Name Madhu Shalini K

Question 1
Write your answer for Part A here.

Period Rate of Growth

2000-2004 27.27%

2004-2010 90.47%

2010-2015 50%

Three factors responsible for the growth of 2-wheeler market in India are:

• The aspirations of India’s consumers, mainly middle class, to own a motorized

vehicle. • Increasing disposable incomes of consumers in recent years

• The availability of easy financing of vehicle loans from banks.

Question 2
 Three private players in the industry are:

1. Shell
2. Gulf

3. Valvoline

Three public sector players in industry are:

1. Indian Oil Corporation Limited

2. Bharat Petroleum Corporation Limited
3. Hindustan Petroleum Corporation Limited

Two direct distribution channels are:

1. Franchised workshops
2. Forecourts like Petrol pumps, Gasoline stations

Three distribution channels serviced through the distributor for the lubricant market are:

1. Agri stores
2. Non-franchised workshops
3. Institutional like large sellers such as co-operative stores, associations, etc.

Question 3
 During the vehicle’s warranty period (i.e., 18 to 24 months), consumers visited the
motorcycle dealerships, or franchised workshops (FW), for taking the warranty benefits
provided by the manufacturers as most of the consumers believed oil changes as a necessary
part of their bike maintenance.

However, once the warranty period was over, they would enter the after-warranty markets,
or after-market. Consumers have previously chosen to buy the oil of their preference and
take it to their trusted mechanics for servicing, but now they were more likely to take the
bike to the mechanics shop and trust the mechanic to use the right oil. Rai called this change
in approach as a move “from shop to workshop.”

Trust, convenience, and personal attention from the mechanic were the major factors driving
this behavioural change, since the mechanic were seen as a credible source of information
who recommends the right oil for their bikes.

The impact of technological advancement like a shift from 2-stroke to 4-stroke engine since
in 2-stroke vehicles the lubricating oil was mixed with gasoline, and it burned along with
the fuel. Whereas in a 4-stroke vehicle a separate lubrication was present which needed to
be changed only once every 2000 to 2500 Kms. Consumers would change the oil during
maintenance service, which would often occur at the workshop.

Earlier PSUs were the market leaders in the 2-stroke oil category, but the 4-stroke
category was a level playing field, a market where all players had equal opportunities.

Question 4
 Channel Partner Channel Share (%) 2010

Franchised workshops 30.95%

Spare part outlets 42.85%

Oil shops 11.9%

Non-Franchised workshops 14.28%

For Franchised workshops and Non-Franchised workshops, the channel share (2005) for
four stroke oil market is greater than the channel share for Castrol’s four-stroke oil sales
i.e., 39.47% against 29.8% for franchised workshops and 10.5% against 7.1% for Non-
franchised workshops.
Channel Partner Sales (in litre) per channel outlet, 2005 Franchised

workshops 6667

Spare part outlets 578.94

Oil shops 1103.44

Non-Franchised workshops 400

Channel Partner Sales (in litre) per channel outlet,

2005

Franchised workshops 5323.3

Spare part outlets 577.38

Oil shops 884.15

 Non-Franchised workshops 670.87

For Franchised Workshops and Oil shops, the sales per channel outlet (for four-stroke
oil market) is significantly greater than the sales per channel outlet (for Castrol).

Castrol is facing problems in the Franchised workshops as well as Oil shops, the
reasons being:

1. In Franchised workshops, the OEMs like Hero Honda were advocating the use
of packaged engine oils under their brand name, which they sold through their
own dealerships and the bazaar trade.
2. In Oil shops, there was a presence of wide variety of engines oil players who offer
more discounts to sell their products which in turn becomes beneficial for the Oil
shop owners as they enjoy higher margins. Hence the Oil shop owners try to sell
competitors brand over Castrol four-stroke engine oil.

Question 5
The three segments of non-franchised workshops are:

1. The stock-and-sell mechanics who stocked and sold lubricants, also known as
‘Ustaad’ mechanics
2. The mechanics who had worked at franchised workshops and were ready to set up
their own business
 3. The mechanics who were approached for small jobs like clutch wire changes and
brake adjustments

The characteristics on the basis of following parameters are:

• Segment Size

Segment 1: Small segment size which was approximately 10% of the

market Segment 2: A significant segment size of 40%

Segment 3: Comprised 50% of the mechanic base

• Share in the oil change process

Segment 1: Approximately 30% of the oil changes

Segment 2: 50% of the oil changes

Segment 3: Merely 20% of the oil changes

• Oil buying behaviour

Segment 1: Routinely serviced by a distributor (either Castrol or

competitor) Segment 2: Nearby spare parts shops, based on their business

relationships Segment 3: Consumer would buy their own bottle of MCO

• Financial condition

Segment 1: Commanded a premium price for their services so relatively good

financial condition
Segment 2: Short on finances and were looking for financial support
 Segment 3: Were approached for small jobs and struggled to build their clientele,
worst financial condition of the three segments

Module Parameter 1 Parameter 2 Parameter 3 Parameter 4 Parameter 5 1 Low Low

Low Low High 2 High High High High Low 3 High Low High Low Medium

Question 6

• These CASAs will report to the distributors

• These CASAs will serve the NFWs (Non- Franchised Workshops)