Name MANAV SACHDEVA

Question 1

Write your answer for Part A here.

Period Rate of Growth

2000-2004 Approximately
27.27%

2004-2010 Approximately
90.48%

2010-2015 Approximately
50%

B. The three factors influencing the growth (or decline) of the two-wheeler market in India, as
mentioned in the case, are:

1. Trust in Mechanics (NFW): Consumers' trust in non-franchised workshops (NFWs)

led to a shift towards direct servicing by mechanics, driving market growth.

2. Awareness of Maintenance Importance: Consumers' strong awareness of the

importance of regular maintenance for optimal bike performance contributed to
market growth.
 3. Lack of Brand Differentiation: Consumers did not distinctly differentiate between
products and brand offerings, suggesting other factors influenced purchasing decisions
and market dynamics.

Question 2

Part A: Private Sector Players:

1. Castrol (as mentioned in the case).

2. Shell (mentioned indirectly as one of the multinational lubricant companies).

3. Veedol (mentioned as one of the local manufacturers).

Public Sector Players:

1. Indian Oil Corporation Limited (PSU mentioned in the case).

2. Bharat Petroleum Corporation Limited (PSU mentioned in the case).

3. Hindustan Petroleum Corporation Limited (PSU mentioned in the case).

Part B:
Direct Distribution Channels:

1. Franchised Workshops (FWs): These are workshops associated with original

equipment manufacturers (OEMs) and are crucial in the distribution of lubricants,
especially for approved and OEM-endorsed products.
 2. Forecourts: These are retail outlets, often associated with petroleum companies,
where lubricants can be sold directly to consumers at the time of refuelling.

Distribution Channels Serviced Through Distributors:

1. Bazaar Trade: This channel includes spare parts shops, dedicated oil shops, and
mechanic workshops (NFWs). Distributors play a significant role in supplying
lubricants to these outlets.

2. Rural and Agricultural Dealers: These dealers cater to the lubricant needs of rural
and agricultural customers, and distributors play a role in supplying to them.

3. Supermarkets and Wholesalers: Distributors are involved in supplying lubricants to

supermarkets and wholesalers, which serve as retail points for consumers.

These channels collectively form the distribution network for lubricants in the Indian market.
Castrol, for instance, primarily utilizes the bazaar channel, leveraging distributors and
retailers to access a wide range of retail outlets.

Question 3

Part A : Based on the provided information, here's the impact of the mentioned parameters on
the Indian Motorcycle Oil (MCO) market:

1. Consumer Behavior and Attitudes:

 Impact: Consumer behavior and attitudes play a crucial role in shaping the
MCO market. The shift from reliance on dealerships and franchised workshops
to non-franchised workshops (NFWs) indicates a change in consumer
preferences towards more trusted and personalized servicing options. This shift
 could lead to increased demand for MCO in the after-warranty market,
particularly in NFWs.

2. Consumer Segmentation:

 Impact: Castrol's identification of distinct consumer segments (minimalists,

appreciators, enthusiasts) provides valuable insights into the diverse needs and
preferences of consumers. This segmentation allows Castrol to tailor its
marketing strategies and product offerings to cater to the specific requirements
of each segment. For example, targeting enthusiasts may involve emphasizing
premium, high-performance MCO products.

3. Brand and Product Differentiation:

 Impact: The case suggests that consumers do not distinctly differentiate

between products and brand offerings in the motorcycle lubricant market. This
lack of clear differentiation might influence consumer purchasing decisions. To
gain a competitive edge, lubricant companies, including Castrol, may need to
focus on effective branding, product quality, and marketing initiatives to stand
out in the market.

4. Technological Advancements:

 Impact: Technological innovations enable Castrol to maintain its leadership in

the four-stroke category. This implies that keeping pace with technological
advancements and offering products that align with evolving engine designs
and technologies will be crucial for sustaining market dominance.

5. Rural Expansion and Service Network:

 Impact: The expansion of service networks into Tier 2 and Tier 3 towns by
major motorcycle manufacturers suggests a growing market potential in rural
areas. This expansion can create new opportunities for MCO sales, especially
in regions where the availability of authorized service centres is limited.
 Castrol and other lubricant companies may need to align their distribution
strategies with this trend to tap into these emerging markets.

6. Price Sensitivity and Competitive Landscape:

 Impact: The Indian automotive lubricants market is largely price-sensitive. This

indicates that pricing strategies will play a significant role in influencing
consumer choices. Castrol, along with other market players, will need to
carefully consider their pricing models and strategies to remain competitive
and meet the demands of price-conscious consumers.

Part B The technological advancements in the two-wheeler industry have had significant
impacts on the motorcycle oil (MCO) market:

1. Shift from Two-Stroke to Four-Stroke Engines:

 Impact: The transition from two-stroke to four-stroke engines has altered

consumer behaviour and preferences in terms of lubricant usage. Two-stroke
engines required a specific type of oil mixed with fuel, and consumers typically
obtained this mixture at petrol pumps. However, with the shift to four-stroke
engines, which have a separate lubrication system, the oil change interval
increased. This change led to a shift in lubricant sales from forecourts to the
open market or bazaar. This shift in consumer behaviour and distribution
channels is a significant impact of technological advancements.

2. Reduced Frequency of Oil Changes:

 Impact: Four-stroke engines, with their separate lubrication systems, require

less frequent oil changes compared to two-stroke engines. This has influenced
consumer behaviour as they now associate oil changes with regular
 maintenance services at workshops. It also affects the purchasing patterns and
demand for MCO 4T, as consumers are less likely to buy oil mixed with fuel
from petrol pumps.

3. Rapid Growth in MCO 4T Market:

 Impact: The transition to four-stroke engines has resulted in a surge in demand

for MCO 4T. The market for MCO 4T is growing at a much higher rate (more
than 20 percent per year) compared to the overall lubricants market (growing
at 3 percent per year). This indicates a direct correlation between
technological advancements in engine design and the demand for specific types
of motorcycle oil.

4. Shift in Sales Channels:

 Impact: Technological advancements have prompted a shift in lubricant sales

channels. With the reduced reliance on forecourts for oil purchases, the open
market or bazaar has become the primary distribution channel for MCO. This
shift in distribution channels is a direct result of the changing engine
technologies in the two-wheeler industry.

Overall, technological advancements in the two-wheeler industry, particularly the shift to

four-stroke engines, have had a profound impact on consumer behaviour, lubricant demand
patterns, and the distribution channels in the motorcycle oil market.

Question 4

 Part A : Franchised Workshops:

 Channel Share (%) 2010 = (Sales Potential in Franchised Workshops 2010 /

Total Sales Potential 2010) * 100
  = (65 / 210) * 100 = 30.95%

 Spare Part Outlets:

 Channel Share (%) 2010 = (Sales Potential in Spare Part Outlets 2010 / Total
Sales Potential 2010) * 100

 = (90 / 210) * 100 = 42.86%

 Oil Shops:

 Channel Share (%) 2010 = (Sales Potential in Oil Shops 2010 / Total Sales
Potential 2010) * 100

 = (25 / 210) * 100 = 11.90%

 Non-Franchised Workshops:

 Channel Share (%) 2010 = (Sales Potential in Non-Franchised Workshops

2010 / Total Sales Potential 2010) * 100

 = (30 / 210) * 100 = 14.29%

Channel Partner Channel Share (%) 2010

Franchised workshops 30.95%

Spare part outlets 42.86%

Oil shops 11.90%

 Non-Franchised workshops 14.29%

Part B:

Franchised Workshops:

 Channel Share (2005) for Four-Stroke Oil Market: 14.8%

 Channel Share (2005) for Castrol’s Four-Stroke Oil Sales: 11.8%

Oil Shops:

 Channel Share (2005) for Four-Stroke Oil Market: 30.4%

 Channel Share (2005) for Castrol’s Four-Stroke Oil Sales: 24.4%

Part C: To find the sales per channel outlet for the four-stroke oil market in 2005, we'll divide
the total sales for each channel by the respective number of outlets in the 'Outlet Universe'.
This will give us the sales (in litres) per outlet.

Channel Partner Sales (in litre) per channel outlet, 2005

Franchised workshops 6,666.67

Spare part outlets 578.95

Oil shops 1,103.45

 Non-Franchised workshops 400

Part D: To find the sales per channel outlet for Castrol in 2005, we'll divide Castrol's four-
stroke oil sales by the number of outlets selling Castrol's four-stroke oil. This will give us the
sales (in litres) per outlet.

Channel Partner Sales (in litre) per channel outlet, 2005

Franchised workshops 5,328.32

Spare part outlets 577.17

Oil shops 884.11

Non-Franchised workshops 670.27

Part E: In 2005, the channel where the 'sales (in litre) per channel outlet (for the four-stroke oil
market)' is significantly greater than the 'sales (in litre) per channel outlet (for Castrol)' is:

Spare Part Outlets

The sales per channel outlet for Spare Part Outlets in the four-stroke oil market is approximately
577.17 litres per outlet, whereas for Castrol, it is significantly lower (i.e., 884.11 litres per outlet
for Oil Shops). This indicates that the sales per outlet for Spare Part Outlets in the four-stroke
oil market is significantly greater compared to Castrol.
 Part F: Based on the key metrics provided:

1. Market Potential Coverage (2005): Franchised Workshops: Castrol's coverage is

14.8% compared to a total market potential of 30%. This indicates a gap in market
coverage for Castrol in this segment.

2. Sales per Channel Outlet (2005): Franchised Workshops: Castrol's sales per outlet is
11.8 litres, which is considerably lower than the market average of 30 litres. This
indicates that Castrol is not performing as well as the industry average in this channel.

Based on this data from 2005, it can be concluded that Castrol faced challenges in
effectively penetrating Franchised Workshops. There was a significant gap in market
coverage for this channel. On the other hand, Castrol performed well in both Spare Part
Outlets and Oil Shops, exceeding the market potential in both cases.

Question 5

Part A: Characteristics of the Three Segments of NFWs:

1. Stock-and-Sell Mechanics (Segment 1):

 Segment Size: Approximately 10% of the market.

 Share in the Oil Change Process: Contribute to 30% of the oil changes.

 Oil Buying Behaviour: Stock and sell lubricants. Highly respected, trusted by
consumers for major bike jobs.

 Financial Condition: Command premium prices for their services, financially

stable.
 2. Former Franchised Workshop Mechanics (Segment 2):

 Segment Size: 40% of mechanics, contributing to 50% of oil changes.

 Share in the Oil Change Process: Skilled mechanics who have worked at
franchised workshops.

 Oil Buying Behaviour: Receive supply of MCOs from nearby spare parts
shops. Can manage some credit on MCOs and spare parts.

 Financial Condition: Young, skilled, but may be short on finances.

3. Approached for Small Jobs Mechanics (Segment 3):

 Segment Size: Comprise 50% of the mechanic base.

 Share in the Oil Change Process: Trusted for minor bike issues like clutch
wire changes and brake adjustments.

 Oil Buying Behaviour: Consumers buy their own bottle of MCO and take it to
the shop for oil changes.

 Financial Condition: Likely apprenticed under a more experienced mechanic,

struggling to build clientele and reputation.

Part B:

Module Parameter 1 Parameter 2 Parameter 3 Parameter 4 Parameter 5

1
Low High Low Low Medium
 2
High Low Low High High

3
High Low Low Low Low

Question 6

1. CASAs will report to the existing Castrol distributors who will oversee and
coordinate their activities.
2. CASAs will primarily serve the Non-Franchised Workshops (NFWs) in the
motorcycle servicing industry. They will act as a link between the distributors
and the NFWs, ensuring efficient supply of Castrol products to these small
mechanics.
This strategic move aims to enhance the distribution efficiency and reach of
Castrol products in the market by leveraging the entrepreneurial spirit and
local presence of CASAs.