Marketing Strategy for Marketing Strategy for BALMEROLBALMEROL range of Lubricants at range of Lubricants at
Balmer Lawrie & Co. LtdBalmer Lawrie & Co. Ltd
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Scope of ProjectScope of ProjectScope of ProjectScope of Project
Analyze the Analyze the market trendsmarket trends
Understand the Understand the buying behavior of buying behavior of
customerscustomers
Select appropriate Select appropriate market channelmarket channel Suggest a suitable Suggest a suitable
Marketing StrategyMarketing Strategy
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MethodologyMethodology
Industry Analysis
Competitor Analysis
Segmentation, Targeting, Positioning
Proposed Marketing Strategy
Survey Analysis- Customer Behavior
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About the companyAbout the company BL is a multi product Business Unit with BL is a multi product Business Unit with diversified portfoliodiversified portfolio
BL is among the top-10 grease manufacturers globally, boasting of BL is among the top-10 grease manufacturers globally, boasting of significant exports. significant exports.
Enjoys market leadership with 30% market share in the used-for-industrial Enjoys market leadership with 30% market share in the used-for-industrial applications grease segment.applications grease segment.
Major clients are Indian Railways, the ship-building industry, oil Major clients are Indian Railways, the ship-building industry, oil exploration companies, heavy-engineering industries, ports, cement exploration companies, heavy-engineering industries, ports, cement plants, integrated steel plants, secondary steel mills and mining plants, integrated steel plants, secondary steel mills and mining complexes.complexes.
Rising crude oil prices – affected the price of raw materialsRising crude oil prices – affected the price of raw materials
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Contd …Contd … Planning to tap retail (lubricants), in which it will compete Planning to tap retail (lubricants), in which it will compete
with major MNCs. with major MNCs.
Advantages: Advantages: Growth prospects for retail are high on the back Growth prospects for retail are high on the back of rising demand for personal vehicles. It is easier to pass on of rising demand for personal vehicles. It is easier to pass on price hikes in retail as against the industrial segment.price hikes in retail as against the industrial segment.
Current market share in the Indian lubricant industry is 4%Current market share in the Indian lubricant industry is 4%
Target: Obtaining a share of 10% by 2010, in the Indian Retail Lubricant Market.
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Industry HistoryIndustry History
Market regulated pricing of base oil
Entry of foreign players
Castrol BLted bazzar.
Market regulated pricing of base oil
Entry of foreign players
Castrol BLted bazzar.
Liberalization of the Indian economy
Import of Base oil de-canalized with IOC
Deregulation of base oil pricing
Liberalization of the Indian economy
Import of Base oil de-canalized with IOC
Deregulation of base oil pricing
Highly regulated market
Cleardominance
of PSUs
IOC, HP, BPCL market share > 75%
Highly regulated market
Cleardominance
of PSUs
IOC, HP, BPCL market share > 75%
Until 90sUntil 90s Early 90sEarly 90s From 2002From 2002
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Indian Lubricant Industry Current Indian Lubricant Industry Current ScenarioScenario
Emphasis on concern for environment
No entry and exit barriersQuality at affordable prices
CompetitiveCharacteristics
ExpandingMargins under pressure
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Indian Lubricant Industry Current Indian Lubricant Industry Current ScenarioScenario
1.2 MMTPA Market of value appox. 7700 Crores
95% - Automotive Lubricant
Expected Growth Rate Of 3%.
7th largest lubricant market in the world
Ratio of automotive/ industrial lubricants 65:35
Different Composition of Survey teams.Retail Lube Market – 0.7 Million Tons
Marketing Channels
Institutional Retail OEM Export
Fuel Stations Bazaar e-Choupal
Distributor
AuthorizedServiceStation
Retailer/Dealer
ExclusiveLube
Shops
Garages/Workshops
Fleets
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Industry Trends in Retail Industry Trends in Retail ChannelChannel
Fuel StationsFuel Stations Traditionally managed by inefficient people (1980-2000 govt.’s equal Traditionally managed by inefficient people (1980-2000 govt.’s equal
opportunity initiative)opportunity initiative) Captive customers, so not much selling skills neededCaptive customers, so not much selling skills needed With the transition from 2 stroke to 4 stroke and CNG technology, sales of With the transition from 2 stroke to 4 stroke and CNG technology, sales of
fuel stations has sufferedfuel stations has suffered
BazaarBazaar Exclusive distributorsExclusive distributors Company promoted repair shops (e.g. Castrol’s Bike Zones)Company promoted repair shops (e.g. Castrol’s Bike Zones) Exclusive lube shops (e.g. IOC’s ServoXpress and Valvoline’s Advantage Exclusive lube shops (e.g. IOC’s ServoXpress and Valvoline’s Advantage
Points)Points)
e-Choupale-Choupal Lubricant retailing outlets at the existing ITC e-choupal hubs (e.g. BPCL)Lubricant retailing outlets at the existing ITC e-choupal hubs (e.g. BPCL)
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Competitor Analysis - Competitor Analysis - Major PlayersMajor Players
Total Lubes market: Rs 10,000 croreTotal Lubes market: Rs 10,000 crore
CompanyCompany Overall Overall Retail* Retail*
35%35% 20%20%
22%22% 30%30%
18%18% 8%8%
10%10% 3%3%
OthersOthers 15%15% 39%39%
* excluding fuel stations
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Competitor AnalysisCompetitor AnalysisStrengthsStrengthsIndia’s largest company India’s largest company
by salesby salesLargest network of petrol Largest network of petrol
and diesel stations in the and diesel stations in the countrycountry
OEM tie-upsOEM tie-ups
largest private sector largest private sector operatoroperator
More than one-third of More than one-third of total sales through the total sales through the ‘bazaar trade’ channels‘bazaar trade’ channels
Distribution Network: 270 Distribution Network: 270 distributors, 40,000 retail distributors, 40,000 retail outletsoutlets
Powerful brand building, Powerful brand building, aggressive entry strategy, aggressive entry strategy, strong distribution strong distribution networknetwork
WeaknessesWeaknessesBureaucratic set-upBureaucratic set-upTakes time to adapt to Takes time to adapt to
new challenges forced new challenges forced by competitorsby competitors
No manufacturing/ No manufacturing/ blending plantsblending plants
No sales through petrol No sales through petrol pumpspumps
Opportunity for BLBuild robust and
innovative strategies as per the latest competitor environment
Can approach through the petrol pump dealers
Own blending plants
Can afford lower prices
Company
IOCL
Castrol
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Competitor AnalysisCompetitor AnalysisStrengthsStrengths
7700 Retail Outlets, 7700 Retail Outlets, 150-200 Distributors150-200 Distributors
E-choupalE-choupalStrategic locations of Strategic locations of
petrol pumpspetrol pumpsOEM tie-upsOEM tie-ups
Small and achievable Small and achievable targets- targets- focusedfocused
Aggressive salesAggressive salesMaintaining the target Maintaining the target
market market Higher MarginsHigher Margins
WeaknessWeakness
Major selling through Major selling through Petrol pumps (75%) before Petrol pumps (75%) before liberalization post which liberalization post which this share dropped to 35%this share dropped to 35%
No manufacturing/ No manufacturing/ blending plantsblending plants
Not much focus on brand Not much focus on brand building, more than 50 building, more than 50 small brands exist in small brands exist in marketmarket
Opportunity for BLCompete in bazaar(3%)
with better strategies
Build competitive brand
Own blending plants
Better access to technology being an old player
Can afford lower prices
Company
BPCL
Others
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Segments &Target MarketSegments &Target Market
CVs2/3
wheelers
RailwaysRoadways
BL
Defense vehicles
Cars MUVs
Tractors Pumps
Target segment
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Positioning
BL is positioned as a lubricant which cares; it cares about you, your family, your vehicle and your environment. It is not only about style, or power, it is about the responsibility to take care of the things which matter the most to you.
BL is an environment friendly lubricant, which leads to greater fuel efficiency, higher mileage and longer engine life as against other lubricants which position themselves more as a racing, style based and all terrain lubricants.
Positioning of other lubricants:
Servo – Any Vehicle. Any Terrain. 100 % performance. Every Time Motul – Every Ride is a Race Castrol – Its more than just Oil, Its Liquid Engineering
Positioning Statement
We care. We know your vehicle is more than just a ‘vehicle’
Product Management16
Brand Promotion‘ We Love ‘
Product Management17
‘ We Adore ‘
Product Management18
‘ We Care ‘
Product Management19
BL Loves, Adores and Cares for you and your vehicle giving the best mileage and greater fuel efficiency enabling it to
become an environment friendly and caring lubricant
We care. We know your vehicle is more than just a ‘vehicle’
2020
Survey conducted to develop the marketing strategySurvey conducted to develop the marketing strategy
Ideal Packaging size:
Motorcycle:1 litre Passenger cars:1 ,3 and 5 litres Truck:20 litres (handy buckets)
Ideal MRP: Rs 130-138 per litre
Margin expected from new product:10%
Contractual obligation with the Oil company .Consumers are not brand loyal.
MRP, availability, genuineness.TV advertisement is a major source of brand awarenessConsumer Promotions: Seasonal discounts and gifts, .
Fuel Station
Findings
Suggestion to BLSuggestion to BL::
Co branding of its lubricant products with companies like HPCL, BPCL which Co branding of its lubricant products with companies like HPCL, BPCL which
have a good market share in the Fuel station segmenthave a good market share in the Fuel station segment..
Survey Findings of Authorized Service Survey Findings of Authorized Service
StationsStations::
They keep the same brand of lubricants as that of the fuel stations to They keep the same brand of lubricants as that of the fuel stations to
which they are attached .which they are attached .
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Analysis of Unorganized Service Analysis of Unorganized Service Stations SurveyStations Survey
Promotion by giving utility products like grease, oil etc to the service stations.
Ideal packaging 3-3.5 liters.Low Brand Loyalty.
Margin 4-5 Rs. Per literFindings
The stations product mix depends on the distributors push
Suggestions: The company should aggressively push its products through distributors by
giving them more margin & incentives.The company should give free gifts like greases, oil etc.
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Analysis of Retailer SurveyAnalysis of Retailer Survey
Analysis of Retailer SurveyAnalysis of Retailer Survey
Bulk discountBulk discount
Different brandsDifferent brands
Samples of new productsSamples of new products
Margin Margin
Gifts for retailerGifts for retailer
SuggestionSuggestion::
Maximize Shelf space VisibilityMaximize Shelf space Visibility
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Exclusive BrandsExclusive Brands Margins vary according to salesMargins vary according to sales PromotionsPromotions Brand switchingBrand switching
Suggestions:Suggestions:
Build a new distributor networkBuild a new distributor network Guarantee to take back goods not soldGuarantee to take back goods not sold
VRS scheme for attracting new distributorsVRS scheme for attracting new distributors
Analysis of Distributor Survey
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Marketing StrategyMarketing Strategy Phased Rollout: Starting from East where they have a presence.Phased Rollout: Starting from East where they have a presence.
Price: Same Range as that of PSU players.Price: Same Range as that of PSU players.
Retail Outlets: Fuel Station market- Co brandingRetail Outlets: Fuel Station market- Co branding
Bazaar: Bazaar:
– Distributor PushDistributor Push
– Customer PullCustomer Pull
– Alternate sales strategy for service stationsAlternate sales strategy for service stations
Performance Measures & Monitoring StandardsPerformance Measures & Monitoring Standards
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Co-BrandingCo-Branding
Entry strategy into fuel stations – tie Entry strategy into fuel stations – tie up with PSU’s for selling at their up with PSU’s for selling at their outlets under a co-branded nameoutlets under a co-branded name
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Distributor PushDistributor PushChallenges & ApproachesChallenges & Approaches
Large distributors have Strong existing relationships with Large distributors have Strong existing relationships with competitorscompetitors
- Give attractive promotional schemes and gifts (e.g. - Give attractive promotional schemes and gifts (e.g. grease packs) to motivate them to stock as well push sales.grease packs) to motivate them to stock as well push sales.
- Scratch card with gift schemes lets say in every fifth - Scratch card with gift schemes lets say in every fifth pack under the cap of the lubricant pack will help in attracting pack under the cap of the lubricant pack will help in attracting distributors/workshop owners.distributors/workshop owners.
- Establish new distributor networks by helping ppl with - Establish new distributor networks by helping ppl with VRS to set up distributorship; giving special incentives/ higher VRS to set up distributorship; giving special incentives/ higher discounts.discounts.
- Higher margins/ incentives for Dual distributorship to - Higher margins/ incentives for Dual distributorship to expand the distributor network.expand the distributor network.
- Build faith among distributors by assuring buy back of - Build faith among distributors by assuring buy back of unsold lubricants.unsold lubricants.
Higher Margins need to be givenHigher Margins need to be given- Try and leverage on own blending capacity.- Try and leverage on own blending capacity.
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Customer PullCustomer Pull BrandingBranding AdvertisingAdvertising Emphasize on better quality base 2 Emphasize on better quality base 2
oil used as raw materialoil used as raw material Prices lower than players like Castrol Prices lower than players like Castrol
and similar to other PSU’s pricesand similar to other PSU’s prices
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Alternate Sales StrategyAlternate Sales Strategy
Tie up with existing sales shop on the Tie up with existing sales shop on the highways around BL’s manufacturing highways around BL’s manufacturing locations by revamping their POP locations by revamping their POP materials and giving them discounts materials and giving them discounts on lubricants.on lubricants.
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Performance Performance MeasuresMeasures
Sales VolumeSales Volume Net margin after all Net margin after all
costs (before tax and costs (before tax and depreciation)depreciation)
Market Outstanding/ Market Outstanding/ Debtors (no. of days)Debtors (no. of days)
Finished Goods Finished Goods InventoryInventory
Monitoring Monitoring StandardsStandards
Distributor and Distributor and Retailer Retailer ThroughputThroughput
SKU wise sales SKU wise sales (against targets)(against targets)
Quality control at Quality control at sourcing level sourcing level (base oil) as well as (base oil) as well as pakaging materialpakaging material
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ReferencesReferences
Primary SourcesPrimary Sources Senior executives of IOCL, BPCL, Valvoline, BLSenior executives of IOCL, BPCL, Valvoline, BL Internal resources of co. BLInternal resources of co. BL
Secondary SourcesSecondary Sources Corporate websites of IOCL, BPCL, Castrol, BLCorporate websites of IOCL, BPCL, Castrol, BL R Suresh, DGM IOC: Current challenges and R Suresh, DGM IOC: Current challenges and
opportunities for Retail Lubricant Marketopportunities for Retail Lubricant Market Dharmesh Joshi, Vertical Market Manager, Dharmesh Joshi, Vertical Market Manager,
Honeywell: Role of technology in petrol retailingHoneywell: Role of technology in petrol retailing ICIS: Competitive Intelligence for the Global ICIS: Competitive Intelligence for the Global
Lubricant IndustryLubricant Industry AT Kearney Report on FICCI Petrotech 2007AT Kearney Report on FICCI Petrotech 2007
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