MARKET SURVEY TO STUDY THE EXISTING LUBE MARKETING SCENARIO THROUGH IOCL RETAIL OUTLETS AND OTHER COMPETITORS

AND TO SUGGEST AREAS OF IMPROVEMENT

Submitted to:
Mr. Girish Jain
State Retail Sales Manager(LUBE) IOCL, Jaipur

Submitted by:
Ravi Kant Nawani & Paritosh Gupta
MBA (Oil and Gas Marketing) University of Petroleum and Energy Studies

ACKNOWLEDGEMENT
Industrial training is an integral part of any management program. We feel ourselves lucky that we got the opportunity to do the training in one of the largest and most popular oil sector company, Indian Oil Corporation Limited. We take the opportunity to express our gratitude to all of them, who helped us to accomplish this challenging project in Indian Oil Corporation Limited. We wish to express our deepest sense of gratitude towards our respected mentor, Mr. Girish Jain, State Retail Sales Manager & Mr. Sanjay Kumar, Assistant Manager Retail Sales. We have received enormous inputs and inspiration in various stages of our project from them. We also extend my heartiest thanks to all the faculty members of UNIVERSITY OF PETROLEUM AND ENERGY STUDIES, DEHRADUN for gracing us with the knowledge that we could use in the completion of this training. We are grateful to our faculty guide Dr. Suresh Malodia, for his everlasting support and guidance. Finally without the blessing of God almighty and moral support of our family members, it would not have been possible to complete the dissertation successfully.

AUTHORIZATION STATEMENT
Dated

To Whomsoever It May Concern

This is to certify that Ravi Kant Nawani & Paritosh Gupta have developed and implemented the Project work entitled Study of existing Lube marketing through retail outlets of IOCl vis-o-vis competitors, identify areas of improvement and recommendations, Jaipur under my guidance at Indian Oil Corporation Limited from 2nd July12 to 10th August12 for partial completion of MBA (Oil & Gas Management) from University Of Petroleum & Energy Studies, Dehradun.

The project has been completed successfully to our satisfaction and their conduct during the tenure of the project was good.

For: Indian Oil Corporation Limited,

Name: Mr. Girish Jain Designation: State Retail Sales Manager(LUBE) Companys Name: Indian Oil Corporation Limited

SYNOPSIS

Project Title

Study of existing Lube marketing through retail outlets of IOCL vis-o-vis competitors, identify areas of improvement and recommendations

Industry Organization Project undertaken by

OIL & GAS SECTOR Indian oil Corporation Limited Ravi Kant Nawani Paritosh Gupta

Project guide

Mr. Girish Jain Mr. Sanjay Kumar

Duration of project

2nd July 2012-10th august 2012

TABLE OF CONTENTS Introduction Of Lubricant Industry Indias Flagship National Oil Company Vision of IOCL Mission of IOCL Competitors of IOCL Objectives Of IOCL IOCL Brands & Products in the Market o Servo Branding of Servo Safeguard Mechanism for failure/ default Differentiation Strategy in the Retail Market by IOCL Research Methodology Sampling Design Data Tabulation & Interpretations Questionnaire Suggestions and Recommendations Conclusion References

ACKNOWLEDGEMENT

Industrial training is an integral part of any management program. We feel ourselves lucky that we got the opportunity to do the training in one of the largest and most popular oil sector company, Indian Oil Corporation Limited. We take the opportunity to express our gratitude to all of them, who helped us to accomplish this challenging project in Indian Oil Corporation Limited. We wish to express our deepest sense of gratitude towards our respected mentor, Mr. Girish Jain, state Retail Sales Manager & Mr. Sanjay Kumar (RSE). We have received enormous inputs and inspiration in various stages of our project from them. We also extend my heartiest thanks to all the faculty members of UNIVERSITY OF PETROLEUM AND ENERGY STUDIES, DEHRADUN for gracing us with the knowledge that we could use in the completion of this training. We are grateful to our faculty guide Dr. Suresh Malodia, for his everlasting support and guidance. Finally without the blessing of God almighty and moral support of our family members, it would not have been possible to complete the dissertation successfully.

INTRODUCTION

A lubricant is a substance (usually a liquid) introduced between two moving surfaces to reduce the friction and wear between them. A lubricant provides a protective film which allows for two touching surfaces to be separated, thus lessening the friction between them. Lubricants are an essential part of modern machinery. Everything from computer hard disk drives to the Airbus A380 requires lubrication of its moving parts. Typically lubricants contain 90% base oil (most often petroleum fractions, called mineral oils) and less than 10% additives.

Purpose of Lubricants: Lubricants perform the following key functions Keep moving parts apart Reduce friction Transfer heat Carry away contaminants & debris Transmit power Protect against wear Prevent corrosion

Application of Lubes Lubricants are mainly used is three sectors automotive, industrial and aviation. There are numerous application of lubes in these sectors, some of these applications are listed below: Automotive o Engine oils Petrol (Gasoline) engine oils Diesel engine oils

o o o o o o o o o

Automatic transmission fluid Gearbox fluids Brake fluids Hydraulic fluids Tractor (one lubricant for all systems) Universal Tractor Transmission Oil UTTO Super Tractor Oil Universal STOU includes engine Other motors 2-stroke engine oils

Industrial o Hydraulic oils o Air compressor oils o Gas Compressor oils o Gear oils o Bearing and circulating system oils o Refrigerator compressor oils o Steam and gas turbine oils o Aviation o Gas turbine engine oils o Piston engine oils o Marine o Crosshead cylinder oils o Crosshead Crankcase oils o Trunk piston engine oils o Stern tube lubricants

LUBRICANT COMPANIES: Public Sector Undertakings (PSUs): o Indian Oil Corporation Limited (IOCL) o Hindustan Petroleum Corporation Limited (HPCL) o Bharat Petroleum Corporation Limited (BPCL)

Private Players: o o o o o o o o Reliance Petroleum Castrol Elf Total-Fina Gulf Shell Oil Caltex Pennzoil Mobil

MARKET SCENARIO

WORLD: From a global perspective, total lubricant demand is expected to be about 41.8 MMT, or about 13 billion gallons, according to a 2007 Freedonia Report. Growth is expected to be about 2%/yr through 2010. The fastest growth will be in the Asia/Pacific region, with China being the major gainer.

In the world market, the segmentation by application area is: Engine oils 48% Process oils 15.3% Hydraulic oils 10.2% All other - 26.5%

The geographical segmentation is: Asia/Pacific 36.7 North America 28% Western Europe 12.5% Rest of world 22.8%

U.S. MARKETS

Sales of all lubricants in the US were in the range of 2.5 billion gallons in 2006, accordingto the latest National Petroleum Refiners Association report. This number is lower than the3.6 billion gallons estimated by the above Freedonia study. The NPRA numbers are likelyto be more accurate. The market is segmented according to the NPRA 2006 data as: Automotive 56.1% Industrial 21.2% Process oils 18.1% Metal working 2.1% Greases 2.4% The overall growth rate was about 1%/yr. Industrial oils were flat while automotive oils andmetal working fluids were down, although some parts of these segments grew. The lowgrowth has been attributed to the lengthening of oil change intervals and the higherperformance oils being developed, in spite of the increase in vehicles and other machineryrequiring lubricants.

INDIA: The Background These are exciting times for the lube industry in India. Each one of the vast contingent of 22 Multinationals and a total of 80 big & small players are vying for a pie of Rs.5,500 Crore market. Worldwide established brands,some of them albeit new to India, like Shell, Mobil, Caltex, Elf, Pennzoil are fighting it out with established Indian brands like SERVO, Castrol& others to establish their foothold in the 6th largest lubricant market in the World. Compared to the average World consumption of 35 Million tonnes per annum & Asia-Pacific region consumption of 7.5 million tones, the Indian lube industry with annual demand of 1 million

tonnes is just behind Japan and China in Asia having a demand growth rate of 4% compared to the World growth rate ranging between zero to 2%. That is the lube industry in India today. Prior to 1992 the lube industry in India was controlled by the 4 major Public Sector Oil companies namely Indian Oil, HPCL,BPCL& IBP and a handful of private companies like Castrol, Gulf, Tidewater & others. With the distribution & canalization of base oil import being controlled by the Government of India, the PSU Oil Companies controlled 90% of the market share. The decanalization of the lube base oil imports in 1993 by the Govt. of India followed by reduction of import duty on lube base oils from 85% to 30% and gradual scrapping of administered pricing observed the announcement of almost a new lube venture every month during 1994. Most of the new entrants formed associations with Indian companies both in the Private and Public sectors. All these new entrants are targeting for a very small share of the market considering that even 1% market share means a sale of Rs.55 Crores. The Indian Oil controlled 54% of the lube market out of total PSU's market share of more than 90% during 91-92. The Government policy of deregulation followed by entry of multinationals through JVCs had its effect on the market dominance of PSUs. This has been followed by sudden entry of lot many players, each one claiming to have some international collaboration and a `foreign' brand name.This had its initial impact and illusions in the market and the market became more volatile. During these phases marketing channels of distribution had drifted from petrol stations to bazaar trade. The Marketing Channels The marketing channels for automotive lubricants in India consist of the following: Petrol Stations Wholesale Distributors Lube Oil Shops Auto Spare Shops Authorized Service Stations

 Garages Rural & Agricultural dealers Super Markets Till recently, the Indian consumers linked filling of lubricants to that of petrol & diesel in petrol stations. With the advent of deregulated market scenario & fierce competition, efforts are being made to position lubricant as high involvement consumer goods. Hence, the resultant drift towards the bazaar trade i.e., outside the petrol stations. The sales of automotive lubricants through bazaar trade increased from a mere 10% prior to 1993 to a handsome present level of 40% compared to Worldwide Trend of more than 70%.In the developed World, because of high degree of customer sensitivity & awareness, Do-it-Yourself (DIY) concept has evolved for filling of engine oil. People buy from super markets & fill it themselves. In India, this job is still left to the mechanics & service stations. During these years this shift in trade had the following effects: Decline in Market Share of PSU oil companies. Market became heavily crowded & the industry got transformed into FMCG. Dumping of products in the bazaar. War of trade discounts resulting in rice war & lesser margins for dealers. Entry of spurious lubricants. Lubricant Industry Segmentation

The lubricant industry can be divided into two major categories i.e., Automotive and Industrial brand of lubricants. The industrial segment basically comprises of Core Sector industries like Defence, Railways, State Transport Undertakings, Steel Plants, Coal Mines, Fertilizers, Power Houses, and Chemicals& Heavy Engineering Industries. In the industrial segment, the PSUs could successfully maintain their stronghold due to the reasons that the requirement is most end use specific, customer focused, productivity linked & service oriented. Here, price, quality, performance track record, R&D infrastructure for technology up gradation and product development for end use specific application & after sales service play the most significant role & FMCG techniques of promotion and creating illusions takes a back seat. Indian Oil virtually dominated and continues to dominate this sector through their proven track record of quality product and vast network of

professionalized pre sales & after sales services. But the automotive segment which accounts for major share i.e., 67% of the lubricant market became soft target for new entrants and here private sector players could immediately consolidate their market share by adopting FMCG techniques. PSU oil companies in general and IOCL in particular initially restricted their channel of distribution through their large infrastructure of marketing network i.e., petrol stations & distributor network. The focus happened to be on ensuring quality & customer accountability and restrict mushrooming of spurious trade in bazaar through the marketing channels where some kind of control could be exercised by the company. The major thrust put by Industry leader like Indian Oil at this juncture was to promote brand visibility and creation of brand image through endorsement, TV advertisements & image building at Retail sites. Tie Up with OEMs Among the PSU Oil Companies Indian Oil is one company who has all along given utmost importance on tie ups with Original Equipment Manufacturers (OEMs) after signing agreements with major OEMs like Maruti Udyog Ltd,TELCO, Bajaj Auto, Kinetic Engineering,SKODA etc. Even initial fill & warranty fill agreements were also signed with TELCO & Hindustan Motors. In fact, the Japanese vehicle manufacturers prefer to tie up with one or two major oil manufacturers for use of engine oils as `Genuine Spare Part' of the vehicle whereas the American vehicle manufacturers prefer to follow the American Petroleum Institute who defines the performance parameters of engine oils. The Indian vehicle manufacturers follow a route which is Combination of both. These inner strengths of PSUs and the quality policy adopted by them, even attracted major multinational players like Shell, Mobil, Exxon & Caltex to enter into tie up with one or the other PSU to have access to their well established marketing network.

Strategic Business Plan

The PSUs initially could not resist the onslaught of dumping in bazaar channels and illusions created by FMCG practices but off late started regaining their lost ground and to some extent restrict & arrest their decline from a level as high at 90% to 65%. In this front Indian Oil after emerging as India's largest commercial organization and being the only company in the country to feature in the Fortune Global 500 listing has adopted structured business plan approach to strike a balance between conventional marketing channels (petrol stations)/distribution network and parallel marketing channels (bazaar trade). The parallel marketing channels chosen by the Company also adopted the path of brand image, customer focus & customer accountability by way of putting up SERVO Premium Lube Shops in the bazaar trade. The petrol stations are also simultaneously undergoing major facelifts through implementation of the companies Vision-2000 modernization plan. By way of this modernization the customers will get the opportunity to pick up all their convenience stores in the Convenio (departmental store) put up at the petrol stations while filling up petrol, diesel & lubricants.

IOC is also in the process of establishing certain strategically located modern petrol stations on the highways where apart from all way side amenities like motel, dhaba, restaurant, amusement parks, toilets, car parking slots, wash rooms, communication facilities (STD/ISD,E-mail) etc. also service & repair shops of major OEMs of the country will be put up to facilitate quality services at right price. The concept being developed in the Golden Jubilee year of India's independence,these outlets will be christened `Jubilee Outlets'. The coming years will ensure availability of more effective & customer friendly channel of distribution and will have its impact in the long run on the short terms strategy presently being practiced in the automotive lubricant market. The strength of a marketing company more so in the field of specialized lubricants definitely lies in their access to superior technology base. This is more so because the automotive sector is undergoing a major technology upgradation program with entry of reputed international automobile manufacturers in the market. Moreover, stringent emission norms & eco-friendly devices are taking over old practices which will necessitate improvement in performance of lubricating oils. Such

challenges cannot be encountered with only technological collaborations but also input resourcing. Consistency of inputs and sound infrastructural base will play a significant role to combat competition. The thrust in the coming years will be more on adopting to Indian market & Indian road conditions and thereby it will be essential to develop indigenous lubricants technology keeping pace with international standards.

INDIAN OIL Corporation Limited: INDIAS DOWNSTREAM MAJOR

Introduction Indian Oil Corporation Ltd. is currently India's largest company by sales with a turnover of Rs. 271,073 crore and profit of Rs. 10,220.55 crore for fiscal 2009-10. Indian Oil Corporation Ltd. is the highest ranked Indian company in the prestigious Fortune Global 500. It was ranked at 116th position in 2008 ,Now ranked 83rd in 2012. It is also the 20th largest petroleum company in the world. Indian Oil and its subsidiaries today accounts for 49% petroleum products market share in India.

2012

83

Indian Oil group has sold 59.29mn tonnes of Petroleum including 1.74mn tonnes of Natural gas in the domestic market and exported 3.33mn tonnes in the yr 200708. Indian Oil operates the largest and the widest network of fuel stations in the country, numbering about 17606 (15557 regular ROs & 2049 Kissan Sewa Kendra). It has also started Auto LPG Dispensing Stations (ALDS). It supplies

Indane cooking gas to over 47.5 million households through a network of 4,990 Indian distributors. In addition, Indian Oil's Research and Development Center (R&D) at Faridabad supports, develops and provides the necessary technology solutions to the operating divisions of the corporation and its customers within the country and abroad. Subsequently, Indian Oil Technologies Limited - a wholly owned subsidiary, was set up in 2003, with a vision to market the technologies developed at Indian Oil's Research and Development Center. It has been modeled on the R&D marketing arms of Royal Dutch Shell and British Petroleum. Indian Oil Corporation Ltd., currently India's largest company by sales with a turnover of Rs. 271,073 crore and profit of Rs. 10,220.55 crore for fiscal 2009-10, is also the highest ranked Indian company in the prestigious Fortune 'Global 500' listing, having moved up 11 places to the 105th position in 2009.

INDIAs FLAGSHIP NATIONAL OIL COMPANY

Incorporated as Indian Oil Company Ltd. on 30th June, 1959, it was renamed as Indian Oil Corporation Ltd. on 1st September, 1964 following the merger of Indian Refineries Ltd. (established 1958) with it. Indian Oil and its subsidiaries account for approximately 48% petroleum products market share, 34% national refining capacity and 71% downstream sector pipelines capacity in India.

For the year 2008-09, the Indian Oil group sold 62.6 million tonnes of petroleum products, including 1.7 million tonnes of natural gas, and exported 3.64 million tones of petroleum products. The Indian Oil Group of companies owns and operates 10 of India's 20 refineries with a combined refining capacity of 60.2 million metric tonnes per annum (MMTPA, .i.e. 1.2 million barrels per day). These include two refineries of subsidiary Chennai Petroleum Corporation Ltd. The Corporation's cross-country network of crude oil and product pipelines, spanning over 10,000 km and the largest in the country, meets the vital energy needs of the consumers in an efficient, economical and environment-friendly manner. Indian Oil is investing Rs. 43,400 crore (US $10.8 billion) during the period 200712 in augmentation of refining and pipeline capacities, expansion of marketing infrastructure and product quality up gradation as well as in integration and diversification projects.

Vision and mission of IOCL

Vision A major diversified, trans-national, integrated energy company, with national leadership and a strong environment conscience, playing a national role in oil security & public distribution.

Mission To achieve international standards of excellence in all aspects of energy and diversified business with focus on customer delight through value of products and services, and cost reduction. To maximize creation of wealth, value and satisfaction for the stakeholders. To attain leadership in developing, adopting and assimilating state-of-the-art technology for competitive advantage. To provide technology and services through sustained Research and Development. To foster a culture of participation and innovation for employee growth and contribution. To cultivate high standards of business ethics and Total Quality Management for a strong corporate identity and brand equity. To help enrich the quality of life of the community and preserve ecological balance and heritage through a strong environment conscience.

OBJECTIVES OF IOCL To serve the national interests in oil and related sectors in accordance and consistent with Government policies. To ensure maintenance of continuous and smooth supplies of petroleum products by way of crude oil refining, transportation and marketing activities and to provide appropriate assistance to consumers to conserve and use petroleum products efficiently. To enhance the countrys self-sufficiency in crude oil refining and build expertise in lying of crude oil and petroleum product pipelines. To further enhance marketing infrastructure and reseller network for providing assured service to customers throughout the country. To create a strong research & development base in refinery processes, product formulations, pipeline transportation and alternative fuels with a view to minimizing/eliminating imports and to have next generation products. To optimize utilization of refining capacity and maximize distillate yield and gross refining margin. To maximize utilization of the existing facilities for improving efficiency and increasing productivity. To minimize fuel consumption and hydrocarbon loss in refineries and stock loss in marketing operations to effect energy conservation. To earn a reasonable rate of return on investment. To avail of all viable opportunities, both national and global, arising out of the Government of Indias policy of liberalization and reforms. To achieve higher growth through mergers, acquisitions, integration and diversification by harnessing new business opportunities in oil exploration & production, petrochemicals, natural gas and downstream opportunities overseas. To inculcate strong core values among the employees and continuously update skill sets for full exploitation of the new business opportunities. To develop operational synergies with subsidiaries and joint ventures and continuously engage across the hydrocarbon value chain for the benefit of society at large.

OBLIGATIONS Towards customers and dealers:- To provide prompt, courteous and efficient service and quality products at competitive prices. Towards suppliers:- To ensure prompt dealings with integrity, impartiality and courtesy and help promote ancillary industries. Towards employees:- To develop their capabilities and facilitate their advancement through appropriate training and career planning. To have fair dealings with recognised representatives of employees in pursuance of healthy industrial relations practices and sound personnel policies. Towards community:- To develop techno-economically viable and environmentfriendly products. To maintain the highest standards in respect of safety, environment protection and occupational health at all production units. Towards Defence Services:- To maintain adequate supplies to Defence and other para-military services during normal as well as emergency situations. FINANCIAL OBJECTIVES To ensure adequate return on the capital employed and maintain a reasonable annual dividend on equity capital. To ensure maximum economy in expenditure. To manage and operate all facilities in an efficient manner so as to generate adequate internal resources to meet revenue cost and requirements for project investment, without budgetary support. To develop long-term corporate plans to provide for adequate growth of the Corporations business. To reduce the cost of production of petroleum products by means of systematic cost control measures and thereby sustain market leadership through cost competitive.

COMPETITORS Indian Oil has been ranked at 2nd position amongst the top 50 most valuable brands of India, assessed by global brand valuation firm, London-head quartered Brand Finance. Much of this comes from the sheer scale and strength Indian Oil commands in its sector. It stands tall amongst giants like Tata Consultancy Services, Tata Motors, Wipro Technologies, and state petroleum companies BPCL&HPCL. Indian Oil had also a place of pride in this coveted list of year 2006-07. Indian Oil Corporation has two major domestic competitors, Bharat Petroleum and Hindustan Petroleum. Both are state-controlled, like Indian Oil Corporation. There are also private competitors like Castrol, Reliance Petroleum, Essar Oil and Shell.

BHARAT PETROLEUM CORPORATION LIMITED (BPCL)

BPCL has been one of the key players in the Indian Lube market since the deregulation of the lube sector in 1991. In 2003, BPCL went for Umbrella Branding under the name MAK Lubricants. MAK Lubricants has been registering a growth of 8-10% regularly over the past few years.

Retail Channel Channel partners include 7530 retail outlets, 190 PLDs, 600 MAK Garages and MAK Mobile vans to ensure penetration of the market at all levels.

Brand Promotion BPCL signed up Indian cricketer Mahendra Singh Dhoni as their brand ambassador in 2006. The rise of MAK Lubricants in the market has been identical to that of M.S. Dhoni in the field of cricket.

Packs 20 Ltr.

Scheme 1 Ltr. free with 19 Ltr.

Grades Covered MAK Diamond/Gold/Multigrade/GE/SPIROL 90/SPIROL 140EP

15 Ltr. 10 Ltr. 7.5 Ltr 7 Ltr 5 Ltr

1 Ltr. free with 14 Ltr. 500 ml free with 9.5 Ltr. 500 ml free with 7 Ltr. 500 ml free with 6.5 Ltr. 500 ml free with 4.5 Ltr.

MAK Diamond/Tata Motors CH4 MAK Diamond/Multigrade/Tata Motors CH4 MAK Diamond/ Multigrade MAK Gold MAK Diamond/Gold/Multigrade

HINDUSTAN PETROLEUM CORPORATION LIMITED (HPCL)

HPCL entered the lube market in 1984 and has registered consistent growth ever since. HPCL is the owner of the largest lube refinery in India with a capacity of 335 TMT which accounts for more that 40% of Indias total Lube Base Oil production. Product range consists of 300+ grades of lubes, specialties and greases.

Retail Channel HPCL Retail channel consists of 9140 retail outlets and 1638 LDO/SKO dealers as well as partnering with several automotive brands as the official lubricant suppliers for their vehicles.

Brand Promotion HPCL appointed ace Indian tennis player Sania Mirza as their brand ambassador in 2005. HPCLs club HP initiative where in it provides basic amenities like toilets, food items and facilities like free windshield wipes, free air for the consumers has been hit with the customers in the last few years. HPCL has been offering several discount options as well as other materialistic gifts with their lube packs for e.g. coupons ranging from Rs. 5 to Rs. 50 are found in packages of their lube oils which can be encashed at the retailer by the consumer or the mechanic.

CASTROL INDIA LTD.

Castrol India is a part of Castrol Limited UK (Part of BP Group) and is the second largest manufacturer of automotive and industrial lubricants in the Indian Lubricant market and holds 22% share of the market. Castrol entered the market in 1910 when it started importing lubricants from the CC Wakefield & Co.

Retail Channel Castrol has a strong hold over the Indian lube market through its extensive channel spread across the country. The network consists of 270 distributors and over 70000 retailers.

Brand Promotions Castrol has appointed bollywood actor John Abraham and Star cricketer Sachin Tendulkar as their brand ambassadors. John, who himself is a motor sports enthusiast, and Sachin Tendulkar, who is known for his passion for automobiles, have provided castrol with ample support in promoting the brand and making it the market leader. Castrol has actively organized mechanic meetings where representatives from the company have spread awareness among the mechanics regarding the benefits of using castrol products. Castrol has also provided sponsorship for several clubs like xBhp.com which promote motorsports in the country and has been the most visible of players in the market whether it is electronic or print media.

PRODUCTS OFFERED BY IOCL Indian Oil is not only the largest commercial enterprise in the country it is the flagship corporate of the Indian Nation. Besides having a dominant market share, Indian Oil is widely recognized as Indias dominant energy brand and customers perceive Indian Oil as a reliable symbol for high quality products and services. Major Products of IOCL are Auto LPG Aviation Turbine Fuel Bitumen High Speed Diesel Industrial Fuels Liquefied Petroleum Gas Lubricants & Greases Marine Fuels MS/Gasoline Petrochemicals Crude oil Superior Kerosene Oil

IOCL BRANDS & PRODUCTS IN THE MARKET

IOCL PRODUCTS IN THE MARKET SERVO

Indian Oil's SERVO range of lubricants reigns as the undisputed market leader in the Indian lubricants market. Known for its cutting-edge technology and high

quality products, SERVO backed by Indian Oil's pioneering R&D, extensive blending and distribution network, sustained brand enhancement and new generation packaging is a one-stop shop for complete lubrication solutions in the automotive, industrial and marine segments. In the retailing segment, besides Indian Oil petrol stations, SERVO range of lubricants is available through a network of SERVOXpress stations, bazaar outlets and thousands of auto spare parts shops across the country. The SERVO range includes over 500 lubricants and 1200 formulations encompassing literally every lubricant requirement. The SERVOXpress is a one-stop shop for quick, easy and convenient auto care, providing customers with a refreshing experience. The SERVOXpress stations have facilities for oil change, tyre/battery checkups, A/C service, vacuum cleaning, perfuming, and upholstery cleaning, polishing and lamination installation too.

RESEARCH METHODOLOGY

The Methodology is an integral primary part of the project work. Every project has been undertaken in a definite manner, which forms the validity of the report. The project undertaken is also based on definite methods, which are usually found in most of the research projects. The methodology in the project is based on the following manner in a sequential order.

Data collection Source of data collection Methods of data collection Data Analysis Sampling Sampling size

DATA COLLECTION The collection of data is core part of every activity relating to marketing decisions. The information derived from such data is closely analyzed. Interpretation and conclusion have been arrived on which other decisions are totally dependent. There are various sources from where data can be collected and there are also most appropriate methods in the application of which we can collect the data. In the application of sources and methods the reliability the accuracy must be well judged prior to collection. The whole study has been worked out depending on the datas availed from.

SOURCES OF DATA COLLECTION There are two sources on which data can be collected, via primary source and secondary source. The data which are prepared from the main purpose and researcher or owner it is called primary source and the collected from this source is called primary data. The data which is collected from the persons, private bodies, private research agencies etc are called secondary source and the data collected is from both primary and secondary type. The following are the data from which have been collected from both the sources.

PRIMARY DATA In the course of carrying out the project we have collected the most of the data from the source as they are mostly needed in carrying out the project work. The following data has been collected from the Dealers of the Retail Outlets, Bazar counters.

SECONDARY DATA Most of the data in this report is collected from the secondary source of information i.e. from the data which already exists and has been collected by some specialized researchers for another purpose. Sources of Secondary data which have

been collected from the firm itself is known as Internal secondary data and the data which is published by some other organization is known as External Secondary data. The data which have been collected from this source, are mentioned below: Historical data from internet Historical data from organization. Data from already existing researches, etc.

TYPE OF RESEARCH: Exploratory in nature. EXPLORATORY RESEARCH: Exploratory research provides insights into and comprehension of an issue or situation. It should draw definitive conclusions only with extreme caution. Exploratory research is a type of research conducted because a problem has not been clearly defined. Exploratory research helps determine the best research design, data collection method and selection of subjects. Given its fundamental nature, exploratory research often concludes that a perceived problem does not actually exist Our main aim was to find out the working of IOCL channel partners in the market development and market development based on suggestions obtained from bazaar shops through questionnaire. Further giving possible suggestions to IOCL to gain a competitive edge in its bazaar shops.

Methods of Data Collection The method of data collection is as essential as the source of collection of data. The method of data collection establishes a pattern, the application which provides a well fledged data. The most appropriate method to collect data is the one which is cheap, reliable, accurate and which requires less time and effort in collection. Following methods have been used in collecting the data:From Petro Retail Outlets:

The data from the retailer has been collected by the use of the method of personal enquiry. To obtain favorable and required data to add into the project we visited Retail Outlets located at different parts of Jaipur. From Bazar counters: The information was collected through personal survey. Direct customer contact was done at Bazar counters. In order to get accurate and proper information about the experiences and thinking of the shopkeepers about Servo brand of IOCL, we visited several retail outlets in approximately every part of Jaipur.

SAMPLING Sampling is a most important part of the data collection. It is a tool that tries to match the data according to the criteria. The sampling methods are used specially in the context of data segregation researcher in the field of market research scientific investigation and other fields study where it requires a deep ground selection of variables.. So, sampling is a relevant answer to the accurate and most appropriate selection. There are many methods of segregating the samples- probability and nonprobability sampling the probability sampling is the abstraction of the data into mathematical calculation which is done by the application of various formulas of probability. The non probability sampling is the abstraction of the data into mathematical calculation which is done by the application of various formulas of probability. The non- probability sampling is the non-mathematical presentation of the sampling. The most important part of non-probability sampling is the samples are selected ambiguously without any concrete methods. There are various type of non-probability sampling, which is used by the investigator or researcher according to his convenience.

CONVENIENCE SAMPLING:

The convenience sampling is a kind of non-probability sampling where the researchers select the samples from according to their convenience. The criteria have been fixed previously before taking into consideration of the samples. The convenience sampling is one of the most important parts carrying out in any project work.

SAMPLING METHOD In this project study, the method adopted for the sampling purpose is the convenience sampling method.

SAMPLING SIZE Samples size is different for bazaar counters and petro-retail outlets.They are taken such away so that they can truly represent the whole structure of market. If the sample is too small, it cant represent the population and outcome will be far more reality. Large samples provide good result, but if sample is too large, it becomes difficult to handle and is also very expensive, but in this project accurate sample size has been taken in order to get the present state of retail outlets.

OBJECTIVE: THE OBJECTIVES OF THE RESEARCH ARE: To cover Study of existing Lube marketing through retail outlets of IOCL vis-o-vis competitors, identify areas of improvement and recommendations in Jaipur region. To study the current sales and current buying behavior of Servo lubricating oils To promote the sale of Servo lubricants. To study the effects of sales promotion techniques by the company. To find out the expectations of bazaar shop owners from IOCL To study the effectiveness of the efforts of sales team.

SCOPE OF THE RESEARCH: The research scope covers Study of existing Lube marketing through retail outlets of IOCL vis-o-vis competitors, identify areas of improvement and recommendations. The scope also includes the market potential , to know the current buying behavior through survey at bazaar lube shops and Petro retail outlets. The study is carried out for the Jaipur city only. The bazaar shops are selected for survey purposes from different regions. The questionnaire is filled by the bazaar shops owner through direct interaction to know the customer buying behavior.

LIMITATIONS: All the bazaar shops cannot be approached of the survey because of the time constraint; hence a sample of 120 is taken from the Jaipur city to know the buying behavior and the market potential which may not represent the whole population. Assumptions are made in the estimation of market potential (based on survey) which may not be correct for each grade of the lubricant. Data collected may not be accurate because the information is provided by the workers of the shop on behalf of shop owners.

THE MARKET SURVEY-PRESENTATION OF FACTS Tabulation and representation of data based on questionnaire To achieve the objective of research the bazaar shops owners were directly contacted/interviewed and were asked to fill up the questionnaire. The questionnaire was designed so as to take an idea current buying behavior, market potential for lubricating oils.

The first questionnaire was revised because after interaction at first phase with bazaar shops some questions were found of no use so these questions were eliminated in the new and revised questionnaire. The responses to the questions of the questionnaire from the bazaar shops are tabulated below.

Q1. How many products do you keep at your outlet? Engine Oil B. Coolant C. Brake Fluid No. Responses Engine Oil Coolant .Brake Fluid Gear Oil Greases of No. of People 98 72 74 75 75 D. Gear Oil E. Greases ?

100 90 80 70 60 50 40 30 20 10 0 No. of People

Engine Oil Coolant Brake Fluid Gear Oil Greases

Q2. What brands are you selling at your counter? No. of Responses Servo Castrol Valvoline Chemoleum Veedol HPCL Mico Ipol No. of People 59 86 20 08 13 45 1 1 No. of Responses Shell BPCL Elf Total Gulf Pensol Honda Savsol No. of People 39 29 16 07 28 5 1 4

90 80 70 60 50 40 30 20 10

Servo Castrol Valvoline Chemoleum Veedol HPCL Shell BPCL elf Total Gulf

0
No. of People

Q3. Which brand is the most selling brand at your counter? No. of Responses Servo Castrol Valvoline HPCL Shell BPCL No. of People 26 42 0 9 9 01 No. of Responses Pensol Mico Bosch Savsol Ipol Mobil Gulf
50
40 30 20 10 0 No. of People

No. of People 02 01 01 01 01 01 04

Servo Castrol Valvoline HPCL Shell BPCL Pensol Mico Bosch

Q4.How much margin are you earning per litre sale of your highest selling brand?

Margin (in Rs./Ltr.) 1-5 6-10 11-15 16-20

No. of People 40 39 17 2

40 35 30 25 20 15 10 5 0 No. of People
16-20 6-10 11-15 1-5

Q6. Payment terms being offered (Cash, Credit or both)? Cash B. Credit C. Both No. Responses Cash Credit Both of No. of People 36 22 40

40 30
Cash

20 10 0 No. of People

Credit Both

Q7. Delivery Methods? Through Distributor delivery van B. Through Transport No. Responses Through Distributor delivery van Through Transport of No. of People

83 15

90 80 70 60 50 40 30 20 10 0 No. of People

Through Distributor delivery van Through Transport

Q8. Are you visited by a representative of IOC (Servo) or stockist? Yes B. No No. Responses Yes No of No. of People 36 52

60 50 40 30 20 10 0 No. of People
Yes No

Q9. Which is the highest selling product from your counter? A) Engine Oil A. Servo B. Castrol C. Valvoline D. HPCL G. Shell H. BPCL Bosch J.Veedol I.

50
Servo

40 30 20 10 0 No. of People

Castrol Valvoline HPCL Shell BPCL Bosch Veedol

No. of Responses No. of People Servo Castrol Valvoline HPCL Shell BPCL Bosch Veedol 30 48 02 07 07 0 2 2

B) Gear Oil Servo B. Castrol C. Valvoline D. HPCL G. Shell H. BPCL

30 25 20 15 10 5 0 No. of People
Servo Castrol Valvoline HPCL Shell BPCL

No. of Responses No. of People Servo Castrol Valvoline HPCL Shell BPCL 20 26 2 13 10 4

C) Greases
25
Servo

20 15 10 5 0 No. of People

Castrol Valvoline HPCL Shell BPCL Waxpol Red X Savsol Pensol

No. of Responses No. of People Servo Castrol Valvoline HPCL Shell BPCL Waxpol Red X Savsol Pensol 19 25 3 5 6 3 1 1 1 11

Q10.In your opinion, how consumer perceives the IOC products? A) Quality
60 50
Excellent

40 30 20 10 0 No. of People

Very Good Good Bad Very Bad

No. of Responses No. of People Excellent Very Good Good Bad Very Bad 18 24 54 1 1

B) Price
80 60
Very High

40 20 0 No. of People

High Value for Money

No. of Responses No. of People Very High High Value for Money 03 20 75

Q11. Are you satisfied by the services by IOC distributor? Yes B. No No. Responses Yes No of No. of People 51 8

60 50 40 30 20 10 0 No. of People
Yes No

Q12. Is the credit from IOC distributor? Yes B. No C. NA No. Responses Yes No NA of No. of People 35 25 14

40 30 20 10 0 No. of People

Yes No NA

Q13 Are you aware about the recent price increase? Yes B. No No. Responses Yes No of No. of People 23 51

60 50 40 30 20 10 0 No. of People
Yes No

Q14 Has any promotional campaign been carried out at your outlet by IOCL? Yes B. No C. NA No. Responses Yes No of No. of People 9 65

70 60 50 40 30 20 10 0 No. of People
Yes No

Q15 if campaigning was done, what was the effect on sales? Increased Sales B. Decreased No. Responses Yes No No Effect of No. of People 6 2 2 C. No Effect

6 5 4 3 2 1 0 No. of People
Yes No No Effect

ANALYSIS OF QUESTIONNAIRES FOR RETAIL OUTLETS Q1. How many products do you keep at your outlet? A. Engine Oil B. Coolant C. Brake Fluid D. Gear Oil E. Greases.

No. of responses
Engine Oil Coolant .Brake Fluid Gear Oil Greases

no of PEOPLE
20 20 18 19 16

20 18 16 14 12 10 8 6 4 2 0 No of people

Engine Oil Coolant Brake Fluid

Gear Oil
Greases

Q2. Payment terms being offered (Cash, Credit)? A. Cash B. Credit C. Both

No. of Responses Cash Credit Both

No. of People 11 5 4

12 10 8 6 4 2 0 No. of People
Both Cash

Credit

Q3. Delivery Methods? A. Through Distributor delivery van B. Through Transport

No. of Responses Through Distributor delivery van Through Transport

No. of People 16 4

16 14 12 10 8 6 4 2 0 No. of People
Through Transport Through Distributor delivery van

Q4. Are you visited by a representative of IOC (Servo) distributor or the company?
A. Yes B. No

No. of Responses Yes No

No. of People

15 5

16 14 12 10 8 6 4 2 0 No. of People
No Yes

Q5. As 2T sales have gone down by nearly 75% in the last 10 years. Are you able to compensate for the loss in sale of 2T & the market growth with increase in 4T? A. Yes B. No

No. of Responses Yes No

No. of People 5 15

16 14 12 10 8 6 4 2 0 No. of People
No Yes

Q9. What is the highest selling product from your counter? A) Engine Oil B. 4T B. 2T C. Multi Grade D. Pride TC E. Pride CF4 F. Pride 40

No. of Responses 4T 2T Multi Grade Pride TC Pride CF4 Pride 40

No. of People 10 2 3 1 1 3

10 8 6

4T

2T

Multi Grade

4 2 0 No. of People
Pride 40 Pride TC

Pride CF4

B) Gear Oil A. HP 90 B. HP 140 C.80W90

No. of Responses HP 90 HP 140 80W90

No. of People 19 0 0

20 18 16 14 12 10 8 6 4 2 0 No. of People
HP 90 HP 140 80W90

C) Greases A. MP B. C C.MP3 D. RR3

No. of Responses MP C MP3 RR3

No. of People 1 0 14 1

14

12

10

MP

6
MP3 RR3

0 No. of People

Q7.How much margin are you earning per litre? A. 1-5 B. 6-10 C. 11-15 D. 16-20

No. of Responses 1-5 6-10 11-15 16-20

No. of P No. of People 4 5 6 5

6 5 4 3 2
11-15 6-10 1-5

1 0 No. of People
16-20

Q8. Are you aware about the recent price increase?

A. Yes B. No No. of Responses Yes No
No. of People

9 11

12

10

6
Yes No

0 No. of People

Q10.In your opinion, how consumer perceives the IOC products? A) Quality A. Excellent

B. Very Good

C. Good

D. Bad

E. Very Bad

No. of Responses Excellent Very Good Good Bad Very Bad

No. of People 5 6 9 0 0

9 8 7 6 5 4 3 2 1 0 No. of People
Very Bad Good Bad Excellent Very Good

B) Price A. Very High B. High C. Value for Money

No. of Responses Very High High Value for Money

No. of People 0 7 13

14

12

10

Very High

High

Value for Money

0 No. of People

Q10. Are the sales of SERVO products at your counter increasing or decreasing? A. Increasing B. Decreasing

No. of Responses Increasing Decreasing

No. of People 9 11

12 10 8 6 4 2 0 No. of People
Decreasing Increasing

Q11. Are you satisfied with the services rendered by SERVO distributor? A. Increasing B. Decreasing

No. of responses Yes No

No. of People 18 2

20 15
Yes

10 5 0 No. of People

NO

Q12. Is the credit from your distributor sufficient?

A. Yes B. No No. of responses Yes NO N/A No. of PEOPLE 5 0 15

16 14 12 10 8 6 4 2 0 No. of People
N/A No

Yes

Q13. Has any promotional campaign been carried out at your outlet by IOCL? A. Yes B. No C. NA No. of responses Yes No NA No of PEOPLE 8 12 0

12 10 8
Yes

6 4
No

2 0 No. of People

Q14. if campaigning was done, what was the effect on sales? A. Increased Sales B. Decreased No. of Responses Increased Sales Decreased No Effect C. No Effect No. of People 5 0 3

5 4 3 2
Decreased Increased Sales

1 0 No of People
No Effect

ANALYSIS OF QUESTIONNAIRES FOR RETAIL OUTLETS (HPCL/BPCL) Q1. How many products do you keep at your outlet? B. Engine Oil B. Coolant C. Brake Fluid D. Gear Oil E. Greases.

No. of responses
Engine Oil Coolant .Brake Fluid Gear Oil Greases

no of PEOPLE
21 21 21 21 21

25

20

15 Series1 10

0 Engine Oil Coolant .Brake Fluid Gear Oil Greases

Q2. Payment terms being offered (Cash, Credit)? B. Cash B. Credit C. Both

No. of Responses Cash Credit Both

No. of People 12 1 8

12 10 8 6 4 2 0 No. of People
Both Cash

Credit

Q3. Delivery Methods? C. Through Distributor delivery van B. Through Transport

No. of Responses Through Distributor delivery van Through Transport

No. of People 11 10

11 10.8 10.6 10.4 10.2 10 9.8 9.6 9.4 No. of People

Through Transport Through Distributor delivery van

Q4. Are you visited by a representative of your distributor or the company?

B. Yes B. No

No. of Responses Yes No

No. of People

17 4

18 16 14 12 10 8 6 4 2 0 No. of People
No Yes

Q5. As 2T sales have gone down by nearly 75% in the last 10 years. Are you able to compensate for the loss in sale of 2T & the market growth with increase in 4T? B. Yes B. No

No. of Responses Yes No

No. of People 4 17

18 16 14 12 10 8 6 4 2 0 No. of People

Yes No

Q6.How much margin are you earning per litre? B. 1-5 B. 6-10 C. 11-15 D. 16-20

No. of Responses 5-10 11-15 16-20

No. of People 6 12 3

12 10 8 6
11-15

5-10

4 2 0 No. of People
16-20

Q7. Are the sales of lubricant products at your counter increasing or decreasing? B. Increasing B. Decreasing

No. of Responses Increasing Decreasing No Effect

No. of People 9 6 6

9 8 7 6 5 4 3 2 1 0 Increasing Decreasing No effect

No. of People

Q8. Has any promotional campaign been carried out at your outlet by the company? B. Yes B. No No. of responses Yes No No of PEOPLE 15 6

16 14 12 10
Yes

8 6 4 2 0 No. of People
No

Q9. Does the company provide you with any pre-defined sales targets? No. of Responses Yes No No. of People 11 10

11 10.8 10.6 10.4 10.2 10 9.8 9.6 9.4 Yes No

No of People

Findings Nearly all the bazaar counters are selling engine oils while 3/4 th of them deal in other fluids like brake fluids, gear oils and greases but it was also stated verbally that engine oil dominated the sales while other fluids sold considerably lesser than it. Around 60% of bazaar counters are dealing in SERVO while almost 88% are dealing in castrol, which is an evidence of the strong hold that castrol has over the market. Almost 50% of the retailers said that castrol is the highest selling brand while SERVO came in second position with around 28% retailers saying it is the highest selling brand. When asked if the shop keeper has been visited by an IOC representative for purposes other than collection of payment or order, 37% shopkeepers said yes while 53% shopkeepers said no. When asked about the highest selling brands product wise the trend in the market followed as discussed above for the engine oils and gear oils with castrol leading with a healthy advantage over Servo. In the case of greases local players like pensol also emerged influential. When asked about the consumers opinion of Servo products it was found that 56.25% of the retailers replied with good quality while 25% said very good and another 18.75% said excellent. In terms of prices 75% retailers said that it is value for money. The counter owners were very much satisfied with the services rendered by the SSA with around 90% owners said yes while only 10% said no. When asked about their awareness of the recent price increase 68% people said no while only 32% people said yes. Lack of promotional campaigning was clearly evident with 86.66% people saying no promotional campaigning was done by Servo in the past 6 months. One of the conclusions that can be drawn from the study is that Castrol is very successful in creating brand awareness among the customers because of its successful advertising strategy. A customer knows about Castrol even if he is using some other brand of lubricant. The study also revealed that 30% of the users of motor vehicles are motivated by their mechanics.

 Most of the RO operators reported leakage in smaller packs of Servo 2T while some bazaar counters also mentioned the same problem with larger packs. Another major issue brought up by the retailers was duplicacy. According to majority of retailers the market is being hampered by the presence of such duplicate products and the end consumers are fleeing away from the brand due to undesired consequences of using adulterated and duplicate products The lower income group people prefer to purchase cheaper lubricants whereas the high income group is more conscious about the branding and quality of the product. Most of the customers prefer to purchase lubricant from the bazaar shops instead of ROs because they can get the product at a discounted price.

RECOMMENDATIONS: IOCL should promote the visibility of the Servo brand at bazaar shops through flex boards wall paintings, shutter paintings and assigning particular space at major shops for Servo visibility. IOCL sales team should keep an eye on the newly opened bazaar shops to get the timely orders from them. IOCL should held a seminar to educate the customers regarding the latest technological advancement in the lubricant industry and let them know the benefits of using an advanced quality product like Servo Synth and Servo 4T Goben. IOCL should educate the bazaar shop owners regarding the new products so that they can properly interact with the customers during the customer buying process. IOCL should have tie ups with major garages to promote the sales of Servo lubricants. Generate a Buzz Whenever IOCL is launching a new product or a scheme they should send a press release to the media. The idea is to grab any free coverage possible.

 Get involved with community events. Use a unique promotional event to generate a buzz about the business. Connect With the Customer - Excellent customer service is the key to increasing sales. Listen to the customer to understand their needs and wants. Then tell them about the products. Offer value-added services and products. Create a mailing list by asking for contact information from each customer. For eg : sending an sms/email to the customers timely regarding quick oil change. Inspite of Tv/Newspaper/Radio advertisement the Servo lubricants can also be promoted through Social media such as Facebook,Twitter etc. IOCL should carry out road campaigns to promote the sales of Servo lubricants. Set up a customer rewards program : It can be as simple as a discount on a customers birthday or as complex as a points system that earns various rewards such as discounts on particular lubricants. Done right, rewards programs can really help build customer loyalty and increase sales. Servo should start packaging higher volumes like 20, 15, 10 liters in buckets rather than in drums because most of the drivers and mechanics consider the free bucket as a bonus.

REFERENCES: IOCLs Automotive Lubricants Product Line Book. https://iocl.com/Products/LubesGreases.aspx http://en.wikipedia.org/wiki/Motor_oil http://en.wikipedia.org/wiki/Lubricant http://topmotoroil.com/engine-oil/engine-oil.php www.wisegeek.com http://www.scribd.com http://www.researchandmarkets.com/reportinfo.asp http://www.best-motorcycle-gear.com/ http://www.ask.com http://www.business.mapsofindia.com/india-company/ioc.html http://www.best-motorcycle-gear.com/ http://www.scooterhelp.com/genmaintain/2stroke.oil.htlml