Lafarge-Aget Case Study
Question 1: How can Lafarge-Aget differentiate its position in the eyes of customers?
Lafarge-Aget can differentiate its position using several ways:
- Product offering: cement could be delivered with a bundle package of services to provided helpful support to the customer. Before that, Lafarge- Aget should conduct a marketing research about its customers’ needs and their expectation to offer them only valuable services.
- Lafarge-Aget can also change its approach of dealing with its customers: most of deals are transactional and based essentially on the price. The company could also develop a partnership approach by training its salespeople to offer deals in longer periods with more services such as advices for choosing the good product and support on building sites.
Question 2: Although cement is a commodity at large, does pricing affect demand in the industry?
Cement is a commodity; this means that it is a basic product with few differences in terms of product characteristics. So, one of the most important factors that make the product different from another is the price. Pricing strategies have a huge impact on the demand; when prices are down companies buy in order to replenish stocks, when prices are high companies use their stocks and decrease their purchases.
Prices are affected by several factors such as importation taxes, global cement consumption, competitor’s prices, indirect costs or industry capacity utilization. That means it is not easy to have and maintain a specific pricing strategy regarding all these previous factors.
On the other hand, regarding specificities of this market: market commoditization, with high local competitiveness, differences between capacities of production and demand. In such case pricing will not affect the demand so much in the industry, mostly because the demand is in a growing structural tendency and because prices cannot decrease by more than 25% because of the structure of costs (for Aget’s
Lafarge-Aget can differentiate its position using several ways:
- Product offering: cement could be delivered with a bundle package of services to provided helpful support to the customer. Before that, Lafarge- Aget should conduct a marketing research about its customers’ needs and their expectation to offer them only valuable services.
- Lafarge-Aget can also change its approach of dealing with its customers: most of deals are transactional and based essentially on the price. The company could also develop a partnership approach by training its salespeople to offer deals in longer periods with more services such as advices for choosing the good product and support on building sites.
Question 2: Although cement is a commodity at large, does pricing affect demand in the industry?
Cement is a commodity; this means that it is a basic product with few differences in terms of product characteristics. So, one of the most important factors that make the product different from another is the price. Pricing strategies have a huge impact on the demand; when prices are down companies buy in order to replenish stocks, when prices are high companies use their stocks and decrease their purchases.
Prices are affected by several factors such as importation taxes, global cement consumption, competitor’s prices, indirect costs or industry capacity utilization. That means it is not easy to have and maintain a specific pricing strategy regarding all these previous factors.
On the other hand, regarding specificities of this market: market commoditization, with high local competitiveness, differences between capacities of production and demand. In such case pricing will not affect the demand so much in the industry, mostly because the demand is in a growing structural tendency and because prices cannot decrease by more than 25% because of the structure of costs (for Aget’s