Buying Behaviour for Decorative Paints

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Transcript of Buying Behaviour for Decorative Paints

Study on Consumer Buying Behavior of Decorative Paints

Submitted To: Prof. Jojo Joy. N

Submitted By:Group Number B 9 Haniya Eram (11139)

Harish Sankar N I (11140) Himanshu Tipre (11141) Kausthub Sinha (11145)

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Table of ContentsAbstract ................................................................................................................................................... 3 Paint Industry in India ............................................................................................................................. 3 Some Facts .......................................................................................................................................... 4 Segmentation of paints ....................................................................................................................... 4 FY12 for Paint Industry........................................................................................................................ 5 Prospects............................................................................................................................................. 5 Research Objective ................................................................................................................................. 6 Methodologies ........................................................................................................................................ 6 Sampling.................................................................................................................................................. 7 Characteristics of Survey Respondents................................................................................................... 7 Analysis ................................................................................................................................................... 7 Regression Analysis of Berger Paints .................................................................................................. 7 Stochastic Analysis on understanding the Mind space for Paint Brands ............................................ 8 Stochastic Analysis for Understanding the Influencer effect on Consumers Mind to Make Decisions ............................................................................................................................................................ 9 Jacard Analysis to Rank the Factors taken for Purchase Decision ...................................................... 9 SWOT Analysis to Understand Strength and Weakness of Brands................................................... 10 Asian Paints ................................................................................................................................... 10 Berger Paint .................................................................................................................................. 10 Dulux Paint .................................................................................................................................... 10 Shalimar Paint ............................................................................................................................... 10 Nerolac Paint ................................................................................................................................. 11 Consumer Insights................................................................................................................................. 11 Conclusion ............................................................................................................................................. 14 Appendix ............................................................................................................................................... 15 Pictures ............................................................................................................................................. 18

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AbstractPainting was not given importance when decision were made regarding a house construction, but over the years due to the increase in competition, growth in infrastructure, consumer awareness about beauty, ambience and upkeep of their building, the consumer has become aware about the importance of buying best paints. Initially the decision to buy paints depended up on the contractor or the construction firm but now it has slowly become part of the final users decision. The paint industry has its 53% controlled by Asian paints followed by Berger Paints 19% , Kansai Nerolac 16%, Akzo Nobel (8%) and Shalimar Paints (2.5%). To differentiate one from the other the Indian Paint firms has employed techniques like implementation of colour mixing equipment at dealers shop, computerization of the supply chain, ensuring return on investment for the dealer. From the consumer point of view paint firms have ventured in to providing free brochures on SMS, technical support for consumers in choosing colour, price estimation for the painting project, combinations, new product innovations like Eco friendly/ lead free green paints. The industry is estimated to grow at the phase of more than 12% over the next 5 years with government support for construction and infrastructure sector, the growth possibility are immense. The study looks forward to understand how a firm needs to channelize their effort, and the impact of branding exercise by firm in customer buying decision of paints.

Paint Industry in IndiaIndias strong economic growth has propelled the paint industry to double-digit growth over the past few years and has made it Asia Pacifics fastest growing paint market. Despite fast growth, Indias per capita paint consumption is still abysmally low at ~2kg/year. Due to increased Government funding for infrastructure, demand for paints both in industrial and decorative segment is set to rise, thereby rendering Indian paint industry to be poised for further growth.

Nearly ~65% of the paint market is organized. The organized market is highly concentrated and a classic example of an oligopoly, where entry barriers are high and the top-5 players capture most of the market, while the unorganized market is highly fragmented with over 2,000 players

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Some Facts The paint industry is expected to grow at 12-13% annually over the next five years. FY12 was a challenging year for the industry as a whole due to subdued demand across key sectors and rising inflation. The unorganised sector controls around 35% of the paint market, with the organised sector accounting for the balance. In the unorganised segment, there are about 2,000 units having small and medium sized paint manufacturing plants. Top organised players include Asian Paints, Kansai Nerolac, Berger Paints and ICI

Segmentation of paints

Decorative: Major segments in decorative include exterior wall paints, interior wall paints, wood finishes and enamel and ancillary products such as primers, putties etc. Decorative paints account for over 77.3% of the overall paint market in India. Asian Paints is the market leader in this segment. Demand for decorative paints arises from household painting, architectural and other display purposes. Demand in the festive season (SeptemberDecember) is significant, as compared to other periods. This segment is price sensitive and is a higher margin business as compared to industrial segment. Industrial: Three main segments of the industrial sector include automotive coatings, powder coatings and protective coatings. Kansai Nerolac is the market leader in this segment.4

User industries for industrial paints include automobiles engineering and consumer durables. The industrial paints segment is far more technology intensive than the decorative segment.

FY12 for Paint Industry FY12 was a mixed bag for the paint companies. While all the 3 players viz. Asian Paints, Kansai Nerolac and Berger Paints reported strong growth in sales, operating margins came under severe pressure due to raw material price inflation. Top-line growth was boosted by strong demand from the rural markets. Nonetheless, the demand environment in the industrial segment continues to remain challenging due to hawkish interest rate environment. Performance on the margins front was a big disappointment. Rising prices of crude oil and titanium dioxide increased the overall expenditure thereby impacting profitability growth. However, companies are undertaking a gradual and calibrated price increase to shield margins. Nonetheless, as a complete pass on of raw material price increase is not possible in the industrial segment, the blended margins continue to suffer. All the key players are in an expansion phase. Asian Paints plant in Khandala, Maharashtra is under construction and is expected to be commissioned by 4QFY13. Kansai Nerolacs capacity expansion plans at Jainpur and Bawal culminated during the year. Berger Paints has also undertaken capacity expansion for its plants located in Andhra Pradesh (AP). The first phase of the project in AP is expected to be completed in the middle of 2013. Further, expansion of water based plant at Rishra and Goa is also on track.

Prospects The market for paints in India is expected to grow at 1.5 times to 2 times GDP in the next five years. With GDP growth expected to be between 5-6% levels, the top three players are likely to clock above industry growth rates in the future, considering they have a strong brand and good reach. Decorative paints segment is expected to witness higher growth going forward. The fiscal incentives given by the government to the housing sector have benefited the housing sector immensely. This will benefit key players in the long term

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Although the demand for industrial paints is lukewarm it is expected to increase going forward. This is on account of increa