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A SUMMER INTERNSHIP PROJECT REPORT SUBMITTETED TO PARTIAL FULFILLMENT OF THE REQUIREMENT FOR MASTER OF BUSINESS ADMINISTRATION OF BPUT ORISSA

ON MARKETIMG MIX DECISION AT WUERTH AUTO INDIA LTD WITH SPECIAL FOCUS TO BREAK FLUID

A summer project report submitted to Academy of Management Studies Under affiliated by B.P.U.T. University SUBMITTED BY ASHISH KUMAR DASH (Researcher) Regd no-0906272087 Academy of Management Studies-2009-11 Supervisor (Internal) Prof. ANIL MISHRA Faculty, AMS Supervisor(External) Mr. MADAN SAHOO
HEAD MARKETING WUERTH AUTO INDIA PVT. BHUBANESWER

ACADEMY OF MANAGEMENT STUDIES

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DECLARATION
I do hereby declare that the summer internship program with the report entitled MARKETING MIX DECISION AT WUERTH AUTO INDIA LTD WITH SPECIAL FOCUS TO BREAK FLUID submitted by me to the Academy of Management Studies, Pubasan, Prasanti Vihar,Kousalyaganga,

Bhubaneswar is of my own. This project report is a result of my original work and not any part of the said report has been copied or duplicated nor has any project report similar to this one ever been submitted to any of the universities or any other organizations. This report has been prepared for the partial fulfillment of the Master in Business Administration (MBA) program (20092011), under BPUT.

Ashish Kumar Dash Regd. No.-0906272087 MBA (4th Trimester) AMS, BBSR

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ACKNOLEDGEMENT
I feel very happy to take the opportunity to extend my heartily thanks to Mr.Madan sahoo, HEAD:Marketing, Wuerth Auto INDIA

Ltd.Bhubaneswar,Orissa allowing me to conduct my studies over the concern.

I am also thankful to all the executives of Personnel and other departments of Wuerth Auto India LTD for their co-operation, advise and suggestion and those who contribute to complete this research project paper in time. I extend my heartily thanks to Prof.Anil Mishra, sinior faculty,Academy of Management Studies, timely guidance to prepare this research project paper.

I am also heartily thanks to Prof. rajesh Sathpathy, senior faculty, Academy of management studies, for his guidance to prepare this project paper.

Ashish Kumar sDash

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CONTENTS

CHAPTER 1

Introduction

INDIAN AUTO ANCILLARY INDUSTRY COMPANY PROFILE

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INTRODUCTION: INDIAN AUTO ANCILLARY INDUSTRY: OVERVIEW Auto ancillary companies experienced amongst the largest number of rating downgrades within the universe of ICRA-rated entities during the 21month period ended December 2009, that is the full fiscal year 2008-09 and the first nine months of 2009-10. At the beginning of 2008-09, companies comprising the Indian auto ancillary industry were in the investment phase, and thus had a stretched capital structure already. The relatively sudden contraction in automotive demand that followed in the wake of the global financial crisis, besides fluctuations in foreign exchange (forex) rates, increase in commodity prices, and the drying up of liquidity in the market, aggravated the situation further, causing a sharp deterioration in the credit profiles of many auto ancillary companies and leading to several rating downgrades. However, over the last few quarters, the situation has stabilised with original equipment manufacturers (OEMs) experiencing improvement in demand conditions. With that, ICRA expects the Indian auto ancillary industry to be able to report a steady improvement in the credit profiles of its participants over the medium term. Following seven years of healthy growth in automotive demand across segments, there was a sharp contraction in domestic OEM volumes in 2008-09. While almost all segments of the industry faced demand pressures in the third quarter (Q3) of 2008-09, the sharpest decline was witnessed in the commercial vehicle (CV) segment, which then translated into significantly lower offtake and losses for suppliers of CV components. Overall, the key challenges facing the auto ancillary industry during the quarter were under absorption of capacities, forex fluctuations, high interest costs, and increasingly stretched payment terms (imposed by OEMs). Further, the capital structure and coverage indicators of the industry deteriorated as a result of lower accruals and significantly higher pg. 5

working capital requirements, driven by the build-up of receivables. On the whole, weak profitability and cash accruals impaired the credit profiles of most industry participants, thereby exerting pressure on their credit ratings. Among the various segments of the auto ancillary industry, suppliers to the medium and heavy commercial vehicles (M&HCV) segment were the worst affected by the down turn. The demand for passenger vehicles, on the other hand, was affected only for a brief period and that too by the reduced availability of customer finances. The passenger vehicle segment delivered healthy growth during most months of 2008-09, supported both by domestic demand and a strong pickup in small-car exports. Additionally, vehicle demand from rural areas remained steady, with cash purchases offsetting the impact of the credit scarcity. However, while demand in the passenger vehicle and twowheeler segments held steady, suppliers to these segments were also affected by tight liquidity conditions, forex fluctuations, and high commodity prices factors that led to a few downgrades in these segments as well. Apart from OEM demand, replacement automotive volumes continued to grow at a relatively steady rate in 2008-09, thereby sustaining components demand from this segment. Besides demand contractions, the auto ancillary industry was also adversely affected by high commodity (steel, aluminium, crude, rubber among others) prices in 2008-09, although the pressure eased to an extent towards the last quarter. While reduced capacity utilisation affected overheads, most companies responded with aggressive cost reduction initiatives, including rationalisation of employee expenses and other costs. The quarterly profitability of auto component suppliers hit the bottom in Q3, 2008-09, before staging a recovery in the subsequent quarters. Driven by a pick-up in volumes across segments, the industrys profitability has improved sharply in the current financial year. With the trend continuing in the current pg. 6

quarter, ancillaries catering to the domestic market are likely to see profitability returning to 2007-08 levels however exporter profits will continue to be weak. Auto Ancillary IndustryTrend in Operating Income, Operating Profit Margin and Net Profit Margin:

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Lower OEM offtake hits auto component industrys profitability in 200809: With production volumes contracting sharply across automotive OEMs, offtake of components dwindled in H2, 2008-09. Given the high fixed-cost structure, low asset turnover had an adverse impact on the profitability of the industry participants. As always, this difficult period also led to increased focus on cost containment and reduction of operating expenses. Reacting to the demand decline, many auto ancillary companies initiated cost control measures in the areas of purchases, contract labour, and fixed overheads as early as Q2, 2008-09. Besides, there was rationalization of planned capital expenditure (capex) as well. Also, some component manufacturers approached their credit providers for amendments in repayment schedules citing short-term liquidity pressures. However, despite these measures, the severe demand contraction eroded the profitability of the components industry during the last two quarters of 2008-09. The coverage indicators also weakened significantly for most companies during this period.

M&HCV component suppliers bear the brunt of demand dry-up: In the automotive industry, it was the highly cyclical M&HCV segment that was the worst hit during H2, 2008-09. Following more than five years of cyclical uptrend, which had led to substantial industry-wide capacity additions, large channel inventories and somewhat aggressive financing penetration, the M&HCV segment was already poised for a cyclical correction. Subsequently, the situation was further aggravated by the economic downturn (which resulted in tightening of credit norms in response to increasing financier delinquencies), declining freight rates, and the onset of weak industrial demand, which then had a severe impact on component suppliers with a significant dependence on the M&HCV segment, like wheel rim suppliers (e.g. Wheels India Limited) and axle suppliers (e.g. Automotive Axles Limited). Suppliers with high pg. 8

concentration on a single OEM were further constrained by their weak bargaining power, and saw the payment terms being stretched even as pricing pressures increased significantly. The sharp slowdown in the auto component industry brought into focus the importance of having a diversified revenue model across OEMs, segments and products.

Trend in Quarterly Volumes in the Light Commercial Vehicle (LCV) and M&HCV Segments

Rural demand shores up volumes in certain automotive segments: The rural market proved to be a key source of sustained automotive demand during the economic slowdown. The factors shoring up rural demand during this period included the higher disposable surplus accruing from over four years of good monsoon, rising minimum support prices (MSP) of crops, and increase in land prices. Thus, cash purchases continued, driving the demand for two-wheelers, passenger vehicles and tractors, even as credit became scarce in the wake of the liquidity crisis. Component suppliers to these segments were able to meet revenue targets even during the weakest quarters of the downturn. pg. 9

Further, the passenger vehicle segment benefited from higher export demand and a spate of successful model launches. For instance, the global success of the i10 and i20 models of Hyundai Motors India Limited (HMIL) for which the company used the Indian facility as an export hub) and the impressive market response that the Ritz, A-Star and Swift Dzire models of Maruti Suzuki Limited (MSL) elicited supported the volumes of their component suppliers. Going forward however, while the rural markets showed no effect of the belowaverage and delayed monsoons during the October 2009 festive season, the outlook for rural demand outlook remains uncertain, given that the monsoon impact comes in with a lag.

Replacement volumes continue to grow at a healthy pace: For an auto ancillary company, a balanced mix between OEM and &HCVs are more expensive. 2 A wreckage premium of Euro 2,500 is being offered to car owners to replace cars that are more than nine years old. 3 Losses on long-term forex loans used for procuring fixed assets can be capitalised. However, losses on other loans are parked under the Foreign Currency Monetary Item Translation Difference Account (FCMITDA), which is either written off over the life of the asset or on or before March 31, 2011, whichever is earlier. For the Indian auto ancillary industry, most export segments reported muted growth in 2008-09 despite the depreciation of the Indian rupee which pushed up realisations. Contraction in automotive sales in North America and Europe, which accounts for over 65% of Indias auto component exports, had an adverse impact on component offtake during 2008-09 and the first nine months of 2009-10. Two segments that reported a particularly precipitous decline in sales were exported components for CVs and off-highway vehicles. The European CV market witnessed a fall for 18 consecutive months till November09 and posted a decline of 33.9% during January-November 2009 over the pg. 10

corresponding period in the previous year. Component exporters like Bharat Forge Limited, Rane Engine Valves Limited, Wheels India Limited and Rane Madras Limited bore the brunt of this contraction. An added concern continues to be the possibility of Chapter-11 filings by global OEMs and Tier-I suppliers, which could lead to temporary disruptions in business and payments. The shortterm outlook for the auto ancillary export markets remains weak with accretions to the order book being negative. While Government initiatives like scrappage schemes2 in EU and Car Allowance Rebate Scheme in the USA have provided some impetus to growth, especially in the passenger car segment, there are no clear signs of recovery on the global front yet aftermarket sales is a significant positive. Typically, a strong aftermarket provides for greater sales stability and stronger operating margins than an OEM. However, strong OEM sales are often the basis for an established presence in the aftermarket, given that OEM sales provide significant brand visibility. A balanced mix between OEM and aftermarket sales helps maximise returns on investment by enabling a component manufacturer to exploit the entire product cycle from product launch to replacement. Despite the downturn in the automotive market, component suppliers with a stronger presence in the aftermarket were better able to withstand the pressures on top-line and profitability.

Domestic vehicle demand stages strong recovery in current fiscal: Barring the M&HCV segment, the Indian automotive industry reported a strong volume recovery in Q2, 2009-10. The M&HCV segment has also witnessed sequential growth over the last two quarters (Q2 and Q3, 2009-10), and is expected to register increasing volumes over the rest of the current fiscal. The demand revival in the Indian automotive industry is being supported by a positive economic outlook and the gradual return towards normalcy that is being witnessed in the vehicle financing market. CV demand is also being supported by the excise duty cuts and accelerated depreciation that are part of pg. 11

the fiscal stimulus package initated by the government in Q4, 2008-09. Additionally, the M&HCV industry also anticipates strong demand generated by the emission norm1 change triggered pre- buying in Q4, 2009-10. Managing forex volatility and fluctuations in commodity prices turns critical: Apart from the impact of a depreciating rupee on imports and exports, the unprecedented movement in currency rates also resulted in large forex losses on un-hedged foreign currency denominated loans used by the auto ancillary industry. During the 22 months till October 2009, the Indian rupee showed significant volatility against other international currencies, and at one point depreciated by over 30% against the US dollar, around 22% against the euro, and 48% against the yen. Companies with uncovered long and short-term debt positions faced significant realised and unrealised losses. Most of the industry participants availed themselves of the AS-11 provisions of the March 2009 Ministry of Corporate Affairs notification, thereby reducing the impact of the long-term unrealised losses on profitability. However, there was a noticeable impact on their capital structure3. The first half of 2008-09 was marked by sharp increases in commodity prices as well as volatile exchange rates. With a sizeable number of component manufacturers in India being heavily dependent on yen imports, they were hit by the high commodity prices as well as the sharp depreciation of the Indian rupee against the Japanese yen. With the OEMs themselves under considerable margin pressure, the ability to pass on these price increases to the customers remained limited. In Q3, 2008-09 however, there was a significant downward correction in commodity prices because of falling global demand. Nevertheless, several auto component suppliers were saddled with high cost inventory and suffered losses on the same. Volatile commodity prices in a scenario of low volumes and high overheads eroded the profitability of the auto ancillary industry during 2008-09. pg. 12

The slide in commodity prices that had begun in early Q3, 2008-09 was arrested in Q4, 2008-09, and this was followed by a mild recovery in Q1, 200910, and a further firming up during the next quarter. However, despite this firming up, commodity prices were lower in H1, 2009-10 as compared with the corresponding period the previous fiscal and this benefited auto ancillary companies, especially those that had been able to liquidate the older stock of high-cost inventory. While raw material costs as a percentage of sales are likely to fall year-on-year (y-o-y) in 2009-10, the rising trend in commodity prices is expected to have a negative impact on the auto ancillary industrys margins during the last two quarters of the current fiscal. Nevertheless, the impact is expected to be mitigated to an extent by healthy demand.

Stretched working capital cycle affects capital structure:

The low volume off-take by OEMs resulted in an industry-wide inventory pile-up for auto component manufacturers. Companies that are dependent on imports with a long lead time ended up with relatively larger quantities of raw material. On the other hand, stretched OEMs (debtors) delayed payments while large steel manufacturers (creditors) required advance payments for purchases. With low accruals, the ancillaries had to increasingly depend on bank credit to fund the working capital shortfall. Working capital utilisation across the auto ancillary industry thus shot up significantly in 2008-09, straining the capital structure of component manufacturers and driving their interest expenses up.

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Downgrades in ICRA-rated auto-ancillary companies increased during the past 18 months:

In 2008-09, ICRA downgraded 12 entities from among its universe of rated auto ancillary companies. During the first nine months of 2009-10, there were six rating downgrades, and this included two cases in which two entities that had been downgraded in 2008-09 were downgraded further. Against this, the universe of ICRA-rated auto ancillary companies had seen just three rating downgrades in 2007-08. While the domestic auto components industry as a whole experienced pressures on profitability and some deterioration in debt coverage indicators in 2008-09, the deterioration was found to have been much sharper in the case of the entities downgraded.

ICRA-rated Auto Ancillary Companies (Long-Term Scale):

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ICRA-rated Auto Ancillary Companies (Short-Term Scale):

The rating downgrades primarily reflect industry-related issues like slowdown in OEM demand, forex fluctuations, and strained liquidity in the domestic market, all of which have had a negative impact on the cash flows of ancillary. While the Indian auto ancillary sectors overall dependence on exports is limited, a few entities with significant exports contribution or significant investments in exports-focused capacity were affected severely during the downturn. Among the rating downgrades effected in 2008-09 and 9 months 2009-10, a few were also attributable to company-specific issues like labour problems and large acquisitions. Since mid-2009-10, demand pressures in the domestic market have eased, thereby mitigating downgrade pressures. However, some entities whose balance sheets had weakened significantly in 2008-09 remain susceptible to industry-related shocks. Also, companies with significant export-oriented investments would remain vulnerable, given the weak demand conditions prevailing in the European and North American markets. ICRA currently has 81 auto ancillary companies in its universe of rated entities, with most of them (42 entities) carrying ratings between LA- and LBBB- on the long-term scale. Overall, there are only eight entities rated in the LAA category, while there are 17 in the non-investment grade. Most of the entities in the non-investment grade are Tier-II suppliers, generally suffering from lower pricing power and the limitations arising from their relatively smaller scale of operations. pg. 15

COMPANY PROFILE
Wrth in the world markets Competence, Quality and Closeness to the Customer:

The building up of the Wrth Group is the life's work of Professor Reinhold Wrth, and one of the outstanding business success stories in post-war German history. He has turned the two-man business of his father since 1954, the time of rebuilding after the Second World War, into a worldwide active group with over 350 companies in 81 countries today. The core business of the Wrth Group is the global trade with connecting and assembly technology that is implemented through an international network of group companies. All over the world, more than 2.8 million customers trust in the products and service of Wrth. Competence, quality and closeness to the customer build the foundation of our activities. Wrth stands for good, solid and lasting product quality. Professor Reinhold Wrths daughter, Bettina Wrth has been a member of the Board of Directors of the Wrth Group since 2001. As of March 1, 2006 she has taken the chair of the Advisory Board of the Wrth Group. Before she became member of the Board of Directors she was the person in charge of sales, product and marketing of the Construction Division and of the regions North and East of Adolf Wrth GmbH & Co. KG.

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Visions The Wrth Group is one of the worldwide biggest suppliers of assembly and connecting technology to craft and industry. What spurs us on? We love selling. Satisfying our customers is not enough. We want to inspire them - by offering ideas that make their business progress. We consistently pursue everything that has proven to be successful, and we try out new things optimistically, dynamically and with strong powers of self-assertion. Our vision: Becoming the number 1 in the eyes of our customers as the best sales team. The Wrth Group received the German Logistics Award 2009 from the German Logistics

Association for its modular systems logistics concept which can be specifically tailored to individual customer groups. As a family business with a strong corporate culture, the Wrth Group is very well-positioned to achieve this goal. Managing with visions, linked to a strict orientation towards excellent performance and great respect for the employees achievements, has been a characteristic feature of the company since its inception and is in no small part thanks to Reinhold Wrths leadership. Already in the early years, the company aimed to approach customers actively instead of waiting for them to come. Seeing behind the mountains and around the bend, leaving the beaten track behind to find potential for optimization is one of the basic rules of the company that was formulated by Reinhold Wrth. Bettina Wrth, the daughter of Reinhold Wrth, is keeping up this tradition as the Chairwoman of the Advisory Board of the Wrth Group.

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Exemplary for the visionary and strategic thinking in the Wrth Group is the Vision 2000, which Reinhold Wrth had developed in 1987: The sales volume of the Wrth Group amounted to EUR 700 billion in that year. The aim was to attain a sales volume of EUR five billion by the turn of the millennium. Indeed did the company succeed in reaching exactly this target in the business year 2000. And we move on: to pastures new and with a new vision. For the business year 2020, the Wrth Group has set itself the goal to generate sales of EUR 20 billion with 100,000 employees. Company portrait World market leader in the trade with connecting materials

The Wrth Group is world market leader in its core business, the trade in assembly and fastening material. It currently consists of about 400 companies in 84 countries and has more than 59,000 employees on its payroll. Over 29,000 of these are permanently employed sales representatives. The Wrth Group generated EUR 4.2 billion in sales in the first half of the business year 2010. In the core business, the Wrth Line, the product range for craft and industry comprises over 100,000 products: From screws, screw accessories and anchors to tools, chemical-technical products and personal protection equipment. The Allied Companies of the Wrth Group, which operate under their own company name, round off the range by offering products for DIY stores, material for electrical installations, electronic components (e.g. circuit boards) as well as solar modules and financial services.

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We are a family business About 3 million customers all over the world trust in Wrth today. Human beings and a very special corporate philosophy are the driving forces of the long-standing success enjoyed by the Wrth Group. Wrth is a family business that was founded by Adolf Wrth in 1945. Prof. Reinhold Wrth, todays Chairman of the Supervisory Board of the Wrth Groups Family Trusts, took over the business at the age of 19 after his father had passed away and developed it further in the following years. Starting from the early years of the company in post-war Germany, he turned the former two-man business into a worldwide operating trading group. Our philosophy We owe it to Reinhold Wrth that the Wrth Group has a clear business orientation: It is marked by a strong brand policy, future-oriented product strategy, closeness to the customer, clear quality offensive, thinking in terms of visions and not least by a strong corporate culture. Bettina Wrth, Reinhold Wrths daughter and Chairwoman of the Advisory Board together with the members of the Central Managing Boar d see to it that these values are filled with life and developed further.

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Preliminary Annual Financial Statement of the Wrth Group 2009

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Our Strategy : Quality: True to its motto Quality beats price, Wrth is positioned at the very top of the quality spectrum: We do not only offer top-notch quality when it comes to our products, but also for our services. Wrth - a strong brand: We want to inspire our customers all over the world, with identical quality and the same brand promise. This means that we support our customers actively and in a solution-oriented manner. This way, they can focus on their business. We are working passionately to optimize our products and services constantly. The sales force is the companys heart and soul: One of our particular strengths and a key to the Wrth Groups success story is the system of direct selling through our sales force organization. Over 29,000 permanently all over employed sales

representatives

world

advise our

customers and see to it that craft and industry businesses are offered product solutions tailored to their needs as well as optimal services. Thanks to our specialization through the divisions Automotive, Metal, Wood, Construction and Industry, every sales representative is a competent contact in his/her line of business, ensuring individual advice. This approach makes Wrth a reliable partner for its three million customers worldwide.

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Active in the market of 84 countries: We are a global player and currently active on all five continents with about 400 Wrth companies. Thanks to this strong presence, our customers, be they a small craft enterprise or an international industry business, can reach us easily. They are certain to receive Wrths top-rate product and service quality wherever they may be. At the same time, the Wrth Groups decentralized structure provides the possibility to react flexibly to the requirements of local markets and answer to individual needs. Milestones in the Company's History 1945 With 20 years' experience in this line of business, Adolf Wrth establishes a wholesale firm in Knzelsau, in the Hohenlohe region of southern Germany, supplying screws, nuts and bolts. 1954 Death of Adolf Wrth, founder of the firm, at the age of 45. His 19-year-old son Reinhold takes over the running of the business. Annual sales at the time are around EUR 80,000. 1962 Reinhold Wrth ventures outside Germany and sets up the company's first foreign subsidiary, Wrth Nederland B.V. 1965 Adolf Wrth OHG is converted into a limited commercial partnership ("KG"). The general partner is Wrth-Verwaltungs-GmbH. The limited liability partnership capital is contributed solely by the family. pg. 22

1969 The firm's premises at the railway station in Knzelsau reach the limit of their capacity. The offices are moved to new building in the Gaisbach district of Knzelsau. The Wurth Screw and Fastener Corporation is set up in the USA - Wrth's first company on the American continent. 1970 Wrth celebrates 25 years in the business. Sales rise 50 percent to EUR 32.9 million, and the first Wrth company is established in South Africa.

1973 Wrth establishes a company in the UK. Wrth Screw and Fastener Ltd. is formed as a one man operation based in Maidstone in Kent. 1974 Wrth Screw and Fastener Ltd. moves premises to an office and warehouse in Woolwich, London. 1978 A new distribution center goes into operation in Knzelsau-Gaisbach.Wrth Screw and Fastener Ltd. now employ 21 staff and move to larger premises in Woolwich.

1980 Wrth Screw and Fastener Ltd. changes its name to Wrth UK Ltd. in order to depart from the image of "nuts and bolts people". pg. 23

1981 Wrth establishes its company in Australia. 1985 Adolf Wrth GmbH & Co. KG celebrates 40 years in business, and Reinhold Wrth celebrates his 50th birthday.Winzer Industrial (UK)Ltd. is established with one employee selling assembly and industrial consumables to the trade. 1986 Wrth UK Ltd. moves to new purpose built premises in Erith, Kent. The official opening is attended by staff, suppliers, customers and local dignitaries.Reinhold Wrth acquires Winzer Industrial (UK) Ltd., now employing 8 staff, and the company joins the worldwide Wrth Group becoming Winzer Wrth Industrial Ltd. 1987 Wrth enters the Asian market by acquiring a company in Japan and establishing its own subsidiary in Malaysia. Wrth now has a presence on all five continents. 1989Adolf Wrth GmbH & Co. KG is awarded the German Marketing Prize. 1990 The company opens its first branch office in former East Germany, in Dresden.

1992 On May 15, 1992, the new headquarters building in Knzelsau-Gaisbach is officially opened. The modern office complex includes a museum of art that is open to the public.

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1994 On January 1, 1994, Reinhold Wrth retires from operational management and takes the chair of the Advisory board of the Wrth Group. Dr. Walter Jaeger is appointed Chairman of the Board of Management. Rolf Bauer becomes Deputy Chairman of the Board of Management. 1995 On April 20, 1995, Adolf Wrth GmbH & Co. KG celebrates its 50th anniversary. In the 1995 jubilee year, the Wrth Group achieves record sales of EUR 2.2 billion.Winzer Wrth Industrial ltd. move to a new purpose built warehouse and office in Godalming, Surrey. Wrth House was officially opened in time to celebrate the company's 10th anniversary. 1998 Two Wrth Group companies steeped in tradition, toolmakers Hahn & Kolb Werkzeuge GmbH & Co. KG in Stuttgart and the Arnold Umformtechnik GmbH & Co. KG screw factory in Ernsbach, celebrate their 100th year in business. 1999 Reinhold Wrth is appointed Professor of Entrepreneurship at the University of Karlsruhe in recognition of his outstanding entrepreneurial achievement. 2000 The Wrth Group rounds off an outstanding fiscal year by setting new records, with the company's sales exceeding EUR 5 billion. This represents the fulfillment of the target set by Professor Reinhold Wrth for the year 2000. His "Vision 2000," first formulated back in 1987 when Group sales were just EUR 700 million, becomes reality. pg. 25

2001 Despite the general economic slowdown in the trades, the Wrth Group boosts sales to a new record of EUR 5.28 billion.

On January 1, 2001, the Wrth Group is given a new management structure. The members of the new Board of Directors are Dr. Walter Jaeger (Chairman), Rolf Bauer (Deputy Chairman), and Bettina Wrth. Two years later, the Board is expanded to four persons with the appointment of Dr. Harald Unkelbach. 2002 The Wrth Group hires an additional 2,729 sales representatives worldwide and posts new record sales of EUR 5.36 million despite the weak economy. The operating result increases by 4.1 percent to EUR 281 million. 2003 Despite a challenging economic environment and a focus on consolidation, the company continues to invest heavily in expanding its worldwide sales force. This policy is rewarded by record sales of EUR 5.45 billion, with the operating result outstripping sales growth to reach a new record of EUR 330 million. 2005 The Wrth group celebrates its 60th anniversary. The focus of the celebrations is the official anniversary ceremony on 22 April 2005, when the company welcomes guests from politics, economics, art and culture. 2006 On the 1 March 2006 Bettina Wrth takes over the council presidency of the Wrth group from her father. Prof. Dr. hc mult. Reinhold Wrth now serves as Honorary Chairman of the Advisory Board and will pg. 26

remain chairman of the foundation's supervisory board. On 4 May 2006 Alma Wrth, co-founder of Adolf Wrth GmbH & Co. KG. dies. With her husband Adolf Wrth she was the driving force behind the founding of the screw wholesale business in Knzelsau in 1945. She remained a council member during the growth of the Wrth Group until 1993 and thereafter remained an honorary member of the Advisory Board. 2007 The German parent company of Wrth Group, Adolf Wrth GmbH & Co. KG, became the first single company of the group to achieve a turnover of one billion euros within a business year, including intercompany sales. On 10 May 2007 Prof. Dr. hc mult Reinhold Wrth receives an honorary doctorate in art history and museography from the University of Palermo in Palermo. 2008 The Wrth Group generated a record turnover of 8.82 billion euros.In April Wrth Austria welcomes the three millionth customer of the Wrth Group.At the beginning of the school year 2008/2009 the Freie Schule Anne-Sophie, a project financed by the Wrth Foundation charity, celebrates the opening of its new building. 2009 Winzer Wrth Industrial Ltd. and Wrth UK Ltd. merge into one single company called Wrth UK Ltd. The new company has one of the largest sales forces in the UK market.

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The operational units of the Wrth Group The Wrth Group has around 400 companies serving the markets in 84 countries. The companies are divided into two units: companies belonging to the Wrth Line and Allied Companies. Wrth Line Wrth Line operations focus on assembly and fastening materials, supplying customers in the trades, the construction sector, and industry. Internationally, the operational business units within the Wrth Line comprise the Metal, Auto, Wood, Construction, and Industry Divisions. The Metal Division comprises the subdivisions Metal, Household Technology and Maintenance, and the Auto Division the Car and Cargo subdivisions. Allied Companies The Allied Companies do not trade under the name of Wrth and operate independently of the Wrth Line companies. They are divided into nine strategic business units. With the exception of a small number of manufacturing companies, the majority are sales companies operating in related areas. The Diversification group within the Allied Companies comprises service companies operating at regional level, such as hotels and restaurants, Wrth logistics operators, and a company set up as a training program. A very special corporate philosophy Wrth the name stands for high product quality and excellent service. Nevertheless, the Wrth Group is not just a business trading in assembly and fastening material. A very special corporate philosophy and shared values that inform our daily activities underlie the companys longstanding success, be it in Germany, the birthplace of the Wrth company, or in any of its roughly 400 companies all over the globe. pg. 28

Our visionary thinking spurs us on to go the extra mile and attain ever new milestones, guaranteeing the lasting development of the family business. All employees are requested to contribute their ideas and their

creativity. Demanding and promoting performance is firmly embedded in Wrths corporate culture. Working together in the spirit of optimism, responsibility and mutual respect are not just empty words, but principles filled with life every day. Responsibility Entrepreneurial activities mean future-oriented activities. As a family business, Wrth has been committed to this principle ever since its early years. Of course, this comprises our core business, but as a holistic approach, it far exceeds the orientation to customers and employees. We recognize and embrace the responsibility we have within and for society. Customers We passionately support our customers. Satisfying our customers is not enough. We want to inspire them. First and foremost, a customer-oriented sales force, the service idea it represents and top-notch quality are characteristic of the products and services of the Wrth Group. As a consequence, we continuously try to find new solutions to support our customers business even better. One of our most important principles is to achieve perfection in everything we do. New challenges are tackled in an optimistic, dynamic and pragmatic way all with one aim: Making sure that each customer gets their own Wrth. Employees As a responsible employer, the Wrth Group invests in ongoing training of its workforce, an important foundation for the future of the company and its employees. The Wrth Group also assumes responsibility for a decisive contribution to its employees quality of life. Among others, this commitment pg. 29

includes offers for the promotion of good health, cultural events as well as access to the company museums. We also support our employees in the endeavor to make family and job compatible. This includes part-time working arrangements and teleworking models for parents. Arab-Jewish Youth Orchestra Israel receives the Wrth Prize of Jeunesses Musicales Deutschland 2009 awarded by the Charitable Wrth Trust

Company As a good citizen, we are involved in all sorts of corporate initiatives, support charitable organizations, and promote numerous projects in the fields of art and culture, research and science as well as education. In order to unite these commitments under one roof and ensure a continuation of the efforts, Reinhold and Carmen Wrth founded the Charitable Wrth Trust in 1987. The trust capital currently amounts to EUR 5.0 million. Furthermore, the individual Wrth companies have become active in many social areas right on their doorstep, in over 80 countries worldwide. Working at Wrth Attracting and retaining competent employees is an important component of the Wrth Group's growth strategy. For this reason, we consider human resource management to be of crucial importance in our strategic Group management. The applicant situation shows us that Wrth has an excellent reputation in the labor market as a family business. As such, we work on the principle of demanding, but at the same time promoting, performance. This also means that we offer our staff opportunities for further training and create a work environment in which delivering peak performance is fun. pg. 30

Qualification and training For us, the development of employees is one of our fundamental future-oriented duties. Education and training is therefore a priority in the Wrth Group. A key concern for us is that we teach not only knowledge and expertise, but also promote our employees' social skills and personality development. Components such as work-out activities in the sales force, broadening ones horizon through international internships at European Wrth companies as well as supporting social institutions form an integral part of the training plan at Adolf Wrth GmbH & Co. KG, the Wrth Groups parent company. MBA graduates of Akademie Wrth Business School. Wrth also offers all employees various programs to train alongside their jobs and to work on personal development. In Germany Akademie Wrth has become firmly established, offering management seminars as well as training in personal and social competence across the Group. Creating quality of life Employee motivation is not an empty phrase within the corporate culture of the Wrth Group, but clearly visible in many areas. As a performance-oriented company, it is important for us that our employees participate in our success. That is why our remuneration system has a strong performance-related component, according to which employees receive annual premiums based on economic success. We also have an effective system of incentives in place that we review regularly. The Wrth Group also takes responsibility for making a decisive contribution to the quality of life of its employees. This includes offers for health promotion, cultural events and our own museums. We also support employees in combining family life with work. For instance, parents can take advantage of part-time regulations or models for working from home. pg. 31

Demanding and promoting performance Wrth puts the human being at the center of business life. Being inquisitive and dynamic, filling out new spaces that is the corporate philosophy lived at Wrth. This includes the readiness of all employees to demonstrate full commitment to the company, be optimistic, tackle new challenges dynamically and achieve set goals pragmatically. At the same time, the employees are given considerable room for maneuver at their workplace, space to develop their creativity and put their ideas into practice. Tasks connected with responsibility are to be delegated as far as possible, following the rule: The bigger the success, the bigger the degree of freedom. Above-average performance is recognized and rewarded: we strive for perfection in everything we do.

New trainees 2009: Training begins at Wrth

Tackling new tasks Wrth considers the promotion of staff to be a fundamental, future-oriented duty. This already begins when starting into the world of work. The company therefore runs an intensive and comprehensive training program. All over Germany, for instance, the Wrth Group currently employs over 800 trainees learning one of over 60 occupations. Given such a wide selection, everybody can find and pursue their dream occupation. It also goes without saying that we don't promote expertise alone - personal development is also important. Another part of the Group's active training initiatives for future professionals is the internship program for university students. Whether Germany, Spain or China there are plenty of opportunities to get a taste of real work experience. pg. 32

Lifelong learning We want to inspire our customers time and again. That is why we need qualified and committed employees. Wrth offers its employees various programs of onthe-job further training and personal qualification. In Germany, Akademie Wrth has been active for 20 years, offering management seminars as well as personal and social skills training to all Wrth Group employees worldwide. Combining studies with work Anyone wishing to combine further academic training with work will be spoilt for choice at Akademie Wrth Business School. A Bachelor of Arts (BA) degree can be gained after three and a half years of study. Akademie Wrth also offers a Master of Business Administration (MBA) in Global Business in cooperation with the University of Louisville, USA, with PhD opportunities also available since the summer of 2009. These programs are available to applicants outside of the Wrth Group as well. Learning to lead Management positions are mainly filled by employees from Wrth's own ranks. The Group has two programs to support employees in this career step: MC Wrth and the High Potential Program. MC Wrth prepares professionals for positions in mid-management. The High Potential Program supports managers on their way to upper management levels. Also in place is the International Trainee Program, which runs in Asia, Eastern Europe and South America, and is aimed at local graduates of economics degree courses. It specifically guides employees into leadership roles in these particularly promising regions of the future.

pg. 33

Supervisory Board The Wrth Group is a family-owned business. As early as1987, the company assets were transferred to various family trusts. Prof. Dr. h. c. mult. Reinhold Wrth is the Chairman of the Supervisory Board of the Wrth Groups Family Trusts.

Prof.Dr. H.C. Mult. Reinhold Wrth Chairman of the Supervisory Board of the Wrth Groups Family Trusts Advisory board of the Wrth Group The Advisory Board is the supreme supervisory entity within the Wrth Group. In addition to advising on strategic matters, it is responsible for approving corporate planning and the use of funds, and appoints the members of the Central Managing Board and the managing directors of the major companies. Bettina Wrth Chairwoman of the Advisory Board of the Wrth Group Award The annual report of the Wrth Group 2008 is the winner of the private publ!c Awards 2009. The competition was organized by the consultants ergo Kommunikation together with the auditors PKF Fasselt Schlage Lang und Stolz among the 240 largest family and trust companies in Germany that are not listed on the stock exchange. pg. 34

CHAPTER 2
Review of Literature Need of the study Objectives of the study Scope of the Study

pg. 35

REVIEW OF LITERATURE

Marketing Mix
The basic task of marketing is the delivery of product(s) to consumersso that their needs are fulfilled and organisational objectives are alsoachieved. The process of marketing or distribution of goods require particularattention of management of business because production has no relevanceunless products are sold.

Marketing mix, simply stated, is the process of designing and


integrating various elements of marketing in such away as to ensure the achievement of enterprise objectives. The elementsof marketing mix have been classified under four heads - product,price, place and promotion. That is why marketing mix is said to bea combination of 4 Ps. Decisions relating to the product include productdesigning, packaging and labelling and varieties of the product. Decisionon Price is very important because sales depend to a large extent onproduct pricing. Whether uniform price will be charged or differentprices will be charged for the same product in different markets areexamples of decision pertaining to the price of the product. The thirdimportant element is place, which refers to decision regarding themarket where products will be offered for sale. Promotion involvesdecisions bearing on the ways and means of increasing sales. Differenttools or methods may be adopted for this purpose. The relativeimportance to be attached to the various methods is decided while concentrating on the element of promotion in marketing mix, Lastly,the marketing manager has to take into account the impact of externalfactors like consumer behavior, competitors strategy, and Governmentpolicy on each element of marketing mix. In short, marketing mix involves decisions regarding products to themade available, the price to be charged for the same, the incentives tobe provided to the consumers in the markets where products would bemade available for sale. pg. 36

These decisions are taken keeping in view theinfluence of marketing forces outside the organisation. Marketing Mix shows some characteristics like: Marketing-mix is the crux of marketing process. Marketing mix has to be reviewed constantly in order to meet the

changing requirements. Changes in external environment necessitate alterations in the mix. Changes taking place within the firm too necessitate changes in

marketing mix.

The elements or constituents of marketing mixmay be grouped broadly under four heads: (i) Product (ii) Price (iii) Place (iv) Promotion

Product: Product refers to a physical product or a service or an idea which aconsumer needs and for which he is ready to pay. Physical productsinclude tangible goods like grocery items, garments etc. Services areintangible products which are offered and purchased by consumers.Services may involve also an innovative idea on any aspect of operation. Product is the key element of any marketing mix. The decisionsconcerning product may relate to a) Product attributes b) Branding c) Packaging and labeling d) Product support service e) Product mix. pg. 37

a)

Product attributes refer to the quality, features and design of the product.

A product should serve the purpose for which it is made, in terms of utility and quality. In a competitive market, products are differentiated on the basis of certain features or design.

b)

Brandingis a crucial decision. In a competitive market, many productsare

sold by brand names. Brand is an identification of product.It plays an important role in creation of demand while branding aproduct, it should be ensured that the name is simple, easy to read andpronounce and if possible, it should have an appeal. c) Packaging and labeling of product are quite important decisions

Packaging means putting the products in suitable containers or packets such as tin, plastic jar or card board box, etc. Packaging should be such that product is protected and easily handled. Labeling serves the purpose of indicating the contents, weight ormeasure, instructions for use, price, name of the producer, date ofmanufacture and expiry etc. d) Product support service is another important element of product decision.

It includes decision pertaining to the type of service and availability of the service. Service may be by way of installation service, training in product use, after sale service, credit and financing service, etc. Secondly, how the services would be made available by the producers or agencies. e) The markets in which products will be offered is yet another

importantdecision. A company may decide to a single or a variety of products,add new products, or withdraw certain products. Relevant decisions aremade keeping in view the scope of marketing. Such decisions are called product line or product mix decisions. Product life cycle is a guidingfactor while decisions are made. pg. 38

Product life cycle: Product life cycle denotes different stages through which the sale ofany product changes over a period of time. Generally, there are fourstages in the life of each productintroductory stage, growth stage,maturity stage, and declining stage. When any product is introduced in the market, heavy expenditure is incurred on advertising and othermethods of increasing the sale. This is known as introductory stage.

During the growth period, sale of the product increases fast and costof production comes down due to increase in scale of production.Profits earned increase substantially. During the maturity stage, thegrowth in sale of the product slows down. Profits also start declining.After the maturity stage there is a stage of decline, when the productstarts losing its acceptance.

There is a pressure for price cut. Firmsgenerally start withdrawing the product after maturity stage. Some firmsstart preparing for introducing alternative product at the end of growthstage. Product life cycle, thus, helps in deciding about the product orproducts which should be offered in different markets.

Price Price is the amount charged for a product or service. It is theconsideration paid by consumers for the benefit of using any productor service. Price fixation is an important aspect of marketing. Pricingdecisions of a company are affected by both internal as well as externalfactors.

pg. 39

Internal factors -Cost of product -Marketing objectives -Marketing Mix strategy -Organisation for pricing Pricing decision

External factors -Nature of market or demand for product -Competitors cost price offers -Other environmental factors

There may be two methods of price-fixation 1. Cost-based approach 2. Competition-based approach

Cost-based approach: This is the simplest method of pricing. Generally companies add acertain percentage of Profit, to the total cost of the product. The totalcost of the product is calculated after taking all types of costs intoconsideration. While following this approach, no other factors e.g. pricesof substitute goods, nature of demand, etc. are considered.

Competition-based approach: In competitive market, cost-based approach is not always practicable.The prices are determined on the basis of conditions in the market.Companies may follow any one of the following three approaches. a) Price-in-line b) Market-plus c) Market-minus pg. 40

Price-in-line means prices fixed nearly equal to the prices of closealternatives. Generally this happens under free market conditions i.e.when the number of buyers and sellers is so large that they cannotaffect the prices. Prices are decided by the market forces of demandand supply.When companies charge (fix up) a price which is more than the priceof existing substitutes, it is called market plus pricing. This approachis adopted when the quality of a product is better, or it has a popularbrand name, or its packaging is attractive and useful.Sometimes business enterprises get ready to supply products at a pricelower than the market price. It may be adopted to grab a larger marketshare or to make a newly introduced product more popular. Thisapproach is called market-minus approach.

Promotion

Promotion refers to using methods of communication with twoobjectives: (1) Informing the existing and potential consumers about aproduct, and (2) to persuade consumers to buy the product.

It

is

animportant

element

of

marketing

mix.

In

the

absence

of

communication,consumers may not be aware of the product and its potential to satisfytheir needs and desires. Companies must decide which tool(s) should be used for larger sales and in what proportion. The tools should be combined.These decisions are known as promotion-mix decisions. Thus, promotion mix isa companys total communication programs which consists of differentblends of its components and which is used to achieve the companysmarketing objectives. Advertising, personal selling, sales promotion and publicity are themajor tools of promotion-mix. pg. 41

Advertising: Advertising is an impersonal form of communication for which theseller pays in order to promote a physical product or service. It maybe in print form as in newspapers and magazines, or in audio form ason the radio and other similiar methods, or in audio-visual forms as onthe Television, cinema screen, etc.The merits of advertising is that it reaches a larger number of people,the message can be repeated, its cost is not high, and with thedevelopment of art and computer graphics, simple statements can betransformed into forceful messages.

Personal selling:

Personal

selling

is

personal

communication

with

one

or

moreprospective buyers for the purpose of selling a product or service.These days, personal selling is considered to be the most effective toolbecause of various characteristics which are listed below: It involves personal interaction, hence feedback is receivedimmediately; it is quite flexible, salesman can adjust communication accordingto the

level of customers under-standing. it is more persuasive; buyers can be convinced about the utilityof the

product; impressive salesman leaves an impression on the prospectivebuyer;

Personal selling suffers from a few drawbacks too. It is the mostexpensive tool of promotion. Secondly, it requires too much dependenceon sales force.

pg. 42

Sales Promotion;

Sales promotion means the use of short-term incentives which are designed to encourage immediate purchase of a product or service by the buyer. It may include offer of discounts, free gifts, free sample, coupons, demonstration, store display, etc. Most of the sales promotion activities come in the form of some incentive for the buyer; hence sales generally increase immediately. Big business enterprises use sales promotion tools while introducing a new product. It adds to the effectiveness of total promotional efforts of a company.

Publicity: Publicity takes place when a favorable presentation is made through mass media about a product or service. People believe more on such news than in advertising. It covers people who do not entertain personal selling and sales promotion approaches. It is a non-paid form of communication but sometimes it is not regarded as a promotional tool within the reach of a company.

Packaging is also considered as a powerful sales promotion tool these days. It immediately attracts the buyer and makes him buy the product. This tool has produced good results in case of consumer goods. To some extent, packaging has replaced the counter salesman.

Factors governing Promotion-mix: Nature of product Type of the market Stage of the product life cycle Budget Push vs. Pull Strategy pg. 43

Place Place is another important element of marketing mix. Once the goods are manufactured, packaged, priced and promoted, they must be made available to the consumers. Activities related to placing the products are covered under this element of marketing-mix. It consists of decisions relating to channels of distribution and physical distribution. Channels of distribution refer to the individuals and organisations which facilitate moving the goods from manufactures to consumers. It is important that regular and smooth flow of goods is maintained so that products are not spoiled and supplies are not delayed. To ensure this, various facilitating services need to be arranged like transportation, warehousing, inventory control, and order processing. These are known as components of physical distribution. The two sub-elements of place(A) Channels of distribution (B) Physical distribution (A) Channels of Distribution : Channel of distribution denotes the intermediaries involved in the process whereby a product passes from the manufacturer to consumers. It is very important for the producers to involve middlemen in order to reach consumers. Middlemen reduce the problems of both producers and consumers. Secondly, middlemen help in distributing the products over a large area. Middlemen also supply useful market information to the producer for improving the product. There can be various levels of channel. It is for the producer to decide which level would suit the sale of his product.

pg. 44

Distribution channel starts from the producer and ends with the consumer. Each layer of middleman that performs some work in bringing the product closer to the final layer is a channel level. The diagram given below shows the various channel levels. Channel 1 Manufacturer Channel 2 Manufacturer Channel 3 Manufacturer Channel 4Manufacturer Consumer Retailer Wholesaler Wholesalers Consumer Retailer Jobers Consumer Consumer

Retailer

There are a number of factors which govern the choice regarding channelof distribution. These are listed below: Nature of product Nature of market Middlemen Size and Policy of the Company Marketing Environment Competitors

(B) Physical Distribution : Physical distribution comprises all those activities which deliver customer satisfaction by supplying right type of products at right place and at right time regularly. Economical and satisfactory customer service is the primary goal of physical distribution. Providing the right type of good at right place and at right time is the ultimate goal of any marketing department.

pg. 45

Components of physical distribution:(i) Order Processing: Physical distribution begins with customers order. Both the company and customer are benefitted if order processing is carried out quickly and accurately. These days computers are used, which establish a link between retailers and producers. Producers keep a watch on the stock position at retailers place retailers may also place orders through computer. (ii) Warehousing Every company must store goods to maintain a proper flow. Storage facilities are important because production and consumption cycles generally do not match. Companies need to decide the number, space and location of warehouses. The cost of these should be in balance with customer service. (iii) Inventory Marketers would like that company having enough stock to full fill all customers order immediately. But it involves heavy cost. Companies should, therefore, carefully plan when to order and how much to order. (iv) Transportation Transportation has in fact, facilitated the physical distribution of goods and services over a larger area. Modes of transportation may include road, rail, water, air, etc. The choice of mode of transport affects the pricing and condition of goods. Each element of the mix is so wide that it needs careful alteration and lot of concentration. A marketing manager has to design an optimum marketing mix which takes care of both customers satisfaction and organizational objectives. Each element of marketing mix is related with other element. Thus tools of promotion depend upon the nature of product, the price that can be charged for that product, and the process through which it would reach the consumer. Likewise while deciding on the price of product; the important considerations are manufacturing cost of the product, cost of promotion and money spent on pg. 46

distribution. Thus, all the elements are mutually inter-related. It would be unwise to take a decision on marketing mix without going deep into every elements of marketing mix. Marketing mix should be such that it helps in achieving organisational objectives of profit, sales volume, market share, etc. It should meet the competition in the market. It must click with the demand from different markets. It must deliver consumer satisfaction. All this requires an ideal blending of all the elements of marketing mix as the elements are complementary and mutually supporting.

Channel Distribution System: The term channel of distribution refers to the root taken by goods as they flow form the producer to the consumer. This flow of goods means its physical distribution or the transfer of title( Ownership). The distribution system is concerned with the movement of goods from the point of production to the point of consumption which involves a variety of functions. The main participants in the disrtibution systems are 1. The manufacturer. 2. The intermediaries 3. The facilitation agencies 4. The consumers. Distributors. Business that buy of resell merchandise to the retailers and other distributors but donot sell in significant months to end users (Consumers).

pg. 47

Distribution Channel

COMPANY MANUFACTURING UNIT

DISTRIBUTOR

SUB DISTRIBUTOR

RETAILER

CONSUMER

pg. 48

ROLE AND IMPORTANCE OF DISTRIBUTION CHANNELS Distribution Channel play a vital role in the successful marketing of more products, specially consumer products. The importance of distribution channels can be understood clearly by analysing the wide variety of functions performed by them Channels provide distribution effeciency to manufacturers. Channels supply products in required assortment. Channels provide salesmanship. Channels helps merchandise the product. Channels helps implement the price machanism. Channels look after the physical distribution. Channels act as change agents and generate demand. Channels assists in sales promotion. Channels provide feed back and market intelligence. Channels transfer technology to users and act as change agent. TERMS AND CONDITIONS FOR DISTRIBUTORS These are following conditions: Distributors should have previous work experience. Financial capability should be good. Should have market reputation. What products he deals on presently. His infrastructure ( vehicles, godowns, manpower etc) His attitude towards business. Capability to handle future growth.

pg. 49

THE INTENSITY OF DISTRIBUTION Company must decide on the intensity of distribution. The numbers of middle men are to be used at the wholesale and retail levels in a particular territory. INTENSIVE DISTRUBUTION Under intensive distribution a product sales it product through every available outlet in a market where a customer might reasonably look for it. Ultimate consumers demand immediate satisfaction from convenience goods and will not defer purchase to find a particular brand. SELECTIVE DISTRIBUTION In selective distribution a producer sales its products through multiple, but not all possible. Distributor and ratailer in a market where a consumer might reasonable took for it. A company may shift to a selective distribution strategy after some experience with intensive distribution. EXCLUSIVE DISTRIBUTION Under exclusive distribution the supplier agrees to sell its product only to a single distributor, middleman or retailer in a given market producer often adopts an exclusive distribution strategy when it is essnential that the reatiler carry a large inventory. PLANNING THE DISTRIBUTION SYSTEM IN AN ORGAINSATION. Planning for distribution is an important adjunct of long run marketing planning as it involves critical marketing decision such as the selection of selectiv distribution outlets and creation of physical distribution through careful distribution planning.

pg. 50

STEPS OF DISTRIBUTION An organisation is found with a number of questions at the time of decision how to distribute its product. These questions are as: Should it go direct or through conventional market middleman? How many wholesales points should it cover to ensure satisfactory market coverage? Where to locate these points? What should be the number of companies owned warehouses and where should these be located?

A satisfactory answer to these questions would require a careful consideration of firms objective, its resources, the business philosophy of its top management specific needs of products and those of its customers sucsh planning can be done through the following steps: State the objectives of distribution. Examine the resources of the organisation Examine the product needs. Examine the market needs. Study the market needs. Study the legal environment. Identify the alternative system of distribution. Evaluate the various altrnatives and select one which is found to be most conductive to the attainment of marketing goals.

pg. 51

PHYSICAL DISTRIBUTION SYSTEM The management of physical distribution provides and exciting opportunity for improving customer service and reducing costs efficient distribution can increase profitability by increasing sales and reductin costs actually physical distribution management is the process of strategically managing the movement and storage of material, parts and finished inventory from supplier between enterprise facilities and to customers. PHYSICAL DISTRIBUTION LEVEL

MANUFACTURER

SUPPLIER

MIDDLEMAN

END USERS

pg. 52

COMPONENTS OF PHYSICAL DISTRIBUTION SYSTEM Transportation :Transportation management is important making physical distribution system such transportation related decision as: Measuring the cost aspects of transportation selecting transportation mode and pipelines specific careers. Deciding whether to use owned equipment or to hire transportation service. ORDER PROCESSING Physical distribution system being deals with customers order. The cycle involves many steps, including transmission of order by the sales person, order entry and customer check, inventory and production scheduling. The longer the cycle takes the lower the customer satisfaction and the company profit SERVICE RENDERED BY THE MIDDLEMAN Choice of channel distribution is determined the market in Wuerth. Channel management decision is also determined by selecting channel members. The service rendered by the middleman are : Market feedback. Competitors activities. Proper distribution of companys product. Surplus of product Market equipment placement and maintenance.

pg. 53

WUERTH PRODUCT: There are numerous products of wuerth in various categories but I have taken Weurth Break Fluid for my project study. Important Information:

Wrth recommends that brake fluid ischanged every two years can be mixed with all brake fluidsmeeting the same specifications.Never mix with AutomaticTransmission Fluids (ATF) oruse in vehicles with LHM or mineraloil systems.Follow vehicle manufacturersrecommendations when adding andusing brake fluid.Keep brake fluid clean and dry.Contamination with dirt, water,petroleum products or other materialsmay result in brake failure or othercostly repairs. Store brake fluid in its originalcontainer. Keep container clean andtightly closed to prevent absorptionof oisture. When un-opened shelf life is typically3 years, but always check use by dateon packaging.Do not refill container or use forother liquids.Brake fluid will damage paintwork.

pg. 54

Technical data: Dry boiling point: Min Dry Boiling Point >260C Wet boiling point: Min Wet Boiling Point >165C

Description Contents ml Art no. Dot 4 Dot 4 Dot 4 Dot 4 Dot 4 250 500 1000 5000 20000 0892 009 25 0892 009 050 0892 009 1 0892 009 5 0892 009 20

Pack Quality 24/1 24/1 10/1 4/1 1

Your advantages: High quality and high performance Suitable for ABS brakes. High thermal stability Provides excellent protection against corrosion of iron, steel and non-ferrous metals. Will not damage rubber parts can be mixed with all brake and clutch fluids meeting the same specifications. Suitable for use in hydraulic clutch systems.5 litre in a clear container, with easy to see fluid level5 litre container will fit Orsyracking systems.

pg. 55

COMPETITORS PRODUCTS:
1. CASTROL GT LMA BRAKE FLUID IS RECOMMENDED FOR ALL INDIAN AND FOREIGN VEHICLES WITH DOT 3 AND DOT 4 REQUIREMENTS, INCLUDING GM, FORD AND CHRYSLER.

Exceeds DOT 3 and DOT 4 requirements. Unique Low Moisture Activity (LMA)

formulation provides maximum protection against vapor lock brake failure.

Maintains

higher

boiling

point

than

conventional brake fluids.

Superior protection against chloride and zinc corrosion of braking system parts.

Ideally suited for Audi, BMW, Jaguar, Mercedes-Benz, Porsche, Saab, Volkswagen, Volvo, Honda, Acura, and many other brake systems. Exceeds specifications SAE 1703, SAE 1704, ISO 4925, JIS K2233 and FMVSS No. 116 DOT 3 and DOT 4. 2. WAXPOL 3.

Contains high boiling solvents Non-drying in composition Scientifically blended Does not swell or soften the rubber parts Non-reactive to different metals in the brake

system

Water tolerrant within limits pg. 56

Ensures safe, easy and confident driving

Packing: 100ml, 250ml, 500ml, 1Litre.Poly Bottles, 5 Litre Jerrycan, 20 Litre Poly Jar & 205 Litre Drum 3.VOLVOLIN

Compatible with all braking systems

requiring a DOT 3 or DOT 4 fluid


Mixes well with conventional fluids High dry boiling point up to 480F reduces

the risk of fluid evaporation and possible brake failure

Low-moisture formula provides excellent

vapor lock protection


Maximizes ABS performance Ideal for hydraulic and disc brakes

Surpasses specifications SAE J1703, FMVSS No. 116 and DOT 4 Motor Vehicle Brake Fluid Minimum wet boiling point is 311F

pg. 57

Need of the study.


Wuerth has completed 2 years of operation in Orissa. To ascertain the impact of the marketing activities for the last two years it is essential to find out the brand awareness level of wuerth and its market position. To frame any marketing strategy further it needs to know the preferences of retailers regarding keeping stocks. The study is an endeavor to suffice to all these needs.

OBJECTIVES OF THE STUDY:


1. To ascertain the brand awareness level of Wuerth. 2. To find out the preferences of retailers in keeping stocks. 3. To find out the market share of Wuerth.

Scope of the Study.


The Auto Ancillary industry in India is emerging with many domestic and international players. The growing use of automobiles has given the industry a needed acceleration. Wuerth is continuing its third year of operation in Orissa. Being a Multinational Company and an international player its strategies for market proliferation is worth studying. By this study I could find the market share of different companies operating in this industry and in Orissa.

pg. 58

CHAPTER 3
Research Methodology

pg. 59

Research Methodology:
Research Objective: The objective of research is: To know the market share of the product. To know about the preferences of the retailers that influence their decision to keep stock of Wuerth products. To know the Channel of Distribution and how product fulfill the demand of the consumer. To measure why company gives more importance on Sales Promotion. To measure the Brand awareness level of Wuerth. Sources of Data Collection: Secondary Sources: Collected from published sources like Automobile Journals, Dealer Manuals and Websites. Primary Sources: Collected from a sample of a cross section of Sambalpur, Rourkela and Jharsuguda including concerned Retailers through Questionnaire. To nullify the error in sampling I divided the city of Sambalpur, Rourkela and Jharsuguda into 3 areas and the sample elements were gathered uniformly from each area. This gave a preliminary idea on the Product quality, Promotional Offerings, Pricing Strategies, and distribution channels of Wuerth.

Type of Research: Descritive study by questionnaire survey. Research Instruments: Mainly by questionnaire(Close ended format)

pg. 60

CHAPTER 4
Data Analysis Findings Suggestions & Recomendations

pg. 61

1. Which company products do you keep?


Frequency a b c d e Total 88 4 2 11 5 110 Percent 77.2 3.5 1.8 13.1 4.4 100.0

Market Share
c b 2% 4% d 10% e 4%

a 80%

Fig. No. 1 According to the study it is found that 3M is the market leader with 80% of Market share and it, main competitor is waxpol having 10% of Market share. Wureth comes in third position with 4% of Market share. Castrol and volvolin have a minimal market share of 4% and2% respectively.

pg. 62

2. How you rate the quality of the Wurth Products?


Frequenc Percent y a b c d Total 18 43 35 14 110 15 37.7 30.7 12.3 100.0

Product Quality of Wuerth


d 13% a 16%

c 32% b 39%

Fig. No. 2 According to the study 39% of the Retailers respond that the quality of Wuerth is very good, a maximum 32% of retailers respond that it is of Good quality. For 16% retailers it is of excelent quality and only for 13% of retailers it is Average.

pg. 63

3. What influences your decision to stock Wuerth Product?


Frequency a b c d e Total 11 33 48 13 5 110 Percent 9.6 32.9 42.1 11.4 4.4 100.0

Cause of Keeping Stock of Wuerth Products


d 12% e 4% a 10% b 30%

c 44%

Fig. No. 3 The main cause that influence the decision of the retailers to stock Wuerth Product is mainly the Product Quality. In the study it is found that 44% of the retailers stock Wuerth Product only because of its quality. 30% retailers stock to meet demand, 12% for Damage Settlement, 10% for Pricing and only 4% for other causes.

pg. 64

4. Price of Wuerth products as compared to other competitors products?


Frequency a b c Total 79 11 20 110 Percent 69.3 9.6 21.1 100.0

Comparision of Price
c 18% b 10%

a 72%

Fig. No. 4 In the study 72% of retailers responded that the Wuerth Products are expensive. For 18% of retailers it is somewhat equal and for 10% retailers it is cheaper.

pg. 65

5. From which source you got the information?


Frequency a b c d e Total 26 10 5 18 51 110 Percent 26.3 8.8 4.4 15.8 44.7 100.0

Source of Information
a 24%

e 46%

b 9%

d 16% c 5%

Fig. No. 5 Maximum number of Retailers get the information about the Wuerth Product from the Direct Marketing Professionals i.e. 46%. 24% Retailers get information from the Mechanics, 16% Retailers form other People in the Business, 9% from Internet and 5% from Magazine.

pg. 66

6. Do you receive any scheme or sales promotion offer while procuring Wuerth product?

Frequency

Percent

a b Total

80 30 110

70.2 29.8 100.0

Recipt of Sales romotion Offers and Scheme


b 27%

a 73%

Fig. No. 6 73% of the retailers responded that they receive sales promotion offers and schemes, while 27% denied any such.

pg. 67

7. If yes, then how far the schemes or discounts are comparable with other companysproducts?
Frequency Percent

a b c Total

65 15 30 110

57.0 13.2 29.8 100.0

Comparision of Wuerth's Scheme and Offers with Others'

27% a 59%

b 14%

Fig. No. 7 In the study 59% of the Retailers responded that the Sales promotion Offers and Schemes given by Wuerth is more than others. 27% said it is equal and 14% said it is less.

pg. 68

8. Since how long, you know about the Wurth Products?


Frequency a 10 Percent 8.8

b c d Total

20 60 20 114

17.5 52.6 21.1 100.0

Knowledge of the Product


d 18% a 9%

b 18%

c 55%

Fig. No. 8 In the study 18% of Retailers responded that they know Wuerth from more than 2 years, 55% said they know the product form last 1 to 2 Years, 18% said they from last 6 Months to 1 year and only 9% said they know it from less than 6 Months.

pg. 69

9. What is your response towards product availability by the Wurth Auto India?
Frequency a b c d e Total 55 25 15 10 5 110 Percent 48.2 25.4 13.2 8.8 4.4 100.0

Availability of Wuerth Products


d 9% c 14% e 4% a 50%

b 23%

Fig. No. 9 In the study 50% of retailers responded that the availability of Wuerth Products are excellent, 23% responded that it Very Good, for 14% of retailers it is Good, for 9% of retailers it is Average and for 4% of Retailers it is Poor.

pg. 70

10. Within how many days you receive the product after the placement of order?
Frequency Percent

a b c d Total

60 30 15 5 110

52.6 29.8 13.2 4.4 100.0

Receipt of Stock after Placemebt of Order


c 14% d 4%

b 27%

a 55%

Fig. No. 10

In the study 55% of the retailers responded that they receive the product within one day of from the placement of order. 27% of retailers said that they receive it within two days, 14% of retailers receive it within four days and only 4% receive it beyond four days of the placement of order.

pg. 71

11.In which way you receive the product ?

Modes of receipt of Product

By other modes of transportation 36% By salesmen 64%

Fig. No. 11 64% of the retailers responded that they receive Wuerth Products by Direct Sales Personnel and 36% of retailers responded that they receive it through other modes of transportation.

pg. 72

Suggestions & Recommendations:


In my opinion following suggestions should be taken into consideration by the company which helps it to increase its sales, market share, and customer satisfaction and of leading position in the market and further growth can be achieved. Wuerth Auto India Company recently lunch in orissa market, therefore it should give more attention in promotion for better understanding of the customer. The company should segment the market according to customers and consumers. Company should make the price as such affordable by all consumers. The sales persons and marketing executives should be aware of the contents and usage of the products. The company should maintain a strong relationship with the sub distributors and dealers. The company should develop its service system to gain satisfaction of the customers. The company should give offer to the retailers as well as to the customers. The company should give more attention towards research.

pg. 73

CONCLUSION: Gaining and maintaining consumer preference is a battle that is never really won. Continued and consistent branding initiatives that reinforce the consumers purchase decision will, over time, land the product in consumer preference sets. Attaining and sustaining preference is an important step on the road to gain brand loyalty. During my study I come to understand that WUERTH company is the market leader in USA and UK. But it is new for Orissa market. In Orissa Castrol Break Fluid is the market leader. Most of the consumer in Orissa they do not know the WUERTH Company. Therefore, it should improve in some areas like in the field of promotion of the products, customer service, channel of distribution etc. to improve its customer satisfaction value. I think that by following some of the part of my recommendations the company may get improvement in its business.

pg. 74

Bibliography: Name of the site:www.google.com www.wikipedia.com www.ask.com www.wuerth auto industry UK.com www.wuerth auto India.com www.3M.com www.volvolin.com www.waxpol.com www.castrol.com www.India automotive.com

Name of the books:Philip Kotler,Keller, Koshy & Jha, Marketing Management,Pearson Education. Kotler, A framework for Marketing; Pearson. Arun Kumar, N Meenakshi, marketing Management, Vikash Publication. Srinivasan, case studies in Marketing, Indian context: PHI. C.R.Kothari, Research Methodology, (second revised edition), New age International publishers. Best, John w. & Kahn, James V., Research in Education, 5th Ed., New Delhi: PrenticeHall of India pvt. Ltd.

Magazines: Business and Economy

pg. 75

Questionnaire for Retailers Dear Sir, As part of my 2-year MBA program at Academy of Management Studies, BBSR. I have under taken a project work to study the Marketing Mix Decisions at Wurth Auto India Ltd with special focus to Brake Fluid I would be grateful if you spare few minutes in filling up the following questionnaire. Name :-

1. Which company products do you keep? A) 3M B) Wuerth C) Volvoline D) Waxpol E)Castrol

2. How you rate the quality of the Wurth Products? A) Excellent B) Very Good C) Good D) Average E) Poor

3. What influences your decision to stock Wuerth Product? A) Pricing Others 4. Price of Wuerth products as compared to other competitors B) Demand C) Quality D) Damage Settlement E)

products? A) Expensive B) Cheaper C) Somewhat equal

5. From which source you got the information? A) Mechanics B) Internet C) Magazines D) People in this business

E) Direct Marketing Professional

pg. 76

6. Do you receive any scheme or sales promotion offer while procuring A) Yes Wuerth product? B) No

7. If yes, then how far the schemes or discounts are comparable with other companys products? A) More B) Less C) Equal

8. Since how long, you know about the Wurth Products? A) Less than 6 months B) 6 months to 1 year C) 1 to 2 years D) More than 2 years

9. What is your response towards product aviability by the Wurth Auto India? A) Excellent B) Very Good C) Good D) Average E) Poor

10. Within how many days you receive the product after the placement of order? A) Within one day B) Within two days C) Within four days D) Beyond 4 days.

11. In which way you receive the product ? A) By Salesman transportation. 12. Any suggestion: pg. 77 B) Delivery through other modes of

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