asian paints final document research scribd

8/8/2019 Asian Paints Final Document Research Scribd

1/22

Industry overview

Company overview

Stp

4Ps

Marketing strategies

Role and impact of CRM

Future outlook

Key recommendations

ASIAN PAINTS:

INDUSTRY OVERVIEW

y The Indian paint industry is a Rs 49 billion sector.

y The demand for paints is relatively price-elastic but is linked to the industrial and economical

growth.

y The per capita consumption of paints in India is very low at 0.5 kg per annum if compared with 4

kgs in the South East Asian nations and 22 kgs in developed countries. The global average per

capita consumption is 15 kg.

y In India, the organized sector controls 70 percent of the total market with the remaining 30

percent being in the hands of nearly 2000 small-scale units.

y In India the industrial paint segment accounts for 30 percent of the paint market while the

decorative paint segment accounts for 70 per cent of paints sold in India.

y In most developed countries, the ratio of decorative paints vis- -vis industrial paints is around

50:50.

y All the industry majors have a vast dealership network and are required to maintain high

inventory levels.

y Most of the paint leaders have technical tie-ups with global paint leaders.


2/22

Sector comments

Paint is a mixture of four elements - solvents, binders, pigments and additives. Solvents give the paint a

liquid flow while the binder binds it to the surface. Pigments impart colour and opacity to the paint and

the additives give it special resistance properties.


3/22

Sector trends

The recession in the construction and automobile sector had thrown in shades of grey across the Industry

spectrum, but the revival in these sectors is cause for cheer for the paint industry as well. The balance

sheets of the industry majors are now painted with bright colors

Sector specifics

On product lines, paints can be differentiated into decorative or architectural paints and industrial paints.

While the former caters to the housing sector, the automotive segment is a major consumer of the latter.

Decorative paints can further be classified into premium, medium and distemper segments. Premium

decorative paints are acrylic emulsions used mostly in the metros. The medium range consists of enamels,

popular in smaller cities and towns. Distempers are economy products demanded in the suburban and

rural markets. Nearly 20 per cent of all decorative paints sold in India are distempers and it is here that the

unorganized sector has dominance. Industrial paints include powder coatings, high performance coating

and automotive and marine paints. But two-thirds of the industrial paints produced in the country are

automotive paints.

Market profile

SPACE

The market can be further split into decorative paints and industrial paints. The demand for decorative

paints is highly price-sensitive and also cyclical.Monsoon is a slack season while the peak business

period is Diwali festival time, when most people repaint their houses. The industrial paints segment, on

the other hand, is a high volume-low margin business. In the decorative segment, it is the distribution

network that counts while in the industrial segment the deciding factor are technological superiority and

tie-up with automobile manufacturers for assured business.

APIL dominates the decorative segment with a 38 per cent market share. The company has more than

15,000 retail outlets and its brands Tractor, Apcolite, Utsav, Apex andAce are entrenched in the market.

GNPL, the number-two in the decorative segment, with a 14 per cent market share too, has now increased

its distribution network to 10,700 outlets to compete with APIL effectively. Berger and ICI have 9 per


4/22

cent and 8 per cent shares respectively in this segment followed by J&N and Shalimar with 1 and 6 per

cent shares.

The share of industrial paints in the total paint consumption of the nation is very low compared to global

standards. It accounts for 30 per cent of the paint market with 70 per cent of paints sold in India fordecorative purposes. In most developed countries, the ratio of decorative paints vis- -vis industrial

paints is around 50:50. But, with the decorative segment bottoming out, companies are increasingly

focusing on industrial paints. The future for industrial paints is bright. In the next few years, its share

would go up to 50 per cent, in line with the global trend.

GNPL dominates the industrial paints segment with 41 per cent market share. It has a lion's share of 70

per cent in the OEM passenger car segment, 40 per cent share of two wheeler OEM market and 20 per

cent of commercial vehicle OEM market. It supplies 70 per cent of the paint requirement ofMaruti,

India's largest passenger car manufacturer, besides supplying to other customers like Telco, Toyota,

HindustanMotors, Hero Honda, TVS-Suzuki,Mahindra &Mahindra, Ashok Leyland, Ford India, PAL

Peugeot and Bajaj Auto. GNPL also controls 20 per cent of the consumer durables segment with clients

like Whirlpool and Godrej GE. The company is also venturing into new areas like painting of plastic, coil

coatings and cans. APIL, the leader in decorative paints, ranks a poor second after Goodlass Nerolac in

the industrial segment with a 15 per cent market share. But with its joint venture Asian-PPG Industries,

the company is aggressively targeting the automobile sector. It has now emerged as a 100 per cent OEM

supplier to Daewoo, Hyundai, Ford and General Motors and is all set to ride on the automobile boom.

Berger and ICI are the other players in the sector with 10 per cent and 9 per cent shares respectively.

Shalimar too, has an 8 per cent share.

Price sensitivity factors

Various factors that have influenced the pricing of paints are summarized below:

y The industry is raw-material intensive. Of the 300 odd raw materials, nearly half of them are

imported petroleum products. Thus, any deficit in global oil reserves affects the bottom-line of

the players.

y The major raw materials titanium dioxide, phthalic anhydride and peutarithrithol constitute 50 per

cent of the total cost. Besides, this, there are other raw materials such as castor, linseed and

soybean oils, turpentine. The raw materials cost sums up to a whopping 70 per cent. Any increase

in the prices of these raw materials could adversely affect paint prices.


5/22

y Most of the paint majors have to import nearly 30 per cent of their raw material requirements thus

changes in import policies can affect the industry.

y The prices of packing materials such as HDPE, BOPP and tinplate have reduced considerably.

However, the decision of the Central Government to ban import of tinplate waste could lead to a

spurt in the prices of the tinplate in the near future.

Technology collaboration

All the paint majors have tie-ups with global paint leaders for technical know-how. Asian Paints has

formed a JV with PPG Industries Inc to service the automotive OEMs.

Berger has a series of tie-ups for various purposes. It has a technical tie-up with Herbets Gmbh of

Germany in addition to its joint venture with Becker Industrifag. With the agreement with Herbets

coming to an end in 2001, Berger has now allied with the Japanese major Nippon Paints to boost its OEM

turnover since the Indian roads are being flooded with Japanese automobiles. It also has an agreement

with Orica Australia Pvt. Ltd. to produce new generation protective coatings. The company also has tie-

ups with Valspar Corp and Teodur BV for manufacturing heavy duty and powder coatings.

Incidentally, ICI makes paints with the technical support of Herbets, which has been recently acquired by

by E I Du Pont de Nemours of the US. Interestingly, Du Pont, which is a leader in automotive coatings in

the US, has a technical tie-up with Goodlass Nerolac for the manufacture of sophisticated coatings for the

automotive sector. Goodlass also has technical collaborations with Ashland Chemcials Inc, USA, a leader

in the petrochemical industry, Nihon Tokushu Toryo Co and Oshima Kogyo Co Ltd, Japan.

Overseas expansion

If the global Goliaths are foraying into the Indian paints market aggressively, the Indian paint companiesare also spreading their wings. Asian Paint exports its paints to over 15 countries. It also has joint

ventures in Fiji, Tonga, Nepal, Vanuatu, Solomon Islands, Australia, Oman and Mauritius. In October

1999 it acquired 76 per cent equity stake in Delmege Gorsyth & Co (Paints) Ltd, the second largest paint

company in Sri Lanka with a 12 per cent market share in Sri Lanka's Paint Industry. Within a short span

of just five years, the company has emerged as the number one player in these markets.


6/22

COMPANY OVERVIEW:

Vision

Asian Paints aims to become one of the top five Decorative coatings companies world-wide by leveraging

its expertise in the higher growth emerging markets. Simultaneously, the company intends to build long

term value in the Industrial coatings business through alliances with established global partners.

Today

y Asian Paints becomes the 10th largest decorative paint company in the world

y Asian Paints is more than twice the size of its nearest competitor

y Present in 22 countries with 27 manufacturing locations, over 2500 SKU's, Integrated SAP - ERP & i2 -

SCM solution

y Rated Best Employer by BT-Hewitt survey, 2000 Bluest of the blue chips by Hindu Business Line;

Most admired company to work for by ET-BT survey, 2000

y On the recommendations of Booz, Allen and Hamilton, Asian Paints restructured itself into Growth,

Decorative and International business units and adopted SCM and ERP technology

y

Asian Paints aims to become the 5th largest decorative paint company in the world

PLANTS:

Indian Plants

Asian Plants

Bhandup (Maharashtra) in India

Asian Plants

Kasna (Uttar Pradesh) in India


7/22

Asian Plants

Sriperumbudur in India

Asian Plants

(Rohtak, Haryana)

Overseas Plants

BergerInternational Plants

Barbados


Bahrain


Jamaica


Singapore



8/22

Trinidad

Manufacturing Facilities

Asian Paints along with its subsidiaries has operations in 17 countries across the world and 23 paint

manufacturing facilities, servicing consumers in 65 countries through Berger International, SCIB Paints-

Egypt, Asian Paints, Apco Coatings and Taubmans. Asian Paints operates in 5 regions across the world

viz. South Asia, South East Asia, South Pacific, Middle East and Caribbean region through the five

corporate brands viz. Asian Paints, Berger International, SCIB Paints, Apco Coatings and Taubmans. In 7

markets, it operates through its subsidiary, Berger International Limited; in Egypt through SCIB Paints; in

5 markets in the South Pacific it operates through Apco Coatings and in Fiji and Samoa it also operatesthrough Taubmans.

Country No. CountriesManufacturing

PlantsCompany Location

South Asia

1 India 9 Bhandup, Ankleshwar, Patancheru, Kasna,

Sriperumbudur, Rohtak, Sarigam, Baddi, Taloja

2 SriLanka 1 Asian Paints

3 Nepal 1 Asian Paints

4 Bangladesh 1 Asian Paints

South East Asia

5 Singapore 1 Berger International

South Pacific

6 Tonga Asian Paints

7 Fiji 1 Asian Paints & Taubmans

8 Samoa Islands 1 Taubmans

9 Vanuatu 1 Asian Paints


9/22

10 Solomon Islands Asian Paints

Middle East

11 Oman 1 Berger International

12 Bahrain 1 Berger International

13 Dubai 1 Berger International

14 Egypt 1 SCIB Paints

Caribbean

15 Jamaica 1 Berger International

16 Barbados 1 Berger International

17 Trinidad & Tobago 1 Berger International

Total 23

Supply Chain

Asian Paints has harnessed the powers of state-of-the-art supply chain system using cutting edge

technology to integrate all its plants, regional distribution centres, outside processing centres and branches

in India. All the company's paints plants in India, two chemical plants, 18 processing centres, 350 raw

material and intermediate goods suppliers, 140 packing material vendors, 6 regional distribution centres,

72 depots are integrated.

The supply chain runs through a wide spectrum of functions right from materials planning to procurement

to primary distribution. It has played a pivotal role in improving operational efficiencies and creating

agile procurement, production and delivery systems. It has also enhanced the flexibility of operations,

lowered output time and reduced delivery costs, while improving customer-servicing levels and

profitability.

The Supply ChainManagement is backed by IT efforts that help the company in demand forecasting,

deriving optimal plant, depot and SKU combinations, streamlining vendor relationships, reducing

procurement costs and scheduling production processes for individual factories.

Retail Initiatives


10/22

Customers - the very core of all our business activities. From the beginning, Asian Paints has fostered a

customer-centric approach to business. A simple but unbeatable concept of "going where the customer is"

drives all their retail strategies.

In the early 90s, for the first time in the paint industry Asian Paints offered the consumer over 150 shades.

The concept was extended to the dealer shops through Colour World in the mid-90s, where Asian Paintsbegan offering over 1000 shades. The introduction of Colour World provided a new direction for the paint

industry into the age of retailing by providing the consumer - a service interface. With only a limited set

of bases and colourants, manufactured and transported throughout the supply chain, Asian Paints

provided a choice of innumerable shades to the customer through a technology of tinting at the last retail

store.

With the introduction of Colour World, almost all wall-finishes from Asian Paints offer a wide range and

choice in colours be it for interior or exterior application. It has been their endeavour to reach out to the

customers not only with our products but also with value-added services and initiatives.

The Asian Paints Helpline introduced few years ago is a toll free service where consumers call and ask

queries related to painting. The company has now extended this service to ASIAN PAINTS HOME

SOLUTIONS, which offers painting services in addition to the paint. This service is available in 10 cities

viz - Hyderabad, Bangalore, Kolkata, Delhi, Chennai, Ahmedabad, Mumbai, Pune, Coimbatore &

Cochin.

The company entered into a new foray of prediction of colour trends in India. Intensive research is carried

out with interior designers, architects and the fashion community to arrive at trend movements in coloureach year. The study being done for the second year is termed ColourNEXT 2006, which is a collection of

15 shades predicted to be the trendiest and most happening colours in decor space in 2006.

This study has helped consumers get an insight into the latest trends in colour. This exercise has also gone

a long way in helping various industries decide their colour combinations for a range of products ranging

from furnishings, floorings to home accessories.

Another important area was the offer of painting solutions for children with the launch of Kids World. A

foray into Kids' World marks yet another milestone wherein the company offers painting designs for Kids

Rooms as well as Kids Corners. For the first time, an attempt has been made to invite the customer to getinto a Do-It-Yourself mode with these designs. Royale Play is another innovative concept introduced by

the company. It is a collection of innovative and ready-to-use special effect finishes for interior walls,

comprising a range of special effects. And each of these effects are available in a shade palette that is

fitting for that effect in interesting colour combinations. The revolutionary product gives wall paint a

whole new usage. Now, along with colour, you can give your walls dimension, texture and life.


11/22

Asian Paints efforts are continuously on to engage the consumer in the painting process and fulfill all the

requirements related to the world of painting.

Information Technology

Information technology (IT) plays a key role in enabling the company to grow and generate profits. Asian

Paints is the only company in India to have integrated Supply ChainManagement (SCM) Solution from

i2 Technologies, and Enterprise Resource Planning (ERP) solution from SAP. With these IT tools firmly

in place and with the backing of an extensive communication platform, they are an internally enabled

enterprise. The road ahead is to integrate all the stakeholders including suppliers, employees and

customers and create an extended enterprise.

Asian Paints has launched a supplier portal that includes an automated digital document exchange facility

that will improve the efficiency and effectiveness of interaction with suppliers. An employee portal hasalso been set up. Customer Relations Management (CRM) tools are being used in Asian Paints Helpline

and Home Solutions initiatives.

The successful deployment of ERP, CRM, Business Intelligence and Portal software from leading

solution providers and integrated SCM systems has helped improve efficiency in the business as well as

increase the transparency and accuracy of information across the company. In order to affect 24x7

availability of the IT infrastructure, they are setting up a disaster recovery site in South India.

To match the pace of growth of the international business, they are focusing on improving transaction

systems and messaging platforms. Implementing of a portal platform for improved collaboration and

sharing of information across all geographies is already underway.

STP: Segmentation, Positioning and targeting:

Setting up Greenfield project and buyout are viable options for international players to enter the domestic market. Industry growth depends on two factors (a)Repaint activity and (b)Construction. Any slowdown in any of the two will have direct impact on the company sales. Aggression from existing players The external environment saw an entry of a lot of multinationals trying to attack us on various segments 10.M arket segmentation: Asian Paints segment the market based on the usage : BRAND POSITIONING


12/22

It is how the Asian paints enabled people to form a mental image for theirproducts in the customers mind. The strategies that they followed where asfollows,

Brand Image The ways in which Asian Paints attempted to meet the customers psychological

and social needs.Indian paint industry is a low involvement industry. Till 1990speople will just tell their budget for painting their house to their contractors.And few customers will also mention the colour they need. During that periodAsian Paints analyzed the customer market and found that people where notbrand conscious but their concern was only the price of the paint. To meet thisneeds of the customer Asian paints reduced the cost of the raw materials by backward integration inorder to reduce the cost of the paints Established an advertising strategy with created an emotional touch among thecustomersAll these strategies helped them in creating a Brand Image for their products

among people and people started realizing the need for brand conscious in thisindustry.

Umbrella Brand In 2004 the company realized that though they have almost 20 brands only few

products like Apex emulsion, Royale interior emulsion, Apcolite and Touchwood had high recall among the customers. Therefore they decided to promote

the brand as a whole, to create a corporate image and the various products undertheir Umbrella BrandAsian Paint, which became their mother brand. Thiscreated a Brand Awareness as a whole among the customers.Brand Portfolio:It was realized that instead of spending on individual brands and in promotingthem it was logical topromote their corporate image and allthe brands undertheir umbrella brands ...Asian Paints has embarked on an umbrella branding policy encompassing all itsproducts and services.The project includes a new visual identity that establishesthe company name as the dominant reason forpurchase. Tractor, Royale, Utsavand Apcolite names are no longer the focus on the can, rather consumerswill bebuying "Asian Paints." Some key brand names are being retained for the timebeing--to signal aposition in the market rather than a product or surface. Forinstance, Tractor will represent the "value formoney" brands.The immediate advantage is obvious. Rather than spread resources thinly acrossbrands and sub-brands, acompany centric portfolio can synergizecommunication efforts. To be competitive in a world offragmentation andrising costs, traditional mass media, such as television, can be prohibitively costly.

With the umbrella-branding move, Asian Paints can also afford to moveforward from a mere functionalplatform for each individual product to the highground of a mood-based emotional dimension.

An Underlying ThemeAt Asian Paints, the underlying theme is "har ghar kuchh kehta hai," or "everyhome has something tosay." The depth and texture visualized by this line goesinto the customer's basic psyche of owning ahome, and will carry throughvarious messages emanating from the company, which is the leader inthedecorative coatings market in India


13/22

Marketing Strategy:

Asian Paints sound marketing has earned it strong brand equity. It has been able to do it by focusing on product features that are appreciated by customers. And by ensuring that the products are of high and

consistent quality and are widely available by Enviable track record in breaking away the position of

MNCs in the Indian paint Industry building a strong distribution system.

The paint industry of India is more then 100 years old. Its beginning can be traced to the setting up of

factory by Shalimar Paints in Kolkata in 1902. Till the advent of World War II. the industry consisted of

just a few foreign companies and some small Indigenous producers. Foreign companies continued to

dominate the industry. At the time Asian Paints entered the Indian paint business. Distribution was the

most crucial task for any new entrant. Both physical distribution and channel management posedformidable challenges. The foreign companies and their wholesale distributors dominated the business.

Also they were shutting the doors on any new paint company seeking an entry into the business. They

concentrated on big cities where they could make the sales without much investment in distribution

infrastructure and market development. Asian Paints sized up the scenario and formulated a unique

strategy. It went in for a strategy that differed totally from the existing pattern

Elements of Asian Paints Marketing Strategy:

1. Asian Paints bypassed the bulk buyer segment and went to individual

consumers of paints.

2. Asian Paints went slow on urban areas and concentrated on semi urban

and rural areas.3. Asian Paints went retail. While its competitors remained content with handful of wholesale distributors.AP preferred direct contact with hundreds of retail dealers.4. Asian Paints went in for an open door policy. It broke the prevailing trend in those days. Of limiting thenumber of dealers to the barest minimum. And chose to use practically everyone in the trade, Who waswilling to function as its dealer?5. Asian Paints voted for nationwide marketing/distribution. It wanted to have an active presencethroughout the country. in all the geographical zones. States and territories

Main steps in the implementation Process

1. Asian Paintscreated a large network of dealers.

2. It established a network of company depots to service the dealers


14/22

3. It created a marketing organization that matched its distribution

4. It successfully resolved the cost service conflict in distribution with a

A strong commitment to distribution cost control. Without

compromising service level.

Effective inventory management

Effective control of credit outstandings

IT initiatives in distribution cost controlAs already mentioned. Asian Paints is India's largest paint company and themarket leader in decorative paints. The story of Asian Paints is a story ofmarketing excellence. It achieved an enviable leadership position by masteringthe distribution function and gained a distinctive and powerfulcompetitiveadvantage

KEY RECOMMENDATION:

The customer today is much more involved with the process of painting and is looking at the whole

experience of interior decoration as well as painting as an expression of their personalities. They are

buying into a product thats promising self-expression, sophistication, technology and even services.

How should APILs advertising evolve itself to remain continuously relevant to these customers?

Q 2: How should APIL, as a market leader in decorative paint category, upgrade its customers to value-

added/ superior-quality/ high-margin products?

Ans: As Asian Paints is already a leader in decorative paints market, it can persuade its customers to

value-added/ superior-quality/ high-margin products by formulating and implementing the following

strategies:

Changing Focus:

AP should emphasize more on technology and marketing that would enable them to come up with more

revolutionary products that can cater the demand of customers. It hence can implement Enterprise

Resource Planning (ERP) and Supply Chain Management (SCM) solutions for streamlining its processes

and supply chain.

New Product Launches:


15/22

Asian Paints can launch new products into the market to satisfy the value-added/ superior-quality/ high-

margin demanding customers. Launching various new products into the market will also increase its

market presence and penetration into the segments where its presence was small.

Customer Service Solutions:

Asian Paints should realize that distribution and service are the keys to success in the paints industry.

Right from the start, apart from the urban markets, Asian Paints should focus on small towns, and on

rural markets.

Changing Image:

Along with the customer relationship building initiatives, Asian Paints should also focus on its

communication and brand strategy. Communication would help the company to reach out to the

customer and create an attractive public image. Indian consumers are not brand conscious with regard

to paints; usually the painter purchased paints for consumers according to the allocated budget. In order

to change its image Asian Paints need to extensively work to change its image. Q 3: APIL has made

substantial mark for itself in decorative paints category. Can you design a suitable advertising strategy to

ensure there is a positive rub-off in the industrial segment also? Ans: Kansai Nerolac is presently the

market leader in industrial paints segment. Asian Paints has a very small share in this market. It should

effectively plan its strategy before fully venturing into this market. It can use it market leader status in

decorative paints strategy to attract industrial customers and the advertising strategy to be taken up by

Asian paints should be in this way:

Expansion of its product range and introduction of value added, niche products in the industrial paints

area:

o Expansions of production capacity:

o

Line extensions of existing products to target lower income market segments both in rural andurban areas:

o Continuous modernization to keep pace with the growing demand:

o Diversification in to the unrelated but synergistic area of ceramics:


16/22

FUTURE PLANS

The company plans to consolidate its dominant position in India by launchingnew products in line with

the market developments in both decorative paint andindustrial coating segments. The company is

focusing on further improving theoperations of all of its subsidiaries in India and abroad and has already

launchedE-Strides, an ERP initiative through which all the overseas ventures are beingcovered for sharing

of global knowledge, best practices and better control onoperations. The companys objective is to be

among the top three players ineach market where it is currently operating or plans to operate in the future

Introducing Water based Paints

Repositioning of existing Brands in Rural Market

Broadening of Distribution Network

Adding more choices for shades and effects

Enhancing Better Quality

Demand will be generated through the new

constructions coming in housing and industries


17/22

CRM

The following features are available on the website:

Chat assistance by online expert to solve queries from 8 am to 8 pm

Colourspeak: Helps find the best color combination.

Paint calculator; if dimensions of interior/exterior are given, the calcul;ator would work out a cost

estimate for painting requirements.

Painting guide: pre-painting, painting and post painting tips


18/22


19/22


20/22


21/22

IMPACT


22/22

4 PS

asian paints final document research scribd

Documents