Asian Paints Distribution Strategy

Asian Paints Distribution Strategy

INDEX 1. About Company 2. Product Mix a. Decorative Segment b. Industrial Segment 3. Paint Industry 4. Competitors 5. Retail and Service Initiatives a. Color World b. Color Idea. c. Color store d. Kid’s World e. Asian Paints Helpline 6. Asian Paints (AP) Distribution Strategy a. Prevailing Market Situation b. Bypassing Bulk Buyers Segment c. Entry to Semi-urban and Rural Markets d. Going Directly To Retail Dealers e. Open-Door Dealer policy f. Nationwide Marketing/Distribution Reach 7. Implication Of Distribution Strategy 8. Distribution Strategy Implementation Process: a. AP Created a Large Network of Dealers b. AP Established a Network of Company Depots c. AP Created a Marketing Organisation that Matched its Distribution Intensity: d. Effective Cost-Service Distribution e. Strong Commitment to Distribution Cost Control f. Effective Inventory Management g. Control Of Credit Outstanding h. Information Technology Initiative: i. Leadership Through Distribution Excellence 9. Conversion with Jamshedpur Dealer 10. References

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Asian Paints Distribution Strategy

1.

About Company: Asian Paints is India's largest paint company and now Asia’s thirdlargest paint company, behind Japan’s Kansai and Nippon, and the world’s 13th largest. This year it appears on the Forbes Asia's Fab 50 for the third time in a row. It had revenue of INR 10,970 crore in 2013 with 13.9% increase over previous year revenue. Revenues from paint sales of the overseas operations of the group have increased by 23% to INR 1,400.6 crores. It was founded in 1942 by four young men Champaklal H. Choksey, Chimanlal N. Choksi, Suryakant C. Dani and Arvind R. Vakil. in a garage in Bombay. The name Asian Paints was picked randomly from the telephone directory. From 1968, this brand occupies a premium position in the Indian Paint industry. Asian Paints operates in 21 countries with 29 paint mfg. facilities with capacity of 440 mn.Lts/annum, servicing consumers in 65 countries. Asian Paints operates in five regions across the world viz. South Asia, Southeast Asia, South Pacific, Middle East and Caribbean region through the five corporate brands viz. Asian Paints, Berger International, SCIB Paints, Apco Coatings and Taubmans. It is ranked among the top 10 decorative coatings companies in the world. It is a fully-integrated paints company.

Figure 1: Geographic wise sales contribution

2.

Product Mix: Asian Paints manufactures and markets industrial and decorative coatings.

Along with that the company also provides home painting services and solutions. The company's key products and brands include the following:

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Asian Paints Distribution Strategy

Figure 2: Product Mix

a. Decorative Segment:    

Wall Finishes: Powerful brands like Tractor, Royale, Royale Play, Apcolite etc. Enamels Brands viz. Apcolite Synthetic Enamel, Utsav Enamel dominate Exterior Finishes: Brands like Apex, Apex Ultima, Ace dominate segment in just a few. Wood Finishes: Powerful brands viz. Touchwood, Asian Melamine Wood Finish

b. Industrial Segment:  

3.

General Industrial Finishes: Apcolite (Hammerton Finish) Other Industrial Products: Expory Coatings, Chlorinted Rubberfinishes, viny I & Polyurethane Systems.

Paint Industry: Over the past few years, the Indian paint market has substantially grown and caught the attention of many international players. The growth in the market is driven by emergence of the middle class in India, growing infrastructure, increase in the tendency to spend and growing young population inclined towards lavish lifestyle. On the back of such advocacy, it is anticipated that the sector will post a CAGR of around 16.2% during 2013-14 to 2015-16. Companies with attractive marketing strategies and comprehensive product portfolios are expected to gain greater market share. Additionally, the increased focus on research and development of the paints will lead to Page 3

Asian Paints Distribution Strategy

greater advancements. Annual paint consumption is 1.9 kilos a person, as opposed to 5.5 kilos for the Asia-Pacific region. Consumption in rural areas is growing even faster, and that’s where the company has long been the strongest—Asian Paints wooed small shopkeepers in villages and tiny towns early on because foreign companies dominated paint sales in the cities. All the major players in the $5.3 billion Indian paint market are expanding capacity and seeking to boost market share. Decorative paints available in wide range of combination account for 70% of the coatings total production. While industrial paints share the balance of 30%.This rate is diametrically opposite to the trend in the industrialized countries where industrial paints account for 70% and Decorative paints for the balance of 30%. 4.

Competitors: a. Kansai Nerolac Paints: It is largest in industrial paint and second largest decorative paint company based in Mumbai. It is a subsidiary of Kansai Nerolac paints, JAPAN. It is engaged in the industrial, automotive and powder coating business. It is the subsidiary of Kansai Paints Ltd Japan. b. Berger Paints India: It has come a long way since its inception in the year 1923. India’s second largest decorative paint player, Berger Paints is headquartered in Kolkata and services the market through a distribution network of 82 stock points and 12,000+ paint retailers. c. Akzo Nobel India: It is the fourth largest player in the domestic paint industry in terms of revenues, and known for its premium segment product Dulux, is targeting to emerge the No.2 in the next five years. Akzo has a market share of 9-10. It is the Indian arm of the Amsterdam-headquartered global paints and coatings leader, Akzo Nobel.

Figure 3:Market share

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Asian Paints Distribution Strategy

5.

Retail And Service Initiatives: a) Colour World: Customers are the very core of all business activities. From the beginning, Asian Paints has fostered a customer-centric approach to business. A simple but unbeatable concept of "going where the customer is" drives all the retail strategies. In the early 90s, for the first time in the paint industry Asian Paints offered the consumer over 150 shades. The concept was extended to the dealer shops through Colour World in the mid-90s, where Asian Paints began offering over 1000 shades. The introduction of Colour World provided a new direction for the paint industry into the age of retailing by providing the consumer - a service interface. With only a limited set of bases and colourants, manufactured and transported throughout the supply chain, Asian Paints provided a choice of innumerable shades to the customer through a technology of tinting at the last retail store. With the introduction of Colour World, almost all wall-finishes from Asian Paints offer a wide range and choice in colours be it for interior or exterior application. It has been our endeavour to reach out to the customers not only with their products but also with value-added services and initiatives. b) Colour Idea: Stores too have gone upmarket. In 2009 the company introduced dealer-owned Colour Idea stores and now has 100 of them. Unlike traditional dealers who sell through hardware stores, the new stores focus on matching customers to the right colour. They’re outfitted with boards displaying samples of interior and exterior finishes, and there’s a consultant who provides computer visuals showing how a room will look when painted.

Figure 4: View of Colour Ideas store

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Asian Paints Distribution Strategy

c) The Colour Store: Asian Paints also runs two high-end showcase stores, in Mumbai and New Delhi. These don’t sell any paint, but have walls of displays showing various shades and textures under different light settings. It is a retail experience that offers a personalized colour solution to each customer without directly selling a single can of paint (the paint itself is sold via a network of nearby dealer stores).Style preferences, colour ideas, and other details are stored on RFID ―color cards‖ as consumers move through the store. At the end of the experience, they download their card and watch as a customized colour magazine is created. They can then take their magazine to any Asian Paints dealer store to choose and purchase paint, or they can use the magazine as a discussion tool with their architect or designer. Company continued to broaden its network by installing more than 2900 Colour Worlds, taking the tally of Colour World dealers to over 24000 across the country. At the top of retailing hierarchy, Company increased Colour Ideas Stores to almost 100. Hassle-free painting solutions offered through the Asian Paints Home Solutions (APHS) service was used across 13 cities. The service experience was enhanced by introducing mechanisation in painting. Customer satisfaction scores and customer feedback continue to guide the APHS operations. Colour Next (annual colour trend forecast) has become a strong brand amongst Architects and Interior Decorators (AIDs). d) Kid’s World: Another important area was the offer of painting solutions for children with the launch of Kids World. A foray into Kids' World marks yet another milestone wherein the company offers painting designs for Kids Rooms as well as Kids Corners. For the first time, an attempt has been made to invite the customer to get into a Do-ItYourself mode with these designs.

Figure 5: View of Kids’ Store

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Asian Paints Distribution Strategy

e) Asian Paints Helpline: In the late 1990s it started a customer helpline, which now gets 2,000 calls a month. It offers home-painting services in 13 cities—an employee comes to a home, sizes up the job, brings in painters who cover up the furniture and do the work. It sent out Happy Painting Guides to 300,000 customers last year. It provides colour consultancies, in which an employee with interior-design training comes to the home to suggest what can be done for the walls. f) It trains 8,000 painters a year in two-day workshops to ensure they apply its premium paint in the right way. Customer interaction leads to insights: It has started offering 200 ml samples of its premium paint at a nominal price, allowing a customer to paint a swath of a wall to see how the colour will look—a significant improvement over the shade card.Asian Paints efforts are continuously on to engage the consumer in the painting process and fulfill all the requirements related to the world of painting. g) It introduced computerised colour-matching in the mid-1970s. There were PCs in branches by the early 1980s. Today it dishes out a free paint app for smart phones. A key factor in Asian Paints coming out ahead of the competition is the significantly better supply chain it had, which allowed the company to service a much larger number of dealers than the competition. 6.

Asian Paints (AP) Distribution Strategy: a) Prevailing Market Situation: Previously, for 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 as 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 distributors. The credit out-standings for the supplies made throughout the year were required to be settled by the wholesale distributors only at the yearend, at Diwali time. These distributors had neither the compulsion nor the motivation to invest in distribution infrastructure. They were not required to move out to semi-urban and rural areas. They concentrated on big cities where they could make the sales without much investment in distribution infrastructure and market development. Also, they were shutting the doors on any new paint company seeking an entry into the business. In other words, these distributors controlled the paint business and were making it impossible for a new paint company to enter and establish itself in the business. Asian Paints sized up the scenario correctly and formulated a unique distribution strategy. In the normal course, a firm entering the industry in this scenario would have opted for the low risk strategy of gaining a limited access to the wholesale traders and be satisfied with a small share of the Page 7

Asian Paints Distribution Strategy

existing business. But Asian Paints went in for a strategy that differed totally from the existing pattern. Its strategy in fact, meant the polar opposite of the established/existing pattern. b) Bypassing Bulk Buyers Segment: Bulk buyer segment was the major segment of the paint business in the earlier days and any paint company needed a share of this major segment for sheer survival. Though, this segment was dominated totally by foreign companies and their wholesale distributors, a company like AP would normally have rushed to this segment and tried to garner a share of it. AP, however, had a totally different game plan. Seeing that this segment was not a growth segment, though it was certainly the major segment at that point of time, AP decided to ignore this segment for the present and go to individual consumers. And that was a crucial decision. It influenced every subsequent decision AP took in the realm of distribution. Over time, AP proved to the paint industry that there existed a large and bottomless segment in the paint business of India, outside the bulk buyer segment, comprising of individual consumers. c) Entry to Semi-urban and Rural Markets: Along with the decision to go to individual consumer segment leaving aside the bulk buyer segment, AP also decided that within the individual consumer segment, semi-urban and rural areas would constitute AP’s priority market. 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 semiurban and rural areas, and felt it wise to tap this market. AP also understood that a company 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 semiurban 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. d) Going Directly To Retail Dealers: It 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. It totally bypassed the well-entrenched wholesale distributors and went directly to the retailers. While AP’s competitors remained content with their linkage with a handful of wholesale distributors, AP preferred direct contact with hundreds of retail dealers. e) Open-Door Dealer policy: AP followed the policy in the matter of adding retail dealers to its network. The prevailing trend in those days was to limit the number of dealers to the barest minimum. AP broke this trend and chose to use practically everyone in the trade, who was willing to function as its dealer. It was as a combined Page 8

Asian Paints Distribution Strategy

result of the policy of going directly to retailers and the policy of open door to dealership that AP’s dealer network swelled rapidly. Even after achieving stability and maturity in distribution, AP continued to follow a policy of continuous expansion of dealer network. By 1990, AP was having a 7,000 strong dealers network. By the year 2000, the number had swelled to 12,000. And even now, on an average, AP is adding 200 to 250 new dealers every year and now in 2014, the number reached to 35,000. f) Nationwide Marketing/Distribution Reach: AP took yet another important and strategic decision in the realm of distribution. Those days nationwide distribution/marketing was not the standard practice in the paint business. On the one side, there were the 1,000 odd small paint companies who, as a class, believed in marketing their paints in limited territories in and around 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 all the geographical zones, states and territories. 7.

Implication Of Distribution Strategy: AP’s distribution strategy described in the preceding paragraphs had its associated implications. AP had taken due note of them and faced them squarely. a) Had AP concentrated on the bulk buyer segment, it could have managed with a limited product range, at least, in the initial years. But, AP’s decision to turn to the individual consumers necessarily meant a wide product range. In the nature of things, the individual consumer segment involves a very wide choice in terms of products, materials, shades and pack sizes. On top of this, AP believed in making products based on the preferences of consumers. It gathered feedback from the consumers and turned out products, shades and pack sizes on the basis of such feedback. This policy resulted in a further burgeoning of the product range. b) At the time of AP’s entry, paint companies were supplying paints in containers of 500 ml or larger. AP saw that there was a felt need in the market for paints in smaller packs. All end uses did not require a large quantity. Moreover, it was common practice for consumers to buy paint initially in a larger quantity and supplement it with small size purchase to complete the job. AP decided to harness the business opportunity and started supplying it paints in small packs- in 200 ml, 100 ml and 50 ml packs. This proliferation in pack sizes also contributed to AP’s growing product range. AP was by now manufacturing and marketing as many as 2,000 distinct items of paints, none of which was strictly a substitute for the other. c) The policy of having the widest range of products, colours and pack sizes had it implications on AP’s distribution. When 2,500 different items had to be made Page 9

Asian Paints Distribution Strategy

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. d) The decision to go to the semi-urban and rural markets instead of confining to the urban markets also meant enlargement of the distribution function. AP had to go in for more dealers in order to serve the scattered semi-urban and rural market. The decision also meant that AP could not opt for a simple, centralised distribution of its products from its factory. It had to go in for a decentralised, field-focussed distribution, with a network of depots located all over the country/marketing territory. Without such extensive and intensive distribution network, it would not have been possible for AP to cover the semi-urban and rural markets. e) Through its decision to go retail, AP was getting deeply involved in physical distribution and channel management. In the system chosen by AP, the physical distribution-cum-channel management task was far more demanding, compared to the wholesaler-oriented system practised by the other paint companies. While, for companies that embraced the wholesaler-oriented system, it was enough to service a handful of distributors, AP had to service a network of thousands of retail dealers. Having taken the decision to go retail, AP necessarily had to create and service a vast dealer network. It also had to create the physical distribution facilities required for servicing such a large network. f) Extent of marketing territory and complexity of distribution organisation are interrelated. The moment AP voted for nationwide marketing, it was getting into intensive as well as extensive physical distribution and channel management. AP thus had to create a nationwide distribution-cum-marketing organisation. g) AP’s strategies made distribution the most important element of its marketing mix. And, AP gave to distribution all the inputs that were demanded by it. 8.

Distribution Strategy Implementation Process: a) AP Created a Large Network of Dealers: An extensive network of dealers and a matching physical distribution infrastructure play a crucial role in the decorative paints segment. This is essential for ensuring easy accessibility of the product to customers. In this, Asian Paints scored over its competitors with a massive network of 35,000 dealers spread over 3,500 towns across the country. AP has the largest distribution network among all the players. b) AP Established a Network of Company Depots: AP established a large chain of company operated depots/stock points throughout its vast marketing territory, from Page 10

Asian Paints Distribution Strategy

where the retail dealers could conveniently pick up their requirements. AP’s basic strategies explained in the earlier sections necessitated a liberal approach in the matter of stock points/depots. It also meant that the depots had to be company operated. After all, AP did not have any wholesale distributors to whom the responsibility for operating the stock points could possibly have been assigned. AP established a network of 72 company-run depots, spread throughout the country and serviced its retailers from them. The number of depots varied from city to city. For example, Bangalore had just one depot while Mumbai had four depots. The depot typically supplied to about 200-300 dealers. c) AP Created a Marketing Organisation that Matched its Distribution Intensity: Effective control of the large number of depots, each having substantial stocks of 2,500 odd distinct items necessitated a matching marketing organisation structure. AP set up a marketing organisation consisting of 6 regional sales offices, 150 branch sales offices and a 500-person strong sales force e.g. sales supervisors and sales representatives spread all over the country. The marketing organisation of the company is presented in figure 6. It can be seen from the chart that a very extensive structure has been created in the consumer division. It is primarily meant for taking care of the massive distribution task involved in this sector. Each branch sales office has its own depots and the various items are stocked in the depots under the control of the concerned branches. The branches service the dealers and customers in their territories. These are supported by 6 regional distribution centers, which cater to 72 depots. Each depot has a branch manager for supervision of several salespersons who cater to more than 30,000 dealers in the more than 3,500 big and small cities all over the country.

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Asian Paints Distribution Strategy General Manager Marketing

Sales Manager Trade

Manager Export

Regional Sales Manager

Product Managers

Branch Managers/ Depot Executives

Product Executives

Sales Manager Industrial

Product Managers

Zonal Managers

Product Executives

Sales Supervisor

Sales Representative

Service Representative s

Sales Representative s

Figure 6: Marketing Organization Chart

d) Effective Cost-Service Distribution: Managing the cost-service conflict was the main challenge that AP faced in the implementation of its distribution strategy. 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. Demand for decorative paints is characterised by seasonality. Demand drops during monsoons and picks up around a mouth-and-a-half before the festive season. Major part of the sales takes place in the second half of the financial year. Manufacturers have to carry huge inventories during the lean period. As a result, distribution cost becomes all the more significant. Naturally, distribution cost emerged as a major hurdle that AP had to cross. The strategy adopted by AP necessitated expensive distribution. In addition, AP took another basis decision. It went in for a very high service level in distribution. Service level is measured in terms of the number of stock keeping units (SKUs) available in stock as a percentage of the number of SKUs that should have been in stock. A high service level in physical distribution-in transportation, warehousing, order processing and inventories necessarily means a high level of costs. Every firm has to face this cost-service dilemma and work out a compromise. AP voted for a high service level and without compromising this service level, it tried to contain the distribution costs. Interestingly, AP succeeded in this endeavour. Page 12

Asian Paints Distribution Strategy

e) Strong Commitment to Distribution Cost Control: While following a totally customer-oriented distribution strategy. AP could not afford to ignore the cost angle. AP was in no position to pass on any additional costs to the consumers. AP’s marketing philosophy demanded that the consumer price of its paints should be on the lower side, so as to suit the pockets of the average Indian. Moreover, AP’s business growth demanded more and more investment in manufacturing and distribution. AP had to find the resources. This apart, the intensity of competition had also been on the increase. Naturally, profitability was coming under greater strain in these circumstances. AP had to control its distribution costs in order to maintain its profitability and market leadership. f) Effective Inventory Management: Effective inventory management is the first major component of AP’s strategy on distribution cost control. And, AP achieved high efficiency in this regard. Actually, in inventory cost, AP took the lowest position in the industry. AP’s average inventory level significantly lower than industry average. This right away edge in inventory costs to AP compared t its competitors. AP’s stock of finished goods was just 7 per cent of its net sales while for the others in the industry it was nearly twice that level. What is particularly striking in this achievement is that AP offered customers and dealers a high level of service in product delivery compared to its competitors and yet kept the inventory costs down by 45 percent compared to the competitors. g) Control Of Credit Outstanding: Large credit out standings, running beyond two months or more, was a natural concomitant of the distribution strategy chosen by AP. The dealers are required to maintain stocks of all the SKUs that are on demand in the territory. It pushes up inventory levels at the outlets. They need credit. AP allowed 15-21 days credit for dealers located in the major towns and 22-30 days credit for dealers in upcountry regions. AP had to pull off a smart credit control strategy for survival. It resolved the thorny problem through an innovative dealer incentive scheme. AP stipulated that each of its dealers should pay for the supplies within a specified time norm and offered them as attractive incentive scheme for doing so. It consisted of two components: 



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. 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 payment has been made in advance by draft in order to be eligible for the cash discount.

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Asian Paints Distribution Strategy

The scheme was a grand success. AP’s credit out standings always stood below 25 days, better than the other major companies. Systematic computerisation also helped AP maintain the credit outstanding within limits. h) Information Technology Initiative: Information technology (IT) plays a key role in enabling the company to grow and generate profits. Asian Paints is the only company in India to have integrated Supply Chain Management (SCM) Solution from i2 Technologies, and Enterprise Resource Planning (ERP) solution from SAP. With these IT tools firmly in place and with the backing of an extensive communication platform, it is an internally enabled enterprise. It has integrated all its stakeholders including suppliers, employees and customers and created an extended enterprise. Asian Paints has launched a supplier portal that includes an automated digital document exchange facility that has improved the efficiency and effectiveness of interaction with suppliers. An employee portal has also been set up. Customer Relations Management (CRM) tools are being used in Asian Paints Helpline and Home Solutions initiatives. The successful deployment of ERP, CRM, Business Intelligence and Portal software from leading solution providers and integrated SCM systems has helped in improving efficiency in the business as well as increase the transparency and accuracy of information across the company. In order to affect 24x7 availability of their IT infrastructure, they have set up a disaster recovery site in South India. To match the pace of growth of their international business, it is focusing on improving transaction systems and messaging platforms. The decision-making capability has been raised within the organisation to next level by investing in cutting edge In-Memory Database technology from SAP called HANA. This has provided the managers with powerful and faster analysis capabilities. The IT initiatives also ensured prompt billing, accurate customer accounting and effective control of credit outstanding. Computerisation also enabled AP to process recent sales data for the 100 fastest moving SKUs. This analysis was used to project sales of specific products, which helped plan production and raw material purchases. With computerisation, AP was able to analyse past trends to arrive at a 90 per cent accurate sales forecast. Corrections were made every month between the sales projections and actual sales. Production was thus evened out month-to-month. Sales statistics were maintained, classified by product, month, salesman, branch, region and dealer. Such computerised planning and control of production, sales and inventories helped AP cut distribution costs without compromising on the high level of service sought by it in physical distribution. i) Leadership Through Distribution Excellence: The story of Asian Paints is a story of distribution excellence. AP achieved an enviable leadership position through the distribution route. While AP did not ignore any of the other functions of marketing, it was by mastering the distribution function that AP’s gained a distinct and powerful competitive advantage. AP’s distribution strategy was truly innovative; it broke new Page 14

Asian Paints Distribution Strategy

ground in every aspect of distribution. In the final analysis, excellence in distribution led the company to marketing and corporate excellence 9.

Conversation With Jamshedpur Asian Paints Dealer: We visited the dealer named Ashoka Enterprise at Bistupur. Following are the findings that dealer informed us about:         

   

  

     

Dealer deals with Asian Paints and Akzo Nobel. Turnover of the dealer was 9.5 Cr and out of which 7 is from Akzo Nobel Dealer is also working as a whole sale dealer for smaller dealers in rural area. Acqua – is the name of agency (based at Ranchi) that delivers all the paint products to the dealers across Jamshedpur Credit terms- Asian Paints- 7 days, Dulux- 21 days Company has made many dealers in Jamshedpur area and therefore the power of the dealers is diluted. Items are ordered as per the requirement of shopkeepers only It’s tough to understand the Promotional schemes of Asian Paint and most of the consumer schemes stock and promotional items remains out of sync. Shopkeepers show different paint shades to the customers, customers also come prepared after doing online search on the company’s websites for the right kind of shade. Margin average around 7% which is lower than Azko Nobel’s. Customized paints are prepared on customer demand at the shop. Supply is very good. Dealer has significant clout and therefore do not accept tagging/dumping terms and therefore excluded from Critical retail services (CRS) system. The entire newly launched / premium product schemes first given to CRS dealer and then given to other dealer with a time lag. Brand pull is good. Claims settlement takes long time and sometimes it drags to even more than one year. Company asks for feedback, but hardly implements i.e. Dealer has suggested packaging improvement in Asian Paints’ Apcolite but Asian Paints did not change and hence lying uselessly in the shop. Painter training is done by the company itself. Incentive schemes to painters were first given through dealers, but now those are directly given to the respective person e.g. to the Painters and dealer has no say. Targets are given to the dealer, but once the target met, prizes are given to the local performers Area sales manager hardly visits the dealer’s shop Return of slow moving goods also depend upon the clout of the dealer. All the points discussed above in the report regarding AP distribution strategy were found consistent.

10. References:

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Asian Paints Distribution Strategy

Asian Paints annual report. http://www.scribd.com/doc/6655788/ASIAN-Paints-Distrbn

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