Marketing Strategy for Marketing Strategy for BALMEROLBALMEROL range of Lubricants at range of Lubricants at

Balmer Lawrie & Co. LtdBalmer Lawrie & Co. Ltd

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Scope of ProjectScope of ProjectScope of ProjectScope of Project

Analyze the Analyze the market trendsmarket trends

Understand the Understand the buying behavior of buying behavior of

customerscustomers

Select appropriate Select appropriate market channelmarket channel Suggest a suitable Suggest a suitable

Marketing StrategyMarketing Strategy

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MethodologyMethodology

Industry Analysis

Competitor Analysis

Segmentation, Targeting, Positioning

Proposed Marketing Strategy

Survey Analysis- Customer Behavior

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About the companyAbout the company BL is a multi product Business Unit with BL is a multi product Business Unit with diversified portfoliodiversified portfolio

BL is among the top-10 grease manufacturers globally, boasting of BL is among the top-10 grease manufacturers globally, boasting of significant exports. significant exports.

Enjoys market leadership with 30% market share in the used-for-industrial Enjoys market leadership with 30% market share in the used-for-industrial applications grease segment.applications grease segment.

Major clients are Indian Railways, the ship-building industry, oil Major clients are Indian Railways, the ship-building industry, oil exploration companies, heavy-engineering industries, ports, cement exploration companies, heavy-engineering industries, ports, cement plants, integrated steel plants, secondary steel mills and mining plants, integrated steel plants, secondary steel mills and mining complexes.complexes.

Rising crude oil prices – affected the price of raw materialsRising crude oil prices – affected the price of raw materials

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Contd …Contd … Planning to tap retail (lubricants), in which it will compete Planning to tap retail (lubricants), in which it will compete

with major MNCs. with major MNCs.

Advantages: Advantages: Growth prospects for retail are high on the back Growth prospects for retail are high on the back of rising demand for personal vehicles. It is easier to pass on of rising demand for personal vehicles. It is easier to pass on price hikes in retail as against the industrial segment.price hikes in retail as against the industrial segment.

Current market share in the Indian lubricant industry is 4%Current market share in the Indian lubricant industry is 4%

Target: Obtaining a share of 10% by 2010, in the Indian Retail Lubricant Market.

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Industry HistoryIndustry History

Market regulated pricing of base oil

Entry of foreign players

Castrol BLted bazzar.

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

Liberalization of the Indian economy

Import of Base oil de-canalized with IOC

Deregulation of base oil pricing

Highly regulated market

Cleardominance

of PSUs

IOC, HP, BPCL market share > 75%

Highly regulated market

Cleardominance

of PSUs

IOC, HP, BPCL market share > 75%

Until 90sUntil 90s Early 90sEarly 90s From 2002From 2002

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Indian Lubricant Industry Current Indian Lubricant Industry Current ScenarioScenario

Emphasis on concern for environment

No entry and exit barriersQuality at affordable prices

CompetitiveCharacteristics

ExpandingMargins under pressure

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Indian Lubricant Industry Current Indian Lubricant Industry Current ScenarioScenario

1.2 MMTPA Market of value appox. 7700 Crores

95% - Automotive Lubricant

Expected Growth Rate Of 3%.

7th 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

AuthorizedServiceStation

Retailer/Dealer

ExclusiveLube

Shops

Garages/Workshops

Fleets

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Industry Trends in Retail Industry Trends in Retail ChannelChannel

Fuel StationsFuel Stations Traditionally managed by inefficient people (1980-2000 govt.’s equal Traditionally managed by inefficient people (1980-2000 govt.’s equal

opportunity initiative)opportunity initiative) Captive customers, so not much selling skills neededCaptive customers, so not much selling skills needed With the transition from 2 stroke to 4 stroke and CNG technology, sales of With the transition from 2 stroke to 4 stroke and CNG technology, sales of

fuel stations has sufferedfuel stations has suffered

BazaarBazaar Exclusive distributorsExclusive distributors Company promoted repair shops (e.g. Castrol’s Bike Zones)Company promoted repair shops (e.g. Castrol’s Bike Zones) Exclusive lube shops (e.g. IOC’s ServoXpress and Valvoline’s Advantage Exclusive lube shops (e.g. IOC’s ServoXpress and Valvoline’s Advantage

Points)Points)

e-Choupale-Choupal Lubricant retailing outlets at the existing ITC e-choupal hubs (e.g. BPCL)Lubricant retailing outlets at the existing ITC e-choupal hubs (e.g. BPCL)

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Competitor Analysis - Competitor Analysis - Major PlayersMajor Players

Total Lubes market: Rs 10,000 croreTotal Lubes market: Rs 10,000 crore

CompanyCompany Overall Overall Retail* Retail*

35%35% 20%20%

22%22% 30%30%

18%18% 8%8%

10%10% 3%3%

OthersOthers 15%15% 39%39%

* excluding fuel stations

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Competitor AnalysisCompetitor AnalysisStrengthsStrengthsIndia’s largest company India’s largest company

by salesby salesLargest network of petrol Largest network of petrol

and diesel stations in the and diesel stations in the countrycountry

OEM tie-upsOEM tie-ups

largest private sector largest private sector operatoroperator

More than one-third of More than one-third of total sales through the total sales through the ‘bazaar trade’ channels‘bazaar trade’ channels

Distribution Network: 270 Distribution Network: 270 distributors, 40,000 retail distributors, 40,000 retail outletsoutlets

Powerful brand building, Powerful brand building, aggressive entry strategy, aggressive entry strategy, strong distribution strong distribution networknetwork

WeaknessesWeaknessesBureaucratic set-upBureaucratic set-upTakes time to adapt to Takes time to adapt to

new challenges forced new challenges forced by competitorsby competitors

No manufacturing/ No manufacturing/ blending plantsblending plants

No sales through petrol No sales through petrol pumpspumps

Opportunity for BLBuild 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

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Competitor AnalysisCompetitor AnalysisStrengthsStrengths

7700 Retail Outlets, 7700 Retail Outlets, 150-200 Distributors150-200 Distributors

E-choupalE-choupalStrategic locations of Strategic locations of

petrol pumpspetrol pumpsOEM tie-upsOEM tie-ups

Small and achievable Small and achievable targets- targets- focusedfocused

Aggressive salesAggressive salesMaintaining the target Maintaining the target

market market Higher MarginsHigher Margins

WeaknessWeakness

Major selling through Major selling through Petrol pumps (75%) before Petrol pumps (75%) before liberalization post which liberalization post which this share dropped to 35%this share dropped to 35%

No manufacturing/ No manufacturing/ blending plantsblending plants

Not much focus on brand Not much focus on brand building, more than 50 building, more than 50 small brands exist in small brands exist in marketmarket

Opportunity for BLCompete 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

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Segments &Target MarketSegments &Target Market

CVs2/3

wheelers

RailwaysRoadways

BL

Defense vehicles

Cars MUVs

Tractors Pumps

Target segment

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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’

Product Management16

Brand Promotion‘ We Love ‘

Product Management17

‘ We Adore ‘

Product Management18

‘ We Care ‘

Product Management19

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’

2020

Survey conducted to develop the marketing strategySurvey 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 awarenessConsumer Promotions: Seasonal discounts and gifts, .

Fuel Station

Findings

Suggestion to BLSuggestion to BL::

Co branding of its lubricant products with companies like HPCL, BPCL which Co branding of its lubricant products with companies like HPCL, BPCL which

have a good market share in the Fuel station segmenthave a good market share in the Fuel station segment..

Survey Findings of Authorized Service Survey Findings of Authorized Service

StationsStations::

They keep the same brand of lubricants as that of the fuel stations to They keep the same brand of lubricants as that of the fuel stations to

which they are attached .which they are attached .

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Analysis of Unorganized Service Analysis of Unorganized Service Stations SurveyStations Survey

Promotion by giving utility products like grease, oil etc to the service stations.

Ideal packaging 3-3.5 liters.Low Brand Loyalty.

Margin 4-5 Rs. Per literFindings

The stations product mix depends on the distributors push

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.

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Analysis of Retailer SurveyAnalysis of Retailer Survey

Analysis of Retailer SurveyAnalysis of Retailer Survey

Bulk discountBulk discount

Different brandsDifferent brands

Samples of new productsSamples of new products

Margin Margin

Gifts for retailerGifts for retailer

SuggestionSuggestion::

Maximize Shelf space VisibilityMaximize Shelf space Visibility

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Exclusive BrandsExclusive Brands Margins vary according to salesMargins vary according to sales PromotionsPromotions Brand switchingBrand switching

Suggestions:Suggestions:

Build a new distributor networkBuild a new distributor network Guarantee to take back goods not soldGuarantee to take back goods not sold

VRS scheme for attracting new distributorsVRS scheme for attracting new distributors

Analysis of Distributor Survey

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Marketing StrategyMarketing Strategy Phased Rollout: Starting from East where they have a presence.Phased Rollout: Starting from East where they have a presence.

Price: Same Range as that of PSU players.Price: Same Range as that of PSU players.

Retail Outlets: Fuel Station market- Co brandingRetail Outlets: Fuel Station market- Co branding

Bazaar: Bazaar:

– Distributor PushDistributor Push

– Customer PullCustomer Pull

– Alternate sales strategy for service stationsAlternate sales strategy for service stations

Performance Measures & Monitoring StandardsPerformance Measures & Monitoring Standards

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Co-BrandingCo-Branding

Entry strategy into fuel stations – tie Entry strategy into fuel stations – tie up with PSU’s for selling at their up with PSU’s for selling at their outlets under a co-branded nameoutlets under a co-branded name

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Distributor PushDistributor PushChallenges & ApproachesChallenges & Approaches

Large distributors have Strong existing relationships with Large distributors have Strong existing relationships with competitorscompetitors

- Give attractive promotional schemes and gifts (e.g. - Give attractive promotional schemes and gifts (e.g. grease packs) to motivate them to stock as well push sales.grease packs) to motivate them to stock as well push sales.

- Scratch card with gift schemes lets say in every fifth - Scratch card with gift schemes lets say in every fifth pack under the cap of the lubricant pack will help in attracting pack under the cap of the lubricant pack will help in attracting distributors/workshop owners.distributors/workshop owners.

- Establish new distributor networks by helping ppl with - Establish new distributor networks by helping ppl with VRS to set up distributorship; giving special incentives/ higher VRS to set up distributorship; giving special incentives/ higher discounts.discounts.

- Higher margins/ incentives for Dual distributorship to - Higher margins/ incentives for Dual distributorship to expand the distributor network.expand the distributor network.

- Build faith among distributors by assuring buy back of - Build faith among distributors by assuring buy back of unsold lubricants.unsold lubricants.

Higher Margins need to be givenHigher Margins need to be given- Try and leverage on own blending capacity.- Try and leverage on own blending capacity.

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Customer PullCustomer Pull BrandingBranding AdvertisingAdvertising Emphasize on better quality base 2 Emphasize on better quality base 2

oil used as raw materialoil used as raw material Prices lower than players like Castrol Prices lower than players like Castrol

and similar to other PSU’s pricesand similar to other PSU’s prices

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Alternate Sales StrategyAlternate Sales Strategy

Tie up with existing sales shop on the Tie up with existing sales shop on the highways around BL’s manufacturing highways around BL’s manufacturing locations by revamping their POP locations by revamping their POP materials and giving them discounts materials and giving them discounts on lubricants.on lubricants.

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Performance Performance MeasuresMeasures

Sales VolumeSales Volume Net margin after all Net margin after all

costs (before tax and costs (before tax and depreciation)depreciation)

Market Outstanding/ Market Outstanding/ Debtors (no. of days)Debtors (no. of days)

Finished Goods Finished Goods InventoryInventory

Monitoring Monitoring StandardsStandards

Distributor and Distributor and Retailer Retailer ThroughputThroughput

SKU wise sales SKU wise sales (against targets)(against targets)

Quality control at Quality control at sourcing level sourcing level (base oil) as well as (base oil) as well as pakaging materialpakaging material

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ReferencesReferences

Primary SourcesPrimary Sources Senior executives of IOCL, BPCL, Valvoline, BLSenior executives of IOCL, BPCL, Valvoline, BL Internal resources of co. BLInternal resources of co. BL

Secondary SourcesSecondary Sources Corporate websites of IOCL, BPCL, Castrol, BLCorporate websites of IOCL, BPCL, Castrol, BL R Suresh, DGM IOC: Current challenges and R Suresh, DGM IOC: Current challenges and

opportunities for Retail Lubricant Marketopportunities for Retail Lubricant Market Dharmesh Joshi, Vertical Market Manager, Dharmesh Joshi, Vertical Market Manager,

Honeywell: Role of technology in petrol retailingHoneywell: Role of technology in petrol retailing ICIS: Competitive Intelligence for the Global ICIS: Competitive Intelligence for the Global

Lubricant IndustryLubricant Industry AT Kearney Report on FICCI Petrotech 2007AT Kearney Report on FICCI Petrotech 2007

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