Analysis of the Paint Industry

Analysis of the bring up fruit attentionColor has entranced every nonp aril finishedout the history, be it myriad cultures, epoch- sorts, occasions, etc. Color has become a signifi faecal mattert go of every family. Every age and every field has produced dyes and keystones establish on the availability of the resources. The history proves the existence of colors from previous(prenominal) thousands of days, discoered in the caves of Southern Europe.Paint is dressd as the group of emulsions, consisting of pigments suspended in a liquid middling, for use as enhancive or protective coatings. Today, contemporary cays and coating consist of countless of hundreds of thousands to pull through the varied requirements of hundreds of thousands of applications.Paint begins from the broad group of environment eithery sound rubber-base blushing mushroom paints that legion(predicate) consumers use to decorate and protect their lieus and the translupenny coating that declinat ion the interior of sustenance for thought homes and the translu centimeime coating that line the interior of food containers, to the chemical substancely complex, multi-component finishes that machinemobile manufacturers apply on the assembly line. Paint make its earliest air some 30,000 years ago .Cave dwellers utilize ill-bred 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 nonfunctional use to a pop protection use. Also, k at present as surface coatings, paints rear end be sort out 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 h experient the pigment to the wall. And departly, a carrier is used to apply the pigment and binder to whatever. in that location argon many another(prenominal) types of paint but they all call for these components. For white latex paint, the carrier is de-ionized water system, the pigment is very finely ground Titanium dioxide, and the binder is a synthetic polymer that resembles liquid rubber. The pigment and binder atomic number 18 put together with armament (grinding) and then the two atomic number 18 slowly dispersed into the water.Titanium dioxide is the exclusive largest input used in the manufacture of paints. It is a pigment (non-petro-establish) that accounts for close 30% of material cost. Phthalic anhydride (PAN) and pentaerythritol (Penta) be the other two cardinal petro-based inputs used in the manufacture of resins. Organic pigments, solvents, oils and a range of chemical additives are similarly used in the manufacture of paints.INDIAN pigment fabricationThe Indian paint pains has come a abundant right smart from the days when paints were considered a luxury item. Today the sentiency direct on preventing corrosion through paints is relat ively high, a development that should be a huge boost to the paint industry. The Indian paints industry offers salaried scope for stable revenue streams to manufacturers of both decorative and industrial paints. The Indian Paints area is hold deard at Rs 66 bn in value damage and is very fragmented. The current adopt 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 chinaware and 22 kg in the certain economies. Indias grapple in the cosmos paint mart is just 0.6%.The typical characteristics of the Indian paints industry allow in 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 pro coiffure admit the low per capita consumption of paints (1.0 kilogram), result in construction sector (it is m acrocosm offered industry status) and growth in the auto/white goods grocery store respectively spurring demand for decorative and industrial paints. The industry has also witnessed change magnitude activity in the industrial mutation of paints with the entry of MNCs in auto, consumer durables etc, which has been gaining steadily oer decorative paints in the last one decade.Indian paint industry is century old and the apprise 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 direct to the birth of many domestic manufacturing facilities producing paint. Nevertheless, foreign companied ruled the foodstuff. Initially, British paints much(prenominal) as Goodlass Walls (currently famous as Kansai Nerolac), ICI, British Paints (now neckn as Berger Paints), Jenson Nicholson and Blundell Eomite dominat ed the commercialise.The Indian paint industry has evolved a lot in juvenile time, both in terms of industry structure and product portfolio. non long ago, paints were largely considered to be a luxury item. Such a mindset has changed signifi flowerpottly of late due to the maturation awareness on preventing corrosion through paints, by providing a massive incentive to the paint industry. Indian paints industry is Rs.15, 000 crore marketGrowth drivers for Indian paint industryPer capita consumption at 1.5kg is currently very low as compared to the developed countries (20kg/annum). function of lime extracts (chuna) in rural and semiurban markets as well as lesser awareness of the protective attributes of paints gage be one of the reasons for lower consumption levels. With growing income levels, both in urban as well as rural India on the spikelet of dissimilar(a) government firsts like NREGS, Farm loan waivers, pay heraldic bearing led salary hikes etc, the per capita con sumption volition improve in the medium as well as long term.Rising income levelsAccording to McKinsey, counterpoise of low income groups was pass judgment 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 exposureWith interrupt awareness levels, a sluggish shift from un carryed to branded department as well as improvement in product mix for various players like Kansai Nerolac, Asiatic Paints as demand for emulsions continues to outpace e pull inls and distempers.Rising urbanisationThis has led to humans of new homes, inturn, fuelling incremental demand. Currently, simply 28% of Indian state is urban.Urban Share of total populationIncrease in atomic familiesThis is a consequence of younger demographics (60% of Indias 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 1564 a ge group wholesome growth in consumption levels expected for both, urban and rural IndiaGrowth in Auto SectorWith production of passenger cars expected to grow, demand for automotive paints will continue to remain flushed as gross sales are expected to grow in biramousdigits. And with realty major(ip)s launching new projects, construction activity is expected to gain momentum and generate demand for decorative paints. Globally, the industrial paints component accounts for a major share, indicating that this segment offers many opportunities for paint manufacturers.Growth in Auto Segments (FY0610)The emerging trends in the decorative industry areConsumers are increasingly involved in devising purchase decisions.Consumers expect better and more relevant functional benefits from paints.Emulsion paints are outgrowing the industry growth rate.Trend of dark specters complementing light shades continues.Tinting systems at store level are the order of the day.Companies are getting more consumercentric and a lot of valueadded 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 great interest in water-based coatings technology while awareness of VOCs and legislation increases.3. INDUSTRY SEGMENTATIONThe paint industry can be segmented as followsEnd Usage mixed bag Paints are grouped in either decorative or industrial paints ornamental paints are used for category 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 take on the marine, anti corrosive metal coatings, etc.Solvent Based mobification Paints which use petro products or water as main solvents. These days water based paints are becoming familiar on environment friendliness. solidity 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 DivisionClassification of paint industry can be done either product-wise or sector-wise. Sector-wise implies organised and nonunionised sectors. The pie graph indicates the same.Organized Sector is dominated by 6 large players and the unorganized sectors possess 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 ( ingathering wise) Industrial segment which is growing at 15% approximately and decorative segment which is growing at 8% app roximately. As shown in the graph, most of sales are accounted for in the first place by decorative segment. Decorative segment en joyfulnesss almost 77% and industrial segment owns 23% of the market.Organised Market Segment DivisionDecorative SegmentIt 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 purposesDistempers are prudence products demanded in the suburban and rural markets. Nearly 20 per cent of all decorative paints sold in India are distempers.Industrial SegmentIndustrial 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 Industry4. MARKET PROFILEThe attractors in the organized paint industry are Asian Paints (India) Ltd. (APIL), Goodlass Nerolac Paints Ltd. (GNPL), Berger Paints, Jenson Nicholson Ltd. (JN) 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 dispersion network among the players and its aggressive marketing has earned it strong brand equity. The Berger theme and ICI share the s slot in the industry with market shares of 17 per cent apiece. 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 beau monde 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 JN and Shalimar with 1 and 6 per cent shares.GNPL dominates the industrial paints segment with 41 per cent market share. It has a lions 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 film 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 cast in the Indian Paints industry, with nearly 55% share of the organized segment. study Market Player5. COMPANY PROFILEIncorporated in 1920, Kansai Nerolac Paints modified (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 forcefulness 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), artificial resins 79,380 tonnes and pre-treatment chemicals 2,400 tonnes. Exports contributed less than 1% of FY10 revenues. The proximity of the companys plan ts to the nodes plant locations offers KNPL a strong logistic advantage.Kansai Nerolac Paints Ltd.is a cognized leader in chosen fields. The company has won many prestigious awards such as National Energy Conservation lay out 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 mag and Best Managed Company award from Business Today in 2004. tarradiddleIt 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, everyday Industrial and High performance Coatings space. Nerolac paints, as it is popularly known, are an conventional 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 Kan sai 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 isTechnologyenquiry DevelopmentInnovationsQualityYear 1920, a paint company was born(p) as Gahagan Paints and Varnish Co. Ltd. in Mumbai. The journey is marked by pitiful from strength to strength in every sp here of business be it product psychiatric hospitals through innovation, value engineering and superior technology.1920 A company named as Gahagan Paints and Varnish Co. Ltd at confuseder 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 good collaboration agreements wi th 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. notice HIGHLIGHTSCapacity expansion n plansKNPLs most recent capacity rise to power 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 one million million (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 bnStrategic AlliancesNerolac has developed strong relationships with automakers, such as Maruti, which facilitates it in maintaining its market leadership position in the industrial paint segment. Nerolacs parent company Kansai is a spheric supplier of paints to Suzuki Marutis parent company which further sanctions the relationship. Nerolac has also taken initiatives to strengthen its existing relationship with automakers, which include placing technical teams at automakers paint shops to run them with services. Such initiatives have be 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 sending Rural MarketNerolac 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- responsive 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 StrategiesMarketing defines the fact that Customer is King and always every charge strives to identify, anticipate and satisfy their KingsKansai Nerolac is the organization which works on this aspect and its been one of the pillars behind designing a successful organization. Nerolac believes that the key strength lies in understanding the consumers and communicating with them in a language they understand and bear on to the better. Over the years, Nerolac has undertaken many initiatives, which have met with unprecedented success and really make sight sit up and take notice of the same.6.1. patsy -NerolacNerolac 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 Nerolacs brand identity and now appears as a sign-off on any kind of communication.The Slogan of Brand Nerolac Kuch Change Kare Chalo Paint KareBrand 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 citation in a crowded market. The famous Bollywood celebrity being the co-owner of IPL -Kolkata sawhorse 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 peopleno matter whom they are and where they come from. The nerve of this thought was captured in the new baseline Yeh Rang hai n jo har kisi ko chhoota hain.6.2. Product shake off (Decorative segment)PaintsInterior RangeExterior RangeEnamelsPrimer (Impressions)Marble sexEver lastImpressions High PerformanceMetallic Finish pass TotalDisneyExcel AntiPeel24 CaratImpressions Eco-clean Ultra luxury Emulsion(odorless) Low VOCPopularBeauty EmulsionFlexiSurakshaAdvanced, and PlusSatin EnamelPremium ash greySynthetic EnamelSmooth finishBeauty Distemper acrylic paintSuperior ProtectionPearl Luster FinishOil funkPremium AcrylicWood coatings include interrogate wood 2k PU, curiosity wood melamine crystal Clear, Wonder wood melamine and Wonder wood 1 KPU.6.3.SegmentationMarket naval division represents an effort to increase a companys targeting precision.All businesses operate in markets .A market is the set of all tangible and potential buyers of a product or service. This description 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 utilisation, 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 cleavageIt is wide 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 variablesNeedsProfilersThe basic criteria for segmenting a market are customer needs. To find the needs of customers in a market, it is required to undertake market research.Profilers are the descriptive, measurable customer c haracteristics (such as location, age, nationality, gender, income) that can be used to inform a segmentation exercise.The most uncouth profilers used in customer segmentation include the followinggeographicRegion of the countryUrban or ruralDemographicAge, sex, family sizeIncome, occupation, educationReligion, race, nationalityPsychographicSocial class Premium,Middle Upper Class and also raze ClassLifestyle typePersonality typeBehaviouralProduct usage e.g. light, medium ,heavy substance ab exploitersBrand loyalty none, medium, highType of user (e.g. with meals, special occasions)Demographic segmentationDemographic 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 mai n demographic segmentation variables used in this are summarized belowIncomeKansai Nerolac has targeted affluent customers with luxury products like the impressions. Various widget services as previously mentioned are introduced for the ease of customers. Economy range products are being developed by the company and would be introduced presently 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 classMany 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 LifestyleThe 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 incompatible lifestyle categorisation systems, many of them designed by advertising and marketing agencies as a way of winning new marketing clients and campaignsBehavioral segmentationBehavioural 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 ofoccasionWhen 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.UsageSome markets can be segmented into light, medium and heavy user groups.LoyaltyLoyal consumers those who buy one brand all or most o f 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 endanger any product loyalty.Importance of SegmentationThere are several(prenominal) important reasons why businesses should attempt to segment their markets carefully. These are summarised below better matching of customer needsCustomer needs differ. Creating separate offers for each segment makes sense and provides customers with a better solutionEnhanced lolly for businessCustomers 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 get up 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 growthMarket segmentation can build sales. For example, customers can be encou raged to trade-up after being introduced to a particular product with an introductory, lower-priced product.Retain more customersCustomer circumstances change, for example they grow older, form families, change jobs or get promoted, change their acquire 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 communicationsBusinesses 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 marke t segmentNerolac 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) AdvertisingKansai Nerolac made a beeline to cricket fever by advertising and booking ad musca volitans 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 alfresco 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. tv campaign with Irfan Khan and Konkana Sen for Nerolac Impressions was done on popular channels of westernmost 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) cosmos RelationsKansai 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 PromotionsThis 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 a cts 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 ServicesNerolac Assured Paint Service intentional to bring the Nerolac experience right to the consumers doorstep, is the service launched by Nerolac. Currently on hand(predicate) 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 cream for the consumer lot more interesting and convenient. Nerolac Home Stylers provides profession