Asian Paints

Asian Paints is the largest paint company in India and market leader in decorative paints. It manufactures
and markets a wide spectrum of coatings and ancillaries, which include decorative, production paints and
heavy duty coatings. The manufacturing facilities are located in 4 places Bhandup, Mumbai which was
established in 1955, Taloja in Maharashtra where the second unit was established in 1980, Ankleshwar,
Gujarat where operation commenced in 1981 and Pantancheru, Andhra Pradesh where manufacturing
started in 1985. Asian Paints offered a wide range of paints in terms of product and shades as well as pack
size the availability of the wide range offering was one of the critical success factors for Asian Paints.
Today Asian Paints manufactures and manufactures more than 2800 items.

The Paint industry in India is 100 years old. It started with Shalimar paints in Kolkata back in 1902.
Earlier there were more foreign players and less of Indian players due to World War II. Due to war the
imports of certain items were stalled as a result many entrepreneurs stepped in. Currently the industry
turnover is about 3600 crore the industry is comprised of 2 sectors Organized and Unorganized 70% is
controlled by organized sector and 30% is controlled by the Un-organized sector. The industry is
establishing itself as a capital intensive and demand for paints is fairly price-elastic and it is not linked to
economic or industrial growth.

The Paint Industry is comprised to main segments namely Decorative and Industrial paints. Decorative
paints comprise of 70% of the industry while Industrial paint account for 30% of the industry. Industrial
paints will hold a greater potential and its share is expected to go up to 50% in line with global trend. The
reason that industrial paints will be preferred more is simply because they are technology intensive.
Industrial paints can be further classified into automotive paints, marine, power coating, high
performance coating and others. Original Equipments Outsourcing of products such as automobile,
furniture and white goods such as refrigerators are prime consumers of industrial paints.

The main competitors to Asian Paints in Paint industry are namely Goodlass Nerolac, ICI (India), Berger,
Jenson & Nicholson and Shalimar are the leading companies in organized sector. Out of these top 6
manufacturers account for 80% of the market in the organized sector in terms of value. Asian paints has a
market share of 33% and threat to Indian companies by foreign companies is minimum. TATA is ranked
2nd with 14% share and Berger & ICI with 9%. Out of these Goodlass dominates the industrial paint
segment with 41% market share. The dominance of Goodlass Nerolac is largely due to technical
associated with the Japanese paint major Kansai paints which has 29.5% equity stake in the company.

In terms of Performance Asian Paints has turned out to be good for more than 2 decades it has been a
market leader. Asian Paints has set a target to achieve gross sales of 2100 crores by 2003 it aims to be in
top ten in decorative paints by 2003. Its Brand equity is very strong and its product such as tractor,
apcolite, uttav, apex and ace well entrenched the market. Asian Paints logo is a boy named Gattu with
paint tin and brush symbolizes it as one of the most recognized and prosperous mascots in Indian
business. Asian Paints received the award for corporate performance twice within a decade by Economic
times and Harvard Business School association of India.
Paints Distribution Network:
Distribution was the most crucial task for any new entrant and so was for Asian Paints as well. This
business was dominated by the foreign companies and their wholesale distributors. The distributors
focused on in the urban areas and not in the smaller towns and cities which help them in less investment
as well. There was hence a monopoly in the paints industry which was handled by the distributors. They
didn’t even let the other new companies to enter the market.

Asian Paints sized up the scenario well and entered into the competition with a unique distribution
strategy which was completely opposite to the existing pattern rather than adapting a low risk strategy.

Asian Paints Distribution Strategy:

1) Asian Paints bypassed the bulk buyer segment and went into individual segment for paints:

Every paint company was looking for the share in a bulk buyer segment as this was really profitable.
As this segment was fully dominated by the foreign companies and their wholesale distributors, Asian
Paints instead of joining the league, focused on individual consumer segment. This decision was risky
and very crucial for Asian Paints as it would help it establish in the near future or break down in loss.
But Asian Paints were determined with the step they were taking and it was also proved later on that
there lies a huge opportunity in the individual consumer segment as well.

2) It went slow on urban areas and concentrated on semi-urban and rural areas:

Deciding on to focus on the individual consumer segment instead of the break bulk segment, they
also saw a huge market potential in the semi-urban and rural areas which was totally untapped by the
competitors. Moreover, any big wholesale distributer and companies were not giving any opening in
the cities to any new player in the market. So, they took a wise decision against committing all its
resources on a head-on collision with the foreign companies and their big wholesale distributors in
the urban areas.

3) It goes retail:

The main big player i.e. the foreign companies were practicing a wholesale-distributor dependant
marketing system, which Asian Paints thought was vague. Asian Paints could not see the importance
of wholesalers in the system, so they directly went to contact the retailer dealers. Deintermediation
helps them to lower the price also as the wholesalers margin is saved.

4) It went in for an ‘open door dealer policy’ :

The trend in those days was to limit the dealers as minimum as possible. But Asian Paints didn’t
believe in the same and hence followed the open door policy, which helped them in adding on the
number of retail dealers. They believed in including as many people as dealers as possible in their
distribution channel so as to widen their scope of customers.

This policy helped them in increasing their distribution channel really fast.
5) Asian Paints voted for nationwide marketing/distribution:

Nationwide distribution was not so popular those days. Two class of the companies, one being the
huge number of small companies who used to distribute their products near their area of production
only and the other class being the big companies who used to distribute its product only in metro
cities. In contrast to both the classes, Asian Paints tried to cover the entire nation. They always
believed that their product should be available every time the customers ask for it. It helped them to
building their brand known to the entire nation very fast.