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ARAVINDAN A

CASE STUDY: AKZO NOBEL: MANAGING THE BRAND PORTFOLIO

Key decision maker: Leif Abildgaard – Managing Director

Decision Problem:

How can Akzo Nobel's paint sector boost its present market share and profitability by ceasing
a few of its retail brands and putting more of an emphasis on its trade business?

Cause of the problem:

 Limited channels of distribution in the retail industry

 Retail brand products are of poor quality.
 Less marketing initiatives.
 More purchasing of factories and warehouses
 High levels of competition in customer service and price

Alternatives:

 The majority of brands with lower retail division profitability can be discontinued and
repositioned to provide the best possible allocation of marketing budgets.
 Better use of shelf space in retail establishments for new items, as well as offering
Crown brand retailer’s promotions and rebates since the Crown brand accounts for
80% of all retail sales.
 Shifting from white paint product to colorful paints.
 Reduction of personnel and closure of plants and warehouses.
 Putting more of an emphasis on trade businesses, particularly small and medium-sized
enterprises whose purchasing decisions are driven by both price and quality.

Criteria:

 Profitability
 Stock accessibility
 Risk reduction Cost
 Gains in ROS and ROI
Analysis:

Retail business brand reduction and rationalization can boost the segment's profitability.
Akzo Nobel distributes three brands in the retail sector that have high ROS and brand sales.
Abildgaard should therefore concentrate more on its trade business since it has specifiers and
users who can advise consumers on which paint brands to buy. Through the sale of these six
brands, Akzo Nobel is able to generate significant ROS and high profitability. After
eliminating its 12 percent outlets, Akzo Nobel's own distribution outlet is now functioning at
break-even, which increased Crown Decorative Centre’s profitability.