Paint?
Yes, paint.
MBA students are always talking about two particular kinds of ‘goods’- The first being automobiles and the like – the good ol’ consumer durable and the other being mobile phones, pretty much FMCG in today’s markets. Part of the discussion is occasionally about the concerned industries in India approaching saturation, at whatever point in time. And as focus of such discussions shifted to paint owing to trimester-end presentations, as a friend rightly pointed out, ‘The paint industry in India has enormous scope, it will never saturate, simply because India is one of the most under-painted countries in the world!’
The top 5 paint companies in India make up more than 80% sales of the organized market. The future of this industry is bright – the housing sector is booming, shifts to permanent and semi-permanent housing structures have been driving massive growth in the decorative paints segment. Repainting has more leverage now than seasonality. New projects in infrastructure, roads, ports that require protective coatings, waterproofing and the like are complementary to expansion of the industry. A large portion of the industrial paints sector is covered by OEM finishes. That, along with growth in the automobile sector, has led to the expectation that the current ratio of the decorative to industrial paints sector (70:30) will arrive at 50:50 over the next few years. The market share of the organized sector is continuously improving as consumer preference is shifting towards better products offered by the leading brands. Foreign companies have entered the Indian market by acquiring existing Indian companies. Kansai Paints, Japan entered the Indian Market by acquiring Nerolac, AkzoNobel, the world’s largest Paint Company, entered the Indian market by acquiring ICI Paints (now AkzoNobel India.)
Asian paints, however, with no foreign backing, is ranked first in the country. It has a competitive ratio of 2, which speaks volumes about the brand and its strength. It has a far reaching distribution network. And of course, it has Saif Ali Khan telling the masses that Asian Paints is, to put it crudely, just plain awesome. The paint industry consists of two segments, namely the Decorative segment – caters to the housing sector and the Industrial segment - consisting of powder coatings, floor coatings and other protective coatings catering to the automobile, marine and other industries. Most paints have a presence in most segments. So what is it that has made Asian Paints the giant that it is in India? What does a marketer need to do to create a paint brand to reckon with? The answer is much simpler than its implementation. Creation of a brand loyalty or an absolute, irrevocable longing for the brand is an absolute must.
This is because the final sale of paint or a brand to the end customer is highly dependent on the retailer or the wholesaler who stocks your product. All products are eventually priced at a similar MRP. If you are a company that offers them high margins at the expense of your own profits, then rest assured that you will enjoy a push from his side and you can trust blindly that he will spare no effort in promoting your product as his own. However, if that isn’t the way you work, then you can only hope that the customer refuses to budge from his decision to purchase your brand. And that is possible only if you have created a strong brand pull. Asian Paints provides comparatively abysmal margins to retailers, and yet, they sell.
Marketers need to tap a few areas while advertising their paint – the Indian customer today is no longer the ignorant that lets his ceiling leak stagnant water into his home. Firstly, the concept of the protective value of high quality paints – to address the same concern. Secondly, ‘healthy’ paints or ‘green’ paints are an absolute obligation on companies in this day and age. People like to know that the paint they use is healthy for their families and healthy for their children. The ‘Har Ghar Kuch Kehta Hai’ campaign was extremely spot on: it touched two strong and relevant feelings in the hearts of the people, that is, a reason to believe that their home and family is special and the desire to be appreciated for being special. And lastly, decorative paint is now all about innovation in design and the regal feel it brings to your home. Put all these facets into a commercial, implement it effectively (even maybe let it go viral) and you have your brand pull.
Outside the realm of advertising, it is noteworthy that Tier II and Tier III cities are also growing in terms of usage of emulsions and distempers are now becoming obsolete. Trial samples could also be made available in such localities separately in packs of 200 ml priced at a discount. This permits people to analyse their preferences more effectively. Otherwise, paint studios could be made available offline as well. Most companies have an interactive one accessible online, for example, AkzoNobel calls it ‘Mouse Painter’. One must not forget the increasing relevance of after-sales services – a customer expects no less from a company that has convinced him that it cares. These are all techniques through which the customer is involved in his own paint selection process effectively.
The demand for decorative paints, which account for a bulk of Paints companies’ revenues, is robust, as paints are increasingly being looked at as a necessity and not just a discretionary spend. The industry has a strong linkage to the gross domestic product (GDP) growth. As a result, the Indian paint industry gets to cater the second-fastest growing market after China. The only deterrents are the increasing costs of raw materials like Titanium Dioxide and Petroleum and the entry of MNC’s into the market, giving rise to increased competition that may impact profit margins in spite of growth in volume – most companies are investing heavily in infrastructure in order to increase capacity. Still, the absolute consumption of paint is expected to rise – demand is not dependent on supply, of course. And given the amount of demand that is going to come in from rural India, paint companies are pretty literally going to paint the town red!
By: Ragini Kate, NMIMS, Mumbai
