Executive summary
The report develops the global marketing plan for Cemex’s entry into the Indian construction industry. Cemex deals with selling cement into the global market, with operations in 28 countries. The analysis of the external micro and macro environment indicates that there are favorable factors that attract Cemex into the Indian market. These include; market size growth and performance, economic growth, stable political condition, and good demographic characteristics such as the availability of market and labor due to the high population in India. The company will utilize a strategic alliance with NCC to enter the Indian construction market and introduce its products. The marketing plan program is designed using the 4Ps of marketing, such as the products factor, which includes the design of cement that meets customer specifications, pricing that is based on India’s economic performance, the place strategy that consists of the use of a global distribution channel that ensures the timely distribution of cement. Promotion strategies include using sales discounts, impressing contractors, and online marketing on the Cemex website. Finally, the analysis of India’s business environment implies that Cemex has a high chance of survival because of economic growth, political stability, labor market, increased market size, and clear legal framework.
Step 1: Introduction
A global marketing plan is a business strategy that enables the company to penetrate an international market. The global business plan utilizes various alternative techniques, such as using the target market’s local culture, franchising, strategic alliances, joint venture, and wholly owned subsidiaries. Others include using global production and marketing distribution through designing and manufacturing products in different countries. Also, other marketing model uses social media, planning global campaigns, and pricing strategies to penetrate the international market. Therefore, this report develops a global marketing plan for the Cemex company’s entry into the Indian construction industry.
Company Brief
Cemex is a multinational company across America, Africa, Europe, the Middle East, and Asia Continents. The company is a major dealer in construction materials such as cement, ready mix cement, aggregates, and urbanization solutions, creating opportunities for more than 96000 people (Cemex, 2023, Par. 2). Its global locations are Mexico, USA, and others locations are Croatia, Czech Republic, Egypt, France, Germany, Philippines, Israel, Poland, Switzerland, Spain, United Arab Emirates, UK (EMEA&A). Also, it has a presence in SCA&C like Colombia, Costa Rica, Barbados, Dominican Republic, EI Salvador, Guatemala, Guyana, Haiti, Jamaica, Nicaragua, Panama, Peru, Puerto Rico, Trinidad and Tobago (Cemex, 2023, Par. 1). Therefore, the company global presence makes it possible to utilize existing strategies to enter into Indian market construction industry which is expected to grow in next two to three years.
Step 2: External macro and micro environment analysis
The external environment is a variable that Cemex company may not be able to control because they affect the business environment externally; such factors include demographic factors such as age, and population size, among others. Economic factors such as GDP growth also form the macro environment of the global market, and natural forces that promote a good business environment influence the business’s success in the international market. Also, cultural factors, political and technological factors play a major role in business success in the global market. The legal environment influences business penetration in the international market; these legal frameworks in the country may include taxes, policies on the construction industry, and standards to be met by Cemex. The microenvironment consists of issues such as the availability of suppliers in the foreign market, marketing channels in the global market, customer characteristics, the extent of competition, and public view of the company’s products.
Step 2a: Macro-environment analysis
Demographic forces
India’s population is steady increase, which calls for an increase in construction materials for building structures for living. The population currently stands at 1.4 billion people, thus creating a potential market for the products of the Cemex company (Jain and Korzhenevych, 2020, P. 102). The average age group in India is between 14 and 60 years that represents about 67% of the total population; this is an important analysis because it shows a high supply of active labor force required by the company in its operations, thereby showing that Cemex will not face any labor risks operating in India (Asher et al., 2019, P. 3). Thus, this analysis indicates that India’s population characteristics favor introducing the construction company in the country to tap the future opportunity for population growth.
Political forces
The political environment involves political risks, policies, and sovereignty influencing the construction industry in India. World Bank data (2021, par. 5) shows that political stability in India is strong, with a figure of negative 0.62, thus being stronger than most developing countries. The good political climate is due to the absence of violence and terrorism activities reported by the government of India, therefore, a strong score in terms of political stability. Therefore, there is no risk to Cemex regarding the political instability risks when investing in the global market segment in India. The construction industry in India is influenced by various political frameworks such as labor policies, environment protection policies, and remuneration policies that increase the cost of operating in the company through complying measures in the country. Also, taxes on construction goods are classified as Goods and Service Tax (GST), which introduced taxes on construction materials and thus contributed to solving tax complexity that used to occur in taxation in India. The tax policy has removed the exercise duties and VAT on construction materials, promoting a good business environment for Cemex company.
Legal forces
Several laws that influence the construction industry’s success in India include the labor code 1995 Act, which requires construction companies to allow workers to join labor unions. Also, there should be no discrimination against age, sex, or religion (Dhal, 2020, p. 200). Another political environment is the factories act 1993, which regulates working conditions in the Indian construction company, such as a clean environment and free drinking water at the company premises (Dhal, 2020, p. 206). Also, the act requires that companies pay sick wages if the worker is suffering. The contract law in India, especially the contract act 1872, outlines the guidelines on contract formation and termination of construction workers (Mojumder & Singh, 2021, p. 10). In addition, environmental law in India governs the companies’ operations and environmental protection, such as forest conservation and protection of water resources for all building and construction industries. Finally, Cemex company must adhere to the material safety data sheet on safety at work.
Economic forces
Economic forces include issues such as the financial stability of India’s economy, some degree of economic freedom, national income, and economic integration. According to the world bank, India’s biennial flagship publication shows the Indian economy has demonstrated economic resilience to economic shocks. Therefore, despite the existing challenges, India remains to be the fastest-growing economy in the world, with a GPD growth of 7.7% annually in the first quarter 2022/2023 financial year (World Bank, 2023, P. 23). The economic growth prospects indicate clearly that income growth of consumers will be high thus, increasing the purchasing power of the customers. Therefore, it shows that businesses have chances of success because of good sales and high demand for building and luxury products in India. Hence Cemex company benefit more through the availability of the market.
Socio-cultural forces
The social and cultural characteristics of the Indian population include religion, values, beliefs, and cultural difference that affects the establishment of a construction industry. There are two main ethnicities in India such as Indo-Aryan and Dravidian; theIndo-Aryans live in the northern part of the country, while Dravidians live in the southern half of the country (Cultural Atlas, 2023 Par.5). However, these two ethnic groups do not show any form of divided society thereby indicating that the company will not face any ethnic politics in its establishment in India. The largest religion in India is Hindu, thus showing harmony in faith, thereby supporting the construction industry in India because of the lack of religious disparities. In addition, India has a highly stratified social structure, hence showing that some groups require specialized building designs that promote the use of construction materials.
Step 2b: External analysis of micro-environment
The micro-environment of the Indian construction industry includes the market size of the construction industry, the market growth rate, market potential, consumer buying power and level of competition, market similarity, and average industry margin. The market size of the construction industry in India is growing immensely, with the expectation to reach around $ 1.4 trillion by 2025 (National Investment Promotion and Facilitation Agency, 2023., Par. 3). With the expected elections in 2024, the demand for construction materials will be high because the government seeks to finish the projects such as roads, sports facilities, and cities. According to NIPFA (2023, Par. 4), the construction industry is expected to grow at about 6.3% due to the Pradhan Mantri Gati Shakti master plan. Thus, this shows that India’s construction market size provides opportunities to new investors such as Cemex company. Further, the report indicates that India’s economy is expected to grow due to these strategies, increasing buyers’ incomes and promoting their purchasing power.
Figure 1 External macro and micro environment analysis
Step 3: Develop Global Marketing Strategy
How to enter the market
Cemex company penetration strategy into the Indian construction market is through a strategic alliance agreement, which involves a bilateral agreement between two multinational companies (Collier et al., 2022, p. 511). The two companies under the strategic alliance agreement ensure that each firm maintains its intellectual property. Therefore, Cemex will agree with NCC Limited to promote entry into the Indian market through combined sales of construction materials such as cement. The framework involves joining together to boost competitive advantage in the market; NCC company is among the top companies in civil engineering, thus will require a reliable supplier of cement products, thus promoting Cemex products. Two types of strategic alliances exist horizontal strategic partnership and strategic vertical coalition, which need a company to agree with another company that uses company product in its production process (Collier et al., 2022, p. 514). A horizontal alliance agrees with companies that sell similar products to promote competitive advantage.
Figure 2 Market entry framework
According to Figure 2, the vertical strategic alliance will penetrate India’s construction industry; the Cemex company will make a joint venture agreement with NCC to promote selling company products in India. The key rationale for this decision is that it will enable safe entry into the Indian market and the introduction of new cement products in the Indian market. The move also allows the company to improve its leadership position in the industry; the joint venture promotes a competitive advantage for the Cemex company in India. According to a study by (Ryan et al., 2022, p. 751), the outcomes of the vertical strategic alliance include more competitive advantage in the industry and enable companies to access global markets. In addition, Sodangi (2022, Par. 5) indicated that a joint venture is efficient in international marketing if the partner company has a similar organizational culture and has knowledge of local regulations.
The target customers are construction materials buyers who are contractors in building roads, power stations, market infrastructures, and modern houses. The NCC will be the main buyer of the cement produced by Cemex company; the product will be used in the building of various projects such as roads, buildings, and water projects, among others. Also, the Cemex company is a multinational company with a framework for operating in global markets; thus will be able to work well in a joint alliance agreement with NCC.
Step 4: Designing a Global Marketing Programme
The global marketing program shall involve comparing the marketing mix of the Indian construction market and the Cemex company’s internal marketing mix. The marketing mix is a combination of variables that the company controls to promote the sale of the products in the market. The marketing mix principles in the marketing plan involve four key factors; Product, Price, Place, and Promotion. According to a study by Peres et al. (2022, P. 10), the global marketing mix entails the 4Ps of worldwide marketing and how this affects the marketing activities of local companies.
Product
The cement and construction materials, such as ready mix cement from the Cemex company, will be able to meet the customer needs in construction engineering. The Cement products will be developed based on the customer demand and requirements; this ensures the sustainability of company projects in the global market. The product analysis will entail understanding the customer’s unique needs in construction materials, thus boosting the chances of meeting the customer’s demands (Kaur et al., 2022, p. 5). The Indian construction market is growing, so opportunities for construction materials and needs will be met using this model. Thus, three main product strategies shall be used to promote company entry into the Indian market: high product and solutions, high-quality customized products, and tailor-designed products for modern construction.
Price
pricing of the products will include a reflection of the market research, production cost, and logistics cost. Also, the pricing strategy will consider India’s existing economic performance, whereby the pricing strategy will take care of customer ability to buy the company products. The price of 50kg of cement will cost between $ 4.77 and $ 4.52, based on international market segmentation and growth potential (Dhal, 2020, p. 7). Hence, the pricing of cement products is influenced by India’s market growth and GDP.
Placement
The place factor considers the distribution model, and Cemex utilizes its global distribution model. The framework will involve cement production on the company site and follow international distribution channels (Kaur et al., 2022, p. 3). It will include cement production from the company headquarters, then distributing the product through identified means to reach the NCC premises. The cement shall be distributed by the joint company to various distributors of the NCC, then to the wholesales of the commodity, then the retailing stores of the cement, and ultimately to the final consumer. Thus, the global distribution channel shall ensure that the product is distributed from the company manufacturing point up to the final user of the cement.
Promotion
The promotional strategy includes joint strategies such as sales promotion of cement in India. The promotion strategies that Cemex may use include popularizing the company products through advertising in media, such as leading TV stations in India. Another promotion strategy to use includes unified products in India; the component of cement sold in Mexico should be the same in the form of composition as one sold in India (Kaur et al., 2022, p. 5). There will also be a reservation for the impress of contractors who uses the Cemex product in the building; such will be in terms of discounts and other recognitions. Online marketing will promote the sale of Cemex products through updates on the company website; the feedback mechanism will be auto-updated on the company website.
Figure 3 Market mix
Step 5: Invest recommendation
According to our analysis of the macro and micro environment of the construction industry in India, the recommendation is to invest in the market. Several variables have contributed to this conclusion; firstly, the Indian market is likely to grow up to 6.3% by 2025, thus presenting an opportunity for a company willing to invest in the market (NIPFA 2023, Par. 4). Also, the economic growth in the country empowers the consumers to be able to buy construction materials, therefore increased sales and development of the industry (Collier et al., 2022, p. 511). In addition, the political stability and absence of complicated regulations in construction are other factors that will favor Cemex’s investment in the Indian market (World Bank data 2021, par. 5). The Indian demographic forces, such as high population, provide the necessary labor for running the company and operates at a lower cost. Therefore, these factors improve Cemex company’s attractiveness in the Indian construction market, and the analysis shows high success potential due to the favorable environment.
References
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