Potential Study of Lubes in the Bazaar Sector Final

A

PROJECT REPORT

ON

“POTENTIAL STUDY OF LUBES IN THE BAZZAR SECTOR”

Submitted By

“Lakshmi Viswanathan”

In partial fulfilment of the requirements for the

Degree Of

Masters in Management Studies

AT

Pillai’s Institute of Management Studies and Research

DECLARATION I, Lakshmi Viswanathan studying in the Final Year of Masters In Management Studies course in the academic year 2009-2010 at Pillai Institute of Management Studies and Research, New Panvel, hereby declare that I have completed the project titled “Potential Study of Lubes In The Bazaar Sector” as a part of the requirements of Masters in Management Studies if University of Mumbai.

I further declare that the information presented in this project is true and original to the best of my knowledge.

Lakshmi Viswanathan

BONAFIDE CERTIFICATEThis is to certify that Ms _____________________of Pillai's Institute of Management Studies and Research has successfully completed her summer internship with us from May 2009 to June 2009. During the summer internship Ms ___________________ was found to be punctual, positive and performance oriented. Ms _______________________has completed her project on _________________________________. We wish her success in her career.

ACKNOWLEDGEMENT

It is indeed a great moment of pleasure to express my senses of per

found gratitude & indebtness to all the people who have been instrumental

in making my tanning a rich experience. I got the opportunity to do a

challenging project in BPCL LUBES. This project is an important part of

our study and gives us a real practical exposure to the corporate world and

it is almost impossible to do the same without the guidance of peoples in

and around us.

It gives me immense pleasure to acknowledge BPCL LUBES, Sewree

which has been nice enough to give me a chance to do my summer training

and providing me wonderful support through out my training period and

afterward.

I am thankful to Mr. Dinesh Kumar Sharma, Mumbai for allowing

me to do my research in his office and also grateful to my mentor Miss

Spardha Sood for guiding and training me to do the project. And, also

grateful to Mr Umesh the distributor I worked under. The entire experience

has been very encouraging and will certainly help me stand in good stead

throughout my Career in Future.

I would like to thank to my college director Prof. Chandran for giving me

chance to get an industrial experience. Finally I thank all other, Staffs of

BPCL, my Parents, my Friends and the staffs of School Management who

helped me in completing this dream project successfully.

SYNOPSIS

Liberalisation has seen interesting changes in the industry. The public sector oil companies — IOC, Bharat Petroleum (BPCL), Hindustan Petroleum (HPCL) and IBP — which dominated the market had to give way to the new entrants.

The combination of a shrinking market and the more-than-required number of players has lead to a chaotic situation in the market. With very little to distinguish the various brands in terms of products or technology, price has become the basis for competition. In fact, pricing and market reach are the two factors that distinguish competition in the industry today. Setting up a network to service the retail market is not an easy job and this has been made more difficult by the entry of the public sector oil companies into the bazaar trade.

The Lubricants industry is one of the leading and the fastest growing in the world. It acts as a major catalyst for economic growth.

MAK LUBES has good brand awareness among the people. This could be attributed to its long history in the market as well as the support from Government

In today’s competitive world MAK LUBES has to provide excellent services to attain a major market share and keep their customers satisfied in all aspects.

This research is useful for MAK to understand the expectations and requirements of the customers, dealers and salesmen and can serve them in a better way. This research was conducted from May 2008- July 2008.

The researcher has done an internship project at BPCL, Mumbai in pursuance to determine the brand equity for BPCL and the consumer behaviour for MAK GE and dealer development for MAK.

The samples of 200 autos and 200 taxis from among the universe of LUBE users at different pockets in the city. The researcher strongly believes that this study would helpful to the MAK Management in knowing about the customers satisfaction, customers perception, customers preferences, and service requirements about the other competitors status in the market thereby helping them in improve their quality of Services offered. Questionnaire was designed Data analysis and interpretation was done using the collected data.

The researcher strongly believes that this study would be helpful to the LUBES Management in knowing about the Customers Satisfaction, Customer Perception, Customer Preferences, and service requirements and about the other competitors status in the market thereby helping them in improve their quality of Services offered

TABLE OFCONTENTS

S.NO. CONTENTS PAGE NUMBER

LIST OF TABLES

LIST OF CHARTS

1.0 INTRODUCTION

1.1 STATEMENT OF PROBLEM

1.2 IMPORTANCE OF THE STUDY

1.3 OBJECTIVES

1.4 SCOPE OF THE STUDY

1.5 RESEARCH METHODOLOGY

1.6 LIMITATIONS OF THE STUDY

2.0 PROFILE

2.1 INDUSTRY PROFILE

2.2 COMPANY PROFILE

3.0 CONCEPTUAL REVIEW

4.0ANALYSIS AND INTERPRETATIONS

5.0FINDINGS AND SUGGESTIONS

6.0 CONCLUSION

7.0 BIBLIOGRAPHY

8.0 ANNEXURE

LIST OF TABLES


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LIST OF CHARTS


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Chapter Scheme :

Chapter I: - Deals with the Introduction of the project work, which includes Statement of Problem, Importance of the study, Objectives, Scope of the study, Research Methodology and Limitations of the study.

Chapter II: - Deals with the Industry and Company Profile.

Chapter III: - Deals with the Conceptual review.

Chapter IV: - Deals with the Analysis and Interpretation.

Chapter V: - Deals with the Findings and Suggestions.

Chapter V: - Deals with the Conclusion.

Chapter VII: - Deals with the Bibliography.

Chapter VIII: - Deals with the Annexure.

1. INTRODUCTION

1.1 Statement of Problem

A study has been conducted in order to understand the Customers and Dealers opinion and satisfaction level of MAK LUBRICANTS In Mumbai, research titled “Potential Study On Lubes In The Bazaar Sector” and its role in building Brand Equity for the company” has been conducted.

1.2 Importance of the Study

In this competitive arena Lubricants plays a vital role so the Lubricants Industries are a major source. MAK have to compete with various players like Veedol, Gastrol, Lal Ghoda, Shell, Gulf and the local brands with their stringent rules and regulations. Hence, in order to understand about the customers and dealer requirements their likes and dislikes preference is sine-quo-non-for MAK.

1.3 Objectives

To ascertain the customers preferences of MAK Lubricants. To ascertain the customers satisfaction level for MAK services. To analyze the customers opinion and satisfaction with special reference to

MAK

To suggest some guidelines to MAK in order to provide better focussed services.

To determine the status of brand awareness and brand loyalty in order to conclude about brand equity.

To learn about the brand attributes and their preferences in MAK.

1.4 Scope of the Study:

This project gives me great exposure to the Lubes market because it includes product knowledge and awareness of MAK product.

This research study is useful for MAK to understand the expectations and requirements of Customers as well as dealer development so that they can serve them in a better way.

This research was conducted from May 2009- July 2009

The respondents from various parts of Mumbai like, Chembur, Sion, Mulund, CST, Dadar and Kurla have been taken into this study.

The brand equity was measured in terms of brand attribute preferences, brand awareness, brand loyalty and preferences about the brand.

1.5 Research Methodology:

DATA SOURCE:

In this study Primary data and secondary data have been used. Secondary

data have been collected from Internet.

PRIMARY DATA

Primary research is the basic market research, which helps to know the current trends in the market. It helps us to get the real picture of the sector we are researching for.

For our primary research we had the tools as:-

Questionnaire (affixed in the annexure)

Brainstorming with customers and shop owners

Limitations of the Primary research:-

The main constraint we had was the time constraint which we were not able to overcome as the project was so deep and the time we had was very less as compared to the topic.

The other constraint was the sample was from different areas, different age, and mainly different cultural background.

The other constraint we had was the information we received from the shop keepers was in the time of full rush in the evening so they were not so much interested in giving the answers and sharing the knowledge with us.

The constraint, which can be understood by everyone, is that the 50 consumers are not the representatives of the total population of India.

SECONDARY RESEARCH:

The secondary research is basically getting important information from a lot of data stored in the books and different sites. So, in our secondary research we have referred books such as. Secondary research enabled us to get a view about the Lubricant industry in India. Also, referred to various Lubricant store magazines. I have taken help of various websites to collect secondary data relating to trends prevailing in the Lubricant t industry and also tried to know the buying behaviour of consumer in Bazaar Sector It also gives us some idea about the influencing factor to consumer at the time of purchase.

RESEARCH APPROACH:

Primary data have been collected through surveys. Personal interview

technique has been used for conducting the survey. Data collection has been done

through the use of Structured questionnaire.

SAMPLING:

Convenient Sampling method has been adopted for this study

. Researcher has taken respondents from Chembur, Sion, Mulund, CST,Dadar

and Kurla for this project.

The researcher has chosen from 200 autos and 200 taxis from different areas in

the city.

The researcher had respondent a Questionnaire both open and close ended

questions to elicit responses for the following areas:

I. Location

II. Kind of Schemes Preferred

III. Lubricants usage

IV. Lubricants service usage

1.4 Limitations of the Study:

Time was not sufficient to conduct detailed study.

Study had been conducted only in a few areas of Mumbai

For few questions researcher was not able to get proper response which are as

follows:

I. Chances of Switching.II. Reason for Switching.

III. Monthly Income.IV. Comparative questions.

2. INDUSTRY PROFILE

2.1 OIL INDUSTRY

India has significant amounts of oil and natural gas, and four ofIndia's top six revenue-generating companies are in the oil andnatural gas business. India has indigenous sources for around 60percent of its oil needs and has worked diligently to use substituteforms of energy to fulfill the other 40 percent. Indian Oil incommercial quantities was first discovered in Assam in 1889. The Oiland Natural Gas Commission was established in 1954 as a department ofthe Geological Survey of India, but a 1959 act of Parliament made it,in effect, the country's national oil company. Oil India Limited, atone time one-third government owned, was also established in 1959 anddeveloped an oil field that had been discovered by the Burmah OilCompany. By 1981 the government had purchased all of the Burmah OilCompany's assets in India and completely owned Oil India Limited. TheOil and Natural Gas Commission discovered oil in Gujarat in 1959 andopened other fields in the 1960s and 1970s.

The early oil fields discovered in India were of modest size. Oilproduction in India amounted to 200,000 tons in 1950 and 400,000 tonsin 1960. By the early 1970s, production had increased to more than 8million tons. In 1974 the Oil and Natural Gas Commission discovered alarge field--called the Bombay High--offshore from Bombay. Productionof Indian oil from that field was responsible for the rapid growth ofthe country's total crude oil production in the late 1970s andthroughout the 1980s. In FY 1989, oil production peaked at 34 milliontons, of which Bombay High accounted for 22 million tons. In the early1990s, wells were shut in offshore fields that had been inefficiently

exploited, and production fell to 27 million tons in FY 1993. Thatamount did not meet India's needs, and 30.7 million tons of crude oilwas imported in FY 1993.

India has thirty-five major fields onshore (primarily in Assam andGujarat) and four major offshore oil fields (near Bombay, south ofPondicherry, and in the Palk Strait). Of the 4,828 wells, in 19902,514 were producing at a rate of 664,582 barrels per day. The oilfield with the greatest output is Bombay High, with 402,797 barrelsper day production in 1990, about fifteen times the amount produced bythe next largest fields. Total reserves are estimated at 6.1 billionbarrels.

The government has sanctioned ambitious exploration plans to raiseproduction in line with demand and to exploit new discoveries asrapidly as possible. In the late 1980s and early 1990s, there wereencouraging finds in Tamil Nadu, Gujarat, Andhra Pradesh, and Assam;many of these discoveries were made offshore. Officials estimated thatby the mid-1990s these new fields could contribute as much as 15million to 20 million tons in new production and that total crude oilproduction could increase to 51 million tons in FY 1994. In the early1990s, the government renewed attempts, which had begun in the early1980s, to interest foreign oil companies in purchasing exploration andproduction leases. These efforts drew only a modest response becausethe terms offered were difficult, and foreign companies remainedsuspicious of India's investment climate. One response, agreed on inJanuary 1995, was an Indian-Kuwaiti joint venture to invest in a newoil refinery to be built on the east coast of India.

2.2 LUBRICANT INDUSTRY

WHAT ARE LUBRICANTS Lubricating oils are basically made of two components viz., Lube base oil which comes out from refineries after refining the crude oil and has some inherent lubricating properties like any other liquid. And the performance enhancing chemical additives, which are added to improve different characteristics of the resultant mixture. When two solid surfaces are rubbed against each other heat is generated because of friction. If a thin film of any liquid is put between the two surfaces the friction is reduced and the heat generation also reduces. The lubricating oils basically perform this simple duty in the most complicated situations be it inside engine, in a machine tool, in a gear box or any other relevant machinery application. Lubricating oil is basically required to perform the following duties: Cooling, Sealing, Cleaning, Resist corrosion & wear & lubricate. These parameters are enhanced by the addition of chemical additives. Lubricating oils are broadly categorized in two categories - Automotive & Industrial. While Engine Oil, gear oil, transmission oil etc constitutes automotive oils, turbine oil, bearing oil,

hydraulic oil etc. are examples of industrial oils. Greases are mixture of a thickening agent like soap with oil. The soap may be metallic soaps like lithium, calcium etc. Greases are used where lubrication by oil is not possible. For example wheel bearings, chassis of vehicles.

INTRODUCTION TO LUBE INDUSTRY

These are exciting times for the lube industry in India. Each one of the vast contingent of 22 Multinationals and a total of 80 big & small players are vying for a pie of Rs.5,500 Core market. Worldwide established brands, some of them albeit new to India, like Shell, Mobil, Caltex, Elf, Pennzoil are fighting it out with established Indian brands like SERVO & others to establish their foothold in the 6th largest lubricant market in the World. Compared to the average World consumption of 35 Million tonnes per annum & Asia-Pacific region consumption of 7.5 million tones, the Indian lube industry with annual demand of 1 million tonnes is just behind Japan and China in Asia having a demand growth rate of 4% compared to the World growth rate ranging between zeros to 2%. That is the lube industry in India today. Prior to 1992 the lube industry in India was controlled by the 4 major Public Sector Oil companies namely Indian Oil, HPC,BPC & IBP and a handful of private companies like Castrol, Gulf, Tidewater & others. With the distribution & canalisation of base oil import being controlled by the Government of India, the PSU Oil Companies controlled 90% of the market share.

The Indian automotive lubricant market is the sixth largest market in the world with revenues of approximately $1.30 billion in 2002. It is also one of the fastest growing retail markets in India. Until 1993, it was a highly regulated market with a clear dominance of the public sector. Companies like Bharat Petroleum (BPCL), Hindustan Petroleum (HPCL), and Indian Oil Corporation (IOC) held more than 75 percent of the market share. In recent years, with the advent of the increasing number of multinationals in the Indian market there is a growing presence of private companies. Companies like Castrol, Elf Total-Fina, Gulf, and Shell Oil have made their presence felt in the market.

Market Size

Total production of automotive lubricants in India is approximately 8 to 10 percent of global lube production. Unlike other countries where lubricant demand has witnessed stagnation, the Indian market has been growing at approximately 7 percent per annum for the past 2 years. The public sector contributes to over 60 percent of the revenues for this market. MNC’s have 5 percent market share and the remaining share is held by the unorganized sector. Automotive lubricants are further divided into diesel lubes and

petrol lubes. Diesel lubes comprise 70 percent of the market and petrol based lubricants cover the rest. As diesel lubes are used by commercial vehicles, which have to cover greater distances, their market share is higher. Engine oil constitutes around 83 percent of total sales volumes. Gear oils, transmission fluids, hydraulic brake fluids, and engine coolants contribute to the balance.

Competitive Analysis

The first seeds of competition were sown in the early 1990’s when following the liberalization of the Indian economy, the government decided to open the Indian market to foreign competition. Import of base oil, the key raw material, was de-canalized with IOC losing its status as the sole canalizing agent. Pricing of base oil was deregulated in a phased manner and currently it is market determined. Basic custom duty on base oil stock was also reduced from a peak of 85 percent to a level of 25 percent. All quantitative restrictions were also removed. These developments naturally encouraged the entry of foreign players on Indian shores who were already facing a slowdown in demand in their local markets. The coming in of foreign participants created an excess supply situation in the Indian automotive lubes market, which made it more difficult for the Indian lube manufacturers to survive.

Recent deregulations in the lubricant market have promised many new opportunities for the private lube manufacturers. With the dismantling of Administered Price Mechanism (APM) the burden of subsidies is now being passed on to the government. Private participants will also gain a presence in the Indian oil and gas sector and hence there will be competition between participants that will ensure the growth of the sector. In the next couple of years, the industry is going to witness sea changes. Retail networks, logistics management, and risk management are going to be the crucial factors. The stand-alone refineries will have to be merged with the marketing companies, as they do not have the distribution infrastructure to sell their products in a deregulated market. Companies like Reliance are already selling their products through petrol pumps. The monopoly of the public sector holdings will no longer exist. MNC’s will be able to sell their products through petrol pumps. Lubes manufactured by Reliance Petroleum, Castrol, Elf, Gulf Oil etc, which are now sold at petrol pumps. In medium to long term, Frost & Sullivan expects private sector companies to have a market share of around 25 percent. All quantitative restrictions were also removed. These developments naturally encouraged the entry of foreign players on Indian shores who were already facing a slowdown in demand in their local markets. The coming in of foreign participants created an excess supply situation in the Indian automotive lubes market, which made it more difficult for the Indian lube manufacturers to survive.

Recent deregulations in the lubricant market have promised many new opportunities for the private lube manufacturers. With the dismantling of Administered Price Mechanism (APM) the burden of subsidies is now being passed on to the government. Private participants will also gain a presence in the Indian oil and gas sector and hence there will be competition between participants that will ensure the growth of the sector. In the next couple of years, the industry is going to witness sea changes. Retail networks, logistics management, and risk management are going to be the crucial factors. The

stand-alone refineries will have to be merged with the marketing companies, as they do not have the distribution infrastructure to sell their products in a deregulated market. Companies like Reliance are already selling their products through petrol pumps. The monopoly of the public sector holdings will no longer exist. MNC’s will be able to sell their products through petrol pumps. Lubes manufactured by Reliance Petroleum, Castrol, Elf, Gulf Oil etc, which are now sold at petrol pumps. In medium to long term, Frost & Sullivan expects private sector companies to have a market share of around 25 percent.

Distribution Structure

There are two key markets for lubricants in India. Given high levels of competition original equipment, linkages are gaining importance. The original equipment market contributes almost 70 percent and 30 percent of the market is comprised by the retail sales segment. The channel for replacement market or the retail segment is petrol pumps or retail stores. Almost 70 percent of the lubricants in India are sold through petrol pumps. Most of the MNC’s have tied up with oil majors for marketing their lubricants like Castrol with Escorts and Tata BP with Telco. After the deregulation of the petrol pumps companies are keenly watching the developments in the lubes market.

The distribution channel adopted by public sector units is through the petrol pumps. Other private participants have had to set up an independent infrastructure comprising of distributors, stockiest and retailers through out India. MNC’s and private companies sell through retail stores. To compete with dominant public sector distribution, concepts like "Bazaars" and "Super Stores" have also been developed. Castrol developed the concept of "Bazaars." These are outlets meant only for lubricant sales.

The concept of "User Outlet" is another new concept developed by Castrol. In this, the consumer selects his own brand of lube after giving his vehicle for service in the same outlet. Convenient stores and highway stops for vehicles are being built from where the vehicle owners can get their vehicles repaired and get their supply of lubricants. In the lube market, Indian Oil Corporation Limited is leading the market with 30 percent market share. Castrol is next with 25 percent of the share and HPCL and BPCL are next with about 20 percent and 15 percent shares respectively. Other private companies hold the remaining market share.

Key Success Factors:-

Companies are adopting a more customer-oriented approach where they are likely to focus on creating brand awareness through print and visual media. For example promotional campaigns and trade shows offering gifts to their customers are methods of driving sales of automotive lubricants.

Brand Image

With lubricants becoming a fast moving consumer good and the brand preference of the consumers witnessing a change, brand image plays a key role in affecting the

consumer’s decision to buy a lubricant., It is found that vehicles owners’ decision to buy a certain lubricant is affected by a garage mechanic, retail storeowner, or the advertisements. Hence, it becomes important to have a good brand name in the market, which can affect the customer’s decision to buy a certain brand.

Distribution Channels

With increasing number of players in the market, it is vital for the companies to reach a wider segment 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 deeper penetration. Most of the MNC’s have tied up with oil majors to market their brands like Castrol with Escorts, Tata BP with Telco. This will help the private companies to establish a wider access, brand awareness, as well as preference.

Margins and Discount Schemes

Private companies mostly sell their products through stockiest, dealers, distributors, mechanics, and retail stores. Maximum sales are achieved through mechanics and retail stores. Margins and discount schemes offered to the storeowners and mechanics prompt them to sell and promote a particular brand.

Prices and Promotion

The transformation from the administered pricing mechanism to free pricing has increased the importance of providing cost effective product to the users. Thus product costing and competitive pricing are key factors affecting the market.

Market Trend

In 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 launch themselves on their own in the market. However, with increasing number of competitors it is not possible for every one to carve a nich in the market. This sector has witnessed considerable amount of mergers and acquisitions. British Petroleum’s not so recent acquisition of Castrol is one example. The Indian lubes market is a combative market place and lubricant companies find themselves fighting a tough battle for survival. In the OE sector also lubricant manufacturing, companies are entering into collaborations with vehicle manufactures. Maruti Udyog, Hyundai Motors, Hindustan Motors, TAFE, Toyota, and Skoda have entered into collaboration with IOC and Castrol for some of their models.

Outlook

In the future, growth in the automotive lubricants industry will largely depend on the overall performance of the economy. In the years, the scenario has improved with higher sales of Taxi’s and Auto’s. However, in the future volume growth will be affected because of use of better quality, long drain lubes. This will increase the

replacement cycle for lubes. In the shorter term, one will witness intense competition in a slow growing market marked by a consolidation activity, which has the potential to change the face of the lubricant industry. Given the rising competition, success of a product would largely depend how well it is branded and distributed.

The Marketing Channels

The original equipment segment and retail trade are the two major marketing channels in the Indian automotive lubricants market. Due to the growing competition, tie-ups with original equipment manufacturers (OEM) are becoming important as they reinforce the value proposition of a particular brand.

The marketing channels for automotive lubricants in India consist of the following,

Petrol Stations:- Petrol pumps form a major distribution channel in retail trade, however sales of lubricants through retail outlets (also called ‘the bazaar trade’) has transformed the Indian automotive lubricants market into a fast moving consumer goods (FMCG) sector.

The other marketing channels are authorized:-

Wholesale Distributors Lube Oil Shops Auto Spare Shops Authorized Service Stations Garages Rural and Agricultural dealers Super Market

Till recently, the Indian consumers linked filling of lubricants to that of petrol & diesel in petrol stations. With the advent of deregulated market scenario & fierce competition, efforts are being made to position lubricant as a high involvement consumer goods. Hence, the resultant drift towards the bazaar trade i.e., outside the petrol stations. The sales of automotive lubricants through bazaar trade increased from a mere 10% prior to 1993 to a handsome present level of 40% compared to Worldwide Trend of more than

70%.In the developed World, because of high degree of customer sensitivity & awareness, D0-it-Yourself (DIY) concept has evolved for filling of engine oil. People buy from super markets & fill it themselves. In India, this job is still left to the mechanics & service stations. During these years this shift in trade had the following effects:

Decline in Market Share of PSU oil companies. Market became heavily crowded & the industry got transformed into FMCG.

Dumping of products in the bazaar.

War of trade discounts resulting in rice war & lesser margins for dealers.

Entry of spurious lubricants

Lubricant Industry Segmentation The lubricant industry can be divided into two major categories i.e., Automotive & Industrial brand of lubricants. The industrial segment basically comprises of Core Sector industries like Defence, Railways, State Transport Undertakings, Steel Plants, Coal Mines, Fertilisers, Power Houses, Chemicals & Heavy Engineering Industries. In the industrial segment, the PSUs could successfully maintain their stronghold due to the reasons that the requirement is most end use specific, customer focussed, productivity linked & service oriented. Here, price, quality, performance track record, R&D infrastructure for technology upgradation and product development for end use specific application & after sales service play the most significant role & FMCG techniques of promotion and creating illusions takes a back seat. Indian Oil virtually dominated and continues to dominate this sector through their proven track record of quality product and vast network of professionalised pre sales & after sales services. But the automotive segment which accounts for major share i.e, 67% of the lubricant market became soft target for new entrants and here private sector players could immediately consolidate their market share by adopting FMCG techniques. PSU oil companies in general and IOC in particular initially restricted their channel of distribution through their large infrastructure of marketing network i.e, petrol stations & distributor network. The focus happened to be on ensuring quality & customer accountability and restrict mushrooming of spurious trade in bazaar through the marketing channels where some kind of control could be exercised by the company. The major thrust put by Industry leader like Indian Oil at this juncture was to promote brand visibility and creation of brand image through endorsement, TV advertisements & image building at Retail sites

Public sector unit (PSU) companies, that manufacture their own base oil, follow different distribution strategies as compared to private participants that solely dependent on imports. While PSUs sell through their own wide spread network of petrol stations private manufacturers prefer retail outlets.

Engine oil, which accounted for over 70.0 percent market share in 2004 in the Indian automotive lubricants 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 oil segment.

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 brake systems, consumption of lubes by commercial passenger vehicles, and changing customer mindset 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 increasing number of vehicles on the road. New generation vehicles with advanced gear system technologies and automatic transmission systems require special type of lubricants resulting in greater demand for multi axel gear oil and API synthetic gear oil, API GL-5, API MT-1, and ultra-Matic, which reduce the oil changing intervals.

Tie Up with OEMs Among the PSU Oil Companies Indian Oil is one company who has all along given utmost importance on tie ups with Original Equipment Manufactures (OEMs) after signing agreements with major OEMs like Maruti Udyog Ltd,TELCO, Bajaj Auto, Kinetic Engineering, SKODA etc. Even initial fill & warranty fill agreements were also signed with TELCO & Hindustan Motors. In fact, the Japanese vehicle manufacturers prefer to tie up with one or two major oil manufacturers for use of engine oils as `Genuine Spare Part' of the vehicle whereas the American vehicle manufacturers prefer to follow the American Petroleum Institute who defines the performance parameters of engine oils. The Indian vehicle manufacturers follow a route which is combination of both. These inner strengths of PSUs and the quality policy adopted by them, even attracted major multinational players like Shell, Mobil, Exxon & Caltex to enter into tie up with one or the other PSU to have access to their well established marketing network.

Strategic Business Plan The PSUs initially could not resist the onslaught of dumping in bazaar channels and illusions created by FMCG practices but off late started regaining their lost ground and to some extent restrict & arrest their decline from a level as high at 90% to 65%. In this front Indian Oil after emerging as India's largest commercial organisation and being the only company in the country to feature in the Fortune Global 500 listing has adopted structured business plan approach to strike a balance between conventional marketing channels (petrol stations)/distribution network and parallel marketing channels (bazaar trade). The parallel marketing channels chosen by the Company also adopted the path of brand image, customer focus & customer accountability by way of putting up SERVO Premium Lube Shops in the bazaar trade. The petrol stations are also simultaneously undergoing major facelifts through implementation of the companies Vision-2000 modernisation plan. By way of this modernisation the customers will get the opportunity to pick up all their convenience stores in the `Convenio' (departmental store ) put up at the petrol stations while filling up petrol, diesel & lubricants

In the long term, the overall outlook for the automotive lubricants market is expected to be positive due to the growing Indian economy along with the increased purchasing power of consumer

2.3 COMPANY PROFILE

BHARAT PETROLEUM CORPORTATION LTD (BPCL) is one of India’s leading Private sector oil companies engaged in exploration, production, refining and marketing of petroleum products. Ranked 325th on the prestigious Fortune 500 list and among the PLATTS top 250 energy companies in the world.

The six key businesses or SBU’s of BPCL are – Refining, Aviation, Lubricants, Retail, LPG and I&C (Industrial & Commercial). Some of the popular BPCL brands developed successfully over the last few years include. “Speed”, Hi speed Diesel, MAK LUBRICANTS, “Pure for Sure” and “Petrocard”. Innovation, Care and Reliability have been the core values around which all BPCL’s offerings have been designed. ”. A pioneer in marketing initiatives employing “Best in Class” practices. Pursuit of excellence. A journey to the Glorious Heritage of BPCL as under: -

Early History - Dawn of a New Era

Do take some time off for a brief interlude with the past, as we take you back in time to the evolution of Bharat Petroleum Corporation Limited. A new chapter in the history of Indian industry.

Petroleum (derived from Latin Petra - rock and oleum - oil) first came up in wells drilled for salt. People found it useful as illuminating oil and the demand for it steadily increased. Samuel Kier, a Pittsburgh druggist, bottled and marketed Petroleum as medicinal cure. To market a deodorised variant, he designed the first primitive refinery in 1852, which was a huge improvised kettle, connected to a metal tank.

'Colonel' Edwin Drake and 'Uncle' Billy Smith drilled a well with the specific objective of finding oil, and on 27th August 1859, they 'struck oil' at Titusvale, in North Western Pennsylvania, USA, at a depth of 69.5 ft.

From Nothing to Gold

The 1860s saw vast industrial development. A lot of petroleum refineries also came up.

An important player in the South Asian market then was the Burmah Oil Company. Though incorporated in Scotland in 1886, the company grew out of the enterprises of the Rangoon Oil Company, which had been formed in 1871 to refine crude oil produced from primitive hand dug wells in Upper Burma.

The search for oil in India began in 1886, when Mr. Goodenough of McKillop Stewart Company drilled a well near Jaypore in upper Assam and struck oil. In 1889, the Assam Railway and Trading Company (ARTC) struck oil at Digboi marking the beginning of oil production in India.

While discoveries were made and industries expanded, John D Rockefeller together with his business associates acquired control over numerous refineries and pipelines to later form the giant Standard Oil Trust. The largest rivals of Standard Oil - Royal Dutch, Shell, Rothschilds - came together to form a single organisation: Asiatic Petroleum to market petroleum products in South Asia.

In 1928, Asiatic Petroleum (India) joined hands with Burmah Oil Company - an active producer, refiner and distributor of petroleum products, particularly in Indian and Burmese markets. This alliance led to the formation of Burmah-Shell Oil Storage and Distributing Company of India Limited.

The Pioneering Spirit - Burmah Shell Marketing

A pioneer in more ways than one, Burmah Shell began its operations with import and marketing of Kerosene. This was imported in bulk and transported in 4 gallon and 1 gallon tins through rail, road and country craft all over India.

The company took up the challenge of reaching out to the people even in the remote villages to ensure every home had its supply of kerosene. The development and promotion of efficient kerosene-burning appliances for lighting and cooking was an important part of kerosene selling activity.

With motor cars, came canned Petrol, followed by service stations. In the 1930s, retail sales points were built with driveways set back from the road; service stations began to appear and became accepted as a part of road development. After the war Burmah Shell established efficient and up-to-date service and filling stations to give the customers the highest possible standard of service facilities.

On 15th October 1932, when civil aviation arrived in India, the company had the honour of fuelling J.R.D. Tata's historic solo flight in a single engined de Havillian Puss Moth from Karachi to Bombay (Juhu) via Ahmedabad. Thirty years later, i.e. in 1962,

Burmah Shell again had the privilege to fuel JRD Tata's re-enactment of the original flight. Burmah Shell also fuelled flying boats, which carried airmail at slightly higher rates than sea transport, at several locations.

As a true pioneer would, the company introduced LPG as a cooking fuel to the Indian home in the mid-1950s. And all along, it went beyond selling petroleum, to educate the customer. Besides selling Bitumen, the company pioneered desert road construction, training road engineers. It provided free technical services to industrial customers - big and small - and it became a part of the company's culture.

On Stream - The Burmah Shell Refinery

An agreement to build a modern refinery at Trombay, Bombay was signed between the Burmah Shell group of companies and the Government of India on 15th December 1951.

Burmah Shell Refineries Limited was incorporated as a private limited company under the Indian Companies Act on 3rd November 1952, and work began on the marshland of Trombay at Bombay. Man and machine worked relentlessly, and soon the swamps gave way to towers and tanks of steel, and miles of pipeline.

Shaping the Future

The core strength of Bharat Petroleum Corporation Limited has always been the ardent pursuit of qualitative excellence for maximisation of customer satisfaction. Thus Bharat Petroleum, the erstwhile Burmah Shell, has today become one of the most formidable names in the petroleum industry.

Bharat Petroleum produces a diverse range of products, from petrochemicals and solvents to aircraft fuel and speciality lubricants and markets them through its wide network of Petrol Stations, Kerosene Dealers, LPG Distributors, Lube Shoppes, besides supplying fuel directly to hundreds of industries, and several international and domestic airlines.

Dynamic Growth Post Nationalisation

Following Nationalisation in 1976, Bharat Petroleum changed gears and embarked upon a rapid growth path. Turnover, profitability and financial reserves grew by leaps and bounds. Massive expansion and modernisation provided a tremendous boost to the company's performance. Large-scale recruitment and training became critically important to meet the demands of expansion.

The Winds of Change - A Transformed Organisation Emerges

Opening up of the Indian economy in the nineties brought with it more competition and challenges, kindled by the phased dismantling of the Administered Pricing Mechanism (APM) and emergence of additional capacities in the region in refining and marketing.

In 1996, Bharat Petroleum went through a process of visioning, involving people at all levels, which evolved a shared vision and a set of shared values. Based on this, the company restructured itself, in a proactive move to adapt to the emerging competitive scenario. The function-based structure was carefully dismantled and replaced with a process-based one. This made the company more responsive to its customer needs.

Bharat Petroleum realises that, in the long run, success can only come with a total reorientation and change in approach with the customer as the focal point. Today, Bharat Petroleum is restructured into a Corporate Centre, Strategic Business Units (SBUs) and Shared Services and Entities. The organisational design comprising of five customers facing SBUs, viz. Aviation, Industrial and Commercial, LPG, Lubricants and Retail and one asset based SBU, viz. Refinery, is based on the philosophy of greater customer focus.

The Planned Approach

Increasing globalisation, new products and services, and innovative marketing have resulted in a very market savvy consumer. The production-based success philosophy of marketers has now been replaced by a customer-oriented philosophy. Bharat Petroleum has taken cognisance of this situation well in time and has been taking radical steps to keep itself attuned to the changing times, realising that the future belongs to those who listen and adapt to their customers.

Strategy Development

Bharat Petroleum recognises that all strategic initiatives must conform to the overall vision of the Corporation and improve the economic value. The Strategy Development effort at the corporate level achieves better focus in the new organisational structure, besides facilitating the SBUs in developing their respective strategies that lead to an integrated Corporate Strategy. A Business Planning process has been put in place that not only provides opportunities for the SBUs to pursue their visionary goals in consonance with the Corporate Vision, but also continuously monitors trends and identifies strategic opportunities for the Corporation.

Brand Management

In the highly competitive scenario, it has become imperative to own dominant brands. The Brand Management team at Bharat Petroleum endeavours to build and manage a strong brand image reflecting Bharat Petroleum's core values of being 'INCARE', viz. Innovative, Caring and Reliable. Emphasis is laid on continuously understanding customer behaviour, tracking their changing needs and expectations, and meeting these needs in the most cost-effective manner.

Research and Development

Research and development Centre Always on the forefront to innovate, Bharat Petroleum is making distinct efforts towards Research and Development (R and D). Besides the R and D facilities at the Refinery and the Product Application Development Centre in Sewree in Mumbai, a new state-of-the-art R and D Centre is being set up near Delhi. The R and D Centre are being organised around three core groups - Process and Technology Development, Product Application Development and Environmental Engineering. A total outlay of Rs.3, 000 million has been planned to be spent in three phases up to the year 2003-04 on this project.

Technological Edge

Bharat Petroleum has always been on the forefront of harnessing technology initiatives for BPCL has been on forefront in harnessing technology. maximising efficiency and achieving greater customer satisfaction.

Bharat Petroleum is the first Public Sector Oil Company to implement Enterprise wide Resource Planning (ERP) solutions - SAP. The implementation project known as ENTRANS (Enterprise wide Transformation) has been awarded the 'SAP Star Implementation Award', with Bharat Petroleum having the distinction of executing the largest and the most ambitious SAP project in India. The challenge of SAP implementation was to ensure that all the integrated elements (of the complex multi-modular integrated solutions that impact the entire workflow of the organisation) work seamlessly across the length and breadth of the country, including the remote locations. Providing online connectivity in these remote locations, given the full-fledged IT network infrastructure, was in itself a daunting task.

Bharat Petroleum is reaping the benefits of the integrated system in many areas of its operations. The early gains of implementation are in the areas of tracking customer-receivables; monitoring credit-management, inventory management, besides easing the operations in a large number of areas.

Furthermore, Bharat Petroleum has also set up one of the biggest 'Centres of Excellence' in Asia to provide online support to the end users and also work towards continuous improvement in business processes and handle product upgrades and new generation products.

With SAP as the IT backbone, Bharat Petroleum plans to take advantage of the Internet based capabilities along the entire value chain with a Customer Relationship

Management solution. A large data warehouse project has also been implemented, which facilitates access to real-time accurate information on key performance indicators at all Bharat Petroleum locations. This enables the management to take strategic and business decisions, thus ensuring value-added services, better customer satisfaction and enhanced shareholder value.

People Above Oil

Over the years, Bharat Petroleum continues to meet the challenges of the rapidly changing environment, leading to changes in the marketing of products and services. In all these changes, only one factor has remained constant and has been the source of Bharat Petroleum's strength and inspiration for any future innovations - Bharat Petroleum's People. The feeling of ownership has facilitated all employees to understand the complexity of the market and needs of the customers, and respond to these needs with innovative initiatives and offerings.

For Bharat Petroleum, commitment of its employees is a critical resource. Fully realizing that only a happy employee will put his best foot forward with the customers, Bharat Petroleum has taken many steps to make the organization a great place to work. In a survey conducted by Hewitt Associates for the January 2001 issue of Business Today magazine to identify the best employers, Bharat Petroleum was ranked among the top ten employers in India. The objective of the study was to find out which companies had really charged the emotional and intellectual energy of their employees. The other companies who were selected were Infosys, Hewlett-Packard, P and G, ICICI, Hughes, LG, HLL, Compaq and Asian Paints

Bharat Petroleum fosters effective value-based HR processes for development of people and their organisational capabilities with a view to provide them with a competitive edge and also to realise their personal vision in tandem with the corporate vision. The thrust areas include:

Performance Management which links business goals with individual performance goals

Recognising competencies and capabilities of the staff through Competency Modelling to help identify and place the right person in the right job

Identifying competency gaps and bridging such gaps through appropriate training and developmental programmes

Multi-skilling to encourage employees to take up new initiatives in the areas of Enhanced Fuel Proposition, Add-on Stores, One Stop Truck Shops, Grocery and Fast Food Stores.

Bharat Petroleum has been conferred the National HRD Award - 2000 by National HRD Network for making Outstanding Contribution to HRD.

At the National Petroleum Management Programme (NPMP) on Excellence in Creativity and Innovation (1999-2000), Bharat Petroleum employees bagged all the three awards in the individual category, along with four certificates of recognition in the team category

COPORATE VISION

We are a leading energy company with global presence through sustained aggressive growth and high profitability

We are the first choice of customers, always

We exploit profitability growth opportunity outside energy

We are the most environment friendly company

We are a great organisation to work for

We are a learning organisation

We are a model corporate entity with social responsibility.

ENERGISING SOCIETY

At BPCL, sustenance of the environment and promoting eco-friendly schemes is an area of priority. Products from BPCL conform to the stringent eco-friendly EURO III norms and are blended with oxygenates to reduce the level of pollutants released in the air. Our endeavour has been to make this Earth a better place to live. Read about our efforts to keep our earth Green

Corporate Social Responsibility

Vision

We are a Model Corporate Entity with Social Responsibility

Build a Powerful Partnership with Society for ‘Sustainable Development’

Objective

Building Sustainable Communities - to have a positive impact on the communities in which we operate

Health and Safety - to ensure the health and safety of our workforce and communities

Environment - to minimize adverse impacts while taking steps to protect and enhance the natural environment

Employees – train tomorrows leaders in teamwork skills and running socially responsible business

Methodology

Integrated with Business Strategy and Context Leverage our Core competency – People and Technology

Three way Execution model for Community Projects

Develop deserving Communities through ‘Focused’ & ‘Need based’ interventions – No ‘Giveaways’

Create ‘Sustainable Models’ which are Replicable & Scalable

Sharing Wider Responsibility

At BPCL we believe that it’s equally important to return back to society. Which is why, we believe some of our finest achievements aren’t those found in our balance sheets but those, in small towns and villages spread across India. Our involvement in sharing this wider responsibility dates way back to 1984, when in pursuance with our philosophy “to give back to the society/community our best”, we aimed to help the people enrich their lives, be it our employees or their families also extending the scope of definition of families to those that we saw beyond our glass cabins in these rustic surroundings, and

thus started our romance. Today, we term them as our extended family i.e. our villagers from rural areas.

India, has a social contrast, while one strata of the society comprising of approximately 30% live in the cities, a great percentage of nearly double -700 million Indians reside in villages, which we term as rural India. Now rural India too has its own disparity, some are what we call the islands of prosperity and the rest that have the other extremes, riddled by droughts and some difficult conditions of weather and climate and sometimes these villages are so remote and far flung from cities that many a times makes others go past unnoticed

BPCL initially started working in Mahul, the village located in the neighbourhood of its Mumbai refinery in 1986, with the sole reason of their social upliftment. The residents of Mahul, essentially from the fishing community, were rich because they possessed marine wealth but as far as education, health, etc was concerned, they needed direction and help. BPCL volunteered and the initial success brought such gratification that immediately it adopted another village (this time an interior one) called Karjat. Developments with selfless intentions helped introspect about the future role BPCL should adopt in its aim to contribute to this effort. There after there was no looking back.

As a corporate responsibility, BPCL has today adopted 37 villages across India. This adoption included, making substantial investments for nearly a decade and a half in them to make them fully self reliant, providing them fresh drinking water, sanitation facilities, medical facilities, enhancing their income standards by imparting vocational training and agricultural innovations. However, BPCL also firmly believes that the only vehicle for raising the villagers from their present state is by educating the young and the old, a focus on providing grants for opening schools and opening adult literacy camps as well.

A Herculean task indeed, which BPCL recognized and thus even sought assistance from NGO’s working around these centers in fulfilling its dream, which to many of BPCL employee’s still remains incomplete, on account of the large magnitude of work necessary in completion

Following are the main products of BPCL:-

Gases

o Poly Propelene Feed Stock (C3)

o Natural Gas

o LPG

o Bharat Metal Cutting Gas

Fuels

o Marine Fuels

o White Oils

o Black Oils

Solvents and Special Products

Bitumen

Lubricants

Sulphur

LUBRICANTS SBU

The Lubricants SBU caters to the Automotive and Industrial requirements of Lubricants through the popular brand “MAK”. The business envisions “to be the most respected, knowledge driven, customer focused Lubricants Company in India offering environment friendly and best quality lubricants.”

http://bharatpetroleum.com/EnergisingBusiness/FIP_Bitumen.aspx?id=1

In line with the corporate objective, the business has set out to achieve a volume of 250 TMT per annum by the end of 2010. In an environment of a growing Indian economy and the Indian Industry, this could be challenging but a realizable target.

Automotive Industry, one of the key consumers of Lubricants, has witnessed tremendous growth over the years. From vehicle sales of 2.5 million two wheelers in1995-96 to a projected 10.9 million two wheelers in 2009-10, the anticipated growth in sales is pegged at 11%. (Source: SIAM estimates) In the Four wheelers category, from 3 lakh passenger cars sales in 1995-96 to a projected 15 lakh in 2009-10, this segment is likely to witness a 11% growth in sales. In Four wheelers Commercial vehicles category, from sales of 2 lakh units to a projected 4-lakh units in 2009-10, this segment promises growth as well.

However the crowded lubricants market has over 35 players - both Indian and International. The lubricants business in India is intensely competitive and dynamic. Some of the prominent players include Castrol, Indian Oil, HPCL, Lubrizol and Gulf Oil to name a few.

Castrol retains leadership position in an intensely competitive market. IOCL comes next to Castrol, the market share of the two other PSU oil companies namely HPCL and BPCL follow suit, while smaller players like Tide and Gulf continue to nibble away at the market share of the larger players.

THE ‘MAK –makes it possible’ BUSINESS

The present volumes sold under the ‘MAK’ brand of lubricants totals 130 TMT(Thousand metric tones) per annum. The same is marketed through three different sales channels – Retail, Bazaar & Industrial (B2B).

To market the MAK-range of lubricants, and also realize the set objectives, Lubricants SBU has made elaborate efforts to back up its strategy. Tie-ups with OEMs like TVS/ Tata Motors / Hero Honda/ GM have also been forged in order to identify business

enhancement opportunities. Besides, focused attention to sales through retail outlets of NRL/IGL/CUGL/ADANI is being given to boost lubricant sales

The MAK brand has an international presence with the range being available in Nepal, Bangladesh, Mozambique and the latest entry in to Srilanka.

The realisation of 250TMT per annum sales thus depends, on a concerted effort in not only improving quality of goods and services but also in creating world-class communication programs that lead to increased brand recall. In this context, the latter is of key concern to us. Below mentioned does the Lubricants SBU initiate a brief on the activities: -

Product

‘MAK’ grade of lubricants are blended out of environment friendly Group –II grade of base oil. The base oil is produced at the Mumbai refinery in its recently commissioned LOBS plant. The plant uses state of the art Hydro processing process for producing base oil and then uses iso - dew axing instead of the normal solvent process to remove wax. In many ways, the base oil thus obtained is considered to be superior in comparison to other base oils available in India. These base oils have special property to support the oxidation at high temperatures and pressures The additives used in blending are obtained from reputed manufacturers and thus produce superior quality of lubricants matching performances competing against the best in the Industry. Backed by intense quality checks, the product made available to customers are not only of high quality but also environment friendly. The products today also confirm to JASO & others such as American specification - API norms.

Packaging

With over 365 SKUs, the business uses attractive small packs (250 ml) and the entire range including large barrels (210 litres) to reach the product out to customers. Pack Labels are periodically updated with requisite communication messages.

Placement

A robust SCM supports the logistics of product planning and placement, with well established depots to store and forward the product when necessary. MAK lubricants are sold through the three main channels – Retail, Bazaar and Industrial.

The Retail channel is the set of approx. 7500 dedicated retail outlets (petrol pumps) of BPCL, through which lubricants are sold. The retail channel is the most promising for the lubricants business as far the value realisation is concerned.

The Bazaar channel comprises of the shops in the bazaar, which sell lubricants along with automotive spare parts at times. They are categorized as

PLD (primary lube distributorship)

MAK Garage

Lubes Shoppe

Shops marketing all grades of lubricants

The Bazaar channel, where most of the leading players are strongly present, remains a challenge for BPCL. While the volume potential is high, BPCL’s entry into this channel has been more pronounced only in the last 3-4 years. Value realisation from this channel is lower than the retail channel.

The Industrial (B2B) channel is the direct marketing to the industrial customer base with a high volume but the lowest value realisation. Hence, expansion of customer base and increase in volume share of existing customers has been the focus area. The no. of Direct customers is approx. 2876 nos. The operating strategy in such situation to maximize value is to maximize high margins from low volume customers & to build profitability in key customers

Promotion

Adopting the tagline of “MAK makes it possible” over the last five years, MAK started of its campaign with a view to achieve awareness through the “being different” route – the cricket series of advertisements raised the awareness of the brand and the continuing series have thereafter given the brand the necessary recognition and respectability. Currently the dashing and dynamic Indian Cricketer M.S.Dhoni endorses the brand. The current TV ads are centred on him endorsing one of the products – MAK4T Plus which addresses the youth through the communication while communicating product Adopting the tagline of “MAK makes it possible” over the last five years, MAK started of its campaign with a view to achieve awareness through the “being different” route – the cricket series of advertisements raised the awareness of the brand and the continuing series have thereafter given the brand the necessary recognition and respectability. Currently the brand is endorsed by the dashing and dynamic Indian Cricketer M.S.Dhoni. The current TV ads are centered on him endorsing one of the products – MAK4T Plus which addresses the youth through the communication while communicating product.

Retail Channel initiatives

BPCL has undertaken several initiatives in order to serve its customers better. Renewed focus on the retail channel has been of emphasis in the year 2006-07.The MAK

salesman at the forecourt, point-of-sales branding, pole signs and MAK signage’s have been successful. Oil change segment at R.O.’s have been well received as well.

Bazaar Channel initiatives

As a bazaar initiative, in the current year, several ‘MAK garages’ were commissioned to improve sales and promote retailing of MAK grades in this segment. About 1000 MAK garages are proposed to be set up in 2007-08 along with several MAK mobile vans at each Primary Lubes Distributor (PLD)

Industrial (B2B) initiatives

Initiatives to strengthen marketing network to handle small customers thru industrial distributors are being taken. In addition to that, the product portfolio would be increased to include Marine oils, High temperature greases and Transformer oils. Services are also being enhanced to provide value-added technical consultancy to key customers.

TARGET OBJECTIVE

The lubricants SBU proposes to meet its target of 250TMT as such

Through Retail Channel - 70 TMT

Through Bazaar Channel - 90 TMT

Through Industrial Channel - 90 TMT

3.0

CONCEPTUAL REVIEW

MARKETING MANAGEMENT

DEFINITION: Marketing management is the practical application of marketing techniques.

It is the analysis, planning, implementation, and control of programs designed to create,

build, and maintain mutually beneficial exchanges with target markets. The marketing

manager has the task of influencing the level, timing, and composition of demand in

way that will achieve organizational objectives.

BRAND EQUITY

What is brand equity?

The goal of the brand leadership paradigm is to create strong brands – but what is a

strong brand, anyway? In Managing Brand Equity, brand equity was defined as the

brand assets (or liabilities) linked to a brand’s name and symbol that add to (or subtract

from) a product or service. These assets can be grouped into four dimensions: brand

awareness, perceived quality, brand associations, and brand loyalty. These four

dimensions guide brand development, management and measurement.

Brand awareness

Brand awareness is an often undervalued asset; however, awareness has

been shown to affect perceptions and even taste. People like the familiar and

are prepared to ascribe all sorts of good attitudes to items that are familiar to

them. The Intel Inside campaign has dramatically transferred awareness into

perceptions of technological superiority and market acceptance.

Perceived quality

Perceived quality is a special type of association, partly because it influences

brand associations in many contexts and partly because it has been empirically

shown to affect profitability (as measured by both ROI and stock return)

Brand associations

Brand association can be anything that connects the customer to the brand. It

can include user imagery, product attributes, use situations, Organizational

associations, brand personality and symbols. Much of brand management involves

determining what associations to develop and then creating programs that will link

the associations to the brand.

Brand loyalty

Brand loyalty is at the heart of any brand’s value. The concept is to strengthen

the size and intensity of each loyalty segment. A brand with a small but

intensely loyal customer base can have significant equity

Brand Preference

The stage of brand loyalty at which a brand will select a particular brand but will

choose a competitor’s brand if the preferred brand is unavailable. See Brand

insistence; Brand recognition.

Customer Satisfaction

If the customer's expectations of product quality, service quality, and price are

exceeded, a firm will achieve high levels of customer satisfaction and will create

"customer delight." If the customer's expectations are not met, customer

dissatisfaction will result. And the lower the satisfaction level, the more likely the

customer is to stop buying from the firm.

4.0

ANALYSIS AND INTERPRETATIONS

PROFILE OF THE SAMPLE RESPONDENTS

LOCATION OF AUTO

TABLE1:

Frequency Percent Valid Percent Cumulative Percent

Valid CHEMBUR 95 47.5 47.5 47.5

SION 57 28.5 28.5 76

MULUND 48 24 24 100.0

Total 2OO 100.0 100.0

CHART 1:

LOCATION

INFERNCE:

As the table depicts, a good majority of the respondents (47.5%) of auto drivers belongs to chembur while the least is Mulund (24%)

LOCATION OF TAXI

TABLE 2:


Valid CST 130 65 65 65

DADAR 38 19 19 84

KURLA 32 16 16 100.0

Total 200 100.0 100.0

CHART 2:

LOCATION

INFERENCE

As the Table depicts, a good majority of the respondent (65%) of taxi drivers belongs to CST while Kurla is the least (16%)

VEHICLE OWNED OR HIRED

TABLE 3:


Valid AUTO OWNED 120 60 60 60

AUTO HIRED 80 40 40 100

TOTAL 200 100 100

TAXI OWNED 85 42.5 42.5 42.5

TAXI HIRED 115 57.5 57.5 100

TOTAL 200 100 100

CHART 3:

VEHICLE OWNED OR HIRED

INFERNCE:

As the Pie Chart depicts, (21%) of the respondents owned the taxi while the rest (30%) didn’t own. Similarly, (29%) of the respondents owned the auto while the rest (20%) didn’t own.

USE OF LUBE OIL IN AUTO

TABLE 4:


Valid MAK GE 65 32.5 32.5 32.5

LOCAL 93 46.5 46.5 79

OTHERS 42 21 21 100

TOTAL 200 100.0 100.0

CHART 4:

USE OF LUBE OIL

INFERENCE:

As the above Pie Chart depicts, (47%) of the autos using local Lubes while, (32%) use MAK GE and the rest that is (21%) use LUBES of other brands.

USE OF LUBE OIL IS USED IN TAXI

TABLE 5:


Valid LOCAL 65 32.5 32.5 32.5

OTHERS 80 40 40 72.5

MAK GE 55 27.5 27.5 100

TOTAL 200 100.0 100.0

CHART 5:

USE LUBE OIL IS USED IN TAXI

INFERENCE

From the above chart it is seen that around (33%) of taxi’s use the local lubes, (40%) use Lubes which are available with other brands and only (27%) of the taxi’s use MAK GE.

PARAMETERS CONSIDERED WHILE PURCHASING LUBE OIL IN AUTO SEGMENT

TABLE 6:


Valid Price 80 40 40 40

Mechanic Recommendation

10 5 5 45

Performance 50 25 25 70

Schemes 05 2.5 2.5 72.5

Others 55 27.5 27.5 100.0

Total 200 100.0 100.0

CHART 6:

PARAMTERS CONSIDERED

INFERENCE

As the above chart shows, (40%) of the respondents consider price while choosing lubes, (28%) give more importance to performance, (5%) of the respondents use those lubricants whic are recommended by the mechanic (2%) use lubricants according to the schemes available and the rest (28%) use a particular brand of lubricant either because the owner of the vehicle recommends it or their peers suggest them or because they are loyal to a particular brand.

PARAMTERS CONSIDERED WHILE CHOOSING LUBE OIL IN TAXI SEGMENT

TABLE 7:


Valid Price 95 47.5 47.5 47.5

Mechanic Recommendation

05 2.5 2.5 50

Performance 65 32.5 32.5 82.5

Schemes 05 2.5 2.5 85

Others 30 15 15 100.0

Total 200 100.0 100.0

CHART 7:

PARAMETERS CONSIDERED

INFERENCE

From the above chart its seen that (47%) of the respondents use a particular brand of lubes depending upon the price of the lubes. (33%) of the respondents give more importance to the performance of the vehicle while choosing the Lubes. (3%) use Lubes depending upon the Schemes. (2%) give importance to mechanic’s recommendation and the rest (15%) depends on the rest factors.

COMPETITOR’S OF MAK IN AUTO SECTOR

TABLE 8:


Valid Gulf 30 15 15 15

Lal Ghoda 85 42.5 42.5 57.5

Castrol GTX 35 17.5 17.5 75

Veedol 10 5 .5 80

Servo 35 17.5 17.5 97.5

BP 5 2.5 2.5 100

TOTAL 200

CHART 8:

COMPETITOR’S

INFERENCE

From the above chart it is seen that the major competitor of MAK GE in the Auto sector is Lal Ghoda with (42.5%), followed by Castrol GTX and Servo with (17.5%), Gulf with (15%), BP with (2.5%) and Veedol with (0.5%).

COMPETITOR’S OF MAK IN TAXI SECTOR

TABLE 9:


Valid Veedol 65 32.5 32.5 32.5

Castrol 50 25 25 57.5

Servo 20 10 10 67.5

Lal Ghoda 65 32.5 32.5 100

TOTAL 200

CHART 9:

COMPETITOR’S OF MAK IN TAXI SECTOR

INFERENCE

From the above chart it is seen that in the Taxi Sector the main competitors for MAK GE other than the Local lubes come from Veedol and Lal Ghoda with (32.5%), the next followed by Castrol (25%) and the least from Servo (10%).

THE SCHEMES PREFERRED IN THE AUTO SECTOR

TABLE 10:


Valid Discounts 90 45 45 45

Free Products 80 40 40 85

Oil with Oil Free 20 10 10 95

Luck Draw 5 2.5 2.5 97.5

Cash Coupons 5 2.5 2.5 100

TOTAL 200

CHART 10:

SCHEMES PREFERRED IN AUTO SECTOR

INFERENCE

From the above chart it can be seen that most of the respondents would prefer to get discount (41%) with the lube they purchase, (37%) would prefer Free Products like Side Cover, Mechanic Set and Cash Coupons, Lucky Draw is preferred by only (2%) of the respondents.

SCHEMES PREFFERRED AMONG TAXI DRIVERS

TABLE 11:


Valid Discounts 80 40 40 40

Free Products 95 47.5 47.5 87.5

Oil with Oil Free 10 5 5 92.5

Luck Draw 5 2.5 2.5 97.5

Cash Coupons 5 2.5 2.5 100

TOTAL 200

CHART 11:

SCHEMES PREFFERRED

INFERENCE:

From the above chart it can be seen that (49%) of the respondents prefer Free Products like Viper, Mobile Stand, (41%) prefer to get Discounts, (5%) prefer to get Oil Free, (3%) Cash Coupons and only (2%) prefer Lucky Draw

FREQUENCY OF OIL CHANGE IN AUTO’S

TABLE 12:


Valid 15 Days-1Month 65 32.5 32.5 32.5

1-2Month 90 45 45 77.5

2-3 Month 43 21.5 21.5 99

3 Month & more 2 1 1 100

TOTAL 200

CHART 12:

FREQUENCY OF OIL CHANGE IN AUTO

INFERENCE:

From the above chart it can be seen that (45%) of the respondents change oil after evey 1-2 Month, (32&) change oil between 15 Days-1 Month, (21.5%) change between 2-3 Month and the least is 3 Month and more (1%).

FREQUENCY OF OIL CHANGE IN TAXI

TABLE 13:


Valid 2-3 Months 3 1.5 1.5 1.5

3-4 Months 15 7.5 7.5 9

4-5 Months 70 35 35 44

5-6 Months 112 56 56 100

TOTAL 200

CHART 13:

FREQUENCY OF OIL CHANGE

INFERENCE

From the above chart we can come into the Conclusion that (56%) of the respondents changed their oil between 5-6 months the time for servicing, (35%) between 4-5 Month, (7.5%) between 2-3 Month and the least is during 2-3 Moth (1.5%).

QUANTITY REQUIRED FOR OIL CHANGE IN AUTO

TABLE 14:


Valid ½-1 Litre 20 10 10 10

1-2 Litre 40 20 20 30

2-3 lITRE 140 70 70 100

TOTAL 200

CHART 14:

QUANTITY REQUIRED

INFERENCE:

From the above chart we can come into the conclusion that (70%) of the respondents require 2-3 Litres of Oil for changing, (20%) require 1-2 Litre and only (10%) require ½- 1 litre.

QUANTITY REQUIRED FOR OIL CHANGE IN TAXI

TABLE 15:


Valid 2-3 Litre 45 22.5 22.5 22.5

3-4 Litre 155 77.5 77.5 100

TOTAL 200

CHART 15:

QUANTITY REQUIRED

INFERENCE:

From the above chart we can understand that(77.5%) of the respondents require 3-4 Litre oil for changing, while (22.5%) of the respondents require 2-3 Litre.

WHEN IS TOP-UP DONE FOR TAXI

TABLE 16:


Valid 1-15 Days 77 38.5 38.5 38.5

15-30 Days 85 42.5 42.5 81

30 Days and more 38 19 19 100

TOTAL 200

CHART 16:

WHEN IS TOP-UP DONE FOR TAXI

INFERENCE:

From the above chart it is seen that (43%) of the respondents do top-up between 15 days to 1 month, (38%) between 1-15 Days and the least (19%) between 30 and more Days.

QUANTITY REQUIRED FOR TOP-UP IN TAXI

TABLE 17:


Valid ½ Litre 111 55.5 55.5 55.5

1 Litre 89 45.5 45.5 100

TOTAL 200

CHART 17:

QUANTITY REQUIRED FOR TOP-UP

INFERENCE:

From the above chart we can depict that (63%) require ½ Litre for Top-Up while, (37%) require 1 Litre.

DEALER DEVELOPMENT

The next part of the project after finding out the customer preferences was Dealer Development. Through this project it was easy to learn the relationship between the dealers and the company, dealer and the supplier.

The main job was to find out those requirements of the dealer in respect of the product. And whether the dealer in all respects is able to pass on to the suppliers and to the final customers.

The main objective of the visit was to prepare a sales kit. And this sales kit would be distributed to the Dealers and the Sales men in the next Sales meet. This was to ensure that the Sales men were fully equipped as well as knowledgeable about the MAK products he is selling.

After visiting and analysing the requirements the following things were decided to include in the sales kit.

SALES KIT to contain the following items:

Pricelist

Brochure

Notepad

Pen

Identity Card

Visting Card

MAK Bag

Uniform/Shirt

Umbrella/Rain Coat

Folder

Calculator

Feedback form.

After discussing the following items were decided to be included so that it would benefit the Dealers and the salesmen alike

MAK DISTRIBUTION SYSTEM

ConsumerConsumer

Indenting

Indenting

Primary Sale

Primary Sale

Secondary Sale

Secondary Sale Suppliers Suppliers

DistributorDistributor

LUBES PLANTLUBES PLANT

5.0

FINDINGS AND SUGGESTIONS

CUSTOMER SURVEY FINDINGS

A good majority of the respondents (55%) are using MAK GE in Taxi Sector

while the rest were using either Local or LUBE OILS from other brands.

A good majority of the respondents (65%) are using MAK GE in AUTO Sector

while the rest were either using Local or other Brands.

A good majority of the respondents (55%) of MAK GE, while Veedol is the

least (0.5%) by considering 200 sample, with respect to Autos

A good majority of the respondents (65%) are using MAK GE, while Servo is

the least (10%) by considering 200 samples, with respect to Taxis

A good majority of the respondents (41%) preferred Discounts, while Lucky

Draws and Cash Coupons are the least (2%) each, with respect to Autos.

A good majority of the respondents (49%) prefer Free Products, while Lucky

Draw is the least (2%) each, with respect to Taxis.

A good majority of the respondents (45%) prefer to change the lube oil after

every 1-2 Months, while 3 Months is the least (1%) with respect to Autos.

A good majority of the respondents (56%) prefer to change the Lube oil

between 5-6 Months, while 2-3 Month is the least (1.5%) with respect to Taxis

During changing the oil a good majority of the respondents (70%) require 2-3

Litres of oil while, the least is ½-1 Litre (10%) with respect to Autos

During changing the oil a good majority of the respondents (77.5%) require 3-4

Litre of oil while, the least is 2-3 Litre (22.5%) with respect to Taxis

A good majority of the respondents (43%) do Top-Up between 15 Days –

1Month while the least, is 30 Days and more (19%) with respect to Taxis

A good majority (63%) require ½ Litre Lube during Top- Up while, (37%)

require 1 Litre during Top-UP

A good majority (40%) prefer Price has a main factor while choosing a

particular Lube while, Mechanic Recommendation is the least with (2%) with

respect to Autos.

A good majority (47%) again prefer Price has a main factor while deciding on a

particular brand of Lube while the least, (3%) of the respondents give more

importance to schemes with respect to Taxis.

Most of the Customers felt that the price of MAK was too high hence the reason

that most of them were either using Lubes of other brands or Local .

Some customers who are Taxi Drivers felt that since their old car i.e Fiat would

be replaced by a new vehicle by the end of the year it wasn’t necessary to use

any branded Lubes, hence because of this reason there is bound to be a business

loss

Most of the customers were of the opinion that dealers and the suppliers are not

passing many if the schemes.

Respondents felt that there was no personalized service to customers

Due to non-availability of MAK GE , most of the customers shifted to other

Lubes like Veedol, Lal Ghoda

Customers are expecting more number of Schemes and also eco-friendly Lube

oil.

Most of the respondents in the Auto as well as the Taxi sector don’t own the

vehicle so here the owner himself decides which Lube oil to use.

Most of the Taxi respondents hhhave to replace their old vehicle so they are

least bothered of changing the Lubes

Most of the Customer’s are not aware regarding the facilities which are provided

by MAK , so effective media campaign is a must to enhance the awareness

level.

Amongst most of the respondents peer group is playing a vital role so they tend

to use the same Lube which the other respondents are using in that particular

area.

SUGGESTIONS:

From the research study, it has been found out that the Customers are very particular about the Quality of the vehicle as well as the performance and hence they want MAK to maintain to maintain the same quality standards.

Customers were unaware about the new schemes provided by MAK, so effective media campaign is a must to enhance the awareness level.

MAK may also introduce some sales promotion such as cash discounts; Quality discounts hence the promotional activities would further strengthen the market share of the Company.

MAK may introduce free service

MAK should take steps to curb the corrupt practices of the suppliers

DEALER SURVEY FINDINGS

It helps to know whether dealer is capable of being a direct dealer of

MAK or not and it also helps to find new dealer.

With visit to the dealer’s shop it was easy to understand the

procedure of after sales service.

By calculating its evident that MAK has more than 50% share in

most of the categories.

Word of mouth plays a vital role in awareness among customer. This

is one factor, which can play a very important role.

There is a high growth rate of sale due to booming technology and

better service.

RECOMMENDATIONS AND SUGGESTIONS

More detailed customaries service is to be provided.

MAK should try new dealers who have the potential

Customers consider quality as their first preference, so the

company should give more stress on this.

The product is well aware and it is on top of the mind of

customer. So, company should always try to improve services

and also improve the technology.

LIMITATIONS

Every study has certain limitations. In my study, also there were certain

limitations, which i wasn’t able to solve.

The research was conducted in a very small area.

The period of my research work also witnessed a lot of ups and

downs in the product sale. And this led to the differences of

perceptions among customers.

Time factor played a very important role.

Most of the customers answered the questionnaire in a careless

manner, so it was difficult to make them hold for time.

The sample size is also very small which represent my research on

consumer behaviour.

My study is recognizable in only certain parts of the city and not

recognizable in whole India due to the above limitations and less

area coverage.

CONCLUSION

MAK, in order to thrive and excel, have to understand about the

customers expectation.

6.0

BIBLIOGRAPHY

BIBLIOGRAPHY

PRINCIPLES OF MARKETING MANAGEMENT P.KOTLER

RAJAN SAXENA

MARKETING RESEARCH DAVID

A.AAKER

GEORGE S. DAY

RESEARCH METHODOLOGY KOTHARI C.R.

WEBSITES

www.bpcl.in

7.0

ANNEXURE

SURVEY OF TAXIS AND AUTOS

Date:- _____________

Area: ________________

Vehicle Make:- Auto/ Taxi

Whether Vehicle :- Owned/ Hired

When do you top-up? ____________________ KM

How much quantity do you require for top-up? ______________________ LTR

When do you change the oil? _______________ KM

How much quantity do you require for oil change? _____________________ LTR

Have you tried MAK GE? Yes/ No

If not, what is the brand and the grade of Lube oil which you use?

Why?

o Price

o Mechanic Recommendation

o Performance

o Scheme ______________

o Others __________________

What kind of schemes do you prefer?

o Discount

o Free Product

a)

b)

c)

o Oil free with oil

o Luck Draw

o Cash Coupons

REMARKS IF ANY:

FEEDBACK FORM FOR MAK LUBRICANTS

Date: _________________

DSR Name: ______________

Name of the Customer: ______________________

Contact No: __________________________

How often in a month do you place an order?

o 1

o 2

o 3

o More than 3

How many days does it take for supplying?

o 2 working

o 3 working

o 4 working

o More than that

Which segment do you cater to ?

o 2 Wheelers

o CNG Auto/ Taxi

o Diesel Taxi

o PCMO

o Commercial Vehicles Trucks/Tractors

Do, the scheme get communicated to you in a timely basis?

o Yes

o No

Are you given the benefits of the schemes on a timely basis?

o Yes

o No

THANK YOU

Potential Study of Lubes in the Bazaar Sector Final

Documents

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