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ACKNOWLEDGEMENT Presenting a research project of this type is an arduous task, demanding a lot of time.

I cannot in full measure appreciate and acknowledgement the kindness shown and help extended by various persons in this endeavor. I will remember all of them with gratitude. My sincere thanks are also due to Dr. N.C. BANSAL for their significant help extended for the successful completion of the project. I highly the help I got from them in providing me and lot of information regarding the functioning of this organization. I am really appreciative this organization (Asian Paints Limited, New Delhi including all employees) for full co-operation, support and motivation that they extended to me in completing my project here. I am always beholden to my God, for always being with me and showing me the right ways, my family, for always doing favors to me and my friends and colleagues consistently helped with encouragement and criticism throughout the project work, for always lifting my sights to higher vision, raising my personality beyond normal limitation and for realizing me my strengths and potential, as I did not always welcome her exhortation, try again; you can do better. But this project owes a great deal to it and so do I.

STUDENT DECLARATION I am ROBIN TYAGI student of M.B.A. here by declares that the project report titled A STUDY OF PRODUCT DESIGNING AND PROMOTION OF ASIAN PAINTS is completed and submitted under the guidance of Dr. N.C. Bansal is my original work.

The imperial finding in this report are based on the data collected by me. This project has not been submitted to SRM University, NCR Campus or any other university for the purpose of compliance of any requirement of any examination or degree.

ROBIN TYAGI Roll No. - 3511130003

PREFACE Product designing and promotion is a social & managerial process by which an individual and group obtain what they need and want through creating offering and exchanging products of value with others. Marketing is getting the right good and services to the right people to the right place, at the right time at the right place with the right communication and promotion. It is the art of creating and satisfying customer at a profit. Advertising is one of the major tools of companies to direct pervasive communication to target buyers and publics. An identified sponsor defines it as any paid from and non personal presentation and promotion of ideas, goods or services. Advertising is a cost effective way to disseminate message whether it is to build brand preference for Nokia to motivate a developing nations consumer to drink milk and practice birth control. Sales promotion is an important instrument market to lubricate the marketing efforts. Today sales promotion is needed and not nearly luxury and fashion.

CONTENTS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Executive summary The Indian paint industry Asian paint india ltd. Company profile Consumer buying behavior Research mythology Findings Swot analysis Recommendation Limitation Conclusion Bibliography

EXECUTIVE SUMMARY The Indian Paints & consumer behaviour to purchase with a variety of new players & product flooding the market. The Indian market, which is under transition, is also getting more and more competitive both in terms of consumption and quality consciousness. A booming paints and varnish industry has resulted innovate marketing techniques come into play. All major players like Modi Paints, Nerolac Paints, Berger Paints and few other players are trying to strengthen there retailing operations with different marketing strategies/techniques because the paints and varnish industries come under the impulse category where factor like supply change management. The width of distribution, advertisement, packing & communication make all the differences. In the background of the above scenario, it was decided by the company to carry out a research to determine what dealer think about Asian Paints and Varnish. Is Asian Paints and Varnish gives value for money, means total satisfaction or not. This Project which was assigned to me is basically a dealer survey through out the project. I had find out the image of the product, purchase behaviour of consumer from dealer, their expection the reasons of satisfaction and dissatisfaction.

ASIAN PAINTS INDIA LTD. In 1942, four partners got together to manufacture paint in a garage in Bombay. The company was named Asian Oil and Paint Company; a name picked at random from a telephone directory. Up against giant international paint companies, Asian Paints hit on the innovative marketing strategy of reaching consumers in the remotest corners of the country with its small, conveniently sized packs. During the 1950s the company grew from being a family-managed, small-time paint manufacturer to a professionally managed organization competing with the best companies in the world. By 1967, through innovative R&D and ambitious grass-roots marketing, forming strong relationships with thousands of paint dealers in small towns all over India, the company jolted its multinational competitors by emerging as Indias number one paint company. [See Exhibits 1, 2, 3, 6,and 7 for more company information] For the next thirty years they maintained their position as market leader through a four pronged strategy i. ii. iii. iv. Excellent marketing Intensive distribution Leadership in Information Technology, and Recruitment of young management professionals.

In 1996-97 APs total sales reached $175 million, almost double that of Goodlass Nerolac Paints, (1996-97 sales $94 million) the number two paint company in the country. Asian Paints had strengthened its technological capabilities through agreements with Nippon Paints of Japan for automotive and powder coatings, Sigma Coatings BV of Netherlands

for marine and high-performance coatings, and PPG Industries of USA for the cathodic electrodeposition technology - a much needed enhancement for its automotive business. Prior to the KMCC/ICI sale, the ownership of the company was as follows: Chokseys Danis, Vakils, and Chowksis Total by Promoters Foreign Institutional Investors Non-resident Indians Individual Investors and Public 9.50% 41.06% 50.56% 11.52% 10.19% 27.73%

INTRODUCTION OF PAINT WHAT IS PAINT ALL ABOUT Can anyone imagine life without Colour? The Answer is absolutely No. So we may say that Paints some thing which add colour to life in Indian people used to whitewash their henses or festore occasions particularly in Dewali, Id, X-mas day etc. For this purpose they used the things called choona(Calcium Hydroxide) but present situation is no longer some with the advent of new sophisticated technologies thing have changed a lot.

First let us why Paint and Primer are used. Ancient used paint (Naturally Occuring) as a Necessity and only for decorated purpose but now Paint and Primers are used other than decorated purpose besides previous used Paint and Primers are used as auto corrosive agent.

We know that Corrosion Cause huge losses to complainers. An estimate of Corrosion Reveals that around Rs.1000 crores is lost because of Corrosion.Which is nearly double the sales turnover of Paints Industry. The paint is most cheapest way perfect as well as provide a decorative look to the valuable Asserts paint cost less than 2.5% of total cost of the assets on which to is applied protective coating thus play a crucial role in the combating corrosion. According to the use of solvents for the applying purpose paint canbe classified into two categories. Oil Based Paints Water Based Paints

In India Oil Based Paints are commonly used but they are somewhat costly because of oil used globally water based paints are preferred in order to produced paints. Certain Raw materials are needed. The required Raw materials are Pigments Resins Solvents Additives Adulterants Let us see what above material meant for the paint manufacturing we will see it through one by one.

ASIAN PAINTS COMPANY PROFILE BACKGROUND Champaklal H Choksey, Chimanlal Choksi, SC Dani and A Vakil set up APIL, in 1942 as a partnership firm .In 1945, it was converted into a private limited company, under the name of Asian Oil and Paint Co Pvt. Ltd. In 1965, the name was change to Asian Paints (India) Pvt. Ltd. In 1973, it was converted into a public limited company. APILs first plant came up in Bhandup in 1957 .It has three other plants located at Ankeleshwar (1981), Patancheru (1985) and Kasna (1990) .All the plants have captive resin manufacturing faculties and are capable of producing the entire range of paints. APIL also manufactures a key raw material Phthalic Anhydride, at its Ankleshwar plant, 30 % of which is costively consumed. Earlier APIL used to also manufacture another raw material, vinyl pyridine latex, which was later hived off onto a separate company, under the name of Apcotex Lattices Ltd. Capacity expansions have come in a phased manner. Productivity at the Bhandup plant has been lackluster. Through a AVS scheme introduced in 1993, APIL was able to cut back workforce. Investment in information technology, especially in the areas of production and distribution logistics has helped APIL improve its operating efficiency .In FY96 APILs ailing subsidiary Pentasia Chemicals Ltd. was merged with APIL. Locations APIL has 4paints manufacturing plants .The oldest plant is at Bhandup in Mumabi .The other plants are at Ankleshwar in Gujarat , Patancheru in Andhra Pradesh and Kasna in

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Uttar Pradesh .The Phthalic anhydride plant is located at Ankleshwar in Gujarat. Penta plant (result of PCL merger) is located at Cuddalore in Tamil Nadu .The installed Capacity of each manufacturing facilities are:

Manufacturing facilities Bhandaup, Mumbai Ankleshwar Patancheru Andhra Pradesh Kasna ,Uttar Pradesh Total

Installed capacity (TAP) 20,000 50,000 50,000 42,700 162,700

APIL ,Indias largest Paints Company , is the market leader in decorative paints .It has remained focused on core business and has consistently improved operating efficiencies .The company has registered a net profile of Rs 1064mn in Fy 01 as compared to Rs 973 mn in the previous year. Paints sector can be segmented application wise , as decorative paints and industrial paints . While both are characterized by low capital costs and high working capital intensive, ht latter requires special technology. Capacities are normally set up close to markets, so as to be able to offer multitude of shades and colors to customers. Brand building and dealer network act as effective entry barriers. Demand is seasonal in nature low during monsoon, high during festivals. Domestic paints sector , dominated by decorative paints (70%) is expected to undergo a structural shift towards industrial paints , as cross border tie-ups in industrial paints are becoming order of the day. Most organized sector players are established with well-

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entrenched distribution network and established brands. Threat of global competition in is minimal. The underdeveloped industrial paints market hold maximum growth potential, albeit competition, product innovations and a fight for superior distribution network. Focussed on decorative paints segment, APIL is set gain the maximum amongst the peer members from the uptrend in the housing sector .The company is restructuring its operations into three SBUs and has set target to be amongst the top ten decorative

manufactures in the world by 2003. APIL is investing heavily in dealer tinting machine Colour World and IT technologies to keep ahead of competition .APIL has set target of Gross sales of Rs21bn by 2003and earning growth of above 20% . It also has set a vision to be among the top five paint companies worldwide by 2005.On export front , the company is looking out for alliances/ takeover in the emerging markets of Asia.

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SALES BREAKUP Period ended No . of months Sales values (Rs mn) Formaldehyde Miscellaneous Penta erythritol Phathalic anhydride Paints , varnishes 0.4 165.4 280.1 618.6 , 9,111.9 0.2 125.7 251.1 485.7 10,339.9 121.0 22237 695.2 12,212.2 145.7 216.7 792.0 13,7396 03/98 12 03/99 12 03/00 12 03/01 12

enamels& oils Sodium formate Others Sales volume (unit) Formaldehyde(Ton Miscellaneous(Ton) Penta erythritol(Ton) Phathalic anhydride(Ton) Paints , varnishes , 116,9420 131,2840 162,110.0 181,271.0 17,376.0 16,688.0 19,060.0 20,195.0 31.0 3,146.0 2,829.0 10.0 2,573.0 2,831.0 2,518.0 2,867.0 2,712.0 2,839.0 14.3 14.1 237. 15.0 79.2 20.7 21.3

enamels & oils (Ton) Sodiumformate(Ton) 971.0 1,414.0 1,156.0 1,366.0

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RAW MATERIAL USED IN THE MANUFACTURE OF PAINTS Five types of raw material are used in the manufacture of paints, these are: A. PIGMENTS: The materials added to the paints to obtain desired final colour and to give opaqueness to the paint are called colouring pigments. Few of the commonly used pigments are; 1. Chrome Pigments 2. Thellocynine (for blue colur) 3. Thellocynine ( for green colur) 4. Red Oxide /Halo Oxide/Hensa Red (for red colour) 5. Hensa Yellow(for yellow colur) 6. Carbon Black (for black colour) B.RESINS: The materials used in paints to give it the property of binding it with other ingredients and causes it to adhere to the surface to be painted are called resins. These are also used proportionally in order to give gloss to the paints. Few kinds of resins are 1. Alkid Resins, 2. Epoxy Resins 3. Acrylic Resins, 4. Polyurethance Resins

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PROMOTIONAL METHOD OF ASIAN PAINT Asian Paints (AP) is the market leader in the Indian paint industry, commanding a market share of 38 per cent in decorative paints and 33 per cent overall in the organised sector. Its annual sales turnover exceeds Rs. 1,300 crore, way ahead of all the competitors in the industry. In profits too, AP is far ahead. APs market leadership in the decorative paints segments can be grasped correctly when we take note of the relative position of the various players in the industry. Whereas AP has a market share of 38 per cent, its nearest rival, Goodlass Nerolac, commands a share of just 14 per cent. All others have only less than 10 per cent. Such an achievement by a company that is wholly Indian in capital, management and technology and in an industry historically dominated by multinationals is certainly a commendable feat.

How did AP achieve this success? APs success is the combined result of its strong corporate and marketing strategies. Maximum credit should, however, go to its marketing strategy. Within marketing, it was distribution excellence that took AP to the enviable position, which it holds today in the Indian paint industry. This case study explains APs distribution strategy.

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A STORY OF DISTRIBUTION EXCELLENCE This case study, in fact, depicts the distribution strategy adopted by AP in the early years of its operations. The interesting point is that this strategy serves AP well even today, when the context has somewhat changed. In the earlier years, in the decorative paint segment, a wide product range in terms of colour and pack size was a crucial factor for success. AP literally leapfrogged and overtook all its competitors, and offered the widest range of products. It also created the distribution outfit that was necessary for reaching the wide range of products to customers in every nook and corner of the country. In later years, technology came to the rescue of the players in this regard. Customers could get the colour of their choice through mixing at the retail outlet. With the help of an automated machine kept at the retail outlet, paint is given the desired colour by mixing different shades and stainers in the required proportion. The paint companies need to maintain only half-a-dozen basic colourants with retailers; mixing can create the other variants. The new arrangement helps the campanies to manage with a narrow range of paints. They can reduce the number of SKUs handled and cut down inventory holding costs. The above shift has no doubt reduced somewhat the importance of the physical distribution task in the business, compared to the position in the earlier years. At the time AP entered the Indian paint business, the physical distribution and channel management task was the most crucial one in paint marketing. This context is elaborated in one of the sections in this case study. We can appreciate the lessons of the case study better, if we keep in mind this contextual position. Even now, physical distribution and channel management continue to be crucial functions in the business. In the matter of product

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range too, companies are not able to totally dispense with the need for variety in view of the many practical limitations of mixing at retail outlets. It is no easy task to provide mixing and computers. Before we actually go into APs distribution strategy, let us have brief profiles of the company and that of the paint industry, so that the contextual setting of the case is clear. Let us start with the industry.

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THE INDIAN PAINT INDUSTRY The paint industry of India is 100 years old. Its beginning can be traced to the setting up of a factory by Shalimar Paints in Kolkata in 1902. Till the advent of World War II, the industry consisted of just a few foreign companies, and some small, indigenous producers. The war led to a temporary stoppage of imports leading to many more local entrepreneurs setting up manufacturing facilities. Nevertheless, foreign companies

continued to dominate the industry. Even now, they remain active contestants, though their foreign shareholdings stand reduced, with two of them having become totally Indian. Currently, the industry has a sales turnover of about Rs.3, 600 crore. In terms of volume, it corresponds to 5 lakh tonnes. The industry is composed of two sectors, the organised and the unroganised. The organised sector controls 70 per cent of the total market. The remaining 30 per cent is in the hands of the unorganised sector, consisting of 2000 odd small-scale units. The industry is not capital intensive. It is however working capital intensive. The demand for paints is fairly price-elastic and is linked to economic and industrial growth. Demand is somewhat seasonal in nature-low during monsoon months, high during festival seasons.

THE MAIN SEGMENTS The industry comprises two main segments decorative/architectural and industrial paints. The decorative/architectural paint segment accounts for 70 per cent of the total paint market while the industrial paint segment accounts for the remaining 30 per cent. The industry is, however, expected to undergo a structural shift towards industrial paints in the next few years, when its share is expected to go up to 50 per cent in line with the

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global trend. Industrial paints thus holds greater growth potential in the coming years. Actually, with the decorative segment gradually bottoming out, companies are already increasing their focus on industrial paints. Industrial paints are technology intensive. The industrial paints segment can be further classified into automotive paints, marine, powder coatings, high performance coatings, and others. Original equipment manufacturers (OEM) of products such as automobiles, furniture and white goods such as refrigerators are prime consumers of industrial paint. The automobile industry accounts for 50 per cent of the industrial paint market. A good part of the demand is from shipping and heavy industry. Navy being the largest customer in shipping. THE MAIN PLAYERS Asian Paints, Goodlass Nerolac, ICI (India), Berger, Jenson & Nicholson and Shalimar are the leading companies in the organised sector. The top six manufacturers account for about 80 per cent of the market in the organised sector in value terms. AP is the industry leader, with an overall market share of 33 per cent in the organised sector. Threat of global competition is minimal in the industry. AP dominates the decorative segment, with a 38 per cent market share. Goodlass, a Tata company, is number two with a 14 per cent market share. Berger and ICI have 9 per cent and 8 per cent shares, respectively, in this segment followed by Shalimar, with 6 per cent.

Goodlass dominates the industrial paints segment, with 41 per cent market share. AP is a poor second here, with a 15 per cent market share. Berger, ICI, and Shalimar are the other substantive players in the sector, with 10 per cent, 9 per cent and 8 per cent shares, respectively. The dominance of Goodlass in industrial papints is largely the result of its

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technical associated with the Japanese paint major, Kansai Paints, which has a 29.5 per cent equity stake in the company. Goodlass has a lions share of 70 per cent in the OEM passenger car segment, 40 per cent share of two-wheeler OEM market and 20 per cent of commercial vehicle OEM market. Goodlass also holds 20 per cent of the white-goods segment.

The market shares of the five leading companies are shown in Exhibit 1

Exhibit 1 Market Shares of Five Major Players Sr. Company Market Share (%) Decorative Industrial 1. Asian Paints 38 15 2. Goodlass Nerolac 14 41 3. Berger Paints 9 10 4. ICI Paints 9 9 5. Shalimar 6 8 THE COMPANY

Overall 33 18 9 9 7

As already mentioned, Asian Paints is Indias largest paints company and the market leader in decorative paints. AP manufacturers and markets a wide spectrum of coatings and ancillaries, which include decoratives, production paints and heavy-duty coatings. The manufacturing facilities of the company for paint products are currently spread over four locations- Bhandup, Mumbai, which was established in 1955; Taloja, Maharashtra, where AP established its second unit in 1980; Ankleshwar, Gujarat, where operations started in 1981; and Patancheru, Andhra Pradesh, where manufacturing started in 1985. Asian Paints offers the widest range of paints in terms of products and shades, as well as pack sizes. Availability of wide range of shades is in fact, one major critical success

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factor in the decorative paints business. And AP scores high in this factor. AP manufactures and markets more than 2,800 items of paints (SKU).

PERFORMANCE AP has been consistently turning out a good performance over the years. For more than two decades now, it has been the market leader. Besides, the company has also consistently proved its excellence in operating performance. Exhibit 2 gives details of APs sales performance during the last four years. Exhibit 3 gives some other important details of APs performance. AP has set a target of gross sales of Rs 2,100 crore by 2003. It aims to be amongst the top ten decorative paints manufacturers in the world by 2003 and among the top five by 2005.

Exhibit 2: Asian Paints-Sales Performance : 1998-2001 1998 1999 2000 Sales Value (Crore) 911 1,033 1,221 Sales Volume (Tonne) 116,942 132,284 162,110 Exhibit 3: Asian Paints Select Performance Indicators (FY 2000) APs operating profits stood at Rs 191 crore in FY 2000, an increase of 37.7 percent over the previous year.

2001 1,373 181,271

The net profit stood at Rs 97 crore as compared to Rs 77 crore the previous year, higher by 26.6 per cent. Net

Operating profits have grown at a CAGR of 13 per cent in last five years, much higher than the sales growth of 21

profit has grown at a CAGR of 12.7 per cent in last five years.

8.6 per cent The profit before tax (PBT) stood at Rs 143 crore, an increase of Rs 49 crore over the previous year. PBT has grown at a CAGR of 12.35 per cent in last five years.

Return

on

net

worth

(RONW)

improved from 25.2 per cent in FY 1999 to 27.1 per cent in FY 2000. RONW has remained close to 25-26 per cent in last five years. Return on Capital Employed

(ROCE) improved from 26.6 per cent in FY 1999 to 35.9 per cent in FY 2000. APs sound marketing has earned it strong brand equity. To quote APs managing director: We have been able to build strong brand equity for our products by focusing on features that are appreciated by customers, ensuring that our products are of high and consistent quality, offering a wide range of shades and packs, and ensuring that our products are available wherever and whenever required, by building a strong distribution system.

Its brand Tractor, Apcolite, Uttav, Apex and Ace are well entrenched in the market. And APs logo, Gattu, the impish boy, with the paint tin and brush, symbolises one of the most recognised and most prosperous mascots in Indian business! All this has earned the company a place among the worlds leading paint manufacturers. AP is the winner of the 1995 corporate performance award by the Economic Times and Harvard Business School Association of India. It actually received the award twice within a decade.

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AP STRIKES A NEW PATH IN DISTRIBUTION At the time AP entered the Indian paint business, distribution was the most crucial task for any new entrant. Both physical distribution and channel management posed formidable challenges. The foreign companies and their wholesale distributors dominated the business. The foreign companies appointed a few traders as their wholesale distributors and allowed them to perpetuate a situation of monopoly. Each distributor was assigned a large territory and was given the right to operate as the exclusive channel of the company in the assigned territory. The trade terms were also very liberal. The companies also extended virtually unlimited credit to the distributors. The credit outstandings for the supplies made throughout the year were required to be settled by the wholesale distributors only at the year-end, at Diwali time. These distributors had neither the compulsion nor the motivation to invest in distribution infrastructure. They were not required to move out to semi-urban and rural areas. They concentrated on big cities where they could make the sales without much investment in distribution infrastructure and market development. Also, they were shutting the doors on any new paint company seeking an entry into the business. In other words, these distributors controlled the paint business and were making it impossible for a new paint company to enter and establish itself n the business. AP sized up the scenario correctly and formulated a unique distribution strategy. In the normal course, a firm entering the industry in this scenario would have opted for the low risk strategy of gaining a limited access to the wholesale traders and be satisfied with a small share of the existing business. But AP went in for a strategy that differed totally from the existing pattern. APs strategy in fact, meant the polar opposite of the established/existing pattern.

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Chart 1: Elements of APs Distribution Strategy AP bypassed the bulk buyer segment and went to individual consumers of paints. AP went slow on urban areas and concentrated on semi-urban and rural areas. AP went retail. AP went in for an open-door dealer policy. AP voted for nationwide marketing / distribution.

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AP BYPASS THE BULK BUYER SEGMENT AND GOES TO INDIVIDUAL CONSUMERS Bulk buyer segment was the major segment of the paint business in the earlier days and any paint company needed a share of this major segment for sheer survival. Though, this segment was dominated totally by foreign companies and their wholesale distributors, a new entrant to the business like AP would normally have rushed to this segment and tried to garner a share of it. AP, however, had a totally different game plan. Seeing that this segment was not a growth segment, though it was certainly the major segment at that point of time, AP decided to ignore this segment for the present and go to individual consumers. And that was a crucial decision. It influenced every subsequent decision AP took in the realm of distribution. Over time, AP proved to the paint industry that there existed a large and bottomless segment in the paint business of India, outside the bulk buyer segment, comprising of individual consumers. AP GOES TO SEMI-URBAN AND RURAL AREAS Along with the decision to go to individual consumer segment leaving aside the bulk buyer segment, AP also decided that within the individual consumer segment, semi-urban and rural areas would constitute APs priority market. Prior to APs entry, the paint business was by and large concentrated in the urban areas. All the major paint companies and their wholesale distributors were content with the market that was available in the urban areas. In contrast, AP clearly saw that a large market for paints was emerging in the semi-urban and rural areas, and felt it wise to tap this market. AP also understood that a new entrant like AP had also a compulsion to go to the semi-urban and rural areas. The major companies and their wholesale distributors were not giving any worthwhile

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opening in the big cities for new entrants. AP found it difficult to attract the wholesalers in the cities to deal in its products. It had to necessarily turn to the semi-urban and rural areas for support. AP wisely decided against committing all its resources on a head on collision with the foreign companies and their big wholesale distributors in the urban areas.

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AP GOES RETAIL Going directly to retail dealers was the next major strategic decision of AP in the realm of marketing and distribution. Here too, AP totally broke with the prevailing distribution practice. As mentioned earlier, the foreign companies, who were the main players, were practising a wholesale distributor-dependant marketing system. AP did not see any great merit in the system. It totally bypassed the well-entrenched wholesale distributors and went directly to the retailers. While APs competitors remained content with their linkage with a handful of wholesale distributors, AP preferred direct contact with hundreds of retail dealers.

AP GOES IN FOR AN OPEN-DOOR DEALER POLICY AP followed an open-door policy in the matter of adding retail dealers to its network. The prevailing trend in those days was to limit the number of dealers to the barest minimum. AP broke this trend and chose to use practically everyone in the trade, who was willing to function as its dealer. It was as a combined result of the policy of going directly to retailers and the policy of open door to dealership that APs dealer network swelled rapidly. Even after achieving stability and maturity in distribution, AP continued to follow a policy of continuous expansion of dealer network. By 1990, AP was having a 7,000 strong dealer network. By the year 2000, the number had swelled to 12,000. And even now, on an average, AP is adding 200 to 250 new dealers every year.

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AP VOTES FOR NATIONWIDE MARKETING/ DISTRIBUTION AP took yet another important and strategic decision in the realm of distribution. Those days nationwide distribution/marketing was not the standard practice in the paint business. On the one side, there were the 1,000 odd small paint companies who, as a class, believed in marketing their paints in limited territories in and around their point of production. On the other side were the big companies, who as a class, believed in limiting their distribution to the big cities. In contrast to both these existing practices. AP voted for a nationwide distribution/marketing. It wanted to have an active presence throughout the country, in all the geographical zones, states and territories.

THE IMPLICATIONS OF APs DISTRIBUTION STRATEGY APs distribution strategy described in the preceding paragraphs had its associated implications. AP had to take due note of them and face them squarely.

GOING TO INDIVIDUAL CONSUMERS IMPLIED WIDE PRODUCT RANGE AND COMPLEX DISTRIBUTION Had AP concentrated on the bulk buyer segment, it could have managed with a limited product range, at least, in the initial years. But, APs decision to turn to the individual consumers necessarily meant a wide product range. In the nature of things, the individual consumer segment involves a very wide choice in terms of products, materials, shades and pack sizes. On top of this, AP believed in making products based on the preferences of consumers. It gathered feedback from the consumers and turned out products, shades

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and pack sizes on the basis of such feedback. This policy resulted in a further burgeoning of the product range.

SMALLER PACKS PROLIFERATED THE PRODUICT DEPTH FURTHER At the time of APs entry, paint companies were supplying paints in containers of 500 ml or larger. AP saw that there was a felt need in the market for paints in smaller packs. All end uses did not require a large quantity. Moreover, it was common practice for consumers to buy paint initially in a larger quantity and supplement it with small size purchase to complete the job. AP decided to harness the business opportunity and started supplying it paints in small packs- in 200 ml, 100 ml and 50 ml packs. This proliferation in pack sizes also contributed to APs growing product range. AP was by now manufacturing and marketing as many as 2,000 distinct items of paints, none of which was strictly a substitute for the other.

WIDE PRODUCT RANGE IMPLIED EXPENSIVE DISTRIBUTION The policy of having the widest range of products, colours and pack sizes had its implications on APs distribution. When 2,000 different items had to be made available to the consumers, it automatically meant that the company had to be prepared for high inventory holding in its various depots/retail outlets. Accounting and sales arrangements had also to be provided for on a matching level. Naturally, distribution was becoming more complex and expensive for AP.

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GOING TO SEMI-URBAN / RURAL MARKETS FURTHER ENLARGED DISTRIBUTION The decision to go to the semi-urban and rural markets instead of confining to the urban markets also meant enlargement of the distribution function. AP had to go in for more dealers in order to serve the scattered semi-urban and rural market. The decision also meant that AP could not opt for a simple, centralised distribution of its products from its factory. It had to go in for a decentralised, field-focussed distribution, with a network of depots located all over the country/marketing territory. Without such extensive and intensive distribution network, it would not have been possible for AP to cover the semiurban and rural markets.

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Chart 2: Main Steps in the Implementation Process

AP created a large network of dealers It established a network of company depots to service the dealers

i ii iii

It successfully resolved the cost-service conflict in distribution (i) A strong commitment to distribution cost control, without compromising service level (ii) Effective inventory management (iii) IT initiatives in distribution cost

It created a marketing organisation that matched its distribution iv

Control

GOING RETAIL IMPLIED DEEP INVOLVEMENT IN CHANNEL MANAGEMENT Through its decision to go retail, AP was getting deeply involved in physical distribution and channel management. In the system chosen by AP, the physical distribution-cumchannel management task was far more demanding, compared to the wholesaler-oriented system practised by the other paint companies. While, for companies that embraced the wholesaler-oriented system, it was enough to service a handful of distributors, AP had to service a network of thousands of retail dealers. Having taken the decision to go retail, AP necessarily had to create and service a vast dealer network. It also had to create the physical distribution facilities required for servicing such a large network.

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National Marketing Necessitated Nationwide Organisation Extent of marketing territory and complexity of distribution organisation are interrelated. The moment AP voted for nationwide marketing, it was getting into intensive as well as extensive physical distribution and channel management. AP thus had to create a nationwide distribution-cum-marketing organisation.

DISTRIBUTION BECOMES APS SHOWCASE FUNCTION APs strategies made distribution the most important element of its marketing mix. And, AP gave to distribution all the inputs that were demanded by it. In fact, the rest of this case study is essentially a description of how AP managed its distribution activities how it chalked out its distribution programmes, how it implemented them, what problems it encountered in this task, how it tackled them and how through distribution success, it achieved marketing and corporate success.

THE IMPLEMENTATION PROCESS We shall see how AP went about the actual management of the distribution function. The main steps in APs implementation process are shown in Chart 32.2. Let us see the details.

AP Creates a Large Network of Dealers An extensive network of dealers and a matching physical distribution infrastructure play a crucial role in the decorative paints segment. This is essential for ensuring easy accessibility of the product to customers. In this, Asian Paints scored over its competitors

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with a massive network of 15,000 dealers spread over 3,500 towns across the country. AP has the largest distribution network among all the players. Goodlass has a network of 8,000 dealers.

AP Established a Network of Company Depots AP established a large chain of company operated depots/stock points throughout its vast marketing territory, from where the retail dealers could conveniently pick up their requirements. APs basic strategies explained in the earlier sections necessitated a liberal approach in the matter of stock points/depots. It also meant that the depots had to be company operated. After all, AP did not have any wholesale distributors to whom the responsibility for operating the stock points could possibly have been assigned. AP established a network of 30 company-run depots, spread through out the country and serviced its retailers from them. The number of depots varied from city to city. For example, Bangalore had just one depot while Mumbai had four depots. The depots typically supplied to about 200-300 dealers.

AP creates a Marketing Organisation that Matched its Distribution Intensity Effective control of the large number of depots, each having substantial stocks of 2,000 odd distinct items necessitated a matching marketing organisation structure. AP set up a marketing organisation consisting of four regional sales offices, 35 branch sales offices and a large number of sales supervisors and sales representatives spread all over the country. The marketing organisation of the company is presented in Exhibit 4. It can be seen from the chart that a very extensive structure has been created in the consumer

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division. It is primarily meant for taking care of the massive distribution task involved in this sector. Each branch sales office has its own depots and the various items are stocked in the depots under the control of the concerned branches. The branches service the dealers and customers in their territories.

These are supported by six regional distribution centres, which cater to 55 depots. Each depot has a branch manager for supervision of several salespersons who cater to more than 14,500 dealers in the more than 3,500 big and small cities all over the country. AP faced many challenges. Of these, the cost-service dilemma was no doubt, the most important one. And, that is the aspect in which we are mainly interested in this case study.

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RESEARCH METHODOLOGY

Research methodology is a systematic way, which consists of series of action or steps necessary to effectively carry out research and the desired sequencing of these steps. The marketing research is a process of involves a number of interrelated activities which overlap and do rigidly follow a particular sequence. It consists of the following steps.

1. Formulating the objectives of the study 2. Designing the methods of data collection 3. Selecting sample plan 4. Collecting the data 5. Processing and analyzing the data 6. Reporting the findings

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Objective of the study


(Effectiveness of sales promotion in print media, consumer perception about scheme)

Research design
(Descriptive research design)

Sample design
(Random sampling design)

Data collection
(primary data collection ,secondary data collection)

Data analysis

Reporting of findings

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OBJECTIVE OF THE STUDY

The main objectives of conducting research on To study the consumer behavior among urbanites for Asian paints are following

To study the product designing of Asian paints. To study the promotion method abopted by asian paint. To study the supply chain management of Asian paints, To study the post purchase behavior of Asian paints.

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AREA COVERED These are the places where I have collected data related my research project report

Ghaziabad :-

1. Raj nagar 2. Shastri nagar 3. Kavi nagar

DATA COLLECTION

Sample Consumer

No. of respondent 100

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DATA COLLECTION PRIMARY DATA The primary data are those data which are collected afresh and for the first time and happen to be original in character. The primary data to be collected for the study are----

By interviewing to the Marketing people. By structured questionnaire.

SECONDARY DATA:Secondary data are those data have already been collected by someone else and which already had been passed through the statistically process. The secondry data to be collected fore the study are -- Annual reports of each news paper company. Newspapers, magazines, journals, books. By internet websites

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RESEARCH INSTRUMENTS STRUCTURED QUESTIONNAIRE A questionnaire consists of a number of questions printed or typed in a definite order or set of forms. It is the set of questions presented to the respondents for their answer. In my study Ill be used structured questionnaire because sequence or series are required to ask the question to respondent.

DATA ANALYSIS Data analysis refers to the computation of certain measures along with searching for patterns of relationship that exist along data groups, as the objective of study is already divided in to two main parts, thus the data analysis of collected data is primary divide in to two divisions as the field is completed and questionnaire have been received the task is to prepare the -- Consumer Behavior

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RESEARCH DESIGN In my study, Descriptive research design are used because it provides information in a described manner which is relevant to a research project . in this research design the objective of the study is clearly defined and have accurate method of measurement with a clear cut definition.

SAMPLING DESIGN A Sample design is a definite plan for obtaining a sample from a given population . it refers to the technique or the procedure adopted In selecting items for the sample. The main constituents of the sampling design below Sampling unit Sample size Sampling procedures

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SAMPLING UNIT A sampling framework i.e. developed for the target population that will be sampled i.e. who is to be surveyed Consumer behavior

SAMPLE SIZE It is the substantial portions of the target population that are sampled achieve reliable results. Sample size100

RANDOM SAMPLING Random sampling is chosen for my study. Probability sampling is also is also known as Random sampling or chance sampling. Under this sampling design, every item of the universe has an equal chance of inclusion in the sample it is, so to say, a lottery method in which individual units are picked up from the whole group not deliberately but by some mechanical process. Here it is blind chance alone that determine whether one item or the other is selected. The result obtained sampling can be assured in the terms of probability i.e. we can measure the error of estimation or the significance of result obtained from a random sample, and this fact bring out the superiority of random sampling design over the deliberate sampling design.

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STATEMENT OF THE PROBLEM WHY THIS STUDY To get a general overview of the Indian paint industry. To identify the major players. To a ascertain the reasons for the industry not picking up.

Question Unanswered (Some recent Facts about the industry). Overall industry growth rate declined to 9%-10% in the current year from 12%. The industry received a major setback in the fourth quarter due to the recent earthquake in Gujarat. Though Asian Paints, Goodlass Nerolac and Berger combined reported a 15% growth in sales in the first half of the current year, growth wanted in the second half, notably in the fourth quarter. The construction activity was subdued in the current year due to a less than average monsoon and natural calamities in some of the key Eastern and Southern states. As a result the decorative paint demand also declined. The Gujarat earthquake in the fourth quarter was more pressing for paints companies. Industrial paint demand in the current year dropped due to a 7% decline in passenger car sales and a fall in commercial vehicle volumes in the current year. One of the key factors was the lower agricultural output, which affected the purchasing power of the consumer, notably in the semi-urban and the rural markets. Despite interest rates cuts and increase in depreciation rates, automobile demand did not show any sharp uptrend in the fourth quarter also.

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Rutile titanium dioxide prices moved up from USS 1,800 per tonne last year to more than US$ 1,950 per tonne, an increase of more than 11%. Since this account for almost 50% of the raw material costs of paint companies, margins were strained. Apart from this, prices of other raw material like mineral spind and tarriyl also by 20% and 18% respectively. Paint companies resorted to an increase in prices during the current year, though not commensurate with the rise in input costs. Operating margins declined in the current year due to a rise in both raw materials was sharp for the industrial paint segment, as these companies could not pass on the rise in costs to their customers, primarily the auto companies (as these companies were also witnessing declining sales). Exterior paint segment continued to grow at a fast rate compared with other segments. The segment is estimated to be growing at CAGR of 15% per annum. New productions from almost all the major paint companies in the exterior segment performed well in the current year.

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SCOPE The project under taken was to study dealers perception regarding present trends in the Paint industry market potential, consumer perception and various factors affecting the buyers behavior.

Our study was restricted to the area of Ghaziabad and it includes the product varieties, thinner, decorative and industrial paints.

The study gave a clear view regarding the factors influencing, The purchase decision like price, quality, advertising promotional schemes, packaging, the finish of the product etc. and the distribution policy followed by Asian paints vis--vis its competitors. The companys policies regarding profit margin, services, replacement etc. were given sufficient thought. We looked in to the matter and found different factors where Asian Paints could improve upon and those places where Asian paints was a quite ahead than its competitors.

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NAME THE PAINTS YOU BUY

Paints Asian paints Nerolac paints Berger paints Others

No. of respondent 45 25 15 15

Percentage of respondent 45% 25% 15% 15%

50 40 30 20 10 0
in t pa

45 25 15 15

Series1

ts

ts

in

in

pa

pa

ia n

la c

ro

Interpretation:

1. 45 % consumer prefer to Asian Paint. 2. 25% consumer prefer to Nerolac Paint. 3. 15 % consumer prefer to Berger paint. 4. 15% consumer prefer to other paint.

DO YOU AWARE OF ALL TYPE OF PAINTS

ne

be

as

rg

er

46

ot

he

rs

Awareness Yes Cant say No

No. of respondent 55 15 30

Percentage of respondent 55% 15% 30%

60 50 40 30 20 10 0 yes can't say no Series1

Interpretation:

1. 55 % consumer aware to yes. 2. 15% consumer aware to cant say. 3. 30 % consume aware to no.

WHO IS THE DECIDER AT YOUR HOME

Decider Father Mother

No. of respondent 45 35

Percentage of respondent 45% 35%

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Wife Other

15 5

15% 5%

50 40 30 20 10 0 father mother wife other Series1

Interpretation:4. 45% chance decide to father. 5. 35% chance decide to mother. 3. 15% chance decide to wife. 4. 5% chance decide to other.

FROM WHERE U COME TO KNOW ABOUT ASIAN PAINTS

Sources For advertisement For magazine Other sources

No. of respondent 55 25 20

%age of respondent 55% 25% 20%

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60 50 40 30 20 10 0 for for magazine other sources advertisement Series1

Interpretation:1. 55% for advertisement. 2. 25% for magazine. 3. 20% for other sources.

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PLACE FROM YOU BUY THIS PAINT

Place Market Super market Shop Supplier

No. of respondent 35 15 40 10

percentage of respondent 35% 15% 40% 10%

50 40 30 20 10 0 market super market shop supplier Series1 Series2

Interpretation: 1. 35% buy to the market. 2. 15% buy to the supermarket. 3. 40% buy to the shop. 4. 10% buy to the supplier.

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WHO INFLUENCE YOU TO BUY PARTICULAR PAINTS

Influences Friend Family Advertisement Other

No. of respondent 15 25 45 15

percentage of respondent 15% 25% 45% 15%

% 50 40 30 20 10 0 Advertisem ent Family Friend other

Interpretation:1. 15% influence by the Friend. 2. 25% influence by the Family. 3. 45% influence by the advertisement. 4. 15% influence by the other.

HOW FREQUENTLY YOU USE PAINTS

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Use of paint Party Marrige Festival Other occasion

No. of respondent 25 35 35 5

percentage of respondent 25% 35% 35% 5%

% 40 30 20 10 0 Party Marrige Festival Other occasion 5 25 % 35 35

Interpretation:-

1. 25% use in the party. 2. 35% use in the Marrige. 3. 35% use in the Festival. 4. 5% use in the other occasion.

WHICH BRAND YOU CONSIDER BEFORE PURCHASING THE PAINTS

Brand consider Asian paint Nerolac Berger Cant say

No. of respondent 38 30 27 5

percentage of respondent 38% 30% 27% 5%

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% 40 30 20 10 0 Asian paint Nerolac Berger Cant say %

Interpretation:-

1. 38% considering the Asian paint. 2. 30% considering the Nerolac paints. 3. 27% considering the Berger paints. 4. 5% considering the cant say.

WHICH BRAND IS MOST EFFECTIVE

Effectiveness Asian Paints Nerolac Berger Other

No. of respondent 40 30 20 10

percentage of respondent 40% 30% 20% 10%

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% 50 40 30 20 10 0 Asian Paints Nerolac Berger Other

Interpretation:-

1. 40% say the Asian paint is Most effective. 2. 30% say the Nerolac is Most effective. 3. 20% say the berger paint is most effective. 4. 10% say the other paint is most effective.

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RECOMMENDATIONS

1. The company should popularize the brand through massive advertising campaign so that the people are well aware of its products. 2. The company should increase the dealers margin so that they will be motivated and make an effort to push this products first to the customers. 3. The company should offer the various schemes for the customers so that customer attract towards their products. 4. Management should make aware their employees about sales volume and export volume through meetings, seminars or through annual report. 5. Some incentive should be provided to motivate the employers on the basis of good work done. 6. To motivate dealers, painters and customers schemes should be updated from time to time. 7. There must be an improvement in the quality of all brands. 8. The budget of advertisement should be increased in comparison to competitors. If we want to compete with our competitors we have to spread our advertising channel. We should do through various media, as audio, video press /print and hoarding. 9. The company should strengthen the distribution channel so that as its products is made available at every length and breadth of the city. 10. I have also observed that there is no proper service in some areas. There fore service must be improved.

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LIMITATION 1. Time constraint: a. The time duration of conducting the research w3as less. So lots of other factors were ignored. b. A large sample could not be taken due to same reason. 2. It was only possible to conduct the survey during free hours. The dealers did not respond when contacted during peak hrs. 3. As the areas covered in the survey were off the route and the any convenient mode of transport was not available. The investigator faced a lot of problem 4. Most of the consumer were ignorant and were not willing to respond that leads inaccuracy in the data collected. 5. As the data was based on consumer perception, it might be biased to certain extent.

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CONCLUSION Investor, interested in any form of investing, should carefully look at the structure of the paint industry. It has a large unorganized sector, which constitute approximately 40% of the total production of paints .The organised sector comprises of handful of large units. The categorization is important because of the differential in excise duties faced by these two sectors .The differential , however , has narrowing since 1993 and the excise duties between the organized sector is now at 18% (from the highest of 40.25% ). With the narrowing of he differential in excise duties between the organised and unorganised sector, the market share of the organised sector is expected to grow in the future .The small sector will probable start contact manufacturing for the large units or may develop niche markets based on location.

The industry can further be divided into two broad segment decorative (architectural ) paints and industrial paints .The decorative segment is the dominant segment, in terms of sheer volume ,in contrast to the developed economies where industrial paints normally have half the market .The decorative paints market can be further be subsumed into emulsions , synthetic enamels , distemper and cement paints. The essence of the small sector is in the easier to evaluate lower-end products such as distempers and cement paints whereas the middle range enamels and the premium range emulsions are the terrain of the large players.

The industrial paints segment comprises of the industrial coating the automotive coating segment .The main growth for the industrial paints market has been the high growth in

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automotive coating , with the entry of the auto majors (multinationals) resulting in a literal boom in this sector.

There are more than 300 input going into the manufacturing process of paints of which 70% are petroleum based .The raw material are Pigments.

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BIBLIOGRAPHY C. R. Kothari Research Methodology Second Edition, Wishwa Prakashan. Donald S. Tull, Dell I. Hawkins Marketing Research Sixth Edition, Published by Ashok K. Ghosh, Prentice-Hall Of India Pvt. Ltd. Business Today paint industry Page 25 March 2005. Business world growth of Asian Paint Page 35 Feb. 2005.

News papers: Times of India Hindustan times Business standard The Hindu

Date: November 6th 2004 November 7th 2004 February 3rd 2005 March 7th 2005

www.asianpaints.com www.google.com

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