Asian Paints kj6o

EXECUTIVE SUMMARY

In December 2011, we are assigned a project. For this project I have choose “Marketing environment and 4P‟s of Asian Paints”. I have explain how our chosen product is being marketed, and how environmental factors, environmental analysis, market segmentation, demographic trends, target market, positioning strategies, marketing mix, market planning & brands are relevant to their particular product. Following a massive report, recommendations were completed. The information used in the analysis of Asian Paints came from variety of resources, including the internet & different Books and Journals. The combination of these resources provides the basic for a valid current analysis of Asian Paints. The major findings of Asian Paints are as under: Asian Paints maintaining strong relationship with customers by taking under consideration its Macro & Micro environment very efficiently. Asian Paints has segmented its market on the basis of segmentation variables like demographic, psychographic, geographic & behavioral.

1

Asian Paints Introduction:-

a) Established on 1 Feb. 1942 with name Asian Oil and Paint Company with great determination of C.H. Choksey. b) India‟s largest paint company and 3rd largest paint company in Asia today. c) It is a 3000 crores Indian MNC and is amongst top 10 decorative paint companies in India. d) Operates in 22 countries and serving consumers in over 65 countries. e) Has a 50:50 t venture with Pittsburg Paints and Glass industries ( PPG ), U.S.A, the world‟s largest company in automotive coatings.

There are two sectors of paint industry-unorganized sector controls around 35% of the paint market, with the organized sector ing for the balance. In the unorganized segment, there are about 2,000 units having small and medium sized paints manufacturing plants. Top organized players include Asian Paints (30% market share).

2

HISTORY

Asian Paints is an Indian paint company headquartered in Mumbai, India.Asian Paints is India‟s largest paint company and Asia‟s third largest paint company, with a turnover of Rs 77.06 billion. It is one of the largest paint corporation that operates in 17 countries and has 23 paint manufacturing facilities in the world servicing consumers in over 65 countries. Besides Asian Paints, the group operates around the world through its subsidiaries Berger International Limited, Apco Coatings, SCIB Paints and Taubmans. Over the course of 25 years Asian Paints has become a corporate force and India's leading paints company. Driven by its strong consumer-focus and innovative spirit, the company has been the market leader in paints since 1968. Today it is double the size of any other paint company in India. Asian Paints manufactures a wide range of paints for Decorative and Industrial use. Vertical integration has seen it diversify into products such as Phthalic Anhydride and Pentaerythritol, which are used in the paint manufacturing process. Asian Paints along with PPG Inc, USA, one of the largest automotive coatings manufacturer in the world has begun a 50:50 t venture, Asian PPG Industries to service the increasing requirements of the Indian automotive coatings market. Another wholly owned subsidiary, Asian Paints Industrial Coatings Limited has been set up to cater to the powder coatings market which is one of the fastest growing segments in the industrial coatings market. This wholly owned subsidiary of Asian Paints has entered into a tie-up with Canada-based Protech Chemicals which is one of the top ten powder coatings companies in the world for technological know-how in the area of powder coatings. 1st February, 1942 Armed with little knowledge and great determination, Champaklal H. Choksey, Chimanlal N. Choksi, Suryakant C. Dani and Arvind R. Vakil get together to manufacture paint in a garage on Foras Road, Bombay. They name their company 'The Asian Oil & Paint Company', a name that they picked randomly from a telephone directory. 1945 Asian Paints touches a turnover of Rs. 3,50,000, with an innovative marketing strategy "to reach consumers in the remotest corners of the country with small packs." 1954 3

Asian Paints mascot, Gattu, the mischievous kid, is born1957 - 66 The family-owned company makes the transition to a professionally managed organisation. British company BalmerLawrie rejects the products of a giant British paint company in favour of Asian Paints. Asian Paints embarks on an ambitious grassroots marketing campaign, partnering with thousands of dealers in small towns all over India. Asian Paints emerges as India's leading paint company ahead of any international competition. Asian Paints becomes the 10th largest decorative paint company in the world Asian Paints is more than twice the size of its nearest competitor It is one of the most ired companies in India 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 ired 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.

VISION:4

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. They focus on Identifying needs of customers.  Delivering customers value for money.  Contribution to society.  Maximum long term value for stake holders.

Mission:5

Become one of the top five decorative companies world wide by leveraging its expertise in the higher growth emerging markets. Also intends to build long term value in the industrial coatings business through alliances with established global partners.

MAJOR PRODUCTS AND SERVICES 6

Asian Paints manufactures and markets industrial and decorative coatings. The company's key products and brands include the following:

Products: Decorative paints: Interior wall paints Exterior wall paints Wood surface paints Metals surface paints Industrial coatings: Protective coatings Floor coatings Road markings Automotive: Body coatings Plastic coatings Ancillaries:

Product Name: Asian Paints Decoprime Wall Primer WT Description:Asian Paints Deco-Prime Wall Primer (WT) can be used as primer for painting of water-based wall finishes such sa distempers & plastic emulsion paints.Its special features are easy brushing,excellentcovering,alkaliresistance,quick drying & good sealing properties.It is specially fortified with fungicides. 

Products infomation sheet

7

Product Name: Asian Paints Decoprime Wall Primer ST Description: Asian Paints Deco-Prime Wall Primer (ST) is suitable for use as primerformasonary topcoats like distempers, emulsions,lustre& matt wall finishes.It helps in providing a suitable surface for applicationof subsequent coats of putty & finish paint.It seta fast,has good sealing properties,good resistance to wall alkalinity, moisture & fungus. 

Products infomation sheet

Product Name: Asian Paints Acrylic Wall Putty Description:Asian Paints Acrylic Wall Putty is water_basedputty.It is one of the best product of its kind available in the market.It provides a very strong durable foundation & brings out the best performance from the finish paints.both in looks & durability. 

Products infomation sheet

Product Name: Asian Paints Exterior Wall Putty Description: Asian Paints Exterior Wall putty is a specially designed product based on white cement, redispersible polymer & functional additives for application on exterior rough plasters to give a smooth finish. 

Products infomation sheet

Product Name: Asian Paints Wood Primer Description:Asian Paints Wood Primer is specially formulated to protect wood.It has an excellent sealing & filling properties which protects wood from swelling due to absorption moisture.Wood Primer penetrates wood fibre& gives excellent adhesion to substrates & also

8

serves as a sound base for application of undercoats & finishing coats.It also protects the finish coat from exudation of resinous matter oozing out from wood. 

Products infomation sheet

Product Name: Asian Paints Exterior Wall Primer Description: Asian Paints Exterior Primer is water-based wall coating suitable for application on exteriors as an undercoat to exterior emulsions.It has a good opacity & whiteness, which helps improve the appearance of the emulsion top coat.Exterior Wall Primers doesnot chalk & can be applied on freshly plastered surfaces that are adequately cured.Itdoesnot require any water curing.

SWOT ANALYSIS

STRENGTH: 9



Market leaders with 44% market shares.

 Strong in inventory control.  The pricing strategy is oriented to middle and lower end consumers.  Widest product range in of products, shades, pack sizes.  Comprehensive nation wide coverage of the market.

WEAKNESS:  Seasonal demand and hence in off seasons it can lead to cash flow problems.  Innovation in developing new product is inadequate.  Weakness on the technology front in industrial paints

OPPORTUNITIES:  The automobile industry ed for 50% of the industrial markets.

THREATS:  Competitors have gone in for hi-tech instacolour spot mixing.  Domination of few foreign companies.  Competition is catching up fast, hi-tech facilities gives abundant choices.

LITERATURE REVIEW

Author(s) : Claudio Vignali; Ruth A Schmidt 10

Source

: Management Decision Vol.: 32, No.: 3, March, 1 1994 [Page 29-33]

Keyword(s): ; t Ventures; Market Entry; Marketing Mix; Paint Industry; Tiara Paints; United Kingdom

Abstract Based on a large UK paint manufacturer's experiences in the late 1980s, presents a proposal for market entry into . Gives reasons why entry into this market is a challenging proposition. Local requirements make a market research-based adaptation of the marketing mix elements necessary. Furthermore, additional challenges are presented by the East-West split of the German market following reunification which calls for a flexible entry strategy, responding to local rather than national needs. The exploratory stage of the development of a workable market entry proposal in co-operation with German partners is mapped in this case study.

I have tried to find an academic article about entry strategies of a paint company into the Indian market. I could not find such article, but there is another article about entry strategies deployed by a major UK company entering the German market. In this article, titled ” Proposed Entry into the German Market (Tiara Paints) “, by Claudio Vignali; Ruth A Schmidt and published in Management Decision Vol.: 32, No.: 3, March, 1 1994 [Page 29-33]the author came to the conclusion that local strategies instead of national strategies will work especially when going into a culturally different or mixed-culture market. From this we learn that Asian Paints must try to gain insights into local purchasing habits of the consumers, and mould its strategies accordingly.

Marketing Mix( 4P’s)

Product:-

11

1) Asian paints is a water based,100% acrylic, interior wall finish

2) Provides a silky wall finish which lends a soft regal glow to the interior of the room

3) Provides high stain resistance. Wall painted with Asian paints are easy to clean and maintain that look over years

4) Also offers good anti-fungal properties

5) Attributes:- Cove raga: 325-350 sq.ft/lt Drying time: 15-20 min Gloss-soft sheen Shelf life-3 yrs.

6) Line stretching: a) up market stretch : royal play (505/lt) b) Down market stretch : royal shine (305/lt)

7) Product level:

a) Basic product- To protect the wall from cracks, leaks, makes it look clean, make proper ambience, etc. b) Expected product- Decorative or industrial paints, further more like multi choice colors, oil based, mat finish, distemper, primer, wall paint ,etc.

c) Argument product- Should be of acrylic type, washable, sunlight protected, leak proof, long lasting, chemical base, etc.

12

d) Potential product- The customer future requirement is judged and tries to give any such kind of product, so we can say a kind of „mass customization‟ product. Some example can be like getting mirror color , pearl shine etc.

Types of Paint…

Price:-

In the narrowest sense price is the amount of money charged for a product or service .

13

Price has been the major factor in affecting buyer choice. This is still true in poorer nations, among poorer groups and with commodity products. However non price factors have become more important in buyer choice behavior in recent decades.

With respect to Asian Paints, there are two price lists.

Dealers price list Maximum price list

a) placed as a luxury product

b) pricing strategy adopted is value based pricing

c) Price range starts from 315-345 for 1 lts.

d) Variant in prices and product

e) Different discount given by company

f) Affordable price for common men

g) Open box colors in retailers shop because of the customer demand.

h) Different schemes on festivals like Diwali.

14

15

Place:-

a) Extensive network of 4 manufacturing units, 6 regional distribution centers,55 depots,15000 dealers, 90000 sub dealers.

b) Exclusive 3000 Asian paints store.

c) 4500 color world stores

d) Byed the bulk buyer segment and went to individual consumers of paints

e) Went slow on urban areas and concentrated on semi urban and rural areas.

f) Went retail.

g) Went in for an open door dealer policy

h) Nationwide marketing and distribution Asian paints In Sri Lanka

16

Promotion:-

Modern marketing call for more than just developing a good product pricing attractively and making it available to the target customers companies also must communicate to their customers and what they communicate should not be left to chance.

Asian Paints promotional activities consists of ments, schemes, point of purchase, painters schemes. The ment activities are given to OGILVY ANDMATHER who has designed the ments as shown and partly by contract ad agency.

a) Advertising:-Using high profile brand ambassadors like AkshayKhanna, Saif Ali Khan, Soha Ali Khan. Also marketing by print ad‟s.

b)Public relations:-

Divided mainly in two parts-

17



Marketing Public relations by dealers meeting, painters meeting etc.



Corporate

Public

relations

by

communications,

investors,

Corporate

social

responsibilities and media.

b) Sales promotion:

Quarterly dealers meeting



Incentives to painters ( Token exchange, cash in buckets )



Privilege Club



Distributing merchandise to painters such as T-shirts, caps, etc.

c) External

communications:- website

d) Events

and distribution:-



Asian

paints SharadShamman.



Sponsors

award shows from yr.2000 onwards.

e)

Expert help I. Ask Aparna- chat assistance by online expert to solve the problem queries

II. Color speak- authorized color consultants will help the choose the best combination of color

III. Fore site- a customized visualization service that provides 3 colors combinations, as per your selection

IV. Home solutions- hassle free painting service for your home 18

V. Paint calculator- provide the dimensions of exteriors/ interiors, work out a cost estimate. VI. Painting guide- exhaustive pre- painting, painting and post painting tips to paint your home Painting tips- recommended application procedure for all types of surfaces

VII. Project sales- value solutions for large projects

19

Asian Paints is the market leader in the highly fragmented and highly competitive Rs 7750 crore ($1.73 Bn) Indian paint Industry.Theorganised sector constitutes around Rs 540 0crore ( $1.2 Bn). Asian Paints started its journey in 1942 with four young men in a garage in Bombay. The name Asian Paints was picked randomly from the telephone directory. The brand has traveled from that garage to become a Rs 1000 crorebrand.From1968 ,this brand occupies a position in the Indian Paint industry.

The story of the evolution of Asian Paints as a brand is interesting. The brand now has an iconic status in the industry thanks to some blockbuster big ideas from O&M. The brand once positioned as a mass market brand has evolved itself to a higher plane.

Indian paint industry can be broadly divided into two segments a.Decorative segment which constitutes the wall paints : exterior and interior, wood paints etc b.Industrial segment which consists of automotive paints, and paints for industrial sector. Decorative segment constitutes around 75 % of the total paint industry and Asian Paints is the market leader with around 44% share. In the Industrial segment, Nerolac is the market leader.

In the decorative segment, it is interesting to see how Asian Paints have changed the buying process of the product like paints.Paintsare usually considered to be a low involvement product. In earlier times, the decision of the brand was taken by the builder/contractor and the home owners does not involve much in the process may be the decision of color rest with the house owners. Asian Paints realized the need for brand building even during sixties. But at that point of time, the company had a wide range of brands/subbrands. The focus of the company was on product innovation and service network and managing quality proposition.Th

20

e brand focused on mass and rural market. Asian Paints had a mascot called Gattu who was created by the celebrated cartoonist R K Laskhman.These efforts made the brand a leader during the late sixties.

Then the company realised that although volume justified the leadership position, share of mind for the brand was very low.That was the result of the mass segmentation adopted by the brand. Rightly so because the industry was driven by channel driven promotions, building a brand at that time was" uncommon sense". During 1983, the company tried to reposition the brand as a brand. Asian Paints initiated the corporate campaign aimed to position the company as the number one player in the industry.The objective was to a more margin product marketer .The corporate campaign " Spectrum of Excellence" was aimed to increase the Salience of the brand in a quiet market.

But this campaign failed to inspire any interest in the consumers and the company felt that the market is moving towards a commodity market where price is the most important differential. Asian Paints undertook a consumer research aimed at understanding the perception of consumers about the product category. The research revealed lot of interesting insights. Consumers felt that paints could change the mood of the space and it was a sign of festival and plenitude.It could make a gloomy place bright and pleasant. From this insight came the campaign of Asian Paints associating itself with festivals. Research also confirmed that customers tend to repaint their houses on the occasion of festivities. Thus born the campaign "Celebrate with Asian Paints". The campaigns were carefully crafted and there were different campaign for different regions. These campaigns effectively enhanced the brand equity of Asian Paints and established itelf as a brand. More than that , these campaign ensured an emotional connect with a brand in a low involvement category.The brand also phased out many subbrands and rest of the subbrands was brought under Asian Paint's umbrella brand.

21

During the late nineties the brand had to be reinvented. Because no longer festivities formed an important part in ones life. Since many brands went after festival seasons,the positioning platform has become cluttered.More over the consumer buying behavior has changed. The category was becoming less seasonal. People started associating more importance to home decor and interiors. The choice of color became a high involvement decision. From a low involvement category, paint was increasingly becoming a high involvement category.

The brand also went in a brand overhaul. The logo was changed to a contemporary upmarket one designed by Entreprise IG based in Singapore.The logo/design was to convey self expression, sophistication and Technology.

Thus came the birth of a wonderful positioning strategy created by O&M. The insight was that the brand is about people and homes and homes reflect the people living in it. Hence " HarGharKuchKehtaHai" translated to " Every Home has a story to tell". This campaign is a perfect example of a brand laddering up and connecting to a higher level in the mind of the customer. The campaigns reinforced the brand as a emotional brand. Along with the campaign Asian Paints also ran parallel ads for its subbrands. Saif Ali Khan endorsed the brand Royale .For Apex Ultima, the campaign was highly localized and was different in different market

The Asian Paints group is pursuing a three-pronged strategy to drive its export business to quarter of its total turnover within the next five years. Largely spun around the emerging markets, the three-way export strategy will primarily see the group train its eyes on markets where it could gain leadership position, countries where it sees opportunities for growth and nations where licensing arrangement possibilities exist.

22

The group has under its fold Asian Paints, Apco Coatings, Berger International and Scib. Through Berger International, it has presence in dozen countries. Its presence in Egypt is through Scib. Both are acquired units. Asian Paints has a presence in Sri Lanka through an acquisition. In five countries, it is piggy riding on Apco Coatings.

Mr. Dani said the group had a leadership position in Bahrain, Nepal, South-Pacific Region and the Caribbean. The group, he said, had identified Egypt, the UAE, Sri Lanka, Bangladesh, Thailand and Malaysia as `growth focus areas'. The group felt that licensing arrangement could be the least cost route to grow into some countries. "We can be present in some countries but avoid financial costs," he said. In this context, he said the group had broken into countries such as Indonesia, Pakistan and Malta through this licensing arrangement. The foray into Pakistan and Malta happened only in the last few months.

Under the licensing arrangement, it would provide technology and brand to local firms with whom it had tie-ups. Mr. Dani said the group had also identified niche countries and segments and citied Oman for wood finish and China for protective coatings. Mr. Dani, who is also the Chairman of Berger International, said post-acquisition of Berger and Scib there had been a good cash flow and asserted that, "We can the business growth through internal accruals."

To a question, he itted that it was a real challenge for the group when it acquired Berger nearly one-and-a-half-years ago. "Overnight, they quit 12 countries. It was a real challenge to integrate them with Asian Paints," he said. Mr. Dani said the group still had to do a lot of work on a strategy to cross sell technology/brands/products across varied outfits and geographical areas. Effective alignment of HR (human resources) across operations with the overall group corporate vision would be a tough task ahead in the coming days.

While asserting that "emerging markets will be our play ground," he said the group would follow the `hub and spoke' approach and empower regional centres to build size and skill to drive the value for the group as a whole. A chemical engineer, Mr. Dani entered the family business by default when one of the founder-promoters sold his holding to a multi-national company, 23

triggering a convulsion at Asian Paints. The wheel had come a full circle when the MNC had sold the shares back to the Danis. The younger Dani has a ion to make the group an MNC to reckon with in the international sphere in all respects.

24

Asian Paints Analysis

Political And Legal Analysis:-

The Political condition and Government rules and regulations of the country can affect any industry

whether

that

is

at

introduction,

growth,

maturity

or

at

decline. The same case is with the paint industry of India. From the many years, the political condition

of

the

country

is

not

very

certain.

The

high

costs

of the petroleum products, energy crisis and lack of infrastructure are the major hurdles in the growth

of

this

industry.

Government

will

have

to

focus

on

this

industry because it is generating revenues for the country.

Economic Analysis:-

Economy has a critical role in fostering the success or creating problems for any organization. Similarly

in

case

of

paints

industry,

this

industry

is

facing

instability in the sales and growth from many years. Government has imposed sales tax and heavy duties on imports of raw materials. Paints industry of India import raw materials so import duties have increased the production cost thus decreasing the profit margin.

Recessionary conditions continued to prevail as the government pressed on with its efforts to document the economy. The construction industry, the slow trading industry, and the trading environment resulted in an overall market shrinkage in the decorative business by 10%. Against this back drop the business however has able to increase its market share by 1% through its strong

advertising

and

promotional

campaigns

and

effective

after

sale

service.

The industrial business continued to deliver a robust performance driven by penetration of new market segments within the general industry sector. 25

Social Analysis:-

In recent years, paint industry has shown a lot of concern for society. Industry is very conscious about

environmental

pollution,

which

occurs

because

of

the

production of paints. The paint producers are trying to produce those products which are free from the harm full chemicals.

26

MAJORSEGMENTATIONVARIABLEFOR TARGETMARKETINGOFPAINTS::

Geographically:

WORLD, REGION AND COUNTRY:

DENSITY:

Asia, Indian

Urban

Demographically:

AGE: 25 and above

GENDER:

Male and Female

FAMILY LIFE CYCLE:

INCOME:

Single, Married, older but children are not the target market

30,000 to onwards

OCCUPATION:

Businessmen, professionals, high ranking managers.

Psycho graphically:

SOCIAL CLASS:

Upper middles, Lower uppers and Upper Uppers

LIFESTYLE:

Achievers and strivers but not survivors

PERSONALITY:

Ambitious and Compulsive 27

Behavioral:

OCCASIONS:

Regular and special both

BENEFITS:

Quality

STATUS:

USAGE RATE:

Potential s, Regular s, first time s

Medium s, Heavy s

LOYALTY STATUS:

Medium, Strong

READINESS STAGE:

Desirous, Interested, And Aware

28

Asian Paints Environment

MICRO ENVIRONMENT:

SUPPLIERS:

Main supply of raw material for the company comes from foreign

countries like Japan and Europe. Approximately 70% of total purchases of raw material come from Japan and Europe and 30% supply provide from local.

Marketing Intermediaries: Asian Paints give distributions only to its authorizeddealers and distributors.

CONSUMERS:

Households, Painters, interior designers, buildingcontractors are usually

the consumers of Asian Paints.

BUSINESS CUSTOMERS: Asian Paints is supplying paints to some business customers like PPG, USA and Protech chemicals, Canada

GOVERNMENT:

They have no specific or regular contracts with government but it do

execute it occasional order received from Government for military and other Government institutions COMPETITORS:

Direct Competitors: Narolaaints , Berger Paints, Master, Diamond, Silver Sand, Marvell, Buxluy, Black Horse, Gobi etc

Indirect Competitors:

Tiles, Wood peeling, Wallpapers, Rockwall, Paint Puree etc

Publics: Financial Publics:

Citi Bank, ABN AMRO, etcMedia publics: Viacom 18,Radio channels,

newspapers, etc. 29

30

Macro environment:

DEMOGRAPHIC: If we see the demography of Asian Paints. Then this factcome most of its customer‟s are age of 35-40 years.

Technological Environment:

They have installed a plant in the company which purifies

all the harmful material from the disposal. Moreover they are also using the latest technology for paint making. They are also using latest technology for ment of their product.

Natural Environment:

Asian Paints are producing mercury free and lead free paints,

which are environment friendly Asian Paints approaches the environment issue from the perspective of waste minimization and conservation of resources. Thus, the continued attempt is to reuse, recycle and eliminate waste, which results in less and less waste being generated. Accordingly, our material losses in manufacturing have been reduced substantially over the last few years.

Further, the company's four paint plants and the two chemical plants have the ISO 14001 certification for environment management standards. The company's latest manufacturing facility which is situated at Sriperumbudur near Chennai will be certified for ISO 14001 in this financial year 2006-07.

All their paint plants have achieved 'zero industrial discharge' capability. This has been achieved by the installation of upgraded effluent treatment facilities and installation of reverse osmosis plants in conjunction with appropriate recycling and reuse schemes. Our emulsion manufacturing facility has also achieved 'zero waste' status. We have adopted the principles of "green productivity".

Some of our innovative schemes which enhance green productivity are dealer tinting systems which has resulted in large batch sizes ; bulk storage facility for monomers which reduces wastage;

Use

of

natural

gas

which

is 31

a

cleaner

fuel

;

solvent

recovery

plants have been set up which has resulted in zero reduction of solvent disposal ; Improved incinerating systems and reverse osmosis.

32

BIBLIOGRAPHY

33