Project on Marketing Strategy of Asian Paints

A PROJECT REPORT ON ASIAN PAINTS LIMITED

SUBMITTED TO PROF.N.RAJKUMAR DEAN, IBAT SCHOOL OF MANAGEMENT BHUBANESWAR

SUBMITTED BY— 1. DIANA SAHU (71) 2. PUSPANJALI KAR (90) 3. SASWATO BHATTACHARJEE (98) 4. SIBASIS MOHANTY (107) MBA-I SECTION B, GROUP NO-3

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ACKNOWLEDGEMENT: A successful project can never be prepared by the singular efforts but I also demands the help and guardianship of some conversant person who under pin actively or passively in the completion of a successful project. Our project on “ASIAN PAINTS LTD” would not have taken the present form in the absence of the invaluable guidance, inspiration and cooperation from many people. We take this opportunity to express our deep gratitude to Prof. N. Rajkumar, Dean, IBAT school of management, Bhubaneswar who have given us the opportunity to present this project and continuously monitored us to perform well. In this context we would like to express our gratitude and thankfulness to Prof. G.K.Murty for providing us with his advise and support through our project session. We also express our thanks to Sakti Hardware, Damana, Chandrasekharpur, Bhubaneswar for providing us with valuable data. We are deeply indebted to the Director ,faculty members of our institute, IBAT school of management, Bhubaneswar for helping us with their support and guidance that help a lot in successfully completing this project. Finally we express our cordial thanks to our parents, friends for their unmatched support , guidance and love throughout the project preparation. 1.Daina Sahu (71) 2.Puspanjali Kar (90) 3. Saswato Bhattacharjee (98) 4. Sibasis Mohanty (107) Section B,Group No-3 www.managementparadise.com

CONTENTS SLNO

1 2 3

COMPONENTS

ITEMS COVERED

PAGE NO

Situation analysis-I

Category analysis Sales analysis Share Price analysis

1 1 2 4

Situation analysis-II

Competitor analysis Customer analysis Assumptions of planning

5 7 9

Corporate objective Divisional objective Marketing objectives Programme objectives

11 12 13 14

Strategy alternatives Competitor strategy

16 17

Positioning strategy Customer segmentation and Targeting Core strategy

20

Sales forecasts budgets Profitability forecast budgets

40

Executive Summary Introduction

4

5 Marketing objectives 6 Marketing strategy-I 7 Marketing strategy-II 8 Financial Documents

9

10

Marketing Programme

Pricing Product Brand Promotion Distribution Service Research

Control Strategy


22 25

44 27 29 32 33 36 37 38

46

9

46

EXECUTIVE SUMMARY Asian Paints is India's largest paint company and the third largest paint company in Asia today, with a turnover of Rs 30.2 billion (around USD 680 million). The company has an enviable reputation in the corporate world for professionalism, fast track growth, and building shareholder equity. Asian Paints operates in 22 countries and has 30 paint manufacturing facilities in the world servicing consumers in over 65 countries. Besides Asian Paints, the group operates around the world through its subsidiaries Berger International Limited, Apco Coatings, SCIB Paints. The Company's paint business in India consists of Decorative, Industrial & Automotive coatings. During the fiscal year ended March 31, 2006, paints accounted for 79.1% of the Company's sales. Decorative paints include wall finishes for interior and exterior use, enamels, wood finishes and ancillary products, such as primers and putties. Industrial Coatings comprise high performance coatings, powder coatings and auto refinish coatings. The automotive coating segments are catered to by the joint venture Asian PPG Industries Ltd. The Company also has chemicals businesses consisting of phthalic anhydride and pentaerythritol manufactured at Ankleshwar, Gujarat and Cuddalore, Tamil Nadu, respectively. The Indian paint market is highly saturated with many paint companies with varieties of product. Kansai Nerolac paints Ltd. Berger paints India Ltd. ICI India Ltd. Shalimar Paint Ltd, Snowcem India Ltd are the main competitors of Asian Paints. Among them Nerolac Paints have a very good market share in the Industrial Paint segment. Asian Paints adopted some marketing objectives & strategies. Asian paint is ready to

achieve its corporate objective by taking care of the Customers, www.managementparadise.com

Employees, Brand image, Dealer Vendor technology. divisions performing

relationship

&

Company’s

three

are well.

not So

equally it

has

different objective & planning to gain the top most position in the Indian paint market. Asian Paints has different marketing strategy for the urban as well as the rural market in India. The company always maintaining some alternate strategy & keeping in track with the strategy maintaining by its competitor. In decorative sector company is strong enough, but it need to take care of the Industrial sector so as to increase the overall sales. Considering the pricing strategy of Asian paints, company has several priced products. It starts from very low end to the premium level. Asian paints Colour World concept helped the consumer to choose the colour combination & other appropriates according to their wish from a very wide range of product. Company’s famous logo GATTU helped it overcome while entering into the rural market, as visualization has its own effect. Other than this Asian Paints is using its www.managementparadise.com

website as a very good medium to reach the high/upper middle class consumers. With these tools company is expecting to generate much more revenue than the earlier years. Asian paints wonderful promotional strategy helped the company to extend its business in several other countries with success. A very attractive distribution policies & proper distribution channel with more than 15000 dealers helped Asian paints to spread its business in more than 3500 big & small cities in India. The company used to maintain a very strong market research cell, which helps them to take care of the consumers need & intensify their R&D accordingly. Asian Paints approaches the environment issue from the perspective of waste minimization and conservation of resources. Thus, the continued attempt is to reuse, recycle and eliminate waste, which results in less and less waste being generated. Asian Paints, took a huge stride towards promoting the cause of total water management by giving Mumbai (and neighboring districts like Thane) its first Total Water Management (TWM) Centre, which is located in the premises of Asian Paints manufacturing facility at Bhandup.

INTRODUCTION : Asian Paints Ltd. has a combined turnover of 630 million US dollars. With

its strong

presence in the Indian subcontinent, south East Asia, Far East, South pacific Caribbean, Africa & Europe. Along with Asian paints the group consists of SCIB chemicals, Berger International & APCO coatings. Together the group has 30 manufacturing unit globally.


The company was incorporated in the year 1942 in India. Asian paints have extensively computerized its operations in India using the cutting edge solution provided by SAP & i2. It helped the company drive benefits of faster market analysis for better decision making. The product portfolio of the Asian Paints group covers a large spectrum of finish coasts & ancillary products in decorative paints, wood finishes, automobile OEMs & refinishes, marine & Industrial coatings.

SITUATION ANALYSIS-1 CATEGORY ANALYSIS The different categories of Asian paints Ltd. are –

PAINT : Company’s paint business in India consists of decorative, Industrial & Automotive coating. In 2005-06, these accounted for 79.1% of the group sales. It is estimated that the local market for all paints including cement paints & other powder products manufactured by all companies big & small would have been around Rs.95 billion in 2005-06. 1) DECORATIVE PAINTS: Decorative paints account covers almost 75% of the overall paint market in India. In this segment Asian paint has been a leader for almost four decades. Decorative paints include wall finishes, for interior & exterior uses, examples, wood finishes & ancillary products such as primers, putties, etc.

2) INDUSTRIAL COATINGS : Industrial coatings have a moderate growth rate than decorative coating, led by the growth in automotive original equipment sector, powder coatings & protective coatings. Industrial coatings are classified into automotive & non-automotive coatings are classified into automotive & non-automotive coatings. While Asian paints Industrial coating Ltd. (APICL)


services the powder coating segment, Asian paints Ltd. caters to be remaining non-auto industrial coatings segments. 3) AUTOMOTIVE COATING: The actual look and feel of a vehicle undergoes a sea of change over time. The paint on a vehicle loses gloss, is subjected to a lot of wear and tear and hence starts deteriorating. Asian Paints is not having a very good market share in this segment.

CHEMICALS : Asian paints have chemical business consisting of Pthalic Axhydride & pentaerythritol manufactured at Ankleswar, Gujrat & Cuddalore, Tamilnadu. During 2005-06 approximately 42% of company’s chemical was sold in-house & rest at open market.

SALES ANALYSIS : Sales over the last 6 years (in Rs. crores) Year

12 March

March

March

March

March

March

months

2001

2002

2003

2004

2005

2006

Gross

1526.01

1662.33

1887.7

2111.08

2366.16

2807.05

-

8.93

13.55

11.83

12.08

18.63

Net sales

1322.38

1450.71

1641.27

1841.92

2037.55

2433.37

Parentage

-

9.7

13.13

12.22

10.62

19.42

sales Percentag e increasing

increase

Graphical representation of net sales over the period – 2001-2006.


Net sales 3000 2500 2000 1500 1000 500 0 36951

37316

37681

38047

38412

38777

Results of operation : Net sales & operating income of stand alone entity increased to Rs.24333.7 million from 20375 million showing a growth of 19.42% in the year 2005-2006 (March). This is driven mainly on account of good paint volume sales growth of 13.8% & price revisions effected during the year. For the group, net sales & operating income shows an income shows an increase of 17.4% to Rs.30210 million. Asian Paints has a steady growth over the last 6 years, so the financial condition is very much stable & it is expected to reach at the top position in the Indian paint market.

SHARE PRICE ANALYSIS: www.managementparadise.com

In the following share price analysis of Asian paints we have considered the closing price of share of Friday’s for the month of May, June, July 2006. Table showing the share price (on Fridays of May, June, July 2006) Date

5 May

Closing 6487.7 share price (in Rs)

12

19

26

2

9

16

23

30

7

14

21

28

May

May

may

June

June

Jun

Jun

Jun

July

July

July

July

637.5 577.2 553.3 582.

550.

566.

573

597. 581.

571.

581.

585.4

5

75

65

05

85

25

5

5

0

70

65

Graphical representation of share price Closing share price (in Rs) 660 640 620 600 580 560 540 520 500 38842388493885638863388703887738884388913889838905389123891938926

Discussion : Though there is a downfall in the share price of Asian paints but it is among the most actively traded stocks in India market. In terms of absolute daily returns the best performer in the paint market is godless Nerolac, Where Asian paints comes at 4 th place with a return of 17%. The least risky stock among the paint market was Asian paints with daily volatility of returns of around 1.43%.


The investment on the stocks of Asian Paints could be a good investment option from a medium there prospective. It is the largest player in the industry with a vital strangle hold over the decorative segment. With its high level of efficiency & developed marketing infrastructure Asian Paints is well placed in the market & have a very high growth prospect.

SITUATION ANALYSIS-2 Asian paints limited with its three business units decorative, Industrial & International business is one of the largest paint company in India. It had a sell over 300 million litres of paint in 2005-06. Significantly the group has crossed the Rs.3000 crore turnover mark-a preset mile stone for the company. Here we will be analyzing three situations of the company – (i)

Competitor analysis

(ii)

Customer Analysis

(iii)

Assumption on planning

1) COMPETITOR ANALYSIS : The Indian paint market is highly saturated with many paint companies with varieties of product. Asian paints ltd, Kansai Nerolac paints Ltd. Berger paints India Ltd. ICI India Ltd. Shalimar Paint Ltd, Snowcem India Ltd are the market leaders. Here we are only considering the nearby competitors of Asian Paints which are Nerolac paints Ltd, Berger paints Ltd & Indian chemical Imperial (ICI) Ltd. Sales of different companies in the Financial year 2005-2006 Name of the Asian paints ltd Nerolac paints Berger paints company

ltd.

Net sales (in 2433.37

1064.22

Rs. Crore) www.managementparadise.com

948.54

ICI India ltd. 971.19

SWOT analysis of Asian paints & its competitors : COMPANY

Asian Paints

Nerolac paints

Berger paints

Strengths

1. Market

1. Well ahead

1. In the IInd 1.

leader in overall

leader in

position in the refinishing

paint market &

Industrial paint

industrial paint business it has

in decorative

market

sector.

paint market in

2.

India share 40%

kansai

Tie-up

2. Available in provides

ICI paints In

the

one of the best

with 2. Tie up with quality refinish paint for cars. paints Herbert-

foreign Germany

urban & rural technology.

2. In decorative

valspar of US paints

it

area

3. Main supplier & Teodor NV performance is good 3. High Quality in the Indian of Holland MR & MIS

Industrial

&

3.

Pricing automobile main policy oriented market maruty to all kinds of client

purchased 49%

4.

Weakness

1. paint

share of Quest Int.

udyog

customer

India

limited.

Industrial 1. Market share in 1. sector decorative is

Overall 1.

paint market position paint

only 15% share

market

2. No tie up

low.

with foreign

2. Market in rural 2. Asian paints 2.

manufactures.

area is poor.

Through it has

3.

units in several

recently

very is

not

impressive.

&

market

very existence almost 2-3% Overall

Nerolac market conduct

Considering paints capturing poor. the market


Industrial

countries.

overall

paint buyer

3.Innovation in

market

Asian behind

developing new

paint

product.

ahead of Nerolac.

1.

Acquiring/ 1.

Increasing

is

Improve

position

for

well

its 1.

come

in with

market share in decorative

up 1. Merger with new Quest

will

paint innovations to provide to have

Industrial paint segment.

challenge Asian an

experience

sector.

paints & Berger in

foreign

2.

2.

Developing whole

Opportunities market automobile

Capturing

industrial paints

market, particularly in

in paint market

UK.

industry, which accounts 50%

for of

Industrial paint market. 1.

Domination 1. Asian paints is 1. Asian Paints 1. Berger paint

of few foreign coming countries Threats

2. Nerolac advancing rapidly Industrial

up &

Nerolac & there are few

rapidly into the paints are well new entrants in paint ahead & ICI the market. is industrial market with its paint is in new plants products

market

2) CUSTOMER ANALYSIS :


& competing nearly

Asian paint with its natural competitive advantage of size (Number 1 in India), Strong brand equity & largest distribution Network has acquired the number one position in Decorative segment in India. There are few reasons due two which the customers in the decorative segment has been choosing Asian Paint as their brand – 1. As we know brand name has its own value & Asian paint is the number one in decorative segment, so a purchaser automatically leans in purchasing it. For example, we have two different types of paints, namely Apolite glass Aenamel & Apolite care Emulsion, which are from Asian Paints, Nerolac paints, Berger paints & ICI paints. Again due to the competitive market the price is very closed for all the companies. But due to the Branch awareness of common people they mostly tend to purchase the products from Asian paints. 2. Company have provided with different varieties of product for different income groups. For e.g. “UTSAV” which is a low value paint, is growing at a faster rates & penetrating with high speed at the lower income group. This policy is helping the company to move from metros to small towns for branded products. 3. In India frequency of painting has still not increased, which is once is 5 years only. So consumers are normally changing over to the better quantity & branded paints. 4. In 2001, Asian Paint launched a new product “Tractor Emulson”, which pulled the customer who used distemper to move to emulation paints. Accessibility of Asian paints to the customers : Asian paints have started a 24 hours customer help centre at Hyderabad. It is information to consumers to answer their needs for any query related, to their products. Through this company is also getting a lot of data related to the customers need & appreciations of the products. In order to provide better consumer service, company has connected all colour world installations with Asian Paint’s main system through software & providing computes to dealers. This is speeding up order execution, electronic banking will speed up recovery & money transfer.


Market Share Analysis : The market share clearly shows that Asian paint is the leader in Indian paint industry. The nearest competitors of Asian paints are Nerolac & Barger paints. Asian paints has the largest sells in Decorative paints. Nerolac paints being widely used in Industry it has a greater share price value. Industries like Bajaj auto limited, Maruti Udyog & many other car manufacturing companies use Nerolac paints. The Industrial paint are priced with premium in comparison to the decorative paint which is mainly used in house hold decoration. Berger paints & ICI paints are also providing a shift competition to Asian Paints in decorative paint, but still there is no sign of threat from them. Again in the Industrial sector Nerolac paint far ahead of all its competitor. Asian paint presently building up a new manufacturing unit solely to produce Industrial paint. Asian paints annually spends on an average Rs325 Cr on its selling & marketing expenses. It givers us an idea about the effort the company put on expanding its market in all segments. When customers buy the products of Asian paints – As the customers normally uses the products of Asian paints on certain occasions like. Marriage ceremony, Dewali or any other special occasions, other than normal paint in houses, customers are very choosy & brand specific. This appreciation by the customers helped Asian paints to become the number one paint company in India.

3. ASSUMPTIONS OF PLANNING : i.

Though Asian paints is the largest paint company in India but in industrial sector its performance is not satisfactory. A totally new manufacturing unit is coming up & will start production by 2007. This will definitely through new challenges to Nerolac paints, which is the present leader in Industrial coating market. But before that, a proper introduction of positing very important to sustain in market.


ii.

With the advancement of technology the demand & choice of people changes rapidly. So intensive R & d will need to be continued to continuously enhance the quality of the product.

iii.

Internet purchasing is new becoming one of popular way to purchase. So adequate measure will be taken to satisfy customers regarding designing of website & providing a brief demonstration.

iv.

In International market also Asian Paints has become a top paint company. But its strategy regarding the international market must be reviewed at a certain internal so as to maximize value.


MARKETING OBJECTIVES Four Marketing Objectives of Asian Paints are discussed bellow(i)

Corporate objective

(ii)

Divisional objective

(iii)

Marketing Objective

(iv)

Programme Objective

Corporative objective : The corporate objective of Asian Paint is as follows -“Asian Paint has become one of the top decorative company world wide by leveraging its expertise in the higher growth emerging market. Simultaneously, the company intends to build long term value in the Industrial coating business through alliance with established global partner.” With Economic performance as objective the organization now has to develop short-term goals to reach the overall objective. These Goals are usually functional target such as production, Sales, new market develop, new product development and technology up gradation, once the goal are determined the strategies can be evolved to meet the goals. The organization is now on the way to achieve the overall objective of Economic performance. Steps followed by Asian paints for achieving its objective : Asian paint is following certain steps for achieving its corporate objective. They are as follows : (i) Customer Asset : The settings up Asian paints colour world, a chain of state art paint shop, is a major step towards building customer asset. At the same time company is focusing more in rural areas than urban area and continuing to provide good and quality service to the customer.


(ii) Technology asset : Asian paint is one of first Indian company to go hi-tech. Asian paint has always kept its competitor at bay by constantly re-innovating its business process and system. (iii) Employee Asset : Asian paint always praise its employee for its success in the market. Company always considers employee as a biggest factor of its success. (iv) Dealer vendor relationship : Asian paint always maintain a close relationship with its dealers because company think that they play a major role in Asian paint recent success. (v) Brand Asset : Although it is operating in the commodity market but still Asian paint is investing heavily in branding. Gattu- Asian paint official mascot is very popular in India.

Divisional objective : Asian paint has following division that are as follows : (i)

Decorative segment

(ii)

Industrial segment

(iii)

Automotive segment

Decorative segment : Asian paint is the leader in this segment. It is ahead that its competitor Nerolac and Berger in Decorative segment company still have certain objective for this sector that to increase it sales and to acquire maximum position in the market share in Indian paint market. Objective for decorative segment : 

To expanding its range in the economy segment.



To strengthen its position in the emulsion segment in both exterior and interior emulsion.



To continue its strategy of pricing aggression and increase it sales and to gain the market share along with a good operating margin.



To focus on the rural market as company believes as it as been its objective since the beginning.




To focus more on adcampaign for enhancement of their sales in urban as well as rural market.

Industrial segment : Asian paint second line of production deals with the industrial coating. The constraint in these segment is that it is not as successful as the decorative segment. In these sector it has to face a stiff competition from its nearest competitor Nerolac and Berger Paints. Objective for Industrial segment : 

To build new infrastructure in the country for Industrial coating to increase the production capacity.



To develop the quality of the product with a higher technological up gradation.



To increase the sales of the Industrial coating with the help of proper Ad. campaign programme.

Automotive segment : Automotive is the third segment of the Asian paint. It is a product which company target for the automobile market in India as well as abroad. Objective of automotive segment : 

To put emphasis on continuous improvement in quality and productivity.



To put emphasis on detect prevention



To reduce variation and wastage in the supply chain.

Marketing Objective : Asian paints the leader in Indian paint Industry has a very strong marketing division. With more than 35% market share Asian paint is still growing in leaps and bounce to achieve higher targets. It is changing fundamentally with two objective in mind a huge ramp in the market share and better growth over the next three years. Previously company used to function as undifferentiated organization. But now they have divided it into three section each. And each section has its own independent support system, targets and performance parameter. Company marketing objective : As follows




Company is using PC, V-sats based line and internal mesh to become most networked corporation in India.



Company is trying to cutdown the inventory and improve the working capital cycle for a continuous production.



Asian paint is highly accepted in the urban sector and now the company is trying to access the rural market with low price product like Utsav targeting every customer of all income level.



To enhance their marketing in rural sector a huge amount investment is made in adcampaign and demonstration cum sales technique is going on.



To increase its sales in the urban sector Asian paints today have 30 colour world located in different cities of India where any body can have the real taste of the colour.



Online marketing has become an integrated part of the company and company is trying install a strong integrated for online marketing.



Asian paints international unit, which have a dedicated marketing team is also targeting for a rapid growth in overseal market.



Asian paint is concentrating on the development of technological in their industrial coating so that to make the product more stronger positon in the market. And do it they are following the product with huge ad compaign.



Asian paint is now targeting to provide paint solution with insurance.



Asian paint is following unlque strategy of marketing in the rural areas by using their official mascot. According to the company it feels that picture are more dominant than name.



Asian paint website Asian paints com provides several information regarding the product and various other information that is being required by customer and dealer.


Programme Objective : Programme objective is one of the main objective of the company. Here the company frames the strategy about the products related issue and various other thing relating to the business. Most of the company follows the 4’P’s policy namely price, product peace and promotion. Product : Asian paint details with product that is (i) Decorative (ii) Industrial (iii) Automative. In decorative segment company has a wide range of product from low price to high price low price product like utsav which is basically targeted to the rural customer and high price product Apex cefirma for exterior and interior emulsion. Asian paint investing a huge amount of fun in R & D sector for Quality and the technological development of product so that it compets globally. Price : the price range of Asian paint varies according to the product. Asian paint had always a stragegy in domination in the rural sector. The product that is supplied to the rural area have low price range. Where as in the urban sector some of the high price product circulates. Place : Asian paint is available to all types of customer and the main advantage of the Asian paint is that it is easily accessible to its customer. At present there are 20,000 dealer and a large no. of retailer. Asian paints distribution channel extends to the thirty state of India. Asian paints is also exporting to contrites like Caribbean, Africa, Middle east Asia and south pacific.

Promotion : Asian paint follow good promotional strategy regarding their sales of the product. Their promotional strategy are made looking at the different category of the product and price associated with it. In urban areas Asian paint established colour world where the customer can enjoy the taste real colour while in rural sector it follow sales demonstration programme along with van displaying the product of Asian paint in the rural market. It also invest a huge amount of funds in the advertising sector for the promotion of this product.


MARKETING STRATEGY 1 STRATEGY ALTERNATIVES : The prospect of a paint company has many dependence like weather, occasions like puja, id etc. when we consider the decorative segments. So there is always a possibility of ups & downs in the business. Besides this there is another very important factor i.e. the position of the competitor. Through Asian paints is the largest paint company still under circumstances it will have to go for some strategy alternatives. Alternatives available : 1. As Asian paints market is mainly the decorative segment so a downfall in that market will lead the company in trouble them it immediate focus will turn to the Industrial segment. 2. Importance on water based paints may recover a poor situation created due to sustain poor weather condition in some region. 3. As there is every possibility that conventional coatings are likely to lose some share – ecofriendly coasting is going to be very good alternatives. 4.

With all countries in southeast Asia beginning to adhere to the ASEAN free trade Area (AFTA) that will reduce trade barriers for paints & coatings. A reduce in domestic market share of Asian paints then will not be a constant for growth, became export of paints to the foreign countries will contribute a lot.

5. Increasing the product package & application oriented service will make company different from others. 6. A strong post sales service division will be an important factor in building customer loyalty. 7. Tie up with automobile sector with strong appearance will be effective. www.managementparadise.com

8. Lastly but not the least price of oil is increasing day by day, which results to increase the price of paints. If this can be controlled by stocking oil or directly linking up with foreign cheap refineries so as get oil at least available price.

COMPETITOR STRATEGY : In the Indian paint industry Asian paints is the leader keeping the other competitors far behind. In terms of gross sales we can rank the competitors of Asian paints as : i) Nerolac paints (ii) Berger Paints (iii) ICI Paints. In industry they are recognized as trailing firms. But with their high growth in the industry the competitors can touch or even overtake Asian paitns, for that the three main competitors have different strategies. Initially one common strategy must be their mind – is to increase the market share. Now we are considering individual strategies of the three companies. Nerolac Paints : Nerolac, despite a strong brand name has grossly underutilized its potential in decorative paints. But in industrial paint sector it is far ahead of other competitors. So, its two main targets are : i)

to keep hold of the Industrial paint market

ii)

increase the market share in Decorative paint sector. All their business strategies mainly rounded this two issues. The different

strategies they are dealing with : (1) They want to see high growths from decorative segments. In Industrial sector their supply chasing demand strategy accumulated lot of inefficiencies, so there is a scoe for cost reduction. So they want to upgrde www.managementparadise.com

the equipments to improve efficiency in manufacturing & secondly they are taking advantage of IT to improve over all efficiencies. (2) In decorative segment, they are logging behind the demand. So now set up is needed as well as they are concentrating on enamels. They are installing colour dispensing machine across the country. (3) Concentration on emulsions & distempers, other words interior paints. Distinguishing the high – low end products. (4) They want to concentrate also on the automobile paint industry. Here they are already established but Asian paints is also targeting this sector heavily. (5) Another important strategy they are considering is to involve the vendor in their organizational process. For this they want to have proper vendor management processes. Berger Paints : Berger paints is considered as the dark horse of paint industry. While company’s main strength is in decorative sector, it has been actively pushing its presence in the industrial paint segment. To improve its business the company have some strategy : i)

Company is mainly spreaded in Eastern & Southern part of the company, now it is looking for a rapid expansion at the western region also.

ii)

Recognizing the saturation of the urban market, Berger is targeting the rural market.

iii)

They are looking to export in nearby countries such as Bangladesh, Bhutan, Nepal to boost its revenue.

iv)

Within the paint industry, Industrial paint segment has a higher growth rate. Keeping this in mind company has targeted a 15% share of Industrial paints in the company’s product mix.


v)

Berger’s performance in Automotive sector over the lst few years has been fairly. Here also they are targeting to build up some tie-up with automobile companies.

vi)

Berger had ticups with Nippon paints of Japan & orica of Australia. Here they would like to go for the branding of products through proper advertisement compaign & with their new logo.

vii)

An establishment of new plant in Russia was done in 2005, which is expected to start production by the end of 2006. company is likely to utilize the Russian plant to cater to the markets of CIS countries in the future.

ICI Paints : Within 3 years of launch of colour future from ICI it proved to define the International interior designing trend. The company has invested a million dollars in the R&D of the colour futures concept. Which helps to forecast the international colour trends in paints. Though ICI is considered as the 4 th paint against in India, but its presence & development can be a threat to the others. As a part of its strategy ICI is taking the measures : (i)

It is not looking at the increasing Investments but focusing on debottenecking the capacity.

(ii)

Considering the increment of channel partners.

(iii)

Improving technology & offering better quality at a moderate price will help to capture the rural market easily.

(iv)

Improved service & solution to the customers.

The company is slowing penetrating to both of decorative & Industrial paint segment.

MARKETING STRATEGY 2 www.managementparadise.com

POSITIONING STRATEGY OF ASIAN PAINTS LIMITED : Although operating in commodity market. Asian paints have invested heavily in branding, GATTU, the Asian paints official Mascot is a familiar icon across India. The company recently augmented their web pressure. Their website, Asian paints.com is an exhaustive hub of ‘Painting solutions’. The site use Maximum interactivity to enhance user experience. There are painting lips, online shades cards, cost calculation (based on floor area and number of rooms0 dealer locator and a short of other innovative services. From the perceptual map we can understand that Asian paints, have wider range of products for all type of customers consisting of different income levels. It has a product range from Royal Emulsion, Priced 250-400 which is targeted for up market buyers. Hpcolilen is a product which is targeted for high income and upper middle class people. For lowers income group it has UTSAV, TRACTOR EMLSION which priced vary from 40-100 Rupees. These products are mainly targeted to Rural customers. In Industrial segment companies position is relatively weak here Werolac paints captured more than 50% market share. In this segment Asian paints have products like Apcomin synthetic enamel which is used for industrial coating, and Apco synthetic power which is used in automobile sector. In this segment also Asian paints faced stiff competition from Berger and ICI Paints. Bajaj automobiles in the main customer of Asian paints in automotive sector.


POSITIONING STRATEGY OF ASIAN PAINTS

PREMIUM PRICE

ROYALE

INDUSTRIAL PAINTS


CUSTOMER SEGMENTATION & TARGETING : Customer segmentation is the most important part of the marketing strategy of any company. Asian paints, the market leader in the Indian paint market segmented their products mainly in three sectors. (i) Decorative (ii) Industrial (iii) Automotive. Their customers are all also segmented based on the usage of these products.

CUSTOMER SEGMENTATION : Base

Decorative coating Premium

Industrial coating

Medium

Popular

Automotive coat

High

Powder

Quality

Finished

performance

coating

coating

coating

coating Buyer Up market High

aracteristi

buyers

income

achiever

group

quality

Middle

Used

by Used

class & fertilizer & rural

manufacturer

petrochemical &

by Large

s

of

& Old cars are

small

while scale

mainly car recoloured

& Upper

market

s

atomic goods & other industrial

fashion

middle

mostly

energy

industrial

mostly tied

Secker

class

low

installations

products

up

Socially

income

mainly

used

conscious

group

where

to

reduce corrosion losses


led

companie s

Key Quality

Quality

Cost

Quality

& Quality & cot

Quality,

Brightness &

urchasing

surfaces

surfaces

utilization

surfaced & cost

actor

influences

shades

power

conting strength

arch &

Brand

Brand

Cost

valuation

loyal

loyal

+

Cost

+

Utility

Variety

Brand

Cost+

seeking

loyal

variety seeking

variety seeking

rchase

Company’

through

Packet

s

dealer

or paint approaches & manufactures

Authorised

paint

dealer

purchasin

paints the g

or can

Company

Other

points directly paints can

Tie up with Old vehicles the

anto send to work

company

sold

shops

or

purchase

paint

customer

com

of

house

1,2, 5, 10, litre

Post A warranty Limited or

Purchase

Market

period some

for no warranty

No

High scale

Medium or no Service

Service

warrant

service of

warranty

provided

provided for

y

warranty

for limited

0-2 years.

years

years

Asian paint is the market paint Nerolac is the market leader. Nerolac market leader, leader, with more than 50% market Asian paint have only 12% 50% share share. Nerolac, berger, ICI & market share. Other players – Asian paint penetrating Shalimar are there ICI slowly


TARGETING : Asian paints have an unique customer targeting strategy. They used to follow V tier customer – Target strategy. Tires

Tires 1

Tire 2 Tire 4

Tire 3

Tire – 1 - In the recipient end there are strategic solution seekers. Company thinks of cost reductions, performance & productivity improvement for client’s improving customers & share holder profitability. Tier –2 – Here the Customers whom can be considered as the value or brand sensitive. Asian paints target this customers with value added VDS integration customer level service. Tier –3 – These part of the consumer are price sensitive. They least bothered about the service. These are mainly middle or low income group people Asian paints have several brand like UTSAV – to serve them. Tier-4 Here the company targets the small manufacturing & local companies, which can generate revenue, company utilizes its & business & telesales technology to address & satisfy their needs. Tier-5 – This tier is composed of specific targeted companies that although small in size, deserve special attention because they are highly innovative in nature. Asian paints have a good prospect over here.


CORE STRATEGY OF ASIAN PAINTS LIMITED : An origination like Asian paints will always restrict itself for its core strategy on ‘innovation’. For an organization like Asian paints to create a strong future, it has to bred innovation continuously. This strategy of innovative facts will help any organization to fulfill their commitment and integrity in dealing, with internal and external customers. For this core strategy of innovation Asian paints encouraged entrepreneurship. They also give grater autonomy to managers in their reasonability. organiation also develop high tolerance for failures and encouraged risk taking. Asian Paints another important core strategy is of managing people and technology which are also the two important assets. As it is always a people focused company its employees are the main leaders who bring a difference to the company. Asian paints has stressed on employee development and creating leaders of tomorrow. It always have strong belief in individual ability and creating an environment in which an entrepreneurial spirit in encouraged. This is why Asian paints have believed to be a best employees for personal and personal growth. Along with Mass customization, Asian paints has created a plat form where Talent is shared across the organization as Manager are given in different areas of operations. It gives Asian paints on overall good perspectives of business along with challenges of chandelling new Ares of operations. The second most important core strategy of Asian paints limited is its technology. Technology includes both research and development and information technology. Asian paints has used technology throughout its year to gain a competitive edge in the market place today, the company has formulated the entire range of decorative coatings though home grown technology. It has used IT as a tool to bring efficiencies and stress line operations. This applications will


continue in future and Asian paints will not hesitate in making investment in these areas to gain advantages of the organization. The Third but important core strategy of Asian paints. In Reconfiguration of value chain activities : It is a key task for Asian paints to retain competitiveness and achieve highest value cost leveraging. Here a Question arises that as per this given requirement who were the Key initiatives taken by Asian paints during the last 5 years in this regard. In last 5 year, reconfiguration of value chain activities to increase competitiveness has been one of the Major core area of Asian paints. An fact Asian paints has been drain stormed as an organization with highest sales and profit figures. But most important has been initiatives under taken in all areas of operations to increase efficiencies some of the key initiatives undertaken are : -

Initiatives in manufacturing to reduce losses at factory.

-

Sourcing efficiencies

-

Surat existing assets for better productivity

-

Introduction of new technology to drive efficiencies and increase productivity.

-

Implementation of new supply chain solution.

-

Implementation of an ERP solution. Besides the above Asian paints have focused on continuously improving environmental

Management standards at our plants. Today all Asian Paints manufacturing facilities are accredited with ISO 1400/ certification for environment management standards. These systems have enable company to reduce affluent from the manufacturing facilities. The introduction of new supply chain has transformed management

of inventory and forecasting has brought

significant benefit for the company through reduction of working capital. It has completely changed the manner of functioning of the supply chain division.


MARKETING PROGRAMME PRICING Asian paints limited with its three business units decorative, industrial & International business is one of the largest paint company in India. It has a sell over 300 million liters of paints in 200506. Significantly the group has crossed the Rs.3000 crores turnover mark a preset mile stone for the company. Products and its price ranges : The various products and its price ranges are as follows : Product

Price range

Exterior:Asian Paints Apex

Price of 20 lts. Range from Rs.3142.00 – 3328.00

Asian Paints Ace

Price of 20 lts. Ranges from Rs.1761.00 Rs. 2059.00

Asian Paints Tractor Emulsion

Price of 20 lts. Ranges from Rs.1435.00 – Rs. 2047.00

Asian Paints Super Decoplast Plastic Price of 20 Ltd. ranges from Rs.2239.00 – Emulsion Paints

Rs.2544.00

Asian Paints Interior Wall Finish – Matt Price of 20 lts. Is Rs. 2244.00 (White) Asian Paints Interior Wall Finish – Luster Price of 20 lts. Is Rs.2311.00 (White)


Product

Price range

Asian Paints Tractor Synthetic Distemper

Its price ranges from Rs.690 to 757

Wall Finishes

It range from Rs.4638- Rs,4975

Asian Paints Royale

The price for 20 lts. Ranges from Rs.4638Rs.4975.

Asian Paints Premium Emulsion

Range of 20 lts of this product ranges from Rs.2648-Rs.3118

Enamels Asian Paints Apcoute Premium Gloss For 20 lts the range varies from Rs.2068 to Enamel

Rs.2350.

Asian Paints Gattu Synthetic Enamel

For 20 lts the range varies from Rs. 1458 to Rs.1836

Asian Paints Utsav Enamel

For 20 lts the range varies from Rs.1425 to Rs.1652.

Stainer, Aluminium Paints & Others Stainers Apcolite Universal Stainers

For per bottle in plastic bottle of 200ml the price ranges from Rs.41-Rs.77.

Utsav Stainer

For per boltle in plastic bottle of 20 ml its price is Rs.34.

Asian Paints Wood Stains

For per bottle in plastic bottle of 5 lts the range varies from Rs.1000-Rs.1250.

Aluminium

Paints

(Asian

paints

3 For 20 lts its price is Rs.2593

mangoes Aluminium)


Effect of price on future: In the present economic situation, the GDP growth is expected at 6% for cude oil price are soaring. Industrial sector has declined at a low rate with continuous slowdown increment sector. There is depreciation in rupee. Despite such discouraging macroeconomics it is creditable that Asian paints has posted very good result. Asian Paints is trying desperately to keep the same price overcoming the constraints.

PRODUCT Asian paint produces a wide range of products which have more than 1100 shades. Their product were targeted to the different segment of the society. The cost of the produce of Asian paint varies according different income level of the consumer. Company follows the principle providing the customer different kind of products and different price. In company’s Decorative premium sector company have products like Asian paint Royals and Asian paint Emulsion. The cost of these product is Rs.275 and the latter Rs. 201 where the product like GATTU and Utsavfamily product are targeted to lower income segment people the cost varies from Rs.15 – Rs. 20. Products of Asian paints in decorative segment : As Asian Paint is the leader in the decorative segment in the Indian paint market it has wide variety of product. The products are : (i)

Asian Paints Royale

(ii)

Asian Paints Premium Emulsion

(iii)

Asian Paints Apcolite Premium Enamel

(iv)

Asian Paints Gattu Synthetic

(v)

Asian Paints Utsav Enamel

(vi)

Asian Paints Trator Acylic Distemper


(vii)

Asian Paint Utsav Acrylic Distemper

(viii)

Asian Paint Apex

(ix)

Asian Paint Ace

(x)

Asian Paints Tractor Synthetic Distemper.

Asian Paints Royale : This product of Asian paint is targeted to higher income group and customer of urban area. The product contains different shades and price of each shade very. E.g. Regal white Asian Paints Emulsion : it is another product which is targeted to urban area. It is high price premium product. The shades are white, palm group and base. Asian Paints Gattu synthetic : It is a product which is targeted customer of reral area. It price varies Rs.15 to Rs.120 and it has different shades like white, Aquamarine, Azure Blue and etc. Asain Paints Utsav Paint : it is product which is targeted to lower income people as well as rural customer. The various shades were Adyrey, back\, white, super white and etc. Asian Paints Apex : This product is one of the major product of the saian paints as this product is targeted to middle class people and avg income level. These paint have wider range of shades such as classic white, blue ice, Alliance, Antique white, sweet time and etc. The price varies from Rs.180-Rs. 115. Products of Asian Paints in Industrial sector : it is the second category of the product that Asian paint produces. In this segment Asian Paints targets to industry where the paint are used for protective coatings of the machinery. Road mapping and various other industrial uses. In these segment the product are normally sold at the premium price. Asian paint in these sector is behind its competitor Nerolac. Now Asian Paints is trying a lot to improve the product technology and by bringing new product in this sector to compete with its competitor. The products are (i)

Apcomin Synthetic Enamel

(ii)

Apcomin Synthetic Powder

(iii)

Stainer


(iv)

Premium surface & fillers

These products are based on high technological products and are used for asset (Machinery, tools, equipments) coloring and upcoming synthetic powder is used as lubricating agent in the machinery. Premium surface and fillers and strainers are used in for road marking and various other tings in the Industrial sector. Product for automotive sector : This is the third category of product which is produced by Asian paint. These segment is slowly being emerging great user of paint in the Indian market previously automotive company used to import the product from other country. But now some companies like Asian paint, nerolac, Berger have their products in this segment. This sector is emerging market in India. Products : The products of Asian paint in this segment are (1) Allumium Paint (2) Fibre Paint (3) Apcolite Hammertone finish Basically the product in this segment are new but the product are in the great demand automotive vehicles in India. The product are available in different colour basically they are used for colouring the vehicles and the spare parts. Product life cycle : Product life cycle suggests the different stages that a product undergoes during its life cycle Introduction stage: In these stage the product are introduced to the market. (i)

Growth state – In growth stage the product gens the memeenturn an grows rapidly in these stage.

(ii)

Maturity : In these stage the product attains the saturation level it reaches its maximum point and from that point it starts downfall.

(iii)

Decline stage : In these stage product slowly goes downward in to the slope because of low demand and various other things. It end stage of a product.


BRAND a brand is a name, term, sign, symbol, design or a combination of all which is build intended to identify products or services of a company to differentiate it from its competitor. Asian paints, the largest paint company in India have established its position as a great brand. Asian paints promise to deliver consistently a specific set of features, benefits & services to buyers. Asian paints as a brand name is very much attached with allits products. What evr may be the product, like ultima, Emulsion, wall finish lustce, Apcolite premium in the urban area or the UTSAV at the rural area, the brand name is directly attached. The brand name Asian paints brings to the mind of people certain attributes lie – wonderful coloring, royal treatment, 1000’s of colour combinations, pricing not an important factor of concern as the company provides products for all category of consumers. Post purchase service is also an important issue related to brand name. Asian paints Brand extension policies helped them to reduce the effective cost of launching new colours products in new form, with new name. Line Extension technique of branding helped them to go with new forms like – Asian paints UTSAV Enamel, Asian Paints Tractor Emulsion, Asian paints Royal. Company’s universal logo “GATTU’ which is not going to be a logo anymore, helped Asian paints to promote its products in through out India, particularly in rural areas it got the most popularity. Asian paints is using its website as a very strong mode for the promotion of Brand. The wonderful information related to pre-painting & after sales services helped the company to build its unique brand. The on-line services, colour world & Advertisements also helped to build the Brand of Asian paints.


PROMOTION Asian paints the market leader of the decorative segment in the paint market of the India. As it is not for behind in the other tow section that is industrial coating and automotive coating. In achieve the current position a lot things are being done by the Asian paints. The promotion strategy of Asian paints is bringing a lot of positive output to the company. Company is using different techniques such ad. Compaign, sales promotion, personal selling, driect marketing and public relation. Promotion strategy : Direct response marketing : Asian paints is using V-sts based in the and 24 hours online customer help line service open. In enable the customer to interact with the company and know the details about the product, pricing and many things related to the company. Asian paints is dominating the television advertisemnt by increasing other ad campaign cost over 50% from next year. A total amount of 85 crores is spent ont eh ad campaign by asian paint. With huge ad campaign support behind the product the company is able to making a brand name in the mind of customer. Their particular ad campaign ‘Mera Walla Blue” “har ghar kuch kehta hia” are being liked by the customer. Online marketing for urban customer : Asian paint online marketing system is helping company in lot of ways many customer all the necessary information to the customer. It is an unique way of promotion. Colour world : Asian paint had established 30 colur world thorugh out the country giving the people real taste of colur. The punchline for the colour world is “Jjahan Milen world ke saare colour” Promoting in different cities : Asian paint have large area of Network of distribution. It has almost retail outlets through out the country situated in the different city of India. All the customer could easily access the product of Asian paint anywhere and any time. www.managementparadise.com

Promotional strategy followed by Asian paints in rural market On of thing which is contributing to the profit of Asian paint is that its entry to the rural market. As Asian paint gets an competitive advantage from its competitor in this sector. As Nerolac and Berger were only targeting the urban customer. 

First of al Asian paint is bring different low cost product like Utsav group in the rural market.



There packaging very from 200gm to 1 kg \and prices are also relatively low.



To enhance their sales in the rural market they are spending a huge amount of money in ad campaigns.



In rural areas they follow sales demonstration programme where they demonstrate their different product where a large no. of discount is given on the product, lucky coupons, free gifts are given to the customer.



Moving vans are being employed to sell their product in different village.

Promotion in international arena Asian paint is taking we from the domestic market and promoting its product in the international market with establishing colour world in those place particularly Caribbean, Africa Middle east Asia and south pacific. A huge amount fund is invested adcapaign for these product in the international market. Promotion through Ad campaign : Asian paint has different brands over 1100 shades targeting different segments. The company decide to promote all the brand under one name of “Asian paint’ This was a advantage for Asian paint in the Low involvement segment as the people asked the paint by brand. Target Audience : The primary target audience for all of the brands marketing and communication activities has been the adult male who is the primary decision maker. However


female members of the house play an important role in selecting a shade so a large number of ad are done keeping in mind that thing.. 

The non-sue of caps in the headline as in the original ad “Asian Paint” logo which is sin similar font, the design is meant for better readability and structure of colour used.



The company mascot “Gattu” an impish boy with the paint tin and the brush, is most popular and easily reconciled and is one of the ideal mascot.

Sates promotion : Asian paint uses it sale promotion as key ingredient in its marketing campaign. It consist of various incentive designed to stimulate faster or greater purchase of their products. Giving discount to the dealer ; Asian paint gives certain amount of discount to the dealer if he increases the sales of the company product. Specialty advertising : Giving Asian paint T-shirt, Caps and other small things to painter for their advertisement. Trade show : Asian paint always open its stall in the Industry trade so that it products would be promoted globally. Consumer preference : The customer of Asian vary from a period to a big industry in order to enhance it sales it gives price discount on bulk amount of purchase. The company give coupons inside the paint pack so that could be taken by the customer as a gift from the company. Asian paint always try to improve the packaging of the product. If the product would be fancy and stylish then it would increase the sales of the products. As industrial coating is one of tis major product the company uses the name of the company it supply the paint for its promotion. The promotional strategy adopted by Asian is quite unique apart from having such good strategy the company is using high profile brand ambassador like Akshay Khanna, Saif Alikhan” to promote their product in the paint market. Promotional strategy of Asian paint is always aimed looking at customer and this needs and for this strategy company is enjoying the No 1 Position in the Indian paint market.


DISTRIBUTION Asian paints have an extensive distribution channel through out the country. It used to maintain unique channel from the manufacturer to the customer. Distribution system at Asian paints : 1. Multiplant Distribution setup.  Neither geographic nor product specific.  Offers flexibility & variable cost advantages 2. Servicing has been key competitive advantage. 3. Around 15000 dealers serviced from around 85 sales location. 4. Role of distribution department is to ensure timely product availability at these locations at minimum cost. The company ahs 4 manufacturing facilities & more than 2800 stock keeping units (SKUs) These are supported by 6 regional distribution centers, which cater 55 deposits. Each depot is having branch manager for supervision over more than 15000 dealers in more than 3500 small & big cities in India. Asian paint implemented & concisely improving its IT systems over the years. It has already linked all sites & Depots through V-SAT technology, which helps them to monitor constantly & has given benefits in streamlining the distribution channel. Asian paints also implemented 12 solutions to increase its networkings & solutions, which is a very good replacement of ERP.


SERVICE Asian paints is India’s largest paint company & the third largest paint company of Asia today , has an enviable reputtion in corporate & society level for its wonderful serving. Asian paints have three different segments : (i) Decorative paints (ii) Industrial & (iii) Automotive paints. Its service strategy is also different according to these segments. (i) Decorative paints : Asian paints some solutions – which actually offer a hastle free painting experiences to the consumer is presently available in 11 different cities in India. It is particularly meant for premium consumers. In this case painting is done by experienced, trained applicators & according to the wish & choice of customer in presence of him. Here time bound completions of the job is assured. In the website of Asian paints (www.asianpaint.com) all the details related to the availability of the above facility & the help desk is designed to provide the customer ample choices. Asian paints clour world is the unique paint shop of Asian paint available through out the India, where consumer can directly see the different paint combinations through software & chose accordingly. In all t here cases Asian paints also provide warranty for their products & for home solutions free after paint services to the consumer, if anything wrong happens with the paint. For the rural areas, where the most popular product UTSAV, dominate the market, Asian paint used to organize rallys, car or van advertisement of their product & make aware the people about their services. ii) Industrial paint :


here the products are tested under extreme conditions to ensure their durability & how they can withstand different climatic changes. As corporate level the main consumer here Asian paint used to provide importance in servicing this sector too. Its website gives all the product details. It provides technical details regarding the uses of the paint. Coating specification, health & safety are also given importance as a part of services. iii) Automotive coatings : In this segment Asian paints is improving its market share with high speed. Here the vehicles ultimately goes to the consumer, so Asian paints used to provide direct consumer service, private cars, motor bikes & MUV (Multi usage vehicles) vehicle manufactures are directly provided with the post paint service. Asian paint have implemented is solutions. Which helped them to overcome the homegrown supply chain, which had certain drawbacks, in terms of customer service. The is solution helped them to continuously monitor the changing needs of the market place & serve the customers accordingly. In future so as to become open of largest paint company in the world Asian paints is also taking care of the services they provide. They want to have more feedback from the customers through their website & colour world. It is now turning its helpline into an integral part of its operations. Roughly 75 lakh rupees is considered as the annual service cost. Quality service is the future mothe of the company.

RESEARCH Asian paints, the largest paint company of India have a very strong research methodology. There are two ways they follow : - (i) Market Research (ii) Research & Development of the products according to customers need & choices. (i) Market Research : Asian paints used to hold a very strong market research team. The colour

worlds

available throughout India is also keeping the consumer databases & their feed backs. There are three important respect which came out.


(i) Consumer presences (ii) Increasing global competition (iii) Rapidly disappearing completive advantages. The market research suggests company need to improve its presence in Industrial sector. Products related to surface coatings & Intermediates need to be modified. UTSAV range of products achieved a great success in rural market in this area Asian paint need to take the competitive advantage. (ii) Research & Developments : Asian paints have invested 140.54 million Rs. In 2005-06 in the R & D sector, Which gives an idea about the company’s paid interest in R & D. The various sector where company is taking care of are – (i) Development of analytical test methods, characterization technique & application techniques essential for product development, bench marketing & customer servicing. (ii) Up gradation of products & processes to reduce environmental & safety concerns. (iii) As the price of crude oil is increasing day by day. Asian paints is looking for identification of alternate & new raw materials for the products. (iv) Quality improvement, cost benefits, supply chain flexibility & crisis management are also the matter of concern. Future planning : Asian paints is growing rapidly throughout the world. In international market company is planning to introduce new & attractive products though its subsidiaries, like Berger, Apco coating etc. In Jamaica & Fuji company’s market is yet not satisfactory, which is also a matter of concern.

In domestic market company will concentrate on development of new products/

product systems. With improved supply chain management.


Asian paints is looking to invest approximately Rs.160 million in R & D in 2006-2007 financial years. Quality control system will be upgraded & implementation of in solution will be helpful to grow.

FINANCIAL DOCUMENTS Asian paints, one of the leading paint company in Indian market, consists of three different segment. Decorative, industrial & automotive company presently standing in a very good position as per as the competitors are concern with more than 50% market share. Company has some planning to increase its overall sales for the financial year 2006-07.

SALES FORECASTS BUDGET OF ASIAN PAINTS : Paints is a product which is not used in daily life FMCG. Its purchase is mainly based on the requirement of the consumer. Natural factors, festivals are some factor which effect the sales. To increase the sales company is looking at the following factors : (i) Product Style

(ii) Quality

(iii) Pricing (iv) Raw material supply (v) Distribution

system (vi) Promotional activity. Table showing the previous 6 years data : Rs. – Crore Year

Advertising

& Gross sales

Net profit (PAT)

marketing Exp. March 2001

176.26

1526.01

105.58

2002

192.49

1662.33

114.31

2003

216.58

1887.7

142.01

2004

249.29

211.08

147.79


2005

269.15

2366.16

173.43

2006

323.58

2807.85

186.78

Now, to forecast the sales for the year 2006-07 we can use the regression analysis method. The sales for the previous years are increasing in manner & the growth rate follows a certain trend. So we are using last sqnare method. Years

X

Sales (Y)

XY

X2

2001

1

1526

1526

1

2002

2

1662

3324

4

2003

3

1888

5664

9

2004

4

2111

8444

16

205

5

2366

11830

25

2006

6

2807

16842

36

x =21

y=12360

xy=47630

x2=91

Formula = y = xa + bx xy = ax + bx2 putting the values – (12360 = 6a + 21b) x 21 ==> 259560 = 126 a + 441b (47630 = 21a + 91b) x 6 ==> 285780 = 126a+546 b solving we get

a = 1186.05 b = 249.7

y = 1186.05 + 249.7 x for the year 2007; x = 7. Y = 2934 Now, Gross sales (estimated / forecasted) of Asian paints for FY 2006-07 in 2934 Cr. (approx).


Relation – Gross sales & Advertisement & marketing cost : Gross sales of a company is strongly effected by the advertisement expanses incurred. The advertisement & marketing expanses a percentage of the Gross sales for 2001 - 2006 in as follows : Rs. In crores : Year

Gross sales

AD & Mar. Ex.

%

2001

1526

176.26

11.55

2002

1662

192.5

11.58

2003

1888

216.5

11.46

2004

2111

249.29

11.80

2005

2366

269.15

11.37

2006

2807

323.6

11.52

The above table shows that Gross sales & Ad & marketing expenses of Asian paints have a certain trend. Ad. & Marketing expenses is almost 11.5% of the gross sales. For the year – 2006-07 – Gross sales = 2934 Cr. (Approx) Advertisement expenses = 2934 x 1158 = 340 Cr (approx)


Graph showing the % relation of Gross sales & Ad ex.

11.9 11.8 11.7 11.6 11.5 11.4 11.3 11.2 11.1 1

2

3

4

5

6

Effect of union Budget 2006-07 of sales : For the paint sector the union Budget 2006-07 have two import ant implications. (i)

Reduction in Peak customs duty, lead to reduction in customs duty on most of the inputs from 15% to 12.5%.

(ii)

CVD of 4% has been imposed accorss the board of tall the imports to compensate for the sales Tax/ VAT in the domestic market. Full credit of this duty will be allowed to manufactures of excisable goods.

The budget has a positive outlook & Asian paints is expected to be benefited from it in terms of sales. Though it has a force casted sales of 2935 core company is expected to increase it. www.managementparadise.com

Certain unidable impacts like increase of price of crude oil, non-availability of raw material, are certain barriers. Asian paints have achieved a gross sale of Rs.603.33 in Q1 of Ry06-07. The Q2 is the prime season of the company as it is the occasion period. Here company is expected to increase its sales volume tremendously.

PROFITABILITY FORECAST BUDGET OF ASIAN PAINTS :Profitability of a company for any particular financial year is mainly calculated based on the two factors – (i) Total Income (ii) PBDIT Where total income is the addition of gross sales & other source of income & PBDIT is profit before depreciation & Income Tax. Table showing – Total income & DBDIT for 2001-2006 Rs. In crore . Year

Total income

PBDIT

Profitability

2001

1543.85

208.55

0.14

2002

1635.5

236.15

0.14

2003

1928.31

287.98

0.15

2004

2131.04

292.33

0.14

2005

2462.1

325.66

0.13

2006

2830.11

390.61

0.14

WHERE PROFITABILITY = PBDIT Total Income Now, to forecast the profitability of FY 2006-07 we need to forecast the Total income & the PBDIT of the year.


For this we use the regression analysis method by regression analysis of the total Income & forecasting it for FY2006-07 we get the amount o be Rs.2999 crore (approx). Now, PBDIT is measure of profit made by a company for any financial year. Though actual profit or PAT is different, but PBDIT gives us a measure of the profitability. Now, PBDIT of Asian paints for the last 5 years is shown in the above diagram, as it is to some extent linear increment, we can consider regression analysis method to forecast the PBDIT for Fy 2006-07. By forecasting we get – PBDIT for Fy – 2006-07 = 408.48 crore Now, we have profitability = PBDIT/ Total income For Fy-2006 –07 as per our forecasting Is concerned profitability = 408.48/2999 = 01362 Now in percentage term for forecasted profitability of Asian paints for fy-2006-07 is 13.62%

0.16 0.15 0.15 0.14 0.14 0.13 0.13 0.12 1

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4

YEAR WISE PROFITABILITY GRAPH


5

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Project on Marketing Strategy of Asian Paints

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