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STUDY OF DISTRIBUTION CHANNEL OF ASIAN PAINTS
IN
ASIAN PAINTS
JAIPUR
2010-2011
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Jaipur.
examination.
MAISM, Jaipur.
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ACKNOWLEDGEMENT
Surendra singh
(BBA III YEAR)
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EXECUTIVE SUMMARY
STUDY OF DISTRIBUTION OF
The project work done on
CHANNEL OF ASIAN PAINTS.
At asian paints, Jaipur, focuses primarily on assessing the future of the
Insurance sector in India as seen through the eyes of HDFC. Evaluating the
performance of this sector has been very difficult because of the immense
DECLARATION
Declaration by:
(Surendra singh )
BBA III YEAR
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INDEX
INTRODUCTION
RESEARCH
FINDING AND DISCUSSION
BIBLIOGAPHY
QUESTIONNAIRE
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INTRODUCTION
CHANNELS OF DISTRIBUTION
According to Phillip Kotler, “ Every producer seeks to link together the set of
marketing intermediaries that best. Fulfill the firm’s objectives. This set of
marketing intermediaries is called the marketing channel (also trade channel of
channel of distribution).”
the price of the products and continue to charge the customer the same old price.
This is because of the intra-middlemen competition. The middleman also maintains
price stability by keeping his overheads low.
TITLE: Most middlemen take the title to the goods, services and trade in
their own name. This helps in diffusing the risks between the manufacturer and
middlemen. This also enabled middleman to be in physical possession of the
goods, which in turn enables them to meet customer demand at vary moment it
arises.
a customer can affect purchases with ease. According to Wroe Alderson, “The
goal of marketing is the matching of segments of supply and demand.”
A channel symbolizes the path for the movement of title, possession and
payment for goods and services.
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CHANNEL LEVELS:
The producer and the final customer are part of every channel. We will use
the number of intermediary levels to designate the length of a channel.
Wholesaler Wholesaler
Jobber
Product of services
One level
Ultimate consumers or business users
Manufacturer Manufacturer
representative representative
Industrial
distributor
TYPES OF INTERMEDIARIES
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WHOLESALER/STOKIST/DISTRIBUTOR: A ‘wholesaler’ or
basic product from producers and add value to it or, depending on the
nature of the product, modify it and then resell it of final customers.
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Evaluation of Competitor’s
Channel Design
The nature and intensity of competition in the industry will determine the
distribution pattern adopted by a firm. Some firms may adopt an intensive
distribution strategy and be indifferent to multiple brand outlets. Here, these
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firms aim at getting the highest share from such outlets. Other firms may
have the policy of exclusive distribution-insisting that the intermediary deal
in no other brand.
“RESEARCH”
DISTRIBUTION STRATEGY
-THE CASE OF ASIAN PAINTS
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Asian Paints is India's largest paint company and the third largest
paint company in Asia today, with a turnover of Rs 36.7 billion
(around USD 851 million). The company has an enviable reputation in
the corporate world for professionalism, fast track growth, and
building shareholder equity. Asian Paints operates in 21 countries and
has 29 paint manufacturing facilities in the world servicing consumers
in over 65 countries. Besides Asian Paints, the group operates around
the world through its subsidiaries Berger International Limited, Apco
Coatings, SCIB Paints and Taubmans.
Forbes Global magazine USA ranked Asian Paints among the 200
Best Small Companies in the World for 2002 and 2003 and presented
the 'Best under a Billion' award, to the company. Asian Paints is the
only paint company in the world to receive this recognition. One of
the country's leading business magazine "Business Today" in Feb
2001 ranked Asian Paints as the Ninth Best Employer in India. A
survey carried out by 'Economic Times' in January 2000, ranked Asian
Paints as the Fourth most admired company across industries in India.
The company has come a long way since its small beginnings in 1942.
Four friends who were willing to take on the world's biggest, most
famous paint companies operating in India at that time set it up as a
partnership firm. Over the course of 25 years Asian Paints became a
corporate force and Indi's leading paints company. Driven by its
strong consumer-focus and innovative spirit, the company has been
the market leader in paints since 1968. Today it is double the size of
any other paint company in India. Asian Paints manufactures a wide
range of paints for Decorative and Industrial use.
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INTERNATIONAL OPERATIONS
Asian Paints (AP) is the market leader in the Indian paint industry,
commanding a market share of 38 per cent in decorative paints and 33
per cent overall in the organized sector. Its annual sales turnover
exceeds Rs 36.7 billion (around USD 851 million), way ahead of all
the competitors in the industry. In profits too, AP is far ahead.
The paint of India is 100 years old. Its beginning can be traced to the
setting up of a factory by Shalimar Paints in Kolkata in 1902. Till the
advent of World War II, the industry consisted of just a few foreign
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company, is number two with a 14 per cent market share. Berger and
ICI have 9 per cent and 8 per cent shares, respectively, in this segment
followed by Shalimar, with 6 per cent.
Goodlass dominates the industrial paints segment, with 41 per cent
market share. AP is a poor second here, with a 15 per cent market
share. Berger, ICI, and Shalimar are the other substantive players in
the sector, with 10 per cent, 9 per cent and 8 per cent shares,
respectively.
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THE COMPANY
Asian Paints offers the widest range of paints in terms of products and
shades, as well as pack sizes, Availability of wide range of shades is
in fact, one major critical success factor in the decorative paints
business. And AP scores high in this factor. AP manufactures and
markets more then 2,800 items of paints (SKU).
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PERFORMANCE
Exhibit 1 gives details of AP’s sales performance during the last four
years.
‘We have been able to build strong brand equity for our products by
focusing on features that are appreciated by customers, ensuring that
our products are of high and consistent quality, offering a wide range
of shades and packs, and ensuring that our products are available
wherever and whenever required, by building a strong distribution
system.’
Its brands Tractor, Apcolite, Utsav, Apex and Ace are well entrenched
in the market. And AP’s logo, ‘Gattu’, the impish boy, with the paint
tin and brush, symbolizes one of the most recognized and most
prosperous mascots in Indian business!
All this has earned the company a place among the world’s leading
paint manufactures. AP is the winner of the 1995 corporate
performance award by the Economic Times and Harvard Business
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At the time AP entered the Indian paint business, distribution was the
most crucial task for any new entrant. Both physical distribution and
channel management posed formidable challenges. The foreign
companies and their wholesale distributors dominated the business.
The foreign companies appointed a few traders as their wholesale
distributors and allowed them to perpetuate a situation of monopoly.
Each distributor was assigned a large territory and was given the right
to operate the exclusive channel of the company in the assigned
territory. The trade terms were also very liberal. The companies also
extended virtually unlimited credit to the distribution. The credit
outstanding for the supplies made throughout the year were required
to be settled by the wholesales distributors only at the year-end, at
Diwali time.
Bulk buyer segment was the major segment of the paint business in
the earlier days and any
• AP went retail
• AP went in for an open-door dealer policy
• AP voted for nationwide marketing/distribution
was by and large concentrated in the urban areas. All the major paint
companies and their wholesale distributors were content with the
market that was available in the urban areas. In contrast, AP clearly
saw that a large market for paints was emerging in the semi-urban and
rural areas, and felt it wise to tap this market. AP also understood that
a new entrant like AP had also a compulsion to go to the semi-urban
and rural areas. The major companies and their wholesale distributors
were not giving any worthwhile opening in the big cities for new
entrants. AP found it difficult to attract the wholesalers in the cities to
deal in its products. It had to necessarily turn to the semi-urban and
rural areas for support. AP wisely decided against committing all its
resources on a head on collision with the foreign companies and their
big wholesale distributors in the urban areas.
AP Goes Retail
Going directly to retail dealers was the next major strategic decision
of AP in the realm of marketing and distribution. Here too, AP totally
broke with the prevailing distribution practice. As mentioned earlier,
the foreign companies, who were the main players, were practicing a
wholesale distributor-dependant marketing system. AP did not see any
great merit in the system. It totally bypassed the well-entrenched
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their point of production. On the other side were the big companies,
who as a class, believed in limiting their distribution to the big cities.
In contrast to both these existing practices. AP voted for a nationwide
distribution/marketing. It wanted to have an active presence
throughout the country, in the geographical zones, states and
territories.
The policy of having the widest range of products, colurs and pack
sizes had its implication on AP’s distribution. When 2,000 different
items had to be made available to the consumers, it automatically
meant that the company had to be prepared for high inventory holding
in its various depots/retail outlets. Accounting and sales arrangements
had also to be provided for on a matching level. Naturally, distribution
was becoming more complex and expensive for AP.
outstanding
(iv) IT initiatives in distribution cost
control
General Manager
(Marketing)
Branch Managers
Product Product
Or
Executive (6) Executive (6)
Depot Executive (35)
Service
Sales Supervisors (13) Representatives (4)
Sales Representatives
Sales Repersentatives (168) (Industrial Paints)
(27)
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We have seen that AP has over 15,000 dealers in 3,500 towns in India.
AP caters to all of them directly. As a result, for AP, the distribution
task gets tremendously extended and distribution cost becomes a
significant business parameter.
(a) A special discount of 3.5 per cent. This was referred to as the discount
for perfection in payments. It was passed on at the end of the year,
provided each and every payment throughout the year was made
within the stipulated time norms.
(b) A cash discount of 5 per cent. This was paid for all outright cash
purchases. It was given whenever payments were received within 24
hours of the supply/invoice. In respect of outstation accounts, the
payments should have been made in advance by draft in order to be
eligible for the discount.
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One can grasp the full import of AP’s success in this sphere only
when due not is taken of the fact that AP has achieved the lowest
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CONCULSION
BIBLIOGRAPHY
QUESTIONAIR
1. At which place would you like to purchase paint for your home?
3. When you Purchase paint for your home which thing you prefer?
A) Brand
B) Quality
C) Price
D) Availability of product Ans. ( )
5. Which Brand comes to your mind while you start thinking for the
painting of your home?
A) Asian Paints
B) Nerolac
C) Berger
D) Shalimar Ans. ( )