FORE School of Management

Marketing Management II
Marketing Plan Project
Industry: Paints
Nerolac Kansai Paints Ltd.
Submitted to:
Prof. Bhalender Singh Nayyar
Made by:
Snehashish Chowdhary 231174
Sahil Kshetrapal 231126
Sanjay Mallik Vadrevu 231130
Shubhangi Jain 231150
Antoine Le Gal
Francois Xavier Brossard
Group 2

Table of Contents
Acknowledgement.3
Executive Summary4
Introduction ............................................................................................................................................ 5
Company mission & Values ..................................................................................................................... 5
Market analysis ....................................................................................................................................... 6
Defining the paint industry ..................................................................................................................... 7
Competitor analysis .............................................................................................................................. 10
Analyzing rural & urban demand .......................................................................................................... 13
Market share ......................................................................................................................................... 14
Marketing strategy of competitors ....................................................................................................... 15
Analysis of performance of Kansai Nerolac .......................................................................................... 17
SWOT analysis ....................................................................................................................................... 19
Segmentation, Targeting & Positioning ................................................................................................ 20
Objectives ............................................................................................................................................. 22
Positioning Statement..23
Marketing Strategy.23
Action Plans.24
Profit & Loss Statement..28
Controls..29
References...30

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Acknowledgement
All the students of Group 2 from FMG 23 C thank Prof. Bhalender Singh Nayyar for his
guidance and motivation to help in understanding the Indian Paint Industry with focus on key
areas of marketing.
Thank You.

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Executive Summary
Through this report we have studied the Indian Paint Industry. Asian Paints is the overall
market leader in India and has done exceptionally well to maintain its foothold by a
comprehensive margin. Other players in the market include Kansai Nerolac, Berger Paints,
Shalimar Paints and AkzoNobel. Kansai Nerolac, the third largest player, is the market leader
in the sub category of industrial coatings. A look at the vision statement of Kansai Nerolac
indicates that it aspires to capture some of the market of architectural coatings and
consolidate its overall position and compete more closely with Berger Paints. Considering the
market situation at present and the promise it holds for the future, a new interior paint would
be launched by Kansai Nerolac based on some key innovative features which offer most value
to the consumer.
We begin by understanding the present market scenario through Porters five forces model.
This would help us in understanding how the industry stands and whether it can
accommodate our product, also where the brand has to be positioned. We follow it up with
a deep dive into the strategies employed by the existing players in the market. This would
give an idea about the current industry trends.
Once the industry level analysis is done, the focus is switched to the new product. The new
product would be named Nerolac Picasso, with the following positioning statement:
For every consumer who considers their home or office as an extension of their personality
and a part of their life, Nerolac brings a refreshing range of paints that combine innovation
and creativity to breathe life in to your walls in an eco-friendly manner.
Kansai Nerolac Paints Limited (KNPL) is currently the 3rd largest paint manufacturer in India
with a market share of 12% of the total organised market. Through the launch of this new
product in interior paints segment KNPL aims to capture 15% market share.
Kansai Nerolacs existing distribution network will be tapped into. This would work to the
advantage of Kansai Nerolac as it has a robust dealer network already in place. In addition,
builders, contractors and home owners in urban areas would be targeted. As far as price is
concerned, Picasso would be priced in the same bracket as its competitors at marginally lower
than the most premium product of its competitors.
In the final stages of the report, the Profit and Loss account is projected. This is done to
understand the amount of time required for the company to recoup its investment and start
making profits. Due to the limited availability of industry data and mostly secondary data the
statements are based on hypotheticals.

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Introduction
In order to launch a new product and devise a marketing plan it is important to understand
the paint industry, the players and get an idea about the key drivers of this industry.

Company mission & Values

Strategic planning consists of the four components of vision, mission, strategy, and action.
One of the most important steps in strategic planning is the formulation of mission and vision
statements.
Mission and vision statements guide all activities of organizations and businesses. Thus, these
decisions need to be made after careful consideration so that they can contribute to the
planning and implementation of other activities of the organization.
Mission and Vision of Kansai Nerolac Paints Limited:
Mission: To contribute positively to the development of the society, by acting as a good
neighbour, considerate of others, playing the role of a good corporate citizen with passion
and compassion.
Vision: To leverage global technology, for serving our customers with superior coating
systems built on innovative and superior products and world class solutions, to strengthen
our leadership in Industrial coatings and propel for leadership in Architectural coatings, all to
the delight of our stakeholders.
Core Values:

Responsiveness, Innovation, Team orientation, Execution and Simplicity

Engaging all their stakeholders
Operating in an ethical manner
Commitment to promoting the environment of Corporate Social Responsibility (CSR)
Following regulations of human rights, environmental policies, and safe working
conditions for all stakeholders
Contributing to the society under the four verticals of Environment, Health, Education
and Community Development

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Market Analysis
PORTERS 5 FORCES ANALYSIS
Porters five forces analysis is a framework to analyse level of competition within an industry
and business strategy development. It draws upon industrial organization economics to
derive five forces that determine the competitive intensity and therefore attractiveness of an
industry.
Bargaining Power of Buyers - Medium
Household users The buyers can be customers (building contractors who buy in bulk) and end customers
(people who paint/repaint their house). Customers are more price sensitive because number
of options are available for them. The decisions by them are made based on many factors like
quality, price and factors like weather protection etc. The unorganized sector also provides a
number of low cost options.
Industrial users It is a low margin revenue business and buyers of this segment are knowledgeable about their
needs. The price comparison is done effectively by the consumers. However, manufacturers
due to their knowledge and expertise limit the bargaining power.
Bargaining Power of Suppliers - Medium
The paint industry is a raw material intensive company with more than 300 products required
to manufacture of the final products. The raw materials can be divided into different
categories like pigments, additives, solvents, binders etc. Pigments constitute 1/3 of the total
raw materials and Titanium dioxide is one of the key elements and often faces shortages.
Suppliers of Titanium dioxide therefore have high power. The others are crude derivatives
hence their price is subject to market fluctuations. So, here the Supplier has a medium
bargaining power.
Competitive Rivalry Low medium
About 80% of the organized market is catered by top 3 players of the country, out of which
a major chunk is of Asian Paints alone. Kansai Nerolac is one of the top 3 players. The current
market growth rate provides ample room for all the players of the industry to flourish.
Competition may increase as the market gets saturated but at present the market is
unsaturated and there are many options in the market. Competitive rivalry for Kansai Nerolac
varies from low to medium. Also, it is market leader in Automotive Industrial Paint and
decorative paints.
Availability of Substitutes Low
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The availability of substitutes is low. In rural areas, Lime wash is conventionally used
substitute for paints. In the decorative segment wallpaper is an alternative for decorative
interior paints. Wallpapers are a convenient option for small setups and also look more
visually appealing than paints. However, in India wallpapers are used much less than paints
and they dont pose any threat to exterior paints.
Threat of new Entrants Medium
The paint industry in India is dominated by few players making difficult for anyone new
entering the industry and Kansai Nerolac being a reputed company has a low level of threat
from others. Brand, distribution network, working capital efficiency and technology play a
crucial role. Vital role of technology and capital intensive nature make the industry relatively
safe from new entrants, however established foreign players pose some threat by the virtue
of their expertise and knowledge.

The Paint Industry

Defining the industry
The paint industry consists of exterior paints, interior paints, wood finishes, metal finishes
and waterproofing. The industry falls under the category of industrial coating, which is a
broader term for the paint industry. An industrial coating is typically defined by its protective,
rather than its aesthetic properties, although it often provides both. Volume wise, most
industrial coatings are protective, i.e., they are used for corrosion control of steel or
concrete, for example, but this is a complex market segment with numerous different areas.
Demand for paints comes under two major categories:
Decoratives: Major segments in Decoratives include exterior wall paints, interior wall paints,
wood finishes and enamel and ancillary products such as primers, putties etc. Decorative
paints account for over 77% of the overall paint market in India. Asian Paints is the market
leader in this segment. Demand for decorative paints arises from household painting,
architectural and other display purposes. Demand in the festive season (SeptemberDecember) is significant, as compared to other periods. This segment is price sensitive and is
a higher margin business as compared to industrial segment.
Industrial: Three main segments of the industrial sector include automotive coatings, powder
coatings and protective coatings. Kansai Nerolac is the market leader in this segment. User
industries for industrial paints include automobiles engineering and consumer durables. The
industrial paints segment is far more technology intensive than the decorative segment.
The Indian paint industry has evolved from a predominant decorative paints market with
seasonal fluctuations to a more diversified market. In recent years several factors have
contributed to the fortunes of the Indian paint industry including adoption of latest
technologies, launch of innovative products, aggressive marketing strategies, comprehensive
product portfolios, and value added services offered by the companies. Currently the Indian
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paint industry is valued at US$ 5 Billion and is expected to double by 2018. The Indian paint
industry is growing at a double digit rate for several years now, unlike in the western countries
and Japan where the growth has stagnated. And it is expected to continue growing at around
15% as historically it has grown at an average of 1.8 times the GDP rate. The paint industry
can be divided into decorative (60%) and industrial (40%). Decorative demand is mainly driven
by fresh construction (40%) and repainting (60%). The industry demand is mainly from the
auto (about 75%
The paint industry is expected to grow at 12-13% annually over the next five years from Rs.
280 billion in FY13 to around Rs. 500 billion by FY18. FY14 was a challenging year for the
industry as a whole due to subdued demand across key sectors and rising inflation.
The unorganised sector controls around 35% of the paint market, with the organised sector
accounting for the balance. In the unorganised segment, there are about 2,000 units having
small and medium sized paint manufacturing plants. Top organised players include Asian
Paints, Kansai Nerolac, Shalimar Paints, Berger Paints and Akzo Nobel.
The paints sector is raw material intensive, with over 300 raw materials (50% petro-based
derivatives) involved in the manufacturing process. Since most of the raw materials are
petroleum based, the industry benefits from softening crude prices.

Industry Performance
Revenue of Indian Paint Industry

Industry Performance
45000

40600

40000
35000

29000

30000
25000

24000
21000

20000
15000
10000
5000
0
FY 11

FY 12

FY 13

FY 14

Revenue (INR Crore)

Market Cap
TTM

Asian Paints
80,908.33

Kansai Nerolac

Berger Paints
15,695.95

12,072.34
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Akzo Nobel
6,953.28

Shalimar
307.77

*TTM Trailing twelve months, all figures in INR Crores

Source: valueresearchonline.com

Market Cap
90,000.00

80,908.33

80,000.00
70,000.00
60,000.00
50,000.00
40,000.00
30,000.00
20,000.00

15,695.95

12,072.34

10,000.00

6,953.28
307.77

0.00
TTM
Asian Paints

Berger Paints

Kansai Nerolac

Akzo Nobel

Shalimar

Total Income
TTM
Mar 14

Asian Paints
13,910.65
13,548.06

Kansai Nerolac

Berger Paints
4,196.06
3,905.67

3,192.91
2,883.23

Akzo Nobel
2474.6
2370.1

Shalimar
530.3
486.5

Total income
16,000.00
14,000.00

13,910.65
13,548.06

12,000.00
10,000.00
8,000.00
6,000.00

4,196.06
3,905.67

4,000.00

3,192.91
2,883.23

2474.62370.1

2,000.00

530.3 486.5

0.00
Asian Paints

Berger Paints

Kansai Nerolac
TTM

Mar '14

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Akzo Nobel

Shalimar

*TTM Trailing twelve months, all figures in INR Crores

Source: valueresearchonline.com, equitymaster.com

Competitor Analysis
Net revenue from operations, EBITDA and EBITDA margin (crores), PAT
Asian Paints

Net Revenue From Operations(Crores)

EBITDA(Crores)
EBITDA Margin
Profit After Tax(Crores)

FY 09-10 FY 10-11 FY 11-12 FY 12-13 FY 13-14

5134
6336
7964
8960
10419
1154
1232
1493
1673
1951
22
19
19
19
19
775
775
958
1050
1169

Berger Paints
FY 09-10 FY 10-11 FY 11-12 FY 12-13 FY 13-14
Net Revenue From Operations(Crores)
1822
2299
2901
3330
3735
EBITDA(Crores)
200
253
308
367
420
EBITDA Margin
12
12
12
12
12
Profit After Tax(Crores)
120
148
177
210
234

Kansai Nerolac

Net Revenue From Operations(Crores)

EBITDA(Crores)
EBITDA Margin
Profit After Tax(Crores)

FY 09-10 FY 10-11 FY 11-12 FY 12-13 FY 13-14

1687
2085
2650
3024
3385
200
253
304
367
420
11.5
15.5
14
12.5
13
120
148
177
210
234

Akzo Nobel
FY 09-10 FY 10-11 FY 11-12 FY 12-13 FY 13-14
Net Revenue From Operations(Crores)
1041
1211
1978
2232
2418
EBITDA(Crores)
221
243
286
327
249
EBITDA Margin
21
20
14
15
10
Profit After Tax(Crores)
159
177
202
219
150

Shalimar Paints

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FY 09-10 FY 10-11 FY 11-12 FY 12-13 FY 13-14

Net Revenue From Operations(Crores)
367
404
486
530
483
EBITDA(Crores)
26
28
38
36
21
EBITDA Margin
7
7
8
7
4
Profit After Tax(Crores)
10
12
14
11
-3

The net revenue from operations refer to the sales made by these organizations by the virtue
of their operations. Asian Paints undoubtedly leads the pack since it is the market leader.
EBITDA is an acronym for earnings before interest, tax, depreciation and amortization. It is an
approximate measure of a company's operating cash flow based on data from the company's
income statement.
EBITDA margin is the measurement of a company's operating profitability. It is equal to
earnings before interest, tax, depreciation and amortization (EBITDA) divided by total
revenue. Because EBITDA excludes depreciation and amortization, EBITDA margin can
provide with a cleaner view of a company's core profitability.
Profit after Tax is the profit earned by an organization after paying off the taxes to the
government. This is yet another important factor to look for the profitability of a company.

CAGR

Asian Paints Berger Paints

Kansai Nerolac Akzo Nobel Shalimar Paints
15.21
15.44
14.94
18.36
5.65

CAGR
20
18
16
14
12
10
8
6
4
2
0

CAGR

Asian Paints

Berger Paints

Kansai Nerolac

Akzo Nobel

Shalimar Paints

Source: Company reports, Bloomberg, Moneycontrol.com, equitymaster.com, BP equities

research (www.bpwealth.com)
CAGR for the paint industry in India
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Considering the sales made in the FY 09-10 and FY 14-15 are wholly contributed by the top 5
paint companies, the CAGR is:
FY 09-10 paint industry valuation: 12750 crores
FY 13-14 paint industry valuation: 24600 crores
CAGR: 14.05%

Trends in the Industry

Perception Change from Aesthetic to Protective Coating

Focus on Research and Development
Launch of Various Innovative Product Offerings
Increased Thrust on Brand Creation and Distribution
Water Based Paints Substituting Lower End Paints
Tinting Systems a Trend Now

The Future Prospect

Indias strong economic growth has propelled the paint industry to double-digit growth over
the past few years and has made it Asia Pacifics fastest growing paint market. Despite fast
growth, Indias per capita paint consumption is still abysmally low at around 2kg/year. Due
to increased Government funding for infrastructure, demand for paints both in industrial
and decorative segment is set to rise, thereby rendering Indian paint industry to be poised
for further growth.
Nearly 65% of the paint market is organized. The organized market is highly concentrated
and a classic example of an oligopoly, where entry barriers are high and the top-5 players
capture most of the market, while the unorganized market is highly fragmented with over
2,000 players.
Decorative paints segment is expected to witness higher growth going forward. The fiscal
incentives given by the government to the housing sector have immensely benefited the
housing sector. This will benefit key players in the long term.
Although the demand for industrial paints is lukewarm it is expected to increase going
forward. This is on account of increasing investments in infrastructure. Domestic and global
auto majors have long term plans for the Indian market, which augur well for automotive
paint manufacturers like Kansai Nerolac and Asian Paints. Increased industrial paint demand,
especially powder coatings and high performance coatings will also propel topline growth of
paint majors in the medium term.
The paints sector is raw material intensive, with over 300 raw materials (50% petro-based
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derivatives) involved in the manufacturing process. Since most of the raw materials are
petroleum based, the industry benefits from softening crude prices.
The GDP Correlation
There is a high correlation between the paint industry growth and the GDP growth rate (as
per the calculations, the correlation factor comes out to be o.76 and since it is greater than
0.7 we assume there is high correlation between the two factors. Also, we observed that the
paint industry volumes grows 1.5-2.o times the change in GDP.
We anticipate the GDP to surge to 5.4%, 6.3% and 7.5% in 2015, 2016 and 2017 resp. as
projected by the Government. This is also due to the fact that there is a new stable and
business friendly government at the center. Thus we estimate the paint industry to grow at
a pace of around 11-13% and 15% for the next three years.
Increase in GDP will increase standard of living. With rise in income level, consumers will
increase consumption which in turn will help the decorative segment.
Growth in housing sector will increase urbanization, provide cheaper loans and shift to
permanent housing structures will increase spending in the decorative segment.
New projects in roads and ports will increase revenues of paint industry and drive the
infrastructure segment.

Thus since we are assuming the industry to grow at the pace of 11-13% and 15%
respectively for the next three years,
Current valuation (FY 13-14): 24600 cr

Net forecasted sales in 2014-15: 27306 cr

Net forecasted sales in 2015-16: 30856 cr
Net forecasted sales in 2016-17: 35484 cr

Analysing Urban & Rural demand

There is no clear distinction between the rural and urban demand for paints in India based on
secondary research data available. However, we may infer that since 35% of the paint industry
is made up of the unorganised market which amounts to about INR 14200 crores, there is
substantial demand. Increase in the level of education, development of the rural market, and
increase in the income level. Industry experts point that the demand for paint in the rural
market is influenced greatly by the monsoon showers. Another factor which is key is that due
to the diversity not only in choices and beliefs but also in geographical and climatic conditions,
it is difficult for the major players to penetrate into the rural market.
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Market share
The below chart indicates the market share of KNPL and its competitors as on November
2014. This indicates the market share based on both industrial and decorative paints, hence
it is the overall market share in the paint industry as a whole.
Asian Paints is the market leader as it controls approximately 47% of the overall market share
and around 75% market share in the decorative paints. Decorative paints account for over
77% of the overall paint market in India. Berger Paints, is the second largest player with a 14%
overall market share and around 17% market share in decorative paints. Kansai Nerolac
(KNPL) is the third largest player as it has a market share of approximately 12% overall but it
is the market leader in the industrial paints with a market share of close to 45% market share.
Akzo Nobel has about 6% market share.

Market share of top five players in the last two years

2013 (in %)
Evolution
Asian Paints
38
+11
Berger Paints
11
+3
10
+7
Kansai Nerolac
8
-2
Akzo Nobel
5
0
Shalimar

Market Shares in 2013 (in %)

2014 (in %)
49
14
17
6
5

Market Shares in 2014 (in %)

9
5

28

38

49
17

5
8
10

11

14

Asian Paints

Berger Paints

Kansai nerolac

Asian Paints

Berger Paints

Kansai Nerolac

Akzo Nobel

Shalimar

Others

Akzo Nobel

Shalimar

Others

Source:www.sannams4.com/wp-content/uploads/2012/09/Sannam-S4-Presentation-India-Paint-and-Coating-IndustrySector-Fast-Facts.pdf

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Marketing Strategy of Competitors

Asian Paints
Product
The range of products of Asian Paints included paints for interiors, exteriors, metal and
wooden surfaces.
Price
Asian paints classify its products into 2 categories- economic and premium. In both economic
and premium they have metal paints, wooden paints and cement paints (interior and
exterior). Premium quality cost between Rs. 15000 to Rs. 17000 and economic quality cost
about Rs. 9000to Rs. 10000 for 20 Liter pack of same type of paints.
Promotion
Asian paints choose to invest in Radio, TVCs, Print, Internet, OOH, POP, Retail Outlets,
Seminars, and Workshops concerning the advertising. Asian Paints use a lot of promotions
techniques such as advertising Campaign, sales promotion, personal selling, direct marketing
and public relation in order to increase sales. The customers really liked the Mera Walla Blue
campaign of advertising. Asian paints use high profile brand ambassadors like Akshay Khanna,
Saif Ali khan, Soha Khan.
Place
-

4 manufacturing units
6 regional distribution centres
55 depots
15000 dealers
90 000 sub-dealers
3000 Asian Paints stores
4500 world colours stores

Berger Paints
Product
The range of products of Berger Paints included paints for interiors, exteriors, protective
coatings, undercoats, chemical coatings, metal and wooden surfaces.
Price
-

The prices of different brands in the same segment are quite similar with just a
difference of INR 10-15.
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The speciality product can be priced at a higher price.

Pricing decisions in the paint industry largely depend on the price of the inputs like
raw materials and petrol. If one of this element increase or decrease, it will affect all
the segment in the market.
Berger offer 5% margin to the dealer and offer numerous discounts like cash, volume,
seasonal discounts

Promotion
-

Berger use different media for advertising : TV, newspaper, magazines, radio
Demonstrations of colour on wall are provided by the company to make people aware
of the brand
Berger use temporary price reduction to increase their sales
They give incentives promotion scheme to maintain the dealer
Berger paints use sampling in order to convey the word of mouth
Organise contests and give reward between dealer to promote push strategy
Involve key players who influence the final purchase decision

Place
-

Berger has a countrywide distribution network of 15 000 dealers

8000 tinting machine
Strong presence in the western and southern regions by setting up exclusive retail
outlets and distributor base
lway
Distribution : 7 manufacturing facilities in India
85 depots, several regional, area offices

AkzoNobel
Product
The range of products of AkzoNobel included paints for interiors, exteriors, protective
coatings, undercoats, chemical coatings, metal and wooden surfaces. Their focus is majorly
on industrial coatings as they have superior technology.
Price
Price vary a lot, depending of the product and the volume of paint. It goes from 68 to more
than 7000 rupees.

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Some prices:
1 litter
touch 383

Velvet
trends
Dulux
super 223
smooth
ICI Magik
68

4 litres
1501

10 litres
3677

20 litres
7300

895

2137

4179

304 (5 litres)

553

1025

Promotion
-

-offers lots of promotions to dealers in order to increase loyalty toward the brand.
-promoted sales by giving free products and discounts to distributors, occasional
painters and contractors.
-in-shop promotion (samples, promotion stands)

Place
-

-100+ franchisees points (Dulux Decorative Centres)

-4 manufacturing points
-1700 employees in manufacturing, selling and distributing across India

Analysis of performance of Kansai Nerolac

Kansai Nerolac Paints Limited (KNPL) (formerly known as Goodlass Nerolac Paints Ltd) is the
largest industrial paint and second largest decorative paint company of India based
in Mumbai. It is a subsidiary of Kansai Paints Ltd., Japan. It is engaged in the industrial,
automotive and powder coating business. It develops and supplies paint systems used on the
finishing lines of electrical components, cycle, and material handling equipment, bus bodies,
containers and furniture industries.
Product

Decorative Paints: Interior wall paints, Exterior wall paints, Wood surface paints and
Metals surface paints. Under decorative paints 3 basic variants are available which are
based on eco-friendliness, metallic finish and hi-gloss.

Automotive Coatings: Pre-Treatment Chemicals, Electrodepostition, Intermediate

Coats/Primer Surfacers, Topcoats, Clear Coats, Touch Up Paints, Auto Refinishing
Products, Heat Resistant Paints, and Underbody Paints & PVC Sealants & Transit
Protection Films.

Performance Coatings: Performance Coating are available for wide range of products.
For household appliances and metal fittings in factories, there is a comprehensive
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range of general industrial coating systems like P.T. chemicals, Primers, Coil Coat, Heat
Resistant Paints & Metal Decoration Coatings. Powder Coating is now increasing in
popularity because of its high quality, resistance to corrosion, the apparent ease of
application and the environmental friendliness of the technology
Place
In India the company has major presence in Assam, Goa, Gujarat, Haryana, Himachal Pradesh,
Madhya Pradesh, Orissa, West Bengal, Rajasthan, Maharashtra, Punjab, Uttaranchal, Bihar,
New Delhi, Tamil Nadu, and Uttar Pradesh. Kansai Nerolac Paints Company has manufacturing
units situated in Vatva, Lote Parshuram, Jainpur, Bawal, and Perungudi. The total production
capacity of the plants of the company is around 161,100 TPA and all the plants are
technologically advanced and comparable to most state-of-the-art plants in the world. Kansai
Nerolac Paints has a very wide network of more than 11,000 dealers spread all over the
country. KNPL also has a comprehensive and vivid website which is accessible to people all
over India and offers store locator functionality.
Promotion
KNPL spent INR 320 crores on selling and distribution in FY 14. The company runs advertising
campaigns on television, print media and online. KNPL appointed one of the most well-known
personalities in India, Shah Rukh Khan as their brand ambassador in the year 2010 and he has
been closely associated with them since then. KNPL has made strategic tie-ups with leading
e-tailer Flipkart during the festive season (Oct-Nov). The interactive consumer interface on
the website allows one to browse through a gallery of wall finishes, designer textures, product
benefits, videos and customer testimonials before making the purchase. Nerolac also offers
up to INR 10,000 discount throughout this festive period. KNPL is a brand which never
hesitated to invest in promotions and brand building. The brand has a really commendable
awareness which was created through heavy brand promotions. The jingle "Jab Khar Ki
Raunak Badhana ho, Deewaroan ko jab sajana ho, Nerolac, Nerolac" still lingers in the
memory of the public. Such catchy jingles and campaigns lifted the brand to double digits
market share levels but could not bridge the gap with the market leader.
Price
KNPL prices its products as per the standard pricing of the industry. Its premium products
range from INR 350-500, the mid-tier products range from INR 250-300 and economy
products range from INR 100-200 (wood and metal finishes). These are not for industrial
coatings.

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SWOT Analysis of Strategic Business Unit

Strengths

Well-known brand
Accessibility to consumers
Eco-friendly

Weaknesses

In decorative paints Industry Customer tastes and perceptions change very fast and
products may become obsolete with change in trends, hence production planning and
inventory problem.
Asian Paints is still perceived as the most trusted brand.

Opportunities

Using its Japanese R&D to gain competitive advantage

Expansion initiatives in Nepal & Sri Lanka

Threats

Competition from Berger Paints

Supply of Titanium dioxide

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SEGMENTATION, TARGETING & POSITIONING

Segmentation
The following segmentation variables have been considered while segmenting for a paint
variant:1. GEOGRAPHIC: Tier 1 and Tier 2 cities 74 in number. This classification is done on the
basis of HRA paid to public servants employed in various parts of the country. This
choice is done keeping two things in mind. First, the income of people in the
geographical area so that may be able to afford painting activity. Second, Tier 1 and 2
cities will have stronger distribution networks than cities in lower tiers.
2. DEMOGRAPHIC:
a) Age : Above 18 years
b) Family Size: Married and Single
c) Occupation: Working Professionals, Housewives
It tries to include anyone who has an influence in the buying decision for paints.
3. PSYCHOGRAPHIC: Achievers, Experiencers, Thinkers, Strivers are all part of the
segment.
4. BEHAVIOURAL: Based on attitude, knowledge and response for product.
a) Benefits: Quality, Economy
b) User status: Non-user, Potential user, First time user and regular user
c) Loyalty: Medium, None
d) Awareness: Low, Medium & High
SEC Classification: According to the new SEC classification, 15% of total households fall under
A1, A2, A3, B1 & B2 category. As per the report published by MRUC, these households own a
television, subscribe to newspapers and have internet connections. People in this category
are more informed and hence are more likely to try new products aimed at enhancing the
quality of life. The condition of residence is an indicator of quality of life.
Targeting
Interior paints offer a number of variants currently. There are paints available for children eg.
Impressions Disney as well as a number of options ranging from eco-friendly to economy
class. For our new variant of interior paint, we are targeting the following set of individuals:1. Middle and upper class home owners who undertake painting activities every 4-5
years and hence prefer to go for mid-range paints. These are consumers who are
looking for something new as they are open to changing styles. Over 65% of the
surveyed people indicated that they might also be willing to give the painting contract
to the company which manages everything end to end.
2. Distributors: Approximately 60% of the people surveyed indicated that the contractor
made the buying decision when it came to choosing the brand of the paint. These
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contractors have close tie-ups with distributors based on commission. Having a strong
link with distributors makes penetration to the contractors easier.
3. Builders: With large number of residential apartments coming up Builders are a very
important target. Since a high quality paint job really helps in selling a house that is
why many builders turn to high quality paints. In terms of volume Builders provide
very high sales even though the margin might be a little lower.
Positioning
Through survey it was found that out of all the attributes that were most critical for
consumers while choosing a particular brand of paint following were most important (based
on cumulative frequency):

Low VOC (chemicals) Ranked as either 1st or 2nd 15 times

Low odour Ranked as either 1st or 2nd 14 times

For all the innovative attributes that could be provided, consumers preferred the below 2
were most important (based on cumulative frequency):

3D texture Ranked as either 1st or 2nd 20 times

Reflective colours Ranked as either 1st or 2nd 14 times
Low VOC (chemicals)

AkzoNobel
Kansai Nerolac

Low odour

High odour

Asian Paints Market share ~ 75%

Asian Paints

Berger Paints
Berger Paints Market share ~ 17%

Shalimar Paints

High VOC (chemicals)

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http://www.business-standard.com/article/management/asian-paints-reaps-its-headstart-113082101170_1.html

3D Texture

Asian Paints

Target for Nerolac

Akzo Nobel

Non reflective colours

Reflective colours

Berger Paints

Shalimar Paints

No 3D Texture

Objectives
Kansai Nerolac Paints Limited (KNPL) is currently the 3rd largest paint manufacturer in India
with a market share of 12% of the total organised market. Through the launch of this new
product in interior paints segment KNPL aims to capture 15% market share. Assuming the
CAGR to be approximately 14% (as calculated in the competitor analysis) the paint industry
would grow to about INR 46,300 crores by FY 16. 65% of which is in the organised sector,
which would be INR 30,100 crores approximately. KNPLs closest competitor Berger Paints
has net sales of INR 4251 crores. Growing with a CAGR of 15.5% it would have net sales of
approximately INR 4909 crores, which would be a market share of 16%. To achieve a market
share of 15% and cut down the gap from Berger Paints from 2% to 1% KNPL would target net
sales of at least INR 4515 crores. Based on the CAGR of KNPL which is about 15% the expected
net sales would be approximately INR 4300 crores. A net sales of INR 215 crores is therefore
required from the new product to capture an overall share of 15%.
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Note: Assuming that the market share of KNPL in the industrial paints segment does not show
any significant increase, which is a pessimistic approach.
Sources: www.bergerpaints.com/upload/investors/annual-reports/ar-13-14.pdf
www.nerolac.com/low/financial/auditorsreport
www.equitymaster.com/research-it/sector-info/paint/Paints-Sector-Analysis-Report.asp

Positioning Statement
A positioning statement is a concise description of the target market as well as a compelling
picture of how the company want that market to perceive your brand. Though it may read
like something from your promotional materials, your positioning statement is an internal
tool.
For every consumer who considers their home or office as an extension of their personality
and a part of their life, Nerolac brings a refreshing range of paints that combine innovation
and creativity to breathe life in to your walls in an eco-friendly manner.

Marketing Strategy
Kansai Nerolac Paints has decided to come up with a new paint for interiors. This new paint
has been formulated using a special compound that gives it 3D texture and reflective
properties. The presence of 3D texture would make the painted surfaces distinguish itself
from any objects in front or on it and reduce the effects of peeling. The reflective properties
reflect the natural or artificial light in a manner that amplifies the amount of lighting and
makes the surroundings look brighter even in low light. The main target has been decided as
the urban population above 18 years of age, who have an influence over the buying decision
of the paint. The paint would be made available in volumes of 1, 5, 10 and 20 liter packs. The
pricing decided by the company is based on the value it would provide and also target return
pricing. It would also follow our mission and vision statement of providing innovation and
superior quality of products and aim for leadership in the interior paints sector. The paints
would be available to consumers through the intensive network of dealers. Alternatively,
consumers will also have the option of selecting their paints through the website and getting
it at their nearest dealer. Utmost care has been taken by the company in following all norms
and regulations required to be followed for making industrial coatings. Some workshops will
be organized for spreading the awareness of this paint to the dealers and contractors who
would be given demos and shown the first hand product performance so they can
recommend it to their customers. A new campaign will also be started on television starring
the brand ambassador of KNPL, Shah Rukh Khan to spread more and more awareness about
this product.

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Action Plans
Product Strategy
After doing a thorough survey and many analytical and logical analysis, KNPL found that the
consumers found two things most important when it comes to paint and that were 3D texture
and reflective colors. These two features are considered as the innovative features in the
interior paint segment and so far no company has launched a very definite product with these
features. The feature of eco-friendliness has become an expected value in the interior paint
segment and the paint being launches by KNPL contains almost 0% VOC contents. This is also
in line with the recent focus of the company on healthy paints which is reflected in the ad
campaigns. So, for this purpose the company wisely launched a new product using their best
concept which is best suited for the consumers in which has got a balance of 3D texture and
reflective properties and contains 0% VOC. The target market for this type of paint was Middle and upper class home owners who undertake painting activities every 4-5 years and
hence prefer to go for mid-range paints. These are consumers who are looking for something
new as they are open to changing styles. Distributors as quite a lot of people leave the buying
decision on the contractor who in turn deals with the distributor. These contractors have close
tie-ups with distributors based on commission. Having a strong link with distributors makes
penetration to the contractors easier. Builders, with large number of residential apartments
coming up Builders are a very important target. Since a high quality paint job really helps in
selling a house that is why many builders turn to high quality paints. In terms of volume
Builders provide very high sales even though the margin might be a little lower. The paint will
be available in pack of 1, 5, 10 & 20 liter and the packaging will ensure that paint is not
adulterated.

Pricing Strategy
1. Pricing objective
In our case we will adopt the strategy of maximizing market share through penetration. We
are targeting a market share of 3% in the initial one year. For this we have taken the approach
of target pricing and combination with perceived value. Target pricing and perceived value
will help us in balancing two things. First, it will help in the increase of market share and
secondly it will keep the prices within a competitive frame.
2. Determining Demand
Through the launch of this new product in interior paints segment KNPL aims to capture 15%
market share. Assuming the CAGR to be approximately 14% (as calculated in the competitor
analysis) the paint industry would grow to about INR 46,300 crores by FY 16. 65% of which is
in the organized sector, which would be INR 30,100 crores approximately. KNPLs closest
competitor Berger Paints has net sales of INR 4251 crores. Growing with a CAGR of 15.5% it
would have net sales of approximately INR 4909 crores, which would be a market share of
16%. To achieve a market share of 15% and cut down the gap from Berger Paints from 2% to
1% KNPL would target net sales of at least INR 4515 crores. Based on the CAGR of KNPL which
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is about 15% the expected net sales would be approximately INR 4300 crores. A net sales of
INR 215 crores is therefore required from the new product to capture an overall share of 15%.
Through the analysis of prices of mid-level paints and premium paints it is found that the
higher category products are priced at about Rs. 900 per liter by Asian Paints. Taking a
conservative approach and pricing the paint (assumption) at Rs. 600 per liter we can calculate
that a sale of 3.6 million (215 crore/Rs. 600) liters of this product alone is required.
3. Estimating costs
The variable costs aspect for the product will be the one for which the company have to make
an investment. Making the operations efficient as much as possible will give the benefit to
the company in earning more profit and also pricing the product a little low compared to the
competitors. Efficiency in operations will also help the company in penetrating the market.
We have estimated that the manufacturing cost will be 50% of the total selling price to the
customer. Industry average for Promotion is 10% of per unit price for the product. As the
competitors have already made their brand strong in the market we will have to spend a
considerable amount on sales force. We can estimate to spend around 8% of per unit price
for the product. Distribution cost will be 20-25%, to promote the product effectively KNPL will
pay handsome margins to the retailers.
4. Analyzing Competitors Price Mix
Company
Product
Packaging
Ranking
Rate per liter

Asian Paints
Royale Sensation
4 liter
Leader
Rs. 925

Berger Paints
Silk Luxury
4 liter
Challenger
Rs. 875

Shalimar Paints
No. 1 Silk
4, 10 liter
Follower
Rs. 500

All the products offer the best kind of benefits available with the company, there is not much
of a difference in their packaging. The prices of all the products are near about same range of
Rs. 500-900. It can be inferred that this is the price perceived by the customers as fair and
they are happy to spend this much for high quality paints. It can also be said that the category
is such that it targets only the upper middle class society who are willing to pay premium for
a product which caters to their special needs. Price cannot be much of a deciding factor when
it comes to special needs.
5. Pricing Strategy
The pricing decided by the company is based on the value it would provide and also target
return pricing. It would also follow our mission and vision statement of providing innovation
and superior quality of products and aim for leadership in the interior paints sector.
6. Determining the final price
We have decided to keep the price at Rs. 825 per liter. We are not keeping the price too low
so that there may not be a price war. Therefore the target is to sell appx. 26 lac liters of paint.
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Distribution Strategy
Kansai Nerolac is one of the leading company in the paint industry in India. While it has grown
from a relatively small, decorative paint company to a large business that has a vast consumer
customer base, the company's methods of distribution and marketing have changed over the
years.
The basic distribution and marketing strategies are still similar to initial strategies used when
Kansai Nerolac opened its doors.
Kansai had used the strategy of offering wide range of products to push competitors to side
and become the Indian leading company in decorative paints like in this new product they
have offered different types of color, odor free paint, chemical free paint and etc.
By launching this new product the company is trying to increase its share and uproot the legs
of Asian paints from the paint market and take its place.
The companies that have a larger selection available for clients are likely to retain those clients
and customers which are limited and do not have color choices.
Technology is large part of Kansai Nerolac's distribution success. According to the latest
distribution strategy case study of Nerolac Kansai, the company provided automated
machines that mixed paint colors at the distributors to allow customers and consumers more
range in color and more options and so this is how new vibrant colors are offered in this new
launch.
Big problem with the paint companies in India was a competitive market in the large cities,
where distribution was relatively easy and the risks were low. Kansai had started its launch of
new product by working from the rural areas, where distribution was a challenge and where
the companies had overlooked.

Promotional Strategy
The company sponsored many charity events by its new launched product's name. These
shows were one of the major attraction to the people and so this was a right step taken by
the company in order to come between the people.
Like for example recently the company sponsored an event on health of the people and
there promoted there product by saying that as their paint was chemical and odor free so
the people will have no allergies and side effects.
The company also started running advertising campaigns on television, print media and
online.
The interactive consumer interface on the website allows one to browse through a gallery of
wall finishes, designer textures, product benefits, videos and customer testimonials before
making the purchase. Nerolac also offers up to INR 10,000 discount throughout this festive
period.
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KNPL is a brand which never hesitated to invest in promotions and brand building.

Sales force Strategy

Sales force of a company is very important in its distribution channel. Sales managers must
be able to locate prospects, develop them into customers and grow the business. Sales
Management which is concerned with the direction & control of sales force refers to the
management of sales personnel. Sales force management is the planning, direction & control
of personnel selling, including recruiting, self-selection, training (equipping, assigning,
routing), supervising, paying & motivating as these tasks apply to the personal sales force
management. In addition to other responsibilities, controlling & guiding the sale force is one
of the important activities of management. Managing the sales force involves the
implementation of personal selling strategy.
As a department of the sales force, it is important to devote great attention in designing and
managing the sales force. So the following strategies can be employed
1) Sales department objective:
Every department needs to set clear objectives for steering progress to boost the
companys revenue and expand its market share. Like other businesses, nerolac also
has a four-phase growth cycle: the initial startup followed by growth, expansion and
finally evolution into a mature business.
2) Sales Force size :
Sales force size should be based on the analysis of the industry growth their target
customers and the profits that the company is making in a region.
3) Training sales people:
The organization provides adequate training so that the applicant really becomes suitable
for the job. Researchers have clearly indicated that the following are some of the factors
which exist in case of a good salesman, i.e. a salesman properly trained as against one who
was not so trained:
He makes a more enthusiastic presentation.
He has the ability to clinch the order.
He has greater product knowledge.
He pays closer attention to ensure that services are rendered to the customers.
He has superior territory organization.
He answers objections better.
He can obtain more customer interviews.
The objectives of training are to give the following types of information to the salesmen,
namely:

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Knowledge of the company, its background and history. This will give him a perspective
as to how he fits into the organization structure of the company.
Knowledge of the Company's products and more particularly the `selling points' or
advantages that he can emphasize with a view to close the sale.
Knowledge of customers, i.e. details about the types of customers and how they should
be handled.
4) To enhance efficiency of sales teams, a web based portal was built and
individual logins were provided to members of sales teams. This web portal
provided all the necessary information of the customer, plus the sales team
members were able to submit their reports online. Moreover, the sales team was
able to harness real time information like company circulars, making the
complete sales process almost paperless. Other than the sales portal, the web
portal for dealers was also built to streamline process like stock availability,
details of payment, etc involving dealers. A key challenge in this project was
training sales teams and dealers who are usually not so tech savvy and reluctant
to change.

Profit and Loss Statement

Assumptions:

Assuming the paint industry to be around 46300cr by FY16 and assuming Kansai
Nerolac to acquire 15% of market share, a net sales of INR 215 is required from the
new product to capture the required market share.

Profit and loss account:

All Figures in INR and crores

TOTAL REVENUE
LESS:
R&D AND MARKET ANALYSIS COST
COST OF RAW MATERIAL &
MANUFACTURING
INITIAL COST SETTING UP OF
MACHINES AND FACTORY
MARKETING AND SALES EXPENSES
ADMINISTRATION
AND
OTHER
EXPENSES
MISCELLANEOUS

10%

FIRST
YEAR
215

SECOND
YEAR
236.5

THIRD
YEAR
260.15

3%
45%

15
96.75

15.45
106.425

Spread out

15.9135
117.067
5
5

30%
10%

64.5
21.5

70.95
23.65

78.045
26.015

5%

10.75

11.825

13.0075

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TOTAL COST

213.5

233.3

TOTAL PROFIT/LOSS

1.5

3.2

255.048
5
5.1015

Controls
Through use of Information Technology
Kansai Nerolac Portal will be setup where company will monitor demand by the key accounts.
This will give insight about market trends and also help to understand these key accounts
better.
Order placing helpline for contractors and smaller accounts who can directly connect with
central company facility, place orders and receive stock from nearest warehouses leading to
operational effectiveness.

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References

https://www.equitymaster.com/research-it/sector-info/paint/Paints-Sector-AnalysisReport.asp
http://www.sourcinghardware.net/shrd/node/871
http://www.thehindubusinessline.com/economy/macro-economy/bright-outlook-forindian-paint-industry-assocham/article6388228.ece
Annual Report Of Kansai Nerolac
Annual Report of Asian Paints

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