Lafarge spends more on brand promotion as a proportion of sales in India than any other country in the world, the company’s chairman, Bertrand Collomb, told Business Standard today. "The marketing initiative is the maximum in India. Our advertising budget is Rs 13 per tonne or 0.4 per cent of the selling price. This is the highest in the world," Collomb said, adding: "The figure of 0.4 per cent might not look very high. But please remember we are supposed to be in the commodities business." The only exception, said Collomb, was the ready-mix (cement+concrete) business in France, where Lafarge could be spending as much or more. "But on cement, our spending per tonne is the highest in India," he added.
The primary reason for this, according to Collomb, was that retail sales formed a very large part of the Indian cement market, while in the developed world, much of the sales were to large institutional buyers. "This makes the brand very important in India," he added.
Lafarge entered India in 1999 and by acquiring the cement businesses of Tata Steel and Raymond. It is a dominant player in the eastern market. The company sells under the brands Lafarge and Concreto, a premium all-purpose cement. Collomb said India had given a new experience to Lafarge of selling to a diversified market, as against developed markets like France which were standardised. "We are selling to a customer base in India, which is diversified from the high end in the urban areas to the low end in the countryside," he said.
With the marketing insights gained from India, Collomb said, Lafarge could export to other emerging markets. "Our experience in India is helping us in similar economies in the world," Collomb said. He added that though Lafarge had been in Brazil, a market often compared to India, for 50 years, the Indian experience was different. In a corporate social responsibility and market development initiative, Lafarge India had developed a 214 sq ft low-cost housing structure for as little as Rs 40,000.