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Marketing the Asian Paints Way
Wich is the Asian company that started in a small shed in 1942, became a market leader in 1967, went international in 1978, and is now a $500 million multinational spanning 22 countries in Asia and the Asia-Pacific region?
No prize is being offered for the right answer, however. Everyone knows, it is Asian Paints, whose success story continues in Nepal as well.
Until two months ago, Asian Paints Nepal Pvt. Ltd. was reporting a sales growth of 23 percent compared to the same period last year. The figure is now revised upward to 25 percent and the outlook is for further growth. This is despite the fact that the overall paints sale has not increased in Nepal for the last two years.
But what is the secret behind the growth of Asian Paints while others in the industry are suffering stagnation?
“Marketing innovation”, say management experts. The indication is towards the introduction of the ColourWorld chain of speciality outlets.
When asked to explain the marketing innovation introduced recently by the company, S. Roy, Sales and Marketing Manager of Asian Paints Nepal, who came to Nepal from the parent Asian Paints, India in December 2002, recalls that during those days, though there were many paints shops across the cities in Nepal and paints of good quality were available, none of these shops had a good shopping environment. The paints were not presented in a way that helped the consumer to understand which were the best quality paints and which one was best suited to his present need.
One simple textbook concept in marketing was enough for Roy to understand the shortcoming in the prevailing paints marketing practice during those days. The basic purpose of marketing is to satisfy the customer. It should inform the customer about the product and to explain to the customer how he would gain by buying that particular product. Both the seller and the customer should be in a win-win situation. Neither of them should be the loser in an ideal marketing environment.
So, Roy’s first target was to renovate the shops to change the ambience so that customers would like to walk into them with their family as they do in department stores where they can see the product and the rate, feel the product and select from a wide range. In those days, the dealer would push the product which would bring him more profit. Maybe the customer was ready to pay a far better price for a far better product but the seller would feel that if he showed a better quality but higher priced product, the customer would run away, so he would give the customer a lower priced product. The dealers thought that if the paint went bad after a couple of years, the customer would come back to him anyway.
The result of the new strategy by Asian Paints is that now there are about 55 speciality shops in the country selling Asian Paints with ColourWorld machines (from which the sellers can develop the exact shade of the paint required by customers) and a department store-like ambience. According to Roy, Biratnagar now has two air-conditioned showrooms. Similarly, Itahari, Damak and Dharan have one showroom each while Butwal and Bhairahawa have five showrooms between them, Nepalgunj has two and Pokhara has four. Two or three new showrooms are being opened every month now and Roy expects the total number to reach 70 by the end of 2005.
The arrangement of the products in the shop is such that premium products are presented in the front of the shops. When a customer walks into the shop, he first notices the premium products.
Improving the showroom alone is, however, not enough. The attitude of the shopkeeper towards the customer must also be conducive to make the sale. So, the company went for a drive to educate the sellers not only on the basics about the paints and colours so that he can help the customer better, but also on the attitude of the seller, adds Roy. “Though we did not provide them with special training as such, we made them participate in several workshops and seminars exposing them to different ideas and concepts.”
As a result, there was a shift in the customer preference from cement paint to Apex (Asian Paints’ new brand of exterior emulsion). According to Roy, people were previously using cement paint even in the interiors. “They were just colouring their houses and were not aware that cement paint was not a durable product. That is now changing very fast.”
People are normally not aware that while painting a house, the amount a painter charges is almost equal to or even more than the cost of the paint. So, using the right and durable paint is very important. If you paint the exterior with an ordinary paint, you will have to repaint it after two or three years, but if you use a durable paint like Apex, it will last for at least five years if you follow the standards and guidelines properly. This yields a lot of economic gain to the customer as saving on the painter cost. We focused on training the sellers about it and through them to the end consumers,” informs Roy.
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To give the customers the idea about how a quality product works, Asian Paints adopted Dharahara – the tallest structure in the country – and painted it with Apex. The image of the painted Dharahara is advertised on big front-lit and back-lit photos in every ColorWorld outlet. Painted about a year ago, Dharahara appears as if it were freshly painted which gives confidence to the customers about the product.
Roy says that the company is spotting more cultural heritage of Nepal and contributing to their protection by applying Asian paints. So far, it has painted Rani Pokhari, Ratna Park, Balaju Baisdhara and Shahid Smarak park in Hetauda, all free of charge. Also some temples and community schools are painted by Asian Paints, for free.
The company also worked very closely with the traffic police providing them barricade boards and signals too.
Explaining the marketing strategy further, Himanshu Bhatia, Area Sales Manager of Asian Paints Nepal, says that the company tried to treat each segment of the paint market – namely the consumer, the painter, the contractor and the dealer – in different ways. For consumers, the company planned a better visibility by advertisements, brand promotion activities and renovating the dealer shops. In renovating some shops, the company shared some of the expenses. But many shops were renovated by the dealers themselves with ideas from the company when they saw high returns from such investments. The learning was that when you offer something good to customers, they are bound to come to you again.
For the painters, the company organised training workshops. Whenever the company launched a new product, it made sure that the painters knew about it. “Though it is impossible to accommodate all the painters – estimated at least at 25,000 – select ones were accommodated in the training as per the dealers’ interest.”
According to Bhatia, trying to address the segments individually, the company also introduced some products that offered value-for-money to the customers. While the advertisements and such product range attracted more customers to ColourWorld outlets, the dealers experienced increased turnover and thus higher profits by volume. Thus they felt that it was better for them to deal with Asian Paints, and so the company stood out in the market in comparison to its competitors, thus increasing its market share.
The customers are segmented also along the lines of high-end, lower-end and the middle market. Some places need regular painting – say, every year. And the company has different products to address each of these needs.
“But we have concentrated on premium quality brands in our marketing exercise,” he adds.
Recently, Asian Paints introduced five new or revamped products, four of which were at the premium end. These products include premium and luxury emulsions, enamels and exterior primers. The company feels that as the market evolves and matures, consumers and opinion leaders like architects and interior decorators move up the price ladder to more premium products. Asian Paints’ objective is to have a relevant product available at every price point for customers. The company also has plans for further product launches later this year.
The access to international experience pool through the parent company’s 28 factories and six research centres located across 22 countries have helped Asian Paints Nepal to come up with new products and marketing innovations. Also, Asian Paints has developed a global vision targeting to be one of the top five decorative paint companies in the world as well as the leading coatings player in the emerging markets. “This vision is not going to be realised unless we are sincere to the customers – both of the dealers and the end users - and give them good returns on their investment,” says Roy explaining the philosophy behind the ColorWorld concept and the changing of the shop ambience.
For distribution, the company has been following the practice of directly supplying to the retailers, who are called the dealers, from the four depots of the company maintained at Hetauda, Biratnagar, Kathmandu and Pokhara.
In marketing communication, the company is not using TV advertising much as Roy feels that advertising about paints over TV channels is not cost effective. According to Bhatia, though the buyer of the paints is the household leader, children and ladies of the house are influencing the decision these days. The company is using radio and print advertisements very extensively in Nepal. “However, the most effective advertisement is through the shops,” he adds.
One interesting revelation from Roy and Bhatia is that though the growth in urban housing condominiums has helped the paints business, it is not significant. The reason is that the housing companies want very liberal credit terms while Asian Paints is very conservative in granting credits. Moreover, the strategies of the housing companies determine what sort of paints they use for the buildings. “Though some housing companies and all the five-star hotels are using Asian Paints, the main driver for the growth in Asian Paints sale recently is the household sector,” says Roy.
The growth would have been still faster but the difficulty in moving the goods and the sales force to the upcountry areas is causing serious restraints, he adds.
For the last two years, the company scrapped its policy of granting credits. Now it gives credit very selectively and the cash sales policy is successful, according to Roy. “However, the old outstanding dues are still an issue,” he says. The company had to take legal recourse to recover some of the dues, while in some other cases the dealers vanished by pulling down the shutters.
The company offers the same discount to all the dealers though each dealer has different sales targets. The discount policy is announced every month. “This has helped us to avoid cross-selling, unhealthy competition among the dealers and infiltrating into each other’s territories,” says Roy.
Kathmandu is the largest market – more than 50 percent of the value sales – also in paints as in other goods. This is the main market for premium products, followed by Pokhara. But recently premium product sales are increasing in Biratnagar, Butwal and Bhairahawa also, according to Roy.
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