Hpcl lube report by vaibhav

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Hpcl lube report by vaibhav

  1. 1. UNIVERSITY OF PETROLEUM AND ENERGY STUDIES SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS SUMMER INTERNSHIP REPORT BY: VAIBHAV GODSE, MBA OIL AND GAS- 2009-2011 2010 HINDUSTAN PETROLEUM CORPORATION LTD., MUMBAI(INDIA)
  2. 2. 2EXECUTIVE SUMMARYTitle of the Project: Success determinants of selected lubricant brands.Objective of the Project: Determining and analyzing the factors responsible for theof brands in diesel engine oil (DEO), passenger car motor oil (PCMO) and four stroke oil (4T)segment based on suggestions obtained from bazaar shops and retail outlets throughquestionnaire. Further giving possible suggestions to HPCL to gain a competitive edge in itsbazaar shops and retail outlets.This project is an initiative to determine the exact reason for the success of lubricant brands in the Indianmarket. The segment taken for the study was Diesel engine oil, Passenger car motor oil and Four strokeoil. The objective of the project was: To portray the lubricant market in India, it’s historical background, liberalization and current state of competitiveness. To identify the successful lubricant brands launched by Hindustan Petroleum Corporation Limited (HPCL), Bharat Petroleum Corporation Limited (BPCL), Indian Oil Corporation Limited and Castrol India Limited (CIL). To identify the brand success factors of selected lubricant brands launched by HPCL, BPCL, IOCL and Castrol.Methodology: Literature review through secondary data, then expert opinion by interviewing thebrand managers within the industry and interviewing the bazaar shop and retail outlet owners.Findings and Conclusions: Thus the basic reasons for the success of any lubricant branddepends on the seven factors, these are: Brand Name Brand Image Positioning in the mind of consumer Quality of parent brandSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  3. 3. 3 Proper and longer support Above the Line - Promotion Below the line – PromotionThese factors are one or the other way of communicating the product to the customersSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  4. 4. 4ACKNOWLEDGEMENTI, Vaibhav Godse, sincerely acknowledge the support and guidance given by my mentors,without whom, the project would not have taken shape in the desired direction. Every single bitput in by my mentors is precious in its own way.I wish to thank and acknowledge Shri. R. Sudhakar Rao, Executive Director, Direct SalesSBU, for his constant support and being the mastermind of this project. I owe him pricelessgratitude for making me privilege to work with his talented team in his highly esteemed SBU.I also wish to acknowledge the valuable contributions of Shri. L.N.Maheswari, Dy.GeneralManager, Consumer Lubes and Shri. A.K Bhan, General Manager, South Zone.I thank Shri. V.Raghunathan, Chief Manager, Retail Lubes and Shri T. Jaya Surya, ESO-Lubes, Direct Sales SBU.I also acknowledge the efforts put in by Shri Harpreet Ghosal, LSO, Delhi Office for being “onfiled” mentor.The architect of the project and the guide in the true sense of the term, Shri Amit Tandon,Manager, Lubes- Branding, without his guidance this project would never have taken any shape.I wish to sincerely acknowledge to contribution, guidance and support he lent me throughout thecourse of the project and thank him from the bottom of my heart for the same.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  5. 5. 5ABSTRACTThe project is based on success determinant of lubricant brands in diesel engine oil, passengercar motor oil and four stroke oil segments. The companies taken for the study are HindustanPetroleum Corporation Limited (HPCL), Indian Oil Corporation Limited (IOCL), BharatPetroleum Corporation Limited (BPCL), and Castrol India Limited (CIL).The brands selected forthe study are taken, based on highest sale for the past three years. There were four team membersand each one had to study one company. I did the study on success determinants of HPCLautomotive lubricant brands. The brands selected for the study are Laal Ghoda and Milcy Turboin DEO, Cruise and Cruise Classic in PCMO, and Racer 4 in 4T segment. There are about 30small and big sized players in the market, who produce and market automotive lubes.Bazaar shops and retail outlets are the only market where the lubricant is sold to the consumers.For the survey, four cities were shortlisted Delhi, Mumbai, Pune and Jaipur. For data collectionmore emphasis was given for DEO in Delhi and Jaipur bazaars, and more emphasis for PCMOand 4T in Pune and Mumbai bazaars.To start with, I got myself acquainted with the lubricant market and the various terminologiesused, the specifications required, the standards to be followed, reviewing some articles onlubricant market in India as a part of my ground work by reviewing some literature, andgathering information at HPCL’s Marketing Headquarters- Hindustan Bhawan. I reported atoffice on June 1, 2010 for the first time, and from there on, eventually, collected the necessarydata regarding the sales, pricing and packaging. Within company the information gatheredformed the platform for my project.Before exploring the market, one must have a clear awareness about the product of research andsurvey, its specifications, its process and other marketing related issues involved.This was followed by my visit to Delhi Regional office and the Delhi bazaar shops and retailoutlet survey was conducted from June 26 to July 10, 2010. Whereas the data from other citieswere collected by rest of the project members.After collecting the data from various cities, it was merged and segregated according to thecompanies under study. Then this was followed by data analysis and interpretation part.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  6. 6. 6At the end a presentation was given in front of Mr Arunbalakrishnan (C.M&D), Mr. SudhakarRao (E.D) and Mr. Amit Tandon (Manager). Necessary changes were made as guided byrespected Sir and a report was submitted thereafter.Vaibhav GodseUPES Dehradun.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  7. 7. 7 DECLARATIONVaibhav Godse hereby declares that the project work entitled “Success Determinant of SelectedLubricant Brand” is a bona fide work done by me under the guidance and supervision of Mr.Amit Tandoon. The work has not formed part of any earlier studies for the award of degree/diploma/ fellowship.Place: Mumbai, (Maharashtra)Date: 31 July 2010 Signature of the Student.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  8. 8. 8CONTENTSI.NO. TOPIC PAGE NO.1. ABOUT HPCL 8-152. RESEARCH METHODOLOGY 16-193. LITERATURE REVIEW 20-304. INDIAN LUBE MARKET 31-375. SUCCESS DETERMINANTS 38-416. STRATEGIES IN LUBRICANT BUSINESS 42-447. PRODUCT PORTFOLIO AND SPECIFICATION 45-498. MARKETING CONCEPTS 50-559. SAMPLE MARKET ANALYSIS 56-6710. CONCLUSION AND RECOMMENDATION 68-7111. ANNEXURE- 72-8312. GRAPHS 73-83 QUESTIONNAIRE 83 (1-15)13. LIST OF RETAIL OUTLETS AND BAZAAR SHOPS 84-85 SURVEYED14. ABBREVATIONS 86-8715. REFERENCE 88SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  9. 9. 9ABOUT HPCLHPCL is a Fortune 500 company, with an annual turnover of Rs. 1,08,599 Crores andsales/income from operations of Rs 1,14,889 Crores (US$ 25,306 Millions) during FY 2009-10,having about 20% Marketing share in India and a strong market infrastructure.HPCL operates two major refineries producing a wide variety of petroleum fuels & specialties,one in Mumbai (West Coast) of 6.5 Million Metric Tonnes Per Annum(MMTPA) capacity andthe other in Vishakapatnam, (East Coast) with a capacity of 8.3 MMTPA. HPCL holds an equitystake of 16.95% in Mangalore Refinery & Petrochemicals Limited, a state-of-the-art refinery atMangalore with a capacity of 9 MMTPA. In addition, HPCL is constructing a refinery atBhatinda, in the state of Punjab, as a Joint venture with Mittal Energy Investments Pte. Ltd.HPCL also owns and operates the largest Lube Refinery in the country producing Lube BaseOils of international standards, with a capacity of 335 TMT. This Lube Refinery accounts forover 40% of the Indias total Lube Base Oil production.HPCLs vast marketing network consists of 13 Zonal offices in major cities and 101 RegionalOffices facilitated by a Supply & Distribution infrastructure comprising Terminals, AviationService Stations, LPG Bottling Plants, and Inland Relay Depots & Retail Outlets, Lube and LPGDistributorships. HPCL, over the years, has moved from strength to strength on all fronts. Therefining capacity steadily increased from 5.5 MMTPA in 1984/85 to 14.8 MMTPA presently. Onthe financial front, the turnover grew from Rs. 2687 Crores in 1984-85 to an impressive Rs1,16,428 Crores in FY 2008-09.VISION • Market leader in growth and profitability. • Most preferred supplier of quality products at right price and time. • Delighting the customers by value added services. • Professional and empowered team for quick response to customers.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  10. 10. 10QUALITY POLICY • Total customer satisfaction through quality products by doing it right the first time, every time. • Ensure consistency of quality, and adherence to time deadlines. • Strive to achieve excellence in quality through training, motivation, team work and continuous up gradation of technology. • To take appropriate steps to minimize wastage, increase productivity and optimize the quality of products and services in a cost effective mannerPRODUCT COMMITMENT • To provide quality products and services which shall reflect in a growing list of satisfied customers. • To consciously build a quality culture, through employee participation, motivation and training. • To strive for an eco - friendly environment.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  11. 11. 11HPCL LUBRICANTS HP Lubes is an integral part of Hindustan Petroleum Corporation Limited, one of Indias frontline oil majors, committed to providing energy and fueling g growth in every significant area of development. In pursuit of this vision, there is a sustained emphasis on environment protection and preserving the cultural heritage of India. HPCL Lube market share is around 11%. The HP Engine Oils product range covers over 300 brands of lubricants, gr greases and specialties catering to the automotive as well as the industrial sector. HPCL has six lube blending plants at Mumbai, Kolkata, Chennai and Silvassa.HP Lubricants are borne out of an intense and unrelenting R & D effort, which aims at producingquality products that enhance automotive performance standards. The range of HP Lubes iscomprehensive and catering to the minutest needs; from new generation cars to ploughingtractors and industrial machinery. The range conforms strictly to OEM specifica specifications, oftentaking the initiative in customization of products.The various lubricant segments of HPCL are are: HP LUBRICANTS AUTOMOTIVE INDUSTRIAL INDUSTRIAL GREASES GRADES GRADES SPECIALITIESSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  12. 12. 12Since the study is focused on au automotive lubricants and within automotive lubricant, engine oils lubricantare taken under study within which Diesel engine oil, passenger car motor oil and four stoke oilsare taken. The various brands of HPCL in automotive segment are: HPCL AUTOMOTIVE LUBRICANT TRANSMISSION ENGINE OILS GEAR OILS AUTOSPECIALITIES DEFENSE GRADES OILS DIESEL ENGINE OILS PETROL ENGINE OILS NATURAL GAS ENGINE OILS FIRST FILL ENGINE OILSSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  13. 13. 13LUBRICANT PRODUCT LINE IN ENGINE OIL SEGMENT ENGINE OIL DIESEL ENGINE PASSENGER CAR FOUR STROKE OIL MOTOR OIL LAAL GHODA CRUISE RACER 4 MILCY CRUISE CLASSIC RACER 4 EXCEL MILCY TURBO HP ACE CHAMPION HP NO.1DIESEL ENGINE OIL SEGMENT MILCY 40 – SAE 40 API CD LAL GHODA – SAE 20W 40 API CF CHAMPION – SAE 20W0 40 API CF/SF MILCY TURBO – SAE 15W 40 API CF4 HP NO1 – SAE 15W 40 API CI4SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  14. 14. 14PASSENGER CAR MOTOR OIL HP CRUISE - API SG 15W 40 HP ACE - API SL , 15W 40FOUR STROKE OIL RACER 4 - API SG RACER 4- EXCEL (API SL SL)GRAPH SHOWING THE HPCL SALES/INCOME FROM OPERATIONS SALES Rs/Crores 140000 120000 OPERATIONS, RS/crores. SALES/INCOME FROM 100000 80000 60000 SALES Rs/Crores 40000 20000 0 2004-05 2005 2005-06 2006-07 2007-08 2008-09 YEARSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  15. 15. 15GRAPH SHOWING HPCL SALES VOLUME OF LUBES AND GREASES SALES VOLUME 600 SALES VOLUME, 000TONNES 500 400 300 200 SALES VOLUME 100 0 2004-05 2005-06 06 2006-07 2007-08 2008-09 YEARGRAPH SHOWING THE NUMBER OF RETAIL OUTLETS NUMBER OF RETAIL OUTLETS OF HPCL 9000 8000 NUMBER OF RETAIL OUTLETS 7000 6000 5000 4000 NUMBER OF RETAIL 3000 OUTLETS 2000 1000 0 2004-05 2005-06 2006-07 2007-08 2008-09 YEARSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  16. 16. 16 RESEARCH METHODOLOGYSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  17. 17. 17RESEARCH METHODOLOGY PROBLEM DEFINITION DEVELOPMENT OF APPROACH TO THE PROBLEM RESEARCH DESIGN FORMULATION FIELD OR DATA COLLECTION BAZAAR RETAIL SHOPS OUTLETS DATA PREPARATION AND ANALYSIS REPORT PREPARATION AND PRESENTATIONSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  18. 18. 18PROBLEM DEFINATION AND APPROACH TO THE PROBLEMProject is about “Success determinants of lubricant brands”. To identify the determinants for thesuccess of lubricant brands of HPCL in the diesel engine oil segment, passenger car motor oilsegment and four stroke segment.How the market dynamics work for the lubricant brands, which factor influences the most for thesale of any particular brand whether brand name, image, promotion etc.RESEARCH OBJECTIVE To portray the lubricant market in India, it’s historical background, liberalization and current state of competitiveness. To identify the successful lubricant brands launched by Hindustan Petroleum Corporation Limited (HPCL). To identify the brand success factors of selected lubricant brands launched by HPCL. Applying various marketing models on HPCL lubricant brands- Poter’s Five Forces, SWOT Analysis etc.Before starting the research work some of reasons for the success of any lubricant brands wereshortlisted through literature review.The basic objective is success determinants of four lubricant brands of HPCL in the threesegment- Diesel Engine Oil, Passenger Car Motor Oil and Four Stroke oil. The selections ofbrands made for the study was based on sale of each brand in the Indian market i.e., highestselling brands for the past three were shortlisted for the study. Two largest selling brands eachof diesel engine oil and passenger car motor oil and one for four stroke oil were taken. Thebrands included were: Diesel Engine Oil- Laal Ghoda and Milcy Turbo Passenger Car Motor Oil- Cruise and Cruise Classic Four Stroke- Racer 4SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  19. 19. 19RESEARCH DESIGNAt first expert opinion is taken to get the insight of the problem. For the same brand managerswere interviewed using a questionnaire based on the determinants shortlisted from literaturereview.The feedback obtained from experts helped in preparing the questionnaire for bazaar shops andretail outlets. After having the expert opinion and formulating the questionnaire according to thefeedback, field work was carried out. Field work included interviewing the bazaar shop and retailoutlet owners.FIELD OR DATA COLLECTIONField work was based on collecting the data from bazaar shop and retail outlet. The survey wasconducted in four cities- Delhi, Mumbai, Jaipur and Pune.Sampling plan:CITY DEO (laal ghoda and PCMO (cruise and 4T (racer 4) milcy turbo) cruise classic) Bazaar Retail Bazaar Retail Bazaar Retail shop outlet shop outlet shop outletDelhi 12 3 9 2 3 1Mumbai 12 3 9 2 3 1Jaipur 12 3 3 1 9 2Pune 12 3 3 1 9 2DATA PREPARATION AND ANALYSISData obtained from the field was analyzed. Only those factors were taken which were givenhighest weight age or which the retailer and bazaar shops has agreed upon.Based on the field data various graphs are plotted. The graphs are plotted between “reasons forsuccess” versus “percentage of people saying yes” for the determinant of that particular brand.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  20. 20. 20 LITERATURE REVIEWSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  21. 21. 21LITERATURE REVIEWLUBRICANTA lubricant (sometimes referred to as "lube") is a substance (often a liquid) introduced betweentwo moving surfaces to reduce the friction between them, improving efficiency andreducing wear. It may also have the function of dissolving or transporting foreign particles and ofdistributing heat.One of the single largest applications for lubricants, in the form of motor oil, is protectingthe internal combustion engines in motor vehicles and powered equipment.A lubricant is a blend of base oils and performance enhancing additives as required byengine, gear box and other application areas. At the refinery, the crude oil is refined intogasoline, diesel, kerosene, LPG, naphtha and base stocks (Lube). This base stock is furtherprocessed, blended and strengthened with required properties to make different kind oflubricants.Typically lubricants contain 90% base oil (most often petroleum fractions, called mineral oils)and less than 10% additives. Vegetable oils or synthetic liquids such ashydrogenatedpolyolefins, esters, silicones, fluorocarbons and many others are sometimes used asbase oils. Additives deliver reduced friction and wear, increased viscosity, improved viscosityindex, resistance to corrosion and oxidation, aging or contamination, etc.Lubricants such as 2-cycle oil are also added to some fuels. Sulfur impurities in fuels alsoprovide some lubrication properties, which has to be taken in account when switching to a low-sulfur diesel; biodiesel is a popular diesel fuel additive providing additional lubricity.Non-liquid lubricants include grease, powders (dry graphite, PTFE, Molybdenumdisulfide, tungsten disulfide, etc.), teflon tape used in plumbing, air cushion and others. Drylubricants such as graphite, molybdenum disulfide and tungsten disulfide also offer lubrication attemperatures (up to 350 °C) higher than liquid and oil-based lubricants are able to operate.Limited interest has been shown in low friction properties of compacted oxide glazelayers formed at several hundred degrees Celsius in metallic sliding systems, however, practicaluse is still many years away due to their physically unstable nature.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  22. 22. 22LUBE OIL BASE STOCK MANUFACTURINGLubricating oils need to be viscous, have stability during the heat generated by frication of themachine, and the viscosity should not fall sharply with the rise in temperature due to friction.These qualities are met by vacuum gas oils i.e. high boiling cuts distilled by vacuum distillationof crude oil. These gas oil cuts are cal lubricating oil base stocks (LOBS). All crude oil do not calledgive good lube base stock. For example waxy crude oils like Mumbai High or some South EastAsian crudes oils are not good for lube oil manufacture. Yield of suitable lube base stocks arelower in these cases (as the oil is light) and wax creates a lot of operational problems during lube andextraction process. Some of the medium heavy Middle East Crude oils give good quality lubebase stocks.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  23. 23. 23LUBE OIL MANUFACTURING PROCESSThe various processing steps are: De-asphalting Unit: Asphalt from the lube base stocks is removed by solvent extraction process. Aromatics Extraction: Aromatic hydrocarbons are removed by solvent extraction process to improve viscosity. De-waxing: This is another solvent extraction process which removes wax from the lube base stock. Hydro-finishing: After the series of extraction processes, the lube base stock is treated with hydrogen (hydro-finishing process) to improve color and give stability. Finally additive chemicals in small dozes are added to boost certain properties.ADDITIVESPlain mineral oils cannot provide all the necessary functional properties that an engine requires.These plain mineral oils need fortification with chemicals/additives which when used in smallquantities, import or enhance the desirable functional properties. Some of the types and reasonsfor their use are as follows:Dispersants: Keeps sludge, carbon and other deposit- precursors suspended in oil.Detergents: Keeps the engine parts clean from deposits.Rust/Corrosion Inhibitors: Prevents or controls oxidation of oil, formation of varnish, sludge andcorrosive compounds, limit viscosity increase.Extreme Pressure (EP), Anti wear and friction modifiers: These form protective film on theengine parts and reduce wear and tear.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  24. 24. 24Metal deactivators: Forms surface films so that metal surface does not catalyze oil oxidation.Pour Point Depressant: Lowers freezing point of oils assuring free flow at lower temperatures.Anti-foamants: Reduces foam in crankcase and blending.GRADESThe Society of Automotive Engineers (SAE) has established a numerical code system forgrading lubricants (motor oils) according to their viscosity characteristics. SAE viscosity gradinginclude, from low to high viscosity: 0, 5, 10, 15, 20, 25, 30, 40, 50 or 60. The numbers 0, 5, 10,15 and 25 are suffixed with the letter W, designating their "winter" (not "weight") or cold-startviscosity, at lower temperature. The number 20 comes with or without a W, depending onwhether it is being used to denote a cold or hot viscosity grade. The document SAE J300 definesthe viscometrics related to these grades.Kinematic viscosity is graded by measuring the time it takes for a standard amount of oil to flowthrough a standard orifice, at standard temperatures. The longer it takes, the higher the viscosityand thus higher SAE code.Note that the SAE has a separate viscosity rating system for gear, axle, and manual transmissionoils, SAE J306, which should not be confused with engine oil viscosity. The higher numbers of agear oil (eg 75W-140) do not mean that it has higher viscosity than an engine oil.Single/ Mono-gradeA single-grade engine oil, as defined by SAE J300, cannot use a polymeric Viscosity IndexImprover (also referred to as Vicosity Modifier) additive. SAE J300 has established elevenviscosity grades, of which six are considered Winter-grades and given a W designation. The 11viscosity grades are 0W, 5W, 10W, 15W, 20W, 25W, 20, 30, 40, 50, and 60. These numbers areoften referred to as the weight of a motor oil.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  25. 25. 25For single winter grade oils, the dynamic viscosity is measured at different cold temperatures,specified in J300 depending on the viscosity grade, in units of mPa·s or the equivalent older non-SI units, centipoises (abbreviated cP), using two different test methods. They are the ColdCranking Simulator (ASTM D5293) and the Mini-Rotary Viscometer (ASTM D4684). Based onthe coldest temperature the oil passes at, that oil is graded as SAE viscosity grade 0W, 5W, 10W,15W, 20W, or 25W. The lower the viscosity grade, the lower the temperature the oil can pass.For example, if an oil passes at the specifications for 10W and 5W, but fails for 0W, then that oilmust be labeled as an SAE 5W. That oil cannot be labeled as either 0W or 10W.For single non-winter grade oils, the kinematic viscosity is measured at a temperature of 100 °C(212 °F) in units of mm²/s or the equivalent older non-SI units, centistokes (abbreviated cSt).Based on the range of viscosity the oil falls in at that temperature, the oil is graded as SAEviscosity grade 20, 30, 40, 50, or 60. In addition, for SAE grades 20, 30, and 40, a minimumviscosity measured at 150 °C (302 °F) and at a high-shear rate is also required. The higher theviscosity, the higher the SAE viscosity grade is.For some applications, such as when the temperature ranges in use are not very wide, single-grade motor oil is satisfactory; for example, lawn mower engines, industrial applications, andvintage or classic cars.Multi-gradeThe temperature range the oil is exposed to in most vehicles can be wide, ranging from coldtemperatures in the winter before the vehicle is started up to hot operating temperatures when thevehicle is fully warmed up in hot summer weather. A specific oil will have high viscosity whencold and a lower viscosity at the engines operating temperature. The difference in viscosities formost single-grade oil is too large between the extremes of temperature. To bring the difference inviscosities closer together, special polymer additives called viscosity index improvers, or VIIsare added to the oil. These additives are used to make the oil a multi-grade motor oil, however itis possible to have a multi-grade oil without the use of VIIs. The idea is to cause the multi-gradeoil to have the viscosity of the base grade when cold and the viscosity of the second grade whenhot. This enables one type of oil to be generally used all year. In fact, when multi-grades wereinitially developed, they were frequently described as all-season oil. The viscosity of a multi-SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  26. 26. 26grade oil still varies logarithmically with temperature, but the slope representing the change islessened. This slope representing the change with temperature depends on the nature and amountof the additives to the base oil.The SAE designation for multi-grade oils includes two viscosity grades; for example, 10W-30 designates common multi-grade oil. The two numbers used are individually defined by SAEJ300 for single-grade oils. Therefore, an oil labeled as 10W-30 must pass the SAE J300 viscositygrade requirement for both 10W and 30, and all limitations placed on the viscosity grades (forexample, a 10W-30 oil must fail the J300 requirements at 5W). Also, if an oil does not containany VIIs, and can pass as a multi-grade, that oil can be labeled with either of the two SAEviscosity grades. For example, very simple multi-grade oil that can be easily made with modernbase oils without any VII is a 20W-20. This oil can be labeled as 20W-20, 20W, or 20. Note, ifany VIIs are used however, then that oil cannot be labeled as a single grade.The real-world ability of an oil to crank or pump when cold is potentially diminished soon afterit is put into service. The motor oil grade and viscosity to be used in a given vehicle is specifiedby the manufacturer of the vehicle (although some modern European cars now have no viscosityrequirement), but can vary from country to country when climatic or fuel efficiency constraintscome into play.TurbineTurbine motor oils are designed somewhat differently than reciprocating engine oils traditionallyused in automobiles. Deposit control and corrosion are not significant issues when formulatingturbine oil, and the shear stresses that turbine oils are exposed to are minimal in light of the factthat turbines are naturally balanced rotating machines unlike reciprocating engines. Turbine oilstend to have the ISO VG range 32, 46, and 68 (cst at 40 °C/104 °F), and make extensive use ofdiester, polyolester, polyalphaolefin and Group II as base stock due to the high temperatures theymust withstand. Some jet turbine oils contain an amount of polyglycols. Varnish is one of themost problematic contaminants, leading to sticking components, reduced oil flow and increasedwear. Most routine oil analysis tests cannot determine the formation of varnish. The most widelyaccepted process for measuring varnish formation is with Membrane Patch Colorimetry testingalthough the ultra centrifuge test is also run by a few laboratories.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  27. 27. 27In most aviation gas turbine applications, peak lubricant temperatures are not reached duringengine operation, but after shutdown, when heat has been able to migrate from thecombustor cans and the compressors into the regions of the engine with lubricated bearings andgearboxes. The gas flow associated with running the turbine provides significantconvective cooling that disappears when the engine is shutdown, leaving residual heat thatcauses temperatures within the turbine to rise dramatically, an often-misunderstood phenomenon.SPECIFICATION:The lubricant is said to meet a certain specification. In the consumer market, this is oftensupported by a logo, symbol or words that inform the consumer that the lubricant marketer hasobtained independent verification of conformance to the specification. Examples of these includethe API’s donut logo or the NSF tick mark.The most widely perceived is SAE viscosity specification, like SAE 10W-40. Lubricityspecifications are institute and manufacturer based. In the U.S. institute: API S for petrol engines API C for diesel engines.The current specs are API SM and API CJ. Higher second letter marks better oil properties, likelower engine wear supported by tests.In EU the ACEA specifications are used. There are classes A, B, C, E with number following theletter.Japan introduced the JASO specification for motorbike engines.SOCIETIES AND INDUSTRY BODIES FOR STANDARDIZATION OF LUBES: API American Petroleum Institute STLE Society of Tribologists and Lubrication EngineersSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  28. 28. 28NLGINational Lubricating Grease instituteSAESociety of Automotive EngineersILMAIndependent lubricant manufacturer associationACEAEuropean Automobile Manufacturers AssociationJASOJapanese Automotive Standards OrganizationAPPLICATION OF LUBES:Lubricants are mainly used is three sectors automotive, industrial and aviation. There arenumerous application of lubes in these sectors, some of these applications are listed below:Automotive Engine oils Petrol (Gasoline) engine oils Diesel engine oils Automatic transmission fluid Gearbox fluids Brake fluids Hydraulic fluids Tractor (one lubricant for all systems) Universal Tractor Transmission Oil – UTTO Super Tractor Oil Universal – STOU – includes engine Other motors 2-stroke engine oilsSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  29. 29. 29Industrial Hydraulic oils Air compressor oils Gas Compressor oils Gear oils Bearing and circulating system oils Refrigerator compressor oils Steam and gas turbine oilsAviation Gas turbine engine oils Piston engine oils Marine Crosshead cylinder oils Crosshead Crankcase oils Trunk piston engine oils Stern tube lubricantsLUBRICANT COMPANIES:Public Sector Undertakings (PSUs): Indian Oil Corporation Limited (IOCL) Hindustan Petroleum Corporation Limited (HPCL) Bharat Petroleum Corporation Limited (BPCL)Private Players: Reliance Petroleum Castrol Elf Total-FinaSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  30. 30. 30 Gulf Shell Oil Caltex Pennzoil MobilMARKETING CHANNELS:The marketing channels for automotive lubricants in India consist of the following, Petrol Stations Wholesale Distributors Lube Oil Shops Auto Spare Shops Authorized Service Stations Garages Rural & Agricultural dealers Super Markets.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  31. 31. 31 INDIAN LUBE MARKETSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  32. 32. 32MARKET STRUCTUREERA OF LIBERALIZATIONPrior to 1992 the lube industry in India was controlled by the 4 major Public Sector Oilcompanies namely Indian Oil, HPC,BPC & IBP and a handful of private companies like Castrol,Gulf, Tidewater & others. With the distribution & canalization of base oil import being controlledby the Government of India, the PSU Oil Companies controlled 90% of the market share. The de-canalization of the lube base oil imports in 1993 by the Govt. of India followed by reduction ofimport duty on lube base oils from 85% to 25% and gradual scrapping of administered pricingobserved the announcement of almost a new lube venture every month during 1994. Most of thenew entrants formed associations with Indian companies both in the Private and Public sectors.INDIAN AUTOMOTIVE LUBRICANT MARKETTotal demand for finished lubricants in India is estimated at over 1,600 kilo tones. The Lubemarket consists of two major segments, automotive and industrial.The Indian automotive lubricants market is largely price sensitive and volume growth isstagnating due to longer lasting lubricants. The market is fragmented with over 22 big and smallmanufacturers and with the spate of mergers and acquisitions (M&A), only a handful of bigcompanies enjoy a major market share.Companies are adopting a more customer-oriented approach where they are likely to focus oncreating brand awareness through print and visual media. For example promotional campaignsand trade shows offering gifts to their customers are methods of driving sales of automotivelubricants.The original equipment segment and retail trade are the two major marketing channels in theIndian automotive lubricants market. Due to the growing competition, tie-ups with originalequipment manufacturers (OEM) are becoming important as they reinforce the value propositionof a particular brand.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  33. 33. 33Petrol pumps form a major distribution channel in retail trade, however sales of lubricantsthrough retail outlets (also called ‘the bazaar trade’) has transformed the Indian automotivelubricants market into a fast moving consumer goods (FMCG) sector. The other marketingchannels are authorized service stations, garages, rural and agricultural dealers, super markets,and wholesale distributorsPublic sector unit (PSU) companies, that manufacture their own base oil, follow differentdistribution strategies as compared to private participants that solely dependent on imports.While PSUs sell through their own wide spread network of petrol stations private manufacturersprefer retail outlets.Engine oil, which accounted for over 70.0 percent market share in 2004 in the Indian automotivelubricants market, plays the most crucial role in deciding the market share of manufacturers.Increase in demand for four stroke motorcycles, tie ups with original equipment manufacturers,and implementation of new pollution norms are just some of the key drivers of the engine oilsegment.The brake oil and coolant is the next largest segment in the Indian automotive lubricants market.Demand for coolants is increasing due to continuous growth in heavy commercial vehicles,increasing awareness among the customers, new cooling system technologies, and OEM tie-ups.In brake oil segment, increasing growth in light commercial vehicles, introduction of new brakesystems, and consumption of lubes by commercial passenger vehicles, and changing customermindset regarding specialty lubricants are expected to push demand further.The market for gear oils is also growing rapidly and has a high potential due to the increasingnumber of vehicles on the road. New generation vehicles with advanced gear systemtechnologies and automatic transmission systems require special type of lubricants resulting ingreater demand for multi axel gear oil and API synthetic gear oil, API GL-5, API MT-1, andultra-Matic, which reduce the oil changing intervals.In the long term, the overall outlook for the automotive lubricants market is expected to bepositive due to the growing Indian economy along with the increased purchasing power ofconsumers.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  34. 34. 34MARKET SIZE AND GROWTH RATE ZESegment wise market share LUBE MARKET SHARE AUTOMOTIVE SEGMENT INDUSTRIAL SEGMENT 40% 60% MARKET SHARE PCMO CNG Oils 6% 2% 4- stroke 7% 2- stroke 14% Diesel engine oil 71%SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  35. 35. 35Indian Lubricant market comprises about 0.90 MMTPA of the automotive segment and 0.60MMTPA of the industrial/direct segment.The Indian automotive lubricant market is the sixth largest market in the world with revenues ofapproximately $1.30 billion. Total production of automotive lubricants in India is approximately8 to 10 percent of global lube production. Indian lube industry has an annual demand of 1 milliontones. Unlike other countries where lubricant demand has witnessed stagnation, the Indianmarket has been growing at approximately 7 percent per annum for the past 2 years. The publicsector contributes to over 60 percent of the revenues for this market. MNC’s have 5 percentmarket share and the remaining share is held by the unorganized sector. Automotive lubricantsare further divided into diesel lubes and petrol lubes. Diesel lubes comprise 70 percent of themarket and petrol based lubricants cover the rest. As diesel lubes are used by commercialvehicles, which have to cover greater distances, their market share is higher. Engine oilconstitutes around 83 percent of total sales volumes. Gear oils, transmission fluids, hydraulicbrake fluids, and engine coolants contribute to the balance.MARKET TERNDIn the recent past, the Indian lubricant market has witnessed a phase of consolidation.Multinationals with better technology, brand name and finances have the power to launchthemselves on their own in the market. However, with increasing number of competitors it is notpossible for everyone to carve a niche in the market. This sector has witnessed considerableamount of mergers and acquisitions. British Petroleum’s not so recent acquisition of Castrol isone example. The Indian lubes market is a combative market place and lubricant companies findthemselves fighting a tough battle for survival. In the OE sector also lubricant manufacturing,companies are entering into collaborations with vehicle manufactures. Maruti Udyog, HyundaiMotors, Hindustan Motors, TAFE, Toyota, and Skoda have entered into collaboration with IOCand Castrol for some of their modelsSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  36. 36. 36AUTOMOTIVE INDUSTRYThe growth of lubricant industry is directly linked with the growth of automobile industry.Therefore to grow in lubricant market one has to keep the growth record of automobile industry.India is the 4th largest car market in Asia (after Japan, Korea & China). For commercialvehicles, it holds 5th spot in the world. Whereas, for 2-wheelers, India is the second largestmarket, next only to China, with both countries accounting of over 50% of global two wheelerproduction and sales. The Tractor segment is also making steady progress in India.According to McKinsey Report – “Auto Components Industry: Vision 2015,” the Indian AutoComponents Industry is envisaging to grow to US$ 33-40 Billion, by 2015 from around US$ 7Billion, at present.LUBRICANT INDUSTRY SEGMENTATIONThe lubricant industry can be divided into two major categories i.e., Automotive & Industrialbrand of lubricants. The industrial segment basically comprises of Core Sector industries likeDefense, Railways, State Transport Undertakings, Steel Plants, Coal Mines, Fertilizers, PowerHouses, and Chemicals & Heavy Engineering Industries. In the industrial segment, the PSUscould successfully maintain their stronghold due to the reasons that the requirement is most enduse specific, customer focused, productivity linked & service oriented. Here, price, quality,performance track record, R&D infrastructure for technology up gradation and productdevelopment for end use specific application & after sales service play the most significant role& FMCG techniques of promotion and creating illusions takes a back seat. The automotivesegment which accounts for major share i.e., 67% of the lubricant market became soft target fornew entrants and here private sector players could immediately consolidate their market share byadopting FMCG techniques. PSU oil companies initially restricted their channel of distributionthrough their large infrastructure of marketing network i.e, petrol stations & distributor network.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  37. 37. 37The focus happened to be on ensuring quality & customer accountability and restrictmushrooming of spurious trade in bazaar through the marketing channels where some kind ofcontrol could be exercised by the company. The major thrust put by Industry leader like IndianOil at this juncture was to promote brand visibility and creation of brand image throughendorsement, TV advertisements & image building at Retail sites.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  38. 38. 38 SUCCESS DETERMINANTSSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  39. 39. 39KEY SUCCESS FACTORS FOR LUBRICANTSBrand NameA word, group of words, letters, or numbers that represent a product or service; also known as aproduct brand. Name used to distinguish one product from its competitors. It can apply to asingle product, an entire product line, or even a company.Brand ImageWith lubricants becoming a fast moving consumer good and the brand preference of theconsumers witnessing a change, brand image plays a key role in affecting the consumer’sdecision to buy a lubricant. In a recent study by Frost & Sullivan, it was found that vehiclesowners’ decision to buy a certain lubricant is affected by a garage mechanic, retail storeowner, orthe advertisements. Hence, it becomes important to have a good brand name in the market, whichcan affect the customer’s decision to buy a certain brand.Proper and Longer Support- Distribution ChannelsWith increasing number of players in the market, it is vital for the companies to reach a widersegment of customers. The lubricants market in India is very highly fragmented and complex.Public limited companies selling primarily through petrol pumps manage to achieve a deeperpenetration. Most of the MNC’s have tied up with oil majors to market their brands like Castrolwith Escorts, Tata BP with Telco. This will help the private companies to establish a wideraccess, brand awareness, as well as preference.good or bad quality, high or low price.Quality of parent brandAny product in its start has a parent or the initial product and then further modification or upgradation is seen in the upcoming new product. If the initial product or the parent had goodquality then this would in turn affect the success of the product in the market.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  40. 40. 40New TechnologyAny up gradation done in the existing product would reflect its success or not. Introducing newfeatures to the existing lubricant whether in lube itself or packaging would affect its marketshare.Prices and PromotionThe transformation from the administered pricing mechanism to free pricing has increased theimportance of providing cost effective product to the users. Thus product costing andcompetitive pricing are key factors affecting the market.Above the line (ATL)ATL is a type of advertising through media such as television, cinema, radio, print, webbanners and web search engines to promote brands. This type of communication is conventionalin nature and is considered impersonal to customers. It differs from BTL advertising, which usesunconventional brand-building strategies, such as direct mail and printed media (and usuallyinvolves no motion graphics). It is much more effective when the target group is very large anddifficult to define.The term comes from top business managers and involves the way in which Procter & Gamble,one of the world’s biggest advertising clients, was charged for its media in the 1950s and 1960s.Advertising agencies made so much commission from booking media for clients that the creativegeneration and actual production costs of making TV ads was free – hence above the line.Everything else they paid for and were therefore below the line.Below the line promotion (BTL)BTL sales promotion is an immediate or delayed incentive to purchase, expressed in cash or inkind, and having short duration. It is efficient and cost-effective for targeting a limited andspecific group. It uses less conventional methods than the usual ATL channels of advertising,typically focusing on direct means of communication, most commonly direct mail and e-mail,often using highly targeted lists of names to maximize response rates. BTL services may includethose for which a fee is agreed upon and charged up front.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  41. 41. 41BTL is a common technique used for "touch and feel" products (consumer items where thecustomer will rely on immediate information rather than previously researched items). BTLtechniques ensure recall of the brand while at the same time highlighting the features of theproduct.Another BTL technique involves sales personnel deployed at retail stores near targeted products.This technique may be used to generate trials of newly launched products.Private companies mostly sell their products through stockiest, dealers, distributors, mechanics,and retail stores. Maximum sales are achieved through mechanics and retail stores. Margins anddiscount schemes offered to the storeowners and mechanics prompt them to sell and promote aparticular brand.Tie Up with OEMsAmong the PSU Oil Companies Indian Oil is one company who has all along given utmostimportance on tie ups with Original Equipment Manufacturers (OEMs) after signing agreementswith major OEMs like Maruti Udyog Ltd, TELCO, Bajaj Auto, Kinetic Engineering, SKODAetc. Even initial fill & warranty fill agreements were also signed with TELCO & HindustanMotors. In fact, the Japanese vehicle manufacturers prefer to tie up with one or two major oilmanufacturers for use of engine oils as `Genuine Spare Part of the vehicle whereas the Americanvehicle manufacturers prefer to follow the American Petroleum Institute who defines theperformance parameters of engine oils. The Indian vehicle manufacturers follow a route which iscombination of both.These inner strengths of PSUs and the quality policy adopted by them, even attracted majormultinational players like Shell, Mobil, Exxon & Caltex to enter into tie up with one or the otherPSU to have access to their well established marketing network.Environment FriendlyNow a days environment awareness is increasing a lot, therefore providing the lubes inenvironment friendly packaging could be one factor for success. This is basically the factorwhich relates to the packaging, whether providing the lubricant in environment friendlypackaging would affect its success or not.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  42. 42. 42 STRATEGIES IN LUBRICANT BUSINESSSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  43. 43. 43LUBE BUSINESS STRATEGYTo compete with dominant public sector distribution, concepts like "Bazaars" and "SuperStores" have also been developed. Castrol developed the concept of "Bazaars." These are outletsmeant only for lubricant sales.The concept of "User Outlet" is another new concept developed by Castrol. In this, the consumerselects his own brand of lube after giving his vehicle for service in the same outlet. Convenientstores and highway stops for vehicles are being built from where the vehicle owners can get theirvehicles repaired and get their supply of lubricants.In this front Indian Oil after emerging as Indias largest commercial organization and being theonly company in the country to feature in the Fortune Global 500 listing has adopted structuredbusiness plan approach to strike a balance between conventional marketing channels (petrolstations)/distribution network and parallel marketing channels (bazaar trade). The parallelmarketing channels chosen by the Company also adopted the path of brand image, customerfocus & customer accountability.Mergers and acquisitions is another way of increasing market share for any industry. BritishPetroleum’s acquisition of Castrol is one example. The Indian lubes market is a combativemarket place and lubricant companies find themselves fighting a tough battle for survival. In theOE sector also lubricant manufacturing, companies are entering into collaborations with vehiclemanufactures. Maruti Udyog, Hyundai Motors, Hindustan Motors, TAFE, Toyota, and Skodahave entered into collaboration with IOC and Castrol for some of their models.STRENGTH OF OIL COMPANYManufacturing of quality lubricants is guided by two important parameters i.e., resourcing ofconsistent premium quality base oils and incorporation of cost & performance effective additivetechnology which is privy to the oil company and is an effective tool to establish superiority overcompetitors. In this area R & D effort plays a significant role as it has to be end use specific,location specific, environment specific & at the same time cost effective. Just bringing inSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  44. 44. 44imported technology without any own & defined resource of quality inputs like base oil may notbe suitable for Indian road/market conditions. Today, technology has become so demanding andrequirement is so stringent that leading institutes like API (American Petroleum Institute) givesperformance approval on the basis of identification & sourcing of base oils. Their approval is oncrude specific, Refinery specific & base oil specific considerations. Bringing in base oils takingleverage of decanalisation of imports & reduction of duty, putting up blending plants at Taxholiday locations to remain in the cut throat competition & dumping may or may not yield farreaching benefits. The need of the hour is long term commitment and not sheer opportunism andwith more competition expected in the coming years, customers will also realize impact of suchapproach.The automotive lubricant trade is gradually becoming wiser today. The traders now understandthe benefits of stocking fast moving & familiar brands instead of overcrowding the shelf spacebecause there are very few companies in India, who can make the entire range of automotiveproducts available. It has also been found by the trade that because of working capital constraintsthe new entrants are increasing cash discounts resulting in price war and reduction of dealermargins. For making all the products available at all times a company would need to keep a highinventory commensurate with the sales volume for which an additional working capital of atleast 35% would be necessary.OUTLOOKIn the future, growth in the automotive lubricants industry will largely depend on the overallperformance of the economy. In the past one and a half years, the scenario has improved withhigher sales of commercial vehicles and two-wheelers. However, in the future volume growthwill be affected because of use of better quality, long drain lubes. This will increase thereplacement cycle for lubes. In the shorter term, one will witness intense competition in a slowgrowing market marked by a consolidation activity, which has the potential to change the face ofthe lubricant industry. Given the rising competition, success of a product would largely dependhow well it is branded and distributedSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  45. 45. 45 PRODUCT PORTFOLIO AND SPECIFICATIONSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  46. 46. 46PRODUCT PORTFOLIO AND SPECIFICATIONLAAL GHODA 20W40HP laal ghoda is a multigrade diesel engine oil and economy range diesel engine oil. It meetsAPI CF and US military MIL-L- -2104B, IS:13656:1993 specification.It is recommended for, use in all types of diesel engines in truck, bus, muv, tractor, taxi, pumpset and DG set.Characteristics / Features: All round performance Engine cleanliness Efficient lubricationSpecification:Kinematic Viscosity cSt @40 deg C 130Kinematic Viscosity cSt @100 deg C 13.5-16Viscosity Index, MIN 110Flash point, (COC) C,MIN 200Pour Point, C , MAX -18Sulphated Ash,%WT,MAX 0.8TBN ,mgKOH/g,MIN 4.4Colour RedSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  47. 47. 47MILCY TURBO 15W 40HP Milcy Turbo is a premium quality multi grade Diesel Engine Oil with enhanced soot remiumhandling capacity which keeps engine clean and reduces soot induced wear. Excellent oxidation Excelcontrol and sludge control helps to keep the engine in healthier condition. It meets API CF-4, mMB 228.1 & EDL-5 of IS 13656 requirements 5Recommended for:Diesel engines of heavy duty as well as light duty service of both Naturally Aspirated andTurbocharged Engines- heavy & light commercial vehicles, tractors, multi utility vehicles, cars& jeeps.Characteristics / Features: Long drain & Prolonged engine life Good control over soot reduces engine wear d High temperature stability reduces oxidative oil thickening Reduced oil consumptionSpecification:Kinematic Viscosity cSt @100 deg C 14- 15.2Viscosity Index, MIN 120Flash point, (COC) C,MIN 190Pour Point, C , MAX -21TBN, mg KOH/g, MIN 9SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  48. 48. 48CRUISEHP Cruise is premium quality multi grade engine oil which provides outstanding performance inall petrol engine passenger cars. It meets API SJ/CD, MIL-L-46152D & E-PL 3/ E-DL 2 of IS:13656:1993. Recommended as engine oil for all Passenger cars running on petrol.Characteristics / Features: Outstanding engine cleanliness & enhanced engine life Excellent lubrication over a wide temperature range Improved fuel economy Compatible with catalytic converter.Recommended for: M/s Hyundai Motors India M/s Mahindra & Mahindra Ltd.Specification:Kinematic Viscosity cSt @100 deg C 14-16Viscosity Index, MIN 120Flash point, (COC) deg C,MIN 200Pour Point, deg C , MAX -24Sulphated Ash,%WT,MAX 1.03TBN ,mgKOH/g,MIN 6.0Colour OrangeSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  49. 49. 49CRUISE CLASSICHP Cruise Classic is red color superior quality multi grade engine oil for cars made from highquality base stocks and additives. It meets API SF/CC, MIL-L-46152B & E-PL 2/ E-DL 1 ofengine oil for all passenger cars running on petrol.Characteristics / Features: Outstanding engine cleanliness Excellent oxidation stability Improved wear protection & extended engine life Improved fuel economy Compatible with catalytic converter.Specification: 20W40 20W50Kinematic Viscosity cSt @100 14-16 18-20deg CViscosity Index, MIN 110 118Flash point, (COC) deg 200 200C,MINPour Point, deg C , MAX -21 -21Sulphated Ash,%WT,MAX 1 1TBN ,mgKOH/g,MIN 4.19 5.4Colour Red RedApproved by: M/s Maruti Udyog Ltd. M/s Hindustan Motors Ltd.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  50. 50. 50RACER 4HP Racer 4 (20W40) is multipurpose engine oil for lubrication of engine, gear box and wetclutches in 4- stroke two wheelers. it meets API SG and JASO T903: MA specifications. It isrecommended for use in all 4 stroke motorcycles, scooters, mopeds and scootteretes.Characteristics / Features: Optimized co-efficient of friction Excellent oxidation stability Sludge and Varnish control Gear anti wear and extreme pressure properties.Specification:Kinematic Viscosity cSt @100 deg C 1.5-15.5Viscosity Index, MIN 110Flash point, (COC) deg C,MIN 200Pour Point, deg C , MAX -21Sulphated Ash,%WT,MAX 0.82TBN ,mgKOH/g,MIN 5.9Approved by: M/s Escorts Yamaha Motors ltd. M/s Royal Enfield Motors. M/s Bajaj Auto.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  51. 51. 51 MARKETING CONCEPTSSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  52. 52. 52POTER’S FIVE FORCES THREAT OF NEW ENTRANTS RIVALRY BARGAINING BARGAINING AMONG POWER OF POWER OF EXSISTING SUPPLIER BUYER COMPETITORS THREAT OF SUBTITUTE PRODUCTSEXSISTING RIVALRY AMONG COMPETITORS Lubricant market is highly competitive, with more than 30 players in the market more Major competitors are Castrol, BPCL IOCL, Gulf, Valvoline BPCL, Strong product promotions through advertisements for example Castrol is doing for its PCMO and FOUR STOKE (Castrol magnetec) segment Quality of parent brand- quality of first brand launched by the competitors have good - impact on customers mind, therefore driving the customer to buy the current brand Strong distribution channel Castrol has strong hold on bazaar shops channel-BARGAINING POWER OF SUPPLIE SUPPLIER Lube base stock is obtained from its own (HPCL) refinery, hence have some control over refinery, bargaining power May or may not depend on IOCL and BPCLSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  53. 53. 53BARGAINING POWER OF BUYERBargaining power of consumer in high because of large number of competitors, thereforeconsumer has many choices. Margins for retailers and bazaar shop owners Schemes provided for retailers, mechanics. Product variety/ differentiation based on pack size, based on quality or specification Quantity/ volume purchased (KL) per month by buyer- Based on the amount ordered the schemes can be provided to the retailers and bazaar shop owners. Importance of product to the buyer- Whether the brand is providing all the benefits or not Credit period to the buyer, whether the period is 1 month or more Quality of pack- Attractive packaging (sticker, labeling), packaging material Cost of lubes is low as compared to Castrol, Valvoline, Gulf etc.THREAT OF SUBTITUTE PRODUCTS No substitutesTHREAT OF NEW ENTRANTS Government policies- Decanalization of lubricant industry in 1993, gave entry to private players. New technology- IOCL to launch biodegradable lubricant. Cost advantage- Provide same segment lubricant brand at lower price. Entry barrier- Brand name and image of existing brand and distribution network.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  54. 54. 54SWOT ANALYSIS STRENGTH WEAKNESS OPPORTUNITY THREATSSTRENGTH Prices are comparatively low low. Consumer have good image about the company company. Laal ghoda has made position as low price DEO, which is competitive as per cost of product is concerned. Schemes offered to consumers are good good. Manufactures raw material (LOBS) for lubricants thus having control over margins margins. Retail outlet as strong distributional channel.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  55. 55. 55WEAKNESS Low above the line (ATL) activities such as advertisements through media, hoardings, bill boards etc.Since lubricant marketing is same as that of FMCG products therefore requires continuous mediapromotion as a reminder to the customers. Packaging of Racer 4 is not attractive specially the label and sticker. Laal Ghoda is used only for top-up purpose. Also, most of customers use this brand for pressure jack oil, not as engine oil. Has lower percentage occupancy of lubes in bazaar shop shelf, which is around 10-12%.OPPORTUNITY Tie ups with OEMs (original equipment manufacturers) such as with Eicher Motors, Tata Motors, Volvo etc. specifically in DEO segment. Expansion in rural India, auto firms have begun tapping the countryside. For instance, Maruti Suzuki generates 10 per cent of its sales from rural sales, amounting to 32,000 cars.THREATS Increasing market share of Valvoline and IOCL in Delhi NCR region. High duplicity in market leads to low pull for product.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  56. 56. 56 SAMPLE MARKET ANALYSISSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  57. 57. 57SAMPLING PLANIn the project two types of sampling techniques are used judgmental and convenience sampling. Judgmental sampling through expert opinions within HPCL. Convenience sampling was done during field survey based on convenience of bazaar shops and retail outlets.Survey was conducted in Delhi, Mumbai, Pune and Jaipur. Data was collected from both bazaarshops and retail outlets.Table showing number of sample collected from each city:CITY DEO (laal ghoda and PCMO (cruise and 4T (racer 4) milcy turbo) cruise classic) Bazaar Retail Bazaar Retail Bazaar Retail shop outlet shop outlet shop outletDelhi 7 3 6 2 3 1Mumbai 10 3 7 2 3 1Jaipur 12 3 1 1 9 2Pune 12 2 3 1 9 2Therefore a total of 105 questionnaires for HPCL are collected, out of which 82 are from bazaarshop and 23 from retail outlets. Survey data collected for Diesel engine oil segment are 41, forpassenger car motor oil are 17 and four stroke oil are 24.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  58. 58. 58SAMPLE DATA AND ANALYSISResponse of managers across various strategic dimensions within HPCLStrategic Dimensions Hindustan Petroleum Corporation Ltd.Degree to which you focus Width of your product line. Medium to highyour effort in terms of: Target customer segment. Medium to high Geographic spread of markets High served.The degree to which you Price Medium to highseek brand identificationrather competition based on: Other variables MediumDegree to which you seek to Directly on your own Medium to highdevelop brand identificationwith end consumer: Through distributional channel MediumThe choice of distributional Bazaar Trade Low to Mediumchannel based on: Petrol pumps Medium to highLevel of product quality: Raw materials Low to medium Features Medium to highDegree to which you provideancillary services, schemes Medium to Highetc. with your product linePrice position of your Cost position Medium to highproduct in market relativeto: Product Quality LowSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  59. 59. 59Data collected from bazaar shops and retail outlets is represented in form of percentage of peopleagreeing for the reason for success of that particular brand. This data obtained is plotted betweenpercentages of people agreeing versus reasons for success of the brand.Delhi bazaar shopsReasons For success Laal Milcy Cruise% Cruise Racer ghoda(%) Turbo% classic% 4(%)Brand name 71.4 85.7 100 100 66.6Brand Image 71.4 85.7 100 100 100Quality of parent brand 42.8 42.8 83.3 83.3 66.6Positioning of brand in the 71.4 85.7 66.6 66.6 66.6mind of consumerProper and longer support 28 71.4 50 50 33.3(distributional channel)Quality of pack 14.2 85.7 83.3 83.3 33.3Variety of pack 85.7 42.8 66.6 66.6 33.3New Technology 0 42.8 16.6 16.6 33.3Making product 0 0 0 0 0environment friendlyBrand promotion- ATL 42.8 71.4 83.3 83.3 66.6Brand promotion- BTL 14.2 14.2 66.6 66.6 33.3Accreditations/ - - 16.6 16.6 25RecommendationsSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  60. 60. 60Analysis of Delhi bazaar shopThe table clearly shows that for Laal Ghoda the key success factors are brand name, brandimage, positioning in the mind of customer and variety of pack, whereas for Milcy Turbo it is thebrand name, brand image, positioning in the mind of consumer, quality of pack, proper andlonger support, and above the line promotion are dominant factor for its success.For Cruise and Cruise Classic brand name, brand image, quality of parent brand, positioning ofbrand in the mind of consumer, variety of pack, quality of pack, above the line promotion andbelow the line promotion are the success determinants.For Racer 4 brand name, brand image, quality of parent brand, positioning in the mind ofconsumer, and above the line promotion are the reasons for its success.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  61. 61. 61Jaipur Bazaar ShopReasons For success Laal ghoda Milcy Cruise Cruise Racer4 Turbo classicBrand name 83.3 100 100 100 88.8Brand Image 83.3 `100 100 100 88.8Quality of parent brand 75 91.6 100 100 77.7Positioning of brand in the 91.6 100 100 100 88.8mind of consumerProper and longer support 91.6 100 100 100 88.8Quality of pack 16.6 66.6 0 0 77.7Variety of pack 83.3 25 100 100 25New Technology 8.3 8.3 0 0 0Making product 0 0 0 0 0environment friendlyBrand promotion- ATL 75 100 100 100 100Brand promotion- BTL 83.3 100 100 100 100Accreditations/ - - 16.6 16.6 -RecommendationsSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  62. 62. 62Analysis of Jaipur bazaar shopThe table clearly shows that for Laal Ghoda the key success factors are brand name, brandimage, quality of parent brand, positioning in the mind of customer, proper and longer supportvariety of pack, above the line and below the line promotion, whereas for Milcy Turbo it is thebrand name , brand image, quality of parent brand, positioning in the mind of consumer, qualityof pack, proper and longer support, above the line promotion and below the line promotion aredominant factor for its success.For Cruise and Cruise Classic brand name, brand image, quality of parent brand, positioning ofbrand in the mind of consumer, proper and longer support, above the line promotion and belowthe line promotion are the success determinants.For Racer 4 brand name, brand image, quality of parent brand, positioning in the mind ofconsumer, proper and longer support, quality of pack and above the line promotion and belowthe line promotion are the reasons for its success.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  63. 63. 63Mumbai Bazaar ShopReasons For success Laal ghoda Milcy Cruise Cruise Racer4 Turbo classicBrand name 88 100 85.7 100 100Brand Image 80 90 100 85.7 100Quality of parent brand 70 80 85.7 85.7 100Positioning of brand in the 70 80 100 100 100mind of consumerProper and longer support 60 90 85.7 71.4 100Quality of pack 30 70 42.8 57.1 100Variety of pack 70 30 28.5 14.2 0New Technology 0 10 0 0 0Making product 0 0 0 0 0environment friendlyBrand promotion- ATL 30 90 100 100 100Brand promotion- BTL 40 80 85.7 85.7 100Accreditations/ - - 17 17 -RecommendationsSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  64. 64. 64Analysis of Mumbai bazaar shopThe table clearly shows that for Laal Ghoda the key success factors are brand name, brandimage, quality of parent brand, positioning in the mind of customer, proper and longer supportand variety of pack, whereas for Milcy Turbo it is the quality of parent brand, positioning in themind of consumer, quality of pack, above the line promotion and below the line promotionproper and longer support are dominant factor for its success.For Cruise and Cruise Classic brand name, brand image, quality of parent brand, positioning ofbrand in the mind of consumer, proper and longer support, above the line promotion and belowthe line promotion are the success determinants.For Racer 4 brand name, brand image, quality of parent brand, positioning in the mind ofconsumer, proper and longer support, above the line promotion and below the line promotion arethe reasons for its success.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  65. 65. 65Pune Bazaar ShopReasons For success Laal ghoda Milcy Cruise Cruise Racer4 Turbo classicBrand name 66.6 58.3 100 100 100Brand Image 33.3 58.3 100 100 100Quality of parent brand 58.3 83.3 100 100 88.8Positioning of brand in the 83.3 58.3 66.6 66.6 77.7mind of consumerProper and longer support 75 83.3 100 100 100Quality of pack 8.3 0 33.3 33.3 22.2Variety of pack 0 16.6 33.3 33.3 22.2New Technology 0 33.3 33.3 33.3 11.1Making product 0 0 0 0 0environment friendlyBrand promotion- ATL 41.6 33.3 33.3 33.3 66.6Brand promotion- BTL 58.3 75 100 100 77.7Accreditations/ - - 100 100 22.2RecommendationsSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  66. 66. 66Analysis of Pune bazaar shopThe table clearly shows that for Laal Ghoda the key success factors are brand name, positioningin the mind of customer and proper and longer support, whereas for Milcy Turbo it is the qualityof parent brand, proper and longer support and below the line activity is dominant factor for itssuccess.For Cruise and Cruise Classic brand name, brand image, quality of parent brand, positioning ofbrand in the mind of consumer, proper and longer support and below the line promotion are thesuccess determinants.For Racer 4 brand name, brand image, quality of parent brand, positioning in the mind ofconsumer, proper and longer support, above the line promotion and below the line promotion arethe reasons for its success.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  67. 67. 67 CONCLUSIONSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  68. 68. 68 CONCLUSION Those determinants are taken as a success determinant, which the bazaar shop owners and retailers have agreed up to 60%. Thus conclusion is obtained brand wise for the reasons for the success of that particular brand. Key determinants from bazaar shop survey are:Laal Ghoda Milcy Turbo Cruise Cruise Classic Racer 4Brand name Brand name Brand name Brand name Brand nameBrand image Brand image Brand image Brand image Brand imageQuality of parent Quality of parent Quality of parent Quality of parent Quality of parentbrand brand brand brand brandPositioning of brand Positioning of Positioning of Positioning of Positioning ofin the mind of brand in the mind brand in the mind brand in the mind brand in the mindconsumer of consumer of consumer of consumer of consumerProper and longer Proper and longer Quality of pack Proper and longer Proper and longersupport support support supportVariety of packs Brand promotion- Brand promotion- Quality of pack Brand promotion- ATL ATL ATL Brand Promotion- Brand Promotion- Brand promotion- Brand Promotion- BTL BTL ATL BTL Brand Promotion- BTL SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  69. 69. 69 Key determinants from retail outlet survey are:Laal Ghoda Milcy Turbo Cruise Cruise Classic Racer 4Brand name Brand name Brand name Brand name Brand nameBrand image Brand image Brand image Brand image Brand imageQuality of parent Quality of parent Quality of parent Quality of parent Quality of parentbrand brand brand brand brandPositioning of Positioning of Positioning of Positioning of Positioning ofbrand in the brand in the mind brand in the mind brand in the mind brand in the mindmind of of consumer of consumer of consumer of consumerconsumerProper and Proper and longer Brand promotion- Brand promotion- Brand promotion-longer support support ATL ATL ATL Quality of pack Brand Promotion- Brand Promotion- Brand Promotion- BTL BTL BTL Brand promotion- ATL Brand Promotion- BTL SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  70. 70. 70RECOMMENDATIONS / CONCLUSIONSThus the basic reasons for the success of any brand depends on the seven factors, these are: Brand Name Brand Image Positioning in the mind of consumer Quality of parent brand Proper and longer support Above the Line - Promotion Below the line – PromotionThese factors are one or the other way of communicating the product to the customers.For Example: HP Milcy Toofan to HP Milcy Turbo, the change in brand name relates that brand name should able to convey or able to communicate to the customer the type of segment it is meant for. Media promotion, showing a “Oil man” with a tag line “ your engine’s engineer” Promotion through sponsorship like Castrol has done in FIFA world cup.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  71. 71. 71OTHER RECOMMENDATIONSFor DEO Aggressive media promotion. Increase visibility of the brand.For PCMO Strategic Alliance: More tie-ups with OEMs, which would help in increasing the sale at retail outlets through service stations. Introducing “free service programs at retail outlets”. New Distribution system: Making product available at OEM workshops and service stations.For FOUR STROKE Below the line promotion should be aggressive- through mechanics. Awareness among mechanics for the brand- through schemes. Sponsorships- Sponsoring the events like sports, T.V. program (MTV roadies) would increase publicity. Celebrity branding.SUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  72. 72. 72 ANNEXURESUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  73. 73. 73 GRAPHSSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  74. 74. 74GRAPHS FOR BAZAAR SHOPSFOR DIESEL ENGINE OILLAAL GHODA 90 77.3 79 80 67 65.7 70 61.5 63.7 60 47 50 42 40 30 17.1 20 10 2 0 0 0 Percentage of retailer agreeing for the reasons behind the success of Laal GhodaSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  75. 75. 75MILCY TURBO 100 90 84 86 80.7 80 74 73 70 70 67 60 55 50 40 28 30 23 20 10 0 0 0 Percentage of retailer agreeing for the reasons behind the success of Milcy TurboSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  76. 76. 76FOR PASSENGER CAR MOTOR OILCRUISE 120 96 100 100 92 83 87 79 80 64 58 60 40 31 33.3 20 12 0 0 Percentage of retailer agreeing for the reasons behind the success of CruiseSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS
  77. 77. 77CRUISE CLASSIC 120 100 100 96 92 88 83 80 79 80 68 60 40 33.3 28.4 20 12.4 0 0 Percentage of retailer agreeing for the reasons behind the success of Cruise ClassicSUCCESS DETERMINANTS OF SELECTED LUBRICANT BRANDS

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