wall paints

7/29/2019 Wall Paints

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CONTENTS

TOPIC

TITLE

1. Preface

2.Acknowledgement

3. Declaration of the Candidate

4. Certificate

5. Introduction of Asian Paint

6. History of Asian Paint

7. Scope of the Study

8. Limitation of the Study

9. Research Methodology

10 Market Segmentation

11 Company Comparison

12 Data analysis & Interpretation

13 Swot Analysis of Asian Paint

14 Findings

15 Suggestions & Recommendation

16 Conclusion

17 Bibliography


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18 Questionnaires

INTRODUCTION A major focus of channel of distribution is delivery. It is only

through distribution that public and private goods and services can be made

available for use or consumption. Producers of such gods and services are

individually cAsian Paints able of generation only the form or structural utility for

their products and services. They can organize their production Asian Paints

abilities in such a way that the products they have developed can, in fact, be seen,

analyzed and sold in the market. The emergence and arrangement of a wide variety

of distribution oriented institutions and agencies, typically called intermediaries

because they stand between production on the one hand and consumption.

Intermediaries can improve the efficiency n the other, can be explained

in the following terms: of the process.

They help in the proper arrangement of routes of transactions.

They help in the searching process.

They help in the sorting process.

Marketing channels are set of interdependent organizations involved in the

process of making a product of service available for use or consumption.

According to American Marketing Association, A Channel of distribution,

or marketing channel, is the structure of intra-company organization units and


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extra-company agents and dealers, wholesale and retail through which is a

commodity, product or service is marketed.

According to Phillip Kotler, Every producer seeks to link together the set

of marketing intermediaries that best. Fulfill the firms objectives. This set of

marketing intermediaries is called the marketing channel (also trade channel

of channel of distribution).

According to William J Stanton, A channel of distribution for a product is

the route taken by the title to the goods as they move from the producer to the

ultimate consumers or industrial user.


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HISTORY

INFORMATION: Middlemen have a role in providing information

about the market to the manufacturer. Developments like changes in

consumer demogr Asian Paints hy, psychogr Asian Paints hy, media habits

and the entry of a new competitor or a new brand and changes in customers

preferences are some of the information that all manufacturers want. Since

these middlemen are present in the market place and close to the customer

they can provide this information at no additional cost.

PRICE STABILITY: Maintained price stability in the market is

another function a middlemen performs. Many a time the middlemen absorb

as increase in the price of the products and continue to charge the customer

the same old price. This is because of the intra-middlemen competition. The

middleman also maintains price stability by keeping his overheads low.

PRIMITON: Promoting the products in his territory is another

function a middleman performs. Many of them design their own sales

incentive programmes, aimed at building customers traffic at the other

outlets.


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FINANCING: Middlemen finance manufacturers operation by

providing the necessary working cAsian Paints ital in the form of advance

payments for goods and services. The payment is in advance even through the

manufacturer may extend credit, because it has to be made even before the

products are bought, consumed and paid for by the ultimate customer.

TITLE: Most middlemen take the title to the goods, services and trade

in their own name. This helps in diffusing the risks between the manufacturer

and middlemen. This also enabled middleman to be in physical possession of

the goods, which in turn enables them to meet customer demand at vary

moment it arises.

HELP IN PRODUCTION FUNTION: The producer can concentrate

on the production function leaving the marketing problem to middlemen who

specialize in the profession. Their services can best utilized for selling the

production where the rate of return would be greater.

MATCHING DEMAND AND SUPPLY: The chief function of

intermediaries is to assemble the goods from many producers in such a

manner that a customer can affect purchases with ease. According to Wroe

Alderson, The goal of marketing is the matching of segments of supply and

demand.

PRICING: In pricing a product, the producer should invite the

suggestions from the middlemen who are very close to the ultimate users and


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know what they can pay for the product. Pricing may be different for

different markets or products depending upon the channel of distribution.


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MARKETING SEGMENTATION :

A flow is a set of function performed in sequence by channel

members. In the flow process, producers, wholesalers, retailers and

consumers are linked. The functions that need to be necessarily

performed in a channel system include transfer of ownership through

transportation, order processing, inventory carrying, storage, sorting

negotiations and promotions. The same function in a give channel

system, may be performed at more than one level and, in such a case,

the workload for the function would need to be shared between channel

members.

A channel symbolizes the path for the movement of title, possession

and payment for goods and services.

CHANNELS OF DISTRIBUTION FOR INDUSTRIAL

PRODUCTS: Figure below Shows channels commonly used is

industrial marketing. An industrial-goods manufacturer can use

its sales force to sell directly to industrial customers. It can sell to

industrial distributors, who sell to the industrial customers, or it

can sell through manufacturers representatives or its own sales

branches directly to industrial customers, or indirectly to

industrial customers through industrial distributors. 1-1-2-level


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marketing channels are quite common in industrial marketing

channels.

TYPES OF INTERMEDIARIES

SOLE-SELLING AGENT/MARKETER: when a manufacturer

prefers to stay out of the marketing and distribution task, he

Asian Paints points a suitable agency as his sole-selling

agent/marketer and entrusts the marketing job with him. A sole-

selling agent or a marketer is usually a large marketing

intermediary with large resources and extensive territory of

operation. He will be having his own network of

distrinutors/stokists/wholesalers, semi-wholesalers and retailers.

He takes care of most of the marketing and distribution functions

on behalf of the manufacturer. Obviously, a sole-selling

agent/marketer will earn a large margin/commission compared to

other types of intermediaries.

C & F AGENTS (CFAs): In many cases, manufacturers employ

carrying and forwarding agent, often referred to as C & F Agents,

or CFAs. The CFAs can be describe as special category

wholesalers. They supply stocks on behalf of the manufacturer to

the wholesale sector or the retail sector. Their function is

distribution. Their distinguishing characteristic is that they do not


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resell products, but act as the agent/representative of the

manufacturer. They act so behalf of the manufacturer and as his

extended arm. In essence, they are manufacturers branches.

WHOLESALER/STOKIST/DISTRIBUTOR: A wholesaler

or stokist or distributor also a large operator but not on a level

comparable with a marketer of sole selling agent, in size,

resources, and territory of operation. The

wholesaler/stokist/distributor operates under the marketer-

soleselling agent, where such an arrangement is used by the

manufacturer.

SEMI-WHOLESALERS: Semi-wholeseller are intermediaries

who buy product either from producers or wholesellers in bulk,

break the bulk or resell the goods (mostly) to retailers in

assortment needed by them. Like the wholesalers, semi-

wholesellers too perform the various wholesaling functions that

are part of the distribution process. In some cases, they may also

perform the retailing functions. Their strength is specialization

by region. They assist the producer in reaching a large number of

retailers efficiently.

RETAILER/DEALER: retailers sell to the household/ultimate

consumers. They are at the bottom of the distribution hierarchy,

working under wholesalers/stokists/distributors/semi-


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whosalers,as the case may be. In cases where the company

operates a single-tier distribution system, they operate directly

under the company. The retailers are also sometimes referred to

as dealers of authorized representatives. They operate in a

relatively smaller territory or at a specific location; they do not

normally perform stock-holding and sub-distribution functions.

The stocks they keep are operational stocks necessary for

immediate sale at the retail outlet.

VALUE-ADDED RESELLERS: they are intermediaries that

buy the basic product from producers and add value to it or,

depending on the nature of the product, modify it and then resell

it of final customers.

MERCHANTS: They are intermediaries that assume that

ownership of the goods that they sell to customers or other

intermediaries. Marchants usually take physical possession of the

goods that they sell.

RESEARCH METHODOLOGY


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The methodology used in conducting the research work on TWO-

WHEELER with major emphasis on its sales and marketing strategies

involve the following steps:

Defining the problem and deciding research objectives:

Defining the objective is the most important part of any study process.

Proper defining of the problem is a must for proceeding further with theresearch process. The type of study to be carried out, the questions to be

raised, the sampling procedure to be followed, and the data to be

collected, all depends on a correct understanding of the problem. Also,

by clearly focusing on the real problem, the research job can be

simplified and completed with the minimum cost, effort and data.

Identified problem or the objectives of the research discussed in the

report are:

1. Developing the research plan:

In this a plan was developed about how to collect the require

information i.e. whom to contact for gathering the relevant data.

Data is the foundation of all research. It is the raw material with

which a researcher functions.


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Therefore, it requires great care to select the sources of data. Data,

or facts, may be obtained from several sources. Data sources can

either be primary or secondary.

A. Secondary data:

The sources from which secondary data was collected:

Press releases of the company.

Newsletters and In-house journals.

Brochures and detailed descriptive leaflets

Magazines like Business World, Outlook, Auto India, etc.

Websites such as www.herohonda.com, www.google.com.

These were the sources from which secondary data has been

gathered. Most of the information presented in this report was

extracted from the above data sources.
http://www.herohonda.com/http://www.google.com/http://www.herohonda.com/http://www.google.com/


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B. Primary data:

Collection of primary data was conducted by visiting the people

personally for the preparation of the report.

2. Research approach:

It means the way by which the information was collected.

Visiting the various places of Delhi, getting the questionnaire filled

by different individuals.

Beside this, frequent visit to the showrooms of the company wasof great help to conduct the analysis and research work.

3. Contact methods:

Instrument or Data collected Forms: It is the

method by which data is gathered. It could be

done through various instruments like

questionnaires, observations, getting

information from the staff members of the

agency, contacting to the motor mechanics was

sufficient enough to conduct the study.

4. Collection of information :The primary information was collected by face-

to-face and direct interviews with the peoples

and the customers. They provide the relevant


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information regarding the profile of the

company as compared to the other company in

the Indian market. Most employees suggested

visiting companys web site, as it was not

possible for them to spare time from their busy

schedules.

The secondary sources of information were

various web sites of the companies, newspapers

& magazines such as The times of India, The

Hindustan Times, Business world, Auto India,

etc.

5. Analyzing the information:

The data collected was carefully analyzed. The

research and analysis of the information has

been done on the basis of various sales and

marketing strategies adopted by the company

during its tenure.

6. Reporting and conclusions and recommendations:

This is the most vital part of the work

undertaken. After collection and analysis of


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data, it was recorded in the form as prescribed.

The major part of the report is the findings.

The finding also includes charts, tables and

diagrams etc. The report also mentioned the

limitations of the project undertaken. Then

conclusion has been drawn out of the findings

and various recommendations have been given

at the end of the report. Certain tables on the

basis of which the findings were made have

been included in the appendices section

followed by the bibliography.


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COMPANY COMPARISON OF WALL PANTS

Asian Paints, Goodlass Nerolac, ICI (India), Berger, Jenson &

Nicholson and Shalimar are the leading companies in the

organized in the organized sector. The top six manufacturers

account for about 80 per cent of the market in the organized

sector in value terms. ASIAN PAINTS is the industry leader,

with an overall market share of 33 per cent in the organized

sector. Threat of global competition is minimal in the industry.

ASIAN PAINTS dominates the decorative segment, with a 38

per cent market share. Goodlass, a Tata

Market Shares of Five Major Players

Company Market share (%)

Decorative Industrial

Overall

1. Asian Paints 38 15 33

2. Goodlass Nerolac 14 41 18

3. Berger Paints 9 10 9

4. ICI Paints 9 9 9

5. Shalimar 6 8 7


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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. ASIAN PAINTS 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 paints is largely the

result of its technical association with the JAsian Paints anese

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 to the white-goods

segment.

THE COMPANY

As already mentioned, Asian Paints is Indias largest paints

company and the market leader in decorative paints. ASIAN

PAINTS manufactures and markets a wide spectrum of coatings

and ancillaries, which include decorative, production paints and


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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 ASIAN PAINTS established its second unit

in 1980; Ankelshwar, Gujrat, 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 factor in the

decorative paints business. And ASIAN PAINTS scores high in

this factor. ASIAN PAINTS manufactures and markets more

then 2,800 items of paints (SKU).

PERFORMANCE

ASIAN PAINTS 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 1 gives details of ASIAN PAINTS s sales performance

during the last four years.


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Exhibit 1 gives some other important details of ASIAN PAINTS

s performance.

ASIAN PAINTS 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.


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-


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ASIAN PAINTS STRIKES A NEW PATH IN

DISTRIBUTION

At the time ASIAN PAINTS 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 Asian

Paints pointed 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 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 distribution. The

credit outstanding for the supplies made throughout the year were

required to be settled by the wholesales distributors only at the

year-end, at Diwali time.

These distributors had neither the compulsion nor the motivation

to invest in distributions 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


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controlled the paint business and were making it impossible for a

new paint company to enter and establish itself in the business.

ASIAN PAINTS 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 ASIAN PAINTS went in for a strategy that

differed totally from the existing pattern. ASIAN PAINTS s

strategy, in fact, meant the polar opposite of the

established/existing pattern.

Chart presents the elements of ASIAN PAINTS s distribution

strategy. We shall see the details in the page that follow.

ASIAN PAINTS Bypasses 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

Chart Elements of ASIAN PAINTS s Distribution Strategy

ASIAN PAINTS bypassed the bulk buyer segment and went to

individual consumers of paints.


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ASIAN PAINTS went slow on urban areas and concentrated on

semi-urban and rural areas.

ASIAN PAINTS went retail

ASIAN PAINTS went in for an open-door dealer policy

ASIAN PAINTS voted for nationwide marketing/distribution

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 ASIAN PAINTS would normally have rushed to

this segment and tried to garner a share of it. ASIAN PAINTS ,

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, ASIAN PAINTS decided to

ignore this segment for the present and go to individual

consumers. And that was crucial decision. It influenced every

subsequent decision ASIAN PAINTS took in the realm of

distribution. Over time, ASIAN PAINTS 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.


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ASIAN PAINTS Goes to Semi-Urban and Rural Areas

Along with the decision to go to individual consumer segment

leaving aside the bulk buyer segment, ASIAN PAINTS also

decided that within the individual consumer segment, semi-urban

and rural areas would constitute ASIAN PAINTS s priority

market. Prior to ASIAN PAINTS s 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, ASIAN

PAINTS clearly saw that a large market for paints was emerging

in the semi-urban and rural areas, and felt it wise to tAsian Paints

this market. ASIAN PAINTS also understood that a new entrant

like ASIAN PAINTS 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 opening in the big

cities for new entrants. ASIAN PAINTS 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.

ASIAN PAINTS 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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ASIAN PAINTS Goes Retail

Going directly to retail dealers was the next major strategic

decision of ASIAN PAINTS in the realm of marketing and

distribution. Here too, ASIAN PAINTS totally broke with the

prevailing distribution practice. As mentioned earlier, the foreign

companies, who were the main players, were practicing a

wholesale distributor-dependant marketing system. ASIAN

PAINTS did not see any great merit in the system. It totally

bypassed the well-entrenched wholesale distributors and went

directly to the retailers. While ASIAN PAINTS s competitors

remained content with their linkage with a handful of wholesale

distributors, ASIAN PAINTS preferred direct contact with

hundreds of retail dealers.

ASIAN PAINTS Goes in for an Open-Door Dealer Policy

ASIAN PAINTS 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.

ASIAN PAINTS broke this trend and chose to use practically

everyone in the trade, who was willing to function as its dealer. It

was a combined result to the policy of going directly to retailers

and the policy of open door to dealership that ASIAN PAINTS s

dealer network swelled rAsian Paints idly. Even after achieving


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stability and maturity in distribution, ASIAN PAINTS continued

to follow a policy of continuous expansion of dealer network. By

1990, ASIAN PAINTS 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, ASIAN PAINTS is adding 200 to

250 new dealers every year.


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ASIAN PAINTS Votes for Nationwide

Marketing/Distribution

ASIAN PAINTS 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. ASIAN PAINTS voted for a nationwide

distribution/marketing. It wanted to have an active presence

throughout the country, in the geogrAsian Paints hical zones,

states and territories.

THE IMPLICATION OF ASIAN PAINTS S

DISTRIBUTION STRATEGY

ASIAN PAINTS s distribution strategy described in the

preceding paragrAsian Paints hs had its associated implications.

ASIAN PAINTS had to take due note of them and face them

squarely.


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Going to Individual Consumers Implied Wide Product Range

and Complex Distribution

Had ASIAN PAINTS concentrated on the bulk buyer segment.

It could have managed with a limited product range, at least, in

the initial years. But, ASIAN PAINTS s 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, ASIAN PAINTS believed in making

products based on the preferences of consumers. It gathered

feedback from the consumers and turned out products, shades and

pack sizes on the basis of such feedback. This policy resulted in a

further burgeoning of the product range.

Smaller Packs Proliferated the Product Depth Further

At the time of ASIAN PAINTS s entry, paint companies were

supplying paints in containers of 500 ml or larger. ASIAN

PAINTS 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. ASIAN PAINTS decided to


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harness the business opportunity and started supplying its paints

in small packs-in 200 ml and 50 ml packs. This proliferation in

pack sizes also contributed to ASIAN PAINTS s growing

product range. ASIAN PAINTS 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 Distribution

The policy of having the widest range of products, colurs and

pack sizes had its implication on ASIAN PAINTS s 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 ASIAN PAINTS .

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. ASIAN PAINTS had to go in for more

dealers in order to serve the scattered semi-urban and rural


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market. The decision also meant that ASIAN PAINTS could not

opt for a simple, centralized distribution of its products form its

factory. It had to go in for a decentralized, field-focused

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 ASIAN

PAINTS to cover the semi-urban and rural markets.

Going Retail Implied Deep Involvement in Channel

Management

Through its decision to go retail, ASIAN PAINTS was getting

deeply involved in physical distribution and


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Chart Main Steps in the Implementation Process

ASIAN PAINTS s created

a large network of dealers. It established a network of

company depots to service the

dealers.

It created a marketing

organization that matched its

distribution.

It successfully resolved the

cost-service conflict indistribution.

(i) A strong commitment to

distribution cost control without

compromising service level.(ii) Effective inventory

management

(iii) Effective control of credit

outstanding

(iv) IT initiatives in distributioncost control

Channel management. In the system chosen by ASIAN

PAINTS , the physical distribution cum channel management

task was far more demanding, compared to the wholesaler-

oriented system practiced by the other paint companies. While,

for companies that embraced the wholesaler-oriented system, it

was enough to service a handful of distributors, ASIAN PAINTS

had to service a network of thousand of retail dealers. Having

taken the decision to go retail, ASIAN PAINTS 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.

National Marketing Necessitated Nationwide Organisation


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Extend of marketing territory and complexity of distribution

organization are interrelated. The moment ASIAN PAINTS

voted for nationwide marketing, it was getting into intensive as

well as extensive physical distribution and channel management.

ASIAN PAINTS thus had to create a nationwide distribution-

cum-marketing organization.

DISTRIBUTION BECOMES ASIAN PAINTS S

SHOWCASE FUNCTION

ASIAN PAINTS s strategies made distribution the most

important elements of its marketing mix. And, ASIAN PAINTS

give to distributions all the inputs that were demanded by it. In

fact, the rest of this case study is essentially a description of how

ASIAN PAINTS managed its distribution activities-how it

chalked out its distribution programmes, how it implemented

them, what problem 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 low ASIAN PAINTS went about the actual

management of the distribution function. The main steps in

ASIAN PAINTS s implementation process are shown in Chart

2.


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Let us see the details.

ASIAN PAINTS 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 with a massive network of 15,000 dealers spread

over 3,500 towns across the country. ASIAN PAINTS has the

largest distribution network among all the players. Goodlass has a

network of 8,000 dealers.


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ASIAN PAINTS Establishes a Network of Company Depots

ASIAN PAINTS 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. ASIAN PAINTS s basic strategies explained in

the earlier sections necessitated a liberal Asian Paints proach in

the matter of stock points/depots. It also meant that the depots

had to be company operated. After all, ASIAN PAINTS did not

have any wholesale distributors to whom the responsibility for

operating the stock points could possibly have been assigned. As

shown in Exhibit 32.4 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 depots while Mumbai had four

depots. The depots typically supplied to about 200-300 dealers.

ASIAN PAINTS 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 organization structure. ASIAN PAINTS set

up a marketing organization consisting of four regional sales


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offices, 35 branch sales offices and a large number of sales

supervisors and sales representatives spread all over the country.

The marketing organization of the company is presented in

Exhibit 32.5. It can be seen from the chart that a very extensive

structure has been created in the consumer 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 centers, which

cater to 55 depots. Each depot has a branch manager for

supervision of several salesperson who cater to more than 14,500

dealers in the more that 3,500 big and small cities all over the

country.

ASIAN PAINTS 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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Managing the cost-service conflict was the main challenge that

ASIAN PAINTS faced in the implementation of its distribution

strategy. ASIAN PAINTS met this challenge successfully.

We have seen that ASIAN PAINTS has over 15,000 dealers in

3,500 towns in India. ASIAN PAINTS caters to all of them

directly. As a result, for ASIAN PAINTS , the distribution task

gets tremendously extended and distribution cost becomes a

significant business parameter.

Demand for decorative paints is characterized by seasonality.

Demand drops during monsoons and picks up around a month-

and-a-half before the festive season. Major part of the sales take

place in the second half of the financial year. Manufacturers have

to array huge inventories during the lean period. As a result,

distribution cost becomes all the more significant.

Naturally, distribution cost emerged as a major hurdle that

ASIAN PAINTS had to cross. The strategy It went in for a very

high service level in distribution. Service level is measured in

terms of the number of stock keeping units (SKUs) available in

stock as a percentage of the number of SKUs that should have

been in stock. ASIAN PAINTS s service level is more than 85

per cent whereas that of other large paint companies falls between

50 and 60 per cent. This meant a further rise in ASIAN PAINTS


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s physical distribution costs. ASIAN PAINTS had to resolve

this cost-service conflict.

In the chAsian Paints ter on Physical Distribution and Logistics

Management, we had seen that a cost-service dilemma is inherent

in any physical distribution situation. A high service level in

physical distribution- in transportation, warehousing order

processing and inventories-necessarily means a high level of

costs. Every firm has to face this cost-service dilemma and work

out a compromise. ASIAN PAINTS voted for a high service

level and without compromising this service level, it tried to

contain the distribution costs. Interestingly. ASIAN PAINTS

succeeded in this endeavor.

When we go in to the details as to how ASIAN PAINTS

actually resolved the cost-service dilemma, four factors started

out:

A strong commitment to distribution cost control, without

compromising service level

Effective inventory management

Effective control of credit outstanding

IT initiatives in support of distribution cost control


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Strong Commitment to Distribution Cost Control

While following a totally customer-oriented distribution strategy,

ASIAN PAINTS could not afford to ignore the cost angle.

ASIAN PAINTS was in no position to pass on any additional

costs to the consumers. ASIAN PAINTS s marketing

philosophy demand that the consumer price of its paint should be

on the lower side, so as to suit the pockets of the average Indian.

Moreover, ASIAN PAINTS s business growth demand more

and more investment in manufacturing and distribution. ASIAN

PAINTS had to find the resources. This Asian Paints art, the

intensity of competition had also been on increase. Naturally,

profitability was coming under greater strain in these

circumstance. ASIAN PAINTS had to control its distribution

costs in order to maintain its profitability and market leadership.

The question was how to control the costs without sacrificing the

service level.

Effective Inventory Management

Effective inventory management is the first major component of

ASIAN PAINTS s strategy on distribution cost control. And,

ASIAN PAINTS achieved high efficiency in this regard.

Actually, in inventory cost, ASIAN PAINTS took the lowest

position in the industry. ASIAN PAINTS s average inventory


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level equals only 28 days sales, while the industry average is 51

days sales. This right away provided a 45 cent edge in inventory

costs to ASIAN PAINTS compared to its competitors. ASIAN

PAINTS s stock of finished goods was just 7 per cent of its net

sales while for the other in the industry it was nearly twice that

level. What is particularly striking in this achievement is that

ASIAN PAINTS offered customers and dealers a high level of

service in product delivery compared to its competitors and yet

kept the inventory costs down by 45 per cent compared to the

competitors.

Control of Credit Outstanding

Large credit outstanding, running beyond two months or more,

was natural concomitant of the distribution strategy chosen by

ASIAN PAINTS . The dealers are required to maintain stocks of

all the SKUs that are on demand in the territory. It pushes up

inventory levels at the outlets. They need credit. ASIAN PAINTS

allowed 15-21 days credit for dealers located in the major towns

and 22-30 days credit for dealers in upcountry regions.

ASIAN PAINTS had to pull of a smart credit control strategy

for survival. It resolved the thorny problem through an innovative

dealer incentive scheme. ASIAN PAINTS stipulated that each

of its dealers should pay for the supplies within a specified time


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norm and offered them an attractive incentive scheme for doing

so. It consisted of two components:

(a) A special discount of 3.5 per cent. This was referred to as the

discount for perfection in payments. It was passed on at the end

of the year, provided each and every payment throughout the year

was made within the stipulated time norms.

(b) A cash discount of 5 per cent. This was paid for all outright cash

purchases. It was given whenever payments were received within

24 hours of the supply/invoice. In respect of outstation accounts,

the payments should have been made in advance by draft in order

to be eligible for the discount.

The scheme was a grand success. ASIAN PAINTS s credit

outstanding always stood below 25 days, while the outstanding of

the other major companies were in the range of 40 days and

above. Systematic computerization also helped ASIAN PAINTS

maintain the credit outstanding within limits.

IT Initiatives in Distribution Cost Control

ASIAN PAINTS s IT initiatives in respect of distribution-

inventory control and control of credit outstanding, in particular-

helped it no control distribution costs without lowering the


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service level. ASIAN PAINTS went in for a fully computerized

distribution system. ASIAN PAINTS did this not only with an

eye on distribution cost control, but also for the sake of

distribution effectiveness per se. But for such an Asian Paints

proach, ASIAN PAINTS s distribution management would have

gone haywire. Here was a situation where 2,000 different items of

paints, manufactured at four different plants, had to be distributed

to 15,000 dealers in 35,00 towns spread all over the country.

Through 55 depots. ASIAN PAINTS accomplished this,

maintaining the average service level at 85 per cent, a clear 25

per cent above that of competition. The IT initiatives also ensured

prompt billing, accurate customer accounting and effective

control of credit outstanding.

Computerization also enabled ASIAN PAINTS to process

recent sales data for the 100 fastest moving SKUs. This analysis

was used to project sales of specific products, which helped plan

production and raw material purchases. With computerization,

ASIAN PAINTS was able to analyse past trends to arrive at a 90

per cent accurate sales forecast. Corrections were made every

month between the sales projection and actual sales. Production

was thus evened out month-to-month. Sales statistics were

maintained, classified by product, month, salesman, branch,

region and dealer. Such computerized planning and control of

production, sales and inventories helped ASIAN PAINTS cut


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distribution costs without compromising on the high level of

service sought by it in physical distribution.

ASIAN PAINTS later hired from the Department of

Telecommunications, satellite time and got all its offices in the

country networked. They transmit data daily to the corporate had

office in Mumbai, which uses it for sales and production

planning. ASIAN PAINTS has consistently improved its IT

systems over the years. It has linked all its factories and 55 depots

through V-SAT terminals, and derived big benefits in terms of

streamlined distribution. More recently, ASIAN PAINTS has

implemented supply chain management software from i2

technologies. ASIAN PAINTS plans to upgrade its

communication infrastructure through VSAT leased lines and

ISDN lines all over India. It is also implementing an ERP

solution from SASIAN PAINTS to be completed in 2001.

ASIAN PAINTS Acquires a Competitive Advantage

Through Its Inventory Management and Credit Control

One can grasp the full import of ASIAN PAINTS s success in this

sphere only when due not is taken of the fact that ASIAN PAINTShas achieved the lowest distribution cost as well as the highest

differentiated position in the industry. ASIAN PAINTS s Asian

Paints colite, the largest selling brand of paint in the country, is

available in different shades and in eight different pack sizes. Being


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in the business of colours, ASIAN PAINTS utilized colour to

achieve differentiation, and none of its competitors could match

ASIAN PAINTS in this aspect. Simultaneously, ASIAN PAINTS

also achieved the lowest cost position in the industry. Normally, when

a firm consciously opts for the differentiation route with a wide

product line, it automatically point towards higher inventory levels

and consequently higher inventory and other costs. But ASIAN

PAINTS , through its effective distribution management, inventory

management and control of credit outstanding, in particular, managed

to retain its inventory size and inventory costs at the lowest possible

level.

ASIAN PAINTS actually saved so much on inventory carrying costs

that it almost earned its promotion budget through these savings. This

is again praiseworthy because ASIAN PAINTS spends as much as

per cent of its sales on promotion, the highest in the industry. It has to

spend so much in order to maintain its differentiation advantage. But

strikingly, it has kept its total marketing costs the lowest in the

industry. The two factors together-the lowest cost position as well as

the highest differentiation position-has conferred a significant

competitive advantage on ASIAN PAINTS .


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OBJECTIVE OF THE STUDY

The study was done primarily with the following objective in

mind.

To study the brands of Two-Wheeler & consumers

perception Aabout the product of Two-Wheeler.

To know why people buy Two-Wheeler and why some

people prefer other company.

To study the features of different brands that give a good

idea of various products and services offered by the

company.

To understand the competitive environment in which the

company is operating and is desired to meet customer

need and satisfaction.

To provide useful information to the company about the

product features of various competing companies.


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SUGGESTIONS & RECOMMENDATION

It is clear from the report that the Two-Wheeler Motors is facing

cutthroat competition; hence the companys manager has to be fast and

smart so as to understand the customers needs. They have to come up

with various new techniques or schemes to be able to cater to different

categories of people.

Customers are becoming more wise day by day and they are now

willing to know all the in and out of the things happening around them.

This has led to increased customer awareness.

We can analyze that if the brand is reputed that doesnt win the

customers delight unless its provided same value-added features or

else we can say competitive advantage.

For gaining a competitive advantage it has to continuously

compare the product and services with the competitors and find

the weak area of the rivals for gaining competitive advantage.

Surveys revealed that awareness of Two-Wheeler Motors is low

among its target segment for creativity awareness. The company

has to take some keen step for promotional activity.


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The company should regularly send the sales person who have

good communication skill to the customers so that they should be

aware about the product and services in market and know the

quality of the services offered by the company.


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LIMITATIONS OF THE STUDY

As said a basic research was conducted at the company to enable

the company to assess how far the customers are satisfied with

product and services of Two-Wheeler. During the course of the

study the following limitations were observed:

The method will be unsuitable if the number of persons to besurveyed is very less as it will be difficult to draw logical

conclusions regarding the satisfaction level of customers.

Interpretation of data may vary from individual depending on the

individual understanding the product features and services of the

company.

The method lacks flexibility. In case of inadequate or incomplete

information the result may deviate.

It is very difficult to check the accuracy of the information

provided.


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Since all the products and services are not widely used by all the

customers it is difficult to draw realistic conclusions based on the

survey.

CONCULSION

LEADERSHIP THROUGH DISTRIBUTION EXCELLENCE

The story of Asian Paints is a story of distribution excellence.

ASIAN PAINTS achieved an enviable leadership position

through the distribution route. While ASIAN PAINTS did not

ignore any of the other function of marketing, it was by mastering

the distribution function that ASIAN PAINTS gained a distinct

and powerful competitive advantage. ASIAN PAINTS sdistribution strategy was truly innovative; it broke new ground in

every aspect of distribution. In the final analysis, excellence in

distribution led the company to marketing and corporate

excellence.


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BIBLIOGRAPHY ASIAN PAINTS

Widening the Net. Business India Intelligence, Auguest 2001,

Anand, M Diary of Sales Associate. Business World. 21 October,

2002

Brown James R, Fern Edward F., Conflict in Management

Channels: The Impact of Dual Distribution. International Review

of Retail, Distribution & Consumer Research, Asian Paints ril92,

Vol. Issue 2, p121, 12p

Moriarty, Rowland T and Moran, Ursula Managing Hybrid

Marketing Systems. Harvard Business Review,

November/December 1990,

Vol. 68 Issue.

Marketing Management by Kotler / keller 2005 Edition.

Marketing Management ICFAI Center for Management Research

Marketing Management Planning, Implimentation & Control by V

S Ramaswamy / S Nmakumari

www.asianpaints.com

www.mouthshut.com/product-reviews/Asian_Paints_Royale_Luxury_Emulsion-

en.wikipedia.org/wiki/Asian_Paints

www.novAsian Paints aint.org/webasia.html

www.domain-b.com/companies/companies_a/asian_paints/index.html
http://www.asianpaints.com/http://www.asianpaints.com/http://www.asianpaints.com/http://www.mouthshut.com/product-reviews/Asian_Paints_Royale_Luxury_Emulsion-http://www.mouthshut.com/product-reviews/Asian_Paints_Royale_Luxury_Emulsion-http://www.mouthshut.com/product-reviews/Asian_Paints_Royale_Luxury_Emulsion-http://www.mouthshut.com/product-reviews/Asian_Paints_Royale_Luxury_Emulsion-http://www.mouthshut.com/product-reviews/Asian_Paints_Royale_Luxury_Emulsion-http://www.novapaint.org/webasia.htmlhttp://www.domain-b.com/companies/companies_a/asian_paints/index.htmlhttp://www.domain-b.com/companies/companies_a/asian_paints/index.htmlhttp://www.domain-b.com/companies/companies_a/asian_paints/index.htmlhttp://www.domain-b.com/companies/companies_a/asian_paints/index.htmlhttp://www.domain-b.com/companies/companies_a/asian_paints/index.htmlhttp://www.asianpaints.com/http://www.mouthshut.com/product-reviews/Asian_Paints_Royale_Luxury_Emulsion-http://www.novapaint.org/webasia.htmlhttp://www.domain-b.com/companies/companies_a/asian_paints/index.html


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