MARKETING MANAGEMENT

Joseph Thomas
Kunal Bulchandani
ASIAN PAINTS Lalit Ajay Poddar
Manik Baghla
Group C5
Manvi Arora
Contents

Introduction ............................................................................................................................................ 2
The Customer comes first ....................................................................................................................... 2
Value Proposition For Customers ........................................................................................................... 2
Segmentation .......................................................................................................................................... 3
Targeting ................................................................................................................................................. 3
Positioning: ............................................................................................................................................. 4
Value Chain ............................................................................................................................................. 5
Competitive Advantage .......................................................................................................................... 6
Core Competency.................................................................................................................................... 7
Customer Loyalty .................................................................................................................................... 8
Focus, Acquire Or Retain......................................................................................................................... 8
SWOT ...................................................................................................................................................... 9
PORTER’s 5 FORCES................................................................................................................................. 9
Consumer Behavior............................................................................................................................... 10
Marketing Mix ....................................................................................................................................... 11
Competition .......................................................................................................................................... 11
Conclusion ............................................................................................................................................. 13
References ............................................................................................................................................ 14
Introduction

In the 1940s, the Indian paints market consisted only of a few foreign players with the exception of
Shalimar Paints. During the Second World War, there was a temporary ban on the import of paints. This
opportunity was grabbed by a twenty-six-year-old entrepreneur, Champaklal H. Choksey and three of his
friends—Chimanlal N. Choksi, Suryakant C. Dani, and Arvind R. Vakil—who set up Asian Paints in Mumbai.
Today, Asian Paints is the largest player in the domestic paints industry.

The Customer comes first

Yes, Asian paints stuck with its customer base. This understanding helped them in understanding the
packet sizes, quality, colour and pricing requirements. The firm had decided to focus on the retail
segment than the industry segment early on. He understood the importance of capturing the minds of
customers to build a strong brand recall and sustainable relationship with the consumers. It was at that
time the consumer facing segment of paints. Choksey started dealing with the shopkeepers in smaller
towns to reach out to a large segment of customers and retailers. Inorder to meet the price requirements
of customers involved, he introduced an innovative product-washable distemper (cheaper compared to
the ones existed in market).In order to relate with India’s middle-class households, the company
introduced its mascot-Gattu the mischievous kid.

Value Proposition For Customers

In over last few years, the world is changing at a very fast pace because of disruptive innovation and
changing customer needs. To tackle this problem, Asian paints not only provide unique value proposition
to its customer, but also to its employee and dealer, by creating next generation omni channel
experience.

Talking about how Asian paints its providing value proposition to its customer is through by leveraging
technology. It has set up an IT architecture that supports personalized customer journeys across different
touch points for customers and they are:

1. Physical – Color Ideas and Signature stores for the customer, so that they can select and choose.
2. Digital – It has also provided an option for the people to go digital and get their work done in few
clicks by giving them a whole digital package through websites, mobile and kiosks.
3. Consulting Services – It has given its customers to get their doubts clear by a consultant, in which
they mention that get your all doubts clear on colors and color combination in an instant.

They have also created apps in which customer can have a unique experience in selecting its color and
décor.
The company is also spending lot on improving customer experience through integrating predictive and
data mining techniques. It is also upgrading its system to newer technologies which is setting its
foundation for future innovations and scalability.

The company has recently adopted a new product methodology which has significantly reduced its
product cycle which is different from the traditional stage gate approach. Because of this, company has
able to launch 3 different products in short span of time, which in turn helped customers with different
choices and varieties.

Segmentation

In the overall Paint industry in India, demand is derived mainly in following two categories-
1. Decorative: It mainly includes interior wall paints, exterior walls paints, primers, putties etc. The
market leader in this segment is Asian Paints.
2. Industrial: Automotive coatings, powder and protective coating are the main product categories
under this segment. The market leader in this segment is Kansai Nerolac.
Asian Paints has segmented its business of manufacturing paints in the following four main segments-
• Automotive Sector
• Apcolite Hammertone Finish
• Aluminium Paint
• Fiber Paint
• Industrial use
• Stainer
• Apcomin Synthetic Powder
• Apcomin Synthetic Enamel
• Premium surface and fillers
• Decorative Segment
• Royale
• Apex
• Gattu Synthetic
• Utsav Enamel

The company being a market leader in what it does, all the segments of Asian paints mentioned above
are stars in BCG Growth-Share Matrix.

Targeting

Asian Paints has segmented its products into 3 main sectors: decorative, industrial and automotive. The
customers of AP are: homeowners, corporate, automobile industries, distributors and wholesalers. For its
retail segment, the customer demographic and aged 20+ from the middle, upper-middle and upper
income group, while corporate customers include organizations, government bodies and other
institutions. Deciding a target strategy is the next step after segmentation. The products offered vary in
price, durability, health and environment; quality is of course the prime factor.

The exterior paints are targeted at builders and real estate developers/contractors. The products are
economical and durable. The main differentiator is durability, rather than smoothness of color. Interior
paints on the other hand, are targeted at homeowners. Here the stress will lay on the smoothness of
color, texture and finish of the paint. For the industrial sector, the main usage of paint is for protection
and so, easy application, lack of durability and thickness of paint are the factors which come into
consideration.

Asian Paints follows a V-Tier customer target strategy:

• Tier 1: strategic solution seekers. Industries’ aim is to reduce cost, increase durability,
performance and productivity.
• Tier 2: Value/Brand sensitive customers. Asian paints targets these customers with value added
VDS (virtual dedicated server)integration customer service level.
• Tier 3: Price sensitive customers. They are not bothered by service and are usually the middle or
low income group. UTSAV is the AP brand targeted towards them.
• Tier 4: small and manufacturing and local companies which can generate revenue. The company
uses is telesales technology to satisfy their needs.

Asian Paints can take into consideration certain factors to understand the attractive target segments:

• Accessible: the target market is accessible. Asian paints targets individuals and industries,both
are easily accessible and can be reached out through persuasive communications. They should
be on the receiving end of the company’s marketing strategy, know the product exists and how it
can be beneficial for them.
• Responsive: Asian paints create customized products for its customers; making sure they are
responsive to their products. They are customer oriented, understand the needs and
requirements of each segment and incorporate them into their solutions.
• Profitable: Their target market has to be profitable for them to continue serving them. This can
be tracked using market analysis (market growth, current growth rate, future rate, market
access).

Positioning:

Purchasing paint had earlier been a low-involvement decision: taken by the contractor/developer while
the homeowner only had say in deciding the color. Asian Paints understood the need for brand building.
They focused on rural, mass markets. They had a mascot called Gattu, which slowly made Asian Paints a
household name. In the 1980’s the entire paint industry’s focus was to reduce prices. Asian Paints did not
go the down the same road: they conducted market surveys to understand the perception consumers
had regarding their products. Their surveys showed that consumers usually painted their houses close to
festivals in an effort to change the mood of the environment and also to give a new-ish feel to their
houses. Thus, the “Celebrate with Asian Paints” campaign was born. The campaign was modified for each
region and festival and slowly catapulted Asian Paints into being established as a premium brand. More
than that, they created an emotional connect with their consumers, which was huge for a previously low
involvement category product.

Value Chain

Primary Activities
1. R&D
The R&D Lab uses the latest technology to develop paints. They were the first to use digital technology in
tinting.

2. Production
The company has 23 manufacturing facilities across the world. These state of the art facilities ensure that
Asian Paints maintains quality.

3. Marketing & Sales

The rural targeting and the connect to the middle class Indian consumer helped Asian Paints achieve a
market share.

4. Customer Service
Through constant innovation and the understanding of the Indian consumer, Asian Paints has come up
with excellent products such as Do-it-yourself kits and Colour Consulting services.

Supporting Activities
1. Information System
Asian Paints uses software from i2 Technologies and SAP to better predict consumer behaviour and to
control the supply chain.

2. Logistics
A completely integrated supply and distribution system has ensured that changes can be made quickly
and reliably through use of technology.

3. Human Resource
A talent pool of over 5000 employees employed across 17 countries bring in a unique blend of mind-sets
and skills. Apart from this, Asian Paints really takes care of its employees, where senior employees are
treated as a part of the family and the firm has often gone out of its way to help those in need.

Competitive Advantage

Innovation

• Product Innovation introduced washable distempers in 1950s.

• Introduced variety of colour shades (deeper shades than pastel shades).
• Introduced different pack sizes for different section of customers. Advantage of this was ,while
other competitors were focussing on institutional customers and large distributors-Asian paints
built business with smaller cities ,rural markets and selling directly to dealers.

Supply Chain Management

• Asian paints started offering regular payment performance discount, as a result they delivered
faster products to its dealers than its competitors and dealers were able to manage their working
capital cycles better.
• In 1970s Asian paints introduced first mainframe computer-first Indian company to do so.
• Used mainframes to forecast demand for better inventory management.
• Started branch billing on computers in late 1970s
• Imported a colour computer in 1979 reduced tinting time from 6 days to 4 hrs
• Use GPS for tracking movement of trucks carrying finished goods
• Established a network of regional distribution networks in 1980s and 1990s,Over last 5 years this
was replaced by large distribution centres close to manufacturing plants.
• Empowerment of professional -Allowed professionals to take control of middle and senior
management roles as early as 1969.

Brand

• Consistently focussed on advertising from as early as 1950s.

• Strong brand recall even for its sub brands-Gattu ,Utsav, Royale and Apex
• Capitalised on emotional appeal of a house and linked it to paint(emotional connection with
target audience).
• Used common man cartoons in 1970s -appealed to masses and this made them leader in smaller
cities.
• Rebranding in 2012 by personifying paint as a mechanism to transform and personalize every
individual home.

Architecture of the firm

• Creating a Unique working culture.

• Using latest and Innovative IT technologies to improve competitive advantages.
 • Creating a independent board of directors to shape and build the firm.

Core Competency

Asian Paints hired management consultants Booz Allen Hamilton to guide them on the way forward. The
key benefits of this exercise were:

• The best practices of all the manufacturing plants were brought together to improve operating
efficiencies;
• Working capital cycles were brought down by rationalization of both raw material and finished
goods inventory management processes;
• Freeing up of bandwidth of managers which allowed them to focus more on the core business
rather than spend time managing inefficient manual processes; and
• Improved organizational structure across three business units - domestic decorative,
international and industrial paints.

An ex-employee of Asian Paints recalls – “All credit to the Directors that they understood that if we have
to keep the flag flying, then we had to have a relook at several aspects of the business like technology,
formulations etc”.

“We have consciously stuck to a sector which is growing and offers decent potential and have always
strived for excellence across all functional areas. But it is not because somebody is observing us and is
going to applaud us. We have just stuck to our knitting sensibly as the sector has evolved over decades.
Now we are moving towards becoming a décor solution provider to the customer”.
- Mr. Jalaj Dani, member from the promoter family, Asian Paints

For the Choksis, Danis and Vakils, Asian Paints is the single biggest source of theirwealth and to give
them credit, the promoters have refrained from pushing the company towards unrelated diversifications.
They were successful in picking up major points of growth– supply chain efficiencies and brand power –
early on and have relentlessly focused on their central and core competency
Following the departure of Atul Choksey in 1997, the remaining promoters have taken upon themselves
to focus on different divisions within Asian Paints, while the role of the managing director and CEO is held
by an independent professional, K B S Anand.
Asian Paints is the only paints company in the sector which has not seen a change in its controlling
shareholders (promoters) over the past 70 years. As shown in the table below – all its competitors have
seen: a) a change in the controlling shareholder; and b) significant presence of a foreign entity on the
board of directors. Industry experts suggest that this consistency at the Board level has helped Asian
Paints maintain focus on execution of a stable long term strategy over these decades.

Mass customisation: Asian Paints offered different consultation and support service to their end
customers. The customers who intended to decorate their homes and personal spaces had
various options to choose from when the navigate the Asian paints website. Mass Customization
was what the company wanted for its customers. Various options are available for the customers
on the website of Asian Paints where they can simply try with different option of colours, variety
 of paints, interior décor themes and interact with an expert. One of the options available is the
Colourpro‟ 360 degree service. Here the customers have various options to mix and match their
colour combination styles. One of the options is colour code, which is a seamless combination of
colours and combination. Various options are available for the customers on the website of Asian
Paints where they can simply try with different option of colours, variety of paints, interior décor
themes and interact with an expert. Customer satisfaction levels improved. Company witnessed
an 80% satisfaction increase among dealer and customers.

Integrated Distributed System: Asian Paints has leveraged advanced i2 solutions for supply chain
master planning, materials and distribution planning, production scheduling, and change
management since more than a decade. The processes from sales forecasting, master production
planning, raw material planning, distribution planning and shop floor scheduling were covered
through the implementation of key solutions from i2's advanced planning solutions. To ensure a
smooth evolution to this re-engineered solution, Asian Paints enlisted i2 to support deployment,
change management and continuous improvement. The company also relied on i2 for help in
streamlining process workflows, reducing the planning cycle and in formulating overall solution
architectures. AP has used the advantages in inventory management and the supply chain to
build an organization that is much stronger. It has really allowed AP to leverage skills and
strengths in the marketplace.

Customer Loyalty

Asian Paints has reinvented itself in every generation: in the 80’s it was considered as a paint
manufacturer, and over the years it got into home furnishings and décor. Their market share has slowly
increased over the years, implying their level of customer retention and therefore loyalty, is high. They
started a loyalty program called “Masterstrokes” wherein more than 1100 professional building painters
from the western and southern provinces of the country were registered and enrolled. They were part of
an initiative in which Asian Paints would build professional skills, knowledge, practices and earnings of
this segment of the workforce. It was considered a tangible demonstration of their commitment to
develop the local market as well as the livelihood of the painters.

Focus, Acquire Or Retain

Consumers’ perception of the relationship between the price and quality is what drove them to choose a
particular brand. Asian Paint’s focus has been both to acquire and retain customers at different points. In
the initial stages, they were acquiring customers; they wanted to increase their market share, make Asian
Paints a household name. This included great customer service and top of the line technology. Since
1942, Asian Paints has come a long way. It has a current market capitalization of $6.3 billion and is Asia’s
third largest paint company. They recently refashioned themselves from an interior and exterior paint
company to a home décor and furnishings. This was in a bid to attract new customers in a newer income
tier.
Along with their strong efforts to acquire new markets, they also pay attention to their current
customers. High customer satisfaction is evident, thanks to their superior product quality, customer
service and varied range of products. They work with developers and painters to deliver customized
products, which adds to their value chain. Their multiple ad campaigns is testament to the fact that they
try to entice their customers into buying products by building emotional connections with them.

SWOT

STRENGTHS
1. Strong Growth
2. Strong Global Presence WEAKNESS
3.A wide range of Products 1.Low Market Share in Industrial
and Auto Paint
4. Brand Value
2. Slow International Business
5. Strong Supply Chain
Management
6. Marketing campaigns

OPPURTUNITIES
THREAT
1. Growth in Industrial Sector
1. The threat of Slowdown
2. Growing Indian Economy
2. Unorganised sector
3. Adapting to consumer
psyche

PORTER’s 5 FORCES

SUBSTITUTES
1.White cement
2.White wash
3.Dry Distemper

BUYERS
1. Decorative:
Fragmented EXISTING RIVALS SUPPLIERS
Market. 1. Berger 1.Few suppliers,
2. Industrial: Low 2.Akso Nobel 2.Availability of
switching costs. Substitutes
Corporates
3. Kansai Nerolac
have HIGH POWER

NEW ENTRANT
1.High Growth rate may attract
global players
PESTLE

POLITICAL ECONOMIC SOCIAL

• During establishment, ban on • Growth of Indian economy led • Emotional connect between
imports, led to establishment to higher retail driven new house and a fresh coat of
of the firm purchases paint

TECHNOLOGICAL ENVIRONMENTAL LEGAL

• First mover when it comes to • The paints industry is viewed • 100% FDI is permitted in the
technology adaptation helped as highly polluting. Firm sector
it ace the competition adapted green practices

Consumer Behavior

Though paint appeared to be a luxury product in Indian consumer’s life, it is now changing into necessity.
Every human loves to build his or her house, however small or big it may be and most of house requires
paint as an important element.

Earlier, it was considered luxury as people in India had a very low per capita income but now as the
economy is rising, along with that per capita income of people is rising. Because of that paint is becoming
more affordable for people.

Here in above FCB grid, we see the level of involvement of people on basis of cognition and emotion
attachment. In first quadrant, there is high involvement and rational purchase. In second quadrant, there
is high involvement and feel (emotional purchase). In third and fourth quarter, we see low involvement
and rational purchase and low involvement and emotional purchase respectively. We can also see in
above grid, there is a shift from third quarter to 2nd quarter this is because people before used to think
that paint selection is the work of contractors and home builders. But now that perception is changing as
people are starting to get more emotionally attached with the idea of building their home on their own.

Asian paints, in that regard has made its product available which people can relate emotionally. With its
advertising campaigns like, ‘’Har Ghar Kuch Kehta Hai’’ (Every house tells a story) it became more
relatable to people. Also, strategies like supply and apply systems have helped change customers
perspective about paints in which they have removed middle man such as contractors.

Marketing Mix

• Product: Asian Paints is involved in the business of manufacturing paints for different needs and
requirements. The product range include complete painting solutions ranging from paints and
other products to accessories and necessary tools. Where brands like Royale target High end and
premium segment, other brands like apcolite and tractor target the economic segment of the.

• Price: The pricing is set form high to low depending on the product offerings. The high-quality
products by Royale are fixed at a higher price, targeted at high income people. And for other
products aimed for medium and economic segment, value-based pricing strategy is followed.
Discounts are provided to dealers and customers buying products in bulk quantities. These
discounts are very helpful in aiming at the primary target consumers, which include construction
companies and contractors.

• Place: Asian Paints is operating 25+ manufacturing facilities across the world, with at least 1
manufacturing facility being operated in 19 countries that the company is operational in. Asian
Paints has spread it’s reach across many countries like Egypt, Emirates, Bahrain, Fiji, Sri Lanka
and Barbados. Some of the Signature Stores are also set up in Mumbai, Kolkata and New Delhi
where various services are provided to the customers, like expert assistance on painting needs,
new trends and using latest technology products like Colour Visualizer Tool.

• Promotion: Marketing has always been a point of major focus for Asian paints. To promote their
brand Tractor Distemper in 1950’s, the company used a tagline "Don't lose your temper, use
Tractor Distemper". Asian Paints later came with the tagline “Har Ghar Kuch Kehta Hain”, by
coming into association with Ogilvy and Mather, that even today instantly connects with people.
Also, celebrities like Ranbir Kapoor, Deepika Padukone and Rahul Dravid were roped in as the
brand ambassadors by Asian Paints. Not only this, company successfully attracted customers, by
carrying out several social media competitions like #DonateAWall, among many others.

Competition

• For the period 1967 to 1997, Asian Paints’ major competitors, with the sole exception of Berger
were either making mistakes around capital misallocation (e.g. Garware Paints, Jenson and
Nicholson) or were focussing only on the premium segment(e.g. ICI).Asian Paints utilised these
mistakes to widen the gap between their peers during this phase.
 • For the period 1997-2015,Asian Paints gained a substantial market share in the decorative paints
business in India from peers like Akzo Nobel(ICI) and Kansai Nerolac.

The paint industry still at nascent stage and rapid increase in market for the decorative and industrial
paint industry has resulted in an intense competition. With the enormous potential in the market, some
of foreign players are entering into the Indian market such as Nippon, Sherwin Williams and National
Paints.

Talking about Asian Paints, which is largest company in paints industry in India and third largest in Asia
are clear leaders in decorative paints and are second best in industrial paints after Kansai Nerolac paints
in industrial paints and coatings. There are the market leaders in India since 1968. Though there are more
than 12 domestic players and more than 5 international players but this 6 companies dominate the
market and out of this 6, there are only 2 major companies which can be seen from above market share.

The competition in the market has evolved after 1991 after the entries of foreign players, though market
has always been dominated by Indian companies but the competition has become intense in recent
times. With the innovation and marketing muscle behind foreign players there are coming up with new
and innovative ideas spending a large share in research and development to succeed. One of examples is
innovation of computer color mixing facilities (CCMF), which was first introduced by Jenson and Nicolson.

The major advantages that Asian paints have above its competition are:

1. Better visibility in dealer counters and dealer network

2. Debtor’s management of asian paints is better than its competitors.

Major Competitors for Asian Paints are:

1. Kansai Nerolac Paints

2. Jenson & Nicolson India Limited
3. Sherwin Williams
4. Akzonobel
5. Nippon Paint
6. PPG Industries
Though the competition has risen in recent times, but Asian paints are likely to be leader in paint industry
because of its back end network and its ability of stay updated with innovation.

Conclusion

The paints market is expected to grow globally across various industries and most segments. Emulsions in
the premium segment could be a major gamechanger.

Continued and constant innovation can make sure that Asian Paints retains its dominant position in the
market. Water based paints maybe looked into. The presence of both organic and inorganic growth
opportunities will pave the way for the firm to become the global leader in the paints industry, especially
the decorative paints segment. Asian paints started with the rural sector and there is still scope of growth
in the segment. The brands from the rural sector could be rebranded to stay in sync with the Indian
growth story. Industrial sector could represent opportunities for stable growth.

There is still scope for further improvement in the supply chain through continued upgradation of
technology.

To be amongst the top three, it needs to look into their global foray very carefully.

Many factors, which have made Asian Paints a household name in India, have also contributed
immensely in its global expansion. The firm is known to be an innovator and has introduced hundreds of
colours and shades for its customers. Further in the Decorative segment, the company has further
segmented it's brands into sub-segments based on income of the customers. Where Royale is a brand for
high income group of people, Utsav is a brand of Asian paints which specifically caters to the low income
group of customers of the company.

Its innovative products coupled with great branding strategies has made it a force to reckon with.
To capture the global markets, it has been entering fast growing markets with great demand and low per
capita consumption of paints. Asian Paints has especially targeted companies in emerging markets of
Africa, Southeast Asia and South Asia, Middle East and Pacific region. Widespread global acquistions
could also play a major role in establishing it as a global leader in the paints industry.

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