Industry overview

Company overview

Stp

4Ps

Marketing strategies

Role and impact of CRM

Future outlook

Key recommendations

ASIAN PAINTS:

 INDUSTRY OVERVIEW

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

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

 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.

 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.

 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.

 In most developed countries, the ratio of decorative paints vis-à-vis industrial paints is around
50:50.
  All the industry majors have a vast dealership network and are required to maintain high
inventory levels.

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

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.

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 and Ace 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
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 for
decorative purposes. In most developed countries, the ratio of decorative paints vis-à-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 of Maruti,
India's largest passenger car manufacturer, besides supplying to other customers like Telco, Toyota,
Hindustan Motors, 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:

 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.
  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.

 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.

 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 companies
are 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.

 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

 Asian Paints becomes the 10th largest decorative paint company in the world
 Asian Paints is more than twice the size of its nearest competitor

 Present in 22 countries with 27 manufacturing locations, over 2500 SKU's, Integrated SAP - ERP
& i2 - SCM solution
 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
 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
 Asian Paints aims to become the 5th largest decorative paint company in the world

PLANTS:

Indian Plants
 Asian Plants Asian Plants
Bhandup (Maharashtra) in India Kasna (Uttar Pradesh) in India

Asian Plants Asian Plants

Sriperumbudur in India (Rohtak, Haryana)

Overseas Plants

Berger International Plants Berger International Plants

Barbados Bahrain

Berger International Plants Berger International Plants

Jamaica Singapore
 Berger International Plants
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 operates
through Taubmans.

Manufacturing
Country No. Countries Company Location
Plants

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

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 Chain Management 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

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 Paints
began 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 colour
each 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 get
into 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.
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 Chain Management (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 has
also 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
 It is how the Asian paints enabled people to form a mental image for their
products in the customer’s mind. The strategies that they followed where as
follows,
 Brand Image
 The ways in which Asian Paints attempted to meet the customer’s psychological
and social needs.Indian paint industry is a low involvement industry. Till 1990s
 people will just tell their budget for painting their house to their contractors.
And few customers will also mention the colour they need. During that period
Asian Paints analyzed the customer market and found that people where not
brand conscious but their concern was only the price of the paint. To meet this
needs of the customer
• Asian paints reduced the cost of the raw materials by backward integration in
order to reduce the cost of the paints
• Established an advertising strategy with created an emotional touch among the
customers
All these strategies helped them in creating a “Brand Image” for their products
among people and people started realizing the need for brand conscious in this
industry.
 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 Touch
wood 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 under
their Umbrella Brand“Asian Paint”, which became their mother brand. This
created 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 to
promote 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 for
purchase. Tractor, Royale, Utsavand Apcolite names are no longer the focus on the can, rather consumers
will bebuying "Asian Paints." Some key brand names are being retained for the timebeing--to signal a
position in the market rather than a product or surface. Forinstance, Tractor will represent the "value for
money" brands.
The immediate advantage is obvious. Rather than spread resources thinly acrossbrands and sub-brands, a
company centric portfolio can synergizecommunication efforts. To be competitive in a world of
fragmentation 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 functional
platform for each individual product to the highground of a mood-based emotional dimension.

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

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 posed
formidable 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 the
number of dealers to the barest minimum. And chose to use practically everyone in the trade, Who was
willing to function as its dealer?
5. Asian Paints voted for nationwide marketing/distribution. It wanted to have an active presence
throughout 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
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 control

As 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 powerful
competitiveadvantage

 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 that’s promising self-expression, sophistication, technology and even services.
How should APIL’s 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:

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 and
urban areas:
o Continuous modernization to keep pace with the growing demand:
o Diversification in to the unrelated but synergistic area of ceramics:

 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 company’s 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

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

IMPACT
4 P’S