B2B Group A4 Project Report

GREEN-INTERIORS

Name Email ID Aashi Kashyap [email protected]

Abhishek Kumar [email protected]

Ansh Gupta [email protected]

Pushpanjali Rawat [email protected]

Ravi Kumar [email protected]

Samir Kumar [email protected]

Vishnu Chitneni [email protected]

Vivek Kumar [email protected]

Eco Friendly Solutions from Shalimar Paints

Under the Supervision of Prof. Saji K B Nair

B2B Marketing- Term 5- 2nd Year

Indian Institute of Management Lucknow

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Abstract

One of the prime reasons for the choice of product and category for this project is India‟s

growing concern for sustainability and good health. This is most likely to manifest first within

people‟s homes and then elsewhere. Hence our product provides an answer which is practical,

reliable and still makes a lot of sense without asking a lot from customers.

Paints have been notorious for their effects which are increasingly coming into public attention

not to mention the increasing hue and cry about the impact of harmful substances on not just

human health but also environment. The cause being the traditional solvents that are used in

paints i.e. VOCs that evaporate and contribute to the depletion of the ozone, result in poor indoor

air quality and have been proven to be harmful to eyes and the respiratory system.

Eco-friendly paints are formulated without the use of these solvents; as a result they are Zero

VOC and low odour premium paints. Use of such paints ensures a healthy and green

environment too.

The company that we have chosen is an underdog in the giant Indian paint industry- Shalimar

Paints. The company has a rich legacy in this segment and has strong pockets in certain markets.

This New Product: Green-Interiors in its portfolio would serve as a critical weapon to ramp up its

image and also gain market share significantly without directly competing with the bigwigs of

the paint industry in the form of Asian Paints, Nerolac, and ICI Paints. This is because of its

dedicated marketing efforts in the B2B sphere (other players are majorly focused in B2C)

wherein it would cater to the needs of niche clientele who are willing to pay for a healthy and a

sustainable product.

Although not currently the case, it is highly likely that going ahead the market is likely to be

driven by regulatory changes and demands for products with less environmental impact and

improved performance. The relative importance of these factors shall vary on the basis of region

and customer, but we are preempting the market to be readily available amongst the educated

classes in the metropolitan and cosmopolitan cities.

A nascent market now, it is bound to also prove beneficial in the long run strategic focus of a

paints company like Shalimar Paints. „Go Green India!‟ is highly likely to be the next slogan of

every goods manufacturer. Hence, it shall portray the company in excellent light as concerned

about environmental impact of its products and as innovating to find solutions to the same

(Engage its stakeholders like employees, customers, suppliers, painters, dealers and the

community to adopt and promote usage of eco-friendly paints, tree plantation, and water and

energy conservation etc).

Apart from paints, for the first time we are proposing the provision of complementary products

like furnishings and fabrics by a paints company. Not to mention, these would be

environmentally sustainable and state of the art in terms of design and appeal yet non-polluting.

Being a responsible consumer when it comes to paint can be hard. Unlike organic greens, there

really isn‟t an “organic” paint. There is no certification in India for this category and regulatory

agencies don‟t require paint companies to divulge all of their ingredients. So the real challenge

would be to lead a consumer, in this case a B2B consumer to make careful choices when they

don‟t know what‟s in the can?

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Table of Contents

Abstract ......................................................................................................................................................... 2

Introduction ................................................................................................................................................... 4

Product ...................................................................................................................................................... 4

Company ................................................................................................................................................... 4

Our Offering.............................................................................................................................................. 5

Eco friendly paints ................................................................................................................................ 5

Eco friendly Furnishings and Fabrics ................................................................................................... 6

Unit of Service ...................................................................................................................................... 6

Internal Environment Analysis ..................................................................................................................... 7

External Environment Analysis .................................................................................................................... 8

Competitor‟s Analysis ................................................................................................................................ 10

Porter‟s 5-Forces Framework.................................................................................................................. 10

Technology Transfer/ Acquisitions in Eco-Friendly paints ........................................................................ 14

Market Segmentation .................................................................................................................................. 16

Need Based Segmentation ...................................................................................................................... 17

Target Marketing ........................................................................................................................................ 17

Differentiation Strategy .............................................................................................................................. 18

Positioning of the Product ........................................................................................................................... 19

Brand Name and IMC ................................................................................................................................. 20

Inbound Marketing .................................................................................................................................. 21

Outbound Marketing ............................................................................................................................... 21

IPR Issues ................................................................................................................................................... 22

Pricing Policy .............................................................................................................................................. 23

Appendix ..................................................................................................................................................... 25

Entry of Global Players, Recent Joint Ventures ..................................................................................... 25

Estimates of Sales Potential .................................................................................................................... 25

Calculations for Unit Cost ...................................................................................................................... 26

Profit and Loss Statement ....................................................................................................................... 27

Bibliography ................................................................................................................................................ 29

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Introduction

Product

Our Product is essentially a concept built around Eco-friendly interiors, which we should like to

term as “Green Interiors”. As of now, this concept is not available as an offering from any

player in the Indian market place. The main idea behind the concept is to strive for sustainability

at a reasonable cost, which has become the main concern of several builders and owners alike.

The attributes which we should like to include as a part of our concept are:

Eco-friendly Paints

Eco-friendly Furnishings

Eco-friendly Fabrics

Shalimar Paints being an exclusive paint company can generate significant business opportunity

by including this product offering as it complements its current offering and also the customers it

serves. The target customers shall be Builders/Agents who are into constructions.

Company

Shalimar Paints was incorporated in India in 1902 as Shalimar Paint Color & Varnish Co. Ltd.

It became a public limited company in 1961 and adopted the present name Shalimar Paints

Limited in 1963. Shalimar Paints was the first large‐scale manufacturing unit in India and also in

the whole South‐East Asia region.

Shalimar Paints offers comprehensive products range covering all kinds of paints applicable in

home and office decoration and industrial settings. The architectural coatings in home and office

on interior and exterior walls are specially designed and formulated using the expertise of the

research and development wing at Shalimar Paints. Shalimar Paints have their corporate office in

Mumbai and three manufacturing units at Howrah, Nasik and Sikandrabad along with 45

branches and depots. The branches and depots of Shalimar Paints spread all across India cater to

the distribution of Shalimar Paints products to over 6000 dealers and distributors.

The promotional strategy of Shalimar Paints includes media commercial and ad airing on every

TV channel, newspaper, radio channel and other media forms. Besides this, many huge corporate

houses have also had long‐term association with Shalimar Paints. These include Jindal Stainless

and Jhunjhnuwala Group.

Some of the most recommendable achievements by the Shalimar Paints R & D units are being

the first Indian company to develop a radiation resistant paint for nuclear power plants coating

and another would be aviation coatings epoxy/ vinyl system for ester lubricant resistant aircraft

finish.

The whole range of Shalimar Paints products include:

Synthetic Enamel Paints

Superlac Hi ‐ Gloss Synthetic Enamel

Superlac Satin Finish Soft Sheen Synthetic Enamel

Superlac Luster Finish

Diamond Synthetic Enamel

Goldmin Synthetic Enamel

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Our Offering

Green Interiors shall be a one-stop package for all things “green” for your home, from rugs and

wall art to linens, furniture and paint. The goal is to not only reduce carbon footprints by

choosing the material but also to demonstrate that style and quality can also be sustainable.

The central component of our offering shall be Eco friendly paints besides furnishings and

fabrics which are made of materials having the least environmental impact.

Eco friendly paints

GREEN Painting is a painting specialty that uses eco‐friendly paints that have very little negative

impact on our environment. Green Painting refers not to the color, but to the paint that contains

little or no harmful chemicals that are found in all conventional paints, stains, and wood finishing

coats like enamels and varnishes. We propose to learn, understand, and implement new products

and techniques that will be safer for the environment and the inhabitants.

Problems with traditional paint:

Paints and finishes release low level toxic emissions into the air for years after application. The

source of these toxins is a variety of solvents or VOC‟s which, until recently, were essential to

the performance of the paint. Some of these VOC‟s are benzene, toluene, naphthalene, and

formaldehyde which serve as "spreadability" enhancers, biocides, and fungicides. During and

after painting, these VOC‟s outgas and can cause adverse health effects such as headache,

nausea, dizziness and eye, throat, and lung irritation. Exposure to airborne formaldehyde, for

example can cause eyes to water and burning sensations in the eyes, nose, and throat. It can

cause chest tightness and wheezing. The EPA has classified formaldehyde as a probable human

carcinogen.

The benefits of using more eco‐friendly paints:

There are many benefits to using eco‐friendly paints and stains such as: coating flexibility, better

gloss retention, better face resistance, reduced health risks, little to no VOC‟s, less pollution, low

odor, easier clean‐up, safer environment, reduced waste, and improved durability.

VOCs (Volatile Organic Compounds) are harmful gases that are emitted by paint as it dries.

When you apply wet paint to a wall or any other surface, the paint usually dries within a few

hours. As the paint dries like glue to the wall it releases gases from its liquid form, and continues

to for years thereafter. In unventilated areas, those gases over time can be harmful to human

lungs. Most high quality level paints now dry with very low gases that enter the air. So, with

"green" paint, you can be assured that the air you breathe before and after applying paint is safe.

Paints with low or no VOCs also allow families to quickly enjoy their freshly painted homes

without having to wait for strong odors to fade away.

Eco‐friendly paints are not expensive:

Due to ever increasing demand within the paint industry for healthier alternatives, the price

difference which was once significant has now substantially dropped and is usually a match for

the traditional paints.

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Quality of eco‐friendly paints:

In March, Consumer Reports released an assessment of 57 interior paints currently on the

market, (including low‐V.O.C.-ones) that evaluated their "hiding performance, surface

smoothness, and resistance to staining and scrubbing, their gloss change, sticking, mildew and

fading.

Eco friendly Furnishings and Fabrics

The offering shall encompass a customized style board complete with color palettes and paint

suggestions, furniture and accessories, layout ideas and more. Interior decoration is the art of

decorating a room so that it is attractive, easy to use, and functions well with the existing

architecture. The goal of interior decoration is to provide a certain "feel" for the room; it

encompasses applying wallpaper, painting walls and other surfaces, choosing furniture and

fittings, such as light fixtures, and providing other decorations for the area such as paintings and

sculptures. Interior decorating is done professionally by interior decorators. It is considered a

design field. (There is a distinct difference between interior decorating and interior design.

Interior decorating is generally focused on finishes, such as wallpaper, paint, window coverings,

and furnishings. Interior design involves manipulating the architectural integrity of the interior

space as well as the creation of a lifestyle experience through the study of environmental

psychology.)

Unit of Service

The offering shall be defined on the basis of volume of space that needs to be furnished with

“Green Interiors”. We would like to base the rates of the offering for every 150 sq-ft of space

(volume) furnished. There shall also be multiple options as a part of the offering which the

customer can choose from and the rates shall vary accordingly, so as to make customization a

priority of this service.

One single unit of service shall include “all things green” for the interior of the household which

shall include eco friendly paints, furnishings and fabrics.

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Internal Environment Analysis

Internal environment of Shalimar Paints Limited can be analyzed based on following strengths

and weakness:

Strengths

1. Long and satisfied track record of good performance

2. Diversified product portfolio that caters to demands of both decorative and industrial

paint segments.

3. Strong network of dealers. Geographically, SPL has relatively a stronger presence

(around 27-30% of gross sales individually in FY08) in both the northern and the eastern

regions, as against the western and southern regions each comprising 20- 21% of gross

sales. SPL has four regional offices and a network of around 55 depots and 6000 dealers

all over the country. Besides, the company has sales representatives & sales officers and

marketing head for both the paint segments.

4. International Associations: SPL had association/tie-up with international paint

companies. It has tie-up with Creanova, the world leader in manufacturing colorants, for

tinting machines enabling the company to supply color shades as per customer

specification, leading to reduction in inventory carrying cost. This provides a good

technology backup.

5. Satisfactory clientele in Industrial Paints segment

6. Improving profitability and increasing demand for paints from the real estate and

industrial sectors.

Weakness

1. Raw material prices are vulnerable to price increase of crude

2. There have been few instances of dishonor of cheques which has led to decline in

credibility

3. Company has a high overall gearing

4. High Working capital requirements

5. Company‟s ability to pass on raw material price increase to customers is limited and can

affect

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External Environment Analysis

PEST Analysis

Political

Government has announced several relief measures to support the paint industry from time to

time, which has been representing that paint exports have been affected by the global recession.

The Technology Up gradation Fund Scheme (TUFS) was launched to facilitate the

modernization and up gradation of the paint industry both in the organised and unorganized

sector.

To provide the paint industry with world-class facilities for setting up their paints units,

meeting international environmental and social standards, a Public-Private Partnership (PPP)

based Scheme known as the “Scheme for Integrated paint (SIP)” has been introduced in August

2005. To facilitate import of state of the art machinery to make our products internationally

competitive in post quota regime, in 2005-06 Budget, the customs duty paint machinery has been

brought down to 10% except for 23 machinery appearing in List 49, which attracts Basic

Customs Duty (BCD) of 15%. The concessional duty of 5% continues to be at 5% on most of the

machinery items.

Economic

The Indian economy has been impacted by the global slowdown. The economy is expected to

have grown by about 6% in 2008-09. The slowdown has affected several sectors directly related

to the paints industry like real estate and infrastructure. Further the first half of the year also

witnessed high inflation and spiraling raw material prices. In the second half there was severe

contraction of demand. Further the rupee sharply depreciated against major currencies which had

an adverse impact on cost of imports and also on borrowing costs for foreign currency loans. The

growth in the Paints industry is directly linked to the overall economic growth of the country.

With the economy slowly recovering from recessionary trends, growth will be a challenge both

in the decorative and industrial segments. It is expected that the economic growth will pick up in

the second half of the year. In case that happens there could be increased demand for paints.

There are also concerns with regard to infrastructure bottlenecks, growth in sectors like real

estate and auto and overall business confidence which could have an effect on growth in the

Paint Industry.

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Social

Paint is gradually moving beyond a means of cleaning / purifying home and is acquiring several

new dimensions. From a sense of cleanliness, paints are seen as enhancing aesthetics and also

transforming homes. From home rejuvenation, paints are moving into the arena of emotional

rejuvenation. Now the consumer chooses to paint the whole house or part of the house such as

child‟s room with motifs as a birthday gift, drawing room for celebrations, kitchen, bedroom to

welcome the new bride and so on. Changing lifestyles and attitudes of consumer are favorable to

paint industry.

Technological

Technology has been developing at a fast pace in paint industry. With changing consumer

demands, paint industry has come up with many new products in recent years .Environment-

friendly zero-VOC formulations are still ahead of other products. Energy-saving solar-reflective

innovations are also out in the market. Long-lasting and sustainable high-solids are rolling out

manufacturers' labs. Self-cleaning paints sound too futuristic, but are actually being developed in

research labs and may be used by industrial coatings contractors soon. Nippon Paint Co Ltd has

developed a facade coating that serves as thermal insulation as well. Holographic ceramic pearls

in a fluor resin reflect 80% of the infrared radiation of the sun. The coating also serves as

protection against soiling.

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Competitor’s Analysis

Porter’s 5-Forces Framework

THREAT OF NEW ENTRANTS – HIGH

The threat of new entrant is perceived as high. The current environmental concern throughout the

world will certainly draw attention of the other manufacturer to this unutilized potential of the

market and in due course of time the competition will get severe. The entry barrier as such are

very low and it is only the technology that serve as a potential entry barrier. However with

advancing technology this barrier will decrease and will allow other player to enter the market

space. The only potent and significant entry barrier than that will exist is the market reputation of

the proposed product which it will enjoy due to high customer service level and promise of the

product deliverables. Even if an international player wishes to enter into this segment, it will take

him inordinately long time to establish channels. The brands of the existing players could also

make it difficult for a potential new entrant, especially if the Pull factor further increases in the

industry.

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The industrial segment, which gives much more importance to the technology used, and doesn‟t

require such huge networks, is more prone to new entrants. But the flip side of this segment is

the technology. It raises the entry barriers to forbid entry into this segment. Also getting a

foothold in the market is very difficult, as the switching cost is high for the customers.

BARGAINING POWER OF BUYER – LOW

Since the product offered in the market is of quite different nature and is only of its kind in the

market and the competition which it faces from the market is very low, the bargaining power of

the buyer will be low. This is based on following facts

The initial purchaser of the product will be innovators and early adopters who believe in

environmental welfare and also not much price conscious, which is a smaller chunk of

customer out of total market.

The product with its offering is very unique and it provides a complete solution to the

interior decoration of the niche customers, as a result the value perceived by the customer

is very much.

In industrial segment the buyers do have some buying power. There are fewer buyers

with huge demands. Loss of one customer would hit the company in quite noticeable

way. This can be overcome by raising switching costs. The costs can be increased by

giving customers specialized services like after sale services etc.

End-users are demanding higher quality paint for the same or a lower cost. Paint manufacturers

are continuously being forced to reduce prices, and those who fail to do so are losing out to the

closely fought competition. So in future when the competition will increase in the segment cost

cutting measure has to be involved to attract more customers.

THREAT OF SUBSTITUTES – LOW

The threat of the substitutes is much lower to the proposed product. Since the product is carving

a new niche for itself it is representing a new market. The customer will be basically from

metropolitan cities and also the product is priced at a premium. As far as paint is concerned it

may receive some competition from substitutes - some high end decorative paints but when the

whole gamut of services is considered with the offer this become highly differentiated which is

one of its kind in the whole market. So we believe that the threat of substitutes is very low atleast

initially for few years.

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BARGAINING POWER OF SUPPLIER - LOW

The input material required in the manufacture of the eco friendly paint are not much chemical

based. Most of the ingredients are natural and non toxic, which help in reducing the VOC of the

final paint which basically makes the paint safer than the current existing paints in the market

which are chemical based. The natural ingredient such as vinegar (in modified form) which also

acts as binder in these paints is available abundantly. However there may be few ingredients

which are costly and may be imported from foreign markets. We believe the bargaining power of

the supplier will be initially low which will grow as the competition increases. However the

technology acquiring or the joint venture will be costly, in this sense the bargaining power of the

technology holder will be high as technology is the main component and the mo valuable in the

product.

Governmental regulations against paints containing volatile organic compounds (VOC) will be a

major factor in throwing out certain kinds of paints from the market. This will put more pressure

on the supplier to supply the common ingredient of paint at subsidized price.

RIVARLY AMONG ESTABLISHED FIRMS – HIGH

Competition is very strong in the Indian paint market. A few top companies control major stakes

in different segments of the market: decorative coatings are dominated by the likes of Asian

Paints, Goodlass Nerolac and Berger. Asian Paints alone claims to have over 40% of the

architectural coatings market. Goodlass Nerolac is very strong in the industrial segment

especially for automotive coatings. With its joint venture with Kansai Paints, it controls over

50% of the OEM coatings market. Not only is the competition high, it is also constantly

increasing with companies fighting for a bigger share of the pie. Major companies, like Asian

Paints, are investing heavily into activities like brand-building, distribution and marketing

strategies.

However when we draw this competition to the eco friendly paints we couldn‟t see any major

competitor in this field. Recently a month ago Nerolac came with a competitive product for our

proposed product which initiate the chapter of competition in our particular product portfolio.

But the offering which we are delivering is although same but different on quite a lot of other

aspects. We are offering a complete set of solution for interior decoration apart from providing

just paints. Hence the infant competition from a well established market player not only provides

competition but also establishes the significance of this particular niche segment in the market.

In the coming times the competition is only expected to get intense; however there will be clear

cut advantage of being a first mover in the category. As the market becomes more sophisticated

and purchasing power rises, customers are more inclined towards superior quality, branded

products and greater choice in this category. As the market matures, players in the unorganized

sector are expected to get increasingly squeezed.

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Important Brands of Competitors

Brands in the market in decorative segment

Premium category (Emulsions)

ICI Duette, Dulux, Weather Shield and Dulux Velvet Touch.

APL Royale

Berger Paints Luxol Silk

Medium segments (Enamels)

ICI Dulux

APL Apcolite

Berger Rangoli, Vinyl and Luxol.

Popular segment (Distempers)

ICI Farco, Supercote and Maxilite.

APL Utsav, Tractor.

Berger Butterfly

GNP Goody

Refer to Appendix: Entry of Global Players, Recent Joint Ventures

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Technology Transfer/ Acquisitions in Eco-Friendly paints

The transfer of the technology is a process in which the transferor transfers the documents

(blueprint, formulae, plans, and other communications on technique or organisation), people,

process or products embodying the technology to the transferee.

One of the most important stages in the process of negotiation is getting initial contacts .These

contacts can be formed at following places in case our product.

Trade fairs

India Organic trade fair

Event profile

India Organic, Organic agriculture trade fair with active support, to be visited by large buyers,

representation from all stake holders in the country. India Organic is a trade show with a

difference. It is brought about by the collaboration between International Competence Centre for

Organic Agriculture (ICCOA), the Govt. of India through Agricultural Processed Food Products

Export Development Authority (APEDA) and the Govt. of Karnataka.

Visitor's profile

Consumers, Entrepreneurs, Framers looking out for organic input suppliers and certification

agencies, Traders and certification bodies looking for laboratories, Purchase executives of food

ingredient companies supermarkets, Importers of organic products from abroad, Exporters of

organic products, Buyers of raw materials from cosmetic, nutraceutical & pharmaceutical

industries.

Exhibitor's profile

Exhibitors include Farmers Groups, Organic input producers, Organic products producers,

Organic Corporates, Processors, Consumer Organizations, CentralGovt. Institutions, Research

Stations and Universities, StateGovt. Institutions, Commodity Boards, Input Manufacturers,

Certifying agencies, Traders and Exporters, Quality Analysis laboratories, Publication Houses,

Eco-tourism enterprises and entrepreneurs, Medicinal, aromatic & dye plant producers, Essential

oils producers.

India International Coatings Show

India International Coatings Show (IICS) is an exhibition dedicated to the Indian and

International Coatings & Paints Industry. It is an excellent marketing opportunity for the coating

manufacturers, raw material/packing material suppliers, machinery and equipment

manufacturers, testing instruments manufacturers, safety and environment control

advisors/equipment manufacturers, coatings user industries, software providers etc. The

exhibition aims to meet current needs by bringing both the national and the international players

together.

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Worldwide, the paint and coatings industry is an important part of everyday living. Paint industry

statistics confirm that no domestic or commercial arena remains unaffected, with applications

ranging from household and decorative paints, to coatings used in the automotive industry; from

the anti-contamination coatings in the canned foods sector, to the paints used to emblazon

corporate colors on airlines.

Over the years, with the growing emphasis on architectural and aesthetic design, the Paints and

Coatings Industry has become a major business opportunity. The growing importance of

impressive presentation and the need for quality further necessitates the need for large scale

exposure to Coatings Industry. Identifying this need, India International Coatings Show 2011

aims to attract a diverse cross-section of the Industry to further boost its prospects.

These can be ideal places to learn about new technological innovation across industry and

showcase our technology.

New Technologies in this area

Celanese Emulsions Polymers has introduced a new vinyl acetate/ethylene (VAE) emulsion

technology specially designed to facilitate the manufacture of high quality, eco-friendly paints

for North America. Called EcoVAE, this new line of products was created to meet both the

regulatory requirements for lower VOC limits and growing consumer demand for more

environmentally sound, low odor products. The first product in the new line, EcoVAE 401,

offers specific advances for interior paints in wet edge, touch-up performance, scrub resistance,

as well as the new brand's hallmark low odor and emissions. EcoVAE is synthesized to be free of

alkyl phenol ethoxylates (APE) and will assist coatings manufacturers, architects and the

construction industry in achieving 'green' certifications.

Easy formulation and technology transition

For coatings manufacturers looking to transition to low or no VOC products, EcoVAE makes it

easy because it is compatible with a broad range of other paint ingredients. Celanese technical

service personnel offer starting-point formulations based on EcoVAE401 and can assist paint

manufacturers in the transition from either vinyl acrylic or all-acrylic systems to low VOC VAE

technology. The technology of EcoVAE 401 makes it a good choice for a broad range of interior

flat and eggshell paints as well as some semi-gloss paints. The good scrub and stain resistance

make it ideal for premium interior flat paints while the excellent touch-up characteristics make it

ideal for contractor paints. EcoVAE 401 can stake a claim to being the technology of choice for

interior flat paints.

Manufacturers currently using vinyl acrylic technology should be particularly interested in

EcoVAE technology. With the scrub resistance, wet edge and touch-up performance advances of

this new emulsion, there is no question that EcoVAE offers an upgrade over vinyl acrylic as a

foundation for interior paints.

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Shalimar Paint Strategy

Shalimar paints can look at collaborating with or look at technology transfer opportunity from

Celanese Emulsion Polymers (http://www.celanese.com) to increase its presence in the eco

friendly paints market in India. The premise here being that although such a product has been

invented, to fine tune it to the Indian market where consumers are value conscious is a whole

together new challenge. This can be taken up efficiently with the collaboration of a firm which

has technological expertise in this domain.

Market Segmentation

1. Segmentation Based on Demographic (or “Firmographic”) Variables :

a. Industry – Builders of Residential Estates; Commercial Property Builders; Hospitals

and Health Centers

b. Company Size – Small, Medium, Large

2. Segmentation Based on Operating Variables :

a. User Status – Depending upon size of potential order

(Heavy/Medium/Light/Nonuser)

b. Regular/Non-Regular User – Frequency of potential purchases

3. Segmentation Based on Purchasing Approaches :

a. Purchase Criteria

b. Nature of existing relationships

4. Segmentation Based on Situational Factors

a. Size of order

b. Specific application

5. Segmentation Based on Personal Characteristics

a. Buyer-Seller Similarity

b. Loyalty

6. Segmentation Based on Relative Importance of Customer

a. Strategic : strategic to the future of the business, those who are important and

therefore key

b. Transactional : those who are smaller and can be considered more of a transactional

typology

These „demographic‟ segmentations are perfectly reasonable and may suffice. However, they do

not offer that sustainable competitive advantage that competitors cannot copy. A more

challenging segmentation is one based on behaviour or needs.

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Need Based Segmentation

Target Marketing

Key Offerings:

Eco-friendly Paints

Eco-friendly Furnishings

Eco-friendly Fabrics

Key Segments Identified:

Hospitals, Health Care Centers :

Conventional Paints and finishes release low level toxic emissions into the air for years

after application. The source of these toxins is a variety of solvents or VOC‟s which, until

recently, were essential to the performance of the paint. Some of these VOC‟s are

benzene, toluene, naphthalene, and formaldehyde which serve as "spreadability"

enhancers, biocides, and fungicides. During and after painting, these VOC‟s outgas and

can cause adverse health effects such as headache, nausea, dizziness and eye, throat, and

lung irritation. Exposure to airborne formaldehyde, for example can cause eyes to water

and burning sensations in the eyes, nose, and throat. It can cause chest tightness and

wheezing. The EPA has classified formaldehyde as a probable human carcinogen.

On the other hand, our Eco-Friendly offerings mitigate all the above health related

hazards. With the health care sector witnessing an unprecedented boom and increase in

general awareness towards healthier way of living, this sector is one of the most lucrative

segment for our products.

Demographics

•Industry

•Size of Company

Purchasing Approaches

•Purchase Criteria

•Nature of existing relationships

Behaviour

•Price Sensitive

•Delivery Sensitive

•Quality Sensitive

Needs

•Security

•Power

•Esteem

Hard to Do; Hard to

Copy by the Competition Easy to Do; Easy to Copy

by the competition

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Target Products: Eco-Friendly Paints and Furnishings

Residential Real Estate Builders :

This industry is gradually getting commoditized with builders finding hard to

differentiate their offerings. In such a case, Green-interiors provides clear differentiation

to the quality of residences and lifestyle as well. With ever discerning real estate buyer

being more and more environmentally conscious, the builder has very attractive ROI on

using our Eco-Friendly solution.

Target Products: Eco-Friendly Paints, Furnishings, Fabrics

Custom Design Houses :

Especially in metro cities, where super-rich indulge in spending exorbitant sums for

houses/villas/properties.

Target Products: Eco-Friendly Paints, Furnishings, Fabrics

Commercial Properties :

Many firms take pride in proclaiming themselves as eco-friendly. Green-interiors are the

product of choice for them.

Apart from B2B customers, there exists a very lucrative market for B2C customers as well.

Given that eco-friendly paints are priced only marginally above the conventional ones, it has

potential to gain substantive market share at the cost of conventional paints.

Differentiation Strategy

The differentiation strategy will be of immense importance for the newly developed product

„Green-interiors‟. This newly developed product will serve to a very niche category which is

growing at a very fast rate. Hence the category is going to witness huge demand in coming times

so a proper differentiation strategy is important to make to make it an augmented product.

The Indian markets are expected to move towards the international model of competition

and segmentation. In the decorative paints arena, there shall still be stiff competition but the

focus of competition shall move from variety to service, that has been explained in greater detail.

In the B2B segment, the Indian market is, as of now, not matured. This market shall evolve to

form well-defined niches. Each of these niches shall have very specific demands and specific

technology requirements, which shall ensure that only one or two players who have the

competence in the area shall dominate each niche. These niches exist in this segment because of

the switching cost of the buyers, increases with the period of association. This is because the

supplier would have acquired a significant knowledge about the customer and this is the reason

why market shall develop as an aggregation of monopolies.

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The basis for differentiation will be based on following strengths

Offering a complete solution for the home needs as far as home interior decoration is

concerned which will include color palettes and paint suggestions, furniture and

accessories, layout ideas.

As coatings businesses, are also broken down by customer demand for specific customers

customized services and training programs, including providing customers with a special

paint effects, and so a series of value-added services to increase market share and

customer satisfaction degree

The after sales service of the product will be extremely user friendly as being the new

product the customer need a more customized service which we also promise with the

products. For this reason, the company would step up its call center investment, in order

to maximize the satisfaction of customer's specialized requirements. This will create a

highly satisfied customer base which in turn will help in word of mouth publicity of the

product which indeed is most important in niche products.

The above mentioned POD will serve to create both the personnel differentiation as well as the

image differentiation.

Positioning of the Product

To gain advantage in competition in the market, adequate space for development to meet the

Indian localization of paint series, as well as the strong radiation of the Indian market, advanced

coating equipment, support, became the Indian paint a key factor in the development of

enterprises. Shalimar paints having a no. 3 position in the market could reap huge benefit by

adding the organics paint in their portfolio. However the correct positioning is extremely

important because of the novelty of idea in Indian context. India's industrial coatings market will

also have to meet with international standards, and hence foraying into eco paints have

considerable room for acceptability and development.

The main customers for our product are builders and real estate companies who are into

construction business; however they derive their demand from the ultimate customer, so there

will be significant effect of the final consumer choice and reservation about the interiors

decoration in their home. Hence the positioning has to be done by considering not only our

customers but also the ultimate consumers. The basis for positioning will be based on following

strength of our products.

The cost effective solution for the housing interior will be available with consultation and

excellent after sales service from the company, this will position the product in the eyes

of builders and real estate player as a complete solution to one of the important aspect of

their business.

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Maintaining the innovative character of company, the company has always come up with

an excellent product which is meant for people and who not only are interested in a

product which is excellent but also harmless and green, and hence they are decreasing

their overall contribution to safeguard their family health and environment.

The company has long term relationship with many corporate. Many of the corporate

want to decrease their ecological footprint over the time and the concept of Green

Interiors will always be welcoming to them.

The product will be positioned for the final consumer in such a way that the consumer using the

product will be individualistic and pioneering but sociable and have integrity. The kind of person

will be responsible for all the action he takes.

Brand Name and IMC

Our Offering

Green-Interiors shall be a one-stop package for all things “green” for your home, from rugs and

wall art to linens, furniture and paint. The goal is to not only reduce carbon footprints by

choosing the material but also to demonstrate that style and quality can also be sustainable.

The central component of our offering shall be Eco friendly paints besides furnishings and

fabrics which are made of materials having the least environmental impact.

GREEN-INTERIORs – the Green housing solutions

The Idea to keep GREEN-INTERIORs as the Brand name is that it is the fusion of two core

concepts in our offerings. The GREEN and INTERIORS: GREEN-INTERIORs will offer

complete environment friendly interior solutions to businesses [mainly builders] and also to retail

customers. Green-interiors shall be a one-stop package for all things “green” for homes, offices,

buildings, hotels etc., from rugs and wall art to linens, furniture and paint. The goal is to not

only reduce carbon footprints by choosing the material but also to demonstrate that style and

quality can also be sustainable.

Integrated marketing Communication (IMC) Program

TO reach out to our potential customers we will use a mix of both Inbound and Outbound

Marcom tools reason being- we have to educate our customers for our offerings, our service is

more to do with the lifestyle aspect so we plan to make GREEN-INTERIORs the most sought

after and reliable firm when customers are looking for an eco-friendly lifestyle through their

homes.

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Inbound Marketing (also called content marketing and pull marketing) will help us in

bringing potential customers to our business by going where our potential customers are

and customers hang out, where they gather etc. engaging in conversations with them and

drawing them to our website, blog or brick and mortar store, educate them about our

offerings. While interacting with the customers we will be providing content that is

interesting to people who want to learn about the subject we are addressing. We plan share

our knowledge and message in a variety of forms to readers and engaging them in

conversations. The inbound tools will be helpful in targeting customers mainly the big

builders, contractors and real-estate owners, hoteliers etc. who are engaged in active

information search.

Tools we plan to use:-

1. Participating in Trade Shows- some of the popular

o Paint & Varnish Materials Raw Materials & Equipment Exhibition

o Budget & Luxury Properties 2011, Chennai

o Chennai's Property Expo, Chennai

o Jaaydaad Expo Mumbai, Mumbai

o Asian Real Estate Expo, Delhi

o Punjab International Trade Expo 2011, Chandigarh,

o PAINTINDIA 2010, Delhi

2. Direct Marketing- through a dedicated sales force

3. Dedicated Online marketing efforts through Business directories, Website promotion

SEO etc.

Outbound Marketing (also called interruption marketing and push marketing) is the process

of pushing potential customers toward your business by interrupting potential customers

and customers with our message in places where they hang out. Outbound marketing is about

telling listeners about our product or service and pushing them toward our website, blog or

brick and mortar store. Outbound Marketing tactics used by businesses to reach potential

customers and current customers include cold-calling, commercials, post-cards, direct mail,

radio spots, just to name a few. The key to Outbound Marketing is reaching as many people

as possible to attract enough people to purchase our product or service.

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Tools we plan to use:-

Advertising in Trade magazines, lifestyle magazine, home décor magazines

1. Inside & Outside

2. Indian Design And Interiors

3. Society Interiors

Commercials

1. Travel and Lifestyle

2. Business news channels

IPR Issues

The paint industry operates on the basis of pricing and differentiation in the quality of products.

Our main lever is differentiation in the product and hence protecting it and seizing the maximum

market share through its sales makes it imperative that this technology is patented. Since there is

no such product in Indian market, once the technology is developed, we should like to file a

patent for the same. This shall also hold true if the technology were to be developed in joint

collaboration with a foreign firm which already has such a product in its portfolio.

There are myriad new variations in paints which have been patented to reap the maximum

benefits from it by firms. Examples include rust resistant paints, weather proof paints and the

like. The case of Maharani Paints, an extensive B2B player is well documented wherein it

developed and patented an innovative and eco-friendly, Clean Technology for

Recycling/Conversion of Paint sludge, a hazardous waste into user friendly primers, undercoats,

Floor Coatings, Structural Primers etc; as per customer's specification and is undertaking Paint

Sludge Recycling as a service as well as providing Technical Consulting and Know-how to

organizations keen to adopt this technology

Although this technology is available in outside markets, there is no player with this offering in

the Indian market. Hence, we are currently looking at filing for a patent within India, which is

going to be our market. It has often been seen that the time of filing of patents is very crucial to

acquiring the patent; therefore quickness in securing IPR is of essence here.

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Pricing Policy

Basically there are two pricing decisions:

A. Technology pricing

B. Industrial product pricing

Technology pricing

We also know that the technology can not have a fixed price. Technology pricing is

a) Specific

b) Deterministic ,and

c) Strategic in nature.

They are always fixed through negotiations. Technology pricing is a subset of technology

evaluation

Technology evaluation is

a) Continuous

b) Probabilistic and

c) Strategic in nature

For the purpose of our pricing policy we have calculated our costs for next 3 years on the basis

of current market dynamics:

Refer to Appendix: Calculations for Unit Cost

Industrial product pricing

There are six elements to pricing policy

1. Select the pricing objectives:

We have targeted Market skimming objective:

It means to utilize the opportunities in the market to reap the benefits of high sales,

increased profits and low unit costs. We try to study the buyer‟s needs and try to provide

the suitable goods, but charge them high prices. This objective can be realized as in the

markets the magnitude of competition is very low. We in this situation can make profits

over a short period. This pricing objective would be suitable because in the markets the

consumers feel that costly goods are of the superior quality and also environmental

friendly.

2. Determine the TMD/Sales potential

We have done some primary estimates of the sales potential.

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Refer to Appendix: Estimates of Sales Potential

3. Understand the cost structure

We have already covered it in cost structure above.

4. Analyze competitors‟ costs and prices

We are the monopoly in the market with uncertain demand. There are no competitors as

of now. We have come up with a totally new product

5. Select a pricing method

We will create custom pricing structures on a “by-customer” basis .Each customer there

will be a unique price point based upon past purchase history customer lifetime value and

any other synergy that can be exploited in return for a better price.

6. Fix up the price point

On an average the price point that we have fixed is Rs.14500

For a Proforma PnL statement Refer to Appendix: Profit and Loss statement

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Appendix

Entry of Global Players, Recent Joint Ventures

Company Collaborator Purpose

Asian Paints Nippon Paints

PPG Industries

Sigma Coatings

BASF

Pre treatment chemicals, Coil & Powder coating

Automotive paints

High performance coating

Can coating

GNP Kansai Paints

Nihon Tokushu

Auto & Industrial coating

Auto coating

Berger Herberts

Valspar Corp.

Teodur

Auto coating

Heavy duty coating

Powder coating

J&N Tikkurila

Herberts

Chugoku

Decoratives

Auto refinish

Marine

Rajdoot Becker Coil coating

Shalimar Salphi

W.R.Grace

Marine coating

Can Coating & metal packaging

ICI India ICI Auto refinish

Estimates of Sales Potential

Targets for first 3 years

First year Second year Third Year

Market size [in terms of number of

houses]

181080 240836.4 320312.412

Market size [in terms of units] 3621600 4816728 6406248.24

Target market [% of total market size] 30% 40% 50%

Target number of units 1086480 1926691.2 3203124.12

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Calculations for Unit Cost

Calculations for unit cost

First year Second year Third Year

Cost Element Unit

Cost[150 sq-

ft]#

Unit

Cost*Volume

Unit

Cost*Volum

e

Unit Cost*Volume

Technology Cost

Design Cost 1000 1086480000 1926691200 3203124120

Tech Dev Cost 3000 3259440000 5780073600 9609372360

New Product

Development

Cost

6000 6518880000 11560147200 19218744720

Marketing Cost

Distribution

Cost

1500 1629720000 2890036800 4804686180

Sales and

Admin cost

1500 1629720000 2890036800 4804686180

Promotion Cost 1500 1629720000 2890036800 4804686180

Total 14500 15753960000 27937022400 46445299740

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Profit and Loss Statement

(assuming 10% increase in sales due to new

product and 5% normal growth ), net of 15%

Projected

figures for

March 2011

Figures of

March 2010

Figures of March

2009

INCOME

Sales less Return 4532943259.65 3941689791.00

3,688,667,766.00

Less(Excise Duty) 328917083.25 286014855.00

379,837,833.00

Sales (Net of excise) 4204026176.40 3655674936.00

3,308,829,933.00

Other Income 36644500.45 31864783.00

28,684,236.00

Increase/(Decrease) in stocks 90573862.00 78759880.00

(102,122,050.00)

4331244538.85 3766299599.00

3,235,392,119.00

EXPENDITURE

Materials Consumed 2539599857.30 2208347702.00

1,970,547,496.00

Purchase of Bought in Items 131476170.75 114327105.00 97194786.00

Employees’ Remuneration and other

Benefits

226960088.85 197356599.00 160061751.00

Discounts and Rebates 530890130.80 461643592.00 432550830.00

Manufacturing, Administrative, Selling and

other Expenses

578690241.90 503208906.00 376190760.00

Interest 87395435.65 75996031.00 80588230.00

4095011925.25 3560879935.00 3117133853.00

Profit Before depreciation 236232613.60 205419664.00 118258266.00

Depreciation 38891315.25 33818535.00 33998613.00

Profit Before Tax and exceptional Items 197341298.35 171601129.00 84259653.00

Exceptional Items 23508699.05 20442347.00 20868265.00

Profit Before Tax 173832599.30 151158782.00 63391388.00

Provision For Tax

—Current Tax 53820000.00 46800000.00 24500000.00

—Fringe Tax 0.00 0.00 1850000.00

—Deferred Tax 5008815.80 4355492.00 1409108.00

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Profit after Tax 115003783.50 100003290.00 35632280.00

Balance Brought Forward 66524556.00 57847440.00 45502118.00

Amount For Appropriations 181528339.50 157850730.00 81134398.00

APPROPRIATIONS

Transferred to General Reserves 69000000.00 60000000.00 10000000.00

Proposed Dividends 32650972.50 28392150.00 11356860.00

Tax On Proposed Dividends 5549032.90 4825246.00 1930098.00

Balance carried forward to Balance Sheet 74328334.10 64633334.00 57847440.00

181528339.50 157850730.00 81134398.00

Earnings Per Share- Basic and diluted in

Rupees

30.38 26.42 9.41

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Bibliography 1. Concept Information obtained from website: GREENPAINT

http://www.greenpaint.ca/learn.html

2. Product Information from website: ALLBUSINESS

http://www.allbusiness.com/print/14512402-1-22eeq.html

3. Concept Information from website: ECOFRIENDLYPAINTS

http://www.ecofriendlypaints.ie/

4. Other background information on NewProduct Development

5. Competitor Analysis from website: MARKETINGPRACTICE

http://marketingpractice.blogspot.com/2007/03/asian-paints-every-color-tells-story.html

6. Ecofriendly Product Variety information from website: ECOINDIA

http://www.ecoindia.com/products/

7. Industry information retrieved from website: OPPAPERS

http://www.oppapers.com/essays/Paint-Industry-Overview/435677

8. Company information from website: SHALIMAR

http://www.shalimarpaints.com/

9. Differentiation and Positioning based on information from book:

Graham J. Holey, John A. Saunders, Nigel Piercy. (2010). Marketing Strategy and Competitive

Positioning”