traffic only,
roads today need to take care of extensive movement of goods through heavy load axles on the
road due to explosive economic growth. Thus the road designs need to be suitably upgraded to
take care of present load and traffic intensity conditions on the roads. Also, certain parts of the
country are subjected to heavy rainfall or heavy snowfall. India’s legacy road infrastructure as well
as paving modern Highways and Airports of tomorrow needs application of High end products and
technologies as there is a massive legacy road network that has weak base and cannot be upgraded
overnight but need to be maintained using maintenance applications. Also remote roads do not
have the facility of transporting and using conventional Bitumen thereby creating a demand for
Cold Bitumen.


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   Segmentation of the Market;

       Main Roads: Paving solutions to withstand the demands of high volume inter-city road
      networks and highways
       Urban Roads: Pavement solutions to withstand the needs of busy urban areas.
       Rural Roads: Road network for rural areas, particularly in developing countries.
       Heavy Duty Roads: Airports, ports and railways require paving solutions that can
      withstand extremely heavy loads and high pavement stress
       Industrial Roads: Core applications include roofing, flooring and sealing. Roads within the
      Oil & Gas industry use Cold Bitumen to avoid possibility of Hazard due to heating of
      conventional Bitumen during application.

           b. Demand Analysis




   Demand for Bitumen can be categorized into;

       Long-run demand: These supplies are made through tendering and purchase contracts
        wherein Bitumen is supplied to customers in long term consignments.
       Short-run demand: these supplies are made through direct ad-hoc purchase of retail
        drums

    The demand for road infrastructure projects can be estimated from the following facts;

       Annual growth projected at 12-15% for passenger traffic, and 15-18% for cargo traffic
       Investment in road sector during the Eleventh Plan is projected at $ 78.50 billion
       The Government is planning to increase spends on road development substantially with
        funding already in place based on a cess on fuel
       100% FDI under the automatic route is permitted for all road development projects
       100% income tax exemption for a period of 10 years




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The Golden Quadrilateral and NSEW projects map:




           c. 4P’s:

        Product: Cold Bitumen as a product is nascent in its use being an innovative concept
         over conventional Bitumen. The product is used in specialized Paving jobs where
         conventional Bitumen is unfeasible or impractical. The product needs to be promoted as
         a hassle free value added service for quick repair of roads.

        Price: The price of the product should be premium, wherein the operational benefits of
         the product should ensure cost savings over conventional Bitumen. The price should
         also be competitive such that bulk purchases of Conventional Bitumen do not offset
         purchase decisions for Cold Bitumen.

        Place: Cold Bitumen is mainly applied on Road Paving repairs and hence the marketing
         place should be small time contractors who undertake patch work. These contracts are
         either awarded by Municipal contracts or Private companies.

        Promotion: B2B promotion should target business publications, trade shows, direct
         mailers and direct selling.




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           d. Product Strategy

        Company India has developed a comprehensive specialist product portfolio designed to
meet the needs of every user, industrial, professional or domestic. Bitumen products are tailored
to meet the needs of asphalt manufacturers, road builders, construction, government,
communities, asset owners, designers and architects giving usable and effective solutions for all
manner of markets.

       The product offerings can be categorized into;

        Company Cariphalte: Specially formulated polymer modified bitumen based on carefully
         chosen combinations of bitumen and thermoplastic elastomers.
        Company Mexphalte CRMB: Modified Bitumen manufactured using Crumb Rubber and
         specially selected modifiers
        Company Low Temp Binders: Ready-to-use solution for time and cost saving in road
         construction designed to lower the mixing or laying temperature of asphalt compared to
         a conventional asphalt mixture
        Company Instapave: A cost-effective solution to pave rural roads
        Company Mexphalte C: A clear synthetic binder that can produce asphalts in a broad
         spectrum of colours, enabling the colour-matching of pavements to the local
         environment
        Company Spramul: Spray-able emulsified versions
        Company-mac PR: An instant all-weather pothole repair solution
        Standard Grades: 30/40, 60/70, 80/100 based on penetration tests



           e. Pricing Strategy

   The pricing strategy for Company India will depend upon the following two factors;

        Standard grades to be priced competitively: Standard grades (based on penetration
         tests) are widely available in the market under various brand names; hence to compete
         with smaller brands the pricing strategy should be competitive. These products offer
         core benefits to the customer and hence assess the product value based on cost-
         benefit, demand elasticity and switching cost. Once the purchase has been made and
         the customer is satisfied, they become less price sensitive overtime.
        Specialized products are priced at a premium: Specialized offerings pricing strategies are
         value based, which depend on the add-on benefits offered by the product over the core
         benefits. The price of such products is based on product quality, innovative offerings,
         dynamic delivery and strong product service. These products can also be priced based
         on Target costing based on types and quality attributes required to succeed in a
         particular segment.
        New product offerings can be priced on a continuum of skimming (initial high price) to
         penetration (initial low price) pricing strategies.
        Competitive bidding strategies involving bulk supplies of Bitumen can involve either
         closed bidding or open bidding strategies.


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          f.   Promotion Strategy

           Use of Social Media for Business Communication:




   The target audience for Bitumen promotion can be enumerated as;

       Municipal bodies: The advertisement should send a clear message about the core
        benefits of the product which would influence their purchase decisions. Direct mails to
        procurement departments. Creating awareness among procurement officers about the
        quality and price edge of the product over its rivals can help in securing delivery
        contracts.
       Government contracts: Organizing Trade shows to display new advancements and
        technological developments to mass audiences where customers can get hands on
        experience on the products, new customers can be identified and a general goodwill
        would be created for the company.
       Industrial use: Promotions in Business Publications creating awareness among business
        houses.
       Retail use: Use of social media to connect the brand with Small-Medium Users along
        with use of Bill-Board displays, print advertisement.




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            g. Customer Relationship Management (CRM):

   Customer Relationship Management can be widely defined as company activities related to
developing and retaining customers. It is a blend of internal business processes: sales, marketing
and customer support with technology and data capturing techniques. Customer Relationship
Management is all about building long-term business relationships with customers.

       Operational CRM


       Analytical CRM


       Collaborative CRM


                Operational CRM:

        Delivers personalized and efficient marketing, sales, and service through multi channel
         collaboration.
        Enables a 360-degree view of your customer while you are interacting with them.
        Sales people can access complete history of all customer interaction with the company,
         regardless of the touch point
        Replenish field stock of old and outdated material with new stock

                Analytical CRM:

          Acquisition: Customers from conventional Bitumen usage
          Retention: Retaining customers for subsequent purchases/ contracts.
          Information: Providing timely and regular information to customers.
          Modification: Altering details of the transactional nature of the customer’s relationship

                Collaborative CRM:

        Enables efficient productive customer interactions across all marketing channels.
        Enables web collaboration to reduce contract costs.
        Integrates call centres enabling multi-channel personal customer interaction.
        Integrates view of the customer while interaction at the transaction level
        Enables the company to get updates about product usage, expectations and shortfalls to
         maintain product quality standards in line with customer needs
        Extend credit to small contractors who lack purchasing power for the new product




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3. Sales Strategy:
      a.   Channel Strategy

           Bitumen is sold through the following broad channels;

                  Direct Bulk distribution through road tankers (Direct Channel): Direct selling
                   through tenders and contracts wherein no channel intermediaries are
                   involved. Mostly these consignments are long term supply contracts and
                   hence economies of scale strategies in distribution are adopted to maximise
                   channel efficacy.


                                                   Customer
                                                                             Lead
                                                     Care &
                                                                           Generation
                                                    Support




                                                                                           Lead
                                     Fulfillment
                                                                                        Qualification




                                                   Negotiation
                                                                             Bid &
                                                     & Sales
                                                                            Proposal
                                                    Closure



                  Retail distribution through packed drums (Indirect Channel)

                   Bitumen sold through drums involves channel intermediaries which can be in
                   the form of distributors or manufacturers representatives. The end users for
                   the retail Bitumen are industrial units, water-proofing contractors, and small
                   road repairs. Company’s specialized offerings are also distributed through
                   retail outlets which serve specific customer segments.




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           b. Supply Chain Management

               It is an innovative approach to tighten the distribution process, bolster links with
               suppliers and customers and integrating organizational functions like production
               and marketing.

               The                     Bitumen                     Value                    Chain:




   Refinery         Terminals     Processing      Distributor     Wholesaler       Customer




                                                  Direct Distribution Channel




             Integrating business processes from customers to suppliers can help improve system
efficiency through Supply Chain Management wherein information travels opposite to flow of
materials. Real-time information sharing between different stakeholders of the system can ensure;

                    Better quality control of product (waste reduction): Coordination between
                     site, vendor and supplier leads to low rate of consignment rejection.
                    Minimum inventory requirement: Bitumen solidifies at room temperature
                     (pour point > 90 degree Celsius) and hence high inventory leads to high
                     heating cost and hence high cost of ownership.
                    Continuous improvement of product: Feedbacks from vendors can be utilized
                     to improve product quality on a continuous basis.
                    Low lag time between order, processing and delivery: Better business process
                     integration can also result in avoiding unnecessary project delays due to
                     unavailability of Bitumen on time.




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            c. E-Commerce

               E-commerce is a cost effective way of doing business through the aid of
               Information Technology. Business through E-commerce is achieved through a
               virtual market which serves as a global platform for the commodity. Company India
               has an active marketing strategy for its products (Bitumen) through the E-
               Commerce platforms.

B2B Solutions on E-Platform:




E-Commerce includes processes like;

                      E-Auctions/ E-Trading
                      E-Tendering
                      Internet marketing
                      Online transaction processing
                      Electronic data interchange (EDI)
                      Inventory management systems




Abhik (20104001)        Sandeep (20104005)            Vishal (20104009)                Page 18
EMBA10: B2B Marketing; Group-8 Project Report




       Company E-Trading Platform:




Other E-Commerce Platforms for Bitumen Trading:




E-Commerce helps in connecting the buyer and the seller on a virtual platform wherein the price-
discovery happens at a much rational level. It also leverages small players to compete with large
players offering them a level playing platform to conduct business. E-Commerce also helps reduce
the transaction cost of the process, thus reducing the TCO (Total Cost of Ownership) of the
product.




Abhik (20104001)        Sandeep (20104005)           Vishal (20104009)                  Page 19
EMBA10: B2B Marketing; Group-8 Project Report




4. Marketing Budget:
    e. Cost-Benefit Analysis

               Cost-benefit analysis is a means of evaluating all of the potential costs and
revenues that may be generated if the project is completed, the outcome of such analysis will
determine whether the project is financially feasible, or if another project should be pursued.




Principles of cost benefit analysis;

       There must be a common unit of measurement

     Valuations should represent consumers or producers valuations as revealed by their actual
        behaviour

       Benefits are usually measured by market choices

       Cost benefit analysis involves a particular study area


The marketing plan budget allocation should consider both tangible and intangible aspects of cost
and benefit in the long run. The allocation of budget to specific marketing channels for Bitumen
would consists of aspects like dealer margin, bulk discounts, customer benefit campaigns and
budgets for trade shows.




Abhik (20104001)           Sandeep (20104005)           Vishal (20104009)               Page 20
EMBA10: B2B Marketing; Group-8 Project Report




    f.   Balanced Scorecard




                 The balanced scorecard is a strategic planning and management system that is
used extensively in business and industry to align business activities to the vision and strategy of
the organization, improve internal and external communications, and monitor organization
performance against strategic goals.

Customer benefits:

        Corrects most of the types of pavement distresses e.g. raveling, rutting, corrugation,
         shoving etc.
        Hauling cost is considerably low
        Air quality related problems during construction is almost negligible as compared to the
         hot mix process
        Since this process does not involve application of heat, premature aging of bitumen also
         can be avoided
        More durable in freeze-thaw situations, compared to hot mix recycled pavement




Financial:

        Brand the product as a premium product with differentiation in product application with
         enhanced features than conventional Bitumen

Customer:

        The product should reflect the brand value premium with significant positioning of the
         technological superiority

Internal Business Processes:

Abhik (20104001)         Sandeep (20104005)           Vishal (20104009)                    Page 21
EMBA10: B2B Marketing; Group-8 Project Report


      Robust processes should be incorporated to excel in distribution to gain an edge over
       conventional Bitumen

Learning & Growth:

      Product innovation through customer feedback and trial applications through contractor
       relationship would ensure product development of Cold Bitumen in the long run.



   g. Value-chain-analysis




       Analyzing the Bitumen Value Chain (through primary activities);

              Inbound Logistics: For Company Bitumen, the inbound logistics would include
               procurement of Bitumen from refineries, its transportation including intermediate
               warehousing. Each step of the value chain is associated with costs which tend to
               cumulate and add up to the final product price. The cost of storage and logistics
               can be a high percentage of the final cost due to the heating requirements for
               keeping the Bitumen in liquid stage during bulk transportation. Special insulated
               trucks having internal heating arrangement are used for transporting Bitumen over
               long distances.
              Operation: The Bitumen is processes in units to modify its characteristics to suit the
               needs of the end users. The cost of operations includes production cost, packing
               cost, setup cost and labour cost.
              Out-bound logistics: The distribution of Bitumen from the processing plant to the
               end user can be done either through direct bulk delivery or through packed drums.
               The delivery through drums involves many stages wherein the drums are packed

Abhik (20104001)        Sandeep (20104005)            Vishal (20104009)                     Page 22
EMBA10: B2B Marketing; Group-8 Project Report


                and stored in distributor warehouses from where it is supplied to retailers. The
                processed Bitumen can be re-liquefied by heating and hence does not involve high
                cost of heating during transit/ storage. Bitumen packed in drums can be liquefied
                at customer location; some modified versions of Bitumen can be applied by mixing
                it with pre-required solvents.
               Sales and Marketing: A major part of value addition can be attributed to the sales
                and marketing effort of any organization, Bitumen marketing being no different.
                Creating awareness for the customer regarding new innovative concepts of paving
                as well as information to various Governmental agencies to qualify for bidding
                process jacks up the cost of the product. Advertisements, trade promotions,
                sample distribution as well as demonstrations are also counted under the head of
                Sales and Marketing costs.
               Servicing: Product after sales service in Bitumen marketing consists of post
                application visits to ascertain product effectiveness and durability of product.
                Companies need to constantly monitor the performance of the product and gather
                customer feedback regarding difficulties faced by the end user.



           Secondary activities-Bitumen market is highly competitive with presence of a large
number of players forcing major players to leverage support functions like Technology to get past
smaller players in terms of margins. The value added to the product through the value chain, less
the cost incurred thereof is the net margin to the marketer.



    h. ANSOFF Matrix




                  The first three strategies of the ANSOFF Matrix are usually pursued with the same
technical, financial, and merchandising resources used for the original product line, whereas
diversification usually requires a company to acquire new skills, new techniques and new facilities.
Company India marketing strategy involves introduction of innovative products in its product
portfolio which necessarily caters to the existing market for Bitumen which can be termed as a
traditional market.




Abhik (20104001)         Sandeep (20104005)           Vishal (20104009)                    Page 23
EMBA10: B2B Marketing; Group-8 Project Report




Company India product range can be categorized into the ANSOFF Matrix;

      •Standard, emulsion                                          •Bitufresh, Company
       and oxidised grades                                          Spramul
                                                                   •Company WAM
                                                                    Foam



                               Market              Product
                             Penetration         Development




                               Market
                                                 Diversification
                             Development

      •CompanyCariphalte,                                           •Instapave, Company
       Company                                                       Mexphalte
       Multiphalte




6. Key Assumptions
   a. Limitations of study: The study limits itself to marketing of Cold Bitumen (processed) in
      India by Company India. As the product is conceptualized as a new launch product, sales
      data, prices, and costs were not accounted for in formulating the marketing plan. The study
      also relies upon secondary data for conceptualizing the Market analysis. The study being
      part of the B2B course curriculum is not intended to make any judgements or market
      predictions about the Bitumen business markets. Facts and figures mentioned in the data
      might not be accurate but serve as an illustration for visualizing the market dynamics.

   b. Homogenous demand in Market: The market conditions and the demand pattern is
      considered as homogenous across the country and any geographical and seasonal
      variations in demand is excluded from the scope of the study. The announced investments
      to be made by the Government are assumed as constant with a linear growth rate. The sole
      purpose of the study is to make readers aware of the process of B2B marketing and should
      be excluded from the purview of market study. The study also excludes any
      representations from Company India and hence there is no commitment from the
      organization towards the facts shared in this study.




Abhik (20104001)         Sandeep (20104005)         Vishal (20104009)                     Page 24
EMBA10: B2B Marketing; Group-8 Project Report




7. Bibliography

    http://home.iitk.ac.in/~adas/article10.pdf
    http://www.iocl.com/Products/Bitumen.aspx
    http://www.Company.com/home/content/ind/aboutCompany/Compa
      ny_businesses/india_business_structure/Company_bitumen_india/
    http://www-
      static.Company.com/static/idn/downloads/Company_for_businesses/b
      itumen/data_sheets/flinkote3.pdf
    http://books.google.co.in/books?id=bA1tIkRJL8kC&pg=PA113&lpg=PA1
      13&dq=cold+bitumen+Company&source=bl&ots=pbOcJmC_-
      Y&sig=GzNj5c9NaskOjxo0dWjnMiG7iDY&hl=en&ei=peSyTovrKM3wrQe
      64MTJAw&sa=X&oi=book_result&ct=result&resnum=5&ved=0CD8Q6A
      EwBA#v=onepage&q=cold%20bitumen%20Company&f=false
    http://en.wikipedia.org/wiki/Asphalt
    http://www.saudiaramcoworld.com/issue/198406/bitumen.-
      .a.history.htm
    http://en.wikipedia.org/wiki/Customer_relationship_management
    http://www.quickmba.com/strategy/porter.shtml
    http://www.iitk.ac.in/infocell/announce/convention/papers/Changing
      %20Playfield-06-Saurabh%20Kumar%20Saxena.pdf
    http://www.b2bmarketingplan.com/
    http://tutor2u.net/business/strategy/ansoff_matrix.htm
    http://www.renewal.eu.com/resources/Renewal_Pestle_Analysis.pdf




Abhik (20104001)      Sandeep (20104005)        Vishal (20104009)   Page 25

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Marketing Plan for Cold Bitumen in India

  • 1. 2011 Marketing Plan for Cold Bitumen in India ABHIK TUSHAR DAS 20104001 SANDEEP PRASAD 20104005 VISHAL SHUKLA 20104009 EMBA10’ 11/2/2011
  • 2. EMBA10: B2B Marketing; Group-8 Project Report Contents: 1. Historical Glance a. Company perspective b. Business perspective 2. Situational Analysis a. Overview of Global business of Bitumen b. Competitor Analysis c. SWOT analysis of Market d. PESTEL Analysis e. Porter’s 5-forces analysis 3. Marketing Strategy a. Segmentation of the Market b. Demand Analysis c. 4P’s d. Product Strategy e. Pricing Strategy f. Promotion Strategy g. Customer Relationship Management (CRM) 4. Sales Strategy a. Channel Strategy b. Sales Force Management c. Supply Chain Management (SCM) d. E-Commerce 5. Marketing Budget a. Cost-Benefit Analysis b. Balance Score Card c. Value-chain-analysis d. ANSOFF Matrix 6. Key Assumptions a. Limitations of study b. Homogenous demand in Market 7. Bibliography Abhik (20104001) Sandeep (20104005) Vishal (20104009) Page 2
  • 3. EMBA10: B2B Marketing; Group-8 Project Report Executive Summary: Bitumen is the essence of Infrastructure development, roads being the lifeline of an economy. The demand of Bitumen was of 4.1 MMTPA as against a supply of 3.7 MMTPA due to the emphasis by National Governments to induct infrastructure development as constituent of long term plans. India has focussed on Infrastructure development through building of road network in its Eleventh Five-Year Plan (2007–2012) where projects like Golden Quadrilateral, NHDP (National Highway Development Project), Bharat Nirman and PMGSY (Pradhan Mantri Gram Sadak Yojana) have been envisaged. The Union Budget for 2011-12 proposed an allocation of ` 214000 crore for infrastructure sector, which is 23.3% higher than previous year and amounts to 48.5% of the Gross Budgetary support to plan expenditure. This provides business houses with an immense potential for growth and hence major players can leverage their marketing expertise to procure, brand and distribute Bitumen. The study involves developing a Marketing Plan for Company India for creating a marketing channel involving Government agencies, Infrastructure companies and contractors. Company Bitumen in India also supplies ready to use instant road repair premix under brand name Company MAC PR (Micro-surfacing using Cold Bitumen Emulsions). This allows road to be opened to traffic within 10-15 minutes and imparts good strength to repaired area. Company Bitumen product differentiation rests in basic product knowledge, understanding of its complete chemistry, Quality Control and the technology around it along with its performance on the ground, backed by global Company bitumen expertise. Company India is more of a solution provider, supplying tailor- made, fit-for-application and treatment of road products based on customer needs. Company typically works with the contractor, design and supervision consultant and the owner of airport runways/ major highways and even with rural roads to provide the most suitable and best product suited to their application, product needs and local conditions. The cold in-place recycling (CIPR) is a process where the existing bituminous pavement is recycled without application of heat. In CIPR process the scarified material from the existing pavement is crushed to the required gradation and binder in cold form (emulsion or cutback or foamed bitumen) is added. Externally acquired Reclaimed Bituminous Pavement (RBP) or fresh aggregates are also added depending on the requirement. The material is mixed in-situ, compacted, and left for curing. During this process additive like, cement, quick lime, fly ash is also used. Abhik (20104001) Sandeep (20104005) Vishal (20104009) Page 3
  • 4. EMBA10: B2B Marketing; Group-8 Project Report 1. Situational Analysis: a. Overview of Global business of Bitumen Naturally occurring bitumen has been around for many thousands of years; a recording of a bituminous substance is found in the Bible. From the late nineteenth century onwards demand for bitumen has been increasing, Company began major bitumen production in the UK in 1920 with the opening of the Company Haven refinery. Company Bitumen operates for more than 85 years with global experience and local knowledge and offers dedicated account management, seeking to provide cost-effective bitumen solutions to meet business needs - be it industrial, professional, trade or domestic consumption. Also known as Asphalt, bitumen is a sticky, black and highly viscous liquid or semi-solid that is present in most crude petroleum and in some natural deposits, it is a substance classed as a pitch, and is used in road construction, where it is used as the glue or binder mixed with aggregate particles to create asphalt concrete. Its other main uses are for bituminous waterproofing products, including production of roofing felt and for sealing flat roofs. Global asphalt producers such as BP Plc, Exxon Mobil Corporation, Petroleos de Venezuela SA, Royal Dutch Company plc, Akzo Nobel, Anglo American, Atlas Roofing Corporation, Aggregate Industries Limited, CEMEX UK Operations Limited, CertainTeed Corporation, Colas Denmark A/S, CRH PLC, Dehtochema, GAF Materials Corporation, Hanson, Husky, Lafarge SA, Nynas AB, Oldcastle Materials, Inc., Owens Corning, Paramo, SemGroup Corporation, Sinopec, and Skanska AB. World demand for asphalt is forecast to expand 2.1 percent annually from a weak 2008 base to 108 million metric tons in 2013, equivalent to 655 million barrels of primary asphalt. The world’s most developed asphalt markets (North America, Western Europe and Japan) will post moderate gains in demand. In China and India, growth in demand will remain well above the world average, although gains will decelerate. For the rest of the Asia/Pacific region, gains will be about average but will outpace the mature West European and North American markets. In Latin America and the Africa/Mideast region, decelerating growth in road building activity and construction spending will lead to reduced opportunities for asphalt. Paving products accounted for more than 80 percent of total asphalt demand the remaining 20 percent is attributed to water-proofing products. b. SWOT analysis of Bitumen Market Strength: Inelastic Weakness: Low product Demand (universal) differentiation SWOT Opportunities: Growing Threats: Monopolies Markets (India & China) (National Oil Companies) Abhik (20104001) Sandeep (20104005) Vishal (20104009) Page 4
  • 5. EMBA10: B2B Marketing; Group-8 Project Report Strengths: Demand for Bitumen as a product is universal in nature due to unavailability of product substitutes as a Road Paving Medium. Apart from construction of cement roads which is costlier than Asphalt, no other medium is used for road construction. This leads to an inelastic market demand wherein consumption volumes are seldom affected by economic imbalances. Most infrastructure development projects are funded by Sovereign National Governments or international funding agencies like World Bank and hence market demand is stable. Weakness: As a product, Bitumen is differentiated by its grades determined by “Penetration Test”. Penetration @ (25°C; 0.1 mm 100 gm, 5 sec) BIS 1203: 1. 30 to40 milli-meter 2. 60 to 70 milli-meter 3. 80 to 100 milli-meter As Bitumen is a residual by-product of Petroleum Refining, it is available in all the refineries across the globe. Bitumen when processed further develops properties which can be graded based on its softness. Specifications of materials and road are governed by BIS, IRC. Opportunities: Asian economy has been growing at a stealthy pace, India and China being its economic drivers. The economic growth is supplemented by a need for infrastructure growth and hence the enormous market potential for the product. The Chinese government rolled out a series of stimulus packages to boost domestic demand in both infrastructure investment and consumption in a bid to bolster economic growth. China Road Projects Indian Road Projects Region Kilometres Open to traffic (kms) Region Kilometres Open to traffic (kms) 1. Northeast China: Liaoning, Jilin, 1. Golden Quadrilateral - Connecting Heilongjiang 6,127 kms Delhi-Kolkata-Chennai-Mumbai 5,846 2. North China: Beijing, Tianjin, Kms Hebei, Shanxi, Henan, Inner 2. North-South and East-West Corridors Mongolia 10,257 kms connecting Kashmir to Kanyakumari 3. Northwest China: Xinjiang, including Salem to Cochin Spur and Qinghai, Gansu, Ningxia, Shaanxi Silchar to Porbandar 7,300 Kms 6,496 kms 3. 4-laning of (NHDP Phase- III) 4. Southwest China: Chongqing, accelerated road development Yunnan, Guizhou, Sichuan, Tibet programme for the North Eastern 7,929 kms region 10,000 km 5. Central China: Jiangxi, Anhui, 4. 2-laning with paved shoulders of Hunan, Hubei 10,103 kms National Highways under NHDP Phase- 6. South China: Guangdong, IV 20,000 km Guangxi, Fujian, Hainan 7,056 5. 6-laning of GQ and some other selected kms stretches under NHDP Phase-V 6,500 7. East China: Shanghai, Zhejiang, km Jiangsu, Shandong 2,309 kms 6. Development of express ways under NHDP Phase-VI 1,000 km 7. Development of ring roads, bypasses, grade separators, service roads, etc. under NHDP Phase-VII Abhik (20104001) Sandeep (20104005) Vishal (20104009) Page 5
  • 6. EMBA10: B2B Marketing; Group-8 Project Report Threats: In the Indian scenario, refining of petroleum products were controlled by state owned Public Sector Undertakings (PSU) till late 1900’s. However post liberalization, the sector was opened up for private participation and thereafter during 1998-2002, the Administered Pricing Mechanism (APM) was finally dismantled allowing a fair remuneration for private marketers. Though private Oil and Gas majors have made significant investments in Oil Marketing the dominance of National Oil Companies still gives the PSU’s an advantage in the market. Country Annual Tonage BIT. Emulsion Bitumen Percentage USA 3,166,000 26,000,000 12.2% France 1,200,000 2,800,000 42.9% Spain 440,000 1,600,000 27.5% Germany 168,000 2,780,000 6.0% Japan 334,996 4,418,000 7.6% Sweden 69,000 492,000 14.0% Australia 80,000 607,000 13.2% Austria 21,000 386,000 5.4% Brazil 420,000 1,330,000 31.6% South Africa 120,000 300,000 40.0% Mexico 45,000 266,360 16.9% Saudi Arabia 12,000 89,000 13.5% Turkey 20,000 600,000 3.3% Romania 30,000 200,000 15.0% India 30,000 2,500,000 1.2% Ex-Refinery prices exclusive of taxes (Rs. /Metric tonne) Applicable from: November 01, 2011 BITUMEN GRADES VG-10 VG-30 VG-40 PORT REF(Mumbai/Manglore/Kochi) 33660 34460 36830 KOYALI 33660 34460 36830 MATHURA 34860 35660 38030 PANIPAT 35160 35960 38330 PORT REF (Haldia/Vizag/Chennai) 33760 34560 36930 BARAUNI 34790 35590 BITUMEN (PACKED) PORT REF(Mumbai/Manglore/Kochi) 36660 37460 39830 KOYALI 36660 37460 39830 MATHURA 37860 38660 41030 PANIPAT 38160 38960 41330 PORT REF (Haldia/Vizag/Chennai) 36760 37560 39930 Abhik (20104001) Sandeep (20104005) Vishal (20104009) Page 6
  • 7. EMBA10: B2B Marketing; Group-8 Project Report c. Political, Economic, Social, and Technological, Environmental and Legal analysis (PESTEL) Factors which influence business decisions:  Political factors: Thrust by Central Govt. on development of roads. Many State Governments also giving thrust on road developments  Economic factors: The GDP is planned to grow at rate of 7-8% in future. The interest rates are increasing; Government has allowed Private Sector Participation. There is huge requirement of funds. Government is trying to generate resources by innovative methods. The Rupee has weakened.  Social factors: The citizen of the country has started realizing benefits of good roads. Even roads are canvassed for votes. There will be pressure from the citizens for good quality roads  Technological factors: Automated Plants for value added bituminous products. Refineries updating technology of Bitumen Production.SAP being used by Oil Companies Customers using advanced technology.  Environmental factors: The Bitumen market will expand and the demand of value added Bitumen will grow. Quality Bituminous products will be available. The market for generic product may continue. The customers will demand quality and services and will prefer from using value added Bitumen  Legal factors: Contract enforcement, legal recourse, appellate body, civil rules. Abhik (20104001) Sandeep (20104005) Vishal (20104009) Page 7
  • 8. EMBA10: B2B Marketing; Group-8 Project Report d. Porter’s 5-forces analysis Supplier Bargaining Power Threat of Threat of Competitive Substitute New Market Rivalary Product Entrant Customer Bargaining Power Applying Michael Porter’s 5-forces Model to the Cold Bitumen Markets in India, we can analyse the following points;  SUPPLIER BARGAINING POWER a. Supplier concentration: Low b. Importance of volume to supplier: High c. Differentiation of inputs: Low d. Impact of inputs on cost or differentiation: Low e. Switching costs of firms in the industry: Low f. Presence of substitute inputs: Low g. Threat of forward integration: High h. Cost relative to total purchases in industry: Low Abhik (20104001) Sandeep (20104005) Vishal (20104009) Page 8
  • 9. EMBA10: B2B Marketing; Group-8 Project Report  BUYER BARGAINING POWER a. Bargaining leverage: High b. Buyer volume: High c. Buyer information: High d. Brand identity: High e. Price sensitivity: High f. Threat of backward integration: Low g. Product differentiation: High h. Buyer concentration vs. Industry: Low i. Substitutes available: High j. Buyers' incentives: High  THREAT OF NEW ENTRANTS a. Absolute cost advantages: Low b. Proprietary learning curve: High c. Access to inputs: Low d. Asset specificity: Medium-High e. Government policy: Low-Medium f. Economies of scale: Medium-High g. Capital requirements: Medium-High h. Brand identity: High i. Switching costs: Low j. Access to distribution: Low k. Expected retaliation: High l. Proprietary products: High  THREAT OF PRODUCT SUBSTITUTES a. Switching costs: Low b. Buyer inclination to substitute: High c. Price-performance trade-off of substitutes: High  DEGREE OF RIVALRY a. Exit barriers: Medium-High b. Industry concentration: High c. Fixed costs/Value added: High d. Industry growth: Medium-High e. Product differences: High f. Switching costs: Low g. Brand identity: Low-Medium h. Diversity of rivals: Low-Medium Abhik (20104001) Sandeep (20104005) Vishal (20104009) Page 9
  • 10. EMBA10: B2B Marketing; Group-8 Project Report Summarizing Michael Porter’s 5-Forces model of pure competition in seeking to develop an edge over rival firms by understanding the industry context in which the firm operates we observe that; a. Supplier bargaining power is low on account of low concentration ratio of suppliers as Bitumen is a residual product of Petroleum refining and is thus available across different suppliers. b. Buyer bargaining power is high as Bitumen as an end product is used for Paving Roads where purchase tenders are floated by large infrastructure contractors or Government agencies and the volumes traded are high with long term purchase agreement. c. Threat of New Entrant is high as Bitumen handling involves moderate fixed investments where the business switching cost is high. As Bitumen is classified as a Class-C Petroleum Product with Flash point >95 degree Celsius; petroleum storage license is not necessary from The Petroleum and Explosives Safety Organisation (PESO). d. Threat of Product Substitutes is high as Cold Bitumen as a product for Road Paving can be substitutable with Conventional Bitumen which is a low cost affair. Also there is low product differentiation within Bitumen as a product. e. The Degree of Rivalry in the Bitumen Market is high as the market concentration is low owing to large number of players in the market. Low entry barriers, low technological complexity and high bargaining power of the buyer have contributed to the high market dynamics. 2. Marketing Strategy: a. Segmentation of the Market Whereas earlier roads were built with the primary aim of moving passenger traffic only, roads today need to take care of extensive movement of goods through heavy load axles on the road due to explosive economic growth. Thus the road designs need to be suitably upgraded to take care of present load and traffic intensity conditions on the roads. Also, certain parts of the country are subjected to heavy rainfall or heavy snowfall. India’s legacy road infrastructure as well as paving modern Highways and Airports of tomorrow needs application of High end products and technologies as there is a massive legacy road network that has weak base and cannot be upgraded overnight but need to be maintained using maintenance applications. Also remote roads do not have the facility of transporting and using conventional Bitumen thereby creating a demand for Cold Bitumen. Abhik (20104001) Sandeep (20104005) Vishal (20104009) Page 10
  • 11. EMBA10: B2B Marketing; Group-8 Project Report Segmentation of the Market;  Main Roads: Paving solutions to withstand the demands of high volume inter-city road networks and highways  Urban Roads: Pavement solutions to withstand the needs of busy urban areas.  Rural Roads: Road network for rural areas, particularly in developing countries.  Heavy Duty Roads: Airports, ports and railways require paving solutions that can withstand extremely heavy loads and high pavement stress  Industrial Roads: Core applications include roofing, flooring and sealing. Roads within the Oil & Gas industry use Cold Bitumen to avoid possibility of Hazard due to heating of conventional Bitumen during application. b. Demand Analysis Demand for Bitumen can be categorized into;  Long-run demand: These supplies are made through tendering and purchase contracts wherein Bitumen is supplied to customers in long term consignments.  Short-run demand: these supplies are made through direct ad-hoc purchase of retail drums The demand for road infrastructure projects can be estimated from the following facts;  Annual growth projected at 12-15% for passenger traffic, and 15-18% for cargo traffic  Investment in road sector during the Eleventh Plan is projected at $ 78.50 billion  The Government is planning to increase spends on road development substantially with funding already in place based on a cess on fuel  100% FDI under the automatic route is permitted for all road development projects  100% income tax exemption for a period of 10 years Abhik (20104001) Sandeep (20104005) Vishal (20104009) Page 11
  • 12. EMBA10: B2B Marketing; Group-8 Project Report The Golden Quadrilateral and NSEW projects map: c. 4P’s:  Product: Cold Bitumen as a product is nascent in its use being an innovative concept over conventional Bitumen. The product is used in specialized Paving jobs where conventional Bitumen is unfeasible or impractical. The product needs to be promoted as a hassle free value added service for quick repair of roads.  Price: The price of the product should be premium, wherein the operational benefits of the product should ensure cost savings over conventional Bitumen. The price should also be competitive such that bulk purchases of Conventional Bitumen do not offset purchase decisions for Cold Bitumen.  Place: Cold Bitumen is mainly applied on Road Paving repairs and hence the marketing place should be small time contractors who undertake patch work. These contracts are either awarded by Municipal contracts or Private companies.  Promotion: B2B promotion should target business publications, trade shows, direct mailers and direct selling. Abhik (20104001) Sandeep (20104005) Vishal (20104009) Page 12
  • 13. EMBA10: B2B Marketing; Group-8 Project Report d. Product Strategy Company India has developed a comprehensive specialist product portfolio designed to meet the needs of every user, industrial, professional or domestic. Bitumen products are tailored to meet the needs of asphalt manufacturers, road builders, construction, government, communities, asset owners, designers and architects giving usable and effective solutions for all manner of markets. The product offerings can be categorized into;  Company Cariphalte: Specially formulated polymer modified bitumen based on carefully chosen combinations of bitumen and thermoplastic elastomers.  Company Mexphalte CRMB: Modified Bitumen manufactured using Crumb Rubber and specially selected modifiers  Company Low Temp Binders: Ready-to-use solution for time and cost saving in road construction designed to lower the mixing or laying temperature of asphalt compared to a conventional asphalt mixture  Company Instapave: A cost-effective solution to pave rural roads  Company Mexphalte C: A clear synthetic binder that can produce asphalts in a broad spectrum of colours, enabling the colour-matching of pavements to the local environment  Company Spramul: Spray-able emulsified versions  Company-mac PR: An instant all-weather pothole repair solution  Standard Grades: 30/40, 60/70, 80/100 based on penetration tests e. Pricing Strategy The pricing strategy for Company India will depend upon the following two factors;  Standard grades to be priced competitively: Standard grades (based on penetration tests) are widely available in the market under various brand names; hence to compete with smaller brands the pricing strategy should be competitive. These products offer core benefits to the customer and hence assess the product value based on cost- benefit, demand elasticity and switching cost. Once the purchase has been made and the customer is satisfied, they become less price sensitive overtime.  Specialized products are priced at a premium: Specialized offerings pricing strategies are value based, which depend on the add-on benefits offered by the product over the core benefits. The price of such products is based on product quality, innovative offerings, dynamic delivery and strong product service. These products can also be priced based on Target costing based on types and quality attributes required to succeed in a particular segment.  New product offerings can be priced on a continuum of skimming (initial high price) to penetration (initial low price) pricing strategies.  Competitive bidding strategies involving bulk supplies of Bitumen can involve either closed bidding or open bidding strategies. Abhik (20104001) Sandeep (20104005) Vishal (20104009) Page 13
  • 14. EMBA10: B2B Marketing; Group-8 Project Report f. Promotion Strategy Use of Social Media for Business Communication: The target audience for Bitumen promotion can be enumerated as;  Municipal bodies: The advertisement should send a clear message about the core benefits of the product which would influence their purchase decisions. Direct mails to procurement departments. Creating awareness among procurement officers about the quality and price edge of the product over its rivals can help in securing delivery contracts.  Government contracts: Organizing Trade shows to display new advancements and technological developments to mass audiences where customers can get hands on experience on the products, new customers can be identified and a general goodwill would be created for the company.  Industrial use: Promotions in Business Publications creating awareness among business houses.  Retail use: Use of social media to connect the brand with Small-Medium Users along with use of Bill-Board displays, print advertisement. Abhik (20104001) Sandeep (20104005) Vishal (20104009) Page 14
  • 15. EMBA10: B2B Marketing; Group-8 Project Report g. Customer Relationship Management (CRM): Customer Relationship Management can be widely defined as company activities related to developing and retaining customers. It is a blend of internal business processes: sales, marketing and customer support with technology and data capturing techniques. Customer Relationship Management is all about building long-term business relationships with customers. Operational CRM Analytical CRM Collaborative CRM Operational CRM:  Delivers personalized and efficient marketing, sales, and service through multi channel collaboration.  Enables a 360-degree view of your customer while you are interacting with them.  Sales people can access complete history of all customer interaction with the company, regardless of the touch point  Replenish field stock of old and outdated material with new stock Analytical CRM:  Acquisition: Customers from conventional Bitumen usage  Retention: Retaining customers for subsequent purchases/ contracts.  Information: Providing timely and regular information to customers.  Modification: Altering details of the transactional nature of the customer’s relationship Collaborative CRM:  Enables efficient productive customer interactions across all marketing channels.  Enables web collaboration to reduce contract costs.  Integrates call centres enabling multi-channel personal customer interaction.  Integrates view of the customer while interaction at the transaction level  Enables the company to get updates about product usage, expectations and shortfalls to maintain product quality standards in line with customer needs  Extend credit to small contractors who lack purchasing power for the new product Abhik (20104001) Sandeep (20104005) Vishal (20104009) Page 15
  • 16. EMBA10: B2B Marketing; Group-8 Project Report 3. Sales Strategy: a. Channel Strategy Bitumen is sold through the following broad channels;  Direct Bulk distribution through road tankers (Direct Channel): Direct selling through tenders and contracts wherein no channel intermediaries are involved. Mostly these consignments are long term supply contracts and hence economies of scale strategies in distribution are adopted to maximise channel efficacy. Customer Lead Care & Generation Support Lead Fulfillment Qualification Negotiation Bid & & Sales Proposal Closure  Retail distribution through packed drums (Indirect Channel) Bitumen sold through drums involves channel intermediaries which can be in the form of distributors or manufacturers representatives. The end users for the retail Bitumen are industrial units, water-proofing contractors, and small road repairs. Company’s specialized offerings are also distributed through retail outlets which serve specific customer segments. Abhik (20104001) Sandeep (20104005) Vishal (20104009) Page 16
  • 17. EMBA10: B2B Marketing; Group-8 Project Report b. Supply Chain Management It is an innovative approach to tighten the distribution process, bolster links with suppliers and customers and integrating organizational functions like production and marketing. The Bitumen Value Chain: Refinery Terminals Processing Distributor Wholesaler Customer Direct Distribution Channel Integrating business processes from customers to suppliers can help improve system efficiency through Supply Chain Management wherein information travels opposite to flow of materials. Real-time information sharing between different stakeholders of the system can ensure;  Better quality control of product (waste reduction): Coordination between site, vendor and supplier leads to low rate of consignment rejection.  Minimum inventory requirement: Bitumen solidifies at room temperature (pour point > 90 degree Celsius) and hence high inventory leads to high heating cost and hence high cost of ownership.  Continuous improvement of product: Feedbacks from vendors can be utilized to improve product quality on a continuous basis.  Low lag time between order, processing and delivery: Better business process integration can also result in avoiding unnecessary project delays due to unavailability of Bitumen on time. Abhik (20104001) Sandeep (20104005) Vishal (20104009) Page 17
  • 18. EMBA10: B2B Marketing; Group-8 Project Report c. E-Commerce E-commerce is a cost effective way of doing business through the aid of Information Technology. Business through E-commerce is achieved through a virtual market which serves as a global platform for the commodity. Company India has an active marketing strategy for its products (Bitumen) through the E- Commerce platforms. B2B Solutions on E-Platform: E-Commerce includes processes like;  E-Auctions/ E-Trading  E-Tendering  Internet marketing  Online transaction processing  Electronic data interchange (EDI)  Inventory management systems Abhik (20104001) Sandeep (20104005) Vishal (20104009) Page 18
  • 19. EMBA10: B2B Marketing; Group-8 Project Report Company E-Trading Platform: Other E-Commerce Platforms for Bitumen Trading: E-Commerce helps in connecting the buyer and the seller on a virtual platform wherein the price- discovery happens at a much rational level. It also leverages small players to compete with large players offering them a level playing platform to conduct business. E-Commerce also helps reduce the transaction cost of the process, thus reducing the TCO (Total Cost of Ownership) of the product. Abhik (20104001) Sandeep (20104005) Vishal (20104009) Page 19
  • 20. EMBA10: B2B Marketing; Group-8 Project Report 4. Marketing Budget: e. Cost-Benefit Analysis Cost-benefit analysis is a means of evaluating all of the potential costs and revenues that may be generated if the project is completed, the outcome of such analysis will determine whether the project is financially feasible, or if another project should be pursued. Principles of cost benefit analysis;  There must be a common unit of measurement  Valuations should represent consumers or producers valuations as revealed by their actual behaviour  Benefits are usually measured by market choices  Cost benefit analysis involves a particular study area The marketing plan budget allocation should consider both tangible and intangible aspects of cost and benefit in the long run. The allocation of budget to specific marketing channels for Bitumen would consists of aspects like dealer margin, bulk discounts, customer benefit campaigns and budgets for trade shows. Abhik (20104001) Sandeep (20104005) Vishal (20104009) Page 20
  • 21. EMBA10: B2B Marketing; Group-8 Project Report f. Balanced Scorecard The balanced scorecard is a strategic planning and management system that is used extensively in business and industry to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. Customer benefits:  Corrects most of the types of pavement distresses e.g. raveling, rutting, corrugation, shoving etc.  Hauling cost is considerably low  Air quality related problems during construction is almost negligible as compared to the hot mix process  Since this process does not involve application of heat, premature aging of bitumen also can be avoided  More durable in freeze-thaw situations, compared to hot mix recycled pavement Financial:  Brand the product as a premium product with differentiation in product application with enhanced features than conventional Bitumen Customer:  The product should reflect the brand value premium with significant positioning of the technological superiority Internal Business Processes: Abhik (20104001) Sandeep (20104005) Vishal (20104009) Page 21
  • 22. EMBA10: B2B Marketing; Group-8 Project Report  Robust processes should be incorporated to excel in distribution to gain an edge over conventional Bitumen Learning & Growth:  Product innovation through customer feedback and trial applications through contractor relationship would ensure product development of Cold Bitumen in the long run. g. Value-chain-analysis Analyzing the Bitumen Value Chain (through primary activities);  Inbound Logistics: For Company Bitumen, the inbound logistics would include procurement of Bitumen from refineries, its transportation including intermediate warehousing. Each step of the value chain is associated with costs which tend to cumulate and add up to the final product price. The cost of storage and logistics can be a high percentage of the final cost due to the heating requirements for keeping the Bitumen in liquid stage during bulk transportation. Special insulated trucks having internal heating arrangement are used for transporting Bitumen over long distances.  Operation: The Bitumen is processes in units to modify its characteristics to suit the needs of the end users. The cost of operations includes production cost, packing cost, setup cost and labour cost.  Out-bound logistics: The distribution of Bitumen from the processing plant to the end user can be done either through direct bulk delivery or through packed drums. The delivery through drums involves many stages wherein the drums are packed Abhik (20104001) Sandeep (20104005) Vishal (20104009) Page 22
  • 23. EMBA10: B2B Marketing; Group-8 Project Report and stored in distributor warehouses from where it is supplied to retailers. The processed Bitumen can be re-liquefied by heating and hence does not involve high cost of heating during transit/ storage. Bitumen packed in drums can be liquefied at customer location; some modified versions of Bitumen can be applied by mixing it with pre-required solvents.  Sales and Marketing: A major part of value addition can be attributed to the sales and marketing effort of any organization, Bitumen marketing being no different. Creating awareness for the customer regarding new innovative concepts of paving as well as information to various Governmental agencies to qualify for bidding process jacks up the cost of the product. Advertisements, trade promotions, sample distribution as well as demonstrations are also counted under the head of Sales and Marketing costs.  Servicing: Product after sales service in Bitumen marketing consists of post application visits to ascertain product effectiveness and durability of product. Companies need to constantly monitor the performance of the product and gather customer feedback regarding difficulties faced by the end user. Secondary activities-Bitumen market is highly competitive with presence of a large number of players forcing major players to leverage support functions like Technology to get past smaller players in terms of margins. The value added to the product through the value chain, less the cost incurred thereof is the net margin to the marketer. h. ANSOFF Matrix The first three strategies of the ANSOFF Matrix are usually pursued with the same technical, financial, and merchandising resources used for the original product line, whereas diversification usually requires a company to acquire new skills, new techniques and new facilities. Company India marketing strategy involves introduction of innovative products in its product portfolio which necessarily caters to the existing market for Bitumen which can be termed as a traditional market. Abhik (20104001) Sandeep (20104005) Vishal (20104009) Page 23
  • 24. EMBA10: B2B Marketing; Group-8 Project Report Company India product range can be categorized into the ANSOFF Matrix; •Standard, emulsion •Bitufresh, Company and oxidised grades Spramul •Company WAM Foam Market Product Penetration Development Market Diversification Development •CompanyCariphalte, •Instapave, Company Company Mexphalte Multiphalte 6. Key Assumptions a. Limitations of study: The study limits itself to marketing of Cold Bitumen (processed) in India by Company India. As the product is conceptualized as a new launch product, sales data, prices, and costs were not accounted for in formulating the marketing plan. The study also relies upon secondary data for conceptualizing the Market analysis. The study being part of the B2B course curriculum is not intended to make any judgements or market predictions about the Bitumen business markets. Facts and figures mentioned in the data might not be accurate but serve as an illustration for visualizing the market dynamics. b. Homogenous demand in Market: The market conditions and the demand pattern is considered as homogenous across the country and any geographical and seasonal variations in demand is excluded from the scope of the study. The announced investments to be made by the Government are assumed as constant with a linear growth rate. The sole purpose of the study is to make readers aware of the process of B2B marketing and should be excluded from the purview of market study. The study also excludes any representations from Company India and hence there is no commitment from the organization towards the facts shared in this study. Abhik (20104001) Sandeep (20104005) Vishal (20104009) Page 24
  • 25. EMBA10: B2B Marketing; Group-8 Project Report 7. Bibliography  http://home.iitk.ac.in/~adas/article10.pdf  http://www.iocl.com/Products/Bitumen.aspx  http://www.Company.com/home/content/ind/aboutCompany/Compa ny_businesses/india_business_structure/Company_bitumen_india/  http://www- static.Company.com/static/idn/downloads/Company_for_businesses/b itumen/data_sheets/flinkote3.pdf  http://books.google.co.in/books?id=bA1tIkRJL8kC&pg=PA113&lpg=PA1 13&dq=cold+bitumen+Company&source=bl&ots=pbOcJmC_- Y&sig=GzNj5c9NaskOjxo0dWjnMiG7iDY&hl=en&ei=peSyTovrKM3wrQe 64MTJAw&sa=X&oi=book_result&ct=result&resnum=5&ved=0CD8Q6A EwBA#v=onepage&q=cold%20bitumen%20Company&f=false  http://en.wikipedia.org/wiki/Asphalt  http://www.saudiaramcoworld.com/issue/198406/bitumen.- .a.history.htm  http://en.wikipedia.org/wiki/Customer_relationship_management  http://www.quickmba.com/strategy/porter.shtml  http://www.iitk.ac.in/infocell/announce/convention/papers/Changing %20Playfield-06-Saurabh%20Kumar%20Saxena.pdf  http://www.b2bmarketingplan.com/  http://tutor2u.net/business/strategy/ansoff_matrix.htm  http://www.renewal.eu.com/resources/Renewal_Pestle_Analysis.pdf Abhik (20104001) Sandeep (20104005) Vishal (20104009) Page 25