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    Credit: The Freedonia Group, Inc.

    CEMENT & CONCRETE ADDITIVES DEMAND (in million dollars)
Highway construction

Highways and nonresidential buildings were the two largest markets for cement and concrete additives in 2005, each controlling about one-third of total demand. Fueled by strong increases in nonresidential building construction, additives for nonresidential concrete will rebound considerably, rising from the slowest-growing market from 2000 to 2005 to the fastest-growing from 2006 to 2010.

Highway and street applications will benefit from the passage of the SAFETEA-LU highway bill, which provides almost $300 billion in federal funding for highways and streets through 2010.

Also, increasing efforts from the U.S. Federal Highway Administration, which focus on long-term durability of concrete structures and promote emerging technologies, will provide ample increasing opportunities for additives in concrete highways and bridges. The increasing use of better performing concrete will also fuel gains for additives in applications such as sewer and water systems, airport runways, and concrete dams.

The residential market for additives presents substantial opportunities for growth as contractors seek methods of reducing labor and cost requirements for concrete placement and finishing. Moreover, residential builders will increasingly turn to concrete for such applications as countertops and in decorative uses that had been dominated by other materials. Coloring agents have increased the aesthetic possibilities for decorative concrete, and consumers are warming to the idea of houses which use concrete as a building material.

Product differentiation

Companies in the cement and concrete additives industry stress strong marketing, product research and innovation, competitive pricing, product planning, effective distribution, and product differentiation. As consolidation continues, the industry is becoming more competitive and producers are using these strategies to maintain or improve their market position.

Success in the cement and concrete additives industry, as is the case with many other industries, requires successfully implementing different strategies that may involve some tradeoffs with cost. The additional costs stem from substantial outlays that are usually required for advertising and marketing, technical support, and research and development activities.

A differentiation strategy is successful only when end-users are willing to pay premium prices for products and services they consider to be worthy of additional costs. In many instances, commodity products that are largely undifferentiated continue to hold a substantial market presence. However, suppliers in the cement and concrete additives industry have had increasing success marketing value-added products and specialized services.

Differentiation by brand or trade name is universally utilized by cement and concrete additive producers, even if it involves a technique as simple as adding the company's name to the product. Strong identification by brand name is also essential to keep products from being perceived as commodities, which are mainly identified by price.

Array of services

Development of a complete line to serve customers, known as horizontal integration, is another means of establishing product differentiation. The ability to supply cement and concrete additive customers with a full line of related services and products gives a company a distinct competitive advantage. Complementary products help encourage extra sales from construction industry customers, and a large product line in general can lower per product marketing costs.

Differentiation by customer service is also critical in the additives industry. Technical service is of paramount importance, since possible dosage errors involving additives, which represent a minuscule cost of a construction project, can result in costly concrete failures. This attentiveness is particularly important in today's additives environment, which is becoming increasingly reliant on more technical products such as proprietary chemical solutions and specialized polymer fibers.

— The author is an industry analyst at The Freedonia Group. Based in Cleveland, The Freedonia Group is an international business research company, publishing more than 100 industry research studies a year. Cement & Concrete Additives was published this summer and is available for purchase. For more information, visitwww.freedoniagroup.com, e-mailpr@freedoniagroup.comor telephone 440-684-9600.