SIP on Marketing Mix Decision Making at WUERTH AUTO INDIA

pg. 1

A SUMMER INTERNSHIP PROJECT REPORT

SUBMITTETED TO PARTIAL FULFILLMENT OF THE

REQUIREMENT FOR MASTER OF BUSINESS

ADMINISTRATION OF BPUT ORISSA

ON

“MARKETIMG MIX DECISION AT WUERTH AUTO INDIA

LTD WITH SPECIAL FOCUS TO BREAK FLUID”

A summer project report submitted to

Academy of Management Studies

Under affiliated by B.P.U.T. University

SUBMITTED BY

ASHISH KUMAR DASH

(Researcher)

Regd no-0906272087

Academy of Management Studies-2009-11

Supervisor (Internal) Supervisor(External)

Prof. ANIL MISHRA Mr. MADAN SAHOO

Faculty, AMS HEAD MARKETING

WUERTH AUTO INDIA

PVT. BHUBANESWER

ACADEMY OF MANAGEMENT STUDIES

pg. 2

DECLARATION

I do hereby declare that the summer internship program with the report

entitled “ MARKETING MIX DECISION AT WUERTH AUTO INDIA LTD

WITH SPECIAL FOCUS TO BREAK FLUID” submitted by me to the Academy

of Management Studies, Pubasan, Prasanti Vihar,Kousalyaganga,

Bhubaneswar is of my own. This project report is a result of my original work

and not any part of the said report has been copied or duplicated nor has any

project report similar to this one ever been submitted to any of the universities

or any other organizations. This report has been prepared for the partial

fulfillment of the Master in Business Administration (MBA) program (2009-

2011), under BPUT.

Ashish Kumar Dash

Regd. No.-0906272087

MBA (4th

Trimester)

AMS, BBSR

pg. 3

ACKNOLEDGEMENT

I feel very happy to take the opportunity to extend my heartily thanks to

Mr.Madan sahoo, HEAD:Marketing, Wuerth Auto INDIA

Ltd.Bhubaneswar,Orissa allowing me to conduct my studies over the concern.

I am also thankful to all the executives of Personnel and other

departments of Wuerth Auto India LTD for their co-operation, advise and

suggestion and those who contribute to complete this research project paper in

time.

I extend my heartily thanks to Prof.Anil Mishra, sinior faculty,Academy

of Management Studies, timely guidance to prepare this research project paper.

I am also heartily thanks to Prof. rajesh Sathpathy, senior faculty,

Academy of management studies, for his guidance to prepare this project paper.

Ashish Kumar sDash

pg. 4

CONTENTS

CHAPTER – 1 Introduction

INDIAN AUTO ANCILLARY INDUSTRY

COMPANY PROFILE

pg. 5

INTRODUCTION:

INDIAN AUTO ANCILLARY INDUSTRY:

OVERVIEW Auto ancillary companies experienced amongst the largest number of

rating downgrades within the universe of ICRA-rated entities during the 21-

month period ended December 2009, that is the full fiscal year 2008-09 and the

first nine months of 2009-10. At the beginning of 2008-09, companies

comprising the Indian auto ancillary industry were in the investment phase, and

thus had a stretched capital structure already. The relatively sudden contraction

in automotive demand that followed in the wake of the global financial crisis,

besides fluctuations in foreign exchange (forex) rates, increase in commodity

prices, and the drying up of liquidity in the market, aggravated the situation

further, causing a sharp deterioration in the credit profiles of many auto

ancillary companies and leading to several rating downgrades. However, over

the last few quarters, the situation has stabilised with original equipment

manufacturers (OEMs) experiencing improvement in demand conditions. With

that, ICRA expects the Indian auto ancillary industry to be able to report a

steady improvement in the credit profiles of its participants over the medium

term.

Following seven years of healthy growth in automotive demand across

segments, there was a sharp contraction in domestic OEM volumes in 2008-09.

While almost all segments of the industry faced demand pressures in the third

quarter (Q3) of 2008-09, the sharpest decline was witnessed in the commercial

vehicle (CV) segment, which then translated into significantly lower offtake and

losses for suppliers of CV components. Overall, the key challenges facing the

auto ancillary industry during the quarter were under absorption of capacities,

forex fluctuations, high interest costs, and increasingly stretched payment terms

(imposed by OEMs). Further, the capital structure and coverage indicators of

the industry deteriorated as a result of lower accruals and significantly higher

pg. 6

working capital requirements, driven by the build-up of receivables. On the

whole, weak profitability and cash accruals impaired the credit profiles of most

industry participants, thereby exerting pressure on their credit ratings.

Among the various segments of the auto ancillary industry, suppliers to

the medium and heavy commercial vehicles (M&HCV) segment were the worst

affected by the down turn. The demand for passenger vehicles, on the other

hand, was affected only for a brief period and that too by the reduced

availability of customer finances. The passenger vehicle segment delivered

healthy growth during most months of 2008-09, supported both by domestic

demand and a strong pickup in small-car exports. Additionally, vehicle demand

from rural areas remained steady, with cash purchases offsetting the impact of

the credit scarcity. However, while demand in the passenger vehicle and two-

wheeler segments held steady, suppliers to these segments were also affected by

tight liquidity conditions, forex fluctuations, and high commodity prices—

factors that led to a few downgrades in these segments as well. Apart from

OEM demand, replacement automotive volumes continued to grow at a

relatively steady rate in 2008-09, thereby sustaining components demand from

this segment.

Besides demand contractions, the auto ancillary industry was also

adversely affected by high commodity (steel, aluminium, crude, rubber among

others) prices in 2008-09, although the pressure eased to an extent towards the

last quarter. While reduced capacity utilisation affected overheads, most

companies responded with aggressive cost reduction initiatives, including

rationalisation of employee expenses and other costs.

The quarterly profitability of auto component suppliers hit the bottom in

Q3, 2008-09, before staging a recovery in the subsequent quarters. Driven by a

pick-up in volumes across segments, the industry‘s profitability has improved

sharply in the current financial year. With the trend continuing in the current

pg. 7

quarter, ancillaries catering to the domestic market are likely to see profitability

returning to 2007-08 levels however exporter profits will continue to be weak.

Auto Ancillary Industry—Trend in Operating Income, Operating Profit

Margin and Net Profit Margin:

pg. 8

Lower OEM offtake hits auto component industry’s profitability in 2008-

09:

With production volumes contracting sharply across automotive OEMs,

offtake of components dwindled in H2, 2008-09. Given the high fixed-cost

structure, low asset turnover had an adverse impact on the profitability of the

industry participants. As always, this difficult period also led to increased focus

on cost containment and reduction of operating expenses. Reacting to the

demand decline, many auto ancillary companies initiated cost control measures

in the areas of purchases, contract labour, and fixed overheads as early as Q2,

2008-09. Besides, there was rationalization of planned capital expenditure

(capex) as well. Also, some component manufacturers approached their credit

providers for amendments in repayment schedules citing short-term liquidity

pressures. However, despite these measures, the severe demand contraction

eroded the profitability of the components industry during the last two quarters

of 2008-09. The coverage indicators also weakened significantly for most

companies during this period.

M&HCV component suppliers bear the brunt of demand dry-up:

In the automotive industry, it was the highly cyclical M&HCV segment

that was the worst hit during H2, 2008-09. Following more than five years of

cyclical uptrend, which had led to substantial industry-wide capacity additions,

large channel inventories and somewhat aggressive financing penetration, the

M&HCV segment was already poised for a cyclical correction. Subsequently,

the situation was further aggravated by the economic downturn (which resulted

in tightening of credit norms in response to increasing financier delinquencies),

declining freight rates, and the onset of weak industrial demand, which then had

a severe impact on component suppliers with a significant dependence on the

M&HCV segment, like wheel rim suppliers (e.g. Wheels India Limited) and

axle suppliers (e.g. Automotive Axles Limited). Suppliers with high

pg. 9

concentration on a single OEM were further constrained by their weak

bargaining power, and saw the payment terms being stretched even as pricing

pressures increased significantly. The sharp slowdown in the auto component

industry brought into focus the importance of having a diversified revenue

model across OEMs, segments and products.

Trend in Quarterly Volumes in the Light Commercial Vehicle (LCV) and

M&HCV Segments

Rural demand shores up volumes in certain automotive segments:

The rural market proved to be a key source of sustained automotive

demand during the economic slowdown. The factors shoring up rural demand

during this period included the higher disposable surplus accruing from over

four years of good monsoon, rising minimum support prices (MSP) of crops,

and increase in land prices. Thus, cash purchases continued, driving the demand

for two-wheelers, passenger vehicles and tractors, even as credit became scarce

in the wake of the liquidity crisis. Component suppliers to these segments were

able to meet revenue targets even during the weakest quarters of the downturn.

pg. 10

Further, the passenger vehicle segment benefited from higher export

demand and a spate of successful model launches. For instance, the global

success of the i10 and i20 models of Hyundai Motors India Limited (HMIL) for

which the company used the Indian facility as an export hub) and the impressive

market response that the Ritz, A-Star and Swift Dzire models of Maruti Suzuki

Limited (MSL) elicited supported the volumes of their component suppliers.

Going forward however, while the rural markets showed no effect of the below-

average and delayed monsoons during the October 2009 festive season, the

outlook for rural demand outlook remains uncertain, given that the monsoon

impact comes in with a lag.

Replacement volumes continue to grow at a healthy pace:

For an auto ancillary company, a balanced mix between OEM and

&HCVs are more expensive. 2 A wreckage premium of Euro 2,500 is being

offered to car owners to replace cars that are more than nine years old. 3 Losses

on long-term forex loans used for procuring fixed assets can be capitalised.

However, losses on other loans are parked under the Foreign Currency

Monetary Item Translation Difference Account (FCMITDA), which is either

written off over the life of the asset or on or before March 31, 2011, whichever

is earlier.

For the Indian auto ancillary industry, most export segments reported

muted growth in 2008-09 despite the depreciation of the Indian rupee which

pushed up realisations. Contraction in automotive sales in North America and

Europe, which accounts for over 65% of India‘s auto component exports, had an

adverse impact on component offtake during 2008-09 and the first nine months

of 2009-10. Two segments that reported a particularly precipitous decline in

sales were exported components for CVs and off-highway vehicles. The

European CV market witnessed a fall for 18 consecutive months till November-

09 and posted a decline of 33.9% during January-November 2009 over the

pg. 11

corresponding period in the previous year. Component exporters like Bharat

Forge Limited, Rane Engine Valves Limited, Wheels India Limited and Rane

Madras Limited bore the brunt of this contraction. An added concern continues

to be the possibility of Chapter-11 filings by global OEMs and Tier-I suppliers,

which could lead to temporary disruptions in business and payments. The short-

term outlook for the auto ancillary export markets remains weak with accretions

to the order book being negative. While Government initiatives like scrappage

schemes2 in EU and ―Car Allowance Rebate Scheme‖ in the USA have

provided some impetus to growth, especially in the passenger car segment, there

are no clear signs of recovery on the global front yet aftermarket sales is a

significant positive. Typically, a strong aftermarket provides for greater sales

stability and stronger operating margins than an OEM. However, strong OEM

sales are often the basis for an established presence in the aftermarket, given

that OEM sales provide significant brand visibility. A balanced mix between

OEM and aftermarket sales helps maximise returns on investment by enabling a

component manufacturer to exploit the entire product cycle from product launch

to replacement. Despite the downturn in the automotive market, component

suppliers with a stronger presence in the aftermarket were better able to

withstand the pressures on top-line and profitability.

Domestic vehicle demand stages strong recovery in current fiscal:

Barring the M&HCV segment, the Indian automotive industry reported a

strong volume recovery in Q2, 2009-10. The M&HCV segment has also

witnessed sequential growth over the last two quarters (Q2 and Q3, 2009-10),

and is expected to register increasing volumes over the rest of the current fiscal.

The demand revival in the Indian automotive industry is being supported by a

positive economic outlook and the gradual return towards normalcy that is

being witnessed in the vehicle financing market. CV demand is also being

supported by the excise duty cuts and accelerated depreciation that are part of

pg. 12

the fiscal stimulus package initated by the government in Q4, 2008-09.

Additionally, the M&HCV industry also anticipates strong demand generated

by the emission norm1 change triggered pre- buying in Q4, 2009-10.

Managing forex volatility and fluctuations in commodity prices turns

critical:

Apart from the impact of a depreciating rupee on imports and exports, the

unprecedented movement in currency rates also resulted in large forex losses on

un-hedged foreign currency denominated loans used by the auto ancillary

industry. During the 22 months till October 2009, the Indian rupee showed

significant volatility against other international currencies, and at one point

depreciated by over 30% against the US dollar, around 22% against the euro,

and 48% against the yen. Companies with uncovered long and short-term debt

positions faced significant realised and unrealised losses. Most of the industry

participants availed themselves of the AS-11 provisions of the March 2009

Ministry of Corporate Affairs notification, thereby reducing the impact of the

long-term unrealised losses on profitability. However, there was a noticeable

impact on their capital structure3.

The first half of 2008-09 was marked by sharp increases in commodity

prices as well as volatile exchange rates. With a sizeable number of component

manufacturers in India being heavily dependent on yen imports, they were hit

by the high commodity prices as well as the sharp depreciation of the Indian

rupee against the Japanese yen. With the OEMs themselves under considerable

margin pressure, the ability to pass on these price increases to the customers

remained limited. In Q3, 2008-09 however, there was a significant downward

correction in commodity prices because of falling global demand. Nevertheless,

several auto component suppliers were saddled with high cost inventory and

suffered losses on the same. Volatile commodity prices in a scenario of low

volumes and high overheads eroded the profitability of the auto ancillary

industry during 2008-09.

pg. 13

The slide in commodity prices that had begun in early Q3, 2008-09 was

arrested in Q4, 2008-09, and this was followed by a mild recovery in Q1, 2009-

10, and a further firming up during the next quarter. However, despite this

firming up, commodity prices were lower in H1, 2009-10 as compared with the

corresponding period the previous fiscal and this benefited auto ancillary

companies, especially those that had been able to liquidate the older stock of

high-cost inventory. While raw material costs as a percentage of sales are likely

to fall year-on-year (y-o-y) in 2009-10, the rising trend in commodity prices is

expected to have a negative impact on the auto ancillary industry‘s margins

during the last two quarters of the current fiscal. Nevertheless, the impact is

expected to be mitigated to an extent by healthy demand.

Stretched working capital cycle affects capital structure:

The low volume off-take by OEMs resulted in an industry-wide inventory

pile-up for auto component manufacturers. Companies that are dependent on

imports with a long lead time ended up with relatively larger quantities of raw

material. On the other hand, stretched OEMs (debtors) delayed payments while

large steel manufacturers (creditors) required advance payments for purchases.

With low accruals, the ancillaries had to increasingly depend on bank credit to

fund the working capital shortfall. Working capital utilisation across the auto

ancillary industry thus shot up significantly in 2008-09, straining the capital

structure of component manufacturers and driving their interest expenses up.

pg. 14

Downgrades in ICRA-rated auto-ancillary companies increased during the

past 18 months:

In 2008-09, ICRA downgraded 12 entities from among its universe of

rated auto ancillary companies. During the first nine months of 2009-10, there

were six rating downgrades, and this included two cases in which two entities

that had been downgraded in 2008-09 were downgraded further. Against this,

the universe of ICRA-rated auto ancillary companies had seen just three rating

downgrades in 2007-08. While the domestic auto components industry as a

whole experienced pressures on profitability and some deterioration in debt

coverage indicators in 2008-09, the deterioration was found to have been much

sharper in the case of the entities downgraded.

ICRA-rated Auto Ancillary Companies (Long-Term Scale):

pg. 15

ICRA-rated Auto Ancillary Companies (Short-Term Scale):

The rating downgrades primarily reflect industry-related issues like

slowdown in OEM demand, forex fluctuations, and strained liquidity in the

domestic market, all of which have had a negative impact on the cash flows of

ancillary. While the Indian auto ancillary sector‘s overall dependence on exports

is limited, a few entities with significant exports contribution or significant

investments in exports-focused capacity were affected severely during the

downturn. Among the rating downgrades effected in 2008-09 and 9 months

2009-10, a few were also attributable to company-specific issues like labour

problems and large acquisitions. Since mid-2009-10, demand pressures in the

domestic market have eased, thereby mitigating downgrade pressures. However,

some entities whose balance sheets had weakened significantly in 2008-09

remain susceptible to industry-related shocks. Also, companies with significant

export-oriented investments would remain vulnerable, given the weak demand

conditions prevailing in the European and North American markets.

ICRA currently has 81 auto ancillary companies in its universe of rated

entities, with most of them (42 entities) carrying ratings between LA- and

LBBB- on the long-term scale. Overall, there are only eight entities rated in the

LAA category, while there are 17 in the non-investment grade. Most of the

entities in the non-investment grade are Tier-II suppliers, generally suffering

from lower pricing power and the limitations arising from their relatively

smaller scale of operations.

pg. 16

COMPANY PROFILE

Würth in the world markets Competence, Quality and Closeness to the

Customer:

The building up of the Würth Group is the life's work of Professor

Reinhold Würth, and one of the outstanding business success stories in post-war

German history. He has turned the two-man business of his father since 1954,

the time of rebuilding after the Second World War, into a worldwide active

group with over 350 companies in 81 countries today.

The core business of the Würth Group is the global trade with connecting

and assembly technology that is implemented through an international network

of group companies.

All over the world, more than 2.8 million customers trust in the products

and service of Würth. Competence, quality and closeness to the customer build

the foundation of our activities. Würth stands for good, solid and lasting product

quality.

Professor Reinhold Würth‘s daughter, Bettina Würth has been a member

of the Board of Directors of the Würth Group since 2001. As of March 1, 2006

she has taken the chair of the Advisory Board of the Würth Group. Before she

became member of the Board of Directors she was the person in charge of

sales, product and marketing of the Construction Division and of the regions

North and East of Adolf Würth GmbH & Co. KG.

pg. 17

Visions

The Würth Group is one of the worldwide biggest suppliers of assembly

and connecting technology to craft and industry. What spurs us on? We love

selling. Satisfying our customers is not enough. We want to inspire them - by

offering ideas that make their business progress. We consistently pursue

everything that has proven to be successful, and we try out new things -

optimistically, dynamically and with strong powers of self-assertion. Our

vision: Becoming the number 1 in the eyes of our customers as the best sales

team.

The Würth Group received the German Logistics

Award 2009 from the German Logistics

Association for its modular systems logistics

concept which can be specifically tailored to

individual customer groups.

As a family business with a strong corporate culture, the Würth Group is very

well-positioned to achieve this goal. Managing with visions, linked to a strict

orientation towards excellent performance and great respect for the employees‘

achievements, has been a characteristic feature of the company since its

inception and is in no small part thanks to Reinhold Würth‘s leadership.

Already in the early years, the company aimed to approach customers actively

instead of waiting for them to come.

―Seeing behind the mountains and around the bend‖, leaving the beaten track

behind to find potential for optimization is one of the basic rules of the company

that was formulated by Reinhold Würth. Bettina Würth, the daughter of

Reinhold Würth, is keeping up this tradition as the Chairwoman of the Advisory

Board of the Würth Group.

pg. 18

Exemplary for the visionary and strategic thinking in the Würth Group is the

―Vision 2000‖, which Reinhold Würth had developed in 1987: The sales

volume of the Würth Group amounted to EUR 700 billion in that year. The aim

was to attain a sales volume of EUR five billion by the turn of the millennium.

Indeed did the company succeed in reaching exactly this target in the business

year 2000.

And we move on: to pastures new and with a new vision. For the business year

2020, the Würth Group has set itself the goal to generate sales of EUR 20

billion with 100,000 employees.

Company portrait

World market leader in the trade with connecting materials

The Würth Group is world market leader in its core business, the trade in

assembly and fastening material. It currently consists of about 400 companies in

84 countries and has more than 59,000 employees on its payroll. Over 29,000 of

these are permanently employed sales representatives. The Würth Group

generated EUR 4.2 billion in sales in the first half of the business year 2010.

In the core business, the Würth Line, the product range for craft and industry

comprises over 100,000 products: From screws, screw accessories and anchors

to tools, chemical-technical products and personal protection equipment. The

Allied Companies of the Würth Group, which operate under their own company

name, round off the range by offering products for DIY stores, material for

electrical installations, electronic components (e.g. circuit boards) as well as

solar modules and financial services.

pg. 19

We are a family business

About 3 million customers all over the world trust in Würth today.

Human beings and a very special corporate philosophy are the driving forces of

the long-standing success enjoyed by the Würth Group. Würth is a family

business that was founded by Adolf Würth in 1945. Prof. Reinhold Würth,

today‘s Chairman of the Supervisory Board of the Würth Group‘s Family

Trusts, took over the business at the age of 19 after his father had passed away

and developed it further in the following years. Starting from the early years of

the company in post-war Germany, he turned the former two-man business into

a worldwide operating trading group.

Our philosophy

We owe it to Reinhold Würth that the Würth Group has a clear business

orientation: It is marked by a strong brand policy, future-oriented product

strategy, closeness to the customer, clear quality offensive, thinking in terms of

visions and not least by a strong corporate culture. Bettina Würth, Reinhold

Würth‘s daughter and Chairwoman of the Advisory Board together with the

members of the Central Managing Boar d see to it that these values are filled

with life and developed further.

pg. 20

Preliminary Annual Financial Statement of the Würth Group 2009

pg. 21

Our Strategy :

Quality:

True to its motto ―Quality beats price,‖ Würth is positioned at the very top of

the quality spectrum: We do not only offer top-notch quality when it comes to

our products, but also for our services.

Würth - a strong brand:

We want to inspire our customers – all over the world, with identical quality

and the same brand promise. This means that we support our customers actively

and in a solution-oriented manner. This way, they can focus on their business.

We are working passionately to optimize our products and services constantly.

The sales force is the company’s heart and soul:

One of our particular strengths and a key to the Würth Group‘s success story is

the system of direct selling through our sales force organization.

Over 29,000 permanently employed sales

representatives all over world advise our

customers and see to it that craft and industry

businesses are offered product solutions tailored

to their needs as well as optimal services. Thanks

to our specialization through the divisions Automotive, Metal, Wood,

Construction and Industry, every sales representative is a competent contact in

his/her line of business, ensuring individual advice. This approach makes Würth

a reliable partner for its three million customers worldwide.

pg. 22

Active in the market of 84 countries:

We are a global player and currently active on all five continents with

about 400 Würth companies. Thanks to this strong presence, our customers, be

they a small craft enterprise or an international industry business, can reach us

easily. They are certain to receive Würth‘s top-rate product and service quality

wherever they may be. At the same time, the Würth Group‘s decentralized

structure provides the possibility to react flexibly to the requirements of local

markets and answer to individual needs.

Milestones in the Company's History

1945

With 20 years' experience in this line of

business, Adolf Würth establishes a wholesale

firm in Künzelsau, in the Hohenlohe region of

southern Germany, supplying screws, nuts and

bolts.

1954

Death of Adolf Würth, founder of the firm, at the age of 45. His 19-year-old

son Reinhold takes over the running of the business. Annual sales at the time

are around EUR 80,000.

1962

Reinhold Würth ventures outside Germany and sets up the company's first

foreign subsidiary, Würth Nederland B.V.

1965

Adolf Würth OHG is converted into a limited commercial partnership ("KG").

The general partner is Würth-Verwaltungs-GmbH. The limited liability

partnership capital is contributed solely by the family.

pg. 23

1969

The firm's premises at the railway station in

Künzelsau reach the limit of their capacity. The

offices are moved to new building in the Gaisbach

district of Künzelsau. The Wurth Screw and Fastener

Corporation is set up in the USA - Würth's first

company on the American continent.

1970

Würth celebrates 25 years in the business. Sales rise

50 percent to EUR 32.9 million, and the first Würth

company is established in South Africa.

1973

Würth establishes a company in the UK. Würth Screw and Fastener Ltd. is

formed as a one man operation based in Maidstone in Kent.

1974

Würth Screw and Fastener Ltd. moves premises to an office and warehouse in

Woolwich, London.

1978

A new distribution center goes into operation in

Künzelsau-Gaisbach.Würth Screw and Fastener Ltd.

now employ 21 staff and move to larger premises in

Woolwich.

1980

Würth Screw and Fastener Ltd. changes its name to Würth UK Ltd. in order to

depart from the image of "nuts and bolts people".

pg. 24

1981 Würth establishes its company in Australia.

1985

Adolf Würth GmbH & Co. KG celebrates 40 years in business, and Reinhold

Würth celebrates his 50th birthday.Winzer Industrial (UK)Ltd. is established

with one employee selling assembly and industrial consumables to the trade.

1986

Würth UK Ltd. moves to new purpose built premises in Erith, Kent. The

official opening is attended by staff, suppliers, customers and local

dignitaries.Reinhold Würth acquires Winzer Industrial (UK) Ltd., now

employing 8 staff, and the company joins the worldwide Würth Group

becoming Winzer Würth Industrial Ltd.

1987

Würth enters the Asian market by acquiring a company in Japan and

establishing its own subsidiary in Malaysia. Würth now has a presence on all

five continents.

1989Adolf Würth GmbH & Co. KG is awarded the German Marketing Prize.

1990

The company opens its first branch office in former

East Germany, in Dresden.

1992

On May 15, 1992, the new headquarters building in

Künzelsau-Gaisbach is officially opened. The modern

office complex includes a museum of art that is open to

the public.

pg. 25

1994

On January 1, 1994, Reinhold Würth retires from operational management and

takes the chair of the Advisory board of the Würth Group. Dr. Walter Jaeger is

appointed Chairman of the Board of Management. Rolf Bauer becomes

Deputy Chairman of the Board of Management.

1995

On April 20, 1995, Adolf Würth GmbH & Co. KG

celebrates its 50th anniversary. In the 1995 jubilee year,

the Würth Group achieves record sales of EUR 2.2

billion.Winzer Würth Industrial ltd. move to a new

purpose built warehouse and office in Godalming,

Surrey. Würth House was officially opened in time to celebrate the company's

10th anniversary.

1998

Two Würth Group companies steeped in tradition, toolmakers Hahn & Kolb

Werkzeuge GmbH & Co. KG in Stuttgart and the Arnold Umformtechnik

GmbH & Co. KG screw factory in Ernsbach, celebrate their 100th year in

business.

1999

Reinhold Würth is appointed Professor of Entrepreneurship at the University

of Karlsruhe in recognition of his outstanding entrepreneurial achievement.

2000

The Würth Group rounds off an outstanding fiscal year by setting new records,

with the company's sales exceeding EUR 5 billion. This represents the

fulfillment of the target set by Professor Reinhold Würth for the year 2000.

His "Vision 2000," first formulated back in 1987 when Group sales were just

EUR 700 million, becomes reality.

pg. 26

2001

Despite the general economic slowdown in the trades,

the Würth Group boosts sales to a new record of EUR

5.28 billion.

On January 1, 2001, the Würth Group is given a new management structure.

The members of the new Board of Directors are Dr. Walter Jaeger (Chairman),

Rolf Bauer (Deputy Chairman), and Bettina Würth. Two years later, the Board

is expanded to four persons with the appointment of Dr. Harald Unkelbach.

2002

The Würth Group hires an additional 2,729 sales representatives worldwide

and posts new record sales of EUR 5.36 million despite the weak economy.

The operating result increases by 4.1 percent to EUR 281 million.

2003

Despite a challenging economic environment and a focus on consolidation, the

company continues to invest heavily in expanding its worldwide sales force.

This policy is rewarded by record sales of EUR 5.45 billion, with the operating

result outstripping sales growth to reach a new record of EUR 330 million.

2005

The Würth group celebrates its 60th anniversary. The focus of the celebrations

is the official anniversary ceremony on 22 April 2005, when the company

welcomes guests from politics, economics, art and culture.

2006

On the 1 March 2006 Bettina Würth takes over the

council presidency of the Würth group from her

father. Prof. Dr. hc mult. Reinhold Würth now serves

as Honorary Chairman of the Advisory Board and will

pg. 27

remain chairman of the foundation's supervisory board.

On 4 May 2006 Alma Würth, co-founder of Adolf Würth GmbH & Co. KG.

dies. With her husband Adolf Würth she was the driving force behind the

founding of the screw wholesale business in Künzelsau in 1945. She remained

a council member during the growth of the Würth Group until 1993 and

thereafter remained an honorary member of the Advisory Board.

2007

The German parent company of Würth Group, Adolf

Würth GmbH & Co. KG, became the first single

company of the group to achieve a turnover of one billion

euros within a business year, including intercompany

sales.

On 10 May 2007 Prof. Dr. hc mult Reinhold Würth

receives an honorary doctorate in art history and

museography from the University of Palermo in Palermo.

2008

The Würth Group generated a record turnover of 8.82

billion euros.In April Würth Austria welcomes the

three millionth customer of the Würth Group.At the

beginning of the school year 2008/2009 the Freie

Schule Anne-Sophie, a project financed by the Würth Foundation charity,

celebrates the opening of its new building.

2009

Winzer Würth Industrial Ltd. and Würth UK Ltd. merge into one single

company called Würth UK Ltd. The new company has one of the largest sales

forces in the UK market.

pg. 28

The operational units of the Würth Group

The Würth Group has around 400 companies serving the markets in 84

countries. The companies are divided into two units: companies belonging to

the Würth Line and Allied Companies.

Würth Line

Würth Line operations focus on assembly and fastening materials, supplying

customers in the trades, the construction sector, and industry. Internationally,

the operational business units within the Würth Line comprise the Metal, Auto,

Wood, Construction, and Industry Divisions. The Metal Division comprises the

subdivisions Metal, Household Technology and Maintenance, and the Auto

Division the Car and Cargo subdivisions.

Allied Companies

The Allied Companies do not trade under the name of Würth and operate

independently of the Würth Line companies. They are divided into nine

strategic business units. With the exception of a small number of manufacturing

companies, the majority are sales companies operating in related areas. The

Diversification group within the Allied Companies comprises service

companies operating at regional level, such as hotels and restaurants, Würth

logistics operators, and a company set up as a training program.

A very special corporate philosophy

Würth – the name stands for high product quality and excellent service.

Nevertheless, the Würth Group is not just a business trading in assembly and

fastening material. A very special corporate philosophy and shared values that

inform our daily activities underlie the company‘s longstanding success, be it in

Germany, the birthplace of the Würth company, or in any of its roughly 400

companies all over the globe.

pg. 29

Our visionary thinking spurs us on to go the extra mile and attain ever new

milestones, guaranteeing the lasting development of the family business. All

employees are requested to contribute their ideas and their

creativity. Demanding and promoting performance is firmly embedded in

Würth‘s corporate culture. Working together in the spirit of optimism,

responsibility and mutual respect are not just empty words, but principles

filled with life every day.

Responsibility

Entrepreneurial activities mean future-oriented activities. As a family business,

Würth has been committed to this principle ever since its early years. Of course,

this comprises our core business, but as a holistic approach, it far exceeds the

orientation to customers and employees. We recognize and embrace the

responsibility we have within and for society.

Customers

We passionately support our customers. Satisfying our customers is not enough.

We want to inspire them. First and foremost, a customer-oriented sales force,

the service idea it represents and top-notch quality are characteristic of the

products and services of the Würth Group. As a consequence, we continuously

try to find new solutions to support our customers‘ business even better. One of

our most important principles is to achieve perfection in everything we do. New

challenges are tackled in an optimistic, dynamic and pragmatic way – all with

one aim: Making sure that each customer gets their own Würth.

Employees

As a responsible employer, the Würth Group invests in ongoing training of its

workforce, an important foundation for the future of the company and its

employees. The Würth Group also assumes responsibility for a decisive

contribution to its employees‘ quality of life. Among others, this commitment

pg. 30

includes offers for the promotion of good health, cultural events as well as

access to the company museums. We also support our employees in the

endeavor to make family and job compatible. This includes part-time working

arrangements and teleworking models for parents.

Arab-Jewish Youth Orchestra Israel receives the

Würth Prize of Jeunesses Musicales Deutschland

2009 awarded by the Charitable Würth Trust

Company

As a good citizen, we are involved in all sorts of corporate initiatives, support

charitable organizations, and promote numerous projects in the fields of art and

culture, research and science as well as education. In order to unite these

commitments under one roof and ensure a continuation of the efforts, Reinhold

and Carmen Würth founded the Charitable Würth Trust in 1987. The trust

capital currently amounts to EUR 5.0 million. Furthermore, the individual

Würth companies have become active in many social areas right on their

doorstep, in over 80 countries worldwide.

Working at Würth

Attracting and retaining competent employees is an important component of the

Würth Group's growth strategy. For this reason, we consider human resource

management to be of crucial importance in our strategic Group management.

The applicant situation shows us that Würth has an excellent reputation in the

labor market as a family business. As such, we work on the principle of

demanding, but at the same time promoting, performance. This also means that

we offer our staff opportunities for further training and create a work

environment in which delivering peak performance is fun.

pg. 31

Qualification and training

For us, the development of employees is one of our fundamental future-oriented

duties. Education and training is therefore a priority in the Würth Group. A key

concern for us is that we teach not only knowledge and expertise, but also

promote our employees' social skills and personality development. Components

such as work-out activities in the sales force, broadening one‘s horizon through

international internships at European Würth companies as well as supporting

social institutions form an integral part of the training plan at Adolf Würth

GmbH & Co. KG, the Würth Group‘s parent company.

MBA graduates of Akademie Würth Business

School. Würth also offers all employees various

programs to train alongside their jobs and to

work on personal development. In Germany

Akademie Würth has become firmly established,

offering management seminars as well as

training in personal and social competence across the Group.

Creating quality of life

Employee motivation is not an empty phrase within the corporate culture of the

Würth Group, but clearly visible in many areas. As a performance-oriented

company, it is important for us that our employees participate in our success.

That is why our remuneration system has a strong performance-related

component, according to which employees receive annual premiums based on

economic success. We also have an effective system of incentives in place that

we review regularly.

The Würth Group also takes responsibility for making a decisive contribution to

the quality of life of its employees. This includes offers for health promotion,

cultural events and our own museums. We also support employees in combining

family life with work. For instance, parents can take advantage of part-time

regulations or models for working from home.

pg. 32

Demanding and promoting performance

Würth puts the human being at the center of business life. Being inquisitive and

dynamic, filling out new spaces – that is the corporate philosophy lived at

Würth. This includes the readiness of all employees to demonstrate full

commitment to the company, be optimistic, tackle new challenges dynamically

and achieve set goals pragmatically. At the same time, the employees are given

considerable room for maneuver at their workplace, space to develop their

creativity and put their ideas into practice. Tasks connected with responsibility

are to be delegated as far as possible, following the rule: The bigger the success,

the bigger the degree of freedom. Above-average performance is recognized and

rewarded: we strive for perfection in everything we do.

New trainees 2009: Training begins at Würth

Tackling new tasks

Würth considers the promotion of staff to be a fundamental, future-oriented

duty. This already begins when starting into the world of work. The company

therefore runs an intensive and comprehensive training program. All over

Germany, for instance, the Würth Group currently employs over 800 trainees

learning one of over 60 occupations. Given such a wide selection, everybody

can find and pursue their dream occupation. It also goes without saying that we

don't promote expertise alone - personal development is also important. Another

part of the Group's active training initiatives for future professionals is the

internship program for university students. Whether Germany, Spain or China –

there are plenty of opportunities to get a taste of real work experience.

pg. 33

Lifelong learning

We want to inspire our customers time and again. That is why we need qualified

and committed employees. Würth offers its employees various programs of on-

the-job further training and personal qualification. In Germany, Akademie

Würth has been active for 20 years, offering management seminars as well as

personal and social skills training to all Würth Group employees worldwide.

Combining studies with work

Anyone wishing to combine further academic training with work will be spoilt

for choice at Akademie Würth Business School. A Bachelor of Arts (BA)

degree can be gained after three and a half years of study. Akademie Würth also

offers a Master of Business Administra¬tion (MBA) in Global Business in

cooperation with the University of Louisville, USA, with PhD opportunities

also available since the summer of 2009. These programs are available to

applicants outside of the Würth Group as well.

Learning to lead

Management positions are mainly filled by employees from Würth's own ranks.

The Group has two programs to support employees in this career step: MC

Würth and the High Potential Program. MC Würth prepares professionals for

positions in mid-management. The High Potential Program supports managers

on their way to upper management levels.

Also in place is the International Trainee Program, which runs in Asia, Eastern

Europe and South America, and is aimed at local graduates of economics degree

courses. It specifically guides employees into leadership roles in these

particularly promising regions of the future.

pg. 34

Supervisory Board

The Würth Group is a family-owned business. As early as1987, the company

assets were transferred to various family trusts. Prof. Dr. h. c. mult. Reinhold

Würth is the Chairman of the Supervisory Board of the Würth Group‘s Family

Trusts.

Prof.Dr. H.C. Mult. Reinhold Würth

Chairman of the Supervisory Board of the Würth

Group´s Family Trusts

Advisory board of the Würth Group

The Advisory Board is the supreme supervisory entity within the Würth Group.

In addition to advising on strategic matters, it is responsible for approving

corporate planning and the use of funds, and appoints the members of the

Central Managing Board and the managing

directors of the major companies.

Bettina Würth

Chairwoman of the Advisory Board of the Würth

Group

Award

The annual report of the Würth Group 2008 is the winner of the private publ!c

Awards 2009.

The competition was organized by the consultants ergo Kommunikation

together with the auditors PKF Fasselt Schlage Lang und Stolz among the 240

largest family and trust companies in Germany that are not listed on the stock

exchange.

pg. 35

CHAPTER – 2 Review of Literature

Need of the study

Objectives of the study

Scope of the Study

pg. 36

REVIEW OF LITERATURE

Marketing Mix

The basic task of marketing is the delivery of product(s) to consumersso

that their needs are fulfilled and organisational objectives are alsoachieved. The

process of marketing or distribution of goods require particularattention of

management of business because production has no relevanceunless products

are sold.

Marketing mix, simply stated, is the process of designing and

integrating various elements of marketing in such away as to ensure the

achievement of enterprise objectives. The elementsof marketing mix have been

classified under four heads - product,price, place and promotion. That is why

marketing mix is said to bea combination of 4 P‘s. Decisions relating to the

product include productdesigning, packaging and labelling and varieties of the

product. Decisionon ‗Price‘ is very important because sales depend to a large

extent onproduct pricing. Whether uniform price will be charged or

differentprices will be charged for the same product in different markets

areexamples of decision pertaining to the price of the product. The

thirdimportant element is ‗place‘, which refers to decision regarding themarket

where products will be offered for sale. ‗Promotion‘ involvesdecisions bearing

on the ways and means of increasing sales. Differenttools or methods may be

adopted for this purpose. The relativeimportance to be attached to the various

methods is decided while concentrating on the element of ‗promotion‘ in

marketing mix, Lastly,the marketing manager has to take into account the

impact of externalfactors like consumer behavior, competitors‘ strategy, and

Governmentpolicy on each element of marketing mix.

In short, marketing mix involves decisions regarding products to themade

available, the price to be charged for the same, the incentives tobe provided to

the consumers in the markets where products would bemade available for sale.

pg. 37

These decisions are taken keeping in view theinfluence of marketing forces

outside the organisation.

Marketing Mix shows some characteristics like:-

Marketing-mix is the crux of marketing process.

Marketing mix has to be reviewed constantly in order to meet the

changing requirements.

Changes in external environment necessitate alterations in the mix.

Changes taking place within the firm too necessitate changes in

marketing mix.

The elements or constituents of marketing mixmay be grouped broadly under

four heads:

(i) Product

(ii) Price

(iii) Place

(iv) Promotion

Product:

Product refers to a physical product or a service or an idea which aconsumer

needs and for which he is ready to pay. Physical productsinclude tangible goods

like grocery items, garments etc. Services areintangible products which are

offered and purchased by consumers.Services may involve also an innovative

idea on any aspect of operation. Product is the key element of any marketing

mix. The decisionsconcerning product may relate to -

a) Product attributes

b) Branding

c) Packaging and labeling

d) Product support service

e) Product mix.

pg. 38

a) Product attributes refer to the quality, features and design of the product.

A product should serve the purpose for which it is made, in terms of utility and

quality. In a competitive market, products are differentiated on the basis of

certain features or design.

b) Brandingis a crucial decision. In a competitive market, many productsare

sold by brand names. Brand is an identification of product.It plays an important

role in creation of demand while branding aproduct, it should be ensured that

the name is simple, easy to read andpronounce and if possible, it should have an

appeal.

c) Packaging and labeling of product are quite important decisions

Packaging means putting the products in suitable containers or packets such as

tin, plastic jar or card board box, etc. Packaging should be such that product is

protected and easily handled.

Labeling serves the purpose of indicating the contents, weight ormeasure,

instructions for use, price, name of the producer, date ofmanufacture and expiry

etc.

d) Product support service is another important element of product decision.

It includes decision pertaining to the type of service and availability of the

service. Service may be by way of installation service, training in product use,

after sale service, credit and financing service, etc. Secondly, how the services

would be made available by the producers or agencies.

e) The markets in which products will be offered is yet another

importantdecision. A company may decide to a single or a variety of

products,add new products, or withdraw certain products. Relevant decisions

aremade keeping in view the scope of marketing. Such decisions are called

―product line or product mix decisions‖. Product life cycle is a guidingfactor

while decisions are made.

pg. 39

Product life cycle:

Product life cycle denotes different stages through which the sale ofany

product changes over a period of time. Generally, there are fourstages in the life

of each product–introductory stage, growth stage,maturity stage, and declining

stage. When any product is introduced in the market, heavy expenditure is

incurred on advertising and othermethods of increasing the sale. This is known

as introductory stage.

During the growth period, sale of the product increases fast and costof

production comes down due to increase in scale of production.Profits earned

increase substantially. During the maturity stage, thegrowth in sale of the

product slows down. Profits also start declining.After the maturity stage there is

a stage of decline, when the productstarts losing its acceptance.

There is a pressure for price cut. Firmsgenerally start withdrawing the

product after maturity stage. Some firmsstart preparing for introducing

alternative product at the end of growthstage. Product life cycle, thus, helps in

deciding about the product orproducts which should be offered in different

markets.

Price

Price is the amount charged for a product or service. It is theconsideration

paid by consumers for the benefit of using any productor service. Price fixation

is an important aspect of marketing. Pricingdecisions of a company are affected

by both internal as well as externalfactors.

pg. 40

Internal factors

-Cost of product

-Marketing objectives

-Marketing Mix strategy

-Organisation for pricing

There may be two methods of price-fixation

1. Cost-based approach

2. Competition-based approach

Cost-based approach:

This is the simplest method of pricing. Generally companies add acertain

percentage of Profit, to the total cost of the product. The totalcost of the product

is calculated after taking all types of costs intoconsideration. While following

this approach, no other factors e.g. pricesof substitute goods, nature of demand,

etc. are considered.

Competition-based approach:

In competitive market, cost-based approach is not always practicable.The

prices are determined on the basis of conditions in the market.Companies may

follow any one of the following three approaches.

a) Price-in-line

b) Market-plus

c) Market-minus

External factors

-Nature of market or demand

for product

-Competitors‘ cost price offers

-Other environmental factors

Pricing

decision

pg. 41

Price-in-line means prices fixed nearly equal to the prices of

closealternatives. Generally this happens under free market conditions i.e.when

the number of buyers and sellers is so large that they cannotaffect the prices.

Prices are decided by the market forces of demandand supply.When companies

charge (fix up) a price which is more than the priceof existing substitutes, it is

called market plus pricing. This approachis adopted when the quality of a

product is better, or it has a popularbrand name, or its packaging is attractive

and useful.Sometimes business enterprises get ready to supply products at a

pricelower than the market price. It may be adopted to grab a larger marketshare

or to make a newly introduced product more popular. Thisapproach is called

market-minus approach.

Promotion

Promotion refers to using methods of communication with twoobjectives:

(1) Informing the existing and potential consumers about aproduct, and

(2) to persuade consumers to buy the product.

It is animportant element of marketing mix. In the absence of

communication,consumers may not be aware of the product and its potential to

satisfytheir needs and desires. Companies must decide which tool(s) should be

used for larger sales and in what proportion. The tools should be

combined.These decisions are known as promotion-mix decisions.

Thus, promotion mix isa company‘s total communication programs which

consists of differentblends of its components and which is used to achieve the

company‘smarketing objectives.

Advertising, personal selling, sales promotion and publicity are themajor tools

of promotion-mix.

pg. 42

Advertising:

Advertising is an impersonal form of communication for which theseller

pays in order to promote a physical product or service. It maybe in print form as

in newspapers and magazines, or in audio form ason the radio and other similiar

methods, or in audio-visual forms as onthe Television, cinema screen, etc.The

merits of advertising is that it reaches a larger number of people,the message

can be repeated, its cost is not high, and with thedevelopment of art and

computer graphics, simple statements can betransformed into forceful messages.

Personal selling:

Personal selling is a personal communication with one or

moreprospective buyers for the purpose of selling a product or service.These

days, personal selling is considered to be the most effective toolbecause of

various characteristics which are listed below:

It involves personal interaction, hence feedback is receivedimmediately;

it is quite flexible, salesman can adjust communication accordingto the

level of customer‘s under-standing.

it is more persuasive; buyers can be convinced about the utilityof the

product;

impressive salesman leaves an impression on the prospectivebuyer;

Personal selling suffers from a few drawbacks too. It is the mostexpensive tool

of promotion. Secondly, it requires too much dependenceon sales force.

pg. 43

Sales Promotion;

Sales promotion means the use of short-term incentives which are

designed to encourage immediate purchase of a product or service by the buyer.

It may include offer of discounts, free gifts, free sample, coupons,

demonstration, store display, etc.

Most of the sales promotion activities come in the form of some incentive

for the buyer; hence sales generally increase immediately. Big business

enterprises use sales promotion tools while introducing a new product. It adds to

the effectiveness of total promotional efforts of a company.

Publicity:

Publicity takes place when a favorable presentation is made through mass

media about a product or service. People believe more on such news than in

advertising. It covers people who do not entertain personal selling and sales

promotion approaches. It is a non-paid form of communication but sometimes it

is not regarded as a promotional tool within the reach of a company.

Packaging is also considered as a powerful sales promotion tool these

days. It immediately attracts the buyer and makes him buy the product. This

tool has produced good results in case of consumer goods. To some extent,

packaging has replaced the counter salesman.

Factors governing Promotion-mix:

- Nature of product

- Type of the market

- Stage of the product life cycle

- Budget

- Push vs. Pull Strategy

pg. 44

Place

Place is another important element of marketing mix. Once the goods are

manufactured, packaged, priced and promoted, they must be made available to

the consumers. Activities related to placing the products are covered under this

element of marketing-mix. It consists of decisions relating to channels of

distribution and physical distribution. Channels of distribution refer to the

individuals and organisations which facilitate moving the goods from

manufactures to consumers. It is important that regular and smooth flow of

goods is maintained so that products are not spoiled and supplies are not

delayed. To ensure this, various facilitating services need to be arranged like

transportation, warehousing, inventory control, and order processing. These are

known as components of physical distribution.

The two sub-elements of‗ place‘-

(A) Channels of distribution

(B) Physical distribution

(A) Channels of Distribution :

Channel of distribution denotes the intermediaries involved in the process

whereby a product passes from the manufacturer to consumers. It is very

important for the producers to involve middlemen in order to reach consumers.

Middlemen reduce the problems of both producers and consumers. Secondly,

middlemen help in distributing the products over a large area. Middlemen also

supply useful market information to the producer for improving the product.

There can be various levels of channel. It is for the producer to decide which

level would suit the sale of his product.

pg. 45

Distribution channel starts from the producer and ends with the

consumer. Each layer of middleman that performs some work in bringing the

product closer to the final layer is a channel level. The diagram given below

shows the various channel levels.

Channel 1 Manufacturer Consumer

Channel 2 Manufacturer Retailer Consumer

Channel 3 Manufacturer Wholesaler Retailer Consumer

Channel 4Manufacturer Wholesalers Jobers Retailer Consumer

There are a number of factors which govern the choice regarding channelof

distribution. These are listed below:-

Nature of product

Nature of market

Middlemen

Size and Policy of the Company

Marketing Environment

Competitors

(B) Physical Distribution :

Physical distribution comprises all those activities which deliver customer

satisfaction by supplying right type of products at right place and at right time

regularly. Economical and satisfactory customer service is the primary goal of

physical distribution. Providing the right type of good at right place and at right

time is the ultimate goal of any marketing department.

pg. 46

Components of physical distribution:-

(i) Order Processing:

Physical distribution begins with customers‘ order. Both the company and

customer are benefitted if order processing is carried out quickly and accurately.

These days‘ computers are used, which establish a link between retailers and

producers. Producers keep a watch on the stock position at retailers‘ place

retailers may also place orders through computer.

(ii) Warehousing

Every company must store goods to maintain a proper flow. Storage facilities

are important because production and consumption cycles generally do not

match. Companies need to decide the number, space and location of

warehouses. The cost of these should be in balance with customer service.

(iii) Inventory

Marketers would like that company having enough stock to full fill all

customers ‗order immediately. But it involves heavy cost. Companies should,

therefore, carefully plan when to order and how much to order.

(iv) Transportation

Transportation has in fact, facilitated the physical distribution of goods

and services over a larger area. Modes of transportation may include road, rail,

water, air, etc. The choice of mode of transport affects the pricing and condition

of goods.

Each element of the mix is so wide that it needs careful alteration and lot of

concentration. A marketing manager has to design an optimum marketing mix

which takes care of both customers‘ satisfaction and organizational objectives.

Each element of marketing mix is related with other element. Thus tools of

promotion depend upon the nature of product, the price that can be charged for

that product, and the process through which it would reach the consumer.

Likewise while deciding on the price of product; the important considerations

are manufacturing cost of the product, cost of promotion and money spent on

pg. 47

distribution. Thus, all the elements are mutually inter-related. It would be

unwise to take a decision on marketing mix without going deep into every

elements of marketing mix. Marketing mix should be such that it helps in

achieving organisational objectives of profit, sales volume, market share, etc. It

should meet the competition in the market. It must click with the demand from

different markets. It must deliver consumer satisfaction. All this requires an

ideal blending of all the elements of marketing mix as the elements are

complementary and mutually supporting.

Channel Distribution System:

The term channel of distribution refers to the root taken by goods as they

flow form the producer to the consumer. This flow of goods means its physical

distribution or the transfer of title( Ownership). The distribution system is

concerned with the movement of goods from the point of production to the

point of consumption which involves a variety of functions. The main

participants in the disrtibution systems are

1. The manufacturer.

2. The intermediaries

3. The facilitation agencies

4. The consumers.

Distributors.

Business that buy of resell merchandise to the retailers and other

distributors but donot sell in significant months to end users (Consumers).

pg. 48

Distribution Channel

DISTRIBUTOR

COMPANY

MANUFACTURING UNIT

SUB DISTRIBUTOR

RETAILER

CONSUMER

pg. 49

ROLE AND IMPORTANCE OF DISTRIBUTION CHANNELS

Distribution Channel play a vital role in the successful marketing of more

products, specially consumer products. The importance of distribution channels

can be understood clearly by analysing the wide variety of functions performed

by them

Channels provide distribution effeciency to manufacturers.

Channels supply products in required assortment.

Channels provide salesmanship.

Channels helps merchandise the product.

Channels helps implement the price machanism.

Channels look after the physical distribution.

Channels act as change agents and generate demand.

Channels assists in sales promotion.

Channels provide feed back and market intelligence.

Channels transfer technology to users and act as ―change agent‖.

TERMS AND CONDITIONS FOR DISTRIBUTORS

These are following conditions:

Distributors should have previous work experience.

Financial capability should be good.

Should have market reputation.

What products he deals on presently.

His infrastructure ( vehicles, godowns, manpower etc)

His attitude towards business.

Capability to handle future growth.

pg. 50

THE INTENSITY OF DISTRIBUTION

Company must decide on the intensity of distribution. The numbers of

middle men are to be used at the wholesale and retail levels in a particular

territory.

INTENSIVE DISTRUBUTION

Under intensive distribution a product sales it product through every

available outlet in a market where a customer might reasonably look for it.

Ultimate consumers‘ demand immediate satisfaction from convenience goods

and will not defer purchase to find a particular brand.

SELECTIVE DISTRIBUTION

In selective distribution a producer sales its products through multiple,

but not all possible. Distributor and ratailer in a market where a consumer might

reasonable took for it. A company may shift to a selective distribution strategy

after some experience with intensive distribution.

EXCLUSIVE DISTRIBUTION

Under exclusive distribution the supplier agrees to sell its product only to

a single distributor, middleman or retailer in a given market producer often

adopts an exclusive distribution strategy when it is essnential that the reatiler

carry a large inventory.

PLANNING THE DISTRIBUTION SYSTEM IN AN ORGAINSATION.

Planning for distribution is an important adjunct of long run marketing

planning as it involves critical marketing decision such as the selection of

selectiv distribution outlets and creation of physical distribution through careful

distribution planning.

pg. 51

STEPS OF DISTRIBUTION

An organisation is found with a number of questions at the time of

decision how to distribute its product. These questions are as:

Should it go direct or through conventional market middleman?

How many wholesales points should it cover to ensure satisfactory

market coverage?

Where to locate these points?

What should be the number of companies owned warehouses and where

should these be located?

A satisfactory answer to these questions would require a careful

consideration of firm‘s objective, its resources, the business philosophy of its

top management specific needs of products and those of its customers sucsh

planning can be done through the following steps:

State the objectives of distribution.

Examine the resources of the organisation

Examine the product needs.

Examine the market needs.

Study the market needs.

Study the legal environment.

Identify the alternative system of distribution.

Evaluate the various altrnatives and select one which is found to be most

conductive to the attainment of marketing goals.

pg. 52

PHYSICAL DISTRIBUTION SYSTEM

The management of physical distribution provides and exciting

opportunity for improving customer service and reducing costs efficient

distribution can increase profitability by increasing sales and reductin costs

actually physical distribution management is ―the process of strategically

managing the movement and storage of material, parts and finished inventory

from supplier between enterprise facilities and to customers‖.

PHYSICAL DISTRIBUTION LEVEL

MANUFACTURER

SUPPLIER

MIDDLEMAN

END USERS

pg. 53

COMPONENTS OF PHYSICAL DISTRIBUTION SYSTEM

Transportation :Transportation management is important making

physical distribution system such transportation – related decision as:

Measuring the cost aspects of transportation selecting transportation

mode and pipelines specific careers.

Deciding whether to use owned equipment or to hire transportation

service.

ORDER PROCESSING

Physical distribution system being deals with customers‘ order. The

cycle involves many steps, including transmission of order by the sales person,

order entry and customer check, inventory and production scheduling. The

longer the cycle takes the lower the customer satisfaction and the company

profit

SERVICE RENDERED BY THE MIDDLEMAN

Choice of channel distribution is determined the market in Wuerth.

Channel management decision is also determined by selecting channel

members. The service rendered by the middleman are :

Market feedback.

Competitor‘s activities.

Proper distribution of company‘s product.

Surplus of product

Market equipment placement and maintenance.

pg. 54

WUERTH PRODUCT:

There are numerous products of wuerth in various categories but I have

taken Weurth Break Fluid for my project study.

Important Information:

Würth recommends that brake fluid ischanged every two years can be mixed

with all brake fluidsmeeting the same specifications.Never mix with

AutomaticTransmission Fluids (ATF) oruse in vehicles with LHM or mineraloil

systems.Follow vehicle manufacturersrecommendations when adding andusing

brake fluid.Keep brake fluid clean and dry.Contamination with dirt,

water,petroleum products or other materialsmay result in brake failure or

othercostly repairs. Store brake fluid in its originalcontainer. Keep container

clean andtightly closed to prevent absorptionof oisture. When un-opened shelf

life is typically3 years, but always check use by dateon packaging.Do not refill

container or use forother liquids.Brake fluid will damage paintwork.

pg. 55

Technical data:

Dry boiling point:

Min Dry Boiling Point >260°C

Wet boiling point:

Min Wet Boiling Point >165°C

Description Contents ml Art no. Pack Quality

Dot 4 250 0892 009 25 24/1

Dot 4 500 0892 009 050 24/1

Dot 4 1000 0892 009 1 10/1

Dot 4 5000 0892 009 5 4/1

Dot 4 20000 0892 009 20 1

Your advantages:

● High quality and high performance

● Suitable for ABS brakes.

● High thermal stability

● Provides excellent protection against corrosion of iron, steel and non-ferrous

metals.

● Will not damage rubber parts can be mixed with all brake and clutch fluids

meeting the same specifications.

● Suitable for use in hydraulic clutch systems.5 litre in a clear container, with

easy to see fluid level5 litre container will fit Orsyracking systems.

pg. 56

COMPETITOR’S PRODUCTS:

1. CASTROL

GT LMA BRAKE FLUID IS RECOMMENDED FOR

ALL INDIAN AND FOREIGN VEHICLES WITH

DOT 3 AND DOT 4 REQUIREMENTS, INCLUDING

GM, FORD AND CHRYSLER.

Exceeds DOT 3 and DOT 4 requirements.

Unique Low Moisture Activity (LMA)

formulation provides maximum protection against vapor

lock brake failure.

Maintains a higher boiling point than

conventional brake fluids.

Superior protection against chloride and zinc corrosion of braking system

parts.

Ideally suited for Audi, BMW, Jaguar, Mercedes-Benz, Porsche, Saab,

Volkswagen, Volvo, Honda, Acura, and many other brake systems.

Exceeds specifications SAE 1703, SAE 1704, ISO 4925, JIS K2233 and

FMVSS No. 116 DOT 3 and DOT 4.

2. WAXPOL

3.

Contains high boiling solvents

Non-drying in composition

Scientifically blended

Does not swell or soften the rubber parts

Non-reactive to different metals in the brake

system

Water tolerrant within limits

Ensures safe, easy and confident driving

pg. 57

Packing: 100ml, 250ml, 500ml, 1Litre.Poly Bottles, 5 Litre Jerrycan, 20 Litre

Poly Jar & 205 Litre Drum

3.VOLVOLIN Compatible with all braking systems

requiring a DOT 3 or DOT 4 fluid

Mixes well with conventional fluids

High dry boiling point up to 480°F reduces

the risk of fluid evaporation and possible brake

failure

Low-moisture formula provides excellent

vapor lock protection

Maximizes ABS performance

Ideal for hydraulic and disc brakes

Surpasses specifications SAE J1703, FMVSS No. 116 and DOT 4 Motor

Vehicle Brake Fluid

Minimum wet boiling point is 311°F

pg. 58

Need of the study.

Wuerth has completed 2 years of operation in Orissa. To ascertain the

impact of the marketing activities for the last two years it is essential to find out

the brand awareness level of wuerth and its market position. To frame any

marketing strategy further it needs to know the preferences of retailers regarding

keeping stocks. The study is an endeavor to suffice to all these needs.

OBJECTIVES OF THE STUDY:

1. To ascertain the brand awareness level of Wuerth.

2. To find out the preferences of retailers in keeping stocks.

3. To find out the market share of Wuerth.

Scope of the Study.

The Auto Ancillary industry in India is emerging with many domestic

and international players. The growing use of automobiles has given the

industry a needed acceleration. Wuerth is continuing its third year of operation

in Orissa. Being a Multinational Company and an international player its

strategies for market proliferation is worth studying. By this study I could find

the market share of different companies operating in this industry and in Orissa.

pg. 59

CHAPTER – 3 Research Methodology

pg. 60

Research Methodology:

Research Objective:

The objective of research is:

To know the market share of the product.

To know about the preferences of the retailers that influence their

decision to keep stock of Wuerth products.

To know the Channel of Distribution and how product fulfill the demand

of the consumer.

To measure why company gives more importance on Sales Promotion.

To measure the Brand awareness level of Wuerth.

Sources of Data Collection:

Secondary Sources: Collected from published sources like Automobile

Journals, Dealer Manuals and Websites.

Primary Sources: Collected from a sample of a cross section of

Sambalpur, Rourkela and Jharsuguda including concerned Retailers

through Questionnaire.

To nullify the error in sampling I divided the city of Sambalpur,

Rourkela and Jharsuguda into 3 areas and the sample elements were

gathered uniformly from each area. This gave a preliminary idea on the

Product quality, Promotional Offerings, Pricing Strategies, and

distribution channels of Wuerth.

Type of Research: Descritive study by questionnaire survey.

Research Instruments: Mainly by questionnaire(Close ended format)

pg. 61

CHAPTER – 4 Data Analysis

Findings

Suggestions & Recomendations

pg. 62

1. Which company products do you keep?

Frequency Percent

a 88 77.2

b 4 3.5

c 2 1.8

d 11 13.1

e 5 4.4

Total 110 100.0

Fig. No. – 1

According to the study it is found that 3M is the market leader with 80%

of Market share and it, main competitor is waxpol having 10% of Market

share. Wureth comes in third position with 4% of Market share. Castrol

and volvolin have a minimal market share of 4% and2% respectively.

a 80%

b 4%

c 2% d

10%

e 4%

Market Share

pg. 63

2. How you rate the quality of the Wurth Products?

Fig. No. – 2

According to the study 39% of the Retailers respond that the quality of

Wuerth is very good, a maximum 32% of retailers respond that it is of

Good quality. For 16% retailers it is of excelent quality and only for 13%

of retailers it is Average.

a 16%

b 39%

c 32%

d 13%

Product Quality of Wuerth

Frequenc

y

Percent

a 18 15

b 43 37.7

c 35 30.7

d 14 12.3

Total 110 100.0

pg. 64

3. What influences your decision to stock Wuerth Product?

Frequency Percent

a 11 9.6

b 33 32.9

c 48 42.1

d 13 11.4

e 5 4.4

Total 110 100.0

Fig. No. – 3

The main cause that influence the decision of the retailers to stock

Wuerth Product is mainly the Product Quality. In the study it is found that

44% of the retailer‘s stock Wuerth Product only because of its quality.

30% retailers stock to meet demand, 12% for Damage Settlement, 10%

for Pricing and only 4% for other causes.

a 10%

b 30%

c 44%

d 12%

e 4%

Cause of Keeping Stock of Wuerth Products

pg. 65

4. Price of Wuerth products as compared to other competitors‘ products?

Fig. No. – 4

In the study 72% of retailers responded that the Wuerth Products are

expensive. For 18% of retailers it is somewhat equal and for 10% retailers

it is cheaper.

a 72%

b 10%

c 18%

Comparision of Price

Frequency Percent

a 79 69.3

b 11 9.6

c 20 21.1

Total 110 100.0

pg. 66

5. From which source you got the information?

Frequency Percent

a 26 26.3

b 10 8.8

c 5 4.4

d 18 15.8

e 51 44.7

Total 110 100.0

Fig. No. – 5

Maximum number of Retailers get the information about the Wuerth

Product from the Direct Marketing Professionals i.e. 46%. 24% Retailers

get information from the Mechanics, 16% Retailers form other People in

the Business, 9% from Internet and 5% from Magazine.

a 24%

b 9%

c 5%

d 16%

e 46%

Source of Information

pg. 67

6. Do you receive any scheme or sales promotion offer while procuring

Wuerth product?

Frequency Percent

a 80 70.2

b 30 29.8

Total 110 100.0

Fig. No. – 6

73% of the retailers responded that they receive sales promotion offers

and schemes, while 27% denied any such.

a 73%

b 27%

Recipt of Sales romotion Offers and Scheme

pg. 68

7. If yes, then how far the schemes or discounts are comparable with other

company‘sproducts?

Frequency Percent

a 65 57.0

b 15 13.2

c 30 29.8

Total 110 100.0

Fig. No. – 7

In the study 59% of the Retailers responded that the Sales promotion

Offers and Schemes given by Wuerth is more than others. 27% said it is

equal and 14% said it is less.

a 59% b

14%

27%

Comparision of Wuerth's Scheme and Offers with Others'

pg. 69

8. Since how long, you know about the Wurth Products?

Frequency Percent

a 10 8.8

b 20 17.5

c 60 52.6

d 20 21.1

Total 114 100.0

Fig. No. – 8

In the study 18% of Retailers responded that they know Wuerth from

more than 2 years, 55% said they know the product form last 1 to 2

Years, 18% said they from last 6 Months to 1 year and only 9% said they

know it from less than 6 Months.

a 9%

b 18%

c 55%

d 18%

Knowledge of the Product

pg. 70

9. What is your response towards product availability by the Wurth Auto India?

Frequency Percent

a 55 48.2

b 25 25.4

c 15 13.2

d 10 8.8

e 5 4.4

Total 110 100.0

Fig. No. – 9

In the study 50% of retailers responded that the availability of Wuerth

Products are excellent, 23% responded that it Very Good, for 14% of

retailers it is Good, for 9% of retailers it is Average and for 4% of

Retailers it is Poor.

a 50%

b 23%

c 14%

d 9%

e 4%

Availability of Wuerth Products

pg. 71

10. Within how many days you receive the product after the placement of

order?

Frequency Percent

a 60 52.6

b 30 29.8

c 15 13.2

d 5 4.4

Total 110 100.0

Fig. No. – 10

In the study 55% of the retailers responded that they receive the product

within one day of from the placement of order. 27% of retailers said that

they receive it within two days, 14% of retailers receive it within four

days and only 4% receive it beyond four days of the placement of order.

a 55%

b 27%

c 14%

d 4%

Receipt of Stock after Placemebt of Order

pg. 72

11.In which way you receive the product ?

Fig. No. – 11

64% of the retailers responded that they receive Wuerth Products by

Direct Sales Personnel and 36% of retailers responded that they receive it

through other modes of transportation.

By salesmen 64%

By other modes of transportation

36%

Modes of receipt of Product

pg. 73

Suggestions & Recommendations:

In my opinion following suggestions should be taken into consideration

by the company which helps it to increase its sales, market share, and

customer satisfaction and of leading position in the market and further

growth can be achieved.

Wuerth Auto India Company recently lunch in orissa market, therefore it

should give more attention in promotion for better understanding of the

customer.

The company should segment the market according to customers and

consumers.

Company should make the price as such affordable by all consumers.

The sales persons and marketing executives should be aware of the

contents and usage of the products.

The company should maintain a strong relationship with the sub

distributors and dealers.

The company should develop its service system to gain satisfaction of the

customers.

The company should give offer to the retailers as well as to the

customers.

The company should give more attention towards research.

pg. 74

CONCLUSION:

Gaining and maintaining consumer preference is a battle that is

never really won. Continued and consistent branding initiatives that

reinforce the consumer‘s purchase decision will, over time, land the

product in consumer preference sets. Attaining and sustaining preference

is an important step on the road to gain brand loyalty.

During my study I come to understand that WUERTH company is

the market leader in USA and UK. But it is new for Orissa market. In

Orissa Castrol Break Fluid is the market leader. Most of the consumer in

Orissa they do not know the WUERTH Company.

Therefore, it should improve in some areas like in the field of

promotion of the products, customer service, channel of distribution etc.

to improve its customer satisfaction value. I think that by following some

of the part of my recommendations the company may get improvement in

its business.

pg. 75

Bibliography:

Name of the site:-

www.google.com

www.wikipedia.com

www.ask.com

www.wuerth auto industry UK.com

www.wuerth auto India.com

www.3M.com

www.volvolin.com

www.waxpol.com

www.castrol.com

www.India automotive.com

Name of the books:-

Philip Kotler,Keller, Koshy & Jha, Marketing Management,Pearson

Education.

Kotler, A framework for Marketing; Pearson.

Arun Kumar, N Meenakshi, marketing Management, Vikash Publication.

Srinivasan, case studies in Marketing, Indian context: PHI.

C.R.Kothari, Research Methodology, (second revised edition), New age

International publishers.

Best, John w. & Kahn, James V., Research in Education, 5th Ed., New

Delhi: PrenticeHall of India pvt. Ltd.

Magazines:-

Business and Economy

pg. 76

Questionnaire for Retailers

Dear Sir,

As part of my 2-year MBA program at Academy of Management Studies,

BBSR. I have under taken a project work to study the ―Marketing Mix

Decisions at Wurth Auto India Ltd with special focus to Brake Fluid‖ I

would be grateful if you spare few minutes in filling up the following

questionnaire.

Name :-……………………………………………………………………

1. Which company products do you keep?

A) 3M B) Wuerth C) Volvoline D) Waxpol E)Castrol

2. How you rate the quality of the Wurth Products?

A) Excellent B) Very Good C) Good D) Average E) Poor

3. What influences your decision to stock Wuerth Product?

A) Pricing B) Demand C) Quality D) Damage Settlement E)

Other‘s

4. Price of Wuerth products as compared to other competitors’

products?

A) Expensive B) Cheaper C) Somewhat equal

5. From which source you got the information?

A) Mechanics B) Internet C) Magazines D) People in this business

E) Direct Marketing Professional

pg. 77

6. Do you receive any scheme or sales promotion offer while

procuring Wuerth product?

A) Yes B) No

7. If yes, then how far the schemes or discounts are comparable with

other company’s products?

A) More B) Less C) Equal

8. Since how long, you know about the Wurth Products?

A) Less than 6 months B) 6 months to 1 year C) 1 to 2 years D) More

than 2 years

9. What is your response towards product aviability by the Wurth

Auto India?

A) Excellent B) Very Good C) Good D) Average E) Poor

10. Within how many days you receive the product after the

placement of order?

A) Within one day B) Within two days C) Within four days D) Beyond

4 days.

11. In which way you receive the product ?

A) By Salesman B) Delivery through other modes of

transportation.

12. Any suggestion:

……………………………………………………………………………

……………………………………………………………………………

……………………………………………………………………………

……………………………………