Posted at 11.21.2018
The business strategy of AP has been on the basis of acquiring a series of short-term competitive advantages by adopting measures that raised the Cost of doing business for those its competitors by raising the hygiene element in the business. So far, Asian Paints has been using its distribution power and logistical efficiency to realize this advantage. The benefit obtained by leveraging on circulation durability is short-lived and ultimately imitable. In addition, AP has generated such an considerable network that getting incremental gain out of enhancing the circulation network could be very hard. The next rational step for AP to consider to gain competitive edge would be through either route control or through occupying head space. AP should make an effort to increase the window of competitive advantage by using Marketing as a tool to acquiring competitive edge. A number of the industry characteristics could be utilized to gain insights about the competitive range of Asian Paints.
The company follows a three-pronged growth strategy - market growth, acquisition and outsourcing.
By taking the above steps, the industry innovator in the decorative paints portion (market share: 35-37 %), and number 2 in the commercial segment (20 % share), projects to emerge frontrunners in the car paint sector.
Asian Paints' present concentration is on smaller cities and cities, even villages, where surfaces, interiors and exteriors are usually lime-coated - and in the approaching years almost all of them would be paint-coated, making them a significant potential market for paint companies. The business will be spending around Rs 100 crore to increase its dealer-tinting series called Color World, by adding another 2, 000 systems as the demand for acrylic paints in smaller cities and locations is increasing and solid wood polish is another area where in fact the focus happens to be on.
As part of market expansion and brand-building programs, the business has produced a consumer services section. A possible customer can call the division's helpline and check out all about paints and even get a quotation to color his house or shop - an innovative way to lessen the impact of painters on the customers' selection of brands.
The company intends to augment its creation by debottlenecking its flower. This is expected to increase production by 80, 000 tonne per annum (tpa) to 2. 4 lakh tpa. The company is also on the lookout for acquisitions - both home and abroad.
So significantly, the industry hasn't seen any mega mergers as there are extremely few [but large] players and because of low-entry obstacles. So, this is a major change. Asian Paints, in truth, has a considerable presence in foreign countries, with 10 international joint endeavors to its credit.
The industry is characterized by the presence of intermediaries who've a very high influencing ability on the purchase decisions of the buyer, especially in the cities. Asian Paints technique for acquiring higher product demand could be three pronged.
Use these intermediaries for initiating demand: The intermediaries (the painters, companies, designers, decorators etc. ) could be used as a marketing arm of the company. They could acts as spokespersons of the business and promote the business's products to the customers. A number of the bigger companies could be paid a commission for bagging agreements that entail purchase of Asian Paints.
Occupy area of the intermediary space and make an effort to sideline other intermediaries: Asian Paints should start a service arm, which would provide the services provided by the prevailing intermediaries on the market. For operationalising this strategy, AP could decide on a several existing intermediaries, provide them with the label of Asian Paints service wing, and follow a franchisee model of functions. Being present in different seditions of the value delivery system and having a solid brand collateral in the Paints market would give AP the reliability to operate a solid service arm. The service structured strategy of AP can have two different approaches
AP could become a company with the purpose of providing a encouraging arm to the Products business. In cases like this, the fundamental aim of the service sector is always to remove the purchase costs of the end-consumer by giving all the aspects of painting in a bundled fashion. The service sector could be setup as a loss making venture with its fundamental function being attracting more customers for the merchandise. In this case, AP's main business would be in the developing business and the service sector would act as marketing arm for this. The ideal analogy to this kind of service is the financing services arm of motorbike manufacturers of the country. All the funding services are, in themselves, loss-making, but by offering credit they take away the transfer costs of the consumers, in doing so increasing product demand. (Or)
AP could change the industry dynamics totally by giving value added services as an intermediary player. The company could play the role of interior decorator and paints consultant and help the buyer in making and painting his house. In such a situation, AP would be changing the business enterprise from being truly a product based one to a service based mostly industry and would be appropriating value through the assistance it provides.
The first procedure would entail creating a service arm that can focus on a huge market, whereas the next one would necessitate the creation of your well-qualified service arm which is capable of providing value-added services. AP can follow both these strategies and focus on different market segments. The value-addition services arm would cater to the top quality end of the market who have a very high willingness to pay and the other bundling services arm would focus on the requirements of the public.
AP could make an effort to reduce the vitality of the intermediary by increasing the Take for the merchandise. The role of the influencer could be greatly reduced by increasing the energy of the end-consumer. AP can also try to increase end-consumer ability by detatching information asymmetry between customer and manufacturer. AP can achieve this by establishing a strong manufacturer because of its brands. The possible utility of branding in this portion has been examined as presented within the next chapter.
AP has actually been taking efforts along all the three above mentioned lines to gain competitive gain. AP has started out a service arm which is wanting to do Agreement marketing; which essentially means that a marketing team contacts individual homes and offers specific Painting solutions to them cost free. AP 's Colourworld is also an effort in direction of providing value-added services. AP's helpline is an instrument designed to reduce information asymmetry and for that reason increase end customer vitality.
Parallel execution of strategies advised in 2 and 3 could lead to a predicament of eventual disintermediation in the industry. Simultaneously occupying intermediary space and minimizing intermediary vitality could finally lead to a situation when the intermediary providing service gets integrated with the father or mother company functions and the other intermediaries get totally removed, thereby removing an entire layer in the value-chain. (Like the Dell style of operations).
The above-mentioned strategies can be utilized for the metropolitan section. The dynamics of the rural portion are just a little different and different strategies need to be used for these. The rural section is not adult enough to appreciate service related offerings and then the strategy should be product related. The basic strategy that needs to be adopted in the rural portion is one of customer up gradation. The penetration of the rural portion has been attained by offering a basic product well personalized to match the low determination to pay of the rural consumer.
After basic penetration degrees of the category have been achieved and the traditionally used proxies taken away, the rural consumer can be offered a "higher " range of products with a view to up grading the consumers. The highly value hypersensitive rural consumer will probably react positively to product offerings that provide a good cost benefit formula, even if the products are costlier.
The company has a very good penetration generally in most rural markets. The field offices deal with dealers straight even in cities with populace up to 10, 000. Wholesalers interacting with the products have the ability to reach even smaller cities better.
Marketing paints calls for an FMCG kind of strategy. The business is focusing on cities with clusters of villages around them to achieve better rural penetration.
Apart from the business's existing brands for the rural marketplaces, such as 'Utsav' and 'Tractor', they have got plans for new products and business propositions to focus on the needs of the marketplaces. Asian Paints is well poised to have maximum good thing about the concessions directed at the enclosure sector and of the growing disposable earnings in rural India.
THE SUPPLY CHAIN- Asian Paints has harnessed the powers of state-of-the-art resource string system using cutting edge technology to incorporate all its plant life, regional circulation centres, outside control centres and branches in India. Four of the business's paints crops in India, two substance plants, 18 processing centres, 350 organic material and intermediate goods suppliers, 140 packing material distributors, 6 regional syndication centres, 72 depots are integrated.
The supply chain runs through a broad spectral range of functions right from materials likely to procurement to major distribution. It offers performed a pivotal role in increasing functional efficiencies and creating agile procurement, creation and delivery systems. It has additionally enhanced the flexibility of operations, decreased productivity time and reduced delivery costs, while bettering customer-servicing levels and profitability.
The Supply String Management is guaranteed by IT initiatives that help the business in demand forecasting, deriving optimal flower, depot and SKU mixtures, streamlining vendor connections, lowering procurement costs, and scheduling production functions for specific factories.
Asian Paints feels that people are its most powerful assets. For the company can go only as high as its people aim. It is people who innovate and invent, and who engineer the efficiencies that produce a business succeed. At Asian Paints, recruiting systems are made to create a eye-sight focus performance focused, and agile company. A talent pool of over 4700 employees applied across twenty-three countries brings in a unique mixture of mindsets and skills.
Asian Paints approaches the environment concern from the perspective of waste minimisation and conservation of resources. Thus, the continued make an effort is to reuse, recycle and eliminate waste, which results in less and less misuse being generated. Appropriately material loss in processing have been reduced substantially during the last few years. Further, the business's four paint plant life and the two chemical plants in India contain the ISO 14001 recognition for environment management standards. The business uses the latest solutions like solvent restoration plants, change osmosis, and rainwater harvesting for keeping the environment clean and minimising wastages.
The very center of most business activities. From the beginning, Asian Paints has fostered a customer-centric method of business. A straightforward but unbeatable idea of "going where the customer is" drives all retail strategies. Asian Paints initiatives are continuously on to engage the consumer in the painting process and fulfill all certain requirements related to the world of painting.
Asian Paints has launched a provider portal which includes an automated digital document exchange center that will increase the efficiency and efficiency of relationship with suppliers. A worker portal in addition has been create. Customer Relations Management (CRM) tools are being used in Asian Paints Helpline and Home Solutions initiatives. The successful deployment of ERP, CRM, Business Cleverness and Website software from leading solution providers and built in SCM systems has helped improve efficiency available as well as increase the transparency and precision of information across the company. To be able to affect 24x7 option of the IT infrastructure, a disaster recovery site in South India is also being set up.
One of the major factors contributing to the success of Asian paints is the adoption of 'Mass Customization Strategy'.
'Mass customisation' is the power of an company to offer independently tailored products on a sizable scale. This means that the consumer can get only and just what he wants, at a cost he is willing to pay.
This has been effectively utilized by Asian Paints in increasing market management position (more than 40% of Decorative Pain Section). It includes reengineered all its systems from fresh material sourcing and large manufacturing all the way down the string to the retail end, with one well-defined goal: to put the company in synchrony with market demand. This has helped the business to take pleasure from the economies of mass development combined with overall flexibility of customisation. However the company cannot flourish in its try to mass customize the merchandise in the late sixties and early eighties. This is more because of the insufficient synchronisation in the info move of the customisation cycle, especially in the manufacturing planning configuration and product set up which were found to be uneconomical. In the middle-90's, Asian Paints, successfully mass customised paints to meet up with the consumer demand. The flexibility in the creation process helped the customer to choose his own colour/shade of coloring unlike the sooner produced in higher quantities shelf products. More significantly the break in the action through in the IT sector since 1990's allowed APL to add SCM and ERP in effectively synchronising the elements of mass customisation. Thus APL is utiltising mass customisation as a highly effective competitive strategy so far.
Asian Paints has been the marketplace head in the Indian color industry for over three decades. Today the company has a very high market share. The nearest rival is half our size. Yet, regardless of the dominant position in the market, Asian Paints has been able to consistently record a rise in market share. The company's market talk about has increased over 3 per cent in the past seven years.
An excellent cadre of professional professionals and strong entrepreneurial orientation has provided a significant competitive border to the business. The company's strengths are in its recruiting, especially in marketing.