Marketing strategy: Key to success

Anup Menon

The decorative paints segment displays some of the classic attributes of FMCG products.

Since the user-base has no geographical boundaries, a company's ability to penetrate new markets and improve product awareness would be the key to maintaining market share. The future prospects, thus, depend on the marketing and distribution strategy plays a crucial role in future prospects.

Distribution is where Asian Paints is strongly placed. Its dealer network of 14,500 is the largest. It is closely followed by Goodlass Nerolac with 11,000 dealers. Berger Paints and ICI (India) are way behind in terms of market reach. Another major marketing strategy is offering value-added services to consumers. For instance, colour vending machines have been used with great success. Companies that have the ability to provide more choice to the consumers, without significantly impacting the expense budget, are likely to attract more customers.

The product reach also depends on the level and depth of the companies' promotional activity. For the paints industry, however, what matters more is the brand rather than the product. Therefore, the level of ad-spend by the companies should give an idea of the brand-building effort. For instance, Asian Paints registered the highest increase in ad spending (31 per cent growth) in the year ended March 2000 compared to March 1999. Berger Paints recorded a 22 per cent growth. Goodlass growth declined by around 2 per cent, while that of ICI India slipped 30 per cent. But whether the ad-spend has helped the company in 2000 is a moot point.

The sales generated for every rupee of expenditure should give us an indication of the effectiveness of the ad-spend. For every Rs 1 crore spent on advertising, Goodlass Nerolac managed to generate sales volumes of Rs 54 crore, Rs 8 crore more that it managed in 1999. Surprisingly, both Asian Paints and Berger Paints recorded a reduction in sales generated as a ratio of spending on advertisement. Asian Paints managed to generate Rs 38 crore in 2000 compared to Rs 42 crore in 1999. Similarly, Berger Paints generated Rs 48.50 crore in 2000 against Rs 50 crore in 1999.