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Introduction The Indian automotive lubricant market is the sixth largest market in the world with revenues of approximately $1.30 billion in 2002. It is also one of the fastest growing retail markets in India. Until 1993, it was a highly regulated market with a clear dominance of the public sector. Companies like Bharat Petroleum (BPCL), Hindustan Petroleum (HPCL), and Indian Oil Corporation (IOC) held more than 75 percent of the market share. In recent years, with the advent of the increasing number of multinationals in the Indian market there is a growing presence of private companies. Companies like Castrol, Elf Total-Fina, Gulf, and Shell Oil have made their presence felt in the market. Market Size Total production of automotive lubricants in India is approximately 8 to 10 percent of global lube production. Unlike other countries where lubricant demand has witnessed stagnation, the Indian market has been growing at approximately 7 percent per annum for the past 2 years. The public sector contributes to over 60 percent of the revenues for this market. MNC’s have 5 percent market share and the remaining share is held by the unorganized sector. Automotive lubricants are further divided into diesel lubes and petrol lubes. Diesel lubes comprise 70 percent of the market and petrol based lubricants cover the rest. As diesel lubes are used by commercial vehicles, which have to cover greater distances, their market share is higher. Engine oil constitutes around 83 percent of total sales volumes. Gear oils, transmission fluids, hydraulic brake fluids, and engine coolants contribute to the balance. Competitive Analysis The first seeds of competition were sown in the early 1990’s when following the liberalization of the Indian economy, the government decided to open the Indian market to foreign competition. Import of base oil, the key raw material, was de-canalized with IOC losing its status as the sole canalizing agent. Pricing of base oil was deregulated in a phased manner and currently it is market determined. Basic custom duty on base oil stock was also reduced from a peak of 85 percent to a level of 25 percent. All quantitative restrictions were also removed. These developments naturally encouraged the entry of foreign players on Indian shores who were already facing a slowdown in demand in their local markets. The coming in of foreign participants created an excess supply situation in the Indian automotive lubes market, which made it more difficult for the Indian lube manufacturers to survive. Recent deregulations in the lubricant market have promised many new opportunities for the private lube manufacturers. With the dismantling of Administered Price Mechanism (APM) the burden of subsidies is now being passed on to the government. Private participants will also gain a presence in the Indian oil and gas sector and hence there will be competition between participants that will ensure the growth of the sector. In the next couple of years, the industry is going to witness sea changes. Retail networks, logistics management, and risk management are going to be the crucial factors. The stand-alone refineries will have to be merged with the marketing companies, as they do not have the distribution infrastructure to sell their products in a deregulated market. Companies like Reliance are already selling their products through petrol pumps. The monopoly of the public sector holdings will no
the consumer selects his own brand of lube after giving his vehicle for service in the same outlet. Castrol. Distribution Channels With increasing number of players in the market. The original equipment market contributes almost 70 percent and 30 percent of the market is comprised by the retail sales segment.longer exist. In the lube market. or the advertisements. Castrol developed the concept of "Bazaars. After the deregulation of the petrol pumps companies are keenly watching the developments in the lubes market. Lubes manufactured by Reliance Petroleum. Gulf Oil etc. it was found that vehicles owners’ decision to buy a certain lubricant is affected by a garage mechanic. The channel for replacement market or the retail segment is petrol pumps or retail stores. Key Success Factors Frost and Sullivan believe that the key factors for success in this highly fragmented and competitive industry include: Brand Image With lubricants becoming a fast moving consumer good and the brand preference of the consumers witnessing a change. The concept of "User Outlet" is another new concept developed by Castrol. Frost & Sullivan expects private sector companies to have a market share of around 25 percent. Other private participants have had to set up an independent infrastructure comprising of distributors. which can affect the customer’s decision to buy a certain brand. concepts like "Bazaars" and "Super Stores" have also been developed. MNC’s will be able to sell their products through petrol pumps. To compete with dominant public sector distribution. The lubricants market in India is very highly fragmented and complex. Indian Oil Corporation Limited is leading the market with 30 percent market share." These are outlets meant only for lubricant sales. Castrol is next with 25 percent of the share and HPCL and BPCL are next with about 20 percent and 15 percent shares respectively. Most of the MNC’s have tied up with oil majors to market their . which are now sold at petrol pumps. In medium to long term. it is vital for the companies to reach a wider segment of customers. it becomes important to have a good brand name in the market. The distribution channel adopted by public sector units is through the petrol pumps. brand image plays a key role in affecting the consumer’s decision to buy a lubricant. MNC’s and private companies sell through retail stores. Public limited companies selling primarily through petrol pumps manage to achieve a deeper penetration. stockiest and retailers through out India. Distribution Structure There are two key markets for lubricants in India. Given high levels of competition original equipment. Hence. Convenient stores and highway stops for vehicles are being built from where the vehicle owners can get their vehicles repaired and get their supply of lubricants. In a recent study by Frost & Sullivan. linkages are gaining importance. Most of the MNC’s have tied up with oil majors for marketing their lubricants like Castrol with Escorts and Tata BP with Telco. In this. Almost 70 percent of the lubricants in India are sold through petrol pumps. Elf. Other private companies hold the remaining market share. retail storeowner.
Hyundai Motors. Multinationals with better technology. In the OE sector also lubricant manufacturing. Maximum sales are achieved through mechanics and retail stores. brand awareness. Prices and Promotion The transformation from the administered pricing mechanism to free pricing has increased the importance of providing cost effective product to the users. Outlook In the future.brands like Castrol with Escorts. brand name and finances have the power to launch themselves on their own in the market. Maruti Udyog. In the past one and a half years. This will help the private companies to establish a wider access. Tata BP with Telco. a firm specializing in online marketing strategy solutions. In the shorter term. Toyota. long drain lubes. with increasing number of competitors it is not possible for every one to carve a nich in the market. recently claimed a 1st place award for its utilization of product placement in video games and online games. However. growth in the automotive lubricants industry will largely depend on the overall performance of the economy. Margins and Discount Schemes Private companies mostly sell their products through stockiest. distributors. mechanics. which has the potential to change the face of the lubricant industry. The Indian lubes market is a combative market place and lubricant companies find themselves fighting a tough battle for survival. Ever wonder how to make a product stand out in a crowded marketplace and elevate it to a cultural icon brand? Engage your audience with innovative promotional marketing and advertising solutions. However. that will get you traditional results. British Petroleum’s not so recent acquisition of Castrol is one example.” says . the scenario has improved with higher sales of commercial vehicles and two-wheelers. Thus product costing and competitive pricing are key factors affecting the market. Given the rising competition. the Indian lubricant market has witnessed a phase of consolidation. and retail stores. This sector has witnessed considerable amount of mergers and acquisitions. success of a product would largely depend how well it is branded and distributed. Market Trend In the recent past. lubricants marketing strategy MarketSource IMS. "Traditional approach? Well. TAFE. one will witness intense competition in a slow growing market marked by a consolidation activity. This will increase the replacement cycle for lubes. as well as preference. Margins and discount schemes offered to the storeowners and mechanics prompt them to sell and promote a particular brand. dealers. in the future volume growth will be affected because of use of better quality. Hindustan Motors. and Skoda have entered into collaboration with IOC and Castrol for some of their models. companies are entering into collaborations with vehicle manufactures.
advanced search engine management techniques were incorporated.” boasted DeBiasi.' “The idea intrigued us because those males are watching less TV and many spend hours playing video games. The EMMA is the premier accolade for outstanding entertainment in marketing strategy. street billboards. branding guidelines. MarketSource promoted a “cheat code” to the public and emailed it to thousands of Castrol database members to help players access the sought after vehicle.” Castrol oil cans. well. Executive VP at MarketSource IMS. now let the games begin. generating positive product awareness that creates an emotional brand connection. “If you’re looking for iconic brand status. Castrol® SYNTEC®. BP Lubricants asked MarketSource to develop a non-traditional marketing approach that would put Castrol SYNTEC motor oil in front of this very elusive audience.” “We need to be creative in how we reach out to young men. “By integrating brand messages into naturally-occurring places in the virtual “real-world environment. car-loving males that integrated memorable Castrol SYNTEC brand messages into an Electronic Arts (EA) video racing game: 'Need for Speed Most Wanted. The biggest impact idea was incorporating a high-performance vehicle — one of the most powerful in the game — which took many levels of game-play to access. coverage from national publications and the game hitting #3 on the bestsellers list with more than 8 million units sold and you get the kind of viral marketing buzz that makes corporate marketing executives salivate." Innovators of integrating products and brand attributes into video games and online games. research showed a 23% increase in awareness after playing the game. Those product placements played off the Castrol SYNTEC brand message. MarketSource also created online advergames for Castrol’s website that delivered an exciting virtual racing experience while promoting various Castrol brand benefits through product placement and game play.” says Claire Lipnicki. To drive site traffic.” SYNTEC gets fantastic product placement in front of their core target.Peter Morrison.” says Mike DeBiasi. MarketSource has leveraged their expertise to win a Promo 2006 Entertainment Marketing Award (EMMA) in the Best Electronic Games Category. As part of targeting the young male consumer. quick lube stations and a 3-D garage environment were just the beginning. In fact. Marketing Director. BP Lubricants. Castrol SYNTEC was the only major synthetic brand to gain share in that quarter. “Plus. “The male 18-to-34 demographic is increasingly difficult to reach. MarketSource’s Account Director for the Castrol Account. ... Combine that exposure with a 30-minute MTV special promoting the game’s release. “Unlock the Power. assets and messaging while collaborating with EA to execute seamless in-game placements.” MarketSource handled the strategic initiative. MarketSource devised a plan to engage those young. passionate. “Castrol SYNTEC fourth quarter sales increased nearly 30% over the same quarter last year.” added Lipnicki.
To find out more about Castrol products and programs.com/us Press contact: Taryn Tarantino VP. Castrol® SYNTEC® – a full-synthetic.com Marketing & Sales In today’s highly competitive environment and narrow marketing margins.000 miles. Castrol® SYNTEC® BLEND™ – with an added level of synthetic protection. please visit here. oil companies need well-defined marketing and pricing strategies that enable them to extract their brand value in key target markets. New Jersey has been solving online marketing strategy challenges for more than 30 years. Castrol® GTX® High-Mileage™ – designed for vehicles with over 75. markets premium lubricants and business-building programs directly to independent lube operators. click here About MarketSource Integrated Marketing Solutions: MarketSource IMS.3422 Fax: 732. as well as our range of commercial transport lubricants. product sampling. Oliver Wyman has assisted many companies in addressing business challenges in the areas of: . service providers. MarketSource IMS delivers innovative. super-premium motor oil. Our leadership brands include Castrol® GTX® – a premium conventional motor oil.3439 Web: www. please call 1-888CASTROL or log on to www.987. new car dealers and leading retailers. For the Castrol SYNTEC case study. About BP Lubricants: BP Lubricants USA Inc.For more information about MarketSource’s in-game product placement and advergame solutions.castrol. event. based in Howell.987. strategic and nontraditional Internet. gaming. Marketing MarketSource IMS Phone: 732. Castrol® GTX® Start Up™ – formulated to provide superior wear protection during the critical start-up period. emerging media and search engine marketing solutions that impact consumer behavior.marketsourceims.
in China. and competitive offer tools to assist sales force. Developed client-ready simulation.• • • • Marketing and sales strategy Pricing and promotions Sales force effectiveness Customer and channel value Recent engagement example Customer value proposition and offer design . research/analysis of distributor utilities for various offer components and levels. TOTAL Total at a Glance: An international energy provider (2009 figures) Fifth largest publicly-traded integrated international oil and gas company in the world (1) First largest capitalization on the Euronext Paris and the Euro zone: €105.7 billion at December 31. The work identified tactics to increase earnings by 5 percent through increased customer share and lower marketing costs. The work identified alternative combinations for differing customer segments to increase offer take rates by 5 to 10 percent by focusing offers on the highest perceived value elements. Developed segmented offers to increase distributor volume share by 10+% over current offer configuration at lower program costs. Conducted quantitative choice-based. 2009. 96.Oliver Wyman helped a client to assess its current offer configuration to refined fuels product distributors and to redesign the configuration of sales & marketing support elements using our proprietary Customer Value Engineering approach. . planning. The resulting strategy allowed the client to focus on highest value opportunity areas to achieve share and profitability targets. customer requirements/behavior. execution of the strategy transformed the company’s loss-making operation into one of its most profitable and rapidly growing. and expected economics. Pricing and promotions: Oliver Wyman helped a client assess pricing strategies and improve the effectiveness of promotions and direct mail programs to consumers through our proprietary Value Engineering approach. Distributor offer redesign: Redesigned distributor/marketer offer and program elements for a major oil company. For example. Lubricants marketing: Oliver Wyman helped a major global firm develop lubricants marketing and growth strategies across several markets including assessing local competitors and channels.387 employees.
marketing and the trading and shipping of crude oil and petroleum products). 1 Marketer in Africa (5). Total also produces base chemicals (petrochemicals and fertilizers) and specialty chemicals for the industrial and consumer markets (rubber processing.3 billion. Total engages in all aspects of the petroleum industry. nuclear). Producer of oil and gas in 30 countries. biomass. Elf. Brands: TOTAL. Total is helping to secure the future of energy by progressively expanding its energy offerings and developing complementary next generation energy activities (solar.Petrochemicals and Fertilizers.6 million barrels per day. 2009 (2). 2009 sales: €131. Downstream No. development and production. With operations in more than 130 countries. One of the leading traders of crude oil and refined products worldwide Refining capacity: approximately 2. Sales of petroleum products: approximately 3. 1 Western European Refiner-Marketer (4) and No. Production: 2. Total has interests in the coal mining and power generation sectors. resins and electroplating). AS 24. adhesives.5 billion barrels of oil equivalent as of December 31.28 million barrels of oil equivalent per day. A leader in each of its core businesses: 2009 key indicators Upstream Exploration and production activities in more than 40 countries Production of oil and gas in 30 countries.300 service stations. Specialties . Elan. Operations in more than 130 countries Exploration and production operations in more than 40 countries. LNG) and Downstream operations (refining. Chemicals Total is one of the world’s largest integrated chemical producers (6) and a leader in each of its markets . Proved reserves: 10.000 French individual shareholders.6 million barrels per day. including Upstream operations (oil and gas exploration. Approximately 540. In addition. Retail network: nearly 16.
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