Innovations in Lube MarketingIndian Perspective – Challenges faced and way ahead

Vaisakh KV 83Sebin K Joseph 68Dhanish Ahsen 29Ankur Loomba 11

Indian Lube Industry

5th largest market in the worldGrowing @ 3 – 4% where as 0 - 2% globally2.5% of world lube marketAccounts for 10% of Asia’s lube demandPer capita lube consumption of 1 kg p.a. where as

31 kg. in U.S.A and 14 kg. in Western Europe

Market Size

Per capita lube consumption in India: 1 kg p.a. where as 31 kg. in U.S.A and 14 kg. in Western Europe

5th

4th3rd

2nd1st

GrowthIndian Global

3-4% 0-2%

Lubricant Industry Growth

• 4th largest car market in Asia• 2nd largest two wheeler

market in the world• 5th largest commercial

Vehicle market in the world• 2.5% of world lube market• Accounts for 10% of Asia’s

lube demand

Challenges Automobile sector growing at more than 10% but still lube

industry grows only at 3-4% High level of competition

High Base Oil prices & intense competition leading to lower

margins

Heightened threat from spurious lubes

Highly fragmented and complex market

Marketing Research ProcessProblem Definition

Develop the research plan

Data Collection

Data Preparation & Analysis

Report Generation & Presentation

Indian Lube market - Shrinking margins but Market growth rate higher than world average

Supply side expert opinion were taken & Demand side the questionnaire were filled.

Data Sources: Primary Data: Survey Secondary data: White papers.Research Approaches: Survey Research.Research instruments: Questionnaires.Sampling Plan: Sampling Unit Sample Size Sampling Procedure: Convenient JudgmentContact Methods: Mail Questionnaire Telephone Interviews

Data & Analysis

Bike/ Scooter

51%

Car49%

1) Vehicle type owned

Petrol85%

Diesel15%

2) Type of Fuel used

Maybe13%

No12% Not at

all1%

Yes74%

3) Do you care about the brand of Lu-bricant used in your vehicle?

Always69%

Never1%

Some times30%

4) Do you care about qual-ity of Lubricant used?

I don't know21%

Yes41%

No38%

5) Do you think the lubricants are correctly priced presently?

(is it worth it?)

<1000100%

6) Average Kilometers covered in a month?

Workshop64%

Fuel outlet15%

Lubri-cant sale

points2%

Self19%

7) Where do you prefer changing the lubricant?

<400047%

<7000

53%

8) Usual Engine oil Drain period for change in terms of Kilometers?

Min-eral oil

20%

Syn-thetic41%

I don't know40%

9) Which type of Lube is used?

Perfo

rman

ce

Qua

lity

Brand

Efficie

ncy

Oil d

rain

perio

d

Engine

clea

nline

ss

Engine

wea

r and

tear

325 323308 318

295

172

300

Factors influencing the purchase of lubricants

Factors influencing the purchase of lubricants

BPCL

CASTROL

IOCL

GULF

HPCL

SHELL

TOTAL

VALVO

LINE

OTHERS

25

90

37

15

2925

1624

57

Preferred LubricantBrands

Preferred LubricantBrands

Marketing Channels Petrol Stations Wholesale Distributors Lube Oil Shops Auto Spare Shops Authorized Service Stations Garages Rural & Agricultural dealers Super Markets

E-commerce as a marketing channel

Company Blending Plant

Carrying & Forwarding Agents

Distributors/ Wholesaler

Retail outlet

Consumers

Warehouse

Consumers

::::::::::::::::::::::

E Commerce

E-Commerce

Buying or selling of goods, products or services over internet More and more people stated buying online in India Internet penetration growing rapidly in India

How it works

Enter the vehicle model Website suggests the

suited lubricants for the vehicle

Can opt for assistance in Lubricant change.

Option for either online or offline payment

Can fix a proper appointment in case of assisted lube change

Assisted Lube change

OR

Home Delivery

At Customer end Solving

Accessibility (Can find best suitable Lube for the vehicle) Convenience (At Door Service) Reliable oil check and change Based on usage pattern regular alert Assurance of proper quality and service No adulteration with used lubes Proper draining off the used lube

At Lube Manufacturers end Solving

Better Customer delight Better inventory management Proper distribution channels Eliminating losses in distribution channel Repeat Customers Building better Customer Relation Management

Product

Lubricants of different brands. Lubricants,Greese,Coolants,Transmission oils Co-Branded Lubes with different automobile companies. Rationalization of product / pack (Currently it comes in

400ml,1l,2l,4l,5l,20l,50l,210l). Launch of high-end niche products for premium cars.

Place Efficient distribution through authorized channels. Direct marketing initiatives would be pursued for commercial

segment. Solving issues of convenience and accessibility. Local tie ups with workshop for assisted lube change

Price Rationalization of MRPs for select products & packs that

makes customer Increased level of trade discounts will continue to keep

margins under pressure. No delivery Charges from customers. Convenience charge for assisted lube change

Promotions Display and Media Ads Search Engine Marketing Sponsorship Ads Referrals & Email Marketing Online Catalogs & chats Viral Marketing Blog Advertising

Increased focus on CRM activities in the commercial

segment & trade partners

Joint promotion initiatives will increase margins

Reference Product management in India by Ramanuj Majumdar.Chapter-

22,Page 268-280 Indian Lubricant Industry- Shrinking Margins

http://www.crisil.com/Ratings/Commentary/CommentaryDocs/lubart.pdf as retrieved on 14 Feb 2014

Theo Mang, “Lubricants and their market” “Brand Positioning of Automotive Lubricants in Indian Market”

By Gautham Srivastava,Research Scholar,Upes,Dehradun http://www.kenresearch.com/press/indian-lubricants-industry/

124.html as retrieved on 14 Feb 2014 www.ibef.org-

http://www.ibef.org/download/IBEFreport_april6.pdf http://www.motorindiaonline.in/component/valvoline-proves-

fastest-growing-indian-lubricant-company/ http://en.wikipedia.org/wiki/Lubricants

Thank You

Need for long term commitment and not sheer opportunism