Download - 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 user’s 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 dealer’s 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 IndiaIndia’s strong economic growth has propelled the paint industry to double-digit growth over

the past few years and has made it Asia Pacific’s fastest growing paint market. Despite fast

growth, India’s 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 (September-

December) 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.

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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 Nerolac’s 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 increasing investments in infrastructure. Domestic and

global auto majors have long term plans for the Indian market, which augur well for

automotive paint manufacturers like Kansai Nerolac and Asian-PPG. Increased

industrial paint demand, especially powder coatings and high performance coatings

will also propel topline growth of paint majors in the medium term.

Research Objective To understand the primary factors considered by customers in buying a paint.

To understand the influence of various people in buying decision (Family,

Construction people) and the buying process of consumers.

Impact of branding and advertisement on sales and revenue.

Consumer perception about various paint brands and preferences.

Impact of channel motivation activities, technical support activities at dealers point on

sales of the paint brands.

To study the promotion and differentiation practices of market challenger firms and

reaction from the leader.

Methodologies Survey at 3 independent retail firms in Mysore to understand the pull employed by the

paint firms

Survey of people in the age of 20 above who are influenced by the branding and

advertisement. Who are possible to buy a house in the next 5 years.

SWOT analysis of the branded shop and unbranded independent shops.

Regression analysis of investment in advertisement and sales returns.

Finding the factors that are considered before making a buying decision.

Jacard analysis of the factors considered before buying decision to find out the

prominent factors.

Stochastic Analysis to measure the mind space for customers for various brands and

influencers in buying process.

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Sampling Two Independent paint retail shops in Mysore

Youth population the age range above 20 who are interested in buying or building a

house in the coming 5 years.

People going for PG Education , working engineers, consultants were taken for the

study.

Characteristics of Survey Respondents The sample taken for study consists of 52 people in the age range of 22 to 47.

51 % of the studies population has annual income below Rs.20000, 32% between

Rs.20000 and Rs.40000, 17% above Rs.40000.

58% of population has used Asian Paints for their houses and 15% Berger Paints.

Most of the respondents are belonging to PG Students, software engineers and

Consultants.

The survey for consumers was done online and for retailers was done by visiting the

hard ware shops in Mysore city.

Analysis

Regression Analysis of Berger Paints

Year salesSelling exp

Mar 12(12)

2,901.20 280.2

Mar 11(12)

2,299.10 216.2

Mar 10(12)

1,822.28

168.49

Mar 09(12)

1,688.52

146.76

Mar 08(12)

1,521.68

129.76

Mar 07(12)

1,322.16

114.26

The regression analysis is done with sales and selling expenditure for the past six years. It is

showing a very strong relation between the both. As the selling expenses have increased there

is an increase in sales. As from the data it can be seen that company is spending heavily on

selling expenditure which have directly impacted on sales.

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1,000.00 2,000.00 3,000.000

50

100

150

200

250

300

f(x) = 0.106981461158284 x − 30.0823941327166R² = 0.997686079341663

Selling exp

Selling expLinear (Selling exp)

Here the regression value shows the confidence level is .99 so there is positive relationship between sales expenditure (which includes advertisements and other push strategies employed) and Return through sales revenue for the example of Berger Paints.

Stochastic Analysis on understanding the Mind space for Paint Brands

The analysis showed that consumers mostly prefer Asian Paints followed by Berger, Nerolac, Dulux and Shalimar Paints.

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Stochastic Analysis for Understanding the Influencer effect on Consumers Mind to Make Decisions

The analysis showed that painters have the highest influence on the consumers with respect to the decision making on paint purchase followed by friends, contractor, shops, Advertisement and family.

Jacard Analysis to Rank the Factors taken for Purchase Decision

Jacard analysis has given the insight that brand image leads the consumer in making

preference followed by Durability aspect of paint, Colour sections and varieties, Thickness,

ease of cleaning after painting, eco friendliness, price and technical supports.

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SWOT Analysis to Understand Strength and Weakness of Brands

Asian Paints The major strength of the brand is its brand image and people in Mysore are

extremely loyal to the brand according to the retailer inputs also.

The colour varieties offered are also a strength of Asian paints

Pricing aspect is the only weakness but for a firm with huge brand loyalty charging

premium is common.

The brand offers good technical support like paint mixing, guidance on painting.

Berger Paint The thickness of the paint is strength in terms of view of the consumers.

The major opportunities for the brand are in technical support, durability, brand

image.

The threats for the brand is it need to have a look at the pricing, ecofriendly paints

need to be advertised and brought to the people.

According to the consumers they consider ease of cleaning the Berger Painted walls

as it major weakness.

Dulux Paint Technical support offered, durability, proper pricing and ease of cleaning are

considered the opportunities for Dulux Paint. The major weakness is its brand image.

Shalimar Paint Pricing, technical support, and thickness are the opportunities for Shalimar paints.

In terms of weakness the brand has very weak image and durability in terms of

lasting.

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Nerolac Paint Nerolac has got a good brand image as it strength along with proper pricing.

Nerolac need to look at threats by improving technical support and colour varieties

offered.

The weakness in terms of SWOT is the paint thickness aspect.

Consumer InsightsFrom the learning which had been conducted about the Decorative paints the following are

the information’s that have been gathered:

1. According to retailers repeat customers prefer to buy Asian paints because of the

continuing tradition and brand equity. Fear of untried brands in terms of durability is

also an issue.

2. The only way according to the retailers to gain the mind space is by brand building

exercises and technical support.

3. The technical supports offered are not being effective as the consumers come at the

time of painting and the supports like studio system (where in various design concepts

and look for the building with various shades are given free of cost to consumer) it

takes a minimum of 15 days to deliver the service from Asian Paints technical

division Chennai. And consumers are also less aware of the importance of choosing

shades.

4. There is no major fight in terms of pricing, pricing is almost same for all the brands

5. There are no major growths in Mysore region for the Paint demand and the major

influencer is the Contractors, Painters in terms of decision making.

6. All the paint sales are routed through the dealers and in case if there is a direct sale

happening a percentage of the profit is given by the paint firm to the hardware shops

or in terms of discounts.

7. The demand for the ecofriendly paints has not gained momentum due to extreme high

prices the cost of a normal emulsion will be Rs.260 but in case of ecofriendly green

paints the same will cost more than Rs.500.

8. Most of the consumer / repeat purchasers do go for the same brand and same retailer

and in many cases paints being from any brand has to be re-painted with in 4 years

after painting.

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9. Consumer’s behavior in terms of buying paints is still in Low need for Cognition with

less involvement and major decision from others like contractors, and Painters. Most

of the consumers have blind faith in Brands like Asian Paints even if others have

better offering.

10. People have started evincing interest towards protective coating paints for the exterior

wall especially in the premium class of population and in the case of B2B sales like

Builders.

11. Consumers prefer Asian Paints to any other paints because Asian Paints has been an

incumbent in the paint industry form a long time. The distribution network of the

Asian Paints is well established and this has helped in consolidating its presence

through a number of loyal contractors, who usually prefer Asian Paints to the

consumers. The decision regarding the paints is taken by the contractor or the painter

but the colours are selected by the consumers. Asian Paints was also the first company

to introduce the concept of lead free paints and it was closely followed by Nerolac.

Consumers’ perception about Asian Paints is mostly about functional aspects.

Consumers perceive Asian Paints as an economical, value for money and trusted

brand name. Low to high NFC consumers prefer this paint. Commonly used by urban,

semi urban and rich rural folks consumers.

12. Nerolac is still considered as a foreign premium brand, though not many consumers

prefer this because it is not seen as equally economical as Asian Paints. It has more of

an emotional function and consumers who want preferably eco green paints go for

Nerolac. Consumers with an affinity towards environment and the side effects of the

paints are more inclined to buy this paint. High NFC consumers prefer this paint.

Commonly used by urban consumers.

13. Berger Paints on the other hand has created an image of decorative paints and

consumers whose tendency is towards luxury and beauty go for berger paints. Since

the number of contractors who prefer berger tend to emphasis more on the interior

decoration of the house and its has got little or no functional aspect, but more of an

emotional aspect. Berger and Nerolac are also seen as higher standard paints and

consumers who are willing to spend a bit more on the one time construction of their

houses go for Berger Paints. High NFC consumers prefer this paint. Commonly used

by urban consumers.

14. Shalimar paints on the other hand are economical no frills and not much of the

concerned with the effects on health or the environment. They prefer Shalimar instead

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of others because they just want to get their house painted. Purely functional aspect.

NFC is very low. The brand is seen as cheap and of low quality. Few consumers

usually get the exterior painted by Asian Paints and the interior painted by Shalimar

paints. It is popular among the rural- urban and semi urban households.

15. Consumers prefer Asian Paints to any other paints because Asian Paints has been an

incumbent in the paint industry form a long time. The distribution network of the

Asian Paints is well established and this has helped in consolidating its presence

through a number of loyal contractors, who usually prefer Asian Paints to the

consumers. The decision regarding the paints is taken by the contractor or the painter

but the colours are selected by the consumers. Asian Paints was also the first company

to introduce the concept of lead free paints and it was closely followed by Nerolac.

Consumers’ perception about Asian Paints is mostly about functional aspects.

Consumers perceive Asian Paints as an economical, value for money and trusted

brand name. Low to high NFC consumers prefer this paint. Commonly used by urban,

semi urban and rich rural folks consumers.

16. Nerolac is still considered as a foreign premium brand, though not many consumers

prefer this because it is not seen as equally economical as Asian Paints. It has more of

an emotional function and consumers who want preferably eco green paints go for

Nerolac. Consumers with an affinity towards environment and the side effects of the

paints are more inclined to buy this paint. High NFC consumers prefer this paint.

Commonly used by urban consumers.

17. Berger Paints on the other hand has created an image of decorative paints and

consumers whose tendency is towards luxury and beauty go for berger paints. Since

the number of contractors who prefer berger tend to emphasis more on the interior

decoration of the house and its has got little or no functional aspect, but more of an

emotional aspect. Berger and Nerolac are also seen as higher standard paints and

consumers who are willing to spend a bit more on the one time construction of their

houses go for Berger Paints. High NFC consumers prefer this paint. Commonly used

by urban consumers.

18. Shalimar paints on the other hand are economical no frills and not much of the

concerned with the effects on health or the environment. They prefer Shalimar instead

of others because they just want to get their house painted. Purely functional aspect.

NFC is very low. The brand is seen as cheap and of low quality. Few consumers

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usually get the exterior painted by Asian Paints and the interior painted by Shalimar

paints. It is popular among the rural- urban and semi urban households.

Conclusion

The top 5 companies make up more than 80% sales of the organized market. The market

share of the organized sector is continuously improving as consumer preference is shifting

towards better products offered by the leading brands. Established Foreign companies have

entered the Indian market by acquiring existing Indian companies. Kansai Paints, Japan

entered the Indian Market by acquiring Nerolac, Akzo Nobel, the world’s largest Paint

company, entered the Indian market by acquiring ICI Paints (now Akzo Nobel India.)

Asian Paints is the market leader in the Indian Paint Industry and gets the major portion of its

revenue from the Decorative segment. Over the years, it has outperformed its peers in every

aspect by wide margins. This is mainly due to its strong moat (competitive advantage) which

lies in its strong Brand Equity and an extensive Distribution Network. The company’s Net

sales, Net Profit and Book Value have grown with a 5 year CAGR of 22%, 27% and 28%

respectively. Also the company’s debt is very low and its ROIC has been 40% on an average

over the last six years.

Kansai Nerolac holds the second position in the Indian Paint market, and is the market leader

in the Industrial Paint Segment, owing to its leadership position in the Automobile Paint

segment. It is the subsidiary of Kansai Paints Ltd., the leading Japanese paint company.

Berger paints has the third position and derives its major revenue from the Decorative

segment. Dulux/Akzo Nobel (former ICI Paints) is the subsidiary of the world’s largest Paint

Company and is at the fourth position. Shalimar Paints is at the fifth position.

Consumer perception about Asian Paints is that it is economical and a highly recommended

by contractors and painters.41% of the respondents prefer Asian Paints and almost 60% of

the market share in South India is captured by Asian paints.

Berger was the second choice among the respondents though it happens to be the third fast

moving brand in south india as per the details collected form the retailers and wholesalers.

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AppendixConsumer Survey Questionnaire

I. Questions being asked to the consumers regarding paints1. Name of the consumer?2. Age of the consumer?3. Average Monthly Income?

<20000 20000- 40000 >400004. Name the Paint Brand that was used for your house?5. Reason for choosing the brand?6. Do you consider the following factors while buying paint?

Brand NameDurability of PaintColour Combinations offered by the brandPrevious User ExperiencePrice of the Paint BrandTechnical Support of Brand at Paint ShopThickness of PaintEase of cleaning wall painted by specific BrandEco Friendliness (Like Lead Free)

7. Choose the paint brands which you prefer

BergerNerolac

Asian paintsShalimar

dulux8. Who among the following are helpful in giving suggestions for your paint purchase

decisions

Painter

Construction Contractor

Paint Hardware Shop

Friends

Family

Advertisement

9. Rate the following factors considered while making purchase decision for paints

Brand NameDurabilityColour combinations

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Previous user experiencePriceTechnical SupportThicknessEase of cleaning the wall

10. Do you think Asian Paints has the following qualities

Brand NameDurabilityColour CombinationsBetter PriceTechnical SupportThicknessEase of CleaningEco Friendliness

11. Do you think Berger Paints has the following qualities


12. Do you think Shalimar Paints has the following qualities


13. Do you think Dulux Paints has the following qualities


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14. Do you think Nerolac Paints has the following qualities


Questionnaire for Retailers

II. Questions asked to the retailers and the wholesalers1. Name of the shop: N.P.Bharamiah & Sons2. Area: Ashoka Road, Lashkar Mohalla3. Brands sold: Nerolac, Berger4. Interior paints

Nerolac Bergerpremium gold(Rs.260) 70% sold Premium emulsion (Rs.250) 15-20%

soldBeauty smooth(Rs.140) only 15-20% sold

Acrylic distemper(Rs.160) 60-65% sold

5. Push strategies employed: discount of 5% on all the paints but discount of 15% given during festivals

6. Functional and emotional aspects: depending on the TV advertisements and the opinions of neighbours

7. Influencer: painters, contractors and only 20% customers are particular wrt the brand

8. Eco green paints are very slow movers with only 5% consumers asking for it

III. Questions asked to the retailers and the wholesalers1. Name of the shop: Salar Masood & Sons2. Area: Ashoka Road, Lashkar Mohalla3. Brands sold: Asian Paints4. Interior paints

Royale luxury Emulsion (higher range Rs.350)

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Premium Emulsion(medium range Rs.220)Tractor Emulsion (economy range Rs.175)Royale Shyne luxury Emulsion(higher range Rs.450)Royale Glitter (higher range Rs.570)

5. Push strategies employed: discount of 5-7% on all the paints but discount of 12-15% given for contractors working with Asian Paints for 5 yrs and more

6. Functional and emotional aspects: almost 60% of the market is captured by Asian Paints, so the consumers prefer a well known brand

7. Influencer: painters, contractors and 50% customers are particular wrt the brand8. Asian Paints was the pioneer in lead-free paints and is a market leader in the whole of

south India

Pictures

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