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Sales Strategy of Balmer Lawrie in MBA

Sales Strategy of Balmer Lawrie in MBA

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  • 05/17/11
  • 05/17/11
  • 05/17/11
  • 05/17/11 - X is among the top-10 grease manufacturers globally, boasting of significant exports. - The company is the preferred contract processor for oil companies in India and also manufactures products under its own brand name, XOL . - Major clients are Indian Railways, the ship-building industry, oil exploration companies, heavy-engineering industries, ports, cement plants, integrated steel plants, secondary steel mills and mining complexes.
  • 05/17/11 X is planning to tap retail (lubricants), in which it will compete with major MNCs. The growth prospects for retail are high on the back of rising demand for personal Vehicles. Further, it is easier to pass on price hikes in retail as against the industrial segment. Volumes from the segment have tripled in two years growing from ~2,000te to ~6,500te. X is targetting 12,000te volumes by end-FY09E.The division contributed Rs1.3bn & Rs87mn as revenues & EBIT respectively in FY06.YTD FY07 EBIT rose marginally 2.7% despite a sharp 28.9% increase in revenues and rise in volumes, suggesting pressure on margins. The segment contributes 12.4% & 6.7% to total revenues & EBIT respectively.
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Balmer lawrie consolidated Balmer lawrie consolidated Presentation Transcript

  • Marketing Strategy for BALMEROL range of Lubricants at Balmer Lawrie & Co. Ltd
  • Scope of Project Analyze the market trends Understand the buying behavior of customers Suggest a suitable Marketing Strategy Select appropriate market channel
  • Methodology Industry Analysis Competitor Analysis Segmentation, Targeting, Positioning Proposed Marketing Strategy Survey Analysis- Customer Behavior
  • About the company
    • BL is a multi product Business Unit with diversified portfolio
    • BL is among the top-10 grease manufacturers globally, boasting of significant exports.
    • Enjoys market leadership with 30% market share in the used-for-industrial applications grease segment.
    • Major clients are Indian Railways, the ship-building industry, oil exploration companies, heavy-engineering industries, ports, cement plants, integrated steel plants, secondary steel mills and mining complexes.
    • Rising crude oil prices – affected the price of raw materials
  • Contd …
    • Planning to tap retail (lubricants), in which it will compete with major MNCs.
    • Advantages: Growth prospects for retail are high on the back of rising demand for personal vehicles. It is easier to pass on price hikes in retail as against the industrial segment.
    • Current market share in the Indian lubricant industry is 4%
    Target: Obtaining a share of 10% by 2010, in the Indian Retail Lubricant Market .
  • Industry History Market regulated pricing of base oil Entry of foreign players Castrol BLted bazzar. Liberalization of the Indian economy Import of Base oil de-canalized with IOC Deregulation of base oil pricing Highly regulated market Clear dominance of PSUs IOC, HP, BPCL market share > 75% Until 90s Early 90s From 2002
  • Indian Lubricant Industry Current Scenario Emphasis on concern for environment No entry and exit barriers Quality at affordable prices Competitive Characteristics Expanding Margins under pressure
  • Indian Lubricant Industry Current Scenario 1.2 MMTPA Market of value appox. 7700 Crores 95% - Automotive Lubricant Expected Growth Rate Of 3%. 7 th largest lubricant market in the world Ratio of automotive/ industrial lubricants 65:35 Different Composition of Survey teams. Retail Lube Market – 0.7 Million Tons
  • Marketing Channels Institutional Retail OEM Export Fuel Stations Bazaar e-Choupal Distributor Authorized Service Station Retailer/ Dealer Exclusive Lube Shops Garages/ Workshops Fleets
  • Industry Trends in Retail Channel
    • Fuel Stations
    • Traditionally managed by inefficient people (1980-2000 govt.’s equal opportunity initiative)
    • Captive customers, so not much selling skills needed
    • With the transition from 2 stroke to 4 stroke and CNG technology, sales of fuel stations has suffered
    • Bazaar
    • Exclusive distributors
    • Company promoted repair shops (e.g. Castrol’s Bike Zones)
    • Exclusive lube shops (e.g. IOC’s ServoXpress and Valvoline’s Advantage Points)
    • e-Choupal
    • Lubricant retailing outlets at the existing ITC e-choupal hubs (e.g. BPCL)
  • Competitor Analysis - Major Players
    • Total Lubes market: Rs 10,000 crore
    • Company Overall Retail*
    • 35% 20%
    • 22% 30%
    • 18% 8%
    • 10% 3%
    • Others 15% 39%
    * excluding fuel stations
  • Competitor Analysis
    • Strengths
    • India’s largest company by sales
    • Largest network of petrol and diesel stations in the country
    • OEM tie-ups
    • largest private sector operator
    • More than one-third of total sales through the ‘bazaar trade’ channels
    • Distribution Network: 270 distributors, 40,000 retail outlets
    • Powerful brand building, aggressive entry strategy, strong distribution network
    • Weaknesses
    • Bureaucratic set-up
    • Takes time to adapt to new challenges forced by competitors
    • No manufacturing/ blending plants
    • No sales through petrol pumps
    • Opportunity for BL
    • Build robust and innovative strategies as per the latest competitor environment
    • Can approach through the petrol pump dealers
    • Own blending plants
    • Can afford lower prices
    Company IOCL Castrol
  • Competitor Analysis
    • Strengths
    • 7700 Retail Outlets, 150-200 Distributors
    • E-choupal
    • Strategic locations of petrol pumps
    • OEM tie-ups
    • Small and achievable targets- focused
    • Aggressive sales
    • Maintaining the target market
    • Higher Margins
    • Weakness
    • Major selling through Petrol pumps (75%) before liberalization post which this share dropped to 35%
    • No manufacturing/ blending plants
    • Not much focus on brand building, more than 50 small brands exist in market
    • Opportunity for BL
    • Compete in bazaar(3%) with better strategies
    • Build competitive brand
    • Own blending plants
    • Better access to technology being an old player
    • Can afford lower prices
    Company BPCL Others
  • Segments &Target Market Target segment CVs 2/3 wheelers Railways Roadways BL Defense vehicles Cars MUVs Tractors Pumps
  • Positioning BL is positioned as a lubricant which cares ; it cares about you, your family, your vehicle and your environment. It is not only about style, or power, it is about the responsibility to take care of the things which matter the most to you . BL is an environment friendly lubricant, which leads to greater fuel efficiency, higher mileage and longer engine life as against other lubricants which position themselves more as a racing, style based and all terrain lubricants. Positioning of other lubricants: Servo – Any Vehicle. Any Terrain. 100 % performance. Every Time Motul – Every Ride is a Race Castrol – Its more than just Oil, Its Liquid Engineering Positioning Statement We care. We know your vehicle is more than just a ‘vehicle’
  • Brand Promotion ‘ We Love ‘
  • ‘ We Adore ‘
  • ‘ We Care ‘
  • BL Loves, Adores and Cares for you and your vehicle giving the best mileage and greater fuel efficiency enabling it to become an environment friendly and caring lubricant We care. We know your vehicle is more than just a ‘vehicle’
  • Survey conducted to develop the marketing strategy
    • Ideal Packaging size:
    • Motorcycle:1 litre
    • Passenger cars:1 ,3 and 5 litres
    • Truck:20 litres (handy buckets)
    • Ideal MRP: Rs 130-138 per litre
    • Margin expected from new product:10%
    • Contractual obligation with the Oil company .
    • Consumers are not brand loyal.
    • MRP, availability, genuineness.
    • TV advertisement is a major source of brand awareness
    • Consumer Promotions: Seasonal discounts and gifts,
    • .
    Fuel Station Findings
  • Suggestion to BL : Co branding of its lubricant products with companies like HPCL, BPCL which have a good market share in the Fuel station segment . Survey Findings of Authorized Service Stations : They keep the same brand of lubricants as that of the fuel stations to which they are attached .
  • Analysis of Unorganized Service Stations Survey Promotion by giving utility products like grease, oil etc to the service stations.
    • Suggestions:
    • The company should aggressively push its products through distributors by
    • giving them more margin & incentives.
    • The company should give free gifts like greases, oil etc.
    Ideal packaging 3-3.5 liters. Low Brand Loyalty. Margin 4-5 Rs. Per liter Findings The stations product mix depends on the distributors push
  • Analysis of Retailer Survey Analysis of Retailer Survey
    • Bulk discount
    • Different brands
    • Samples of new products
    • Margin
    • Gifts for retailer
    • Suggestion : Maximize Shelf space Visibility
    • Exclusive Brands
    • Margins vary according to sales
    • Promotions
    • Brand switching
    • Suggestions:
    • Build a new distributor network
    • Guarantee to take back goods not sold
    • VRS scheme for attracting new distributors
    Analysis of Distributor Survey
  • Marketing Strategy
    • Phased Rollout: Starting from East where they have a presence.
    • Price: Same Range as that of PSU players.
    • Retail Outlets: Fuel Station market- Co branding
    • Bazaar:
      • Distributor Push
      • Customer Pull
      • Alternate sales strategy for service stations
    • Performance Measures & Monitoring Standards
  • Co-Branding
    • Entry strategy into fuel stations – tie up with PSU’s for selling at their outlets under a co-branded name
  • Distributor Push
    • Challenges & Approaches
    • Large distributors have Strong existing relationships with competitors
    • - Give attractive promotional schemes and gifts (e.g. grease packs) to motivate them to stock as well push sales.
    • - Scratch card with gift schemes lets say in every fifth pack under the cap of the lubricant pack will help in attracting distributors/workshop owners.
    • - Establish new distributor networks by helping ppl with VRS to set up distributorship; giving special incentives/ higher discounts.
    • - Higher margins/ incentives for Dual distributorship to expand the distributor network.
    • - Build faith among distributors by assuring buy back of unsold lubricants.
    • Higher Margins need to be given
    • - Try and leverage on own blending capacity.
  • Customer Pull
    • Branding
    • Advertising
    • Emphasize on better quality base 2 oil used as raw material
    • Prices lower than players like Castrol and similar to other PSU’s prices
  • Alternate Sales Strategy
    • Tie up with existing sales shop on the highways around BL’s manufacturing locations by revamping their POP materials and giving them discounts on lubricants.
    • Performance Measures
    • Sales Volume
    • Net margin after all costs (before tax and depreciation)
    • Market Outstanding/ Debtors (no. of days)
    • Finished Goods Inventory
    • Monitoring Standards
    • Distributor and Retailer Throughput
    • SKU wise sales (against targets)
    • Quality control at sourcing level (base oil) as well as pakaging material
  • References
    • Primary Sources
    • Senior executives of IOCL, BPCL, Valvoline, BL
    • Internal resources of co. BL
    • Secondary Sources
    • Corporate websites of IOCL, BPCL, Castrol, BL
    • R Suresh, DGM IOC: Current challenges and opportunities for Retail Lubricant Market
    • Dharmesh Joshi, Vertical Market Manager, Honeywell: Role of technology in petrol retailing
    • ICIS: Competitive Intelligence for the Global Lubricant Industry
    • AT Kearney Report on FICCI Petrotech 2007
  • Thank You