An analysis of Sales and Distribution Management

issues in Mature Market

 Indian Automotive Lubricants Industry
Prior 1992:
- PSUs domination, 90% market share
- Few private players like as Castrol, Gulf, Tidewater etc.

Since 1992: (Liberalization and Policy Deregulation)*

- Reduction in import duties of lube base oil from 85% to 25%
- Free pricing permitted, Administered pricing eliminated.
- New MNCs ventured viz Shell, Mobil, Exxon, Caltex, et al.
- Led to change in Market Share, increased Competition against PSUs.
 Growth Opportunities
• Early Challenges:
- Low demand & profitability
- Auto technology, sales & crude prices

• Positive factors:
- Growing disposable income
- Changing Demographics
- Changing lifestyle
- Improvement in Road infrastructures
- Increased usage of automotive transportation
- Rural demand
- Support from Government
- One of the fastest growing markets in the world
- Migration to 4 wheelers

• Increasing demand:
- OEM tie-ups
- Pollution norms
- Advances in technology and awareness among
consumers
- Engine oil, Brake oil, Coolant oil, Gear oil.
Future Challenges
 Market Size & Behaviour
• 5th largest market in the world, worth
Rs.17000 crores in 2009.
• 6% annual growth.
(Rs.17000 Cr)
• 67% - Automotive lubricants segment Lubricant
• Fragmented market with 22 players & 30 Market
brands.
• 70% share of 4 big players: IOC, HPCL,
BPCL & Castrol.
• 50% share of PSUs.
• Leading PSU brand: Servo (IOC)
• Leading Private brand: Castrol
(67%)
• Industrial Marine & Energy
Unorganized sector. Automotive
segment segment
• Little scope for Brand Differentiation. segment

• Price wars

• Market Survival:
- Own refineries
- Solid R&D
- Wide distribution network
- Strong Brand recognition (70%) (30%)
- Innovative Business Plan CI Engines (Diesel) SI Engines (Petrol)

- Consumer promotions.
- Consumer relationship.
 Consumer Buying Behaviour
• 2 Basic Types of Customers:
- Quality Conscious
- Price Conscious

Sl Determining Influence Comments

no factors of buying of factor
behaviour
1 Oil Changing Habits Low Generally spend less on maintenance
2 Brand Awareness Low Consumers are not Brand conscious
3 Product Quality & Low Consumers are not quality/performance
Performance conscious
4 Price Awareness Medium They are less aware of price competitiveness
5 Price Sensitivity High Value for Money sells
6 Purchase Location & Medium Petrol pumps/Garages/Mechanic shops, not in
Availability super markets because do-it-yourself kind
7 Key Decision High Head of the family
Makers
8 Key Influencers High Drivers/Chauffeurs/Local mechanics & WOM
9 Level of Low Left to mechanics, not a do-it-yourself kind
Involvement
10 Promotions & Offers High Consumers attracted by offers & discounts
11 Brand Shift Low Consumers go by past experience and don’t try
out
 Branding Strategies
• Advertising

• Brand Endorsements from famous celebrities

- Castrol: Rahul Dravid & John Abraham
- BPCL MAK: M S Dhoni

• Sponsorships for International events and

Sports.
- International cricket, football and car races.

• Marketing Campaigns to build brand loyalty

and long-term relation.
- Castrol Power Passion Hunt
- Castrol Golden Spanner Mechanic

• Continuous Innovation.
- Castrol: Liquid Engineering

• Strategic partnership with top brands for

brand image enhancement.
- Volvo & Castrol
 Distribution and Retailing
• OEM Segment: Collaboration with OEMs to
strengthen Brand.

• Retail Segment: Petrol pumps, Retail outlets

& Retailers.

• MNCs developing User Outlets, Convenience

stores and Highway shops.

• PSUs have advantage of strong & wide

distribution network.

• Some MNCs have Joint Ventures with PSUs

for distribution.

• Strategic partnerships with OEMs and

OMCs.

• Sales person should strengthen the buyer-

seller relationship.

• Major Challenge is to acquire and retain

dynamic sales people.