CONTENTS

TOPIC TITLE 1. 2. 3. 4. 5. 6. 7. 8. 9.
10 11 12 13 14 15 16 17

Preface Acknowledgement Declaration of the Candidate Certificate Introduction of Asian Paint History of Asian Paint Scope of the Study Limitation of the Study Research Methodology Market Segmentation Company Comparison Data analysis & Interpretation Swot Analysis of Asian Paint Findings Suggestions & Recommendation Conclusion Bibliography

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Questionnaires

INTRODUCTION
A major focus of channel of distribution is delivery. It is only through distribution that public and private goods and services can be made available for use or 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 Asian 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 They help in the proper arrangement of routes of transactions. They help in the searching process. They help in the sorting process.

in the following terms: of the 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). 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

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 the information 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 goods, which in turn enables them to meet customer demand at vary moment it arises. HELP IN PRODUCTION FUNTION: The producer can concentrate

on the 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 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 than one 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

SOLE-SELLING AGENT/MARKETER: when a manufacturer prefers to stay out of the marketing and distribution task, he Asian Paints points a suitable agency as his sole-selling agent/marketer and entrusts the marketing job with him. A soleselling agent or a marketer is usually a large marketing intermediary with large resources and extensive territory of operation. He will be having his own network of distrinutors/stokists/wholesalers, semi-wholesalers and retailers. He takes care of most of the marketing and distribution functions on behalf of the manufacturer. Obviously, a sole-selling agent/marketer will earn a large margin/commission compared to other types of intermediaries. C & F AGENTS (CFAs): In many cases, manufacturers employ carrying and forwarding agent, often referred to as C & F Agents, or CFAs. The CFAs can be describe as special category wholesalers. They supply stocks on behalf of the manufacturer to the wholesale sector or the retail sector. Their function is distribution. Their distinguishing characteristic is that they do not

resell products, but act as the agent/representative of the manufacturer. They act so behalf of the manufacturer and as his extended arm. In essence, they are manufacturers branches. WHOLESALER/STOKIST/DISTRIBUTOR: A wholesaler or stokist or distributor also a large operator but not on a level comparable with a marketer of sole selling agent, in size, resources, and territory of operation. under the The wholesaler/stokist/distributor 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, semiwholesellers 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/semioperates marketer-

soleselling agent, where such an arrangement is used by the

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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. 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 TWOWHEELER with major emphasis on its sales and marketing strategies involve the following steps:

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: 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.

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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.

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B. Primary data: Collection of primary data was conducted by visiting the people personally for the preparation of the report. 2. Research approach: It means the way by which the information was collected. Visiting the various places of Delhi, getting the questionnaire filled by different individuals. Beside this, frequent visit to the showrooms of the company was of great help to conduct the analysis and research work. 3. Contact methods: Instrument or Data collected Forms: It is the method by which data is gathered. It could be done through various instruments like questionnaires, observations, getting information from the staff members of the agency, contacting to the motor mechanics was sufficient enough to conduct the study. 4. Collection of information : The primary information was collected by faceto-face and direct interviews with the peoples and the customers. They provide the relevant

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information regarding the profile of the company as compared to the other company in the Indian market. Most 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

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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 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 COMPARISON OF WALL PANTS Asian Paints, Goodlass Nerolac, ICI (India), Berger, Jenson & Nicholson and Shalimar are the leading companies in the organized in the organized sector. The top six manufacturers account for about 80 per cent of the market in the organized sector in value terms. ASIAN PAINTS is the industry leader, with an overall market share of 33 per cent in the organized sector. Threat of global competition is minimal in the industry. ASIAN PAINTS dominates the decorative segment, with a 38

per cent market share. Goodlass, a Tata

Market Shares of Five Major Players Company Overall 1. Asian Paints 2. Goodlass Nerolac 3. Berger Paints 4. ICI Paints 5. Shalimar 38 14 9 9 6 15 41 10 9 8 33 18 9 9 7 Market share (%) Decorative Industrial

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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 cent market 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

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heavy-duty coatings. The manufacturing facilities of the company for paint products are currently spread over four locations Bhandup, Mumbai, which was established in 1955; Taloja, Maharashtra, where ASIAN PAINTS 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.

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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

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controlled the paint business and were making it impossible for a new paint company to enter and establish itself in the business. 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 with a small share of the existing business. But ASIAN PAINTS strategy, in fact, meant the went in for a strategy that polar opposite of the differed totally from the existing pattern. ASIAN PAINTS s 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.

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ASIAN PAINTS went slow on urban areas and concentrated on semi-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 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 distribution. Over time, ASIAN PAINTS took in the realm of 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.

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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 in the 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 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 semiurban and rural areas. The major companies and their wholesale distributors were not giving any worthwhile 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.

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ASIAN PAINTS Goes Retail Going directly to retail dealers was the next major strategic decision of ASIAN PAINTS in the realm of marketing and totally broke with the distribution. Here too, ASIAN PAINTS

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 hundreds of retail dealers. ASIAN PAINTS Goes in for an Open-Door Dealer Policy 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 the trade, 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 preferred direct contact with

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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.

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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. THE IMPLICATION OF ASIAN PAINTS S

DISTRIBUTION STRATEGY ASIAN PAINTS ASIAN PAINTS squarely. s distribution strategy described in the had to take due note of them and face them

preceding paragrAsian Paints hs had its associated implications.

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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 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

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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 Enlarged Distribution The decision to go to the semi-urban and rural markets instead of confining to the urban markets also meant enlargement of the distribution function. ASIAN PAINTS had to go in for more dealers in order to serve the scattered semi-urban and rural

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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 in for 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 Management Through its decision to go retail, ASIAN PAINTS deeply involved in physical distribution and was getting Retail Implied Deep Involvement in Channel

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Chart Main Steps in the Implementation Process ASIAN PAINTS s created It successfully resolved the a large network of dealers. cost-service conflict in It established a network of distribution. company depots to service the (i) A strong commitment to dealers. distribution cost control without It created a marketing compromising service level. (ii) Effective inventory organization that matched its management distribution. (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 more demanding, compared to the wholesaleroriented system practiced by the other paint companies. While, for companies that embraced the wholesaler-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, ASIAN PAINTS 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

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Extend of marketing territory and complexity of distribution organization are interrelated. The moment ASIAN PAINTS voted for nationwide marketing, it was getting into intensive as well as extensive physical distribution and channel management. ASIAN PAINTS thus had to create a nationwide distributioncum-marketing organization. DISTRIBUTION BECOMES ASIAN PAINTS S

SHOWCASE FUNCTION ASIAN PAINTS s strategies made distribution the most

important elements of its marketing mix. And, ASIAN PAINTS give to distributions all the inputs that were demanded by it. In fact, the rest of this case study is essentially a description of how ASIAN PAINTS managed its distribution activities-how it chalked out its distribution programmes, how it implemented them, what problem it encountered in this task, how it tackled them and how through distribution success, it achieved marketing and corporate success. THE IMPLEMENTATION PROCESS We shall see low ASIAN PAINTS went about the actual

management of the distribution function. The main steps in ASIAN PAINTS s implementation process are shown in Chart 2.

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Let us see the details. ASIAN PAINTS Creates a Large Network of Dealers An extensive network of dealers, and a matching physical distribution infrastructure play a crucial role in the decorative paints segment. This is essential for ensuring easy accessibility of the product to customers. In this, Asian Paints scored over its competitors with a massive network of 15,000 dealers spread over 3,500 towns across the country. ASIAN PAINTS network of 8,000 dealers. has the largest distribution network among all the players. Goodlass has a

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ASIAN PAINTS Establishes a Network of Company Depots ASIAN PAINTS established a large chain of company operated depots/stock points throughout its vast marketing territory, from where the retail dealers could conveniently pick up their requirements. ASIAN PAINTS s basic strategies explained in the earlier sections necessitated a liberal Asian Paints proach in the matter of stock points/depots. It also meant that the depots had to be company operated. After all, ASIAN PAINTS did not have any wholesale distributors to whom the responsibility for operating the stock points could possibly have been assigned. As shown in Exhibit 32.4 established a network of 30 company-run depots, spread through out the country and serviced its retailers from them. The number of depots varied from city to city. For example, Bangalore had just one depots while Mumbai had four depots. The depots typically supplied to about 200-300 dealers.

ASIAN PAINTS

Creates a Marketing Organisation that

Matched its Distribution Intensity Effective control of the large number of depots, each having substantial stocks of 2,000 odd distinct items necessitated a matching marketing organization structure. ASIAN PAINTS set up a marketing organization consisting of four regional sales

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offices, 35 branch sales offices and a large number of sales supervisors and sales representatives spread all over the country. The marketing organization of the company is presented in Exhibit 32.5. It can be seen from the chart that a very extensive structure has been created in the consumer division. It is primarily meant for taking care of the massive distribution task involved in this sector. Each branch sales office has its own depots and the various items are stocked in the depots under the control of the concerned branches. The branches service 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 more that 3,500 big and small cities all over the country. ASIAN PAINTS faced many challenges. Of these, the cost-

service dilemma was no doubt, the most important one. And, that is the aspect in which we are mainly interested in this case study.

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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 extended and distribution cost becomes a significant business parameter. Demand for decorative paints is characterized by seasonality. Demand drops during monsoons and picks up around a monthand-a-half before the festive season. Major part of the sales take place in the second half of the financial year. Manufacturers have to array huge inventories during the lean period. As a result, distribution cost becomes all the more significant. Naturally, distribution cost emerged as a major hurdle that ASIAN PAINTS had to cross. The strategy It went in for a very high service level in distribution. Service level is measured in terms of the number of stock keeping units (SKUs) available in stock as a percentage of the number of SKUs that should have been in stock. ASIAN PAINTS s service level is more than 85 per cent whereas that of other large paint companies falls between 50 and 60 per cent. This meant a further rise in ASIAN PAINTS

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s physical distribution costs. ASIAN PAINTS this cost-service conflict.

had to resolve

In the chAsian Paints ter on Physical Distribution and Logistics Management, we had seen that a cost-service dilemma is inherent in any physical distribution situation. A high service level in physical distribution- in transportation, warehousing order processing and inventories-necessarily means a high level of costs. Every firm has to face this cost-service dilemma and work out a compromise. ASIAN PAINTS voted for a high service level and without compromising 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 actually resolved 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

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Strong Commitment to Distribution Cost Control While following a totally customer-oriented distribution strategy, ASIAN PAINTS ASIAN PAINTS could not afford to ignore the cost angle. was in no position to pass on any additional s marketing

costs to the consumers. ASIAN PAINTS

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 was coming under greater strain in these intensity of competition had also been on increase. Naturally, profitability circumstance. ASIAN PAINTS had to control its distribution

costs in order to maintain its profitability and market leadership. The 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. took the lowest Actually, in inventory cost, ASIAN PAINTS

position in the industry. ASIAN PAINTS s average inventory

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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 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 the outlets. 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 stipulated that each

for survival. It resolved the thorny problem through an innovative dealer incentive scheme. ASIAN PAINTS of its dealers should pay for the supplies within a specified time

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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. 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 maintain the 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 particularhelped it no control distribution costs without lowering the

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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 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

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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 technologies. ASIAN PAINTS has implemented supply chain management software from i2 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 Its Inventory Management and Credit Control
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

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in the business of colours, ASIAN PAINTS ASIAN PAINTS

utilized colour to

achieve differentiation, and none of its competitors could match 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 .

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OBJECTIVE OF THE STUDY

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

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SUGGESTIONS & RECOMMENDATION

It 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 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 to know 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.

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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.

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LIMITATIONS OF THE STUDY

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.

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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
LEADERSHIP THROUGH DISTRIBUTION EXCELLENCE The story of Asian Paints is a story of distribution excellence. ASIAN PAINTS achieved an enviable leadership position did not through the distribution route. While ASIAN PAINTS

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, 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 Vol. 68 Issue.

Systems.

Harvard

Business

Review,

November/December 1990,

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

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