1.

Introduction

Asian Paints is Indias largest paint company and Asias third largest paint company, with a turnover of Rs 77.06 billion. The group has an enviable reputation in the corporate world for professionalism, fast track growth, and building shareholder equity. Asian Paints operates in 17 countries and has 24 paint manufacturing facilities in the world servicing consumers in over 65 countries. Besides Asian Paints, the group operates around the world through its subsidiaries Berger International Limited, Apco Coatings, SCIB Paints and Taubmans. Forbes Global magazine USA ranked Asian Paints among the 200 Best Small Companies in the World for 2002 and 2003 and presented the 'Best under a Billion' award, to the company. Asian Paints is the only paint company in the world to receive this recognition. Forbes has also ranked Asian Paints among the Best under a Billion companies in Asia In 2005, 2006 and 2007. The company has come a long way since its small beginnings in 1942. Four friends who were willing to take on the worlds biggest, most famous paint companies operating in India at that time set it up as a partnership firm. Over the course of 25 years Asian Paints became a corporate force and India's leading paints company. Driven by its strong consumer-focus and innovative spirit, the company has been the market leader in paints since 1968. Today it is double the size of any other paint company in India. Asian Paints manufactures a wide range of paints for Decorative and Industrial use.

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2.0

Case Summary

Asian Paints is an Indian paint company headquartered in Mumbai, and a market leader in the decorative paints. It has come a long way in the journey of over 60 years to become one of the top global paint companies with 11th position in the decorative paints market. Following its acquisition the enlarged group now operates in 24 countries scattered over mostly emerging markets in South Asia. And they moved aggressively into international expansion through many joint venture projects. In the beginning of its journey the company followed the niche marketing strategy covering small towns ignored by the Multi-National Companies. The company has followed behavioral segmentation to classify different regions into three broad categories: growth markets, leadership markets, and turnaround markets. In the first phase Asian Paints has targeted rural area and small cities and set up plan to cater to the growing demand in urban areas. In India consumers were mostly price conscious rather than brand. So Asian Paints focused on marketing to create greater brand awareness and to increase its market share by kept its price low with durability of its products. And later on it come up with new positioning strategy Celebrate with Asian Paints as consumer research showed Paints are seen to rejuvenate and brighten up a gloomy place, and give a room a more spacious look. Painting signifies festivity, life and plentitude. Asian Paints has been producing decorative paints from the beginning and they are the market leader in India. In 1990 Asian Paints introduced the Asian Paints solid brand with 151 shades, in contrast to the general practice of offering just 30-40 shades. Asian Paints launched its help line to meet customer more efficiently, and ASIAN PAINTS also have their own retail shops offering a series of decision making tools and shade option. Asian Paints has been promoting its product through ambitious grassroots marketing campaign; it launched a campaign Spectrum of Excellence with a series of press advertisements talking of excellence of Asian Paints products. The company also created advertising that related to specific festive occasions in each part of the country. Unlike its competitors who concentrated only in urban areas, ASIAN PAINTS is found everywhere. It has a country wide distribution.

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2.0

Historical Perspective:
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1942-1967; Evolution Phase: It was started by four entrepreneurs Champaklal

Choksey, Chimanlal Choksi, Suryakant Dani and Arvind Vakil, as a partnership firm for manufacturing paints. In 1945, the partnership firm was turned into a private limited company named Asian Oil & Paint Co. Pvt. Ltd. Asian Paints achieved the brand leadership position in the Indian paints industry by 1967.
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1967-1982; Extension and Consolidation Phase: In the year 1969, Asian

Paints expanded its reach and started selling overseas. During this period, the company consolidated its gains through s series of investments into systems that ensured better product delivery. In 1973, Asian Oil & Paints Co. Pvt. Ltd became a public limited company and changed its name to Asian Paints Limited.
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1982-1986; Years of Excellence: During this period Asian Paints expanded its

manufacturing facilities and focused on ensuring excellence to the customers.

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1987-1997; Moving Closer to the Consumer: In order to keep its price low

Asian Paints had to keep its production cost low. So it undertook backward integration to reduce production cost through many joint venture projects. During this phase the process of product innovation continued. Two launches one in rural and the other in exteriors gave a fillip to the overall image of the brand.
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1997-2005; Changing Rules of the Game: In this phase Asian Paints not only

providing better quality but also they are offering customer Help Line to fulfill the information needs of any person planning to paints. And technological improvement also took place in this phase. And a series of initiatives were launched bringing the brand closer to the user.

3.0

SWOT analysis

Strengths:

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S1: Comprehensive nationwide coverage of the market urban, semi-urban and rural areas. They have quite a number of brands, covering all segments and filling all gaps. For example, they have brands in different price slots like Utsav for rural lower-end markets and Asian Paintscolite for high end-markets. S2: Unlike its competitors who concentrate only in urban areas, Asian Paints is found everywhere. It has a country wide distribution. S3: The pricing strategy is oriented to middle/lower end consumers. S4: Corporate reputation has been a major strength for Asian Paints. The image is that of a successful and well-managed company. They have won many accolades and awards. Weakness: W1: Seasonal demand and hence in off seasons it can lead to cash flow problems. W2: Widening product mix puts strain on production, distribution, accounting and administration W3: Ever expanding product mix throws some strain on inventory management. W4: High bargaining power of customers due to availability of wide choice.

Opportunities: O1: Acquiring/ increasing market share in Industrial paint sector as well as automobile paint and marine paint. O2: Asian Paints traditionally strong in wood finishing paints in the Middle East region. Threats: T1: Domination of few foreign companies. T2: Competition is catching up fast.

Confrontation matrix:
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In the confrontation matrix the different strength, weakness, opportunities, and threats are confronted with each other. It is built on the basis of SWOT analysis:

Confrontation matrix of Asian Paints:

O1 S1 S2 S3 S4 W1 W2 W3 W4 ++ 0 0 ++ 0 0 0 0 +3

O2 0 + 0 + + 0 + + +6

T1 0 0 0 0 0 0 0 0 0

T2 0 + 0 0 0 0 0 -1 +2 +2 0 +3 -1 0 0 +1

Confrontation matrix analysis: S1 & O1: Product variation is the good sign of increasing sales. S2 & O2: Though Asain paints emphasis on well distribution system so it may bring a success in the middle-east. S2 & T2: Although competition is catching up fast but the distribution system of Asian Paints is well organized so that it may helpful to compete in the market. S4 & O1: Asian Paints have a well reputation on the other hand market share is increasing so it will contribute to a strong success. S4 & O2: Corporate reputation is one of the positive sign to growth so it might be helpful to capture the market.
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W4 & O2: Asian Paints have strong backward linkage that helps to keep cost low that is why they offer the product to consumer at a reasonable price. W3 & O2: Although a laps in the inventory management, but in the middle-east region Asian paints has a strong image. W1 & T2: Combination of these may create a problem. W1 & O2: Already Asian paints traditionally strong in Middle East that helps to continuous growth of market.

4.0 Strategic Marketing Plan

4.1 Market Segmentation Asian Paint segmented their market according to geographic and behavioral variables. 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, Asian Paints concentrated on the smaller towns ignored by the multinationals. In other words they followed niche marketing. Later, as they moved on, they divided their market into three different categories. They are: growth markets, leadership markets and turnaround markets. They made this segmentation based on the position of Asian Paints in different countries or areas. This means that this time around they went for the behavioral segmentation.

4.2 Market Targeting The initial target of Asian paint was to target the niche markets. In other words, they wanted to capture those parts that were ignored by the multinationals. So they wanted to focus on the smaller towns in India. Later they carried out a research, and according to the market research
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which was conducted in 1954, Asian Paints found out that they have a potential group of customers in farmers in rural India. The farmers who painted the horns of their bullocks, preferred to buy paints in small quantity. Asian Paints wanted to make the full use of this opportunity and they came up with a 50 ml pack. This new package became really popular. The market strategy was to reach consumers in the remotest corners of the country with small packs.

4.3 Positioning Asian Paints tried to position their product in the mind of the customer as a durable and a product of good quality at a low price. These efforts enabled Asian Paints to achieve the brand leadership position in the Indian paints Industry. Later a consumer research showed that painting signifies festivity, life and plenitude. This influenced Asian Paints to go for repositioning. They tried to relate their product with festivals. They even created advertisement that related to specific festive occasions. Thus they created a new slogan, Celebrate with Asian Paints. 4.4 Marketing Mix Product and services Price Promotion Place

Product and services Asian Paints are offering a wide range of products. These include decorative paints, automotive paints, industrial paints etc. and its brands Tractor, Apcolite, Utasav, Apex, and Ace. In addition to this, they are offering the following services to the customers: a) They are providing necessary information to their potential customers through the Asian Paints helpline.
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b) They have their own retail shops which offer a series of decision making tools and shade options to their potential customers. c) They have invested in technology to improve the supply chain efficiencies and giving a platform to enter into CRM initiatives

Price The company soon realized that in case of paints, brand was not the first criteria that customers considered while purchasing, rather the customers were more interested in the price of the product. Their buying decision was highly influenced by the price of the paint. The company had this fact in their mind and set their price accordingly. They went for the market penetration pricing, to be more specific; they kept their price as low as possible to capture the market.

Promotion The company also embarked on an ambitious grassroots marketing campaign, it launched a campaign Spectrum of Excellence with a series of press advertisements talking of excellence of Asian Paints products. The company also created advertising that related to specific festive occasions in each part of the country and achieved very high salience and has connected emotionally with the consumers. 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. Each distributor was assigned a large territory and was given the right to operate as the exclusive channel of the company in the assigned territory.
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These distributors had neither the compulsion nor the motivation to invest in distribution 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. Asian Paints sized up the scenario correctly and formulated a unique distribution strategy. Bulk buyer segment was the major segment of the paint business in the earlier days and any paint company needed a share of this major segment for sheer survival. 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 a crucial decision. 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 priority market. Thus they decided to focus on the rural areas rather than the urban areas. Going directly to retail dealers was the next major strategic decision of Asian Paints in the realm of marketing and distribution. It totally bypassed the well-entrenched wholesale distributors and went directly to the retailers. While Asian Paints competitors remained content with their linkage with a handful of wholesale distributors, Asian Paints preferred direct contact with hundreds of retail dealers. 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. Asian Paints voted for a nationwide distribution/marketing. Currently the company has been partnering with thousands of dealers in small towns all over India. The market strategy was to reach consumers in the remotest corners of the country with small packs.

4.5 Modes of entries. Their pros and cons

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They mainly followed acquisition and joint venture. Asian Paints have already acquired staked in Berger International Limited (Berger International) of Singapore and SCIB Chemical S.A.E (SCIB) of Egypt. Asian Paints set up two joint ventures Asian Paints (South Pacific) LTD. in Fiji and Asian Paints (Tonga) Ltd. with the company supplying the necessary know-how. The company also set up two more joint ventures under the names and styles of Asian Paints (Nepal) Pvt. Ltd and Asian Paints (S.I) Ltd.

The Pros and Cons of these strategiesThe company has expanded their business internationally through many joint venture and merger, which have some pros and cons that are mentioned belowAdvantages Its very easy to reach overseas market Low production and operation cost Easy to capture market Increase brand value The company may get skilled manpower The company may get new technologies

Disadvantages o Difficult to manage o Dilution of control o Partner may become a competitor.

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o There is a chance to lose brand value, if there any bad impression about joint venture company

5.0 Asian Paints Global Expansion Priorities: The company has classified different regions into three broad categories: growth markets, leadership markets and turnaround markets, based on its position and the immediate corporate strategic objective in these markets. Asian Paints has been facing problems in the turnaround markets and the immediate objective is to improve its performance in these countries. The company is very dominate in the leadership markets and wants to consolidate in these regions. Asian Paints realizes that the immediate growth impetus is going to come from the growth markets (Bangladesh, China, Egypt, Malaysia, Myanmar, Singapore, Sri Lanka, Thailand and UAE). The market in Bangladesh, Myanmar and Sri Lanka are price sensitive and the company realizes that it will have to play a volume driven game to succeed in these markets. The company has been traditionally strong in wood finishing paints in the Middle East and this might dilute its focus for decorative paints in the region. It is therefore logical for AP to focus on the South East Asian region, particularly Malaysia, and Thailand for the next expansion step.

Thailand Thailand gets the first preference for expansion. Thailand has the second highest market size for decorative paints and the market is growing rapidly on account of housing boom in the country. Asian Paints has a 2% market share in this market through its subsidiary and has a stated objective of increasing the market share in Thailand. However market of Thailand is growing rapidly so capturing market will be easier. Malaysia

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Malaysia should be second on the priority list as it is ranked third in South East Asia in terms of the decorative paints market size and remains as attractive market for Asian Paints to enlarge its footprints as it already has 4% market share courtesy Berger International. Malaysia is very productive market for AP. But competition is high. Recently Asian paint exist operation from the Malaysia because of they analyze the future market situation of Malaysia.

Singapore We feel Singapore should be the third country on the priority list. Asian Paints gained significant presence in the Singapore market through the acquisition of Berger international in 2002.however this market has more potential for protective and marine coating .If AP concentrate on protective and marine coating operation then Singapore is the best market for that. Market capture will be easier because only Nippon paints have the operation in Singapore. Indonesia Indonesia should be the fourth on the list as it has the biggest market size for decorative paints in the South East Asian region. It is not too well developed economically and consecutively the decorative paints market in Indonesia is price driven and most catering to the economical segment. To develop new market for decorative paints will be very expensive. So that AP will give the worst priority to expansion its operation in Indonesia. Philippine Philippines should be the country with least preference. For decorative paint Philippine has the lowest market demand. Philippine market is largely price driven market due to relative poor economic status of majority of its population. For expansion the business of Asian paint will not be profitable rather than cost. 5.1 AP is planning to exit from China and Malaysia:

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In South East Asian region Malaysia has the third highest decorative paint market on the other hand China also has a huge population and high market growth. AP wants to exit its operation from Malaysia and China in the beginning of 2010, however it was a right decision for China because Asian Paints has a poor or almost nil market share in China after a long period of operation but they should continue their operation in Malaysia as they already acquired 4% market share in such big decorative paints market. AP is planning to exit from these two regions because they are expecting a tough competition in near future and they fear that they would not be able to sustain the same level of margin that they are getting today. With the growing awareness and improving living standards in the region, the paint industry is becoming increasingly sophisticated and just selling good paint is not good enough to survive in Malaysia. And its possible for AP to solve this problem in this region. So Asian Paint should take initiatives to devise innovative marketing strategies to lure customers and gain their loyalties. So AP should concentrate on new product development, enforcing brand equity, and providing package solutions including painting services or computerized color processing systems to help customers more efficiently in choosing colors. But in doing all this, companies should not take their focus away from providing high quality paints and offering competitive prices because at the end of the day, these are the features which lay the foundation for a strong foothold in this competitive market.

6.0 Recommendation: AP is traditionally strong in wood finishing paints the Middle East paints market so they have to make sure that they do not lose their stronghold in this region. In addition to this they should take necessary steps to popularize their decorative paint which is lagging behind in the Middle East. Asian Paints should try to come up with an innovative product to counter the lack of demand during off season.

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 Asian Paints should take innovative marketing strategies in the potential markets such as in Malaysia, Thailand etc. They should analyze their potential market so that they do not face the same kind of problem that they had encountered in China and Malaysia.

6.0 Conclusion Asian paints have come a long way since its establishment in 1942. Over the course of time, they have taken quite a few bold but effective decisions such as targeting the niche market. Currently they are operating in the foreign countries as well. Although they have made some effective decisions but there are some which can be questioned. Their investment in China is one such example of not taking a good decision.

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