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SITUATION ANALYSIS Asian paints is the market leader in the organized paints sector. But increasing competition and dealer loyalties a concern for Asian Paints Lack of awareness among customers about paint brands. Role of influencers like painters, dealers is high. Customer involvement in paint selection at the retail shops is low Traditional paints and hardware stores lack the ambience to attract the customers as well as the 2nd generation businessmen. Modern trades seem to be an emerging opportunityCASE ANALYSIS METHODOLOGY Industry Analysis Competitve Analysis Primary Research Analysis of the business problems Recommendations
INDIAN PAINT INDUSTRYDynamics: Estimated market size of INR 170 Billion and growing at a CAGR of 15% Indian Paint industry Top 5 companies form 80% of sales in the organized sector Decorative Industrial (including automotive) Asian Paints growing over 15% and has market share of around 53% in organized sector High growth in emulsions and exteriors 25% Increasing customer involvement in painting process over the yearsDrivers: Boom in residential and commercial projects 75% Increase in disposable income and need for ‘Showcase Homes’ Shorter repainting cycles Increasing penetration in rural marketsConcerns: Rising prices of raw materials Market share of major players Slowdown in the economy Asian Paints Berger Increasing advertisement and promotion spends due to intense competition Kansai Nerolac ICI (AkzoNobel) Others Unorganised sectorCharacteristics of the supply chain 32% 35% 5% 11% 6% 11% Source: Company,BCCIR
COMPETITIVE LANDSCAPE Company Strength Market leader in the paints Strong in premium end Focused on enamels and lower Leader in Industrial industry paints/emulsion end paints paints, with half the sales coming from auto industry Major Brands Royale luxury Velvet touch trends, Velvet Illusions, Silk, Breatheasy, Impressions, Eco Clean, Beauty emulsion, Premium touch, Guardian, Dulux Super Rangoli, Weathercoat all guard, Gold, Excel, Lustre, Suraksha emulsion, Tractor, Apex Smooth, Weathershield, Prom Luxol, Bison, Walmasta Ultima, Ace ise, Supercote Distribution ~27000 5500 14000 11000 network (dealers) Dealer Margin 2.5-3% 4-6% 4-6% 5-7% Modern Stores Colour Ideas , Colour with Dulux Decorator Center Berger Paint Center Nerolac Color Stylers Asian PaintsCompetitors tinting machine Financial comparison of major players
Customers visiting the shop Customer colour selection behaviour Series1 50% 35% 45% 30% 25% 15% At the shop Pre-decided Enquiry House owners Painters House owners + Painters• The number of home owners visiting the paint shop has increased over the • Almost 45% of the customers come to the paint shop having years pre-decided the colour and brand they want• 35% of the owners visit a paint shop along with a painter • 30% of the customers either are undecided of the brand or change the brand at the shop based on dealer recommendation• Only 15% of the house owners visit the shop alone • Insight: The decision making power of customers in terms of• Insight: Though the customer awareness in increasing due to advertisements brand and colour selection is increasing due to the ease of and other promotional campaigns, still there is high dependency on the painter availability of shadecards , colour books and online tools CONSUMER CHARACTERISTICS Base Decorative coating Premium Medium Popular Buyer characteristic Up market buyers, achiever, quality & High income group & Upper middle Middle class & rural market, fashion Seeker class, Socially conscious mostly low income group Key purchasing factor Quality Quality and shades Cost Research & Evaluation Brand loyal Brand loyal + Cost + variety seeking Cost Purchase Company’s Authorized dealer paints the through dealer paint or purchasing Packet or paint can customer house paint can of 1,2, 5, 10, litre Post Purchase A warranty period for some years Limited or no warranty No warranty
“Asian Paints has the best supply chain and I get all my orders on time. Also I get printed copies of my billing on time via mail and courier. Hence account reconciliation is not a bother” - Owner, Malanad Hardwares, Kozhikode (Asian Paints PC) “I do more than 10 crores business for Asian Paints annually and expect that I am given exclusive products. I get higher margin in new brands” - Owner, Fashion Paints, Cochin (Asian Paints SPPC) EXISTING LOYALTY PROGRAMS Contractor/Painters schemes (point based schemes) •Painter meets are conducted to create awareness on new product launches Dealer Loyalty program •Masterstrokes loyalty scheme •Golden Brush Award (GBA) : contractors doing 20kl business annually •Bundle of benefits are given as per club annual targets •Super Premium Applicator(SPA): contractors doing 40kl business annually •Annual foreign trips (Colour Merchant program) •Monthly scheme discounts •Invited for Corporate dinners with family •Recognition for work in the form of trophies and certificates Additions to the existing loyalty program •Shop branding and merchandising •Exclusive products to be given to big dealers so that they can make extra margin •Promoting secondary sales through colour consultants during the initial launch period •Central order processing service (COPS)- professional call center •Dedicated salesperson such as a developer or a Relationship officer to be given to to help avoiding calling the depots for order placing generate leads and improve secondary sales •Frequent training programs for painters associated with the dealers •Upgradation to colour ideasRationale: The existing open network policy has been Asian Paint’s strength. The loyalty programs are clearly defined as per different clubs. Thehigher the sales, the higher the dealers gets more rewards. This is an incentive for small dealers to increase their shop share with AP. Howeverproduct exclusivity can be given to big dealers to help them gain additional margin. This can be during the initial few months of product launch
THE CHANGING CONSUMER LANDSCAPE Boom in Indian Less India a young country Housing Sector: Seasonality Rise in Income India has more than 50% of its population below the age of 25 and more Increasing urbanization, cheaper About 65 per cent of the Lifestyle based spending by demand for decorative paints than 65% below the age of 35. It is housing loans and a shift from Indian middle class is helping stems from repainting. Rising expected that, in 2020, the average age semi-permanent to permanent decorative segment of this aspirational levels, Shift in the industry. Contemporary wood of an Indian will be 29 years. housing structures have been driving growth in decorative perception of paints as having finish formulations are Young India means, people have started paints segment, which a protective value rather than replacing the more traditional investing in a house much earlier constitutes 70% of the $2 billion a mere decorative have way and exterior emulsions the average age of the paint buyer has paint industry in India diminished the impact of take over from cement paints. gone down from 41 years in 2005 to 38 in seasonality 2010 MODERN RETAIL: THE WAY FORWARDReasons:•Modern trade is on a upward curve and is expected to boom inthe future as well•Big retail chains are increasing their presence by reaching out tosmaller cities•Convenience is the key for customers and “All in One Roof”malls, hypermarkets are getting maximum footfalls. Source: IBEF, Booz & Co. Analysis Source: Technopak, Booz & Co. Analysis
ASIAN PAINTS: CURRENT MODERN RETAIL FORMATS ASIAN PAINTS SIGNATURE STORE Designed to create an experience with colours and not as a paint sales point Colour Chef: Customers can create unique colour combinations ColourNext: Helps to choose from the latest trend colours Screen Test: Life sized screen to test the customer’s favourite combinations Colour Consultancy: In-house experts to advice on colour combinations CONSTRAINTS FOR EXPANSION ASIAN PAINTS COLOUR IDEAS: Opening up more signature stores would • Designed to to make the paint buying incur high investment for Asian paints experience for the consumer a pleasurable It is difficult to acquire land for such lavish one stores in metros and tier 1 cities • Painted Panels: Panels of Royale play and Colour ideas stores require investment and other emulsions are painted and displayed so shop space from the dealers, which all that customers can touch and feel dealers might not agree to. So expansion is • Colour Consultants: trained colour not easy consultants along with an option to visualise Colour ideas dealers tend to deal with their colour choice on a state of art software multiple brands and are not exclsuive to AP. So ROI is less PROPOSED NEW RETAIL FORMATSTIE UPS WITH RETAIL CHAINS ADVANTAGES FOR ASIAN PAINTS• Asian Paints can tie-up with national retail chains such as Big •Gain from the increased penetration of the retail chains and high customer footfalls Bazaar, More, Star India Bazaar, Spar Hypermarket etc. and •No need to invest in opening new stores regional chains such as total malls, D-mart, N-mart etc. •Easy to connect with the family or female customers facilitating better decision making processADVANTAGES FOR CUSTOMERS•Complete shopping experience under a single roof•Better ambience than traditional paint shops, encouraging customers to touch, feel and understand the brand
PROPOSED NEW RETAIL FORMATS TIE UPS WITH CONSTRUCTION & HOME DÉCOR COMPANIES Lifestyle aspirations are high and the earning capacities are increasingly matching these Companies such as UltraTech, ACC, JK cement are foraying aspirations. People desire for a home that is ultra-plush and has a spectacular appeal. They into retail formats to increase customer shopping want a home with quality and grandeur. experience. The luxury home decor market has seen a huge leap in the past few years. With an Eg: ‘UltraTech Building Solutions’ is tie up between increasing standard of living, most people want a home that will suit their lifestyles. Berger and UltraTech cement Exposure to luxurious living, coupled with peer pressure has given rise to a generation of Asian Paints can become exclusive partner with any of Indians for whom simple living is passé. As affordability for such living is still limited, this is a these companies which will open up new avenues of sales small group, which will continue to grow.Rationale: With the changing lifestyle and customers looking to save time and convenience in shopping, the retail chains have become major attractions. Withpossibilities of FDI opening up very soon, big players like Walmart, Carrefour are waiting to lure Indian customers. So AP’s presence in such stores can give it anedge over its competitors LAYOUT •Customers can get painting consultations from the Asian Paints outlets located in malls like Big Bazar, More, Spencers, Spar Hypermarket etc •These stores in Retail outlets will offer detailed information on the entire line of paints and stains, as well as paint colour selection tools, professional services, and educational programs. •All these stores will be stocked with a wide variety of color chips and fan decks, specialized lighting, and numerous publications on color and design. Rationale:. Since women avoid going in normal hardware shops, these outlets will also help in increasing the Involvement of women in paint buying. The retail shop becomes a one shot solution for all sort of buying for the household, paint being one of them
ASIAN PAINTS: COLOUR STATIONS Free, Personal Home Colour Help at Our Colour Stations: • Get free, personalized home colour and design tips from a colour expert at our Colour Station, located at shopping malls, airports etc. • The colour experts at Asian Paint’s Colour Stations will provide you with a complimentary 30-minute paint colour consultation for your homes interior or exterior and help you find the best colours for your home • Plus, any paint purchased through our Colour Stations will be shipped directly to you, free of charge. • What can we match? If you have a flat sample of a colour, a piece of fabric, carpet, paper, wood, a tile or a piece of existing paint - your local Stockist (with a Spectrophotometer) can match it. The number of paint colours you can have is almost endless. Engaging The 2nd Generation Retailers: Development of a Content Management System An online content management system which can be accessed by the dealers The system will contain the information of all products in a digital format . All information regarding the price, tinting formula, SKUs etc. will be provided. Colour shades will also be provided Apart from the information, there will be various graphical user interfaces which will provide real time information. It would be more like an application protocol interface where Asian Paints will provide a panel where they can view all data. They can also see the inventory of each of the paint . 2 to 3 virtual depots will be created which will represent the different depots and the stock they hold will be visible. The benefit of the above CMS system will be faster replenishment of orders and convenience.Poor ambience, unhygienic environment, inventory pile ups, frequent arguments with painters, lack of technology usage are some of the reasons for the industrybeing unattractive for the younger generation.Asian Paints can upgrade their key accounts to colour ideas stores to attract customers as well as 2nd generation businessmen. AP can invest a certain % in the shopto support dealers to upgrade on the basis of their future potential.
CUSTOMER ENGAGEMENT STRATEGIES: PRESENT OFFERINGS CONSULTANCY/PAINT SERVICES TOOLS OTHERSONLINE Colour Scheme PRO : Mobile Home Painting guide: contains videos of App Use photographs from the how to paint, paint procedures etcAsk Aparna: Live chat with an operator gallery or click a new photograph and match with the 1800 odd Painting tips:Colour speak: You enter details about your colors. Share it with friends viaroom, send a recent picture and get guided by in Gmail, Facebook and many other Color Tools: Pdf Files where varioushouse consultant, option of live chat available services gamut of colors are shown in various shades, brands and styleOFFLINE/ PHYSICAL STORES Samplers: 200 ml samples available inForesight Colour Combinations: Visit an Asian select storePaints Colour World retail store which offers thisservice, and furnish a digital photograph(resolution 300-dpi or more) to the dealer.Next, select a three shade combination, for digital Colour Dezigner is an online toolpainting.. for interior and exterior painting projects.. You can choose from aAsian Paints Colour Consultancy @ Home variety of images in our online Library and try different colourProject sales: 2 broad steps combinations on the image to find CUSTOMER FEEDBACK• decision making step - It involves selection of the ones that best suit you save paint product, finish, shade, etc and export your chosen Your VOICE:• The painting step - which involves all activities combinations post your feedback, queries, etc. on any ranging from hiring painting contractors to and all Asian Paints products and post-painting care services. Paint calculator Write away and let us know what’sHome Solutions: Hastle free paintings with trained going on at your end.painters, 1 year warranty no hidden Search for a topic OR browse Categoriescost, supervised painting, The wall fashion range of VIEWthemes offer 21 different signature looks for Complaints, Queries, Appreciation, andvarious rooms. GIVE FEEDBACK. New strategies + tools proposed in the next slide
IMPROVING CUSTOMER INVOLVEMENT PULL CONVENIENCE AND MOBILITYCOLOUR ON DEMAND Asian paint Trendz 2013 colours a new collection, will be painted on hoardings, walls, boards at malls, airports, movie theaters etc. Below each colour will be a QR code. Customers have to scan the QR code with their smartphone to get the name and code of the colour They can take this to any asian paint store be it a colour station or a colour world and ask for the colour, get price details etc.BRING YOUR OWN COLOURSIf you like any random colour around you, just take a snap of it with yourmobile phone and bring it to the nearest Asian paints retail to buy, match orto get a tipNEW FEATURES IN COLOUR SCHEME PRO APP NEW FEATURES: WEBSITEStore Locator: Nearest store locator be it colour stations, colour ideas or MY PERSONALITY COLOUR QUIZcolour worlds using GPSCustomer feedback: Add the Your Voice feature present in the website One will be asked 6-7 questions related to what one perceives himself, what others perceive, how one will behave in different situations, preferences etc.RATIONALE These questions are predefined with a specific answers. The outcomes will be Predicted CAGR of 39.2% from 2010-16 different personality with colours specified /suggested for each for eg. personality The current market size is 56.5 million USD and is expected to grow to calm 125 million USD in 2013 huge rise Every customer spends more than 2.5 hours per day with their handset 900 mobile users in India in 2012 estimated to grow by 26% in 2013. 70% of the mobile users metros and tier I cities often customers are not aware of the latest colour trendz which will basically be a collection of most popular colours Strategic placing in airports and malls The newly launched colour stations will be placed in malls and airports.Purpose served: 1ST ENGAGEMENT THEN CONVERSION
NEW FEATURES: WEBSITE COLOUR TOOLBAR An interactive web-based tool that allows you to select any online image and instantly identify the colours contained within the picture. Create a profile at www.asianpaints.com/colourtoolbar and then add the “Colour toolbar” bookmark to your internet browser toolbar. This bookmark allows you to identify up to 20 Asian Paint colours represented in online photos simply by scrolling over the image. photo and colour palette can be added to your Colour Toolbar!! profile, can be shared or printed. PURPOSE SOLVED: CUSTOMER ENGAGEMENT which leads to better brand perception. The pic to the right shows the feature PRESENCE ON SOCIAL MEDIA Social media is an opportunity that can no longer be ignoredAccording to Forrester Research 55% of consumers want ongoing conversations with companies and brands. 89% said they would feel more loyal to a brand if they wereinvited to take part in a feedback group. We as a team suggest some SOCIAL MEDIA STRATEGIES AND EVENTS TO DRIVE LOYALTY, ENGAGEMENT and REVENUEWe suggest nothing ground breaking; just extending the services available on web onto Facebook It is essential to Negative word-of-Create new apps on Facebook for each of the following: engage with mouth spreads Customer Feedback: YOUR VOICE easy and convenient customers to fast especially in Colour speak: Online chat with consultant attract new the social media Online appointment with colour consultant @home services customers as well and it is essential Colour Dezigner : on Facebook also drives engagement as to understand to engage Colour calculator the needs of proactively with Sampler + Store locator: One can choose samples and know the nearest stores or just customers such customers enter his/her zip code to get the nearest Asian paint store Painting tips + colour tools + home painting guide to be clubbed under one app THE VALUE OF SOCIAL MEDIA??USE SOCIAL MEDIA to announce new “Color Collections” , new products, new retail stores Social media should not be isolated or stand alone. We mustor colour stations or to hold new contests to drive customer engagement Integrate all of our marketing tools to work TOGETHER and even pass through each other