Asian Paints - Adding Colours

Abstract:

The case examines the marketing strategy adopted by Asian Paints after restructuring its businesses. The case provides a detailed account of how the company initiated customer relation-building initiatives with services such as Colorworld, Helpline and Home Solutions. The case also highlights the problems faced by the company in building up brand image in an industry where consumer involvement was very low. The reasons for dropping 'Gattu' from the AP logo and the company's brand restructuring initiatives are also explained.
Contents:

Changing Colours-Literally Background Note Changing Focus New Product Launches Customer Service Solutions Changing Image Goodbye to Gattu Colourful Future?
Changing Colours-Literally

In July 2002, India's leading paints company Asian Paints Limited (AP) announced it was dropping its famous mascot - 'Gattu'- from its logo. Analysts were surprised at this move as over the last 45 years, Gattu had emerged as one of the most recognizable mascots in India, leading to instant recall of the company AP. However, the company sources felt that with the changing focus of the company, 'Gattu' has lost his relevance. In 2002, AP was the market leader in the Indian decorative paints segment with a market share of around 44% (Refer Table I). It was also one of the top 15 global paints companies.
The success of AP has been attributed to its customer-centric approach and aggressive marketing initiatives, which had changed the way industry, functioned (Refer Exhibit I for a note on paints industry in India.) AP wanted to be one of the top five companies in the global paints industry by 2007. In order to achieve this goal, it focused on three main areas - building the AP brand in terms of a new product portfolio, changing its logo and packaging. The new AP was expected to be even more customer-friendly and service-oriented.

Background Note

The history of AP dates back to 1942. It was started by four entrepreneurs, Champaklal Choksey, Chimanlal Choksi, Suryakant Dani and Arvind Vakil, as a partnership firm for manufacturing paints, in a garage rented for Rs 75 a month. In 1945, the partnership firm was turned into a private limited company named Asian Oil & Paint Co. Pvt. Ltd. And in the same year, its turnover touched Rs 0.35 million. In the 1940s, it was largely multinational companies such as British Paints and Jenson & Nicholson that dominated the Indian paints market. In order to increase revenue, AP concentrated on the smaller towns ignored by multinationals. In 1954, Asian Paints asked the famous cartoonist R.K. Laxman to create a mascot for the company, and from his pen was born - Gattu - which emerged as one of India's most memorable mascots In the 1950s, paints were sold in bulk and the smallest tin size available was 1 litre. However, AP's market research found out that in rural India, farmers who wished to paint the horns of their bullocks preferred to buy paint in small packs. Soon AP came out with 50-ml packs, which became very popular. In 1957, AP achieved a breakthrough when its R&D department developed a process for producing international quality phenolic and maleic acid resins in its simple coal-furnace, with a hand-stirring process. In the same year, AP set up a plant at Bhandup (Mumbai), to cater to the growing demand in urban areas...

Changing Focus

AP emphasized on technology and marketing in its drive to be one of the top five global paints companies. It implemented Enterprise Resource Planning (ERP) and Supply Chain Management (SCM) solutions for streamlining its processes and supply chain. It implemented i2 Technologies SCM solution along with SAP ERP solution with an investment of Rs 290 million to simplify the processes across its operation
New Product Launches
In the late 1990s, and early 2000s, the company launched various new products to increase its market presence and penetrate into the segments where its presence was small

Customer Service Solutions

Along with product launches, AP focused on distribution, as it realized that distribution and service were the keys to success in the paints industry. Right from the start, apart from the urban markets, AP also focused on small towns with population of up to 10,000, and on rural markets. Unlike other companies, AP's field officers dealt directly with the dealers in small towns. AP also launched products such as Tractor and Utsav to cater to small towns and rural markets...

Changing Image
Along with the customer relationship building initiatives, AP also focused on its communication and brand strategy. It realized that communication would help the company to reach out to the customer and create an attractive public image. Indian consumers were not brand conscious with regard to paints; usually the painter purchased paints for consumers according to the allocated budget. In order to change its image, in 2000, AP appointed the

Bangalore-based "Momentum" as consultants for a new advertising strategy for the company...

Goodbye to Gattu
Along with the new logo, AP also changed its packaging in order to communicate its new brand identity. In the earlier packing, there was no clear indication of the company name - Asian Paints. Commenting on the packaging in the paint industry, K.B.S Anand, Vice President, Sales & Marketing, AP, said, "Fortunately or unfortunately, no paint company in the country has used packaging to communicate...

Colourful Future?
With its rebranding initiative, AP is likely to be very successful in increasing customer involvement in the decorative segment. However, many analysts are skeptical about the company maintaining high brand recall, as 'Gattu' was a important factor accounting for the popularity of the company. However, AP was optimistic that the changes would yield many benefits...