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PREFACE

Marketing should not be looked upon in a vacuum or in isolation. It is an

essence taking a view of the whole business organization and its ultimate objective

concern for marketing must penetrate all areas of the enterprise. Market survey in

todays competitive world is a must for every organization.

This project is a study of market potential of Asian Paints . The rational

behind this particular study is to find out the present market scenario of variousbrands & to find out the corporate need and perception. It was a pleasurable

experience to conduct a research on behalf of Asian Paints pertaining to the study

of the Asian Paints Sector.

Conclusion and there by recommendation has been arrived at by proper and

justified interpretation of the result derived from the above said analytical tools and

techniques.


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ACKNOWLEDGEMENT

Preparing a project of this nature is an arduous task and I was fortunate enough to

get support from a large number o persons. I wish to express my deep sense of gratitude to

all those who generously helped in successful completion of this report by sharing their

invaluable time and knowledge.

It is my proud and previledge to express my deep regards to Respected Principal

Sir Dr.J.P.N. Pandey , Head of Department Dr. Anand Tiwari , Mrs. Shikha Urmil Khan

and Miss Deepti Patel Department of Business Management , Govt. Autonomous Girls

P.G. College of Excellence Sagar for allowing me to undertake this project.

I feel extremely exhilarated to have completed this project under the able and

inspiring guidance of Miss. Deepti Patel she rendered me all possible help me guidance

while reviewing the manuscript in finalising the report.

I also extend my deep regards to my teachers , family members , friends and all

those whose encouragement has infused courage in me to complete to work successfully.

(NARGIS KUSHWAHA)B.B.A IInd Semester

IInd Batch


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DELCLARATION BY THE CANDIDATE

Date :

I declare that the project report titled " WALL PAINTS " on Market Segmentation

is nay own work conducted under the supervision of Miss.Deepti Patel Department of

Business Management Govt. Girls P.G. College of Excellence Sagar. To the best of my

knowledge the report does not contain any work , which has been submitted for the award

of any degree , anywhere.

(NARGIS KUSHWAHA)

B.B.A IInd Semester

IInd Batch


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CERTIFICATE

The project report titled "WALL PAINTS " been prepared by Miss. Nargis

Kushwaha BBA IInd Semester , IInd Batch under the guidance and supervision of Miss.

Deepti Patel for the partial fulfillment of the Degree of B.B.A.

Signature of the Signature of the Signature of the

Supervisor Head of the Department Examiner


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CONTENTS

TOPIC TITLE

1. Preface

2. Acknowledgement

3. Declaration of the Candidate

4. Certificate

5. Introduction

6.

7.

8.

9.

10

11

12 Limitations

13 Suggestions & Recommendations

14 Conclusion

15 Bibliography

16 Questionaire

INTRODUCTION A major focus of channel of distribution is delivery. It is only throughdistribution that public and private goods and services can be made available for use or


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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 cAsian 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 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).


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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.

HISTORY


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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 theinformation 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.

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


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

arises.

HELP IN PRODUCTION FUNTION: The producer can concentrate onthe 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 know what they

can pay for the product. Pricing may be different for different markets or products

depending upon the channel of distribution.

MARKETING SEGMENTATION :

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

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


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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 thanone 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 marketing channels are

quite common in industrial marketing channels.

TYPES OF INTERMEDIARIES


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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-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.


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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:

Why I have selected TWO-WHEELER only?

I have selected Two-Wheeler for my summer training because it is the

company that is growing day by day. It has maximum

market share with comparison to its competitors. And it is

the company that gives highest sales and it is also the

highest two-wheeler manufacturer.

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 the

research 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:


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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.

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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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 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


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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, 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 centmarket 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 heavy-duty coatings.

The manufacturing facilities of the company for paint products are

currently spread over four locationsBhandup, Mumbai, which was

established in 1955; Taloja, Maharashtra, where ASIAN PAINTS


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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.

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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_____________________________________________________________ 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 controlled the paint

business and were making it impossible for a new paint company to

enter and establish itself in the business.


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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 witha 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.

ASIAN PAINTS went slow on urban areas and concentrated onsemi-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


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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.

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 inthe 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


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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 anyworthwhile 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.

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 withhundreds of retail dealers.

ASIAN PAINTS Goes in for an Open-Door Dealer Policy


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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 thetrade, 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 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.

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.


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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.

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


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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 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 EnlargedDistribution

The decision to go to the semi-urban and rural markets instead of

confining to the urban markets also meant enlargement of the


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distribution function. ASIAN PAINTS had to go in for more dealers

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

Chart Main Steps in the Implementation Process

ASIAN PAINTS s created alarge network of dealers. It established a network of company depots to service thedealers.

It successfully resolved thecost-service conflict indistribution.(i) A strong commitment to

distribution cost control without


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It created a marketingorganization that matched itsdistribution.

compromising service level.(ii) Effective inventory

management(iii) Effective control of credit

outstanding(iv) IT initiatives in distribution cost

control

Channel management. In the system chosen by ASIAN PAINTS , the physical distribution cum channel management task was far moredemanding, compared to the wholesaler-oriented system practiced bythe other paint companies. While, for companies that embraced thewholesaler-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, ASIANPAINTS 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

Extend of marketing territory and complexity of distributionorganization are interrelated. The moment ASIAN PAINTS voted for

nationwide marketing, it was getting into intensive as well asextensive physical distribution and channel management. ASIANPAINTS thus had to create a nationwide distribution-cum-marketingorganization.

DISTRIBUTION BECOMES ASIAN PAINTS S SHOWCASEFUNCTION

ASIAN PAINTS s strategies made distribution the most importantelements of its marketing mix. And, ASIAN PAINTS give to

distributions all the inputs that were demanded by it. In fact, the restof this case study is essentially a description of how ASIAN PAINTSmanaged its distribution activities-how it chalked out its distribution

programmes, how it implemented them, what problem it encounteredin this task, how it tackled them and how through distribution success,it achieved marketing and corporate success.


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THE IMPLEMENTATION PROCESS

We shall see low ASIAN PAINTS went about the actualmanagement of the distribution function. The main steps in ASIANPAINTS s implementation process are shown in Chart 2.Let us see the details.

ASIAN PAINTS Creates a Large Network of Dealers

An extensive network of dealers, and a matching physical distributioninfrastructure play a crucial role in the decorative paints segment. Thisis essential for ensuring easy accessibility of the product to customers.In this, Asian Paints scored over its competitors with a massivenetwork 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.

ASIAN PAINTS Establishes a Network of Company Depots

ASIAN PAINTS established a large chain of company operateddepots/stock points throughout its vast marketing territory, fromwhere the retail dealers could conveniently pick up their requirements.ASIAN PAINTS s basic strategies explained in the earlier sectionsnecessitated a liberal Asian Paints proach in the matter of stock

points/depots. It also meant that the depots had to be companyoperated. After all, ASIAN PAINTS did not have any wholesaledistributors to whom the responsibility for operating the stock points

could possibly have been assigned. As shown in Exhibit 32.4established a network of 30 company-run depots, spread through outthe country and serviced its retailers from them. The number of depotsvaried from city to city. For example, Bangalore had just one depotswhile Mumbai had four depots. The depots typically supplied to about200-300 dealers.


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ASIAN PAINTS Creates a Marketing Organisation thatMatched its Distribution Intensity

Effective control of the large number of depots, each havingsubstantial stocks of 2,000 odd distinct items necessitated a matchingmarketing organization structure. ASIAN PAINTS set up amarketing organization consisting of four regional sales offices, 35

branch sales offices and a large number of sales supervisors and salesrepresentatives spread all over the country. The marketingorganization of the company is presented in Exhibit 32.5. It can beseen from the chart that a very extensive structure has been created inthe consumer division. It is primarily meant for taking care of themassive distribution task involved in this sector. Each branch sales

office has its own depots and the various items are stocked in thedepots under the control of the concerned branches. The branchesservice 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 morethat 3,500 big and small cities all over the country.

ASIAN PAINTS faced many challenges. Of these, the cost-servicedilemma was no doubt, the most important one. And, that is the aspectin which we are mainly interested in this case study.

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


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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 actuallyresolved 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

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


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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 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


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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 theoutlets. 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 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.


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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 maintainthe 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 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


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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 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 ItsInventory Management and Credit Control


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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 PAINTS has 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 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 .

OBJECTIVE OF THE STUDY

The study was done primarily with the following objective in mind.


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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.

SUGGESTIONS & RECOMMENDATIONIt 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


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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 toknow 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.

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.

LIMITATIONS OF THE STUDY


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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 be surveyed

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.

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


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LEADERSHIP THROUGH DISTRIBUTION EXCELLENCE

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

PAINTS achieved an enviable leadership position through thedistribution 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 s distribution 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,p2,2p.

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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