A STUDY ON THE RELATIONSHIP BETWEEN THE BERGER PAINTSAND THEIR DEALERS

By

ABHINESH RJ

RANJITH KUMAR A

SRINITHI R

PROJECT GUIDE

Dr. P. MOHAN SUYAMBURAJPROFESSOR

THIAGARAJAR SCHOOL OF MANAGEMENTMADURAI-625005

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CHAPTER 1

INTRODUCTION AND INDUSTRY OVERVIEW

1.1 INTRODUCTION

1.1.1Nature and scope of project

This project is a market survey, through which the students were supposed toidentify the problems in the existing dealer chain of Berger paints and also to find out whatdrives the dealer market. The survey and analysis was to be taken from the club card dealers ofBerger paints. They have divided highly potential dealers into three categories called the clubcard dealers. The three categories are Gold card, silver card, stallion card.

In the project the students has to sort out the problems faced by the dealers in connectionto Berger paints, find out the main potential diver for paint sales in dealer market, rate Bergerservice and sales person interaction, finally to find out the dealer influence in Berger sales.Analyzing the problem the students has to give solutions to overcome the scenario and tostrengthen the dealer chain.

Hence the project is more like a problem solving program which starts with a formalsurvey.

1.1.2Objective of the Project

This project is aiming to bring out the potential of the dealer and also to provide a SWOTanalysis of Berger with regards to the club card dealers. This is because today Berger is farbehind Asian, Dulux, Nerolac in south Tamilnadu market is concerned more over Nippon istrying to take advantage of the weak dealer network. They have positioned their product inBerger counters with weak dealer link. Berger should make a strategy in regaining the marketshare it has lost to its competitors.

Hence his project would help Berger to identify the problem and to bring in correctivemeasures to gain back its market share. The SWOT analysis would give a platform for Berger towork on to improve their sales. The project will give the students a great opportunity to interactwith the business people.

1.1.3 Implications of the Study

The project helps the students to understand how to improve the company performance inthe market in partnership with the dealers. The student can also find the areas where thecompany needs to strengthen its ground in market. The study would show the manager how thedealer chain partners feel about the company’s performance and service.

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1.2 PAINT INDUSTRY OVER VIEW

1.2.1Brief Description

The Indian Paint industry, estimated to be a Rs.21,000 Cr. industry, has been growing at arate of above 15% for the past few years. The organized players of the industry cater to about65% of the overall demand, whereas the unorganized players take care of the remaining 35%, invalue terms. The unorganized players mainly dominate the distemper segment.

The industry consists of two segments, namely

Decorative segment – caters to the housing sector and Industrial segment - consists of powder coatings, floor coatings and other

protective coatings catering to the automobile, marine and other industries.

In the domestic market, Decorative segment accounts for 70% of the total demand forpaints whereas the industrial segment accounts for the remaining 30%. Globally, the demand forpaints is almost equally distributed, where both the segments account for close to 50% ofdemand.

The paint industry volume in India has been growing at 15% per annum for quite someyears now. As far as the future growth prospects are concerned, the industry is expectedto grow at 12-13% annually over the next five years.

1.2.2 Industry Structure Indian Paint Industry is over 1000 years old. Its beginning can be traced back to the

setting up of a factory by Shalimar paints in Calcutta back in 1902. Till the Second World Warthe industry consisted of small producers and two foreign companies. After the war, the importsstopped which led to the setting up of manufacturing facilities by local entrepreneurs. Still theforeign companies continued to dominate the market, which in a way is the current scenario aswell. The initial decades saw the complete dominance of British Paint companies such asGoodlass Walls (now GoodlassNerolac), ICI, British Paints (now Berger Paints), Jenson &Nicholson and Blundell &Eomite. The Indian Paints sector is valued at Rs 6,800 crores in valueterms and is very fragmented. The current demand is estimated to be around 650,000 tonnes perannum and is seasonal in nature. The per capita consumption of paints in India stands at 1.0-kgp.a. as compared to 1.6 kg in China and 22 kg in the developed economies. India's share in theworld paint market is just 0.6%.

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Figure 1: Structural representation of paint industrySource: http://stockshastra.moneyworks4me.com/

The Indian Paint industry can be divided as:

The organized sector comprising of large and medium size units

The unorganized or the small scale sector.

There are now twelve players in the organized sector with a market share of 70%. This isin contrast to the 55% share that the sector commanded a few years back. Major companies inthis segment include Asian Paints (44% market share), Berger Paints (17% market share), ICI(12% market share), GoodlassNerolac (15% market share), Jenson Nicholson (6% market share),Shalimar Paints and Rajdoot Paints. The organized sector has grown at a CAGR of 11.5% in thelast five years. The unorganized sector comprising of over 2000 units has a combined marketshare of around 30%. The major players are Asian Paints, GoodlassNerolac, Berger, ICI andShalimar. Recently, world leaders like Akzo Noble, PPG, Dupont and BASF have set up base inIndia with product ranges such as auto refinishes powders and industrial coatings. Kansai Paintsof Japan, which entered into collaboration with GoodlassNerolac in 1984, is now the holdingcompany for GoodlassNerolac with 64.52 % equity holding. PPG has a joint venture with AsianPaints to manufacture industrial coatings. Jenson & Nicholson and

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Snowcem India are no longer active players because of dwindling sales in recent years. Inthe 1990s, helped by a growing economy, the paint industry had recorded a healthy growth of12-13 % annually. This was mainly due to a drastic reduction in excise from a staggering 40% to16%. However, the growth was restricted in 2000-03 to single digits. There was a revival in2003-2004 with a robust growth of 13%.8.The per capita consumption of paint in India is 700grams against 19 kg in the U.S., and 2.7 kg and 5.8 kg in other developing countries like Chinaand Brazil. As the consumption goes with affordability, the low Indian figure is not asurprise.High excise duties, low technology and low capital costs for production led to theincidence of a high number of units in the small scale sector. However, since 1992 thegovernment has been consistently lowering duties from 40.5% in 1992 to around 16% currently.This has led to lowering of price differential between the organized and unorganized sector.Moreover the paints sector was also allowed to claim MODVAT credit on petro-based products,thus lowering the excise incidence further.

Industrial Paints

Industrial paints comprising 30% of the market include automotive paints, highperformance coatings, coil coatings, powder coatings, marine paints and general industrialcoatings. The automotive segment is further bifurcated into OEMs and auto refinishes. Theautomotive and general industrial coatings occupy top slot in terms of production.GoodlassNerolac is the market leader in this segment.

Chart 1: Industry paint Demand chart

Source: www.equtiymaster.com

Demand for these paints is relatively price inelastic, but is prone to businesscycles and depends on industrial and economic growth. Major end user industries includeshipping, capital goods, white goods and heavy industries.

The industrial paints segment due to specialized technology and high capital expenditure attractsfewer players. Most Indian companies have tied up with or are in the process of tying up withinternational paint majors to have access to the latest technology. A tie-up with a global paintmanufacturer also enables the domestic company to supply to local customers of its partner. Forexample, GoodlassNerolac is a majorsupplier to Maruti Suzuki because of Kansai, its Japanese

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collaborator and Suzuki relations. It is for the same reason that Asian Paints (tie-up with PPGIndustries, USA) is a major supplier of paints to Opel Astra.

COMPANY COLLABORATION AREA OF COLLABORATION

BERGER PAINTS Herbert sons GmbH;

Valspar Corp. Inc,;

Teodur BV

Auto coatings;

Heavy duty coatings;

Power coatings

ASIAN PAINTS PPG Ind. Inc.,

Sigma coatings,

Nippon Paints

Electro deposition primers;

High performance coatings,

Power coatings

GOODLASS Kansai paints Auto & Industrial coatings

ICI(India) ICI plc. Auto refinish

J & N Herbert sons GmbH Auto coatings

Table 1: Company collaboration detail

Source: Company website

1.2.3 Drivers to the growth of the Paint Industry

1. Increasing level of income and education – The increasing proportion of young populationalong with increasing disposable incomes is leading to a change in consumer habits. The Indianeconomy is shifting from a savings economy to a spending economy. With more income at theirdisposal, people are now ready to pay for better products and paint is no exception.

Educated consumers are more brand conscious and seek value in what they consume. Thus, paintcompanies offering value-added features like non-toxicity, weather protection, texture, eco-friendly production, etc. will attract more demand. These value-added products enable themanufacturers to earn a better premium as compared to the regular paints, thus offering highermargins.

2. Increasing Urbanization: Urbanization is leading to a shift from temporary houses topermanent houses. Urban houses are well-designed in its interior as well as exterior aspect. Thiscalls for more houses being painted using medium and premium paints. For urban houses,interior design is becoming a fashion statement and a lot of paint is used to decorate the interiors.This will lead to an increase in the per capita consumption of paint which will increase theoverall demand of paint. Urbanization also brings more nuclear families. More nuclear familiesmean more number of houses even for the existing population thus further driving the demand.

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3. Increasing share of organized sector: Decrease in taxes on key raw materials will improve theposition of the organized players. The Organized sector is expanding its distribution network andadopting the installation of tinting machines at retail outlets. These tinting machines offer a widevariety of colour shade options to choose from. The unorganized players are not in a position tooffer such facility as it is comparatively capital intensive. Shift in use, from distemper segmenttowards premier segment is also shifting market share from the unorganized sector to theorganized sector.

4. Development of the Realty, Automobile and Infrastructure sector:The growth of the paintindustry is largely dependent on the development of the realty and housing sector, as decorativesegment generates about 70% of the total paint demand from this sector. The Automobilesegment generates more than two-third of the demand for Industrial paints, and hence is thegrowth driver for Industrial Paints. The Infrastructure segment creates direct demand for paintsas well as creates indirect demand through supporting the growth of the realty, automobile,FMCG and other industries where paint is used.

The growth potential in the above 3 sectors is immense, the paint industry being dependent onthese 3 sectors is expected to grow along with them.

5. Availability of financing options: Easier housing finance and auto finance is expected tofavour more people to buy houses and travel in personal vehicles. This will drive the growth ofhousing and automobile sector, of which the Paint industry will get its share.

6. Increasing Penetration in the Rural Markets: Paint usage in rural areas is generally in thedistemper segment, hence dominated by the unorganized players. Demand in rural areas isdependent on agriculture, which is dependent on the monsoons. With the development ofirrigation facility, the dependence of agricultural output on monsoons will be on a decreasingtrend. Also, with the modernization of agriculture and accompanying development of rural India,consumer preferences are expected to improve. Paint companies are expanding their distributionnetwork in rural parts of India, which is a relatively untapped market for the organized players.These factors supported by the increasing penetration of the paint companies will help drive thedemand for paints.

1.2.4 Top Paint Brands In India

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Market share of companies

Chart 2: Market share of companies

Source: www.equtiymaster.com

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CHAPTER 2

COMPANY PROFILE

2.1 COMPANY PROFILE OF BERGER

Lewis Berger who laid the foundations of brand Berger way back in 1760 in the UK.With modest beginnings in India in 1923, today, Berger Paints India Limited is the secondlargest paint company in the country with and one of the fastest growing paint company.Bergeris an 88 year old painting company in India . Starting out as Hadfield's (India) Limited, it hadjust one factory in Howrah, West Bengal. By the close of 1947, Hadfield's was acquired byBritish Paints (Holdings) Limited, UK and came to be known as British Paints (India) Limited.In 1983, the name of the Company was changed to Berger Paints India Limited. Currently, themajority stake is with the Delhi basedDhingra brothers. Berger Paints has established itselfthrough a long course of time. Berger paints today From an annual sales turnover of Rs.25 lakhs,business revenues today are in excess of Rs.3,600 core on a consolidated basis.

Headquartered at Kolkata, with 11 strategically located manufacturing units and about 170 sales offices( all including those belonging to the Company’s own division andsubsidiaries). The company also has an international presence in 3 countries. The employeestrength is about 2,500 and a countrywide distribution network of 15,000+ dealers, Berger isacclaimed as a game changer in the sector with a vibrant portfolio of paints and tailor-madecustomer services in every paint segment. Committed to being a responsible corporate citizen,Berger proactively pursues strategies both within and without that bring multiple societal andenvironmental benefits to all stakeholders.

History

The name Berger or Lewis Berger is today synonymous with colour worldwide. Butactually the origin of the name dates back to over two & a half centuries in England in 1760,when a young colour chemist named Lewis Berger, started manufacturing in Europe, 'Prussianblue' using a secret process that every designer and householder coveted. Mr. Berger perfectedthis process & art of the blue colour, which was the colour of most military uniforms of thattime. Enriched by the imagination of Lewis Berger, the unending quest for creation andinnovation in the world of colour& paints still continues.

The history of Berger Paints India Limited as a company started in 1923 as Hadfield's(India) Limited which was a small colonial venture producing ready-mixed stiff paints, varnishesand distempers setup on 2 acres of land in one of India's first industrial towns close to Kolkata inHowrah, Bengal. Subsequently in 1947, British Paints (Holdings) Limited, an internationalconsortium of paint manufacturing companies bought over Hadfield's (India) Limited and thusthe name changed to British Paints (India) Ltd. The gentleman who took over, as its firstmanaging director was Mr. Alexender Vernon Niblet, an Englishman who was later on followedby Mr. Alfred Godwin in 1962.

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Further in the year 1965, the share capital of British Paints (Holdings) Limited wasacquired by Celanese Corporation, USA and the controlling interest of British Paints (India) Ltdwas acquired by CELEURO NV, Holland, a Celanese subsidiary.Subsequently in 1969, theCelanese Corporation sold its Indian interests to Berger, Jenson & Nicholson, U.K. Thenonwards the company British Paints (India) Ltd became a member of the worldwide BERGERgroup having its operations across oceans in numerous geographies and this marked thebeginning of Lewis Berger's legacy in India – which the company would later take forward toenviable heights. From 1973 the company entered into one of its dynamic phases of businesswith introduction of new generation products in the industrial, marine and decorative segmentsunder the leadership of its first Indian Managing Director Mr. Madhukar.

Year 1976 was another turning point in the history of the company when the foreignholding in the company was diluted to below 40% by sale of a portion of the shares to the UBGroup controlled by Mr. VittalMallya. The reins of the company were taken over by Mr. Biji KKurien as its Chief Executive & Managing Director in the year 1980. Finally in the year 1983,the British Paints (India) Limited, changed its name to Berger Paints India Limited.

The entire 80's & 90's saw the launch of many new products from company's stable suchas premium emulsions and high quality acrylic distempers. The COLOUR BANK tinting systemwas launched through which the consumer could select from a range of over 5000 shades.

Again the fortunes of the company changed hands in 1991 with UB Group's stake in thecompany bought over by the Delhi based Dhingra brothers Mr. K.S.Dhingra& Mr. G.S.Dhingraand their associates of the UK Paints Group. Presently Dhingra’s control a majority stake ofalmost 73% in Berger Paints India Limited, a professionally managed organization,headquartered in Kolkata, Mr. Bose, a 10-year company veteran, took over as Managing Directoron 1 July, 1994. Completing a challenging 18 year stint at the helm with immense success, Mr.Bose retired on 30 June, 2012, handing over the reign of the company to, Mr .Abhijit Roy. Todaythe stewardship rests with the current Managing Director Mr. Abhijit Roy.

VisionTo be the most admired Indian paint and coating solutions company with globally recognizedcompetencies.

MissionTo maximize shareholder value by developing and delivering innovative and best solutions forour customers, consistently outperforming our peers and providing a dynamic and challengingwork environment for our employees.

COMPANY QUALITY POLICY

Establishing a Quality Management System conforming to International Standards.

Institutionalizing a culture of "Getting it Right, First Time."

Upgrading our Technology continuously to meet expectations of customers.

Planned and structured training and development programs for the employees

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2.2 MILESTONE

1920s On December 1923, Mr. Hadfield, an Englishman set up Hadfield's (India) Ltd, a small paint company in Calcutta.

1940s James Wilfred Adamson, founder of the British Paints Organization, embarked on his career as a traveling salesman.

1950s Sales offices were opened in Delhi and Mumbaiand in 1951 a depot was started in Guwahati. Sales rose to Rs.6 million in1952.

1960s Mr. R. A. Godwin took over as the Chairman &Managing Director in 1962 and initiated further modernization.

1970s Mr. D. Madhukar took over as the Managing Director in the year 1973.

Table 2: Company milestone detail

Source :http://www.bergerpaints.com/

2.3 BOARD OF DIRECTORS

Table 3:Company Board of director detail.

Source :http://www.bergerpaints.com/

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Chairman Mr. Kuldip Singh Dhingra

Vice-Chairman Mr. Gurbachan Singh Dhingra

Managing Director Mr. Abhijit Roy

Director Mr. Subir Bose

Director Mr. Anil Bhalla

DirectorMr. Gerald Kenneth Adams

DirectorMr. Gurcharan Das

Director Mr. Kamal Ranjan Das

2.4 Competitors Asian is the Market leader in India with nearly 70% market share, followed by Berger with

20% and the followed by Nerolac and Dulux. Hence Berger has competition from these three brandsnationwide. In Madurai market, Asian is the market leader with high market share. Nippon is thecurrently into Madurai market offering a higher margin for dealers. There by becoming an emergingcompetition for Berger.

2.5 BERGER PRODUCTS

BERGER INTERIOR EMULSION VS COMPETITION

Table 4: Berger interior emulsion vs competitionSource: Study material given by the organization at the time of internship commencement

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BERGER EXTERIOR EMULSION VS COMPETITION

Table 5: Berger exterior emulsion vs competitionSource: Study material given by the organization at the time of internship commencement

BERGER ENAMEL RANGE VS COMPETITION

Table 6: Berger enamel range vs competitionSource: Study material given by the organization at the time of internship commencement

2.6 BERGER COLORBANK In Today’s scenario Tinting machine is an integral part of all paint shops Tinting machine is a

necessity for selling of emulsions where any shade could be requested by the customer. Function of aTinting Machine is to dispense colorants into Base can to get the desired color

BENEFITS OF COLORBANK SYSTEM

To the Dealer

1. Minimum inventory and Max shades 2. Customization of shades as per customer requirements 3. No stock out. To the Customer (leading to customer satisfaction) 1. Option to choose from a wide range of shade. 2. Availability guarantee. 3. Perfect reproduction in case of repeat order

COMPONENTS OF A MACHINE

• Dispenser- Used for dispensing the colorants into the base • Gyro shaker- Mixes the colorants and base to make the shade • Computer- Used for viewing the formulations and for controlling the dispensing

Operation

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Figure 2: Colour bank systemSource :www.bergerbd.com

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CHAPTER 3

FIELD STUDY AND DATA COLLECTION

3.1 STUDY OF EXISTING SCENARIO

The project was a market survey targeting the Berger club card dealers. The students wasasked to do this project with dealers confined to Madurai depot.

The students had two day induction program to know about the paint industry, aboutBerger paints, current market scenario and competition, company schemes working in themarket,about colour bank scheme. The first day students learned about the company profile,activities, product varieties, painting methodology, alternate channels, club card dealers, profitmargin fixation, master painter schemes, schemes for dealers.

The students learned about the dealer acquisition process and the benefits a new dealerwould get from Berger for starting a dealership. The students learned about the credit periodcalculation and discount rates. The students learned about the competitors product and theremarket schemes. The students gained knowledge about the sales contributors of paint industry.This constituted Dealers, painters, contractors/engineers and customers.

The students learned the new dealer attracting scheme of Berger and these include thefollowing

Initial investment of Rs. 75,000, which includes an initial investment of Rs. 25,000 for tintingmachine and Rs. 50,000 for products

Once the dealer gives the check for Rs. 75,000, the dealer would be given products worth of Rs. 1,00,000 and a tinting machine worth of Rs.1,25,000

The tinting machine costs Rs.1, 25,000. Dealers have to pay this amount in five yearly installments.

When the dealers pay Rs. 50,000 for products, they would get products worth Rs. 1, 00,000 which includes products given in credit worth Rs. 50,000

The shop space needed is just 200 sq. ft.

One dedicated sales person is needed for paint, whom the company will give adequate training to operate the tinting machine

Credit note will be given at the time of order itself. Depending upon the timely payments of due, dealers could enjoy full credit notes. If the dealers delay the payment, the credit note will be decreased accordingly.

Promotion will be taken care by the depot and staff members of Berger

Adequate promotion programs will be conducted to educate Painters and Engineers frequently

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The students also learned about the profit obtained in Cement, Steel, Tile and other hardware business. The students came to know that profit obtained would be greater in Paint sales than any other hardware business the club card dealers are indulged in.

3.2 Field work

The students were give opportunity to learn the market trends and activities through fieldwork(astall management activity). The students had to do direct interaction with the customers,painters who are visiting a Berger dealer counter. The students were asked to brief the customersabout Berger “Home painting scheme” and Painters about the “Master painter scheme”. Thestudents were asked to do interaction with the dealer to gain knowledge about the dealer’sperception about the brand and current market scenarios.

The students learned that current market scenario for Berger needs reconsideration. Thecustomers of Madurai region are unaware of the brand Berger. The customers are driven by thepainters to choose a brand on their behalf. Though there are some exceptions they constitute avery low percentage of the total consumer potential. The Painters are incentive oriented. Thedealers would look for both profit margin and quality. They expect good relationship andindividual concentration.

The students were involved in conducting a Painter meet along with other similaraspirants. They were asked to collect painter details and also to generate valuable leads forMaster painter schemes. The main aim of the painter meet is to interact with the painters and toearn their loyalty. Painter contribution in Berger sales is a considerable one. Shop meets are alsoconducted frequently to keep them in touch with the company. The students conducted shopmeet in one of the exclusive outlet of Berger paint.

3.3 Field Study

The questionnaire for the survey contained details mostly regarding the existing businessof the dealers and other basic information. Survey was the key to find the details form the dealersregarding the current business environment.

The list of information obtained from the survey is as follows:

1. Name of the dealer

2. Contact number of the dealer

3. Type of products in the counter

4. Key volume contributor for the counter

5. Turnover

6. Berger sales volume

7. Expected increase in sales every year

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8. Profitable product in the counter

9. Inventory

10. Awareness about Berger market schemes

11. Fastest moving brand in the outlet

12. Key driver for the product

13. Ratings for company sales team, service and product quality.

14. Number of master painters in the counter.

15. Feedback about the problems faced by the dealers

16. Potential influencer of Paint product.

When the survey gets over the students would have basic idea about the dealers in the market.How they rate the brand against the competitors, the working of sales team and service of thecompany, the key drivers and contributors that the company should focus on. The problemsfaced by the dealers could be obtained from the feedback this would help to take correctiveactions

3.4 Market Study

The geographical area covered by the students coveredunder Madurai district. Thestudents targeted the dealers under Madurai depot.Madurai which is a relationship market coversaround 25 dealers. The market is very sensitive as dealer’s value relationship. Asian isdominating the market with its wide market presence. Rotation of Asian if faster than Berger thisallows the dealers to have more liquidity. Multi branded outlets enjoy the availability of profitmargin from different brands. The highest profit margin is provided by Nippon which isemerging as a major competitor for Berger.

Exclusive show room dealers are good contributors but they find it difficult to convert thecustomer mentality which is fixed on to the bran Asian. Berger is trying to retain its dealers byimparting a colour bank scheme. Painters and dealers influence the sales in the market. Paintersare provided with schemes and tokens in par with their contribution. Dealers are provided withvery good profit margin. But customer awareness of Berger is very low in the market.

From the market the students could find the marketing system of Bergerthe flow of product isindicated by the flow of arrow.

Product

Product

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Depots Customer

BERGER

Product Product

Figure 3: Marketing system

Source : Field observation

CHAPTER 5

RESEARCH METHODOLOGY

5.1Data Collection

Primary Data

Primary data consist of information collected from market through market Survey.Primary data is raw data. The students visited the dealers personally to get the primary data. Areafor data collection included Madurai district. Appointments were fixed before approaching everydealer for mutual convenience. Questionnaire was framed to bring out perceptional and actualdata from the dealer. Questionnaire was constructed based on the requirement of the area salesmanager. Questionnaire was a tool for communication and data collection. Field observationmade contributed for the data collection. Field observations included visualizing the store spaceallocated for Berger product in the outlet.

Questionnaire Survey

Observations

Secondary Data

Secondary data is obtained from the following sources. The students had to go throughthe secondary source to collect information regarding the dealer name, contact number. Theinformation about the sales officers was taken from the company data base. The industrial profileof Berger Paints was obtained from the official website of BPIL. The manager and sales officersgave adequate information necessary for primary data collection.

Web site of Berger paints

Information from organization, sales officers, depot manager.

Questionnaire formation

Questionnaire included 25 questions these were framed by us under the guidance of the area sales manager. The questionnaire was finalized by based on the requirement of the manager.

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Direct dealer Customer

It consisted of turnover data, sales data which were open type questions, ranking questions, likertscale questions and yes or no type which comes under the category of dichotomous questions.

5.2 Samplingtechniques

The samples were the existing dealers under the club card status. There are 3 club card categories they are Gold card, silver card, Stallion card. Dealers are placed under these card based on their yearly sales contribution. There are totally 57 dealers under the club card system

Gold card -1(Sales = 80 lakhs-120lakhs)

Silver card-8(Sales = 50 lakhs-80lakhs)

Stallion card-48(Sales = 20lakhs-50lakhs)

CHAPTER 6

ANALYSIS AND INTERPRETATION

6.1ANALYSIS

6.1.1 Market Observation

The students were given the opportunity to meet the dealers in personal. They had mixedresponses. Every dealer had their own problem. Some were very satisfied by Berger. Theinteraction with the dealers resulted in finding of various problems the need close analysis andimmediate solution. Out of the 57 dealers, 25 dealers are in Madurai and 32 were situated in theup country areas. Among the 57 dealers, 19dealers are exclusive Berger dealers and 38 weremulti branded outlets. These dealers included Alternate channels that were into building needs,tile and other construction material business. A large contribution of the annual turnover isobtained from up country dealers. The contribution of the exclusive dealers is less whencompared to the multi branded outlets.

The common problems faced by the Berger dealers are as follows

Delivery of product is not done on time.

Non availability of the desired products.

No proper implementation of the schemes.

Responses are not as expected.

No upgrading to the shade card.

Unavailability of stock in Berger depot.

Absence of shop meets for painters.

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Difficulty in converting the customer for Berger, because of the lack of awarenesstowards the brand.

Dealers who have mentioned scheme problems are moving towards other brands. TheyBelieve that since Berger is a developing brand it needs to give more margin than Asian. Sincethe circulation of Asian is more than Berger. Due to this reason the margin given by Berger isnullified by the product movement of Asian. The hidden requirement for majority of the dealersis the profit margin. They also demand a good relationship to be maintained between Berger withthe dealers. Dealers see the prior mentioned as the responsibility of Berger.

Dealers expect lot of support from Berger in the form of awareness creation, paintertraining program, market supports, scheme development. There are many potential dealers whocontribute very less towards Berger sales.

Out of the total number of master painters with the club card dealers less than 1/5 areBerger master painters. This means Berger still has a lot of potential painters who have to betargeted and convinced to buy its paint product.

Share of Berger master painter V/S Competitor brand master painters among club carddealers

Chart 3: Distribution of Master painters among club card dealersSource : Field study conducted during months May-June 2014

Many of the multi branded outlets in Madurai region give a low store space for Berger.Nippon focus on the top sales generating dealers to push their product though it lags behind in

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quality dealers do not mind this because of the large profit margin. The painter and dealer meetsconducted by competitor brands are more frequent than the ones conducted by Berger.

Berger has a very strong sales force. But there is a presence of communication betweenthe sales teams. It would be better to conduct meetings among the sales team to share the leadsamong them. Home decorative team may have a project lead or visa-versa. It would be better toshare lead to take necessary action.

Dealer remark is that Berger does not provide painter scheme for a particular store.Dealers are expecting more product variety.

Highest Sales contributor for Berger paints in club card dealer store

Thestudents were asked to find out the highest sales volume contributor for the counter.The dealers made it evident that the highest volume contributor is the painter followed bycustomers and engineers. Builders influence is very low considerably negligible. All the dealershave contact with very high number of painters who intern contribute to their paints sales. It isthe painters who bring customers to the particular store. The painters are attracted towardsschemes, incentives and commissions. Berger has painter schemes which are effective whencompared with the competitive brands. But still, Berger has lot of potential painters who need tobe pulled into the schemes.

Chart 4: Highest Sales contributor for Berger paints in club card dealer store

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Source : Field study conducted during months May-June 2014

Highest sales contributor preferred bythe counter Stallion Silver Gold

Painter 22 5 0

Customer 18 0 0

Engineer 9 2 1

Total 49 7 1

Table 7: Highest Sales contributor for Berger paints in club card dealer store

Source : Field study conducted during months May-June 2014

Fastest moving brand in the club card dealer counter

Chart 5: Fastest moving brand in the club card dealer counterSource : Field study conducted during months May-June 2014Fastest moving Paint in multi branded outlets among the club card dealers

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Chart 6: Fastest moving paint in multi brandoutlet among the club card dealersSource : Field study conducted during months May-June 2014

The survey was done among the club card dealers so the response for the fastest movingbrand resulted in a uniform choice Berger. The result in multi branded outlet remained the same.Berger has a greater profit margin than all its competitors except from that of Nippon. ButNippon is not prevalent in the geographical areas of our survey. Berger provides its dealers withmany incentive packed schemes. Among the club card dealers Berger is mostly preferred for itsprofit margin and quality. Berger has to concentrate on multi branded outlets to overcomecompetitor threat.

Main driver of paint sales among the club card dealers

Chart 7: Main driver of paint sales among the club card dealersSource : Field study conducted during months May-June 2014

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The reason for paint sales among the club card dealers is profit margin and a combinationof quality with a good profit margin. The market is mainly driven by the amount of profit marginand quality of the product being sold. Customers come looking for quality product. While thedealers mainly resort to the amount of profit they get. Dealers who are the main contributors forBerger sales need to be focused to improve Berger sales. Attractive profit margins should begiven for dealers.The most important Paint purchase influencer

Chart 8: product purchase influencer in club card dealer outletsSource : Field study conducted during months May-June 2014

The analysis gives the idea about the product purchase influencer for paint in the outlets.It is found that painters are the most important purchase influencer for these club card dealers.The customers are mostly influenced to buy a particular brand of paint by the painter. Customerawareness in this geographical area for paints is considerably low. Painter has to be given moreattention and preference to improve the sales of Berger in the club card dealer outlets.

Percentage of sales contribution towards Berger in terms of Geographical area

Counters Number ofcounters

Paint annualturnover in lakhs

Berger annualsales turn over inlakhs

% contribution of salestowards Berger

Inside Madurai 25 5057 833 16.47

Up country counters 32 2220 921 41.48

Table 8: Percentage of sales contribution towards Berger in terms of Geographical areaSource : Field study conducted during months May-June 2014

The above table gives the contribution of the club card dealer toward Berger paint sales.It can be seen from the table that the contribution of the dealers are very low. They contributevery less towards Berger paint sales. Dealers in Madurai contribute less than 20% of their totalturnover to Berger paint sales were as up country dealers contribute less than 45% of their total

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turnover to Berger paints. It can be inferred that more concentration is necessary to the 25 dealeroutlet which gives a very low contribution.Percentage of sales contribution by the club card dealers

CountersAnnual Paint turnover in Lakhs

Berger annual salesturn over in Lakhs

% contribution of sales towardsBerger

Exclusive 515 511 99.22

Non Exclusive 6762 1243 18.38

Total paint sales 7277 1754 24.10

Table9: Percentage of sales contribution by the club card dealers

Source : Field study conducted during months May-June 2014

The above table shows the contribution of Exclusive and Non exclusive dealers towardssales of Berger paints. It is evident that Exclusive dealers give their contribution for Berger sales.On the other hand Non exclusive dealers contribute less than 20% towards Berger sales. Theyhave a large potential for paints sales but they contribute very less to Berger. It is important toconcentrate on these dealers to improve Berger sales.

Percentage of sales contributionby Non exclusive dealers towards Berger paints in terms ofGeographical area.

Non Exclusive dealers Paint annual turnover inlakhs

Berger annual salesturn over in lakhs

% contribution of salestowards Berger

In Madurai 4929 695 14.10

Up country 1833 548 29.89

Total 6762 1243 18.38

Table 10: Percentage of sales contribution by Non exclusive dealers towards Berger paints interms of Geographical area.

Source : Field study conducted during months May-June 2014

The table gives table shows the contribution of Non exclusive dealers in Madurai and inup country side. The contribution is considerably less than 15% and 30% respectably. Thedealers have very high potential for paint sales but contribute less toward Berger sales. This trendhas to change for Berger to become a market leader.

6.2SWOT Analysis

Methodology

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SWOT analysis is framed mainly based on the field observation and response to thequestionnaire from the dealers. Dealers were met in person for this data collection.

STRENGTH

Profit margin for dealers Incentive scheme for dealers Presence of Exclusive dealers Product Quality

OPPURTUNITY Large potential dealer market Dealers expected increase in sales

every year(10% approx.) Competitor master painters for club

card dealers-620 Rural penetration using new Dealer

schemes exclusively for upcountryDealers

WEAKNESS Market awareness of Berger Paints More attractive appeal of the

product No scheduled interaction of Sales

Officer with dealers Reliability in scheme

communication Delivery of product on time Enamel quality

THREAT Dealers may switch over to other

brand due to relationship problem Timely implementation of Dealer

scheme with respect to competitors Low Berger paint sales conversion

ratio by the dealers Dealers are unwilling to convince

the customer towards buying Bergerbecause they fear that the customerswill move away to another dealer

Nippon acquisition of majordealers.

SWOT analysis would give the positive, negative and also the areas of improvement.This analysis is based on the field study made during the internship program. This analysis isrelated to the areas covered by Madurai depot.

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CHAPTER 7

RECOMMENDATIONS AND CONCLUSIONS

7.1 RECOMMENDATION

Proper Journey cycle visit should be scheduled for sales team to enhance interaction withthe dealer, also to explain about the current market schemes and push them to buy Bergerpaints. Sales officer interaction could help solve problems related service, productavailability and also lead generation

Painter meet in dealer outlet this would enhance the dealer relation. Dealers expect suchinvolvement from the company. This would also enhance the painter’s involvementtowards buying Berger paints.

On store activity for dealers and painters. We could conduct activity to enhance thetechnical knowledge of the product. On store activity should focus on methodology ofproduct usage and their USP so that it would be easy for dealers to convince customers.Painters could benefit with technical knowledge of the product.

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Special store schemes for non exclusive dealers inside Madurai. Madurai outlets arecontributing a very percentage of their sales to Berger. Implementation ofindividual/special Store Schemes would increase the sales contribution for Berger.

Festival schemes/ Seasonal schemes for both upcountry and Madurai dealers. This is toimprove the Berger sales in the outlet. Dealers are influenced by profit margin. Dealerswould support the company providing them with best profit margin.

Providing sellout and point of purchases at outlets this would increase Berger sales andalso increase the visibility of Berger in the store.

Mall activity awareness testing and creation. Mall activities could always check theawareness level for a brand. Mall activity would also help in creating awareness for theproduct.

Scheduled P-O-P Stalls in-front of dealer outlet by the depot to enhance the productawareness and visibility.

On-time delivery and Replacement of damaged product as early as possible. Timelydelivery has been the source of dissatisfaction among the dealers so it should be rectified.

Feedbacks during delivery and monthly feedback from dealers. This would solve thedealer related problems. Rating of our service can also be done based on the feedback thedealers give. Feedback forms would reduce the communication gap between the dealerand Berger paints.

News paper tags, notices, stop boards, traffic divider, publishing posters in small scale teashops near dealer outlet. These are mainly lead generation activities and can also increasethe Berger sales. The response can be tested by implemented these inareas with lowBerger turnover counters. Based on the response wider areas can be included.

7.2 CONCLUSION

The objective was to find the potential of the club card dealers and make a SWOT analysisfor the same. From the analysis my findings were about the potential opportunity, threat faced byBerger. The analysis also shows the potential and the performance of Berger club card dealers. Myrecommendations are given to rectify the problem faced by Berger and to improve Berger sales indealer outlets. The club card dealers included 57 dealers who were the respondents. The analysis wasdone based on the survey on these dealers. Data included turnover of the outlet, Berger salesvolumeand other details based on the framed questionnaire. I forwarded the analysis to theManager and sales representatives of Madurai depot. It can be concluded from the study thatBerger paint is having a low grip in areas covered by Madurai Depot. Performance improvementis the only way to solve the problem.

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CHAPTER 8

BIBLIOGRAPHIES AND REFERENCES

Bibliographies

Marketing Management, by Philip Kotler, Abraham Koshy, MithileshwarJha and Kevin LaneKeller

Business Statistics, by G C Beri

Title : Importance of relationship in market Journal name: Journal of management marketing by Nagasimhakanagal, IIMBangalore(vol=17,pp-120-135)

Title: Strategic marketing plans Journal name: Emerald insight(vol-27,pp-93-117)Author name: Marco Fava Neves, published-2006, University of Sao Paulo Brazil

Title of the paper: Dealers a integral part of the market

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Author name: Ritwickbanerjee, published -2013, institute of engineering andmanagement Kolkata

Title: Market share analysisAuthor: Imam Shakeer , published 2011 BARC university Dhaka

Title: Customer satisfaction for Berger paints Author: Eusufsheikh, published 2014

Title: Choice of Decorative Paints: Recommendation of Interior Designer and Dealers, anOpinion Survey of Berger Paints Limited, KolkataAuthor: SoumikGangopadhyay, Pujashree Sinha, PradipBandyopadhay, publishe -2013

Title: Satisfaction, Repurchase Intent, and Repurchase Behavior: Investigating theModerating Effect of Customer CharacteristicsAuthor: Assistant Professor Wagner A. Kamakura, University of IowaJournal: American marketing association.(vol-38,pp-132-142)

Study Material Given by the Organization

http://www.bergerpaints.com/ www.bergerbd.com www.equtiymaster.com www.ceeol.com

CHAPTER 9APPENDIX

Questionnaire for Dealers

1. Name:

2. Contact No. :

3. What are all the products you are dealing with:_________________________

4. What is your annual turnover(paint/total):___________________________

5. Kindly rank the volume contributor to your outlet:

a) Painters

b) Engineers & Contractors

c) Customers

d) Builders

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e) _____________

5. A) Mention the % of contribution from the top 2 ranks ____,_____

6. What is the range of your dealership’s sales volume?

a) 20-50 lakh

b) 50-1 crore

c) 1-5 crore

d) Above 5 crore

7. What is your expected % increase in sales every year?

a) 15%

b) 25%

c) Above 25 %

8. What are the most profitable products in your counter:______________________

9. Will you convince the business to desire co?

a) Yes

b) No

10. If yes, kindly mention the reason:_____________________________

If not Berger, kindly mention the reason: _______________________

11. What is the average inventory size you keep?

a) Less than turnover

b) 1.5 times

c) 3 times

d) _______________

12. Are you aware of the current marketing and promotional plans of our company?

a) Yes

b) No

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If yes, kindly mention the scheme:______________________

13. Fastest moving brand in your outlet:

a) Asian

b) Berger

c) Nippon

d) Dulex

e) __________

14. What drives these products in the dealer market?

a) Quality

b) Service

c) Profit margin

d) Niche

15. Reason for Sales gap between top three brands in Madurai:

a) Service

b) Profit

c) Availability

d) Demand

e) Quality

16. Reason for Sales gap between market leader and Berger in Madurai: __________________________

17. Who is the product purchase influencer?

a) Painter

b) Customer

c) Contractor

d) _____________

18. How do you rate Asian paint sales team on interaction and services?

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a) 1

b) 2

c) 3

d) 4

e) 5

19. How do you rate Asian paint Depot services?

a) 1

b) 2

c) 3

d) 4

e) 5

20. How do you rate Asian paint product quality?

a) 1

b) 2

c) 3

d) 4

e) 5

21. How do you rate Berger sales team on interaction and services?

a) 1

b) 2

c) 3

d) 4

e) 5

22. How do you rate Berger depot services?

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a) 1

b) 2

c) 3

d) 4

e) 5

23. How do you rate Berger product quality?

a) 1

b) 2

c) 3

d) 4

e) 5

24. If less than 3, kindly mention the reason: __________________________________

25. How many MP’s are dealing with >50K : ____________________________

26. Are they all nominated for Berger’s MP schemes ; Yes or No How many ______________________

27. Do you hold any prestigious card in any brand?

a) Yes

b) No

If Yes, kindly mention the type :______________

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