ASIAN PAINTS

The Gattu- Spirit of Colours

• History

• Profile of products

• Marketing Mix

• BCG & ANSOFF Matrix

• Problem identification

• Strategies & Recommendations

Overview

HISTORY

o In the 1940’s it was largely multinational Companies such as British paint &Jenson &Nicholson that dominant the Indian paint market

o In order to increase revenue ,AP concentrated on the rural market ignored by multinationals.

• In 1942,Four Young Mumbaikars –Champaklal Choksey,Chimanlal Choksi,Suryakant Dani and Arvind Vakil.

• Started With a strategy “ Going to where Consumer is”.

• The R & D upgraded to International Quality in producing Phenolic & resins on its Coating.

• Driven by Customer Focus and Innovative Spirit.• Mass Appeal By Gattu• Won the Prestigious Economic times-Harvard Business

School twice

• In 1954,APasked the famous cartoonist R.K Laxman to create a mascot for the company & from his pen was born –’Gattu’.

Brand Leadership

a)1942-1967 Evolution Phase

b)1967-1982 Extension and Consolidation Phase

c)1982-1986 The years of Excellence

d)1987-1997 Moving Closer to the Consumer

e)1997-1999 Changing rules of the game

f)1999- The new Asian Paints

The Evolution phase

• Stiff competition from MNC’s• Product innovations• Reaching rural• Seeding relationships• Quality Products• Ensuring service to network

All this leading to leadership status in 1967

Brand Leadership

a)1942-1967 Evolution Phase

b)1967-1982 Extension and Consolidation Phase

c)1982-1986 The years of Excellence

d)1987-1997 Moving Closer to the Consumer

e)1997-1999 Changing rules of the game

f)1999- The new Asian Paints

Extension and consolidation

• Extension of the brand across borders. International presence

• Consolidation of gains/leadership status

• Product Innovation in new categories

• The core value getting strengthened by a series of investment into systems to ensure better product delivery

Brand Leadership

a)1942-1967 Evolution Phase

b)1967-1982 Extension and Consolidation Phase

c)1982-1986 The years of Excellence

d)1987-1997 Moving Closer to the Consumer

e)1997-1999 Changing rules of the game

f)1999- The new Asian Paints

The Excellence Years

• Launch of New technology in terms of tinting which gave a huge fillip to shade selling

• Product innovation

• Connectivity with the sales set up

The Excellence Years• Despite leadership over a decade Asian Paints,

mindshare was perceived to be far lesser

• It was the largest manufacturer of paints in Asia and the sixth largest in the world. However, this was not perceived by the consumer

• Asian Paints also seen to be a company that made paints such as distemper, ordinary enamel and emulsion paints, for the masses.

The Excellence Years• In 1983, the first corporate communcation

Objectives • (i) establishing Asian Paints as the leader in the

paint category • (ii) presenting it as a manufacturer of premium

paints • (iii) establishing high salience for Asian Paints in

what was inherently a low interest category

The Excellence Years

• Launched a campaign ‘Spectrum Of Excellence’ – a series of Press Advertisements talking of

excellence in AP products

The Excellence Years

• The campaign increased saliency of the AP Brand

• In an otherwise quiet scenario, the increase in saliency itself resulted in higher intention to purchase

Brand Leadership

a)1942-1967 Evolution Phase

b)1967-1982 Extension and Consolidation Phase

c)1982-1986 The years of Excellence

d)1987-1997 Moving Closer to the Consumer

e)1997-1999 Changing rules of the game

f)1999- The new Asian Paints

Moving Closer

• The excellence campaigns didn’t increase consumer feelings towards the brand

• Consumer research showed

“Paints are seen to rejuvenate and brighten up a gloomy place, and give a room a more spacious look. Painting signifies festivity, life and plenitude”

Moving Closer

– Celebrate with Asian Paints - thus evolved.

– It ventured to help people think of the joy that follows painting rather than the tedium of the process.

Moving Closer

– It established Asian Paints as a paint for all surfaces, a paint that delivers “lasting beauty” through its durability and good quality

– It also created advertising that related to specific festive occasions in each part of the country delivering regional empathy

• Asian Paints associated with festive events across the country

Moving Closer

– By the end of this period,the brand ‘Asian Paints’ achieved very high salience as well as a highly favourable disposition

– Asian Paints also seen as a manufacturer of premium paints.

– Above , there was a warmth which people felt for Asian Paints

• Established Asian Paints top of mind with a huge competitive edge.

Moving Closer

During this phase the process of product innovation continued

Two launches one in rural and the other in Exteriors gave a fillip to the overall image of the brand

A series of brand building efforts were undertaken in lower market share geographies

A lot of excitement was created by investing into communication for other brands

Brand Leadership

a)1942-1967 Evolution Phase

b)1967-1982 Extension and Consolidation Phase

c)1982-1986 The years of Excellence

d)1987-1997 Moving Closer to the Consumer

e)1997-1999 Changing rules of the game

f)1999- The new Asian Paints

1997-99 Changing rules of the game

• There was a revamp of various Management processes through a re-structuring exercise

• This helped in bringing more focus to the corporate brand and aided the process of innovation in products and services

• A series of initiatives launched bringing the brand more closer to the user

1997-99 Changing rules of the game

The initiatives included:• Launch of a Asian Paints Helpline,a service to fulfill the

information needs of any person planning to paint

• Launch of retail shops offering a series of decision making tools and shade options along with a communication campaign to create the excitement

• Investing in technology to improve supply chain efficiencies and giving a platform to enter into some CRM initiatives

Brand Leadership

a)1942-1967 Evolution Phase

b)1967-1982 Extension and Consolidation Phase

c)1982-1986 The years of Excellence

d)1987-1997 Moving Closer to the Consumer

e)1997-1999 Changing rules of the game

f)1999- The new Asian Paints

1999- The new APThreats

• Aggression from existing players.

• The external environment saw an entry of a lot of multinationals trying to attack us on various segments.

Market Shares of five major players

Company

o

10

20

30

40

Decorative

&

Industrial

AP GN BP ICI P Sh

AP-Asian paint

GN-Goodlass Nerolac

BP-Berger Paint

ICI P-ICI Paint

SH-Shalimar

(Market Share %)

Decorative

Industrial

Market Shares of five major players

AP-Asian paintGN-Goodlass NerolacBP-Berger Paint ICI P-ICI PaintSH-Shalimar

Overall

Company

10

20

30

40

AP GN BP ICI P SH

(M S %)

33

18

9 97

Asian Paint –Sales Performance:1998-2001

9111033

12211373

1998 1999 2000 2001

Sales Value

(crore)

Brands

• Apex

• Tractor

• Apcolite

• Royale

• TouchWood

Profile of products

• Wall Paints– Apcolite Royale Emulsion, Tractor Washable ,Apex

Exterior, Apcolite Finishes(interior).

• Metal Paints– Apcolite Synthetic Enamel paints,

• Wood Finishes– Apcolite Wood Varnish, Wood Finishing (Matt &

Glossy), Touchwood Finishes

• Automotive paints– Apca NC Automotive,Krilo Acrylic Paint

Promotion

• APIL Emulsion brand Royale Competed with ICI Dulux Velvet touch in Discounting the products(3-10 Rs per litre on Emulsion Paints).

• APIL offered 1151 Different Shades.• Advertising Budget Increased Annually.• Urban Customers-Light Colours• Rural Customers- Dark Colurs• Touch Screen Facilities in shops to see the Colour

Texture

Contd

• Mascot Gattu– Indentified as Brand Icon of Asian Paints.

• Uses IT systems in its operation to improve inventory levels and Delivery Schedule.

• Shifting Advertising Theme – Mera Wala Concept to Mera Wala Rang to

MeraGhar Concept( According To Festive Seasons)

Place-Plant & Facilities

• It has 52 Sales offices and 14000 Distribution Channels.• Main Plant location

– Bhandup, Maharastra– Ankleshwar,Gujarat– Patancheru,Andhra pradesh– Kasna,Uttar pradesh

• Brand Equity makes APIL to increase Market Share by 1%.

APIL Ventures & Technology

• APIL has Joint Ventures abroad in– FIJI,Tongo,Solomon Islands– Vanuata, Queensland in Australia

• Technological Collaboration with Japan Nippon Co Ltd.,

• Asian Paints Research & Development Has acquired the Reputation of being Finest in South Asia.

Market Share: Decorative paints

34%

19%13%

12%

6%

5%

8%3%

Asian Paints

Nerolac

Berger

ICI

J&K

Shalimar

Others

Rajdoot

Market Share: APIL

Market Share: Industrial Paints

16%

40%14%

9%

8%

8%5%

Asian Paints

Nerolac

Berger

ICI

J&K

Shalimar

Others

Market Share: APIL

BCG • Cash Cows

– Wall Paints (Interior & Exterior Paints)– Decorative paints

• Stars– Metal/Industrial paints– Wood Finishes(Varnish , Polish)

• Question Marks– APIL products launched in Abroad thro’ Joint

Ventures in Fiji ,Nepal , Solomon Islands, Australia.• Dogs

– Marine Paints,Automotive paints and others( Black board paints)

  Existing Products New Products

ExistingMarkets

Market Penetration     Product Development    

NewMarkets

    Market Development     Diversification

ANSOFF Matrix

Ansoff Matrix

• Market Penetration– Wood Finishes & Metal paints

• Product Development– Wall paints( New Washable & acrylic Emulsion paints

E.g. Tractor & Emulsion acrylic paints)• Diversification

– Marine Paints(Heavy Duty) ,Automotive paints( TVS Collaboration)

• Market Development– Venturing APIL Products abroad

Market Segmentation

• Divided into two segments• Decorative paints-70 % of total paint

market• Industrial paints• Synthetic enamels -47 % share• 34 % of market share• Interior paints and exterior paints• Automotive paints- 50 %

APIL Problems• Less exports in 1998-99 due to absence of third party exports. • 65% of Cost of Production is accounted for the Raw Materials.• 40-60% of the raw materials are imported.• Due to Imports APIL Faced with more Customs Duties• Excise Duties On Coating increased • Excise Duty was levied on MRP rather than on Manufacturing Cost.• Main Raw Materials

– Pthalic Anhydride, Resins– Titanium Dioxide,glycerine

• Due to increasing Duties the Prices of Products had to increase.• Decline in Sales Volume during Monsoon seasons

Solutions & Recommendations

• Vendor Development

– Promote Vendors in supplying the raw Materials Rather than Importing.

– Develop suppliers in supplying basic ingredients for paints(pthalic anhydride, Resins)

• During Monsoon Seasons– Increase Exports to More countries (Already Captured exporting

to 22 markets-Asia Pacific,Middle East,Africa)

• Pricing Strategy-Due to more Excise duties

– Penetration pricing

– Destroyer pricing

– Target Pricing

Contd

• Here in reworking Pricing strategy– Offer Seasonal Products E.g. Diwali in North,Pongal

in south & Christmas.– Increase promotional activities with regard to

Regional festivals.

• Achieve the target using the target pricing during seasonal products.

• Offer other variety of products ( Wood Polishes) at a discounted rate during sale of Decorative paints-predator pricing

Contd.,

• Industrial paints – tie up with Business units for longer periods.– Take over of small companies– In India there are 25 organized companies and 2000

unorganized companies.– Take over of Small companies to increase their

market Share.– Refinishing old Capital equipments/metals with paints

for industries @ low rates to prevent Corrosion.

• Automotive paints– Increase tie up with Automotives (Already with TVS)

Contd.,

• Increase the Per Capita Consumption in kgs( for india it is 0.3 kgs)

• Increase Production during Festive seasons

Per capita consumption of paint in kgs

23%

19%

17%15%

13%

13% 0%US

Germany

Sweden

France

UK

Japan

India

RURAL MARKETING

• Only paid company with an organised rural network(higher product visibility)

• First one to introduce SMALL PACK sizes for a wide variety of paints.

• Choice of Darker Shades like green and red suiting the rural markets.

LATEST SCENARIO

SALES BREAK UP

The 5 Themes for Colour Next 09

• Indigene: - Consisting of earthy tone and shades, they represent the colours that best describe India.

Consisting of earthy tone and shades, they represent the colours that best describe India.

• Earth Song:- It resonates softer colours that have a soothing effect, think environmental friendliness.

It resonates softer colours that have a soothing effect, think environmental friendliness.

• Multiplicity: - A melting pot of colours. It makes way for contrasting shades, subdued tones and everything in between.

A melting pot of colours. It makes way for contrasting shades, subdued tones and everything in between.

• Homepage: - Colours that dominate the virtual world and cyber space. Of the digital era, the theme is inspired by the Gen - Y.

Colours that dominate the virtual world and cyber space. Of the digital era, the theme is inspired by the Gen - Y.

• Metropolis: - These are dominating colours that speak the bold language of the urban individual.

These are dominating colours that speak the bold language of the urban individual.

Results for the FY ended March 09

• “Demand conditions for decorative business improved in the fourth quarter. Our objective will be to secure growth through a host of retailing and customer centric initiatives. The industrial coatings business (including automotive paints) was impacted by the general demand slowdown. Our international operations performed well on the back of good growth in Middle East and South Asia regions.” said PM Murty, Managing Director & CEO, Asian Paints Limited.         

 

PAINTS

• The unorganised sector controls around 35% of the paint market, with the organised sector accounting for the balance.

• Top organised players include Asian Paints (30% market share), Kansai Nerolac (20% market share), Berger Paints (19% market share) and ICI (12% market share).

PORTER’s MODEL• Supply : Supply exceeds demand in both the decorative as

well as the industrial paints segments. Industry is fragmented.

• Demand : Demand for decorative paints depends on the housing sector and good monsoons. Industrial paint demand is linked to user industries like auto, engineering and consumer durables.

• Barriers to entry: Brand, distribution network, working capital efficiency and technology play a crucial role.

• Bargaining power of suppliers : Price increase constrained with the presence of the unorganised sector for the decorative segment. Sophisticated buyers of industrial paints also limit the bargaining power of suppliers. It is therefore that margins are better in the decorative segment.

• Bargaining power of customers : High due to availability of wide choice.

• Competition : In both categories, companies in the organised sector focus on brand building. Higher prices through product differentiation are also followed as a competitive strategy.

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