Marketing DecisionIn the crucial consideration of the market structure of the global cement industry, the marketing organ has settled for market segmentation and differentiation marketing approaches for Lafarge.
Differentiation is a feasible principle in global marketing strategy which runs across culture and marketing as well location. The major segments in the Building construction market constitute the residential and the non-residential categories. The non-residential is the largest segment. The non-building construction involves heavy construction that focuses on areas such as highways, power plants, pipelines as well as heavy industrial structures. Lafarge market segmentation will be hinged on the breaking down of the construction materials market to different construction needs. Lafarge will offer products to be used along side cement such as aggregates, concrete and various others. The marketing decision will be broken down to various functions of aggregates; Lafarge caters to the following markets segments of the aggregates products. Lafarge will offer special aggregates for support which are used to strengthen the high performance concrete as well as bituminous concrete. Lafarge also provides filling aggregates which are used to make mixtures more compact and enabling certain applications such as drainage and heat retention. The company will also provide embellishment filling for the enhancements of structures and surfaces. Lafarge market targeting or segmentation is further broken down to sub categories such as contractors, builders, ready-mix producers, concrete product manufactures and masons.
Different market access or product distribution channels for different market segments describe the ‘placing’ component of Lafarge’s marketing mix stratagem. The target market of the company is accessed through the following distribution channels; cement is normally sold directly to relatively smaller customers and through to retailers such as Lumberyards which accounts for about 20 percent of the total sales. Of that the 55 percent will be bulk cement while the other 45 percent is bagged. The average of 80 percent of the mentioned sales constitutes direct sales and the remaining 20 percent is channeled through brokers and dealers. For the ready-mix concrete the product is sold directly to customers who need a ready application product that is customarily dispensed by use of leased special cement trucks. This makes up about 68 percent of aggregate sales. Precast Concrete Products are also sold directly to a range of customers and amounts to a contribution of about 6 percent of all sales activity. 90 percent of the company’s production capacity is channeled from the plant to selling points using sea vessels or trucks. The rest, (10 percent) is collected by the purchasers using their own transport means. The fact Lafarge transports 90 percent of its production output means the company has consider seriously the dynamics of the global oil prices as this comes with a significant manner on the companies operations cost management and policy. The competition front is not as strong as it would be in an ideal scenario due to the geographical oligopoly of the global cement industry. The Lafarge global (marketing) strategy has focused on dominating where there is no presence of other global competitors such as Holcim, Italcement, Cimpor, Taiheiyo, etc. The strategy of Lafarge particularly in Morocco will be a pilot project as a microcosm of the entirety of the drive of the company’s global markets penetration approach. In Morocco for instance Lafarge will focus on the Center North leaving other areas already dominated by other competitors. Holcim dominates the North-East area while in the South there is remarkable presence of Cimpor. Yip (1989) concurs that market globalization drivers rely on customer behavior and the structure of distribution channels. In Yip's perspectives these drivers affect the use of all global strategy levers. Lafarge will thus concentrate on servicing homogeneous customer needs. Yip explains that homogeneous customer needs are characterized by the demand of a same product, like cement in different countries. Lafarge has taken advantage of the fact tat homogenous market make participation in global markets easier since fewer different product offerings need to be developed and supported. (Michael A, et all (1998). The other aspect on which Lafarge’s marketing has been supported on the principle of serving ‘Global Customers”. What has impacted on the development of uniform marketing approach by Lafarge is the dimensions enunciated by Yip (19989) that the existence global customers allows and require a uniform marketing program. Although Lafarge has leveraged on the advantages of market segmentation to better serve their customer bases the company main product is cement which is a homogeneous customer need in different countries. Some advantages of this marketing decision enlist the economic of scale in cement production and distribution and the lower marketing costs tapping from the homogeneousness of the global market. The marketing decisional also brings with the merits of consistency in brand imaging leveraged on uniformity in marketing practices. Some disadvantages of the marketing decision nonetheless are that the thrust is highly likely to meet different consumer response to the marketing mix component of the marketing approach. The marketing decision also faces challenges in form of differences that may obtain in rand and product development in varying competitive environment. Despite the foregoing the marketing decision has been selected as the best in the explored alternatives and through a holistic global business strategy the marketing approach is expected to yield expected results.