innovative distributionchannel castrol case study hbr

1. Krishna Govind
Priyadarshini
Surya Kumar
SriVikash

2. Castrol India Limited
 Cheers Wakefield
 Technological innovations and marketing expertise.
 “It’s more than just oil, it’s liquid engineering.”
 Headquartered in UK
 Automotive and Industrial applications
 Competitors: IOCL, BPCL, HPCL

3. MCO 4T
 Motorcycle Oil for four stroke engines
 In 4T vehicle, the oil needed to be changed only once
every 2000 to 2500 kilometers.

4.  Supply of only 2.5 million litres of MCO 4T per year,
which was far less than the demand of market.
 Parallel outlet is possible.

5. Project team findings
Team divided the country geographically into four
sections:
 Greater than 5 million people
 5 million to 1 million
 1 million to 500,000
 Less than 500,000.

6. Distribution analysis
Distribution analysis for the following services:
 Motorcycle spare part and accessory shops
 Oil shops
 Motorcycle NFWs

7. Non-Franchised Workshop classification
First segment:
 Sold lubricants
 It contributes 10 % of the market and 30%of oil changes.
Second segment:
 Mechanics ready to set up their own business
 It contributes 40 % of the market and 50%of oil changes
Third segment
 Minor issues
 It contributes 50% of market

8. Market Potential Forecast of Four-Stroke Oils in
India
Channel Four-Stroke Oil
market in
2005(in million
of litres)
Four-Stroke Oil
market in 2010(in
million of litres)
CAGR%
Franchised
Workshops
30 65 17
After Market
Spare part outlets 22 90 33
Oil Shops 16 25 9
Non-Franchised
Workshops
8 30 30
Total 76 210 23

9. Market Coverage of Castrol’s Four
Stroke Oil in India, 2005
Channel Outlet universe Outlet Selling
Castrol Oil
Coverage(%)
Franchised
Workshops
4500 665 14.8
After Market
Spare Part Outlets 38000 6235 16.4
Oil Shops 14500 4411 30.4
Non-Franchised
Workshops
20000 1267 6.3
Total 77000 12578 N/A

10. Castrol India’s Channel Evaluation- Current vs
Future Shares
Channel Four-Stroke
Oil market in
2005(in
million of
litres)
Channel
Share(2005)%
Projected
Four-Stroke
Oil market in
2010(in
million of
litres)
Channel
Share(2010)%
Franchised
Workshops
3.54 29.8 11 1705
After Market:
Spare Parts
Outlets
3.6 30.3 24 38.1
Oil Shops 3.9 32.8 13 20.6
Non-
Franchised
Workshops
0.85 7.1 15 23.8
Total 11.89 100 63 100

11. Thank You