creating a new paint company branding & product managemet
DESCRIPTION
feasibility analysis for setting up a new brand of paint in the Indian decorative paint industry. market research to analyse consumer preferences about paint products.TRANSCRIPT
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Feasibility Analysis to launch a New Paint Brand
WASIM AKRAM
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Introduction:
India is the fastest growing paint market in Asia Pacific
• India’s paint industry size is estimated to be €3.5bn.
• The following paints are available in the market: Acoustic Paints
Resin Paints (Alkyd)
Dripless Paints
Latex Paints
Single Coated Paints
Primary Rubber based Paints
Texture oriented Paints
• The decorative paints to industrial paints ratio is 70:30 both in value and volume terms.
• Almost half of the revenues earned by the Indian paint industry are through enamels.
• The demand in the paint industry is seasonal to some extent. While the demand dips in the monsoon
season, it is the maximum in the festive season.
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Growth:
• Market has been growing on average 15% annually during the last five years and thus it is growing 1.5-2
times faster than GDP.
• The expected CAGR is 13-15 % for the period FY13-14.
• 30% 0f the main business is comprised of new construction projects.
The paint industry growth drivers are:
• Repainting demand fuelled by the real estate boom over the past few years
• Changing consumer preferences, from pure aesthetics to value added features
• Rising demand for industrial paints
• The organized section of the industry is growing faster than the organized sector.
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Decorative Paints:
The key drivers of decorative paints are:
• Robust economic growth leading to higher disposable income.
• Continued growth in real state.
• Change in perception towards painting.
• Launch of affordable houses.
• Shift in demographic profile resulting in increase in number of households.
• Various innovations of market players.
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Industrial Paints:The Industrial Paint Segment is dominated by organized sector.
• Automotive paint form approx. 45 % of industrial paints.
• Performance coating forms approx. 25 % of industrial paints.
• Consumer durables and auto ancillary products use power coating.
• Coil coating are used in industrial constructions, electric equipment and interiors of trains & buses.
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Major Players
The unorganized sector with about 2,000 units having small and medium sized manufacturing plants controls
around 35 % of the paint market.
Out of the rest, most is controlled by the top 5 companies and they are:
• Asian Paints (Overall market leader due to leadership in decorative segment)
• Kansai Nerolac (Market leader in automobile industrial paint segment, also into decorative segment)
• Berger Paints (Major revenue from decorative segment, also into industrial paints)
• Akzo Nobel (Major revenue from decorative segment, also into automotive paints)
• Shalimar Paints (Mainly into decorative and non-automobile industrial coatings)
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Opportunities:
Indian GDP is expected to grow 5.5-7.0 % annually the next few years.
Because of the high correlation between GDP and paint volume growth, decorative paints are expected to grow
on the back of strong economic momentum.
• Real estate boom in the past few years will lead to strong demand for repainting.
• At the moment the per capita consumption of paint in India is merely around 1 kg (20 kg in the developed
countries, global average 15 kg) so the absolute consumption of paint in India is expected to rise.
• The paint demand in tier II and tier III cities is growing at a faster rate than the tier I cities.
• Expected decrease in the use of distemper in future.
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Key Challenges:
All the manufacturers have their own manufacturing units to maintain the quality.
• Paints have high volume-to-value ratio and require manufacturing near the market.
• Entry barrier is very high because the top five players have maintained market share despite of entry of new
foreign players.
• Outsourcing is limited and only for the low-end paints.
• The competition in the paint industry is becoming more intense with the entry of new foreign players like
Jotun, Nippon & Sherwin Williams.
• Crude prices have been in an upswing and this is raising the cost burden of the industry players.
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Mechanism of Paints
Major InputsMajor
ProductsEnd User
Raw Materials (56%)
Selling & Administration
expenses (23%)
Employee Cost (12%)
Decorative Products: Paint
Emulsions, Enamels, Distempers, Wood
Finishes, Metal Finishes etc.
Industrial Products: Powder Coating, Floor Coating,
Surface Coating etc.
Households, Construction firms (70%)
AutomobilesConsumer GoodsMarine Industry
(30%)
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Paint Industry Segmentation
INDIAN PAINT INDUSTRY
DECORATIVE SEGMENT (70%)
INDUSTRIAL SEGMENT (30%)
PREMIUM RANGE
(HIGH END ACRELYC
EMULSION)
MEDIUM RANGE
(ENAMEL PAINTS)
DISTEMPER RANGE
(LOW END PAINTS)
CONSUMER DURABLES,
MARINE PAINTS,
OTHER OEMs
AUTOMOTIVE SECTOR
(2/3 rd SHARE)
METROS AND
LARGE CITIES
SMALL
CITIES
SUB URBAN AND
RURAL AREAS
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Market Segmentation:
Decorative: Major segments in decorative include exterior wall paints, interior wall paints, wood finishes and
enamel and ancillary products such as primers, putties etc.
Decorative paints account for over 70% of the overall paint market in India.
Demand for decorative paints arises from household painting, architectural and other display purposes.
Demand in the festive season (September-December) is significant, as compared to other periods.
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Market Segmentation:
Industrial: Three main segments of the industrial sector include automotive coatings, powder coatings and
protective coatings.
User industries for industrial paints include automobiles engineering and consumer durables.
The industrial paints segment is far more technology intensive than the decorative segment.
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Major Players in Indian Paint Industry:
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Decorative Paints
Exterior PaintsInterior Paints
Wall-Emulsion-DistemperWallpaper
Metal-Enamel
Metal Gloss
WoodWood Finishes
Emulsion
Textured
Cement paints
Distemper
Enamel
Types of Decorative Paints
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Asian Paints Royale luxury Emulsion
Interior Paints (Emulsion)
Dulux Velvet Touch
Silk
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Interior Paints (Distemper)
Tractor Distemper Bison DistemperBeauty Distemper
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Interior Paints Metal & Wood (Enamel)
Apcolite Premium Gloss Enamel
Synthetic Enamel
Luxol
Gloss Premium Enamel
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Exterior Paints
Tartaruga (Textured) Snowcem Plus (Cement)
Weather Shield MAXApex Ultima
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Price of Products (Interior)Segment Product Price (per lt.) Company
Walls (Emulsion) Royal Rs. 360-450 Asian PaintsWalls (Emulsion) Velvet Touch Rs. 360-450 ICI DuluxWalls (Emulsion) Impression Rs. 360-450 Nerolac PaintsWalls (Emulsion) Silk Rs. 360-450 Berger PaintsWalls (Emulsion) Premium Rs. 250-280 Asian PaintsWalls (Emulsion) Super Smooth Rs. 250-280 ICI DulaxWalls (Distemper) Tractor Rs. 60-80 (per
lt.)Asian Paints
Walls (Distemper) Bison Rs. 65-80(per lt.)
Berger Paints
Metal & Woods Dulax Gloss Premium Enamel
Rs. 200-230 ICI Dulux
Metal & Woods Synthetic Enamel Rs. 200-270 Nerolac PaintsMetal & Woods Luxol Rs. 200-270 Berger PaintsMetal & Woods Apcolite Premium
Gloss EnamelRs. 200-270 Asian Paints
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Price of Products (Exterior)
Segment Product Price (per lt.) Company
Walls (Emulsion) Apex Ultima Rs. 350-400 Asian Paints
Walls (Emulsion) Dulux weather Shield Max
Rs. 350-400
ICI Dulux
Walls (Emulsion) Apex Rs. 250-300 Asian Paints
Walls (Emulsion) Dulux weather Shield
Rs. 250-300 ICI Dulux
Walls (Emulsion) Weather coat All Guard
Rs. 250-300 Berger Paints
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Sales of Companies
Asian Paints Kansai Nerolac Berger Paints ICI Paints Shalimar Paints
Net Sales(FY2013) in Cr.
6607.2 2266.2 2096.2 1087.6 404.4
500
1500
2500
3500
4500
5500
6500
Net Sales(FY2013) in Cr.Q
uanti
ty
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Market Shares of Companies (Contd.)
32%
11%11%6%5%
35%
Asian PaintsKansai NerolacBerger PaintsICI PaintsOthersUnorganised
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Distribution Process of Paints
Paint Manufactures
Regional Warehouses
Company Dealer
Customers
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Factors affecting Paint Industry
• Increasing level of income & education• Increasing urbanization• Increasing share of organized sector• Development of the Realty, Automobile and Infrastructure sector• Availability of financing options• Increasing Penetration in the Rural Markets
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New concepts of Paints:
• Multi colored room concept.• Lead free color.
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PORTER’S 5 FORCES
High raw material prices squeezing paint supplier's margins
Paint consumer looking to other alternatives to paint
Large companies becoming larger
Buyers becoming stronger
Threat of new
entrants
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StrengthsIndian Paint Market has very strong potential in terms of market share in the organized sector
Comprehensive nation wide coverage of the market - urban, semi-urban and rural areas.
• Different segment required by different customer and industry has its own growth area and
market.
• A network of 25,000 dealers spread all over the country is available.
• The pricing strategy is oriented to middle/lower end consumers
• Paint Industry is quite strong in production-marketing coordination. Their policy Of offering
tailor-made products to suit customer need has resulted in an ever growing product range.
• In-house production, no outsourcing, high reliability in suppliers, superior in quality assurance.
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Weaknesses• Widening product mix puts strain on production distribution, accounting and administration;
• Innovation in developing new products is inadequate;
• Ever expanding product mix throws some strain on inventory management;
• positioning for the premium brands meant for urban markets;
• Seasonal demand and hence in off seasons it can lead to cash flow problems;
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Opportunities
• The automobile industry accounted for 50% of the industrial paint market.• Indian is the fastest growing paint market in Asia Pacific.• The paint industry growth drivers are:
– Repainting demand fuelled by the real estate boom over the past few years.– Changing consumer preferences, from pure aesthetics to value added features.– Raising demand for industrial paints.
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Threats
• Domination of few foreign companies.
• Since both Goodlass Nerolac (43%) and Berger's (14%) have a higher market share than AP's
(14%), it is possible that in the future, they may capture the entire industrial paint market;
• Competitors have gone in for hi-tech with instacolour spot mixing. For example, J&N's
instacolour offers 626 shades;
• Automated paint blending in retail points already there. ICI's Touch Color and Berger's Color
Bank are indicative of this;
• Competition is catching up fast, hi-tech facilities gives abundant choices.
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Statistical Analysis
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Descriptive Analysis of the Market research Survey
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HALF YEARLY
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Strategies for Consumer
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Strategies for Urban Consumer:• Providing innovative products & painting techniques.
E.g.: Reflective paints, Day night shade change, 3D texture, Radiance, Multiple tints, reflective color.
• Online marketing & online shopping for paints & paint related products.
• Online suggestions & makeover tips.
• Providing safe, odorless, low VOC, durable paints with all weather guard & high gloss attributes.
• Use of existing supplier network.
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Strategies for Semi Urban & Rural Consumer:
• Paints with increased spreadability, more than of normal paints.
• High washability & durability of paints.
• Main focus on distemper & enamel paints.
• Use of hub & spoke supply chain to capture semi urban & rural market.
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BRANDING
• Name of the Brand : Roshan Paints• Tag Line : “Roshan Bharat Ka Roshan Paints.”• Add Campaign : Celebrity endorsement with Hrithik Roshan.• Brand USP : High quality innovative ‘Desi’ Brand.• STP:
Segment: Decorative PaintsTarget : Households of Urban, Semi-Urban & Rural AreasPositioning : Colors of India
• The company would base its promotion & branding strategies on consumer ethnocentrism.
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Brand Attitudes
Brand Equity
Brand Loyalty
Brand Preference
Brand position
Brand Image
Brand Personality
Brand Identity
Brand Familiarity Brand Associations
Brand Awareness
Identification of Opportunity for Branding:
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Strategies for competitors:• Faster Service • Better quality & packaging than others.• Low cost solution to their clients.• Strong relationship with customer & suppliers. • Investmentent in R&D to create more varieties in products.• Introducing technological innovations maintaining CSR & sustainability.
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Product Life Cycle:
MR, R&D,Preparation for launch, publicity Marketing Campaign
Ad campaign, awareness drive, Celebrity Endorsement
Tie ups, CSR, Capacity Expansion
Promo Offers, Innovation, Repositioning
Saturation: Conglomerate Diversification
New business Ideas
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Future Strategies• Tie up with ASI for restoration & renovation works of heritage sites.• Entry into industrial paint segment.• Manufacturing of roof solution products.• Damp proof wall care products.• Production of tiles.
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Cost:
Project cost Amount
Land & Site Development 2.00 cr
Building 6.00 cr
Plant & Machinery 10.00cr
Misc. Fixed Assets 50 lakhs
Contingency 86.35 lkh.
Pre-Operative Cost 27 lakhs
Total 19.62 cr.
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Sr. No. Particulars Unit Basis Unit cost (Rs.) Qty. Cost
1. LAND & SITE DEVELOPMENT Land Acres 15,00,000 10 1.5 cr. Cost of Development Land Development Levelling & Fencing Acres 200000 10 20,00,000 Entry Points & Guard rooms Nos. 15,00,000 2.00 30,00,000 Sub Total 2.00 cr.2 BUILDING Production Room 8 Sqft. 60x18x13 300 0 3.46 cr. Colour Bank 1 Sqft. 40x9x12 300 0 14.4 lkh Waste Yard 1 Sqft. 60x40x14 100 0 3.01 lkh Pre-Production Area 1 Sqft. 40x20 50 0 5.33 lkh Casing Chambers 1 Sqft. 12x10x10 250 0 4.00 lkh
A/C Compressor Room / DG Set room 1 Sqft. 30x18x13 200 0 14.4 lkh
Boiler Room 1 Sqft. 15x12x13 200 0 4.80 lkh Canning Facility 1 Sqft. 60x18x13 250 0 36.01lkh Can Store Room 1 Sqft. 30x18x13 250 0 18 lkh Store / Tool Room / Canteen 1 Sqft. 15x12x13 250 0 6 lkh Sorting Area 1 Sqft. 18x12x13 200 0 5.73 lkh Packing Room 1 Sqft. 12x12x13 200 0 3.86 lkh Service Room (Underground) 1 Sqft. 12x9x8 200 0 2.93 lkh Corridor 1 Sqft. 108x15x13 50 0 10.8 lkh Lab 3 Sqft. 18x15x12 450 0 48.69 lkh Office Block 1 Sqft. 30x18x13 450 0 32.41 lkh Architect Fee % 2.5% 15,00,000 Sub Total 6.00 cr3 PLANT & MACHINERY Casing Unit 2.00 cr. Production Unit 7.00 cr. Canning& Other Equipment 1.00 cr. Sub Total 10.00 cr.4 MISCELLANEOUS FIXED ASSETS Canteen Furniture 30.00 lkh. Communication system 20.00 lkh. Sub Total 50.00 lkh.5 PRE-OPERATIVE EXPENSES Administrative Exp. 1.58 lkh. Professional Charges 3.17 lkh.
Interest During Construction Period 19.05 lkh.
Start-up Expenses 3.17 lkh. Sub Total 27 lkh. TOTAL 18.77 cr.
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Particulars Total % Firm Non Firm Total Total Cost
Land 1.5 cr. 0 1.5 cr. 0.00 0.00 1.5 cr.
Development / Building 6.5 cr. 5 - 6.5 cr. 32.5 lkh. 6.82 cr.
Plant & Machinery 10.00 cr. 5 - 10.00 cr. 50 lkh. 10.5 cr.
Miscellaneous Fixes Assets 50 lkh. 5 - 50 lkh. 2.5 lkh. 52.5 lkh.
Pre-Operative Expenses 27.00 lkh. 5 - 27.00 lkh. 1.35 lkh. 28.35 lkh
Sub Total 86.35 lkh 22.
Total 19.62 cr.
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Profit Calculation:PARTICULARS Rs.
Sales 30 cr.
Total cost 19.62 cr.
Gross Profit 10.38 Cr.
Depreciation (@5% on 18.77Cr.) 9385000
Interest (@10% on 4.62 cr.) 4620000
PBT 89795000
Tax (@ 10%) 8979500
PAT 77815500
Production capacity =3000 TPAAvg. Selling Rate = Rs.100/Ltr.Loan = 4.62 Cr.
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CSR Initiatives
• For the CSR activities the company would tie up with “Aravind eye hospital” and provide them with
financial assistance and help them in setting up eye check up camps in the remote areas.
• The philosophy behind this CSR activity is that ours being a paint company which helps in decorating
and bringing colors to peoples life we should also do something for those whose life just has the shades
of black and white.
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References•
https://www.facebook.com/l.php?u=https%3A%2F%2Fwww.google.co.in%2Fsearch%3Fq%3Didentification%2Bof%2Bopportunity%2Bfor%2Bbranding%26biw%3D1517%26bih%3D692%26source%3Dlnms%26tbm%3Disch%26sa%3DX%26ei%3DjoKwUtPLGc2Ergfn9IGYDQ%26ved%3D0CAcQ_AUoAQ&h=YAQG-l8Kd
• http://www.uniassignment.com/essay-samples/marketing/strategic-analysis-of-indian-paint-industry.php
• http://www.studymode.com/essays/Supply-Chain-Management-Paint-Industry-198939.html
• https://www.google.co.in/search?q=product+life+cycle+images&tbm=isch&tbo=u&source=univ&sa=X&ei=OYOwUsXHCIi3rAfbvIDwCg&ved=0CCoQsAQ&biw=1517&bih=692&dpr=0.9#facrc=_&imgdii=_&imgrc=8Av669ZNSqeXCM%3A%3Bza8A-nRtF9uv4M%3Bhttps%253A%252F%252Ffigures.boundless.com%252F11565%252Flarge%252Fproduct-life-cycle.png%3Bhttps%253A%252F%252Fwww.boundless.com%252Fmarketing%252Fintegrated-marketing-communication%252Fselecting-the-promotion-mix-for-a-particular-product%252Fstages-in-the-product-lifecycle%252F%3B507%3B300
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THANK YOU…