Analysis of the Paint Industry

Published Date: 23 Mar 2015 Last Modified: 02 Oct 2017

Color has captivated everyone throughout the history, be it myriad cultures, age-groups, occasions, etc. Color has become a significant part of every family. Every age and every region has produced dyes and pigments based on the availability of the resources. The history proves the existence of colors from past thousands of years, discovered in the caves of Southern Europe.

Paint is defined as the group of emulsions, consisting of pigments suspended in a liquid medium, for use as decorative or protective coatings. Today, contemporary paints and coating consist of countless of hundreds of thousands to fulfill the varied requirements of hundreds of thousands of applications.”Paint” ranges from the broad group of environmentally sound latex paints that many consumers use to decorate and protect their homes and the translucent coating that line the interior of food homes and the translucent coating that line the interior of food containers, to the chemically complex, multi-component finishes that automobile manufacturers apply on the assembly line. Paint made its earliest appearance about 30,000 years ago .Cave dwellers used crude paints to leave behind the graphic representations of their lives that even today decorate the walls of their ancient rock dwellings. The utility of paints has evolved from a decorative use to a surface protection use. Also, know as surface coatings, paints can be classified on the basis of end use, solvent system and solid content.

Paint is comprised of three separate things working together. A pigment is used for the color. A binder is used to hold the pigment to the wall. And lastly, a carrier is used to apply the pigment and binder to whatever. There are many types of paint but they all have these components. For white latex paint, the carrier is de-ionized water, the pigment is very finely ground Titanium dioxide, and the binder is a synthetic polymer that resembles liquid rubber. The pigment and binder are put together with force (grinding) and then the two are slowly dispersed into the water.

Titanium dioxide is the single largest input used in the manufacture of paints. It is a pigment (non-petro-based) that accounts for about 30% of material costs. Phthalic anhydride (PAN) and pentaerythritol (Penta) are the other two important petro-based inputs used in the manufacture of resins. Organic pigments, solvents, oils and a range of chemical additives are also used in the manufacture of paints.

INDIAN PAINT INDUSTRY

The Indian paint industry has come a long way from the days when paints were considered a luxury item. Today the awareness level on preventing corrosion through paints is relatively high, a development that should be a huge boost to the paint industry. The Indian paints industry offers lucrative scope for stable revenue streams to manufacturers of both decorative and industrial paints. The Indian Paints sector is valued at Rs 66 bn in value terms and is very fragmented. The current demand is estimated to be around 650,000 tonnes per annum and is seasonal in nature. The per capita consumption of paints in India stands at 0.5-kg p.a. as compared to 1.6 kg in China and 22 kg in the developed economies. India's share in the world paint market is just 0.6%.

The typical characteristics of the Indian paints industry include raw material intensiveness, working capital intensiveness, seasonality of demand, price elasticity of demand and low entry barriers with respect to technology and funds.

Crucial parameters that make India a favorable proposition include the low per capita consumption of paints (1.0 kilogram), growth in construction sector (it is being offered industry status) and growth in the auto/white goods market respectively spurring demand for decorative and industrial paints. The industry has also witnessed increased activity in the industrial variety of paints with the entry of MNCs in auto, consumer durables etc, which has been gaining steadily over decorative paints in the last one decade.

Indian paint industry is century old and the can be retraced by the history of Shalimar paints which was set up in the year1902 in Kolkata. Till the 2nd World war, industry consisted of small paint producers and 2 foreign companies. Post World War 2, imports were restricted which led to the birth of many domestic manufacturing facilities producing paint. Nevertheless, foreign companied ruled the market. Initially, British paints such as Goodlass Walls (currently famous as Kansai Nerolac), ICI, British Paints (now known as Berger Paints), Jenson Nicholson and Blundell & Eomite dominated the market.

The Indian paint industry has evolved a lot in recent times, both in terms of industry structure and product portfolio. Not long ago, paints were largely considered to be a luxury item. Such a mind‐set has changed significantly of late due to the growing awareness on preventing corrosion through paints, by providing a massive fillip to the paint industry. Indian paints industry is Rs.15, 000 crore market

Growth drivers for Indian paint industry

Per capita consumption at 1.5kg is currently very low as compared to the developed countries (20kg/annum). Usage of lime extracts (chuna) in rural and semi‐urban markets as well as lesser awareness of the protective attributes of paints can be one of the reasons for lower consumption levels. With growing income levels, both in urban as well as rural India on the back of various government initiatives like NREGS, Farm loan waivers, pay commission led salary hikes etc, the per capita consumption will improve in the medium as well as long term.

Rising income levels:

According to McKinsey, proportion of low income groups was expected to decline from 24% in FY05 to 10% in FY10e, and it has. This has acted as a significant catalyst for demand growth in decorative paints.

Increasing media exposure:

With better awareness levels, a gradual shift from unbranded to branded segment as well as improvement in product mix for various players like Kansai Nerolac, Asian Paints as demand for emulsions continues to outpace enamels and distempers.

Rising urbanisation:

This has led to creation of new homes, in‐turn, fuelling incremental demand. Currently, only 28% of Indian population is urban.

Urban Share of total population

Increase in nuclear families:

This is a consequence of younger demographics (60% of India's population is below 30 years of age), with proportion of working population expected to increase from 40% in FY05 to 48% in FY15e.

% of population in 15‐64 age group

Healthy growth in consumption levels expected for both, urban and rural India

Growth in Auto Sector

With production of passenger cars expected to grow, demand for automotive paints will continue to remain healthy as sales are expected to grow in double‐digits. And with realty majors launching new projects, construction activity is expected to gain momentum and generate demand for decorative paints. Globally, the industrial paints segment accounts for a major share, indicating that this segment offers many opportunities for paint manufacturers.

Growth in Auto Segments (FY06‐10)

The emerging trends in the decorative industry are:

• Consumers are increasingly involved in making purchase decisions.
• Consumers expect better and more relevant functional benefits from paints.
• Emulsion paints are outgrowing the industry growth rate.
• Trend of dark shades complementing light shades continues.
• Tinting systems at store level are the order of the day.
• Companies are getting more consumer‐centric and a lot of value‐added services are being offered, like application support, colour consultancy etc.
• Strong growth in the Indian powder coatings segment, as new applications and their advantages are discovered
• Greater interest in water-based coatings technology while awareness of VOCs and legislation increases.

3. INDUSTRY SEGMENTATION

The paint industry can be segmented as follows:

1. End Usage classification: Paints are grouped in either decorative or industrial paints Decorative paints are used for household and construction purposes while latter can be used for industrial products. Decorative Paints consists of myriad types like enamels, acrylic emulsions, distempers and exterior paints. Industrial ones include the marine, anti corrosive metal coatings, etc.
2. Solvent Based classification: Paints which use petro products or water as main solvents. These days water based paints are becoming popular on environment friendliness.
3. Solid Content: Classified based on type i.e. liquid or solid. Powder coatings find application mainly in white goods industry.

The Indian paint industry has surprisingly only private manufacturing units. This can be reasoned by the fact that in the past, government perceived paints as luxury product and hence taxed heavily, thus regulating the industry to a non-core business.

Sector wise Division

Classification of paint industry can be done either product-wise or sector-wise. Sector-wise implies organised and unorganized sectors. The pie chart indicates the same.

Organized Sector is dominated by 6 large players and the unorganized sectors owned by about 2500 units manufacturing various categories of paints. Though the organized sector controls 65% of paint market, unorganized sector with 35% of market share is still a force to reckon with.

Organized sector can itself be divided into 2 distinct segments (Product wise): Industrial segment which is growing at 15% approximately and decorative segment which is growing at 8% approximately. As shown in the graph, most of sales are accounted for primarily by decorative segment. Decorative segment enjoys almost 77% and industrial segment owns 23% of the market.

Organised Market Segment Division

Decorative Segment

It caters to the housing sector. The following falls under decorative segment.

• Acrylic Emulsions: Premium decorative paints are acrylic emulsions used mostly in the metros.
• Enamels: The medium range consists of enamels, popular in smaller cities and towns. Used on substrates like steel, wood, concrete, etc.
• Cement paints: Used for exterior purposes
• Distempers are economy products demanded in the suburban and rural markets. Nearly 20 per cent of all decorative paints sold in India are distempers.

Industrial Segment

Industrial Paints include powder coatings, high performance coatings and automotive and marine paints Two-thirds of the industrial paints produced in the country are automotive paints.

Structure of Paint Industry

4. MARKET PROFILE

The leaders in the organized paint industry are Asian Paints (India) Ltd. (APIL), Goodlass Nerolac Paints Ltd. (GNPL), Berger Paints, Jenson & Nicholson Ltd. (J&N) and ICI (India) Ltd.

“Asian paints” is the industry leader with an overall market share of 33 per cent in the organized paint market. It has the largest distribution network among the players and its aggressive marketing has earned it strong brand equity. The Berger Group and ICI share the second slot in the industry with market shares of 17 per cent each. GNPL has a market share of 15 percent in the organized sector.

APIL dominates the decorative segment with a 38 per cent market share. The company has more than 15,000 retail outlets and its brandsTractor,Apcolite,Utsav,ApexandAceare entrenched in the market. GNPL, the number-two in the decorative segment, with a 14 per cent market share too, has now increased its distribution network to 11,000 outlets to compete with APIL effectively. Berger and ICI have 9 per cent and 8 per cent shares respectively in this segment followed by J&N and Shalimar with 1 and 6 per cent shares.

GNPL dominates the industrial paints segment with 41 per cent market share. It has a lion's share of 70 per cent in the OEM passenger car segment, 40 per cent share of two wheeler OEM market and 20 per cent of commercial vehicle OEM market. The company is also venturing into new areas like painting of plastic, coil coatings and cans. APIL, the leader in decorative paints, ranks a poor second after Goodlass Nerolac in the industrial segment with a 15 per cent market share. Berger and ICI are the other players in the sector with 10 per cent and 9 per cent shares respectively. Shalimar too, has an 8 per cent share.

Asian Paints enjoys leadership position in the Indian Paints industry, with nearly 55% share of the organized segment.

Major Market Player

5. COMPANY PROFILE

Incorporated in 1920, Kansai Nerolac Paints Limited (KNPL) is the second-largest coating company in India. It is a subsidiary of Kansai Paints, a Japanese company, which holds approximately 69.3% stake. KNPL operates in the decorative as well as the industrial paints segments, and is the market leader in automotive and powder coating segments. It manufactures decorative paints, automotive coatings, general industrial coatings, high performance coatings, powder coatings and speciality coatings.

Its manufacturing plants are located at Ratnagiri (Maharashtra), Kanpur Dehat (Uttar Pradesh), Perungudi and Hosur (Tamil Nadu) and Bawal (Haryana). Its employee strength is approximately 2,000.

The company has a strong distribution network of ~12,000 distributors, 5,000 colour tinting machines and 69 sales locations, as of FY10. The installed capacity for various products as of FY10 is: Paints, varnishes, enamels and powder coatings 2.08 million tonnes (MT), Synthetic resins 79,380 tonnes and pre-treatment chemicals 2,400 tonnes. Exports contributed less than 1% of FY10 revenues. The proximity of the company's plants to the customers' plant locations offers KNPL a strong logistical advantage.

Kansai Nerolac Paints Ltd.is a cognized leader in chosen fields. The company has won many prestigious awards such as National Energy Conservation Award from the Ministry of Power, Government of India for its Jainpur plant, the Golden Peacock Award for Corporate Governance in 2005, the Business Innovator of the year award in 2006 from the CTO Forum Magazine and Best Managed Company award from Business Today in 2004.

History

It is the second largest coating company in India and market leader in Industrial Coatings. Its Industrial Coatings has a wide range of products in the Automotive, Powder, General Industrial and High performance Coatings space. Nerolac paints, as it is popularly known, are an established brand in decorative paints.

Kansai Nerolac Paints Ltd is a subsidiary of Japan based Kansai Paint Company Limited, which is one of the top ten coating companies in the world. The technological edge of Kansai helps us constantly innovate and come up with products that meet consumer need gaps. Kansai Nerolac has always believed that the key to its business is:

• Technology
• Research & Development
• Innovations
• Quality

Year 1920, a paint company was born as Gahagan Paints and Varnish Co. Ltd. in Mumbai. The journey is marked by moving from strength to strength in every sphere of business - be it product introductions through innovation, value engineering and superior technology.

1920: A company named as Gahagan Paints and Varnish Co. Ltd at Lower Parel in Mumbai, was born.

1957: Goodlass Wall Pvt. Ltd grew popular as Goodlass Nerolac Paints (Pvt) Ltd. Also, it went public in the same year and established itself as Goodlass Nerolac Paints Ltd.

1976: Goodlass Nerolac Paints Ltd. became a part of the Tata Forbes Group on acquisition of a part of the foreign shareholdings by Forbes Gokak.

1983: Goodlass Nerolac Paints Ltd. Strengthened itself by entering in technical collaboration agreements with Kansai Paint Co. Ltd, Japan and Nihon Tokushu Tokyo Co. Ltd, Japan.

1999: Kansai Paint Co. Ltd, Japan took over the entire stake of Tata Forbes group and thus GNP became wholly owned subsidiary of Kansai Paint Company Ltd.

2006: On the 11th of July, Goodlass Paints Ltd. name was changed to Kansai Nerolac Paints Ltd.

KEY HIGHLIGHTS

Capacity expansion n plans

KNPL's most recent capacity addition was a new plant at Hosur, which commenced operations in the last quarter of FY10 with a capacity of ~15,000 tonnes. The company plans to spend another ~Rs 2.5 billion (bn) to expand manufacturing capacity at Hosur to 0.28 million (mn) tonnes per annum. A further Rs 1.5 bn will be spent on increasing production capacity in other plants, taking total cost to Rs 4 bn

Strategic Alliances

Nerolac has developed strong relationships with automakers, such as Maruti, which facilitates it in maintaining its market leadership position in the industrial paint segment. Nerolac's parent company Kansai is a global supplier of paints to Suzuki - Maruti's parent company - which further strengthens the relationship. Nerolac has also taken initiatives to strengthen its existing relationship with automakers, which include placing technical teams at automakers' paint shops to provide them with services. Such initiatives have proved to be fruitful, and Nerolac has 9 out of 11 automakers as its customers. The other major a well-established client base from the automotive industry includes Tata Motors, Bajaj Auto, Ashok Leyland, Mahindra & Mahindra, etc

Targeting Rural Market

Nerolac has stepped up its efforts to increase its presence in the rural market. The company has introduced some products, such as Beauty Emulsions in the range of 80-100 rupees per litre, which cater to the price-sensitive market. It has also formed an alliance with ITC on its E-Chaupal initiative to improve its presence in the rural market. The company is also making efforts to strengthen its dealer network to improve sales.

6. KANSAI NEROLAC - MARKETING PROFILE

Marketing Strategies

Marketing defines the fact that “Customer is King” and always every management strives to identify, anticipate and satisfy their Kings'

Kansai Nerolac is the organization which works on this aspect and it's been one of the pillars behind building a successful organization. Nerolac believes that the key strength lies in understanding the consumers and communicating with them in a language they understand and relate to the best. Over the years, Nerolac has undertaken many initiatives, which have met with unprecedented success and really made people sit up and take notice of the same.

6.1. Brand -Nerolac

Nerolac commercials have been well -loved over the years and its jingle - 'Jab ghar ki raunaq badhaani ho...' is now a familiar tune in every Indian household. Many set the same jingle as their caller-tunes.

Beginning with the introduction of the new Brush stroke logo, this stands for the ‘process of painting, depicts motion, dynamism and progress through change. The signal red color, which is the color of Nerolac, is a symbol of eternal joy and hope. It has now become an integral part of Nerolac's brand identity and now appears as a sign-off on any kind of communication.

The Slogan of Brand Nerolac: “Kuch Change Kare Chalo Paint Kare”

Brand Ambassadors: Presently, Shah Rukh Khan, internationally famed Bollywood hero endorses Kansai Nerolac and has proved to give the brand a touch of glamour and the hope that a famous face will provide added appeal and name recognition in a crowded market. The famous Bollywood celebrity being the co-owner of IPL -Kolkata Knight Riders team is indeed a popular ambassador to the recall value of the brand.

Previously Mr. Amitabh Bachhan and Mr. Mohanlal were the brand Ambassadors. Amitabh had embodied Nerolac and had showed “how it touches the lives and dreams of people...no matter whom they are and where they come from”. The essence of this thought was captured in the new baseline ‘Yeh Rang hain jo har kisi ko chhoota hain'.

6.2. Product Range (Decorative segment)

Paints	Interior Range		Exterior Range		Enamels
Primer (Impressions)	Marble Finish		Ever last		Impressions High Performance
	Metallic Finish		Excel Total
	Disney		Excel AntiPeel
	24 Carat
Impressions - Eco-clean : Ultra luxury Emulsion(odorless) - Low VOC
Popular	Beauty Emulsion	Flexi	Suraksha	Advanced, and Plus	Satin Enamel
		Premium
		Silver			Synthetic Enamel
		Smooth finish
	Beauty Distemper	Acrylic		Superior Protection	Pearl Luster Finish
		Oil Bound
		Premium Acrylic

Wood coatings include: Wonder wood 2k PU, Wonder wood melamine crystal Clear, Wonder wood melamine and Wonder wood 1 KPU.

6.3.Segmentation

Market segmentation represents an effort to increase a company's targeting precision.

All businesses operate in “markets” .A market is the set of all actual and potential buyers of a product or service. This definition suggests that a market is the total value and/or volume of products that satisfy the same customer need.

In defining a market, it is important not to focus only on products/services that currently meet the customer need. Thinking about customer needs first - and then identifying the products that meet those needs - is the best way to define a market.

However, it is also important not to define a market too broadly. For example, it is not particularly helpful for a marketing manager to define his or her market as the “food market” or the “transport market”. The purpose of market definition is to provide a meaningful framework for analysis and decision-making.

Bases of segmentation

It is widely thought in marketing that than segmentation is an art, not a science.

The key task is to find the variable, or variables that split the market into actionable segments. There are two types of segmentation variables:

1. Needs
2. Profilers

The basic criteria for segmenting a market are customer needs. To find the needs of customers in a market, it is necessary to undertake market research.

Profilers are the descriptive, measurable customer characteristics (such as location, age, nationality, gender, income) that can be used to inform a segmentation exercise.

The most common profilers used in customer segmentation include the following:

Geographic

• Region of the country
• Urban or rural

Demographic

• Age, sex, family size
• Income, occupation, education
• Religion, race, nationality

Psychographic

• Social class: Premium,Middle Upper Class and also Lower Class
• Lifestyle type
• Personality type

Behavioural

• Product usage - e.g. light, medium ,heavy users
• Brand loyalty: none, medium, high
• Type of user (e.g. with meals, special occasions)

Demographic segmentation

Demographic segmentation consists of dividing the market into groups based on variables such as age, gender family size, income, occupation, education, religion, race and nationality.

Customer wants are closely linked to variables such as income and age. Company Kansai Nerolac Paints has manufactured paints as per customers' requirements and the products are described above.

The main demographic segmentation variables used in this are summarized below:

Income

Kansai Nerolac has targeted affluent customers with luxury products like the impressions. Various convenience services as previously mentioned are introduced for the ease of customers. Economy range products are being developed by the company and would be introduced soon in the market. Premium class impression products for children based of their interests on sports, cartoons are produced and company extends in paintings services with its well equipped painters.

Social class

Many Marketers believe that a consumers "perceived" social class influences their preferences for cars, clothes, home furnishings, leisure activities and other products & services. There is a clear link here with income-based segmentation.

Age & Lifestyle

The cultural dominance in India is targeted and paints based on Vastu are carried on to pull in prosperities with paints.Kansai Nerolac provides this with established vastu veterans and help the customers. It also works on splendid work as per the ambience with various methods like 30-60-90.

Marketers are increasingly interested in the effect of consumer "lifestyles" on demand. There are many different lifestyle categorisation systems, many of them designed by advertising and marketing agencies as a way of winning new marketing clients and campaigns!

Behavioral segmentation

Behavioural segmentation divides customers into groups based on the way they respond to, use or know of a product.

Behavioural segments can group consumers in terms of:

Occasions

When a product is consumed or purchased. Neroalc Paints launches new products near the festive seasons and promotions during those times relate to the festivals giving a slice of life touch.Plus offer varied schemes based on different occasions namely Valentine day offers,F1 fever,IPL dhamaka,etc.

Usage

Some markets can be segmented into light, medium and heavy user groups.

Loyalty

Loyal consumers - those who buy one brand all or most of the time - are valuable customers. Many companies try to segment their markets into those where loyal customers can be found and retained compared with segments where customers rarely display any product loyalty.

Importance of Segmentation:

There are several important reasons why businesses should attempt to segment their markets carefully. These are summarised below

Better matching of customer needs

Customer needs differ. Creating separate offers for each segment makes sense and provides customers with a better solution

Enhanced profits for business

Customers have different disposable income. They are, therefore, different in how sensitive they are to price. By segmenting markets, businesses can raise average prices and subsequently enhance profits. Product segmentation of Nerolac Paints has enabled each segment of the society to relate to a product within the income range.

Better opportunities for growth

Market segmentation can build sales. For example, customers can be encouraged to "trade-up" after being introduced to a particular product with an introductory, lower-priced product.

Retain more customers

Customer circumstances change, for example they grow older, form families, change jobs or get promoted, change their buying patterns. By marketing products that appeal to customers at different stages of their life ("life-cycle"), a business can retain customers who might otherwise switch to competing products and brands.

Target marketing communications

Businesses need to deliver their marketing message to a relevant customer audience. If the target market is too broad, there is a strong risk that (1) the key customers are missed and (2) the cost of communicating to customers becomes too high / unprofitable. By segmenting markets, the target customer can be reached more often and at lower cost. Advertisements relating to different paints of Nerolac Paints are on air each signifying a different target market, a different aspect of life.

Gain share of the market segment

Nerolac Paints is the market leader in the industrial market and gains due to economies of scale. Through careful segmentation and targeting, businesses can often achieve competitive production and marketing costs and become the preferred choice of customers and distributors.

6.4 Promotional Activities.

a) Advertising:

Kansai Nerolac made a beeline to cricket fever by advertising and booking ad spots on Set Max, the sub continental broadcaster for the IPL matches this summer, for IPL 4.

The company has launched ‘Healthy Home Range of Paints' that are safer lead free, odour free, low VOC (VolatileOrganic Compound) and eco-friendly. The brand ambassador endorses a wide range of advancedeco-friendlyproducts in the TV, print and outdoor commercials.

The same ads have been telecasted in Chennai (Sun Network) in the regional language - Tamil in order to remind and recall the brand value of Kansai Nerolac.

Television campaign with Irfan Khan and Konkana Sen for Nerolac Impressions was done on popular channels of West Bengal. The campaign was redone to help build the brand saliency during this period.

There were various other campaigns endorsed by Amitabh Bachhan which proved to be runaway success to name one -“Har Din Diwali “a promotional campaign aimed at the customer.

b) Public Relations

Kansai Nerolac has always been in the fore front for Public Relations, be it marketing or corporate relations. Kansai Nerolac was the first to initiate the dealers meet and painters' meet. It comes up with new product launch activity also.

Corporate relations include the famous Mumbai Marathon (17th Jan 2010) which carried an anti smoking message, with a logo on their T-shirts.

As part of corporate social responsibility, Nerolac has been conducting health camps for needy people every year.

c) Sales Promotions

This includes the dealers meet and painters meet which help regularly to build up a good rapport with the dealers and painters. Promotional offers and schemes with gifts acts as the major sales promotional methods followed by Kansai Nerolac. Incentives to painters include the token exchanges. Foreign trips are also provided for the dealers who qualify in the promotional scheme parameters. Distribution of T-shirts and caps to the paints are also done.

d) Other Services

“Nerolac Assured Paint Service”: Designed to bring the Nerolac experience right to the consumers' doorstep, is the service launched by Nerolac. Currently available in Mumbai, consumers can now relax while the Nerolac team takes over the entire paint job right from sourcing to execution. On consumer friendliness platter, the shade cards have been redesigned. The new look shade cards are not only eye catching and consistent in appearance but also try to make the process of shade selection for the consumer lot more interesting and convenient. Nerolac Home Stylers provides professional help in providing product consultancy and colour consultancy.

Kuch Change Kare. Chalo Paint Kare

6.5. Distribution Methods

The availability of a wide variety of shades and the distribution network is crucial for the success of the decorative paint business. The additional shades by the usage of Computer color dispensed (CCD) has reduced the inventory problems and creation of desired colors on requisition are an advantage. Kansai Nerolac has almost 11000 dealers. These dealers receive their supplies from the nearest company depots.

The sales representatives regularly visit the dealers and orders are taken by them who communicate the same to company depot. Company depot according to the orders placed delivers the product to the respective shops. Sales representatives, form an important information carriers pertaining to the promotional offers and schemes between the company and the dealers. They form a cordial relationship with the dealers.

The new dealer hunt program is a process to extend the distribution network of Kansai Nerolac in Chennai. The sales representatives initiate in increasing the customer base as directed by the company's area sales managers.

These dealers' orders are also taken from the respective depots telephonically regularly to help the customers in stocking the minimum quantity of paints in the shops.

Inventory management is critical in the paints industry. The majors normally carry 70-90 days of sales equivalent of inventory. Among them, Kansai Nerolac is more efficient due to more of its sales coming from the industrial sector. Kansai Nerolac is constantly working on the decorative segment also, to supply the products on time as well as maintaining limited inventories in the depots.

6.6. Competitor Product Information

Companies	Kansai NEROLAC	ASIAN PAINTS	BERGER	ICI	SHALIMAR	J & N
PRODUCT	Enamels
Satin	Nerolac Satin Enamel	AP Premium Satin Enamel		Dulux Satin Finish	Superlac Satin Soft Finish Sheen Enamel
Premium 1st Quality	Nerolac Full Gloss Hard Drying Syn. Enamel	AP Apcolite Premium Gloss Enamel	Luxol High Gloss Syn Enamel	Dulux Gloss Synthetic Enamel	Superlac High Gloss Enamel	Brolac PU Enamel
2nd Quality	---	3Mangoes Syn	---	---	---	---
3rd Quality	Goody Synthetic Enamel	Gattu General Purpose Syn Enamel	Butterfly General Purpose Syn Enamel	Maxilite Synthetic Enamel	Diamond Synthetic Enamel	Umbrella Synthetic Enamel
Economy	---	Utsav Enamel	Jaadu Enamel	---	---	---
WALL FINISHES:	Interior
Luxury Emulsions	Nerolac Allscapes 24Carat Emulsion	AP Royale Luxury Emulsion	Luxol Silk Luxury Premium Emulsion	Dulux Velvet Touch Emulsion	Hussain's Collection Premium Acrylic Emulsion	Special Effects
Premium Emulsion	Nerolac Acrylic Premium Emulsion	AP Premium Emulsion	Rangoli Super Acrylic Enamel	Dulux Acrylic Emulsion	Superlac Acrylic Emulsion	Robiolac Acrylic Plastic Emulsion
2nd Quality		Super Decoplast Plastic Emulsion
Economy Emulsion	Nerolac Plastic Emulsion	AP Tractor Emulsion	Bison Super Emulsion	---	No.1 Silk Emulsion	---
Lusture Finish	Nerolac Pearls Lusture Finish	AP Interior Wall Finish Lusture	Luxol Lusture Finish	Dulux Lusture Finish
					---	---
Matte Finish		AP Interior Wall Finish Matte	BP Synthetic Interior Flat	Dulux Flat Oil Paint	Synthetic Flat Paint
	---					---
Acrylic Distemper	Nerolac Premium Distemper	AP Tractor Acrylic Distemper	Bison Acrylic Distemper	Maxilite Acrylic Distemper	No.1 Premium Acrylic Distemper	J & N Acrylic Washable Distemper
Synthetic Distemper	Nerolac Washable OBD	AP Tractor Synthetic Distemper		Maxilite Synthetic Distemper
			---		---	---
Economy Distemper	Nerolac Acrylic Distemper	Utsav Acrylic Distemper	Jaadu Acrylic Distemper	---	Mela Acrylic Distemper	---
Pouch Distemper	Goody Synthetic Distemper	Utsav Synthetic Distemper	Castle Dry Distemper	Farco Economy Distemper		Bahaar Distemper
					---
WALL FINISHES:	Exterior
Elastomeric	---	Elastomeric HiPerformance	Weather Coat Extraa	---	---	---
Premium Smooth Emulsion	Nerolac Excel	Apex Weatherproof Exterior Emulsion	Weather Coat Smooth	Dulux Weather Shield	Xtra Xterior Emulsion	Special Effects Exterior Acrylic
Premium Texture Finish	Nerolac Mette Decorative & Protective Exterior	Apex Textured Exterior Emulsion	Weather Coat Texture Exterior Finish
				---	---	---
Economy Smooth Emulsion	Surakshaa	Asian Paints Ace	Wall Masta	SuperCoat	Shaktimaan Exterior Acrylic Emulsion	Armour Quartz
Cement Paint	Nero Cem	Gattu Cem	Duro Cem	Farco Cem Waterproof Cement Paint	Maha Cem Coat	RobiaCem Super Cement Paint
WOOD FINISHES:
Premium	Nerolac PU Finish	Asian Paints PU Finish	Woodkeeeper Legend	Bell Co.	---	---
1st Quality	Wonder Wood Melamanised Wood Finish	Asian Paints Melamine Finish	Woodkeeper Melamine Finish	Dulux Timbertone Melamine Finish	Care Wood Melamine Wood Finish
						---
Economy Finish	Wonder Wood	Asian Paints Touchwood	Woodkeeper	---	Care Wood	Wood Glow
PRIMERS:
Exterior	---	AP Exterior Primer	---	---	---	---
Metal Primers:
1st Quality	Nerolac Oil Primer	Tractor red Oxide Oil Primer	---	---	---	---
2nd Quality	Nerolac Red Oxide Metal Primer	AP Metal Primer	Butterfly Red Oxide Primer	ICI Red Oxide Metal Primer	Shalimar Red Oxide Metal Primer	J&N Red Oxide Primer
Economy	---	Utsav Red Oxide Primer	Berger Red Oxide Primer	---	---	---
Wood Primer	Nerolac Wood Primer	Asian Paint Wood Primer	Berger Wood Primer	ICI Wood Primer	Pink / Gery Primer for Wood	---
Cement Primer: Solvent Thinnable	Nerolac Cement Primer Solvent Thinnable	AP Deco Prime Wall Primer Solvent Thinnable	BP Cement Primer Solvent Thinnable	ICI Cement Primer Solvent Thinnable	---	Jensolen Cement Primer
Cement Primer : Water Thinnable	Nerolac Cement Primer Water Thinnable	AP Deco Prime Wall Primer Water Thinnable	BP Cement Primer Water Thinnable		Water Thinnable Cement Primer	J&N Alkali Resistant Water Thinnable

7. RESEARCH PROJECT

7.1. Title of the Project:

A study on “Overall Consumers' perception towards Kansai Nerolac Paints in Chennai city”.

7.2. Statement of Problem:

Kansai Nerolac Paints Ltd., being a market leader for industrial paint segment for many decades stands in second position in the decorative segment. Moreover, 70% of the decorative paint segment is owned by Asian Paints in Chennai. Thus, the competitor “Asian paints” has proved to be a threat in the decorative segment for Kansai Nerolac paints.

Therefore a market study “Customers' Overall Perception towards Kansai Nerolac paints in Chennai”

This study can help understand the perception and hence help the company to capitalize on its brand, strategize better marketing techniques and create an impact on the customers and dealers, to achieve the apex position in the decorative segment too.

7.3 Objectives of the project:

1. To understand the products/services offered by Kansai Nerolac paints in Chennai.
2. To interpret the overall perception of Nerolac paints in Chennai city.
3. To study the attitudes of customers towards the products offered by the company and the other competing paint companies.
4. To evaluate the services offered by the company to the dealers and their responses regarding the same.
5. To draw conclusion and provide suggestions based on the analysis and interpretation of data.

7.4. RESEARCH

Research can be defined as a systematic and objective process of gathering, recording, and analyzing data that provides information to guide business decisions. Market research particularly aims at understanding and examining the marketplace in which the company operates. This helps the organization to devise effective business policies and marketing strategies. Operational research deals with application of mathematical and statistical tools to derive on a solution.

Market Research

To undertake marketing effectively, businesses need information. Information about customer wants, market demand, competitors, distribution channels etc.

Marketers often complain that they lack enough marketing information or the right kind, or have too much of the wrong kind. The solution is an effective marketing information system.

The information needed by marketing managers comes from three main sources:

(1) Internal company information

E.g. sales, orders, customer profiles, stocks, customer service reports etc)

(2) Marketing intelligence

This can be information gathered from many sources, including suppliers, customers, distributors. Marketing intelligence is a catch-all term to include all the everyday information about developments in the market that helps a business prepares and adjust its marketing plans. It is possible to buy intelligence information from outside suppliers (e.g. Mintel, Dun & Bradstreet, Mori) who set up data gathering systems to support commercial intelligence products that can be profitably sold to all players in a market.

(3) Market research

Management cannot always wait for information to arrive in bits and pieces from internal sources. Also, sources of market intelligence cannot always be relied upon to provide relevant or up-to-date information (particularly for smaller or niche market segments). In such circumstances, businesses often need to undertake specific studies to support their marketing strategy - this is market research.

Need for Market Research

A wide variety of information used to support marketing decisions can be obtained from market research. A selection of such uses are summarized below for Kansai Nerolac Paints:

Information about the market

• Analysis of the market potential for existing products (e.g. market size, growth, changing sales trends)
• Forecasting future demand for existing products
• Assessing the potential for new products
• Study of market trends
• Analysis of competitor behaviour and performance
• Analysis of market shares

Information about Products

• Likely customer acceptance (or rejection) of new products
• Comparison of existing products in the market (e.g. price, features, costs, distribution)
• Forecasting new uses for existing products
• Technologies that may threaten existing products
• New product development

Information about Pricing in the Market

• Estimates and testing of price elasticity
• Analysis of revenues, margins and profits
• Customer perceptions of “just or fair” pricing
• Competitor pricing strategies

Information about Promotion in the Market

• Effectiveness of advertising
• Effectiveness of sales force (personal selling)
• Extent and effectiveness of sales promotional activities
• Competitor promotional strategies

Information about Distribution in the Market

• Use and effectiveness of distribution channels
• Opportunities to sell direct
• Cost of transporting and warehousing products
• Level and quality of after-sales service

In terms of data capture and analysis there are two main types of market research:

• Qualitative Research
• Quantitative Research

Qualitative Research

Qualitative Research is about investigating the features of a market through in-depth research that explores the background and context for decision making.

There are two main qualitative methods - depth interviews and focus groups.

Depth Interviewing

Company Depth interviews are the main form of qualitative research in most business markets. Here an interviewer spends time in a one-on-one interview finding out about the customer's particular circumstances and their individual opinions.

While interacting with dealers at the dealers place interviews helped to recognize the culture followed by the dealers in the paint market and the practices which a company should follow that enable a company to be popular among the dealers in the market.

Feedback was taken about Kansai Nerolac Paints was given through many repeated interactions between the dealers and the company.

Quantitative Research

Quantitative research is about measuring a market and quantifying that measurement with data. Most often the data required relates to market size, market share, penetration, installed base and market growth rates.

However, quantitative research for Nerolac Paints was used to measure customer attitudes, satisfaction, commitment and a range of other useful market data that can tracked over time. By way of questionnaires customer awareness and attitudes to different paint manufacturers and their overall buying behavior was judged which applies to the market as a whole

STAGES IN THE RESEARCH PROCESS:

The Business research can entail many forms, but systematic inquiry is a common thread. Systematic inquiry requires careful planning of an orderly investigation. Business research like other forms of scientific research is a sequence of highly interrelated activities. The stages in the research process overlap continuously, and it is somewhat of an oversimplification to state that every research project has the same ordered sequence of activities. Nevertheless business research often follows a general pattern.

There are five stages and the they are as shown in the above exhibit in a cyclical or circular flow process because the conclusion from the research studies usually generate new ideas and the problems that need to be further investigated.

The five stages in the project can be essayed as follows:

a) Define the problem:

Kansai Nerolac Paints Ltd. has been a market leader in industrial paint segment for many decades, but is in the second position in decorative segment. KNP is currently having less market share in comparison to “Asian Paints” in the decorative segment in Chennai city, from past few years.

b) Planning a research design:

The market share of KNP is less in Chennai from past few years and thus the research to study the same with the help of dealers' responses. This has been carried by both primary as well as secondary research methods.

This project was accomplished by primary data obtained through the questionnaire. The questionnaire consisted open ended; close ended and multiple choice questions. These questions were answered by the respondents. Open ended questions help dealers to give detailed answers and thereby help the company to note the perception of the dealers.

The secondary source of data was gathered from the information archives of the company. The data was also collected from various books, magazines, newspapers and company records. The secondary sources of data aided to enlighten the scope for more information and thus help in deriving the conclusions.

c) Planning a sample and gathering the data:

A sample size of 160 paint dealers in Chennai was considered. A method of random sampling activity was chosen, in order to obtain views and suggestions from KNP dealers in market as well as the reason from the dealers not dealing with Nerolac paints. The blend of responses surely helped in concluding the reason for KNP's current position in the market.

Questionnaire preparation:

The first and the foremost step in the project was to the design the questionnaire which was to quiz and record the responses of the paint dealers. Preparation of questionnaire involved few brainstorming sessions with Project guide and the sales executives in the organization. Ideas and suggestions were taken from college faculty guide in order to reach the set of questions to be asked. An effort was made to make sure that the questions were crisp yet sharp enough to extract detailed information from the respondent .It was also made sure that since the respondents were paint dealers the questionnaire had less number of questions as these people are very busy individuals and an elongated question set might just dilute or even in the worst case scenario hinder their intent to give honest and unprejudiced answers.

Once the questions were compiled and ordered in a manner that gave a smooth flow to the questionnaire. The questionnaires were printed and then were moved on to the next step. The next step was to discuss the approach to the respondents in order to convince them to comply which is a very important phase of the overall research. Mock drills of the approach were practiced and perfected.

The next step was the ground zero or the actual field work. Here the scope was to meet the dealers in Chennai which is quite large. It was impractical for a single person to do the entire research traversing the whole city of Chennai; hence 160 random samples were taken. Thus by the seamless segmentation of the territories a sturdy method for covering the cross section of the city was devised.

d) PROCESSING AND ANALYZING DATA:

The responses obtained were bifurcated according to the dealers currently dealing with Nerolac paints and dealers dealing with other paints. Analysis of the responses from both the groups was done independently and conclusions are derived.

Statistic tools were used to analyze and understand the feedback given by the experienced dealers of paints. Statistical analysis helped in testing the potentiality of Kansai Nerolac paints in much better way.

e)FORMULATING CONCLUSIONS AND PREPARING REPORTS:

This approach helped in devising methods for retaining the current customer (dealer) base. The group's (dealing with other paints) responses answered the reason for them to choose other brands and thus strategies for pulling new customers could be concluded. Various Excel tools and business research tools were considered to statistically prove the results. The charts and conclusions based on the analysis are added in the report.

7.5. SAMPLING TECHNIQUES

The accuracy of a research study is enhanced by the usage of statistical tools. It certainly aids in correct interpretation of both quantitative and qualitative data thus obtained from the paints dealers.

The statistical tools used for the following survey analysis include SPSS software package and the generic MS-Excel tool.

The method of percentage analysis method was chosen to conclude from myriad responses obtained from the dealers and respective charts are used to explain the same.

7.5. A. Percentage analysis Method:

A simplest statistical method used in both business and economic statistics. Simple percentages are hereby calculated and the results can be achieved.

Survey Responses analyzed using percentage method:

1. Do the dealers deal with Kansai Nerolac Paints?

Dealers
active	In-active	non-dealers
19	96	45
12%	60%	28%

2. Which promotional method would work better?

TV ads	Newspapers	Hoardings	Internet	leaflets
136	102	117	3	12
37%	27%	32%	1%	3%

3. Do the customers ask for Kansai Nerolac paints?

Active		Inactive		Non-dealers
Yes	No	Yes	No	Yes	No
6	13	10	86	16	29
4%	8%	6%	54%	10%	18%

4. Do you feel customers buying behaviour has improved after SRK has become the brand ambassador?

Active		In-active		Non-dealers
Yes	No	Yes	No	Yes	No
3	16	0	96	0	45
2%	10%	0%	60%	0%	28%

5. Low VOC - has it impacted to boost the sales?

In-active		Active		Non-dealers
Yes	No	Yes	No	Yes	No
0	96	0	19	0	45
0%	60%	0%	12%	0%	28%

6. Do you feel the scheme letters in Tamil will boost sales for the company?

In-active<