Patriminio Hoy: Building Hope for the Poor

 This is an original MFMI resource

Author: Sebastian, Asuncion; Lopez, Tomas
Publication Date: 2005
Publisher / Source: Asian Institute of Management
Length: 12 Pages
File Type: PDF
Language: English
Country: Mexico
Topics: Innovation, Marketing/Demand
Keywords: supplier credit, strategy, innovation, marketing, competition, brand loyalty

Notes:

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Abstract

In an effort to tap into the huge low-income market, CEMEX positioned itself as a low-cost, complete solutions provider rather than just a cement seller competing on price. It realized that if it tried to sell cement alone (in an industry where brand loyalty was crucial), competitors could easily eat into its market. Hence, the CEMEX strategy was to sell cement and other raw materials as a package; and to offer value-added services such as credit facility requiring weekly repayments, technical advice, storage space for raw materials, and customer service. To this end, a housing program called Patrimonio Hoy was thus launched by CEMEX in 1998. The program was able to bring down the cost of construction from US$1,527 for a 100-squarefoot room, to US$ 1,038. Completion time was also shortened from four years to 70 weeks. From nine cells in three cities in 2000, the program grew to 75,000 families in 23 cities in 2004. The growth rate was estimated at 1,500 to 1,600 customers per month. On its part, CEMEX tripled its cement sales in places where the program operated: from 2,300 pounds of cement consumed once every four years per family, to the same amount being consumed in only 16 months.