A PROJECT REPORT ON ASIAN PAINTS LIMITED
SUBMITTED TO PROF.N.RAJKUMAR DEAN, IBAT SCHOOL OF MANAGEMENT BHUBANESWAR
SUBMITTED BY— 1. DIANA SAHU (71) 2. PUSPANJALI KAR (90) 3. SASWATO BHATTACHARJEE (98) 4. SIBASIS MOHANTY (107) MBA-I SECTION B, GROUP NO-3
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ACKNOWLEDGEMENT: A successful project can never be prepared by the singular efforts but I also demands the help and guardianship of some conversant person who under pin actively or passively in the completion of a successful project.
Our project on “ASIAN PAINTS LTD” would not have taken the present form in the absence of the invaluable guidance, inspiration and cooperation from many people. We take this opportunity to express our deep gratitude to Prof. N. Rajkumar, Rajkumar, Dean, Dean, IBAT school of management, management, Bhubaneswa Bhubaneswarr who have given given us the opportunity to present this project and continuously monitored us to perform well. In this context we would like to express our gratitude and thankf thankfuln ulness ess to Prof. Prof. G.K.Mur G.K.Murty ty for provid providing ing us with with his advise advise and suppor supportt through our project session. We also express our thanks to Sakti Hardware, Damana, Chandrasekharpur, Bhubaneswar for providing us with valuable data. We are deeply indebted to the Director ,faculty members of our insti institut tute, e, IBAT IBAT school school of managem management ent,, Bhuban Bhubanesw eswar ar for helpin helping g us with with their their support and guidance that help a lot in in successfully completing this project. Finally we express our cordial thanks to our parents, friends for their unmatched support , guidance and love throughout the project preparation.
1.Daina Sahu (71) 2.Puspanjali Kar (90) 3. Saswato Bhattacharjee (98) 4. Sibasis Mohanty (107) Section B,Group No-3
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CONTENTS SLNO
1 2
COMPONENTS
ITEMS COVERED
Executive Summary Introduction
3 Situation analysis-I
1 2 4
Situation analysis-II
Competitor analysis Customer analysis Assumptions of planning
5 7 9
Corporate objective Divisional objective Marketing objectives Programme objectives
11 12 13 14
Strategy alternatives Competitor strategy
16 17
Positioning strategy Customer segmentation and Targeting Core strategy
20
Sales forecasts budgets Profitability forecast budgets
40
5 Marketing objectives
6 Marketing strategy-I 7 Marketing strategy-II
8 Financial Documents
10
1 Category analysis Sales analysis Share Price analysis
4
9
PAGE NO
Marketing Programme
Control Strategy
Pricing Product Brand Promotion Distribution Service Research
22 25
44 27 29 32 33 36 37 38
46
3
9
46
EXECUTIVE SUMMARY Asian Paints is India's largest paint company and the third largest paint company in Asia today, with a turnover of Rs 30.2 billion (around USD 680 million). The company has an enviable reputation in the corporate world for professionalism, fast track growth, and buildi building ng shareh sharehold older er equity equity.. Asian Asian Paints Paints operate operatess in 22 countri countries es and has 30 paint paint manufacturi manufacturing ng facilitie facilitiess in the world servicing servicing consumers consumers in over 65 countries. countries. Besides Asian Asian Paints Paints,, the group group operat operates es around around the world world through through its subsidia subsidiarie riess Berger Berger International Limited, Apco Coatings, SCIB Paints. The Company's paint business in India consists of Decorative, Industrial & Automotive coatings. During the fiscal year ended March 31, 2006, paints accounted for 79.1% of the Company's sales. Decorative paints include wall finishes for interior and exterior use, enamels, wood finishes and ancillary products, such as primers and putties. Indust Industri rial al Coatin Coatings gs compri comprise se high high perfor performan mance ce coatin coatings, gs, powder powder coatin coatings gs and auto auto refinish coatings. The automotive coating segments are catered to by the joint venture Asian PPG Industries Ltd. The Company also has chemicals businesses consisting of phthal phthalic ic anhydri anhydride de and pentaer pentaeryt ythri hritol tol manufa manufactu ctured red at Ankles Ankleshwa hwar, r, Gujara Gujaratt and Cuddalore, Tamil Nadu, respectively. The Indian paint market is highly saturated with many paint companies with varieties of product. Kansai Nerolac paints Ltd. Berger paints India Ltd. ICI India Ltd. Shalimar Paint Ltd, Snowcem India Ltd are the main competitors of Asian Paints. Among them Nerolac Paints have a very v ery good market share in the Industrial Paint segment. Asian Paints adopted some marketing objectives & strategies. Asian paint is ready to achieve its corporate objective by taking care of the Customers, Employees, Brand image, Dealer Vendor relationship & technology.Company’s three divisions are not equally performing well.So it has different objective & planning to gain the top most position in the Indian paint market. Asian Paints has different marketing strategy for the urban as well as the rural market in India.
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The company always maintaining some alternate strategy & keeping in track with the strategy maintaining by its competitor. In decorative sector company is strong enough, but it need to take care of the Industrial sector so as to increase the overall sales. Considering the pricing strategy of Asian paints, company has several priced products. products. It starts starts from very low end to the premium level. Asian Asian paints paints Colour World concept helped the consumer to choose the colour combination & other appropriates according to their wish from a very wide range of product. Company’s famous logo GATTU helped it overcome while entering into the rural market, as visualization has its own effect. Other than this Asian Paints is using its website as a very good medium to reach the high/upper middle class consumers. With these tools company is expecting to generate much more revenue than the earlier years. Asian paints wonderful promotional strategy helped the company to extend its business in several other countries with success. A very attractive distribution policies & proper distribution channel with more than 15000 dealers helped Asian paints to spread its business in more than 3500 big b ig & small cities in India. The company used to maintain a very strong market research cell, which helps them to take care of the consumers need & intensify their R&D accordingly. Asian Paints approach approaches es the environ environmen mentt issue issue from from the perspe perspecti ctive ve of waste waste minimi minimizat zation ion and conservation of resources. Thus, the continued attempt is to reuse, recycle and eliminate waste, which results in less and less waste being generated. Asian Paints, took a huge stride towards promoting the cause of total water management by giving Mumbai (and neighboring districts like Thane) its first Total Water Management (TWM) Centre, which is located in the premises of Asian Paints manufacturing facility at Bhandup.
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INTRODUCTION INTRODUCTION : Asian Paints Paints Ltd. Ltd. has a combine combined d turnover turnover of 630 millio million n US dollars. dollars. With With
its
strong presence in the Indian subcontinent, south East Asia, Far East, South pacific Caribb Caribbean ean,, Africa Africa & Europe Europe.. Along Along with with Asian Asian paints paints the group group consist consistss of SCIB SCIB chemi chemical cals, s, Berg Berger er Inte Intern rnat atio ional nal & APCO APCO coati coatings ngs.. Toge Togeth ther er the the grou group p has has 30 manufacturing unit globally. The company was incorporated in the year 1942 in India. Asian paints have extensively computerized its operations in India using the cutting edge solution provided by SAP & i2. It helped the company drive benefits of faster market analysis for better decision making. The product portfolio of the Asian Paints group covers a large spectrum of finish coasts & ancillary products in decorative paints, wood finishes, automobile OEMs & refinishes, marine & Industrial coatings.
SITUATION ANALYSIS-1 CATEGORY ANALYSIS The different categories of Asian paints Ltd. are –
PAINT : Comp Compan any’ y’ss pain paintt busi busine ness ss in Indi Indiaa cons consis ists ts of deco decora rati tive ve,, Indu Indust stri rial al & Automotive Automotive coating. coating. In 2005-06, these these accounted for 79.1% of the group sales. sales. It is estimated that the local market for all paints including cement paints & other powder products manufactured by all companies big & small would have been around Rs.95 billion in 2005-06. 1) DECORATIVE PAINTS: Decorative paints account covers almost 75% of the overall paint market in India. In this segment Asian paint has been a leader for almost four decades. Decorative paints include wall finishes, for interior & exterior uses, examples, wood finishes & ancillary products such as primers, putties, etc.
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2) INDUSTRIAL COATINGS : Industrial coatings have a moderate growth rate than decorative coating, led by the growth growth in automo automotiv tivee origin original al equipme equipment nt sector sector,, powder powder coatin coatings gs & protec protectiv tivee coatings. Industrial coatings are classified into automotive & non-automotive coatings are classifie classified d into automotive automotive & non-automot non-automotive ive coatings. coatings. While While Asian Asian paints paints Industrial Industrial coating Ltd. (APICL) services the powder coating segment, Asian paints Ltd. caters to be remaining non-auto industrial coatings segments. 3) AUTOMOTIVE COATING: The actual look and feel of a vehicle undergoes a sea of change over time. The paint on a vehicle loses gloss, is subjected to a lot of wear and tear and hence starts deteriorating. Asian Paints is not having a very good goo d market share in this segment.
CHEMICALS : Asian paints have chemical business consisting of Pthalic Axhydride & pentaerythritol manuf manufac actu ture red d at Ankl Ankles eswa war, r, Gujra Gujratt & Cudda Cuddalo lore re,, Tami Tamiln lnad adu. u. Duri During ng 2005 2005-0 -06 6 approximately 42% of company’s chemical was sold in-house & rest at open market.
SALES ANALYSIS : Sales over the last 6 years (in Rs. crores) Year
12 March
March
March
March
March
March
months
2001
2002
2003
2004
2005
2006
Gross
1526.01
1662.33
1887.7
2111.08
2366.16
2807.05
8.93
13.55
11.83
12.08
18.63
sales Percentage increasing Net sales Parentage
1322.38 -
1450.71 9.7
1641.27 13.13
1841.92 12.22
2037.55 10.62
2433.37 19.42
increase
Graphical representation of net sales over the period – 2001-2006.
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Net sales 3000 2500 2000 1500 1000 500 0 2001
2002
2003
2004
2005
2006
Results of operation :
Net Net sales sales & operati operating ng income income of stand stand alone alone entity entity increa increased sed to Rs.243 Rs.24333.7 33.7 million from 20375 million showing a growth of 19.42% in the year 2005-2006 (March). This is driven mainly on account of good paint volume sales growth growth of 13.8% & price revisions effected during the year. For the group, net sales & operating income shows an income shows an increase of 17.4% to Rs.30210 million. Asian Paints has a steady growth over the last 6 years, so the financial condition is very much stable & it is expected to reach at the top position in the Indian paint market.
SHARE PRICE ANALYSIS:
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In the following share price analysis of Asian paints we have considered the closing price of share of Friday’s for the month of May, June, July 2006. Table showing the share price (on Fridays of May, June, July 2006) Date
5 May
Closing 6487.7 share pri price ce (in Rs)
12
19
26
2
9
16
23
30
7
14
21
28
May
May
may
June
June
Jun
Jun
Jun
July
July
July
July
637.5 577.2
553.3
582.
550.
566.
573
597. 581.
571.
581.
585.4
5
0
70
75
65
05
85
25
5
5
65
Graphical representation of share price Closing share price (in Rs) 660 640 620 600 580 560 540 520 500 6 0 / 5 / 5
6 0 / 2 1 / 5
6 0 / 9 1 / 5
6 0 / 6 2 / 5
6 0 / 2 / 6
6 0 / 9 / 6
6 0 / 6 1 / 6
6 0 / 3 2 / 6
6 0 / 0 3 / 6
6 0 / 7 / 7
6 0 / 4 1 / 7
6 0 / 1 2 / 7
6 0 / 8 2 / 7
Discussion : Though there is a downfall in the share price of Asian paints but it is among the most actively traded stocks in India market. In terms of absolute daily returns the best performer in the paint market is godless Nerolac, Where Asian paints comes at 4th place with a return of 17%. The least risky stock among the paint market was Asian paints with daily volatility of returns of around 1.43%. The investment on the stocks of Asian Paints could be a good investment option from a medium there prospective. It is the largest player in the industry with a vital strangle hold over the decorative segment.
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With its high level of efficiency & developed marketing infrastructure Asian Paints is well placed in the market & have a very high growth prospect.
SITUATION ANALYSIS-2 Asia Asian n paint paintss limi limite ted d with with its its thre threee busi busine ness ss unit unitss decor decorat ativ ive, e, Indu Indust stri rial al & International business is one of the largest paint company in India. It had a sell over 300 million million litres of paint in 2005-06. 2005-06. Significan Significantly tly the group has crossed crossed the Rs.3000 crore turnover mark-a preset mile stone for the company. Here we will be analyzing three situations of the company – (i)
Competitor an analysis
(ii)
Customer Analysis
(iii iii)
Assu Assum mpti ption on plan planni ning ng
1) COMPETITOR ANALYSIS : The Indian paint market is highly saturated with many paint companies with varieties of product. Asian paints ltd, Kansai Nerolac paints Ltd. Berger paints India Ltd. ICI India Ltd. Shalimar Paint Ltd, Snowcem India Ltd are the market leaders. Here we are only considering the nearby competitors of Asian Paints which are Nerolac paints Ltd, Berger paints Ltd & Indian chemical Imperial (ICI) Ltd. Sales of different companies in the Financial year 2005-2006
Name
of
the Asian Asian paints paints ltd Nerolac Nerolac paints paints Berger paints
company company
ltd.
Net Net sal sales (in 2433.37
1064.22
948.54
ICI India ltd.
971.19
Rs. Crore)
SWOT analysis of Asian paints & its competitors :
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COMPAN COMPANY Y
Asian Asian Paints Paints
Nerola Nerolacc paints paints
Strengths
1. Market leader 1. Well ahead
1. In the IInd IInd 1.
in overall paint
leader in
posit position ion in the refinishing
market & in
Industrial paint
industrial industrial paint busin business ess it has
decorative paint
market
sector.
market in India share 40%
2.
Tie-up
ICI paints paints In
the
one of the best
with 2. Tie up with
kansai
quality quality refinish refinish paint for cars.
paints Herbert-
2. Avail Available able in provi provides des
foreig foreign n Germany
2. In decorative
urba urban n & rural ural technology.
vals valspar par of US
area
& Teod Teodor or NV performanc performancee is
3. Main Main suppli supplier er
3. High Quality in MR & MIS 4.
Pricing
to all all kind kindss of
Indian
of Holland
&
3.
automobile main maruty
Int.
2. No tie up
market
Overall 1.
is
very is
low.
not
impressive.
almost 2-3%
manufactures.
area is poor.
units in several countries. 3.Innovation in developing new
&
Con Conside siderring
overall
paint
market
Asian
paint
is
mar market ket
very existence
2. Market in rural 2. Asian paints 2.
3.
Indus dustrial
pain paintt market position pai paint nt
with foreign
Through it has
India
limited.
sector deco decora rati tive ve
only 15% share
recently
share share of Quest Quest
Indu Indust stri rial al 1. Market share in 1. paint
it
purchased 49%
market client
paints
good
udyog
customer 1.
the
Industrial
policy policy orient oriented ed
Weak We akne ness ss
Berger Berger paints paints
Overall
Nerolac market conduct
paints capturing poor. the
market buyer
for
behind well
ahead of Nerolac.
product.
1.
Acqu Acquir iriing/ ng/ 1.
Increasing
Improve position
its 1. iw nith
come
up 1. Merger with new Quest
will
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market share in deco decora rati tive ve
to provide to have
Indust Industria riall paint paint segment.
challenge Asian an
exper experie ienc ncee
sector.
paints & Berger in
foreign
2. Opportunities
pain paintt innov innovat atio ions ns
2.
Capturing
Deve Develo lopi ping ng whol wholee
market
indus industr tria iall
paints
market, parti particul cularl arly y
in paint market
in
UK.
automobile industry, industry, which accounts 5 0%
for of
Indust Industria riall paint paint market. 1.
Domi Dominat natio ion n 1. Asian paints is 1. Asian Paints 1. Berger paint
of few few fore foreig ign n coming up rapidly & countries 2. Threats
Nerolac
into the industrial paint paintss are well well new entrants in is
paint market with ahead its new plants &
advancing rapidly
Nerolac & there are few
in
products
Industrial
&
paint
ICI the market. is
competing nearly
market
2) CUSTOMER ANALYSIS : Asian paint with its natural competitive advantage of size (Number 1 in India), Strong brand equity & largest distribution Network has acquired the number one position in Decorative segment in India. There are few reasons due two which the customers in the decorative segment has been choosing Asian Paint as their brand – 1. As we know know brand brand name has its its own value value & Asian Asian paint paint is the numbe numberr one in decorative segment, so a purchaser automatically leans in purchasing it.
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For For examp example le,, we have have two two diff differ erent ent type typess of pain paints ts,, name namely ly Apol Apolit itee glas glasss Aenamel & Apolite care Emulsion, which are from Asian Paints, Nerolac paints, Berger paints & ICI paints. Again due to the competitive market the price is very closed for all the companies. But due to the Branch awareness of common people they mostly tend to purchase the products from Asian paints. 2. Company Company have have provided provided with different different varieties varieties of product for different different income groups. For e.g. “UTSAV” which is a low value paint, is growing at a faster rates & penetrating with high speed at the lower income group. This policy is helping the company to move from metros to small towns for branded products. 3. In India India frequenc frequency y of painti painting ng has still still not increase increased, d, which which is once is 5 years only. So consumers are normally changing over to the better quantity & branded paints. 4. In 2001, Asian Asian Paint Paint launched launched a new product product “Tract “Tractor or Emulson” Emulson”,, which pulled pulled the customer who used distemper to move to emulation paints. Accessibility of Asian paints to the customers :
Asian paints have started a 24 hours customer help centre at Hyderabad. It is information to consumers to answer their needs for any query related, to their products. Through this company is also getting a lot of data related to the customers need & appreciations of the products. In order to provide better consumer service, company has connected all colour world world instal installat lation ionss with with Asian Asian Paint’ Paint’ss main main syste system m through through softwa software re & provid providing ing computes computes to dealers. This is speeding speeding up order execution, execution, electronic electronic banking banking will speed up recovery & money transfer. Market Share Analysis :
The market share clearly clearly shows that Asian paint is the leader in Indian paint industry. industry. The nearest competitors of Asian paints are Nerolac & Barger paints. Asian paints has the largest sells in Decorative paints.
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Nerolac paints being widely used in Industry it has a greater share price value. Indust Industri ries es like like Bajaj Bajaj auto auto limit limited, ed, Maruti Maruti Udyog Udyog & many many other other car manufa manufactu cturin ring g companies use Nerolac paints. The Industrial paint are priced with premium in comparison to the decorative paint which is mainly used in house hold decoration. Berger paints & ICI paints are also providing providing a shift competition to Asian Paints Paints in decorative paint, but still there is no sign of threat from them. Again in the Industrial sector Nerolac paint far ahead of all its competitor. Asian paint presently building up a new manufacturing unit solely to produce Industrial paint. Asian paints annually spends on an average Rs325 Cr on its selling & marketing expenses. It givers us an idea about the effort the company put on expanding its market in all segments. When customers buy the products of Asian paints – As the customers normally uses the products of Asian paints on certain occasions like. Marriage ceremony, Dewali or any other special occasions, other than normal paint in houses, customers are very choosy & brand specific. This appreciation by the customers helped Asian paints to become the number one paint company in India.
3. ASSUMPTIONS OF PLANNING : i.
Thou Though gh Asia Asian n paint paintss is the the lar largest gest pai paint com compa pany ny in in Indi Indiaa but in in indu indust stri rial al sector its performance is not satisfactory. A totally new manufacturing unit is coming up & will start production by 2007. This will definitely through new challenges to Nerolac paints, which is the present leader in Industrial coating market. But before that, a proper introduction of positing very important to sustain in market.
ii. ii.
With With the the adva advanc ncem emen entt of tech techno nolo logy gy the the dem deman and d & choi choice ce of of peop people le chan changes ges rapidly. So intensive R & d will need to be continued to continuously enhance the quality of the product.
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iii. iii.
Inte Intern rnet et purc purcha hasi sing ng is new new becom becomin ing g one of popu popula larr way to to purch purchas ase. e. So adequate measure will be taken to satisfy customers regarding designing of website & providing a brief demonstration.
iv. iv.
In Inte Intern rnat atio iona nall marke markett also also Asia Asian n Pain Paints ts has has becom becomee a top pain paintt compa company ny.. But its strategy regarding the international market must be reviewed at a certain internal so as to maximize value.
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MARKETING OBJECTIVES Four Marketing Objectives of Asian Paints are discussed d iscussed bellow(i)
Corporate objective
(ii)
Divisional objective
(iii)
Marketing Ob Objective
(iv)
Progra gramme Objective
Corporative objective : The corporate objective of Asian Paint is as follows -“Asian Paint has become one of the top decorative company world wide by leveraging its expertise in the higher growth emerging market. Simultaneously, the company intends to build long term value in the Industrial coating business through alliance with established global partner.” With Economic performance as objective the organization now has to develop short-term goals to reach the overall objective. These Goals are usually functional target such as production, Sales, new market develop, new product development and technology up gradation, once the goal are determined the strategies can be evolved to meet the goals. The organization organization is now on the way to achieve achieve the overall objective objective of Economic Economic performance. Steps followed by Asian paints for achieving its objective : Asian paint is following certain steps for achieving its corporate objective. They are as follows : (i) Customer Asset : The settings up Asian paints colour world, a chain of state art art paint shop, is a major step towards building customer asset. At the same time company is focusing focusing more in rural areas than urban area and continuing continuing to provide good and quality quality service to the customer. (ii) Technology asset : Asian paint is one of first Indian company to go hi-tech. Asian paint has always kept its competitor at bay by constantly re-innovating its business process and system.
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(iii) Employee Asset : Asian paint always praise its employee for its success in the market. Company always considers employee as a biggest factor of its success. (iv) Dealer vendor relationship : Asian paint always maintain a close relationship with its dealers because company think that they play a major role in Asian paint recent success. (v) Brand Asset : Although it is operating in the commodity market but still Asian paint is investing heavily in branding. Gattu- Asian paint official mascot is very popular in India.
Divisional objective : Asian paint has following division that are as follows : (i)
Decorative segment
(ii)
Industrial se segment
(iii)
Automoti otive segment
Decorative segment : Asian paint is the leader in this segment. It is ahead that its compet competito itorr Nerola Nerolacc and Berger Berger in Decora Decorati tive ve segmen segmentt company company still still have have certai certain n objective for this sector that to increase it sales and to acquire maximum position in the market share in Indian paint market. Objective for decorative segment : •
To expanding its range in the economy segment.
•
To strengthen its position in the emulsion segment in both exterior and interior emulsion.
•
To continue its strategy of pricing aggression and increase it sales and to gain the market share along with a good operating margin.
•
To focus on the rural market as company believes as it as been its objective since the beginning.
•
To focus more on adcampaign for enhancement of their sales in urban as well as rural market.
Industrial segment : Asian paint second line of production deals with the industrial coating. The constraint in these segment is that it is not as successful as the decorative
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segment. In these sector it has to face a stiff competition from its nearest competitor Nerolac and Berger Paints. Objective for Industrial segment : •
To build new infrastructure in the country for Industrial coating to increase the production capacity.
•
To develop the quality of the product with a higher technological up gradation.
•
To increase the sales of the Industrial coating with the help of proper Ad. campaign programme.
Automotive segment : Automotive is the third segment of the Asian paint. It is a product which company target for the automobile market in India as well as abroad. Objective of automotive segment : •
To put emphasis on continuous improvement in quality and productivity.
•
To put emphasis on detect prevention
•
To reduce variation and wastage in the supply chain.
Marketing Objective : Asian paints the leader in Indian paint Industry has a very strong marketing division. With more than 35% market share Asian paint is still growing in leaps and bounce to achieve higher targets. It is changing fundamentally with two objective in mind a huge ramp in the market market share and better growth over the next three years. Previously company used to function as undifferentiated organization. But now they have divided it into three section each. And each section has its own independent support system, targets and performance parameter. Company marketing objective : As follows •
Company Company is using PC, V-sats based line and internal internal mesh to become
most networked corporation in India. •
Company is trying to cutdown the inventory and improve the working
capital cycle for a continuous production.
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•
Asia Asian n pain paintt is high highly ly accep accepte ted d in the the urba urban n sect sector or and now now the the
company is trying to access the rural market with low price product like Utsav targeting every customer of all income level. •
To enhance their marketing in rural sector a huge amount investment
is made in adcampaign and demonstration cum sales technique is going on. •
To increase its sales in the urban sector Asian paints today have 30
colour world located located in different cities cities of India where any body can have the real taste of the colour. •
Online marketing has become an integrated part of the company and
company is trying install a strong integrated for online marketing. •
Asian paints international unit, which have a dedicated marketing team
is also targeting for a rapid growth in overseal o verseal market. •
Asian paint is concentrating on the development of technological in
their industrial coating so that to make the product more stronger positon in the market. And do it they are following the product with huge ad compaign. •
Asian paint is now targeting to provide paint solution with insurance.
•
Asian Asian paint is followin following g unlque unlque strateg strategy y of market marketing ing in the rural rural
areas by using their official mascot. According to the company it feels that picture are more dominant than name. •
Asian paint website Asian paints com provides several information
regarding the product and various other information that is being required by customer and dealer.
Programme Objective : Programme objective is one of the main objective of the company. Here the company frames the strategy about the products related issue and various other thing relating to the business. Most of the company follows the 4’P’s policy namely price, product peace and promotion. Product Product
: Asian Asian paint paint detail detailss with with produc productt that that is (i) Decora Decorativ tivee (ii) (ii) Indust Industria riall (iii) (iii)
Automative. In decorative segment company has a wide range of product from low price
19
to high price low price product like utsav which is basically targeted to the rural customer and high price product Apex cefirma for exterior and interior emulsion. Asian paint investing a huge amount of fun in R & D sector for Quality and the technological development of product so that it compets globally. Price : the price range of Asian paint varies according to the product. Asian paint had always a stragegy in domination in the rural sector. The product that is supplied to the rural area have low price range. Where as in the urban sector some of the high price product circulates. Place : Asian paint is available to all types of customer and the main advantage of the Asian paint is that it is easily accessible to its customer. At present there are 20,000 dealer and a large no. of retailer. Asian paints distribution distribution channel extends to the thirty state of India. India. Asian paints is also exporting exporting to contrites contrites like Caribbean, Africa, Middle east Asia and south pacific.
Promotion : Asian paint follow good promotional strategy regarding their sales of the product. Their promotional strategy are made looking at the different category of the product and price associated with it. In urban areas Asian paint established colour world where the customer can enjoy the taste real colour while in rural sector it follow sales demonstration programme along with van displaying the product of Asian paint in the rural market. It also invest a huge amount of funds in the advertising sector for the promotion of this product.
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MARKETING STRATEGY 1 STRATEGY STRA TEGY ALTERNAT ALTE RNATIVES IVES : The prospect of a paint company has many dependence like weather, occasions like puja, id etc. when we consider the decorative segments. So there is always a possibility of ups & downs in the business. Besides this there there is another very important factor factor i.e. i.e. the posit position ion of the compet competito itor. r. Throug Through h Asian Asian paints paints is the larges largestt paint paint company still under circumstances it will have to go for some strategy alternatives. Alternatives available : 1. As Asian Asian paints paints market market is mainly mainly the decora decorativ tivee segmen segmentt so a downfall downfall in that market will lead the the company in trouble them it immediate immediate focus will turn to the Industrial segment. 2. Import Importanc ancee on water water based paints paints may recove recoverr a poor poor situati situation on created created due to sustain poor weather condition in some region. 3. As there there is every every possibi possibili lity ty that conventi conventional onal coating coatingss are likely likely to lose some share – ecofriendly coasting is going to be very good alternatives. 4.
With all all countries countries in southeast southeast Asia Asia beginning beginning to adhere adhere to the ASEAN ASEAN free free trade Area (AFTA) that will reduce trade barriers for paints & coatings. A reduce in domestic market share of Asian paints then will not be a constant for growth, became export of paints to the foreign countries will contribute a lot.
5. Increasing Increasing the the product product package package & application application oriented oriented servic servicee will make make company company different from others. 6. A stro strong ng post post sales sales serv servic icee divi divisi sion on will will be an impor importa tant nt fact factor or in buildi building ng customer loyalty. 7.
Tie up with with automobil automobilee sector sector with strong strong appearance appearance will will be effectiv effective. e.
8. Last Lastly ly but not the least least pric pricee of oil is incr increa easi sing ng day by day, day, whic which h resu result ltss to increase the price of paints. If this can be controlled by stocking oil or directly linking up with foreign cheap refineries so as get oil at least available price.
21
COMPETITOR STRATEGY COMPETITOR STRATEGY : In the Indian paint industry Asian paints is the leader keeping the other competitors far behind. In terms of gross sales we can rank the competitors of Asian paints as : i) Nerolac paints (ii) Berger Paints (iii) ICI Paints. In industry they are recognized as trailing firms. But with their high growth in the industry the competitors can touch or even overtake Asian paitns, for that the three main competitors have different strategies. Initially one common strategy must be their mind – is to increase the market share. Now we are considering individual strategies of the three companies. Nerolac Paints :
Nerolac, despite a strong brand name has grossly underutilized its potential in deco decora rati tive ve pain paints ts.. But But in indu indust stri rial al pain paintt sect sector or it is far far ahea ahead d of othe other r competitors. So, its two main targets are : i)
to keep keep hol hold of the Indu Indusstri trial pain paintt marke arkett
ii) ii)
incr increa ease se the the mar marke kett sha share re in Deco Decora rati tive ve pain paintt sect sector or.. All their business strategies mainly rounded this two issues. The different
strategies they are dealing with : (1) (1) They They want want to see see high high grow growth thss from from deco decora rati tive ve segm segmen ents ts.. In Industrial sector their supply chasing demand strategy accumulated lot of inefficiencies, so there is a scoe for cost reduction. So they want ant
to
upgr upgrde de the equi equip pment mentss
to impro mprove ve eff effici icienc ency
in
manu manufa fact ctur urin ing g & seco second ndly ly they they are are taki taking ng adva advant ntag agee of IT to improve over all efficiencies.
22
(2) In decorative decorative segment, segment, they are logging logging behind the demand. demand. So now set up is needed as well as they are concentrating on enamels. They are installing colour dispensing machine across the country. (3) Concen Concentra tratio tion n on emulsi emulsions ons & distem distemper pers, s, other other words words interi interior or paints. Distinguishing the high – low end products. (4) They They want want to concen concentra trate te also also on the automobi automobile le paint paint indus industry try.. Here they are already established but Asian paints is also targeting this sector heavily. (5) Anothe Anotherr import important ant strate strategy gy they they are consid consideri ering ng is to involv involvee the vendor in their organizational process. For this they want to have proper vendor management processes. Berger Paints :
Berger paints is considered as the dark horse of paint industry. While company’s main strength is in decorative sector, it has been actively pushing its presence in the industrial paint segment. To improve its business the company have some strategy : i)
Company is mainly spreaded in Eastern & Southern part of the company, now it is looking for a rapid expansion at the western region also.
ii) ii)
Reco Recogn gniz izin ing g the the sat satur urat atio ion n of of the the urba urban n mar marke ket, t, Berg Berger er is targ target etin ing g the the rural market.
iii) iii)
They They are are look lookin ing g to expo export rt in nearb nearby y coun countr trie iess such such as Bang Bangla lade desh sh,, Bhutan, Nepal to boost its revenue.
iv) iv)
With Within in the the paint paint indu indust stry ry,, Indus Industr tria iall paint paint segm segmen entt has a hig highe herr growt growth h rate rate.. Keep Keepin ing g this this in mind mind comp compan any y has has targ target eted ed a 15% 15% shar sharee of Industrial paints in the company’s product mix.
23
v)
Berg Berger er’s ’s perf perfor orma manc ncee in Auto Automo moti tive ve sect sector or over over the the lst few few yea years rs has has been fairly. Here also they are targeting to build up some tie-up with automobile companies.
vi) vi)
Berg Berger er had had ticup ticupss with with Nippo Nippon n paint paintss of Japan Japan & orica orica of Aust Austra rali lia. a. Here they would like to go for the branding of products through proper advertisement compaign & with their new logo.
vii) vii)
An esta establ blis ishm hmen entt of new new plan plantt in Russ Russia ia was was done done in 200 2005, 5, whic which h is expected to start production by the end of 2006. company is likely to utilize the Russian plant to cater to the markets of CIS countries in the future.
ICI Paints :
Within 3 years of launch of colour future from ICI it proved to define the International interior designing trend. The company has invested a million dollars in the R&D of the colour futures concept. Which helps to forecast the international colour trends in paints. Though ICI is considered as the 4th paint against in India, but its presence & development can be a threat to the others. As a part of its strategy ICI is taking the measures : (i)
It is not looking at the increasing Investments but focusing on debottenecking the capacity.
(ii) (ii)
Cons Consid ider erin ing g the the incr increm emen entt of of cha chann nnel el part partne ners rs..
(iii) (iii)
Improv Improving ing techn technolo ology gy & offer offering ing bett better er quali quality ty at a mode moderat ratee price price will will help to capture the rural market easily.
(iv) (iv)
Impr Improv oved ed ser servi vice ce & sol solut utio ion n to the the cus custo tome mers rs..
The company is slowing penetrating to both of decorative & Industrial paint segment.
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MARKETING STRATEGY 2 POSITIONING STRATEGY OF ASIAN PAINTS LIMITED : Although Although operating operating in commodity commodity market. Asian paints have invested invested heavily in branding, branding, GATTU, the Asian paints official Mascot is a familiar familiar icon across across India. India. The company recently augmented their web pressure. Their website, Asian paints.com is an exhaustive hub of ‘Painting solutions’. The site use Maximum interactivity to enhance user experience. experience. There are painting painting lips, online online shades shades cards, cost calculation calculation (based on floor area and number of rooms0 dealer locator and a short of other innovative services. From the perceptual map we can understand that Asian paints, have wider range of products for all type of customers consisting of different income levels. It has a product range from Royal Emulsion, Priced 250-400 which is targeted for up market buyers. Hpcolilen is a product which is targeted for high income and upper middle class people. For lowers income group it has UTSAV, TRACTOR EMLSION which priced vary from 40-100 Rupees. These products are mainly targeted to Rural customers. In Industrial segment segment companies position is relatively weak here Werolac Werolac paints captured more than 50% market share. In this segment Asian paints have products like Apcomin synthetic enamel which is used for industrial coating, and Apco synthetic power which is used in automobile sector. In this segment also Asian paints faced stiff competition from Berger and ICI Paints. Bajaj automobiles in the main customer of Asian paints in automotive sector.
25
POSITIONING STRATEGY OF ASIAN PAINTS
PREMIUM PRICE ROYALE APEX
APCOMIN SYNTHETIC ENAMEL
APCOLITE
APCO POWDER DECORATIVE PAINTS INDUSTRIAL PAINTS
UTSAV
TRACTOR EMULSION
LOWPRICE LOW PRICE
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CUSTOMER SEGMENTATION SEGMENTATION & TARGETING : Customer segmentation is the most important part of the marketing strategy of any company. Asian paints, the market leader in the Indian paint market segmented their products mainly in three sectors. (i) Decorative (ii) Industrial (iii) Automotive. Their customers are all also segmented based on the usage of these products. produc ts.
CUSTOMER SEGMENTATION :
Bas Base
Decor ecorat ativ ive e coat coatin ing g Premium
Indu Indust stri rial al coat coatin ing g
Medium
Popular
Auto Autom motiv otive e coat coat
High
Powder
Quality
Finished
performance
coating
coating
coating
coating Buyer Up marke markett High characteristi
buyers
income
achiever
group
quality
Middle
Used
by Used
class lass & fertilizer & rural
by Large
manufacturer
petrochemicals
s
of
& Old cars are
small
while scale cale
mainly car recoloured
& Upper
market
&
atomic goods & other industrial
fashion
middle
mostly
energy
industrial
mostly tied
Secker
class
low
installations
products
up
Socially
income
mainly
used
conscious
group
where
to
companies
reduce corr corros osio ion n
led led
losses Key Quality purchasing factor
Quality
Cost
Quality
& Quality & cot
Quality,
Brightness &
surfaces
surfaces
utilization
surfaced & cost
influences
shades
power
conting strength
27
Search &
Brand loyal Brand
Evaluation
Cost
loyal
+
Cost
+
Utility
Variety
Brand
Cost+
seeking
loyal
variety seeking
variety seeking
Purchase
Company’s through
Packet
Company
Authorised
dealer
or pain paintt appro approach aches es & manufactures
dealer
paint
or can
points points directly directly paints can
pain paints ts the the purchasing customer
pain paintt com com
house
of 1,2, 5,
Other
Tie up with Old vehicle vehicles s the
anto send to work
company
shops
sold
or
purchase
10, litre Post A warranty Limited or Purchase
peri period od some
for for no
No
High scale
warranty service of
warranty
Medium or no Service
Service
warranty
provided
provided for
for limited
0-2 years.
warranty
years
Market
years
Asia Asian n pain paintt is the the mark market et pain paintt
Nerola Nerolac c is the marke markett lead leader. er. Nerol Nerolac ac marke markett
leader, with more than 50% market
Asia Asian n paint aint have have only only 12% 12%
shar share. e. Nero Nerola lac, c, berge erger, r, ICI ICI
market share. Other players –
Shalimar are there
&
ICI
leade leader, r,
50% share Asian Asian paint paint penet penetrat rating ing slowly
TARGETING :
Asian paints have an unique customer targeting strategy. They used to follow V tier customer – Target strategy.
Tires
28
Tires 1
Tire 2
Tire 4
Tire 3
Tire – 1 - In the recipient recipient end there are strategic strategic solution solution seekers. seekers. Company Company thinks of cost cost reduct reduction ions, s, perfor performan mance ce & product productivi ivity ty improv improveme ement nt for client client’s ’s improv improving ing customers & share holder profitability. Tier –2 – Here the Customers whom can be considered as the value or brand sensitive. Asian paints target this customers with value added VDS integration customer level service. Tier –3 – These part of the consumer are price sensitive. They least bothered about the service. These are mainly middle or low income group people Asian paints have several brand like UTSAV – to serve them. Tier-4 Here the company targets the small manufacturing & local companies, which can generate revenue, company utilizes its & business & telesales technology to address & satisfy their needs. Tier-5 – This tier is composed of specific targeted companies that although small in size, deserve special attention because they are highly innovative in nature. Asian paints have a good prospect over here.
CORE STRATEGY OF ASIAN PAINTS LIMITED : An origination like Asian paints will always restrict itself for its core strategy on ‘innovation’. For an organization like Asian paints to create a strong future, it has to bred innovation innovation continuousl continuously. y. This strategy of innovative innovative facts will help any organization organization to fulfill their commitment and integrity in dealing, with internal and external customers.
29
For this core strategy of innovation Asian paints encouraged entrepreneurship. They also give grater autonomy to managers in their reasonability. organiation also develop high tolerance for failures and encouraged risk taking. Asia Asian n Pain Paints ts anoth another er impo import rtant ant core core stra strate tegy gy is of mana managi ging ng peopl peoplee and and technology which are also the two important assets. As it is always a people focused company its employees are the main leaders who bring a difference to the company. Asian Asian paints paints has stress stressed ed on employ employee ee develop developmen mentt and creati creating ng leader leaderss of tomorrow. It always have strong belief in individual ability and creating an environment in which an entrepreneurial spirit in encouraged. This is why Asian paints have believed to be a best employees for personal and personal growth. growth. Along with Mass customization, Asian paints has created a plat form where Talent is shared across the organization as Manager are given in different areas of operations. It gives Asian paints on overall good perspectives of business along with challenges of chandelling new Ares of operations. The second most important core strategy of Asian paints limited is its technology. Technology includes both research and development and information technology. Asian paints has used technology throughout its year to gain a competitive edge in the market place today, the company has formulated the entire range of decorative coatings though home grown technology. It has used IT as a tool to bring efficiencies and stress line operations. This applications will continue in future and Asian paints will not hesitate in making investment in these areas to gain advantages of the organization. The Third but important core strategy of Asian paints. In Reconfiguration of value chain activities : It is a key task for Asian paints to retain competitiveness and achieve highest value cost leveraging. Here a Question arises that as per this given requirement who were the Key initiatives taken by Asian paints during the last 5 years in this regard. In last 5 year, reconfiguration of value chain activities to increase competitiveness has been one of the Major core area of Asian paints. An fact Asian paints has been drain
30
stormed as an organization with highest sales and profit figures. But most important has been initiatives under taken in all areas of operations to increase efficiencies some of the key initiatives undertaken are : -
Initia Initiativ tives es in manuf manufact acturi uring ng to redu reduce ce losse lossess at fact factory ory..
-
Sour Sourci cing ng eff efficien cienci cies es
-
Surat Surat existi existing ng asse assets ts for better better produc productiv tivity ity
-
Introducti Introduction on of new technology technology to drive drive efficienci efficiencies es and and increase increase productivit productivity. y.
-
Impl Implem ement entat atio ion n of new new suppl supply y chain chain sol solut utio ion. n.
-
Impl Implem ement entat atio ion n of of an ERP ERP sol solut utio ion. n. Besi Beside dess the the abov abovee Asia Asian n pain paints ts have have focu focuse sed d on cont contin inuou uousl sly y impr improv ovin ing g
envi enviro ronm nmen enta tall
Mana Manage geme ment nt stan standa dard rdss at our our plan plants ts..
Toda Today y all all
Asia Asian n Pain Paints ts
manufacturi manufacturing ng facilities facilities are accredited accredited with ISO 1400/ certification certification for environment management standards. These systems have enable company to reduce affluent from the manuf manufac actu turi ring ng faci facili liti ties es.. The The intr introdu oduct ctio ion n of new new suppl supply y chai chain n has has tran transf sfor orme med d managem management ent
of inventory inventory and forecas forecastin ting g has brought brought signific significant ant benefit benefit for the
company through reduction of working capital. It has completely changed the manner of functioning of the supply chain division.
MARKETING PROGRAMME PRICING Asian paints limited with its three business units decorative, industrial & International business is one of the largest paint company in in India. It has a sell over 300 million liters liters
31
of paints in 2005-06. Significantly the group has crossed the Rs.3000 crores turnover mark a preset mile stone for the company. Products and its price ranges : The various products and its price ranges are as follows : Product
Price range
Exterior:-
Asian Paints Apex
Price of 20 lts. Range from Rs.3142.00 – 3328.00
Asian Paints Ace
Price of 20 lts. Ranges from Rs.1761.00 Rs. 2059.00
Asian Paints Tractor Emulsion
Price of 20 lts. Ranges from Rs.1435.00 – Rs. 2047.00
Asia Asian n
Pain Paints ts Supe Superr
Deco Decopl plas astt
Plas Plasti ticc Price of 20 Ltd. ranges from Rs.2239.00 –
Emulsion Paints
Rs.2544.00
Asian Paints Interior Wall Finish – Matt
Price of 20 lts. Is Rs. 2244.00
(White) Asian Paints Interior Wall Finish – Luster Price of 20 lts. Is Rs.2311.00 (White)
Product
Price range
Asian Paints Paints Tractor Synthetic Distemper
Its price ranges ranges from from Rs.690 to 757
Wall Finishes
It range from Rs.4638- Rs,4975
Asian Asian Paints Paints Royale Royale
The price for 20 lts. Ranges from Rs.4638Rs.4638Rs.4975.
Asian Asian Paints Paints Premium Premium Emulsion Emulsion
Range of 20 lts of this product product ranges from Rs.2648-Rs.3118
Enamels
32
Asian Asian Paints Paints Apcout Apcoutee Premiu Premium m Gloss Gloss For 20 lts the range varies from Rs.2068 to Enamel
Rs.2350.
Asian Paints Gattu Synthetic Enamel
For 20 lts the range varies from Rs. 1458 to Rs.1836
Asian Asian Paints Paints Utsav Enamel
For 20 lts the range varies varies from Rs.1425 Rs.1425 to Rs.1652.
Stainer, Aluminium Paints & Others Stainers Apcolite Apcolite Universal Universal Stainers Stainers
For per bottle bottle in plastic plastic bottle bottle of 200ml the price ranges from Rs.41-Rs.77.
Utsav Utsav Stainer Stainer
For per boltle boltle in plastic plastic bottle bottle of 20 ml its price is Rs.34.
Asian Asian Paints Paints Wood Stains Stains
For per bottle bottle in plastic plastic bottle bottle of 5 lts the range varies from Rs.1000-Rs.1250.
Alum Alumiinium nium
Pai Paints nts
(Asi (Asian an
pain paintts
3 For 20 lts its price is Rs.2593
mangoes Aluminium)
Effect of price on future: In the present economic situation, the GDP growth is expected at 6% for cude oil price are soari soaring. ng. Indust Industria riall sector sector has decline declined d at a low rate rate with with contin continuous uous slowdown slowdown increment sector. There is depreciation in rupee. Despite Despite such discouraging discouraging macroeconomi macroeconomics cs it is creditable creditable that Asian paints paints has posted very good result. Asian Paints is trying desperately to keep the same price overcoming the constraints.
33
PRODUCT Asian paint produces a wide range of products which have more than 1100 shades. Their product were targeted to the different segment of the society. The cost of the produce of Asian paint varies according different income level of the consumer. Company follows the principle providing the customer different kind of products and different price. In company’s Decorative premium sector company have products like Asian paint Royals and Asian paint Emulsion. The cost of these product is Rs.275 and the latter Rs. 201 where the product like GATTU and Utsav-family product are targeted to lower income segment people the cost varies from Rs.15 – Rs. 20. Products of Asian paints in decorative segment : As Asian Paint is the leader in the decorative d ecorative segment in the Indian paint market it has wide variety of product. The products are : (i)
Asian Paints Ro Royale
(ii (ii)
Asia Asian n Paint aintss Pre Prem mium ium Em Emulsi ulsion on
(iii (iii))
Asia Asian n Pain Paints ts Apcol Apcolit itee Prem Premiu ium m Enam Enamel el
(iv) (iv)
Asia Asian n Pai Paint ntss Gat Gattu tu Synthe ntheti ticc
(v)
Asian Pa Paints Ut Utsav En Enamel
(vi) (vi)
Asia Asian n Pai Paint ntss Trat Trator or Acy Acyli licc Dist Distem empe per r
(vii (vii))
Asia Asian n Pai Paint nt Utsa Utsav v Acry Acryli licc Dist Distem emper per
(vii (viii) i)
Asia Asian n Pain Paintt Apex Apex
(ix)
Asian Paint Ace
(x) (x)
Asia Asian n Pai Paint ntss Tra Tract ctor or Synt Synthe heti ticc Dist Distem empe per. r.
Asian Paints Royale : This product of Asian paint is targeted to higher income group and customer of urban area. The product contains different shades and price of each shade very. E.g. Regal white
34
Asian Paints Emulsion : it is another product which is targeted to urban area. It is high price premium product. The shades are white, palm group and base. Asian Paints Gattu synthetic : It is a product which is targeted customer of reral area. It price varies Rs.15 to Rs.120 and it has different shades like white, Aquamarine, Azure Blue and etc. Asain Paints Utsav Paint : it is product which is targeted to lower income people as well as rural customer. The various shades were A dyrey, back\, white, super white and etc. Asian Paints Apex : This product is one of the major product of the saian paints as this product product is targeted targeted to middle middle class people and avg income level. These paint have wider range of shades shades such as classic white, blue ice, Alliance, Alliance, Antique white, sweet time and etc. The price varies from Rs.180-Rs. 115. Products of Asian Paints in Industrial sector : it is the second category of the product that Asian paint produces. In this segment Asian Paints targets to industry where the paint are used for protective coatings of the machinery. Road mapping and various other industrial uses. In these segment the product are normally sold at the premium price. Asian paint in these sector is behind its competitor Nerolac. Now Asian Paints is trying a lot to improve the product technology and by bringing new product in this sector to compete with its competitor. The products are (i)
Apcomin Synthetic Enamel
(ii)
Apc Apcomin Synth nthetic Powde wder
(iii)
Stainer
(iv) (iv)
Prem Premiium surf urface ace & fil filler lers
Thes Thesee produ product ctss are are base based d on high high tech technol nolog ogica icall prod produc ucts ts and and are are used used for for asse assett (Machi (Machiner nery, y, tools, tools, equipme equipments nts)) colori coloring ng and upcomin upcoming g synth syntheti eticc powder powder is used used as lubricating agent in the machinery. Premium surface and fillers and strainers are used in for road marking and various other tings in the Industrial sector. Product for automotive sector : This is the third category of product which is produced by Asian paint. These segment is slowly being emerging great user of paint in the Indian market previously automotive company used to import the product from other country.
35
But now some companies like Asian paint, nerolac, Berger have their products in this segment. This sector is emerging market in India. Products : The products of Asian paint in this segment are (1) Allumi Allumium um Pain Paintt (2) (2) Fibr Fibree Pain Paintt (3) Apcolite Apcolite Hammert Hammertone one finish finish Basically the product in this segment are new but the product are in the great demand demand automo automoti tive ve vehicl vehicles es in India. India. The produc productt are availab available le in differ different ent colour colour basically they are used for colouring the veh icles and the spare parts. Product Product life cycle cycle : Produc Productt life life cycle cycle sugges suggests ts the differ different ent stages stages that that a product product under undergo goes es duri during ng its its life life cycl cyclee Intr Introdu oduct ctio ion n stag stage: e: In thes thesee stag stagee the the prod produc uctt are are introduced to the market. (i) (i)
Grow Growth th sta state te – In grow growth th sta stage ge the the prod produc uctt gens gens the the meme memeen entu turn rn an grow growss rapidly in these stage.
(ii) (ii)
Matu Maturi rity ty : In thes thesee stage stage the the produc productt attai attains ns the the satur saturat atio ion n level level it rea reache chess its maximum point and from that point it starts downfall.
(iii (iii))
Decli Decline ne stage stage : In these these stag stagee produc productt slowl slowly y goes down downwar ward d in to the slope slope because of low demand and various other things. It end stage of a product.
BRAND a brand is a name, term, sign, symbol, design or a combination of all which is build intende intended d to identi identify fy product productss or servic services es of a company company to differ different entiat iatee it from from its its competitor. Asian paints, the largest paint company in India have established its position as a great brand. Asian paints promise to deliver consistently a specific set of features, benefits & services to buyers.
36
Asian paints as a brand name is very much attached with allits products. What evr may be the product, like ultima, Emulsion, wall finish lustce, Apcolite premium in the urban area or the UTSAV U TSAV at the rural area, the brand name na me is directly attached. The brand name Asian paints brings to the mind of people certain attributes lie – wonderf wonderful ul colori coloring, ng, royal royal treatm treatment, ent, 1000’s 1000’s of colour colour combin combinati ations ons,, pricin pricing g not an import important ant factor factor of concer concern n as the company company provides provides product productss for all categor category y of consumers. Post purchase service is also an important issue related to brand name. Asian paints Brand extension policies helped them to reduce the effective cost of launching new colours products in new form, with new name. Line Extension technique of branding helped them to go with new forms like – Asian paints UTSAV Enamel, Asian Paints Tractor Emulsion, Asian paints Royal. Company’s universal logo “GATTU’ which is not going to be a logo anymore, helped Asian paints to promote its products in through out India, particularly in rural areas it got the most popularity. Asian paints is using its website as a very strong mode for the promotion of Brand. The wonderful information related to pre-painting & after sales services helped the the comp compan any y to buil build d its its uniq unique ue bran brand. d. The The on-l on-lin inee serv servic ices es,, colo colour ur worl world d & Advertisements also helped to build the Brand of Asian paints.
PROMOTION Asian paints the market leader of the decorative segment in the paint market of the India. As it is not for behind in the other tow section that is industrial coating and automotive coating. In achieve the current position a lot things are being done by the Asian paints. The promotion strategy of Asian paints is bringing a lot of positive output to the company company.. Compan Company y is using using differ different ent techni technique quess such such ad. Compai Compaign, gn, sales sales promotion, personal selling, driect marketing and pu blic relation. 37
Promotion strategy : Direct response marketing : Asian paints is using V-sts based in the and 24 hours online customer customer
help line line service service open. In enable enable the customer customer to to interact interact with the the company
and know the details about the product, pricing and many things related to the company. Asian paints is dominating the television advertisemnt by increasing other ad campaign cost over 50% from next year. A total amount of 85 crores is spent ont eh ad campa campaig ign n by asia asian n pain paint. t. With With huge huge ad camp campai aign gn suppo support rt behi behind nd the the produ product ct the the company is able to making a brand name in the mind of customer. Their particular ad campaign ‘Mera Walla Blue” “har ghar kuch kehta hia” are being liked by the customer. Online marketing for urban customer : Asian paint online marketing system is helping company in lot of ways many customer all the necessary information to the customer. It is an unique way of promotion. p romotion. Colour world : Asian paint had established 30 colur world thorugh out the country giving the people real taste of colur. The punchline for the colour world is “Jjahan Milen world ke saare colour” Promoting in different cities : Asian paint have large area of Network of distribution. It has almost retail outlets through out the country situated in the different city of India. All the customer could easily access the product produ ct of Asian paint anywhere and any an y time.
Promotional strategy followed by Asian paints in rural market On of thing which is contributing to the profit of Asian paint is that its entry to the rural market. As Asian paint gets an competitive advantage from its competitor in this sector. As Nerolac and Berger were we re only targeting the urban customer. •
First of al Asian paint is bring different low cost product like Utsav group in the rural market.
•
There packaging very from 200gm to 1 kg \and prices are a re also relatively low.
•
To enhance their sales in the rural market they are spending a huge amount of money in ad campaigns.
38
•
In rural areas they follow sales demonstration programme where they demonstrate their different product where a large no. of discount is given on the product, lucky coupons, free gifts are given to the customer.
•
Moving vans are being employed to sell their product in different village.
Promotion in international arena
Asian paint is taking we from the domestic market and promoting its product in the international market with establishing colour world in those place particularly Caribbean, Africa Middle east Asia and south pacific. A huge amount fund is invested adcapaign for these product in the international market. market. Promotion through Ad campaign : Asian paint has different brands over 1100 shades targeting different segments. The company decide to promote all the brand under one name of “Asian paint’ This was a advantage for Asian paint in the Low involvement segment as the people asked the paint by brand. Target Audience : The primary target audience for all of the brands marketing and communication activities has been the adult male who is the primary decision maker. However female members of the house play an important role in selecting a shade so a large number of ad are done keeping in mind that thing.. •
The non-sue of caps in the headline as in the original ad “Asian Paint” logo which is sin similar font, the design is meant for better readability and structure of colour used.
•
The company mascot “Gattu” an impish boy with the paint tin and the brush, is most popular and easily reconciled and is one of the ideal mascot.
Sates promotion : Asian paint uses it sale promotion as key ingredient in its marketing campaign. It consist of various incentive designed to stimulate faster or greater purchase of their products. Giving discount to the dealer ; Asian paint gives certain amount of discount to the dealer if he increases the sales of the company product.
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Specialty advertising : Giving Asian paint T-shirt, Caps and other small things to painter for their advertisement. Trade show : Asian paint always open its stall in the Industry trade so that it products would be promoted globally. Consumer preference : The customer of Asian vary from a period to a big industry in order to enhance it sales it gives price discount on bulk amount of purchase. The company give coupons inside inside the paint pack so that could be taken by the customer as a gift from the company. Asian paint always try to improve the packaging of the product. If the product would be fancy and stylish then it would increase the sales of the products. As industri industrial al coatin coating g is one of tis major produc productt the company company uses the name of the company it supply the paint for its promotion. The promotional strategy adopted by Asian is quite unique apart from having such good strategy the company is using high profile brand ambassador like Akshay Khanna, Saif Alikhan” to promote their product in the paint market. Promotional strategy of Asian paint is always aimed looking at customer and this needs and for this strategy company is enjoying the No 1 Position in the Indian paint market.
DISTRIBUTION Asian paints have an extensive distribution channel through out the country. It used to maintain unique channel from the manufacturer to the customer. Distribution system at Asian paints : 1. Multip Multiplan lantt Distr Distribu ibutio tion n setup setup..
Neither geographic nor product specific. Offers flexibility & variable cost advantages
2. Servic Servicing ing has has been key key compet competiti itive ve advanta advantage. ge. 3. Around 15000 dealers dealers serviced serviced from from around around 85 sales sales location. location.
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4. Role Role of distrib distributi ution on departmen departmentt is to ensure ensure timely timely product product availab availabili ility ty at these these locations at minimum cost. The compan company y ahs 4 manufa manufactu cturin ring g facili faciliti ties es & more more than than 2800 2800 stock stock keeping keeping units units (SKUs) (SKUs) These are supported supported by 6 regional regional distribut distribution ion centers, which cater 55 deposits. deposits. Each depot is having branch manager for supervision over more than 15000 dealers in more than 3500 small & big cities in India. Asian paint implemented & concisely improving its IT systems over the years. It has already linked linked all sites & Depots through through V-SAT technology technology,, which helps them to monitor constantly & has given benefits in streamlining the distribution channel. Asia Asian n pain paints ts also also impl implem ement ented ed 12 solu soluti tion onss to incr increa ease se its its netw networ orki king ngss & solutions, which is a very good replacement of ERP.
SERVICE Asian paints is India’s largest paint company & the third largest paint company of Asia today , has an enviable reputtion in corporate & society level for its wonderful serving. Asian paints have three different segments : (i) Decorative paints (ii) Industrial & (iii) Automotive paints. Its service strategy is also different according to these segments. (i) Decorative paints :
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Asia Asian n paint paintss some some solu soluti tion onss – whic which h actu actual ally ly offe offerr a hastl hastlee free free paint paintin ing g experiences to the consumer is presently available in 11 different cities in India. It is particularly meant for premium consumers. In this case painting is done by experienced, trained applicators & according to the wish & choice of customer in presence of him. Here time bound completions of the job is assured. In the website of Asian paints (www.asianpaint.com (www.asianpaint.com)) all the details related to the availability of the above facility & the help desk is designed to provide the customer ample choices. Asian paints clour world world is the unique paint shop of Asian paint available through out the India, where consumer can directly see the different paint combinations through software & chose accordingly. In all t here cases Asian paints also provide warranty for their products & for home solutions free after paint services to the consumer, if anything wrong happens with the paint. For the rural rural areas, areas, where where the most most popular popular product product UTSAV, UTSAV, dominate dominate the market, Asian paint used to organize rallys, rallys, car or van advertisement advertisement of their product & make aware the people about their services. ii) Industrial paint : here the products are tested under extreme conditions to ensure their durability & how they can withstand different climatic changes. As corporate level the main consumer here Asian paint used to provide importance in servicing this sector too. Its website gives all the product details. It provides technical details regarding the uses of the paint. Coating specification, health & safety are also given importance as a part of services. iii) Automotive coatings : In this segment Asian paints is improving its market share with high speed. Here the vehicles ultimately goes to the consumer, so Asian paints used to provide direct consumer service, private cars, motor bikes & MUV (Multi usage vehicles) vehicle manufactures are directly provided with the post paint service.
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Asian paint have implemented is solutions. Which helped them to overcome the homegrown supply chain, which had certain drawbacks, in terms of customer service. The is solution helped them to continuously monitor the changing needs of the market place & serve the customers accordingly. In future so as to become open of largest paint company in the world Asian paints is also taking care of the services they provide. They want to have more feedback from the customers through their website & colour world. It is now turning its helpline into an integral part of its operations. Roughly 75 lakh rupees is considered as the annual service cost. Quality service is the future mothe of the company.
RESEARCH Asian paints, the largest paint company of India have a very strong research methodology. There are two ways they follow : - (i) Market Research (ii) Research & Development of the products according to customers need & choices. (i) Market Research : Asian paints used to hold a very strong market research research team. The colour worlds available throughout India is also keeping the consumer databases & their feed backs. There are three important respect which came out. (i) Consumer presences (ii) Increasing global competition (iii) Rapidly disappearing completive advantages. The market research suggests company need to improve its presence in Industrial sector. Products related to surface coatings & Intermediates need to be modified. UTSAV range of products achieved a great success in rural market in this area Asian paint need to take the competitive advantage. (ii) Research & Developments : Asian paints have invested 140.54 million Rs. In 2005-06 in the R & D sector, Which gives an idea about the company’s paid interest in R & D. The various sector where company is taking care of are –
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(i) Development Development of analytical analytical test methods, methods, characteri characterization zation technique & application application techniques essential for product development, be nch marketing & customer servicing. (ii) Up gradation of products & processes to reduce environmental & safety concerns. (iii) As the price of crude oil is increasing day by day. Asian paints is looking for identification of alternate & new raw materials for the products. (iv) Quality improvement, cost benefits, supply chain flexibility & crisis management are also the matter of concern. Future planning : Asian paints is growing rapidly throughout the world. In international market company is planning to introduce new & attractive products though its subsidiaries, like Berger, Apco coating coating etc. In Jamaica Jamaica & Fuji company’s market is yet not satisfactory satisfactory,, which is also a matter matter of concern. concern.
In domest domestic ic market market company will concentrate concentrate on developm development ent of
new products/ product systems. With improved supply chain management. Asian paints is looking to invest approximately Rs.160 million in R & D in 20062007 financial years. Quality control system will be upgraded & implementation of in solution will be helpful to grow.
FINANCIAL DOCUMENTS Asian paints, one of the leading paint company in Indian market, consists of three different segment. Decorative, industrial & automotive company presently presently standing in a very good position as per as the competitors are concern with more than 50% market share. Company Company has some planning planning to increase its overall overall sales for the financial financial year 2006-07.
SALES FORECASTS BUDGET OF ASIAN PAINTS : -
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Paints is a product which is not used in daily life FMCG. Its purchase is mainly based on the requirement of the consumer. Natural factors, festivals are some factor which effect the sales. To increase the sales company is looking at the following factors : (i) (i) Prod Produc uctt Styl Stylee
(ii) (ii) Qual Qualit ity y
(iii (iii))
Pric Pricin ing g
(iv) (iv)
Raw Raw
mate materi rial al
supp supply ly
(v) (v)
Distribution system (vi) Promotional activity. Table showing the previous 6 years data : Rs. – Crore Year
Advertising
& Gross sales
Net profit (PAT)
marketing Exp. March 2001
176.26
1526.01
105.58
2002
192.49
1662.33
114.31
2003
216.58
1887.7
142.01
2004
249.29
211.08
147.79
2005
269.15
2366.16
173.43
2006
323.58
2807.85
186.78
Now, to forecast the sales for the year 2006-07 we can use the regression analysis method. The sales for the previous years are increasing in manner & the growth rate follows a certain trend. So we are using last sqnare method. Years
X
Sales (Y)
XY
X2
2001
1
1526
1526
1
2002
2
1662
3324
4
2003
3
1888
5664
9
2004
4
2111
8444
16
205
5
2366
11830
25
2006
6
2807
16842
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∑x =21
∑y=12360
∑xy=47630
∑x2=91
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Formula = ∑y = xa + b∑x ∑xy = a∑x + b∑x2
putting the values – (12360 = 6a + 21b) x 21 ==> 259560 = 126 a + 441b (47630 = 21a + 91b) x 6 ==> 285780 = 126a+546 b solving we get
a = 1186.05 b = 249.7
y = 1186.05 + 249.7 x for the year 2007; x = 7. Y = 2934 Now, Gross sales (estimated / forecasted) of Asian paints for FY 2006-07 in 2934 Cr. (approx).
Relation – Gross sales & Advertisement & marketing cost :
Gross Gross sales of a company is strongly strongly effected effected by the advertiseme advertisement nt expanses incurred. The advertisement & marketing expanses a percentage of the Gross sales for 2001 - 2006 in as follows : Rs. In crores : Y ear
Gross sales
AD & Mar. Ex.
%
2001
1526
176.26
11.55
2002
1662
192.5
11.58
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2003
1888
216.5
11.46
2004
2111
249.29
11.80
2005
2366
269.15
11.37
2006
2807
323.6
11.52
The above table shows that Gross sales & Ad & marketing expenses of Asian paints have a certain trend. Ad. & Marketing expenses is almost 11.5% of the gross sales. For the year – 2006-07 – Gross sales = 2934 Cr. (Approx) Advertisement expenses = 2934 x 1158 = 340 Cr (approx)
Graph showing the % relation of Gross sales & Ad ex.
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11.9 11.8 11.7 11.6 11.5 11.4 11.3 11.2 11.1 1
2
3
4
5
6
Effect of union Budget 2006-07 of sales :
For the paint sector the union Budget 2006-07 have two import ant implications. (i) (i)
Reduc Reducti tion on in in Peak Peak cus custo toms ms dut duty, y, lea lead d to red reduct uctio ion n in cus custo toms ms dut duty y on mos mostt of the inputs from 15% to 12.5%.
(ii)
CVD of 4% has has bee been imposed accors orss the board ard of tall the import orts to compensate for the sales Tax/ VAT in the domestic market. Full credit of this duty will be allowed to manufactures of excisable ex cisable goods.
The budget has a positive outlook & Asian paints is expected to be benefited from it in terms of sales. Though it has a force casted sales of 2935 core company is expected to increase it. Certain unidable impacts like increase of price of crude oil, nonavailability of raw material, are certain barriers. Asian paints have achieved a gross sale of Rs.603.33 in Q1 of Ry06-07. The Q2 is the prime season of the company as it is the occasio occasion n period period.. Here Here compan company y is expecte expected d to increa increase se its sales volume volume tremendously.
PROFITABILITY FORECAST BUDGET OF ASIAN PAINTS :-
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Profitability of a company for any particular financial year is mainly calculated based on the two factors – (i) Total Income (ii) PBDIT Where total income is the addition of gross sales & other source of income & PBDIT is profit before depreciation & Income Tax. Table showing – Total income & DBDIT for 2001-2006 Rs. In crore . Year
Total income
PBDIT
Profitability
2001
1543.85
208.55
0.14
2002
1635.5
236.15
0.14
2003
1928.31
287.98
0.15
2004
2131.04
292.33
0.14
2005
2462.1
325.66
0.13
2006
2830.11
390.61
0.14
WHERE PROFITABILITY = PBDIT
Total Income Now, to forecast the profitability of FY 2006-07 we need to forecast the Total income & the PBDIT of the year. For this we use the regression analysis method by regression analysis of the total Income & forecasting it for FY2006-07 we get the amount o be Rs.2999 crore (approx). Now, PBDIT is measure of profit made by a company for any financial year. Thoug Though h actu actual al prof profit it or PAT PAT is diff differ erent ent,, but PBDI PBDIT T gives gives us a meas measur uree of the the profitability. Now, PBDIT of Asian paints for the last 5 years is shown in the above diagram, as it is to some extent linear increment, we can consider regression analysis method to forecast the PBDIT for Fy 2006-07. By forecasting we get – PBDIT for Fy – 2006-07 = 408.48 crore
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Now, we have profitability = PBDIT/ Total income For Fy-2006 –07 as per our forecasting Is concerned profitability profitability = 408.48/2999 = 01362 Now in percentage term for forecasted profitability of Asian paints for fy-2006-07 is 13.62%
0.155 0.15 0.145 0.14 0.135 0.13 0.125 0.12 1
2
3
4
5
6
YEAR WISE PROFITABILITY GRAPH
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