FINAL REPORT _Asian Paints Royale Group6

8/10/2019 FINAL REPORT _Asian Paints Royale Group6

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Final Project Report

Product: ASIAN PAINT ROYALE

Group 6


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Executive Summary

Aim of this project was to apply the learning from marketing class and based on that develop a marketingplan for chosen brand. To do that we chose the product Asian Paints Royale and explored the variousproduct related aspects. The detail analysis consisted of 5 stages

1. Detailed analysis of product based on situational analysis

2.

Evaluation of marketing strategy for previous years3. Review of current marketing strategy4. Comparison with marketing plan of competitor brands5. Developing marketing plan for next year

In the first phase of analysis we did situational analysis based on 5Cs Company, customers,Competition, Collaborators and context. With this we were able to identify opportunities, threats etc.

Based on data collected from various sources we were able to evaluate marketing strategies. We evaluated

Segmentation schemes, target segment and rationale behind the target group.

Based on that we understood positioning of the product. We compared this competitors and understoodhow asian paints royale differentiates from its competitors. We did 4P analysis and product, price, place

and promotion of the Royale. Our analysis was based upon data collected through asian paintsspokesperson, social media pages and official reports.

To predict the future strategy for marketing we looked through previous annual reports figured out whatcost and timelines were involved in the project. Based on that we prepared schedule of activities andexpense forecast. Financial projections for 2014 were also part of these predictions.


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INTRODUCTION

Asian Paints is Indias largest paint company and Asias third largest paint company, with a turnover of

Rs 96.32 billion. Asian Paints was established on February 1, 1942 by Champaklal H. Choksey,

Chimanlal N. Choksi, Suryakant C. Dani and Arvind R. Vakil. They name their company The Asian Oil

& Paint Company, a name that picked randomly from a telephone directory (Wikipedia)

1945Asian Paints touches a turnover of Rs. 3,50,000 (Wikipedia)

195766The family-owned company makes the change to a professionally managed 3eflon3d33on.

Forbes Global magazine USA ranked Asian Paints among the 200 Best Small Companies in the Worldfor 2002 and 2003 and presented the Best under a Billionaward, to the company. Asian Paints is the

only paint company in the world to receive this recognition. One of the countrys leading businessmagazine Business Today in Feb 2001 ranked Asian Paints as the Ninth Best Employer. It has beenrecognized by Economic Times as well. Forbes has also ranked Asian Paints among the Best under

companies in Asia in 2005, 06 and 07.(Wikipedia).Asian Paints has acquired 30% stake in Dutch Boy Philippines from Berger International Limited (BIL),

an indirect subsidiary of Asian Paints.Gattu, the mascot:

Gattu, the mascot for Asian Paints was created by cartoonistR.K. Laxmanin 1954. Soon Gattu, with his

shock of black hair eternally dangling over his right eye, became popular and remained so for many

decades, even featured in business quizzes. After over four decades, it was eventually phased out after

2002, when companys advertising agencyOgilvy & Mather(O&M) initiated a rebranding

exercise.(Wikipedia)

Logo Change:

The logo was changed to a contemporary upmarket one designed by an Engineering Student

Devanaboina Krishna Teja from Andhra Pradesh. The logo/design was to convey self-expression,

sophistication and Technology.Thus came the birth of a wonderful positioning strategy created by O&M.

The insight was that the brand is about people and homes and homes reflect the people living in it. Hence

Har Ghar Kuch Kehta Haitranslated to Every Home has a story to tell. This campaign is a perfect

example of a brand laddering up and connecting to a higher level in the mind of the customer. The

campaigns reinforced the brand as a premium emotional brand. Along with the campaign Asian Paints

also ran parallel ads for its subbrands. Saif Ali Khan endorsed the premium brand Royale .For Apex

Ultima, the campaign was highly 3eflon3d3 and was different in different market.(Wikipedia).

Major Product and Services:

1.

Decorative paints:

Interior-wall-paints (Royale, Royale Play,Premium Emulsion,Tractor

Emulsion,Distempers)

Exterior wall paints (Apex Ultima, Apex Exterior Emulsion, Apex Duracast, Ace

Emulsion)

Wood surface paints (Woodtech Emporia PU, Woodtech Polyester, Aquadur PU forinteriors, PU palette Interior, PU for Interior, Melamine Gold Clear, Melamyne,
http://en.wikipedia.org/wiki/R.K._Laxmanhttp://en.wikipedia.org/wiki/R.K._Laxmanhttp://en.wikipedia.org/wiki/R.K._Laxmanhttp://en.wikipedia.org/wiki/Ogilvy_%26_Matherhttp://en.wikipedia.org/wiki/Ogilvy_%26_Matherhttp://en.wikipedia.org/wiki/Ogilvy_%26_Matherhttp://en.wikipedia.org/wiki/Ogilvy_%26_Matherhttp://en.wikipedia.org/wiki/R.K._Laxman


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Touchwood Interior Glossy, Premium Semi-gloss enamel, Premium Satin Enamel,Premium Gloss Enamel, Utsav Enamel)

Metals surface paints( Premium semi-gloss enamel, Premium Satin Enamel, Premium

Gloss Enamel, Utsav enamel)2. Industrial coatings:

Protective coatings,

Floor coatings,

Road markings

3. Ancillaries:

Wall primer,

Acrylic Wall Putty,

Exterior Wall Putty,

Wood Primer

4. Automative Paints:Asian paints made a foray in automotive paints in the year 1997 with a joint venture with PPGIndustries. The joint venture is called PPG Asian paints.[7]The company manufactures body

coatings and plastic coatings.

We chose Asian Paint Royale as our Product for the project even though its the market leader for thefollowing reasons:

It still has almost about 50% market to capture.

It is being projected as a premium product and premium product has the capacity the affect the

overall share of the company more than any non-premium product.

The premium product consumer can afford to paint more frequently.

It can tap unorganized paint sector also(about 10% of total market share).

The percapita paint consumption in India is around 1.5 kg while the same in developed countries

is about 20kg, as the per capita income is on the rise here also we have huge market potential.
http://en.wikipedia.org/wiki/PPG_Industrieshttp://en.wikipedia.org/wiki/PPG_Industrieshttp://en.wikipedia.org/wiki/PPG_Industrieshttp://en.wikipedia.org/wiki/PPG_Industrieshttp://en.wikipedia.org/wiki/Asian_Paints#cite_note-7http://en.wikipedia.org/wiki/Asian_Paints#cite_note-7http://en.wikipedia.org/wiki/Asian_Paints#cite_note-7http://en.wikipedia.org/wiki/Asian_Paints#cite_note-7http://en.wikipedia.org/wiki/PPG_Industrieshttp://en.wikipedia.org/wiki/PPG_Industries


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SITUATION ANALYSIS

5 Cs

Company:

Paint industry is 250 billion rupee industry dominated 75% by decorative segment. In an organizedmarket share of asian paints is 47% (Company, Media reports). Decorative segment has 4 productcategories- Interiors, exteriors, woods, metallics. Interiors has further subcategories of distemper,emulsion and textures. While distemper is targeted to economy and mid range consumers royale is highend emulsion product. Royale has upmarketed with its product Royale Play.

Collaborator :Asian Paints has harnessed the powers of state-of-the-art supply chain system using cutting edge

technology to integrate all its plants, regional distribution centres, outside processing centres and branchesin India. The Supply Chain Management in Asian Paints is backed by IT efforts that help the company in

demand forecasting, deriving optimal plant, depot and SKU combinations, streamlining vendorrelationships, reducing procurement costs and scheduling production processes for individual factories.

PPG Industries Incorporated (USA) ,largest producer and supplier of automotive coatings to major carmanufacturers had 50-50 joint venture incorporated on 19

thFeb 1997 with Asian Paints. PPG Asian Paints

is engaged in the business of manufacturing and marketing automotive and Industrial paints.

Competition:Asian paints has always been market leader in India. Closely followed by akzo nobel- Dulux velvet touch.Value proposition for Dulux velvet touch is the glow and finishes that product gives to walls. Another

major product in this sector is Nerolac impression. Impressions are differentiating itself with its productofferings. Its product offering include Nerolac Impressions eco, Impressions Disney, impressions Disney.

Consumer Trends:

With rise in purchasing power capacity of Indian consumer. Consumers are moving towards morepremium products. Market for high end premium product accounts for 1/5th of total market which hasbeen growing at rate of 25-30% per year.(Media sources)Consumer are reliable on dealers and contractors for decision of choosing the paints. This trend is slightly

changing with more speciality stores coming up and providing painting services to consumers. Currentmarket share for this product is 42%. Asian paints has interactive customer paint guides that has helped toreshape customer paint purchase decisions. Reasons for this has been more consumer participation in

paint selection decision through interactive tools like Paint calculators, online colour visuals whichcompany has facilitated.

Climate:

Political factors:

1) General elections are going to be held shortly so political logjam in anticipation of elections cannotbe ruled out.2) Recent correction in price of commodities and crude oil provide optimism.Technological Factors:

1) Eco friendly product range launched by Nerolac2) Smartcare range (Waterproof, Crack bridging) products are in more demand

Economical Factors:1) Euro financial crisis and US economy signaled growth revival2) Depreciation of rupee raises the cost of raw material
http://www.destimoney.com/inhouse/researchdm/uploads/Equity_Company_Report_7122012101104PM.pdfhttp://www.destimoney.com/inhouse/researchdm/uploads/Equity_Company_Report_7122012101104PM.pdfhttp://www.destimoney.com/inhouse/researchdm/uploads/Equity_Company_Report_7122012101104PM.pdfhttp://www.destimoney.com/inhouse/researchdm/uploads/Equity_Company_Report_7122012101104PM.pdfhttp://www.destimoney.com/inhouse/researchdm/uploads/Equity_Company_Report_7122012101104PM.pdf


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Social Factors:1) Increase in purchasing power of consumers resulting in preference of cheaper brands

Company Collaborator Competitors Climate Consumer

Royale is premiumproduct of Asian

Paints

Asian Paintsharnessed the

powers ofsupply chain

system usingcutting edgetechnology

Major competitorsof Asian Paints

royale are ICIVelvet Touch and

Nerolac Impressions

1)Politicallogjam in

anticipation ofelections cannot

be ruled out.2)Recentcorrection in

price ofcommodities

and crude oil

provideoptimism to

company

Seasonal factorslike festivals etc

affect . thepurchase decisionsof the product.Repainting cycletime has reduced to

3-4 years for pre

Royale is stretchedinto brands likeroyale play royale

shine royal lustre

The SupplyChainManagement is

backed by ITefforts that help

the company indemandforecasting

Market share ofasian paints in thissegment of premium

products is 42%whereas velvet

touch is 35%nerolac is 9 percentand others are 14

percent

1) Depreciationof rupee raisethe cost of raw

material2) Euro financial

crisis and USeconomy6eflon6d growth

revival

Royale has beentargeted to 30+married residence

owners. This isquite evident from

its marketingcampaigns

promoted by Saif

Ali Khan

Product is availablein 1800colours.Product is

anti-fungal andanti-bacterial and6eflon protected

PrPPG Industrieshas 50-50 jointventure with

asian paints

Unique valueproposition fornerolac impression

is it hides the crackson walls.Whiledulux is moretowards emotionalconnect with the

customers throughits innovation.

1) Eco friendlyproduct rangelaunched by

Nerolac

Projected asdurable utility onwhich stains can be

wiped,erased andremove. Targetingcustomer,

promoting longerlife of walls..


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Trend Analysis:

Indian paint industry is expected to grow at 1.5 to 2 times GDP growth rate for the next five years which

opens up more avenues for Asian paints to capitalize on. With GDP growth rate at about 6% top playersin all segments are expected to achieve growth rate higher than that of the market growth rate. The percapita consumption of paint in India is 1.5kg which is very low compared to the developed countrieswhere it is about 20 kg. With Indian government introducing schemes like NREGS, farm loan waivers,

pay commission led salary hikes consumption in both rural and urban market is sure to improve. Despitethese positive figures Indian paint industry may experience a slow growth as a demand for homes, officesand cars is threatening the industry growth. A strong supply and distribution channel followed byaggressive promotion is required to overcome these unprecedented situations that may arise in the futurein the paint industry.

4Ps

Product

Asian Paints Royale is a 100% acrylic, water based paint used for interior wall finish

The silky sheen finish that Royale offers gives the interiors a regal feel

Brush marks seen after painting will be low as Royale gives a smooth flow

Since Royale offers high stain resistance- walls can be cleaned easily and will look new for long

Royale Anti-Fungal property is an added benefit

Royale covers about 325-350Sq.Ft/litre, has a drying time of 15-20 min gives a soft sheen finish

with a shell life of 3 years

Market Statistics: Royale has 42% market share in the premium segment closely followed by

Nerolac velvet touch with 35% the rest is evenly distributed between the other products

Royale offers two product varieties Royale Play with different effects for Premium customers and

Royale for economy segment where it projects its advantages like stain resistance, anti- fungal,durability...etc

Price

Since Royale is being positioned as a premium product it is priced to appeal to the high income

and upper middle class section

Pricing strategy adopted is value based pricing Price range is between Rs 315-345 per litre

Place

Asian paints has a wide distribution platform that it has developed during these years

It has 4 manufacturing plants, 6 regional distribution centres, 55 depots with around 15000

dealers who have around 90000 sub dealers

Asian paints have around 3000 exclusive retail stores around the country and 4500 color world

stores

Asian Paints bypassed bulk buyer segment by directly selling to the individual paint consumers

Promotion

Asian paints have used high profile bran ambassadors like Saif Ali Khan, Akshay Khanna, Soha

Ali Khan to position itself as a premium segment product

Public relations part is divided into two parts:- Marketing public relations which includeshandling the meetings of dealers and painters, Corporate public relations which involvesmonitoring CSR, Media and investors

Sales promotion includes distributing merchandise to painters such as T-shirts, caps..etc, giving

incentives to painters and also forming a privileged club member society

External promotion is also done through internet Asian paints site itself has many tools to catch

the customers eye

Asian paints also sponsor big events like Star Screen Awards and Sharad Sharma.


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Marketing Strategy and Program for previous years:

Asian Paints has been doing great evident it being the market leader. Nomura Securities notes that in thepast decade the company has gained market share.Marketing Strategy:

Staying involved with the customer.

Using customer help line Offering Complete home-painting services: including Exterior walls, Interior walls, metal

finishes to furnitures also.

Sending out Happy Painting Guides to customers for free.

Providing color consultancies: an employee with interior-design training comes to the home to

suggest what can be done for the walls.

It also trains 8,000 painters a year in two-day workshops to ensure that they apply its premium

paint the right way.

Offer 200ml samples of its premium paint at a nominal price, allowing a customer to paint small

part of a wall to see how the color will lookwhich is much more effective than a shade card.

General info:

Raw materials cost is around 56%

Weaker rupee could hurt Asian Paints margins given that crude derivatives (titanium oxide) areits key inputs.

Asian Paints have increased ad spends marginally this year and will maintain the same at anabove-industry average for another couple of years

Peak Season is usually between December to January and during non peak seasons ,dealers are

encouraged to sell more by giving exciting offers like LCD Tvs and Foreign tours.

50% of the sales happens through the Engineers and Contractors

newly paint houses contribute to 25% sales

Repaint takes around 10-15%.

Figure 1: Trend of sales for paint mark

50%

25%

15%

10%

Sales

Through Contractors

new houses

Repaint

others


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Critical view of current marketing strategy and comparison with competitors strategies:

Competitive Product: Nerolac Impressions Velvet TouchAsian Paints Royale:

Target is 30+ married residence owners Marketing Campaign: Wall that takes it all Communication Objective: Idea of Timeless beauty. Idea is to project Royale as a paint thatimproves the life of walls. Consumer insight here is to keep customers want their walls to last longer. More target customers

being urban elite

Royale Nerolac Impressions

1 Launched a Youtube campaign where it showed

how Teflon coating of the product did wonders on

the walls painted by Asian paint. This Marketingstint attracted almost 3.5 customer views and

campaign led to sale of 104 million liters of sale ofroyale paint.

Launched a new initiative Paint the Change to

promote its low VOC (volatile organic

compounds) products. Many customersattached to this campaign resulting in increase

of sales(10-13%) of Nerolac Eco Friendlyproducts.

2 Promoters directly interact with consumers throughmall activities in various cities

Nerolac launched unique Vastu Colour Book toattract consumers

3 Asian paints have come up with specialty storeslike Colors, Colour world. Store is aimed athelping people with painting process in choosingcolors and finishes.

Nerolac has come up with stores called-Stylezones. This has been beneficial and has reapedup twice sales as compared to multibrand store.

4 Asian Paint provides home painting service wherecustomers need not have to refer to contractor. Ithas this service in 13 different cities across India.

Nerolac provides service in 6 different citiesacross India.

5 Painting is high decision involvement process and

for that Asian paints have improved its customersinteractions to assist them by introducing schemeslike Call Aparna.

Interact with consumers using customer care

number and mails

6 Online reach of Asian paints has not been up to the

mark compared to its competitors (199084 fblikes). It has tried to advertise itself on socialmedia. Asian paints talks more about color theme

and has been able to create much impact with thecustomers.

Nerolac Paints in terms of social media

presence, is much better than asianpaints(494787 fb likes). The theme here is totalk about styling and architecture through

which this has been able to attract more activityon social media.


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Setting of an ambitious and realistic marketing objectives for next year:

1. Linking the new movie releases with Asian Paints-creating new ad :

Advertisements serve various purposes.Marketers use advertisement as a communication tool for:

Information: Here, the purpose of the company is just to inform the consumers aboutits products.

Persuasion: These advertisements try to convince the consumers to buy that product byexplaining the benefits associated with its purchase

Reminder: These advertisements are shown with a purpose to encourage the consumersto repeatedly purchase that product.

Reinforcement: The purpose of the advertisement is to make the consumers aware ofthe fact that they have made the right decision in choosing this product.

Since Asian Paints is already a market leader in the Paints industry, the aim of these

advertisements would be Reinforcement.

Expense: 10-15% of the gross margin2. Making a dedicated page on FB for Asian Paints Royale

Presently there is a common page for all the product offerings of Asian Paints. A separate pagededicated to Asian Paints Royale can be created and be used to carry out online competitions,

discussions etc linked specifically with Royale.Expense: No extra cost as the page can be created on Facebook free of cost

3. Setting up a counter/ area at Malls-To carry out interactive activities such as make your

own designThe idea is to set up an interactive kiosk/counter in mall. A wall will be put up where willing

people can come and create textures. They can also leave their hand prints on this wall.In addition, a painting competition can be organised for children and the paintings made by them

will be put up on a wall painted with Asian Paints Royale.

Expense:INR 30,000 + 15% of salesSOURCE:http://articles.economictimes.indiatimes.com/2009-09-18/news/28453882_1_kiosk-

retail-store-retail-venture4. Training program for a dealer whose shop has a reduction in sales:

Due to increasing competition and clutter in the paint industry, a particular dealer in a particularlocality may not be able to achieve the required profit margin. It is essential that a company looksinto this problem and solves the same. This can be done by conducting training programmes for

the dealers.Expense:12.5% of the sales

5. Converting a multi brand dealer of paints into an exclusive Asian Paints Dealer by giving him

Commission/incentive:Since we have free market policy, Asian Paints cannot force a dealer to sell exclusively Asian Paints. He

may choose to sell Nerolac, Dulux, Shalimar in the same shop if he earns a higher margin by selling allthese as against selling Asian Paints alone.

In such circumstances, Asian Paints can offer the dealer more incentives/commission. Thereby, the dealerwould choose to sell Asian Paints. If the commission that the dealer obtains by selling Asian Paints ishigher than that obtained by selling the other competing brands, the dealer may consider becoming anexclusive Asian Paints dealer.Expenses:@3% of sales
http://articles.economictimes.indiatimes.com/2009-09-18/news/28453882_1_kiosk-retail-store-retail-venturehttp://articles.economictimes.indiatimes.com/2009-09-18/news/28453882_1_kiosk-retail-store-retail-venturehttp://articles.economictimes.indiatimes.com/2009-09-18/news/28453882_1_kiosk-retail-store-retail-venturehttp://articles.economictimes.indiatimes.com/2009-09-18/news/28453882_1_kiosk-retail-store-retail-venturehttp://articles.economictimes.indiatimes.com/2009-09-18/news/28453882_1_kiosk-retail-store-retail-venturehttp://articles.economictimes.indiatimes.com/2009-09-18/news/28453882_1_kiosk-retail-store-retail-venture


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Financial Projections

Based on data of past three years we have made predictions of year 2014. For that there were few pointsof consideration and assumptions. Assumptions are as follows

1) We have formulated CAGR based on past 3 year performance and predicted future performance basisof other factors discussed in previous sections of this report.2) Note that the growth is as companys average rather than individual product average of royale. Weassumed product share in total revenue and have based our assumptions on this fact.

Growth rate has been phenomenal from 2009-10 to 2011-12 averaging 24 % but in 2012-13 growth was12 percent. Further depreciation in rupee may further bring down the growth but the price of raw

materials is going to decrease due to less demand from European and Asian market. Predicting exactrevenues thus in coming year is very difficult and we have assumed a similar growth rate in next year too.

Figure 2: Revenue from operations(cr)

j

Premium product market in india is currently 13500 cr with CAGR 20% as per industry reports. Market

share for various products in this category is given as below. So even though though the conditions areweakening for the paint industry the projections are still considered better. Asian Paints have come upwith new Royale Aspira product and there is excitement regarding this in high end market. With 5600

crores of revenues coming from Asian Paints royale we are expecting overall rise of 20% growth as perindustry average. Market share will probably be same for this product and may fluctuate little. Royale ismarket leader in premium products segment and its market share has not changed much over the past fewyears. It has been growing from 35% in 2009 to 43% in 2013. Competitors are trying to improve theirsales and match up with Royale but Asian Paints considering its huge size has a strategic advantage of


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expenditure in marketing and advertisement. With the potential of this sector we predict a sales growthfor Asian paints royale less than past years due to adverse external conditions for industry. But still based

on analysis and marketing strategies adopted we can say that healthy growth rate of 15% minimum can beachieved. Over the past few years growth has been 20-25% and so this growth is highly possible.

FY2014 FY 2013 FY2012 FY2011

Total Income 127386.4 110770.8 96322.4 77223

Total expense 110826.1 96370.56 81219.5 63914.3

Profit 16560.23 14400.2 15102.9 13308.7

So considering the revenue in FY2012 and FY2011 we have predicted growth of 15%. The potentialincome for next period is as mentioned in the table. The expenses calculation is very complex procedures

so we have averaged the expenses over last two years and based on that data and our marketing strategieswe have suggested that expenses in marketing will increase.Worst case analysis we take expenses to be 87% and based on those total expenses can be extrapolated as

shown in chart above.Previous years income statement is given below and due to limitation of knowledge of taxing, debt we

had to restrict overselves to calculating Profit before taxes and interest.


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Figure 3:Premium paint market share

Quarterly sales projections:

Company has projected lower growth for future period on account of fall in economic conditions. Though

company should expect a better sales in monsoons and Diwali so Q3 results for next year can be projectedto be higher in that respect as compared to quarter 2.

Data of past 3 years is shown below. With depreciation in rupee further in Q2 of 2013 results are expected

to be even down. We assume a Q2 results to match somewhere along Q1 results.

Q3 results should have GR of 21-29%. We have projected this growth on the rationale that asDemand for premium products has definitely increased as compared to previous years whengrowth was 21 percent. But as rupee has depreciated and cost of raw material has also shot up the

Q3 results would see growth of 29% which it saw in FY2012 Q3.


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Figure 4: Projected sales

Thus we analyzed that the future sales and revenue of the company based on marketing strategy . Ourpredictions were based on publicly available information that we received through company reports,

spokesperson and news reports. Any internal data might be there which may be different from what wasmade available to us that may cause discrepancy in projections as per company.


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REFERENCE

Marketing Management: Philip Kotler,14thed.

en-wikipedia.org

www.asianpaints.com

Management Accountion: Anthony, Hawkins, Merchant. 13 thed.

:http://articles.economictimes.indiatimes.com
http://www.asianpaints.com/http://www.asianpaints.com/http://articles.economictimes.indiatimes.com/http://articles.economictimes.indiatimes.com/http://articles.economictimes.indiatimes.com/http://articles.economictimes.indiatimes.com/http://www.asianpaints.com/

FINAL REPORT _Asian Paints Royale Group6

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