Description
The report presents a promotion plan for Asian Paints brands -Royale and Apex. Its basically a Sales Promotion report.
PROMOTION PLAN FOR ASIAN PAINTS ROYALE AND ASIAN PAINTS APEX
INTRODUCTION
ASIAN PAINTS
It is India’s largest paint company with revenue of Rs 54.63 billion and in Asia’s it is the third largest company. It has a presence in around 20 countries with customers spread across in almost 65 countries. In all it has 28 paint manufacturing factories spread across the world. It has the following subsidiaries through which it operates around the world ? ? ? ? Berger International Limited (Southeast Asia) Apco Coatings (South Pacific) SCIB Paints (Middle East) Taubmans (Caribbean)
The company was started by four friends in 1942 in a small garage. Within three years it was incorporated as a private company with the name Asian Oil and Paint Company Pvt. Ltd. By the end of 1985 they had managed to set up a fourth plant along with setting up collaborative agreement with Nippon Paints Co. Ltd. of Japan to improve the technical proficiency. In 1998 they came up with Colorworlds wherein the customer could select any color from around 5000 different shades with the help of color tinting machines. This has helped them to achieve highest level of mass customization. Currently it has presence in both decorative and industrial paints. In about 25 years it had become one of the leading companies in India. It has managed to develop culture which has focused more on innovativeness and at the same time being customer centric.
DECORATIVE PAINTS
The decorative or architectural paint caters to housing sector. It can be classified into three type’s premium, medium and distemper segments. The premium paints are mostly sold in metros and consists of acrylic emulsions. The medium paints are more popular in smaller cities and towns and consists of enamels. The distemper is in demand in suburban and rural market. In India, almost 20% paint sold in decorative paints consists of distempers. The demand for decorative paint follows a cyclical pattern. The demand is low during monsoon and picks up gradually reaching a peak during Diwali festival time.
The decorative paint segment accounts for 70 per cent of paints sold in the Indian market. The decorative paint industry in Indian is worth Rs 119 billion and is growing annually at 9 per cent. The global recession just slowed the growth for a short duration but has now recovered and is in a safe mode. The consumption of paint is relatively price elastic and is dependent on industrial and economic growth. The per capita consumption of paint in India is 0.5 kg per annum compared to 4 kg in south-east Asian countries. In developed nations the per capita consumption is 22 kg and global average is 15 kg. It is evident that Indian players have a lot of scope for growth to reach the global levels. Decorative paints can classified into following types ? ? ? ? ? Wood Finishes and Enamel Exterior Wall Paint Interior Wall Paint Ancillary Products – This includes primers and putties Specialty Products
The brands for promotion are Asian Paints Royale and Asian Paints Apex. The Asian Paints Royale is a ready to use water based special effect finish for interior walls. The different types of Royale paint are Special Effect Paints, Metallics, Stucco Marble Finish, Dune and Safari. The pack sizes available in the market are of 1 liter, 200 ml, 1 kg and 5 kg. The trade promotion activities will be carried out for all the SKU’s. Asian Paints Apex is a weatherproof exterior emulsion, which is water based and is 100% acrylic. This product is specifically meant for extreme tropical conditions consisting of high rainfall, humidity and heat. The pack sizes available in the market are 1kg and 5kg. The trade promotion activities will be carried out for both the SKU’s in this category.
NEED FOR SALES PROMOTION
Sales promotion is important for Asian Paints for the following reasons: ? Brand Proliferation: ‘Brand proliferation’ means that company introduces new brands in the same product lines and hence tries to cover each and every market segment for that product line. Asian Paints is targeting Business to Business as well as Business to
Consumers via the same distribution channel. Thus promotions are carried out for ‘brand proliferation’. ? Achievement of short term targets: Sales Promotion would aim to meet the quarterly sales target. ? Withstand Competition: Competition is fierce due to the financial down turn in economy. As a means to with stand such harsh competition, promotion is being carried out.
OBJECTIVE OF SALES PROMOTION
Decorative paint is a ‘shopping good’ i.e. for this type of good, a consumer chooses a final brand from available set of brands by usually comparing a variety of attributes, including suitability, quality, price, and style (competitive parity). This gives retailer or other channel member power to influence decision at moment of purchase. Retailer or other channel member would try to push a particular brand when he has excess of stock of that brand. Thus gaining bigger shelf space in distribution as an objective would help us to gain edge over competitors and to achieve short term targets.
PROPOSAL FOR TRADE P ROMOTIONS FOR ASIAN PAINTS ROYALE AND ASIAN PAI NTS APEX
DURATION OF SALES PROMOTION This promotion plan will be targeted for a period of 3 months. This period comprises of the month of March, April, and May. The rationale behind choosing these months is that it has been observed that consumers try to repaint their houses and other articles before the onset of the rainy season (June to September) and before the arrival of the festive season (Dusshera, Diwali, Pongal etc.) Thus there will be surge in the demand for paint during this period. The trade promotions will induce the channel partners to meet this demand. IMPLEMENTATION OF PROMOTION The techniques to be used implement trade promotions are listed below.
?
Gifts: For this type of promotion technique, gifts would be handed out to the Distributors and Retailers/Dealers. The gifts would be varying depending on the individual sales targets for the channel members. The free gifts would be electronic items like television and micro –wave ovens.
?
Buy Back: The company would offer to buy back the damaged as well paints which have exceeded the shelf life. This would be a way to build trust with the channel members which could lead to future benefits.
?
Contests: A channel member could be rewarded for achieving the highest increase in sales compared to the previous fiscal year. The rewards would be in the form of family holiday package to Mauritius.
The sales promotion will be carried out on a pan India basis. The sales representative will have to inform the distributor about the new promotional scheme. A single sales person will inform all the distributors. He will approximately take around ½ hour for informing each distributor. The retailers/dealers will be informed by the distributors. The gifts will be purchased in bulk from the . The following is the details of the gifts purchased and the price for buying the gifts. Type of gift Television Micro-wave Owen Holiday Package Quantity 300 units 1000 units 10 Price (Rs) 45,00,000 50,00,000 20,00,000
Due to sales promotion the demand for Asian Paints Royale and Asian Paints Apex might increase in the market. To fulfill increased demand the production department will be made aware in advance, so that they plan the production schedule accordingly. DISTRIBUTION CHANNEL PARTNERS The distribution channel for Asian Paints is as shown in the diagram below. The consumers in this case are the architects or designers (who act as an agent for a principal consumer) and also other general consumers. The distributors and retailers will be the targets for the trade promotion activities.
Asian Paints
Distributor
Retailer
Consumer
EXPECTED TARGETS The following table describes the sales target of current year for all the SKU’s Expected sales Q3 2009* 1321 1651.25 59.25 898.64 274.03 1231.92 12.15 89.08 7.2 94.03 29.05 64.98 59.25 1123.30 342.54 1525.09 12.15 126.16 7.20 131.11 39.33 91.78
Q3 2008 Net Sales/Income from operations Expenditure : Fixed expenses Variable expenses Consumption of raw and packing materials Other expenditure Total Expenditure Other income Profit before Interest Interest Profit before tax Tax Net Profit
* The expected sales increase by this sales promotion is 25% on each of the SKU. The expected targets shown in the table above are 25% increase in sales for each of the SKU from the third quarter in the previous year in the territory. The net profit is seen to increase by Rs. 26.80 crores for the quarter. NON SELLING OBJECTIVE The competitive intelligence can be gathered by getting the feedback from the customers who purchase from the same retailer on a regular basis. The differentiating factors from that of the
competitors' products should be captured. Also the features about the paint which give us a competitive edge and similarly drawbacks should be captured. This will enable us to review the product and improve the features. To increase consumer awareness, flyers can be displayed that can be distributed via the distributors to the retail outlets. BUDGETS Total cost of the sales promotion: Expenses on gifts: 300 X Television 1000 X Microwave Oven Expenses on prizes: 10 X Holiday package Advertising specialty expenses Flyers = Total Budget Expected increase in profits from Q3 2008 Net increase in profit after Sales promotion expenses Rs. 10,00,000 Rs. 1,25,00,000 Rs. 26,80,00,000 Rs. 25,45,00,000 = Rs. 20,00,000 = = Rs. 45,00,000 Rs. 50,00,000
doc_685981754.docx
The report presents a promotion plan for Asian Paints brands -Royale and Apex. Its basically a Sales Promotion report.
PROMOTION PLAN FOR ASIAN PAINTS ROYALE AND ASIAN PAINTS APEX
INTRODUCTION
ASIAN PAINTS
It is India’s largest paint company with revenue of Rs 54.63 billion and in Asia’s it is the third largest company. It has a presence in around 20 countries with customers spread across in almost 65 countries. In all it has 28 paint manufacturing factories spread across the world. It has the following subsidiaries through which it operates around the world ? ? ? ? Berger International Limited (Southeast Asia) Apco Coatings (South Pacific) SCIB Paints (Middle East) Taubmans (Caribbean)
The company was started by four friends in 1942 in a small garage. Within three years it was incorporated as a private company with the name Asian Oil and Paint Company Pvt. Ltd. By the end of 1985 they had managed to set up a fourth plant along with setting up collaborative agreement with Nippon Paints Co. Ltd. of Japan to improve the technical proficiency. In 1998 they came up with Colorworlds wherein the customer could select any color from around 5000 different shades with the help of color tinting machines. This has helped them to achieve highest level of mass customization. Currently it has presence in both decorative and industrial paints. In about 25 years it had become one of the leading companies in India. It has managed to develop culture which has focused more on innovativeness and at the same time being customer centric.
DECORATIVE PAINTS
The decorative or architectural paint caters to housing sector. It can be classified into three type’s premium, medium and distemper segments. The premium paints are mostly sold in metros and consists of acrylic emulsions. The medium paints are more popular in smaller cities and towns and consists of enamels. The distemper is in demand in suburban and rural market. In India, almost 20% paint sold in decorative paints consists of distempers. The demand for decorative paint follows a cyclical pattern. The demand is low during monsoon and picks up gradually reaching a peak during Diwali festival time.
The decorative paint segment accounts for 70 per cent of paints sold in the Indian market. The decorative paint industry in Indian is worth Rs 119 billion and is growing annually at 9 per cent. The global recession just slowed the growth for a short duration but has now recovered and is in a safe mode. The consumption of paint is relatively price elastic and is dependent on industrial and economic growth. The per capita consumption of paint in India is 0.5 kg per annum compared to 4 kg in south-east Asian countries. In developed nations the per capita consumption is 22 kg and global average is 15 kg. It is evident that Indian players have a lot of scope for growth to reach the global levels. Decorative paints can classified into following types ? ? ? ? ? Wood Finishes and Enamel Exterior Wall Paint Interior Wall Paint Ancillary Products – This includes primers and putties Specialty Products
The brands for promotion are Asian Paints Royale and Asian Paints Apex. The Asian Paints Royale is a ready to use water based special effect finish for interior walls. The different types of Royale paint are Special Effect Paints, Metallics, Stucco Marble Finish, Dune and Safari. The pack sizes available in the market are of 1 liter, 200 ml, 1 kg and 5 kg. The trade promotion activities will be carried out for all the SKU’s. Asian Paints Apex is a weatherproof exterior emulsion, which is water based and is 100% acrylic. This product is specifically meant for extreme tropical conditions consisting of high rainfall, humidity and heat. The pack sizes available in the market are 1kg and 5kg. The trade promotion activities will be carried out for both the SKU’s in this category.
NEED FOR SALES PROMOTION
Sales promotion is important for Asian Paints for the following reasons: ? Brand Proliferation: ‘Brand proliferation’ means that company introduces new brands in the same product lines and hence tries to cover each and every market segment for that product line. Asian Paints is targeting Business to Business as well as Business to
Consumers via the same distribution channel. Thus promotions are carried out for ‘brand proliferation’. ? Achievement of short term targets: Sales Promotion would aim to meet the quarterly sales target. ? Withstand Competition: Competition is fierce due to the financial down turn in economy. As a means to with stand such harsh competition, promotion is being carried out.
OBJECTIVE OF SALES PROMOTION
Decorative paint is a ‘shopping good’ i.e. for this type of good, a consumer chooses a final brand from available set of brands by usually comparing a variety of attributes, including suitability, quality, price, and style (competitive parity). This gives retailer or other channel member power to influence decision at moment of purchase. Retailer or other channel member would try to push a particular brand when he has excess of stock of that brand. Thus gaining bigger shelf space in distribution as an objective would help us to gain edge over competitors and to achieve short term targets.
PROPOSAL FOR TRADE P ROMOTIONS FOR ASIAN PAINTS ROYALE AND ASIAN PAI NTS APEX
DURATION OF SALES PROMOTION This promotion plan will be targeted for a period of 3 months. This period comprises of the month of March, April, and May. The rationale behind choosing these months is that it has been observed that consumers try to repaint their houses and other articles before the onset of the rainy season (June to September) and before the arrival of the festive season (Dusshera, Diwali, Pongal etc.) Thus there will be surge in the demand for paint during this period. The trade promotions will induce the channel partners to meet this demand. IMPLEMENTATION OF PROMOTION The techniques to be used implement trade promotions are listed below.
?
Gifts: For this type of promotion technique, gifts would be handed out to the Distributors and Retailers/Dealers. The gifts would be varying depending on the individual sales targets for the channel members. The free gifts would be electronic items like television and micro –wave ovens.
?
Buy Back: The company would offer to buy back the damaged as well paints which have exceeded the shelf life. This would be a way to build trust with the channel members which could lead to future benefits.
?
Contests: A channel member could be rewarded for achieving the highest increase in sales compared to the previous fiscal year. The rewards would be in the form of family holiday package to Mauritius.
The sales promotion will be carried out on a pan India basis. The sales representative will have to inform the distributor about the new promotional scheme. A single sales person will inform all the distributors. He will approximately take around ½ hour for informing each distributor. The retailers/dealers will be informed by the distributors. The gifts will be purchased in bulk from the . The following is the details of the gifts purchased and the price for buying the gifts. Type of gift Television Micro-wave Owen Holiday Package Quantity 300 units 1000 units 10 Price (Rs) 45,00,000 50,00,000 20,00,000
Due to sales promotion the demand for Asian Paints Royale and Asian Paints Apex might increase in the market. To fulfill increased demand the production department will be made aware in advance, so that they plan the production schedule accordingly. DISTRIBUTION CHANNEL PARTNERS The distribution channel for Asian Paints is as shown in the diagram below. The consumers in this case are the architects or designers (who act as an agent for a principal consumer) and also other general consumers. The distributors and retailers will be the targets for the trade promotion activities.
Asian Paints
Distributor
Retailer
Consumer
EXPECTED TARGETS The following table describes the sales target of current year for all the SKU’s Expected sales Q3 2009* 1321 1651.25 59.25 898.64 274.03 1231.92 12.15 89.08 7.2 94.03 29.05 64.98 59.25 1123.30 342.54 1525.09 12.15 126.16 7.20 131.11 39.33 91.78
Q3 2008 Net Sales/Income from operations Expenditure : Fixed expenses Variable expenses Consumption of raw and packing materials Other expenditure Total Expenditure Other income Profit before Interest Interest Profit before tax Tax Net Profit
* The expected sales increase by this sales promotion is 25% on each of the SKU. The expected targets shown in the table above are 25% increase in sales for each of the SKU from the third quarter in the previous year in the territory. The net profit is seen to increase by Rs. 26.80 crores for the quarter. NON SELLING OBJECTIVE The competitive intelligence can be gathered by getting the feedback from the customers who purchase from the same retailer on a regular basis. The differentiating factors from that of the
competitors' products should be captured. Also the features about the paint which give us a competitive edge and similarly drawbacks should be captured. This will enable us to review the product and improve the features. To increase consumer awareness, flyers can be displayed that can be distributed via the distributors to the retail outlets. BUDGETS Total cost of the sales promotion: Expenses on gifts: 300 X Television 1000 X Microwave Oven Expenses on prizes: 10 X Holiday package Advertising specialty expenses Flyers = Total Budget Expected increase in profits from Q3 2008 Net increase in profit after Sales promotion expenses Rs. 10,00,000 Rs. 1,25,00,000 Rs. 26,80,00,000 Rs. 25,45,00,000 = Rs. 20,00,000 = = Rs. 45,00,000 Rs. 50,00,000
doc_685981754.docx