DEVI AHILYA VIHSVAVIDYALAYA

INTERNATIONAL INSTITUTE OF
PROFESSIONAL STUDIES

A STUDY OF CONSUMER BEHAVIOUR WITH RESPECT TO

PAINT INDUSTRY

Submitted in partial fulfilment for the degree of

MASTERS OF BUSINESS ADMINISTRATION

MBA (Marketing)

(2009 2011)

Submitted To:-

Submitted By:

Dr. Geeta Nema Mam

Faculty, IIPS, DAVV
Indore

Apurve Patil
MBA (MS)
IM-2K6-13

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CERTIFICATE
This is to certify that the project entitled

STUDY OF CONSUMER

BUYING BEHAVIOR IN PAINT INDUSTRY Submitted By Apurve Patil, in

partial fulfilment of the requirement for the award of degree of Master of
Business Administration, in International Institute Of Professional Studies,
Devi Ahilya Vishvavidhayala is a bonafide piece of research work
conducted under my supervision and guidance and no part of this project
has been submitted for any other degree.

Date:

Dr. GEETA NEMA

Faculty, IIPS
DAVV, Indore

ACKNOWLEDGEMENT

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I would like to take this opportunity to thank Dr. Geeta Nema, Faculty
of International Institute of Professional Studies. D.A.V.V. who has been
guiding force for my Project Report on STUDY OF CONSUMER BEHAVIOR

IN PAINT INDUSTRY
I am also very thankful to all of my teachers and friends for their support
and encouragement in finding out the appropriate material for this Project
Report, without their thankless support and efforts, making this report would
have been impossible for me.
I am also thankful to Dr. Geeta Nema Mam, Head of the Department,
MBA(MS) for providing me the required facilities in the department.

Apurve Patil
MBA-5 years
IM2K613

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DECLARATION

I, APURVE PATIL, Student of MBA (full time), X SEM, Program from

INTERNATIONAL INSTITUTE OF PROFESSIONAL STUDIES, D.A.V.V. Indore hereby
declare that the Major research Project entitled
STUDY OF CONSUMER BUYING BEHAVIOR IN PAINT INDUSTRY.
Undertaken by me is a genuine work and has not been carried out before
for the purpose of award of degree/certificate.

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TABLE OF CONTENT
CHAPTER NO.

Chapter 1

Chapter-2
Chapter 3

Chapter 4
Chapter 5
Chapter 6
Chapter 7

PARTICULARS
INTRODUCTION TO THE STUDY
Abstract
Paint Industry Description
The Unorganised Sector
Industrial Paints
Financial Positions of
Companies
Current Scenario
Economies of Scale
Global Trends
LITERATURE REVIEW
RESEARCH METHODOLOGY
Aim
Objectives of the Study
Research Design
Sampling
DATA INTERPRETATION AND
ANALYSIS
Conclusion
Scope Of Further Study
Limitations Of Study
BIBLIOGRAPHY

ANNEXURE
Questionnaire

PAGE
NO.

8-30

34-35
3639

41-49
50-52
53
54-57

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List of Figures
Sr.No.

Title

Figure 1.

It shows the age group of the respondent.

Figure 2.

It shoes the gender i.e. no. of male and female respondents in research.

Figure 3.
Figure 4.

It shows the annual family income of the respondents

It shows the occupation of the respondents

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LIST OF TABLES
S. No.
Table 1.
Table 2.
Table 3.

Title
It shows the age group of the respondents
It shoes the no. of male and female respondents in research.
It shows the family annual income of the respondents

Table 4.

It shows the occupation status of all the respondents

Table 5.

This shows the respondents awareness and knowledge about

painting process
This table reflects the trust of respondents over paint brands

Table 6.
Table 7.
Table 8.
Table 9.

Table 10.

This Figure includes the data of most remembered advertisements

of the paint brands
It includes the respondents perception for the paint company
offering innovative products.
This Figure 9 showing the brand a painter suggest to the customer
and also shows the brand a shopkeeper suggests to the
respondents..
It includes the most important factor a respondent looks in a
paint.

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CHAPTER - 1
ABSTRACI
AND
INTRODUCTION

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ABSTRACT

Paint industry has shown a rapid growth in the last year 2009-2010, and since then there
has been a decreasing growth in the industry.
Asian Paints one of the largest paint
companies in India, which has shown a tremendous growth since its establishment, liberalization.
This is an achievement, achieved by careful planning a following firm procedures set by the
company management.
There are many companies offering paints to the customers in the market. The major
players are Asian Paints, Kansai Nerolac Paints, Berger, ICI Paints, these are the market known
companies. But there are large local players who are giving a tough competition to the
established players. The local players have around 30% market share but continuously shrinking
market share.
It indicates that the customers are inclining towards brand names. The Asian is
qualitative company with strict rules and regulations. All the planning takes place at the central
office Mumbai. Asian is focusing on services and quality. Each Asian paint production centre has
a distinguished packing so that by looking at the drum or cartons the plant identification become
easy to the godown incharge. The other companies are following Asian Paints activities and
policies in order to beat the competition from Asian Paints.
The Asian Paints company has a excellent distribution network which is the prime reason
for its success followed by marketing plans. The company has a full fledge research of
development function, whose aim is develop and present new products every year. The Asian
Paints price and selection of target is also done to protection. Considering the promotional part
Asian Paints employed Ogilvy and Mather to attract the customers. Asian Paints has developed
many brands and which have well penetrated in the minds of customers.
Ex: Apcolite, Apex, ACE, Tractor, Utsav etc.,
Recently launched products Royale, Royale Shyne, Ultima
Asian Paints is also leader in research and development programs launches competitive
products to the market. The company provides innovative products to the market but other
companies are also launch products of same category. Hence a high competition is present in the
market.
And Asian Paints was the first to enter with manual colour dispensing concept which took
off with the advent of computers, Asian is not lacking behind in this they have developed Colour
World for the consumers with 1150 shades to be selected from.
The study of my topic is Customer Awareness with reference to Asian Paints India
Limited. And Advertising, sales promotion, personal selling, public relations, and publicity are
the customers awareness programs to be conducted by the company.

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Introduction
Industry Description
The Indian paints industry has been valued at Rs. 600 crores with annual consumption
of 06 million tons. The industry has been growing at a CAGR of 8% to 10%. The industry can
mainly be segmented into decorative and industrial paints with a rough distribution of 70% to
30% in favour of the former. This distribution is expected to move towards a 50:50 distribution.
The demand for decorative can be split into
1. First time demand and
2. Demand for repainting.
The first time demand is a derived demand and the growth in the demand for decorative
paints is linked to the state of the housing sector and the government infrastructure sector. In
turn the housing and infrastructure activity is dependent upon the state of the countrys
economy. Cement and Steel are the first sectors that reflect the state of the economy, followed
by the housing and infrastructure sectors, which affect the paints industry. Therefore, the
demand for new paints follows the economic cycle with a lag of about 12 to 18 months.
Empirical evidence shows that the paint industry grows at about 1.5 to 2 times the GDP growth
rate.
The demand for repainting is a slow growing area, since India, as of now has not developed
the culture of using paint as a fashion tool, therefore repainting is not done very often. But, this
sector does show consistent growth, though it is slow.
The demand for decorative paint is also highly seasonal and cyclic, especially for the
repainting segment, the bulk of the demand being during the festivals seasons. The peaking of
demand during specific seasons has been a unique feature of the Indian paint industry and has
led to the introduction of such paints like Utsav by Asian Paints. The marketing activity is also
stepped up during the festival season.
The industrial paint segment is highly cyclical and again, it is also a derived demand
depending upon the sector that is being served. E.g. the automotive paint segment is linked to
the fate of the automobile industry that is directly linked to the state of the economy and reflects
changes in the economy quite fast. Therefore the demand for paint in this segment also reflects
changes in the economy quite quickly.

Industry Structure

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Decorative Paints
The decorative segment of the industry is hourglass shaped. There are a small number of
large players having a high market share and a large number of players in the unorganized
sector. Even though regional medium sized players exist, they do not command a high market
share.
The large players have Economies of Scale in manufacturing, large distribution
networks, centralized Marketing and Advertising departments and very high brand equity
among the consumers, which gives them a significant advantage over the mid-sized players.
Since, regional variation in demand of the product is minimal; the regional players do not have
any advantage over the big players.
The unorganized sectors market comprises of the rural and small town segments, where
they offer a viable, affordable substitute to Proxies. The unorganized sectors competitive
advantage lies in operating in the right willingness to pay segment of the market. The
unorganized sector has a 20-30 percentage cost advantage over the established players and
therefore they have a high share in the price-sensitive rural segments. They offer low-quality
paint as an ideal substitute for the proxies and attract the value-sensitive rural customer with
the proposition.

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The Advantage of the Unorganized Sector

The cost advantage for the unorganized players was derived mainly from government
policies. The tax structure for the paint industry was one of the major constraints and
government policies regarding taxes led to the negative growth of the industry in the early 90s.
The government had classified the paint industry as a luxury industry and therefore
the industry attracted very high excise and import duties. These adversely affected
the organized sectors. The unorganized sectors were small industries and therefore had to
face much lower tax rates. Also, the import duties on the intermediaries and the raw materials
required for the paint industry were very high. This again hit the organized sectors because they
were the companies that were mainly importing these raw materials, and the unorganized
sectors were using lower quality local raw materials. All this led to the proliferation of these
unorganized sector industries, and enabled them to offer significant lower prices than the
organized companies. This price differential was crucial because the rural customer was very
price sensitive and therefore bought from the vendor offering the cheapest options.
However, in recent times, the unorganized sector has struggled to match the
offerings of the organized sector. The rationalization of the tax rates has nullified this
advantage for the unorganized sector. The excise duties have been brought down to
18% from 40% in 1992-93 and the import duties of raw materials have been brought
down to a mean of 40.8% from 67.5% in 1993-94.
This has primarily been due to the change in the classification of the industry from a
luxury industry to a protective industry.
This has minimized the cost advantage that the unorganized sectors has had on the
organized sector, though the unorganized sector shall continue to have some cost advantages
from the use of inferior quality raw materials. The other reason for the recent failure of the
unorganized sector has been changing customer preferences. The rural market has matured
and the primary factor of demand is now not only price but also quality and the value
added services provided. The organized sector has a significant advantage in this area, and
therefore the price disadvantage that they have is overcome and in fact, some sort of advantage
is built.

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Industry Structure Industrial Paints

The Indian industrial market, like the global markets is dominated by a few players. This
is because there is a high technological competence required for competing in the industrial
segment and the unorganized sector does not have this competence.
The industrial segment is further sub-divided into a number of segments and since it is a
technology based industry, the competencies required to be successful in different segments are
distinctive and unique. Due to this, the market operates like a set of niches with different players
operating in different segments. Each segment is like a monopolistic industry with one
player dominating the niche. There is no head on competition and every player has a set of
independent niches to operate in. The customers also have long-term contracts and customized
service requirements with the industrial paints companies.

Industry Characteristics
The industry is characterized by
1. low fixed capital requirements
2. but high working capital requirements.
A plant for manufacturing decorative paint can be set up with low capital requirements,
though for industrial paints there would be specific technologies and higher capital
requirements. High inventory management costs are a very important reason for working
capital requirements. The wide choice offered to the consumer and the large number of SKUs
that are present increases the inventory requirements vastly.
The problem of high inventories due to high variety has been partially solved by the
introduction of tinting machines. These tinting machines postpone the process required for
generating by a large extent and shift the timing of customization to the point of delivery,
thereby reducing the inventory requirements drastically.

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Margins and Industry Attractiveness

The margins that are being offered in the decorative and the industrial segments are different
but the differences are not very significant. The gross margins for the various players are as
follows
Company

Gross Margins

Asian Paints

12.37%

Jenson and Nicholson

9.54%

Goodlass Nerolac

7.78%

Berger Paints

7.36%

ICI

7.23%

It can be observed from the above that the margins for players that are very highly
exposed to the decorative segments are higher and as the dependence on industrial paints
increases the gross margins go down.
The above differences in margins may be slightly distorted by the much higher margins of
Asian Paints. The higher margins of Asian Paints are mainly because of much lower raw
material costs. The proportion of raw material costs of Asian Paints is 34% compared
to about 48% for the rest of the players.
This advantage to Asian Paints could have accrued due to two reasons
Better Logistical Management: Asian Paints has a very good supply chain structure and the
entire supply chain has been integrated through the use of IT. This could lead to better
availability and utilization of resources, less wastages and lower transaction and coordination
costs. All this would lead to lower costs for the supplier and Asian Paints and therefore lower
prices.
Backward Integration: Asian Paints has established capacities to manufacture PAN and PET,
two raw materials that comprise about 35% of the cost of the product.

This backward

integration helps reduction in the raw material cost in two ways. This immunizes Asian Paints to
the fluctuation in the prices of raw materials in the external market. Also, the raw materials
produced at the plants are transferred to Asian Paints at cost or a low margin over cost;
therefore the cost of raw materials is much lower for Asian Paints than the costs for the other
players. The prices of the raw materials depend upon the prices of petrochemicals in
the international market. The intermediate raw material companies help insulate Asian Paints
from major price rises and pass on the price drops.

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This implies that though there is a slight differential in the margins of the decorative and
industrial segment, the differential is quite small and therefore both the industries would have
similar attractiveness. It must also be kept in mind that these figures are for 2001-2002 when
the industry conditions were quite depressed. Industrial segment depends upon the growth of
the economy and the depressed conditions might have driven down industrial margins slightly
and they could be expected to bounce back.

Therefore, financially, the attractiveness of the industrial and the decorative segments is
quite similar. Therefore the differentiation between the decorative and the industrial segments
can be dependant upon the capital intensiveness and the technology of the segment. The
manufacturing processes of the decorative segment are quite similar throughout the industry
but the processes in the industrial segment vary from market to market, with each having its
own method of manufacture. Therefore, the capital intensiveness and the technology
dependence of the industrial segment cannot be evaluated as a whole, but each market can be
evaluated separately as a wholly different segment and its attractiveness with regard to these
parameters gauged separately.

Technological Requirements: The technology required to manufacture decorative paints is

quite standard and quite simple and cheap to imitate. There are no technological advantages
for anyone in the manufacturing side of the decorative paints segment. Comparatively, the
technological requirements for each market in the industrial segment are unique and
therefore are marked by low imitability. The uniqueness of the technological capability that a
company possesses increases the attractiveness of the industry for that particular player.
Most of the Indian players do not have any proprietary technology in the industrial segment
and therefore the markets they enter depend upon the tie-ups that they have in the
international markets.
Capital Intensiveness: The decorative paints industry is very working capital intensive. This
point has been justified later along with the practices being followed in the industry. The
capital investment required for decorative paints is quite low with the cost of a 1 million tpa
plant being only about Rs. 12 crore. Comparatively, the initial capital investment required
depends upon the technology being used. There is no standard template for the capacities
being setup in the industrial paints segment. If the industry is a highly capital intensive one,
the expectation for revenues and margins is bound to be high and is that is not satisfied, that
industry becomes less attractive.

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Decorative Paints Industry: Working Capital Intensive

As mentioned earlier, the decorative paints industry is not fixed capital or initial investment
intensive but working capital intensive. The following points can justify this:

The initial investments required setting up a plant for the decorative paints area is quite low;
a 1 million tpa plant can be setup for Rs. 12 crores.
Since the variety of the paints being sold is very large, the inventories of each type of paints
being manufactured is to be kept, this leads to inventory accumulation and therefore need
for larger warehouse space. This inventory would always be a problem and management of
this inventory would create even bigger problems. What type of inventory to keep? What
product to keep in inventory? What is the optimal inventory level? Some of these questions
would always trouble the managers.
Inventory management is even more crucial keeping in view their customer focused
marketing strategy. If a particular shade is not available, the customer would go to a different
provider since the switching costs are not very high. So, again inventory as part of working
capital gains importance.

Highly raw material intensive: The industry is also highly raw material intensive and 50% of
the raw materials are imported. The international raw material prices are highly volatile and
depend upon the prices of oil. So, to hedge this price volatility better cash management is
required and higher cash balances have to be maintained. Also, higher raw materials
inventory needs to be maintained.

Long debt periods and Seasonal nature of demand: The industry is characterized by long
credit periods for the retailers and dealers. In normal circumstances also this would require
better receivable management. Also, more cash would be stuck in the credit provided and as
the cash to cash cycle increases, requiring better cash management. If we throw in
seasonality of demand where most of the sales occur around the festival season, this long
debt period creates a bigger problem. Since the sales during festival time are a high
percentage of the companys sales, due to the long debt period, a huge amount of cash is
trapped in the cycle leading to higher working capital requirements during this period of
time.
Not just in the last point, but also in the points above that, basically more and more cash
reserves are required because the cash to cash cycle in every case is going up.

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Segmentation
The paint industry can be segmented mainly on the following bases:
1. End Use classification: Under this heading, paints can be classified as decorative/
architectural paints and industrial paints. As the names suggest, decorative paints are
mainly used for household and construction purposes while industrial paints are used as
coatings for industrial products. Main types of decorative paints are enamels, acrylic
emulsions, distempers and exteriors and primary types of industrial paints are marine
paints, anti corrosive metal coatings, etc.
2. Solvent based classification: this includes paints, which use petro products or water as
the main solvent. Water based paints are gaining popularity due to their environment
friendliness.
3. Solid content: can be classified as liquid or solid (powder) paints. Powder coatings find
application mainly in the white goods industry.
On the basis of end user classification the industry is mainly divided into two segments:
1. Decorative/Architectural: This segment can again be geographically divided into two
categories, rural and urban. In India, both these segments show different buying and
decision-making characteristics and the value drivers for both the types of customers are
different. The decorative segment can be further classified into the following:

Emulsions: These can be used on concrete for interior or exterior application. Product
variety is greatest in this segment, but this is a higher priced segment.

White washes and distempers: White washes are basically whiteners in glue solutions,
while distempers can be applied to interior concrete walls.

Cement paints: Are of more use than others for exterior use.

Enamels: These can be used on a variety of substrates like steel, wood, concrete etc.
and are preferred because they provide gloss to the substrate.

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2. Industrial Paints
The industrial segment can be classified into the following:

Automotive segment: This segment serves the large automobile segment.

Powder coatings: These are used for metals that require protective coatings

Performance coatings: These are used by engineering companies and are used for
maintenance coating.

Coil coatings: They are applied on coils and metal rolls and have a very specific
industrial application.

Marine coatings

Price based segments in architectural paints

Particulars

Premium

1st Quality

Popular

Product Description

Super-acrylic Emulsions,

Plastic Emulsions,

Oil-bound distempers,

Premium Enamels

Acrylic distempers

Synthetic enamels

Up-market buyers

High income group,

Middle class and

Upper middle class

Rural markets

Target Segment

Key Purchase Influencers

Quality, Shades &
Dealer push

Quality, Surfaces, Shades, Cost & Availability

Cost & Dealer push

The end user classification is the one that is the primary differentiator. The end user
classification decides not only the marketing and the customer contact part but also the
manufacturing technologies and the capital investments required. The following points
differentiate these two segments:

The decorative segment is characterized by low fixed investments and high working capital
investments. The industrial segment on the other hand requires huge fixed capital
investments.

The technology required for manufacturing of decorative paints is easily replicable and of a
relatively low cost while the technology required for manufacturing of industrial paints is
highly specialized. The technology for industrial paints is not easily replicable and also
requires high capital investments.

In the Indian context, success in the decorative arena depends upon non-manufacturing
and service related factors. Therefore distribution, availability, value added services etc are
more important. For the industrial arena, technical expertise is more important. This has
led to a lot of companies participating in joint ventures for serving the industrial markets.

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The methods for customer development also differ in both these markets. The decorative
segment demands heavy advertising, brand development, value added services etc. The
industrial segment requires very good quality, relationship management, direct marketing
etc.

Financial positions
COMPARATIVE STUDY ALL PAINT COMPANIES
Seri
al
No.

Particulars

1.

Current Ratio

Asian
Paints

Nerolac

Berger

2.60

2.07
2.4296

2.

Quick Ratio

2.52

1.328

0.99

3.

Interest Coverage Ratio

3.30

3.13

1.75

4.

Inventory Turnover

63.80

3.10

3.87

5.

Gross Margin

9862

2588
5439

6.

Net Profit Margin

0.03

0.02

0.01

7.

Total Asset Turnover

1.90

1.88

1.88

8.

Return On Investment

0.16

0.14

0.13

9.

Working Capital

10661

5174
2849

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ASIAN PAINTS FINANCIAL DATA

Mar '
09

Mar '
08

Mar '
07

Mar '
06

Mar '
05

4,510.
12

3,595.
53

2,953.
38

2,447.
78

2,052.2
8

Material consumed

2,640.
48

1,969.
47

1,661.
78

1,365.
30

1,125.4
0

Manufacturing
expenses

86.23

75.12

64.82

53.05

49.34

Personnel expenses

239.77

195.54

155.60

129.43

118.35

Selling expenses

779.34

646.58

508.88

423.76

352.83

Administrative
expenses

170.37

139.33

126.00

110.20

101.62

Cost of sales

3,916.
19

3,026.
04

2,517.
09

2,081.
74

1,747.5
5

Operating profit

593.93

569.49

436.29

366.04

304.73

Financial expenses

15.91

13.46

15.34

8.16

6.58

Reported net profit

362.36

375.20

272.05

186.78

173.48

Equity dividend

167.86

163.06

124.70

119.90

91.13

Dividend tax

28.53

27.72

17.77

16.82

12.54

Retained earnings

365.97

334.42

239.58

150.06

151.82

Particulars
Income
Operating income
Expenses

20 | P a g e

Current Scenario
Market Size
The estimated size of the paint industry in India is about Rs. 5500 crores. The organized
sector occupies 70% of the market and the rest 30% is catered to by the unorganized sector.
Over the last few years, there has been a significant shift in customer preference in favour of the
players in the organized sector.
The Indian paint sector is dominated by decorative paints, which occupy about 70% of
the market. The industrial paints have a meagre share of 30%. This situation is very different
from that of most developed countries where the share of these two segments is 50:50

Growth Rates
The demand for paints depends on the countrys economic development. In India, the
demand for decorative paints comes from two segments i.e. new building construction and retail
demand for refurbishment. The demand for industrial paints is mainly from the consumer
durables, automobiles, shipping and engineering industries.
The growth had been sluggish (2-4% p.a.) in the late 80s and early 90s (87-92) due to low
industrial growth and steep excise duty imposed. In the period 1992-96, the market grew at a
faster face of about 12% on account of lowering of the duty structure and the improvement in
the economic condition of India. This era of high growth extended beyond 1996 as even after a
lower growth in the last couple of years due to economic slowdown.
The growth is on two counts: Increase in price realization and the increase in the volume
consumed. As the price increase has been lower than 5% p.a., most of the growth I due to higher
consumption, which is a healthy sign.
The Indian paint sector is dominated by decorative paints, which occupy about 70% of
the market. The industrial paints have a meager share of 30%. This situation is very different
from that of most developed countries where the share of these two segments is 50:50.
The demand for decorative paints is expected to grow by 8% p.a. for each of the next 5
years, courtesy the construction of new houses. The shortage of housing and the tax
concessions provided in the recent budgets will lead to the growth of the housing construction
and thus the paint industry. Rural areas are expected to be centres of growth in this regard. Due
to a rapid growth in industries like consumer durables, automobiles and the lower current base,
the industrial paints segment is expected to record a higher growth.

Manufacturing Bases & Capacities of ASIAN PAINTS

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The plants are usually located in multiple locations so as to be near the customer. For e.g.
Asian Paints has 4 manufacturing facilities at
1. Mumbai (Maharashtra),
2. Ankleshwar (Gujarat),
3. Patancheru (Andhra Pradesh)
4. Kasna (Uttar Pradesh).
5. Shriperumbudur
The capacities of the above plants are 20000 MT, 50000 MT, 50000MT and 42700 MT per
annum respectively in March 2000. The locations of various plants for major paint companies
have been given in the exhibit 3.
The capacities for manufacture of Paints, varnishes, enamels & oils (in MT) for the top
players in the industry are as follows:
Company
Mar 07
Asian Pints
118900
Berger Paints
34920
Goodlass Nerolac25847
TOTAL

Mar 08
162700
56420
35318

Mar 09
162765
56420
39123

Mar 10
168900
56460
39588

In the last 2-3 years, the top players have not added significant capacities.

22 | P a g e

Utilization
Paint is manufactured in a batch process and the downtime between batches is
significant. In decorative paints, lighter shades are produced in the beginning of the month, and
darker shades as the month progresses. This maintains the purity of the shades. The equipment
is rinsed quickly between the production cycles of two shades and washed thoroughly at the end
of the month. Batch sizes are however significantly lower for industrial paints because the
product variety is much wider. Also, the equipment used in this case have to be washed
thoroughly between different batches, leading to a significant loss of downtime.
Paint is not a capital-intensive industry. Hence, it is affordable to create extra capacity to
meet seasonal demand only. This is more cost affective than building up inventory during the
lean season. The average capacity utilization of the paint industry is 65%. Low levels of plant
automation in India product mix variety, batch size, batch processing time and downtime
between batches adversely affects the plant utilization levels.

Economics of scope in industrial and decorative paints

Theoretically a paint producer has the flexibility to shift from the production of decorative
paints to industrial paints and vice versa. The manufacturing process is very similar and the
equipment can be modified, too. However, varying batch sizes of the two segments, different
vessel sizes and additional safety precautions to be adopted in the manufacture of industrial
paints deter the paint producer from switching equipment between the two segments of paints.
However, the big players are generally present on both sectors because the Economic cycles are
different and this provides the companies with an opportunity to de risk their operations.

Raw Materials
The paint industry is raw material intensive, with the raw materials accounting for about
70% of the total production costs. Approximately, 300 different types of raw materials are used
in the manufacturing process. The most critical ones are Titanium Dioxide (TiO2), Phthalic
Anhydride (PAN) and Pentaerythritol (PENTA) which constitute 30%, 20% and 15% of the total raw
material cost. Besides these, organic pigments, solvents, oils and a range of chemical additives are
used in paint production. The industry imports around 30% of its total raw material requirements,
primarily titanium dioxide.

Titanium Dioxide
Titanium Dioxide is a white pigment that gives colour, consistency and durability to
paints. It exists in two forms namely rutile and anatase. Rutile is 12-15% more expensive and is

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used in high value decorative paints and in industrial paints. Anatase is more commonly used for
exterior paints. Due to the high price of TiO2 (about Rs. 90000/MT for imported rutile),
transportation cost is not much of an issue. India has 7-8% of the worlds ore deposits, mostly in
Kerala, but is unable to exploit it due to power supply problems, the lack of appropriate
technology and the minimum economic size of plant (about 50000MT/annum, costing about Rs.
1000 crores). In India, the demand for rutile and anatase are about 40000MT/annum and
30000MT/annum respectively. The 4 existing manufacturers are currently operating at near 50%
of their utilization and meeting less than half the existing market demand primarily due to lower
quality of their products (unable to produce finer grades). Their prices are however, not lower
than the imported products. Hence, the high imports. Setting up a TiO2 manufacturing facility in
India is currently unviable.
60% of titanium dioxide produced worldwide is used by the paints industry, which is much more
fragmented than the rutile/anatase producing industries (the top 4 players hold about 60% of
the market). Hence, there is significant supplier power.

Pthalic Anhydride
It is used for the manufacture of synthetic resins, which act as binders in paint products.
About 50% of the PAN produced is consumed by the paints industry. The top 2 players viz. I.G.
Petrochemicals and Thirumalai Chemicals account for almost 75% of the domestic production.
Asian Paints with a capacity of about 20000MT has a 7% market share. Although India has a
surplus of PAN, with 40% of production being exported, I.G. Petrochemicals is an export-oriented
unit and does not flood the Indian market. As such, the prices are at a moderate-high level,
fluctuating widely (Rs. 29000 Rs 39000 in last 1 year) in toto with the international prices.
During such time of high international prices, Asian Paints has a significant advantage in cost of
production of paints. Technology is stable and easily available but scale advantages are large.
Hence, the small paint manufacturers are unable to go in for backward integration for captive
consumption only.

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Pentaerythritol
A large number of industries use this product, paints being one of them. The top 3 players
control about two-thirds of the industry. Asian Paints has a market share of 20% and uses twothirds of its production for its own use. The quality of Asian Paints produce is higher than the
other majors, resulting in a 15% higher price, of about Rs. 100,000/MT. The fragmented
consumers of Penta results in high profits for Asian paints.

Organic Pigments
They are pigments, usually in powder from, consisting of white or coloured particles and
provide the characteristic colour and opacity to the paint. It is a fragmented industry, with more
than a 100 small and medium players manufacturing a wide variety of colouring pigments. Thus,
supplier power is low. Also, as far as the major paint manufacturers are concerned, it makes little
sense to set up facilities to manufacture organic pigments. As far as consumption in paints go,
they are a low value, high price item (about 20000MT annually at Rs. 400,000/MT). The
technology is not well developed in India. As such, a partnership in some form with foreign firms
is necessary.

Backward integration of asian paints

Asian Paints has established capacities to manufacture PAN and PET, two raw materials
that comprise about 35% of the cost of the product. This backward integration helps reduction in
the raw material cost in two ways. This immunizes Asian Paints to the fluctuation in the prices of
raw materials in the external market. Also, the raw materials produced at the plants are
transferred to Asian Paints at cost or a low margin over cost; therefore the cost of raw materials
is much lower for Asian Paints than the costs for the other players. The prices of the raw
materials depend upon the prices of petrochemicals in the international market. The
intermediate raw material companies help insulate Asian Paints from major price rises and pass
on the price drops. The process of backward integration also equips the company with the ability
to meet sudden surges in demand that could be created if the industry dynamics undergo a
drastic change.
AP is one of the few companies to have been involved in Backward Integration. This is
fundamentally because of the need for having high capacity utilization in the captive
manufacturing plants. Even Asian Paints, for its size of operations, is able to consume only twothirds of its captive production. The rest 1/3 rd it sold to other manufacturers of paints. This might
prove to be strategically important to AP if the demand surges.

Distribution methods
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The availability of a wide variety of shades and an extensive distribution network is

critical for the success of the decorative paint business. The company salespeople keep visiting
these dealers and maintain a cordial relationship. This is what prevents international players
from entering the Indian market on their own, without any tie-up with a local player. Although
Asian Paints 14,500 dealers are not much more, compared to Goodlass Nerolacs 11,000
dealers, the quality of dealers that Asian Paints has (in terms of financial power, customer
interaction, etc) are much better than that of its competitors. The dealers receive their supplies
from the nearest of 55 company depots which in turn are supplied by 6 regional distribution
centres in India. These depots in turn receive the goods directly from the 4 Asian Paints
factories.
Having plants spread across the region being serviced is very important for cheaper
products like distempers but not so for emulsion paints. The high transportation costs as a
fraction of the COGS would wipe out a substantial portion of the profit margin, otherwise (The
distempers sell for about Rs. 50/litre and the exterior paints and emulsions for Rs.150 to 200 per
litre. The transportation cost from Mumbai to Kolkata is about Rs. 1,500/kilolitre.)
The number of product-pack-shade combinations offered by a paints company is vital for
its profitability in the decorative paints market. Although temporary in nature, Asian Paints had
the first mover advantage in introducing a wide variety of colours first through an extended
shade card of 151 colours. In response to J&Ns introduction of 2500 readily available shades
through tinting machines in late 1996, Asian Paints and the other majors followed suit by offering
1000-1500 shades to their customers. However, Asian paints gained the most as it was able to
penetrate the market most with its tinting machine so much so that most people think that Asian
Paints was the pioneer. Although the inventory carrying cost drastically comes down as only 1015 varieties of stains need to be stocked for mixing, an investment of about Rs. 5 lacs is required
by the dealer for such a machine. Hence, the penetration of such machines is still low, with nonexistence in rural areas.
Inventory management is critical in the paints industry. The majors normally carry 70-90
days of sales equivalent of inventory. Among them, Goodlass Nerolac is more efficient due to
more of its sales coming from the industrial sector where lower inventory is required (fewer
varieties and more specialization).

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Asian Paints was the first paints major to take a rural initiative as long back as 1989.
Since then, it has built up a good dealer network in such areas, where availability of paint is the
primary concern and not the shades or the services offered. Also, small pack sizes (1kg and
0.5kg) are critical as the customers often paint only one or two walls and even if the entire room
is painted, 4 litres of paint is rarely required. (1 litre of distemper and emulsion are sufficient for
painting 2 coats 100 and 150sq ft area. Asian Paints offers the distempers in 0.5kg packs and the
emulsions in 1kg pack.

Forward integration
The major players are considering providing services also, instead of just selling products.
They are thinking of taking care of their customers needs right from the selection of the paint to
the completion of painting their house. This is called as forward integration. Companies provide
complete facility up to final painting to the customer house. This ensures the customer about the
quality and serviceability of the companies.

Technology
Technology is very important for industrial paints. The Indian companies have not
invested in research and development and hence are backward in this regard. They try to copy
the offerings in the international market. Industrial paints can be classified into various
categories including automotive coatings, marine coatings, powder coatings and coil coatings,
all of which are based on different technologies which require considerable R&D effort for
developing and improving. Hence, the Indian players are not geared up to meet the needs for
industrial paints on their own.
The companies are increasingly going in for joint ventures and technical tie-ups with
foreign firms, which have access to modern technology in order to make an impact in the
industrial paints segment. These joint ventures are also very useful in getting the Indian
accounts of the global players that are currently customers of the JV partner. By virtue of
partnering with PPG Industries of USA, Asian Paints got the account of DCM Daewoo, Hyundai
Motors and GM in India. Such joint ventures are beneficial for both the partners, the Indian
partner getting access to the critical technology and the foreign player to the distribution
network and service personnel.

Branding
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The top players have launched various brands in the market. Different brands are
targeted at various segments. For e.g. Asian Paints has Royale for the high end of the decorative
paint market and Utsav for the lower end. Brand building is an important deterrent for new
players wanting to enter the paint market in India.

Duty Structure
The excise duty on paints i.e. the finished products has remained at 16% since 1997-98.
Till the early 90s, the unorganized sector had various SOPs, which enabled them to produce at
40% lower cost and hence play a major role in the decorative paints market. However, in the mid
90s, the change in the duty structure brought down the cost advantage from about 40% to 4-5%.
This resulted in the increase in market share of the players in the organized sector.

Porters Analysis
A Porters five-force analysis was done. It is given in a diagrammatic form in the exhibit 1.

Substitutes
The threat of the substitues is much greater in the rural markets, where the awareness
about paints is still quite low, and it is considered as a luxury good. Either the walls are left as
such without any paint on, or substiutes like whitewash are used. This threat is visible in the
urban markets also, especially in the exterior paint segment. White cement is one of the most
preferred substitutre for the paints for exterior walls. Houses are increasingly made with walls,
constructed of bricks in such a way that the bricks act as a natural dcor. Stones are also being
used in many cases.

Threat of new entrants

We see that the drivers for success are different in both the segments, that is decorative
and industrial. In decorative segment, distribution channel becomes most important for a player
to be a success. Thus for a new player to succeed here, entry barriers are huge. That may have
been one of the reasons that ICI isnt such a big player in Indian decorative segment. Although,
the growth rate of Indian market is very attractive, in comparison to global markets, APIL,
because of its distibution channel, is not all that threatened by new entrants. Even if an
international player wishes to enter into this segment, it will take him inordinately long time to
establish channels which could threated APIL. The brands of the existing players could also make
it difficult for a potential new entrant, especially if the Pull factor further increases in the
industry.
The industrial segment, which gives mcuh more importance to the technology used, and
doesnt require such huge networks, is more prone to new entrants. But the flio side of this

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segment is the technology. It raises the entry barriers to forbid entry into this segment. Also
getting a foothold in the market is very difficult, as the swittching cost is high for the customers.

Buyers power
The decorative segment is very fragmented market as most of the buyers are small
buyers. There are a huge number of buyers, all of them with small demand. Thus they dont
have much power. They have low switching cost though, thus it might be difficult to establish a
brand loyalty though. There might be corporate customers with whom a player may have tieups. In those cases the buyers do have certain power.
The consumers of paints especially in the decorative paints segment do not have
adequate knowledge about the quality, properties and perceived benefits of a particular paint.
Hence, there is a strong reliance on intermediaries like painters, contractors and even paint
dealers in making an informed decision about the type and even the brand of paint to buy and
use, thereby becoming strong influencers.
In industrial segment the buyers do have some buying power. There are fewer buyers
with huge demands. Loss of one customer would hit the company in quite noticeable way. This
can be overcome by raising switching costs. The costs can be increased by giving the customers
specialized services, like after sale services etc.

Suppliers power
One of the main RM in the manufacture of paints is TiO2. 50% of it is imported primarily
because the quality of indigenously prepared compound is not very high. There are very few
suppliers of this material. Also the threat of backward integration into making TiO2 is low, as the
capital costs are in the tunes of 450 to 500 crores, suppliers power further increases.
In industrial segment, technology is imperative. There are only very few companies which
pioneer in the technology, for example Du Pont, thus they command their prices.

Global Trends
Till now we have examined the domestic market and the present scenario through which
we are getting a picture of what the future scenario can be in the Indian market. The Indian
market is expected to move towards the model of the western markets as it matures. In the
global market the share of industrial paints is 70% and that of decorative is 30% while for the
Indian market it is the other way round. The Indian industrial paints market has just about
started growing and the decorative paints market has started maturing, so the long-term
distribution of paints shall be comparable to the world scenario now.

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The global market is estimated at about $21 million tons per annum and valued at about
$60 billion1. The world market is growing at a rate of 3-4% a year, or slightly less than the world
economy and is serviced by 7,000 paint makers. This is because the market in developed
countries is quite mature and a very high level of market penetration has been achieved and
there are few areas where market expansion can take place.

The global market is in a very high stage of consolidation and the top players control
almost 60%5 of the total demand. A lot of mergers and takeovers have happened in the recent
past. Despite the presence of thousands of paint suppliers, the impact of mergers and
acquisitions has been dramatic. In 1980, the top 10 paint manufacturers accounted for 15% of
world sales. During 1980-2000, ICI grew more than four-fold to become the worlds largest paint
manufacturer with a market share of 10% 5 worldwide. Akzo Nobel grew five times and Sherwin
Williams grew three times. The level of consolidation can be seen from the example of the
DuPont takeover of Herberts. DuPont was the leader of automotive coatings in North and South
America and Herberts was the leader in the area in Europe. DuPont planned it expansion to
Europe and the executed this plan through the takeover he Herberts to itself become the largest
automotive paints manufacturer in the world.

1
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The market is quite differentiated and a lot of sectors and niches have been identified. The
bigger the sector or the niche, more likely industry leaders will dominate it. The reason for this is
that most of the players have now started concentrating on the only specialized niches and they
try to dominate that particular niche. Due to a high level of consolidation, only the large players
have remained in each of the markets and therefore survival of marginal or low market share
players has become tough. Therefore, even the large global players who have a small presence
in non core segments have begun hiving off those divisions and are concentrating on the core
segments and the competition in even the core segments is only from very large competitors.

Also, in the industrial arena technology advancements started making the technologies for
manufacture more and more exclusive to the proprietary technology holders. This has made it
infeasible for other players to advance in the markets and they have either sold out or closed
shop. It is very tough for one player to dominate more than three to four niches in the industrial
segment because that would require a lot of R&D capability and expenditure. Also, it would have
to compete with highly focused companies who are just concentrating on one or two areas and
are therefore specialized in these areas. Such a company would find it tough to keep up with the
technological advancements in the area and would therefore have to move towards more focus
on a smaller number of niches.

The ultimate structure of the industry (the signs of which can be observed even now)
would be where a small number of highly focused global competitors compete in each niche with
each having a substantial market share.

Companies such as ICI, Kalon and Akzo Nobel have become experts and so dominate the
decorative markets, with ICI in particular choosing to quit car paint segment four years ago to
concentrate on decorative segment. It has, however, stayed in two big worldwide industrial
sectors: vehicles refinish and can coating.

This trend to concentrate on core competencies was started by Herberts in Germany in the
mid-eighties, when Hoechst, its parent company, allowed it to exit from decorative paints, revive
the former Herberts brand name and concentrate on industrial market alone. The move
astonished an industry then obsessed with volume, for Herberts immediately dropped out of the
premier league of the worlds top 10 paint manufacturers. Today, it is back in the top 10 after
building up through acquisitions and accelerated growth in sectors where it is confident it can
make the worlds top five. In powder coatings it is world number one. It was, of course, taken
over by DuPont in 1999.

ICI, now the worlds largest paint manufacturer, has led the rush for volume and continues
to do so. It has pared down its high-tech, specialized global niches to two - vehicle refinishes and
can coatings - and has developed a profitable world business since its big leap forward in 1986,

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when it bought Glidden, a US giant then in the top 10. A few months prior to this purchase,
BASF, Herberts German rival, had bought Inmont, another US giant, from United Technologies.
Glidden specialized in can coatings, having developed an environmentally friendly water-based
lacquer for spraying the inside of beverage cans. Inmonts expertise was in vehicle repair paints.
Both acquisitions gave their purchasers years of corporate indigestion.

Meanwhile, Courtaulds sold its local UK automotive business to PPG and built on global
niche management skills acquired through its world-leading marine and protective coatings.

Akzo, the Dutch chemical giant, has made a rapid series of acquisitions in the nineties that
have made Akzo Nobel, the largest paint manufacturer in Europe and second to ICI in volume
terms in the world. Many of these companies exchange parts of their portfolios from time to
time, to strengthen their positions in particular niches.

The emerging markets to which the paint majors are targeting are Latin America, Asia and
the Pacific regions. These markets are expected to be the thrust areas of the future competition.

All the big names i.e. PPG, DuPont of US; ICI and Courtaulds of UK; BASF and Herberts of
Germany; Akzo Nobel of the Netherlands; Nippon and Kansai of Japan are in India. Kansai is the
parent company of Goodlass Nerolac and it owns a 65%2 equity share in the company.

The Indian market has also started seeing a lot of mergers and acquisitions happening in
the recent past. Asian Paints also survived a major threat of acquisition from ICI. Even the Indian
market has consolidated quite a lot and most of the minor players in the Indian market have
been taken over. The next major events could be related to mergers or takeovers of Indian
companies by major global players or takeovers of smaller Indian companies by market leaders
like Asian Paints.

2 Source: www.capitaline.com
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Expected growth in each segment

The growth rate of the industry is expected to be about 10% CAGR in the future. The
growth rate of industrial segment now is about 10%, this is expected to accelerate and hit 12%13% in the next few years. The reasons for this could be increased industrialization and more
importantly, the growing importance and awareness about the need for industrial paints.
The decorative paints segment is expected to grow at a slower 7%-8% pa with the exterior
paint segment being the star with 10%-11% growth rates. Growth in the decorative paint
segment is expected to slow down even more in the future.

Changes in segmentation
The Indian markets are expected to move towards the international model of competition
and segmentation. In the decorative paints arena, there shall still be stiff competition but the
focus of competition shall move from variety to service, that has been explained in greater detail
later. The rural segments shall themselves upgrade and move towards the equivalents to the
current urban markets.

In the industrial segment, the Indian market is, as of now, not matured. This market shall
evolve to form well-defined niches. Each of these niches shall have very specific demands and
specific technology requirements, which shall ensure that only one or two players who have the
competence in the area shall dominate each niche. These niches exist in this segment because
of the switching cost of the buyers, increases with the period of association. This is because the
supplier would have acquired a significant knowledge about the customer and this is the reason
why market shall develop as an aggregation of monopolies.

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CHAPTER -2
LITRATURE REVIEW

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LITERATURE REVIEW
It is the secondary data about the research. It include all those previous
researches which are done in relation with the paints, irrespective of the
company or brand also irrespective of the location where the research is been
done.
All these previous researches help us to find a way for our research. We
have the results of all these researches which play a concrete supportive role for
our research.

Abhishek kumar sankrit, a student of School Of Management Sciences

Lukhnow has done a study on customer awareness with respect to Asian Paints
in the year 2009-2010. The respondents are builders, contractors, engineers and
others. The result of the study says that the awareness about the Asian Paints is
100%. It is due to the advertisements which stick in the minds of the customers.
The brand value of Asian Paints is also high due to its quality and serviceability.

Rishab Khecha and group, students has done study on customer

awareness with respect to change in corporate identity of Kansai Nerolac Paints.
It says only 1% of respondents are aware about the change in corporate identity
of Nerolac. Previously Nerolac was Goldas Nerolac and now changed the name to
Kansai Nerolac. Also they find the awareness about services from the paint
companies to customer. It was found very poor i.e. just 20% awareness about
services offered by paint companies.

Abhishek Shrivastava, student of UP Technical University Lucknow, has

done a study on Asian Paints and Nerolac Paints with Comparision to
Unorganised Sector. He found out that the brands stablished in the market are
snatching the market share of unorganised sector at a fast rate. It means the
customer is now moving towards the brand name and high quality products.
Previously the market share of unorganised sector was 30% in the country but
the unorganised sector is loosing their market share in front of leading brands in
the country.

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Kapil Sarin student of LBSIM Delhi, has done a study on the Demand
Forecasting For Asian Paints in the year 2006. He found out the market share of
Paint Companies in the Industrial Segment. He found out that 25% paints are
sold to industry segment and 75% are sold to decorative segment. Asian Paint is
leader in decorative segment with 45% market share, but Nerolac is leader in
industrial segment with 45% share and only 17% goes to Asian Paints in this
segment.

Amit Sunsara student of Gujrat Technological University Ahmedabad has

done a research on Vimal Paints in Ahmedabad in 2009. He found out that a
local paint company like vimal has very low awareness in the market and also
has the low brand image. People can not trust a local brand like vimal over
known brands like Asian Paints, Nerolac, Berger and ICI. So low awareness in the
market brings them a low sales volume.

Ashutosh Parmar student of Sri Ram Murti Smarak College of Engineering

& Technology,
Bareilly has done research on Berger Paints, its Distribution
Channel And Comparison Between Its Peers Group in 2010. He found out that in
the major market is under Asian Paints and 35% is in hands of Burger. Also he
found out that customer are becoming brand loyal to the companies they admire
and use its product. Asian Paints is the most recalled by the customers.

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CHAPTER -3
RESEARCH METHEDOLOGY

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RESEARCH METHODOLOGY
AIM
The aim of this research is to find
1. What factors a customer looks in paint.
2. How much he is involved in the painting process of his house.
3. How he behaves in the market i.e. do he follows the suggestions of shopkeeper
or/and painter.

OBJECTIVES
1. To find
paint
2. To find
3. To find
4. To find

the factors which a customer keep in mind when he purchase the

how much a customer know about the painting process
who influence the purchase decision of customer
what a paint company do to attract customer purchase in market .

Type of Research
The research can be categorised in three heads. They are exploratory, descriptive and
causal. This research is Descriptive type of research. The research type exactly defined as
below.

RESEARCH DESIGN
A framework or blueprint for conducting the marketing research project. It specifies the details of
the procedures necessary for obtaining the information needed to structure and/or solve
marketing research problems.

CONCLUSIVE RESEARCH
The research design to assist the decision maker in determining, evaluating and selecting
the best course of action to take in a given situations.

DESCRIPTIVE RESEARCH
A type of conclusive research that has as its major objective as the description of
something usually market characteristics or functions.

CROSS SECTIONAL DESIGN

A type of research design involving the collection of information from any given
sample of population elements only once. In this research we are reaching the sample i.e.

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target population only once in order to conduct the research. The one time response of the
respondent is sufficient for the study.

SINGLE CROSS SECTIONAL DESIGN

A cross sectional design in which one sample of respondents is drawn from the target
population and information in obtained from this sample once.
This research include survey and fact finding inquiries of different kind. The research has no
control over the variables. He can only report what has happened has what is happening.

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QUESTIONNAIRE
This can be defined as the structured technique for data collection
that consists for a series of questions, written or verbal that a
respondents answer.
The questionnaire is consisting of 22 questions divided in 2 categories. Section 1 consists
of demographic questions of the respondents like his/her age, gender, income etc and section 2
consists of questions which are helpful in fulfilling the objectives of research. These questions
are about awareness, interest, desire, and action of a respondent with respect to PAINT
INDUSTRY.
We have used AIDA model for making questionnaire.

AIDA MODEL
The AIDA Model to convey communication objectives
AIDA model was presented by Elmo Lewis to explain how personal selling works. It shows a
set of stair-step stages which describe the process leading a potential customer to purchase.
The stages, Attention, Interest, Desire, and Action, form a linear hierarchy.
1.
2.
3.
4.

It demonstrates that consumers must be aware of a product's existence,

Be interested enough to pay attention to the product's features/benefits, and
Have a desire to benefit from the product's offerings.
Action, the fourth stage, would come as a natural result of movement through the
first three stages. Although this idea was rudimentary, it led to the later emerging field
of consumer behaviour research.

Awareness- The awareness here counts that a respondent is aware about the paint products
available to him for painting his house. All major companies are known to him is his awareness
about it and the knowledge of painting procedure shows his awareness. It can be increased in
the customers and consumers through various means i.e. advertisements, promotional activities
etc.
Interest- The interest part indicates that a aware customer start building a interest in the
company and keen to purchase the paint when required. The interest of a customer helps him to
retain the brand name of Paint Company in mind and helps company to built a positive image in
customers mind.
Desire- The customer whenever needs to paint his house he starts recalling all his memories
about good brand or brands. He compares all those brands with his point of view on various
attributes of paint. Finally comes with a result. He selects the paint brand on the basis of his
awareness and interest.
Action- The customer goes for making a purchase from the shop through various product
categories. He analyse few aspects like quality with price, supportive factors and finally purchase
a category of his brand recalled.

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SAMPLING
Sample Universe it is finite it means the population of the city Indore.
Sample Frame
A representation of the elements of the target population. It consists of list or set of
directions for identifying the target population. Here in this study the sample frame is the
respondents who are Business persons, Youngsters, Family Woman, Servicemen, and any other
teenager or adult person who is aware about paints and major paint companies.

Sample Unit the person of Indore city who knows about the paints, and paint companies
Sample Size
The number of elements to be included in the study. Determining the sample size is
complex and involves qualitative and quantitative considerations. Here the size of the sample is
i.e. the number of questionnaire filled for the research is 200.

Area of Interest
1. The respondents should be aware of paints and paint companies.
2. He must have involved in painting of his house.
3. He must be aware of quality features and the attributes of the paint.

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DATA COLLECTION
In nature of data, it was both primary and secondary.

PRIMARY DATA
The data originated by the researcher specifically to address the research
problem.
Primary data is one which is collected first time and original in nature. This can be done
in following ways:
Observation
Personal interview
Telephone
Questionnaire
In this research study, the data was collected through questionnaires which had
opened ended and multiple choice questions.

SECONDARY DATA
This is the data collected for some purpose other than problems at hand is
called as the secondary data
The data which was already collected by someone else. This was collected through
journals, magazines, newspaper, previous researches and internet.
This is also called as the literature review of the research.

DATA ANALYSIS
The data analysis was done by different types of methods like rating, pie charts,
percentage, tables and through graph. I have also applied some research tools like
frequency distribution and chi square test on the data which is explained further.

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Tools and techniques applied

After collecting the filled questionnaire responses from the
respondents, I have filled all the data into the SPSS data sheet.

S.P.S.S.
This is the software which is very helpful to a researcher. This software
includes all the research tools and other helpful features which in minimising the
work of the researcher. First of all I have entered the data into the SPSS data
sheet and applied various tool onto it. By applying the tool a data sheet was
prepared in the software through which I have interpreted the results and
findings.
I have used those tools which are best suitable to fulfil my objectives of the study.

TOOLS APPLIED
In order to analyse the data and to interpret the results I have used
Descriptive Statics. In descriptive statics I have used Frequency Distribution and
descriptive distribution. Also I have used Chi Square test. These three tools are
very useful in my study and all the results were interpreted on their basis.
I have used frequency distributions on question no. 1, 2, 3, 4, 5, 15, 16, 17
and 18. The chi square test is applied on the question no. 13, 14. All other
question in the questionnaire is supportive questions to the objectives.

43 | P a g e

CHAPTER -4
DATA ANLYSIS
AND
INTERPRETATION

44 | P a g e

INTERPRETATION AND ANALYSIS

TABLE -1
AGE
Valid Cumulative
Frequency Percent Percent
Percent
Valid 15-25

56

28.0

28.0

28.0

25-35

45

22.5

22.5

50.5

35-45

47

23.5

23.5

74.0

above
45

52

26.0

26.0

100.0

200

100.0

100.0

Total

FIGURE -1

AGE GROUPS
15-25 (56)

25-35 (45)

35-45 (47)

Above 45 (52)

26%

24%

28%

23%

INTERPRETATION
The respondents of all age groups are approximately in same proportion. This
leads the interpretation in a concrete direction. 75% of respondents are of above age of
25. Its leads to a general interpretation that all are in a earning group. It is also indicating
that they are majorly of middle class fellows.

45 | P a g e

TABLE -2
Gender
Frequenc
y
Percent
Valid

Male
Female
Total

Valid
Percent

Cumulative
Percent

111

55.5

55.5

55.5

89

44.5

44.5

100.0

200

100.0

100.0

FIGURE -2

INTERPRETATIONS
Male respondents are high in number as compared to the female customer. The
male respondents are majorly of service and business class people as explained below.
Females also have a good involvement in painting process because they are present in
the house during painting is going on. Females are more involved in deciding the colour
shade for walls.

46 | P a g e

TABLE -3

Annual Income
Income
Valid

Frequency Percent Valid Percent Cumulative Percent

1 lac

14

7.0

7.0

7.0

1-3 lac

88

44.0

44.0

51.0

3-5 lac

89

44.5

44.5

95.5

4.5

4.5

100.0

200

100.0

100.0

above 5 lac
Total

FIGURE -3

INTERPRETATION
Among 200 respondents, the annual income of respondents majorly falls in 1 to 5
lacs. It means that the customers are of middle class people, who can spend a good
amount on their house painting. They can afford good quality paint in painting and their
involvement in painting their house is also high. They are having a close observation on
how their house is getting painted.
The higher involvement leads them to have a good knowledge about the painting
process.

47 | P a g e

TABLE -4

Occupation
Perce
Valid
Cumulativ
Frequency
nt
Percent e Percent
Vali Service
d
Busine
ss

77

38.5

38.5

38.5

57

28.5

28.5

67.0

Studen
t

66

33.0

33.0

100.0

200

100.0

100.0

Total
Figure -4

Occupation
Services (78)

Business (56)

33%

Student (66)

39%

28%

INTERPRETATION
The respondents majority is from those who are earning money i.e. from service
and business class persons. These are those who are self capable and probably the
decision maker of the house. Hence their involvement is high in painting as we already
found that customer is of middle class fellows.
We found that middle class fellows have high involvement in painting of their
house; also they are eager to purchase good quality paint.

48 | P a g e

Know Painting Procedure

TABLE -5

Frequen
cy
Percent
Valid Yes
completely

Valid
Percent

Cumulative
Percent

80

40.0

40.0

40.0

yes
somewhat

83

41.5

41.5

81.5

no don't
know

29

14.5

14.5

96.0

cant say

4.0

4.0

100.0

200

100.0

100.0

Total
INTERPRETATIONS

The data itself indicates that the respondents are aware and have knowledge of painting
process. It obviously indicates the high degree of involvement of the customer in painting process and
the eager to purchase high quality paint product in painting house.

TABLE -6
Which company brand you trust most
Brand
Asian Paints

Observe Expecte
dN
dN

Residual

139

40.0

99.0

Nerolac

36

40.0

-4.0

Berger

23

40.0

-17.0

ICI

40.0

-39.0

Others

40.0

-39.0

Total

200

INTERPRETATIONS
The response on the question which is the brand they trust the most, when asked
to respondents. Among 200, 139 respondents are having trust on Asian Paints. Hence
we can say that in the market of Indore, the most trusted paint brand is Asian Paints.
After that the second comes is Kansai Nerolac, but having very low trust as compared to
Asian Paints.

49 | P a g e

TABLE -7
Which companys advertisements you remember the
most
Brand Name

Observed N

Expected N

Residual

Asian Paints

76

40.0

36.0

Nerolac

107

40.0

67.0

Berger

13

40.0

-27.0

ICI

40.0

-37.0

Others

40.0

-39.0

Total

200

INTERPRETATIONS
Surprisingly most customer of Indore remembers the advertisements of Kansai
Nerolac over Asian Paints advertisements. It is because of famous punch line of Nerolac
Jab Ghar Ki Naurak Bdhani Ho, Deevaro Ko Jab Sajana Ho Nerolac Nerolac and the star
Shah Rukh Khan in its advertisements recently, which says Kuch Change Kare Chalo
Paint Kare
On the other hand Asian Paints comes on second place in effective advertising. It
also indicates that the company relies on its quality than its advertising. Asian Paints
quality products are overcoming Nerolac advertisements.
It also indicates that the customers now days do not believe on attractive
advertisements and celebrities. Customers analyse everything on their on before making
purchase.

50 | P a g e

TABLE -8
Which company gives innovative products
Brand Name
Asian Paints

Observe Expecte
dN
dN

Residual

137

40.0

97.0

Nerolac

29

40.0

-11.0

Berger

30

40.0

-10.0

ICI

40.0

-39.0

others

40.0

-37.0

Total

200

INTERPRETATIONS
This data also supports above interpretations that Asian Paint provides innovative products to
customers time to time. Asian Paints is ahead of others in Research and development activities. The
second comes the Berger which is in healthy competition with the Nerolac in innovativeness.
This quality and innovative image of Asian Paints is due to its consistent performance over
past few decades. Asian Paints is ahead of other companies in providing services to the customers.

Test Statistics
Which company

Which companys

brand you trust

advertisements you

Which company gives

most

remember the most

innovative products

328.700a

235.100a

313.000a

.000

.000

.000

Chi-Square
Df
Asymp. Sig.

a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell
frequency is 40.0.

51 | P a g e

Painters suggestions and shopkeepers suggestions

TABLE-9
Descriptive Statistics
Maximu

1. Which brand painter

Std.

Minimum

Mean

Deviation

200

2.46

.884

200

2.65

.762

suggests you
2. Which brand
shopkeeper suggests
you while purchasing
paint
Valid N (list wise)

200

INTERPRETATIONS

1. The values of Std. Deviation are .884 which shows that the respondents are self
capable in deciding the paint brand for painting their house. They do not follow
blindly the suggestions given by painter in brand selection. They are aware and
knowledgeable in the field and do not require suggestions. But they do follow
family suggestions.

2. The customer also does not follow the suggestions from the shopkeeper of
paint brands. They are self decision maker and rely on their knowledge. It is
interpreted through the value of the Std. Deviation which is found to be 0.762.

52 | P a g e

What factors you look when deciding paint for your house
Frequenc
y
Percent
Valid Quality

Valid
Percent

Cumulative
Percent

103

51.5

51.5

51.5

Brand Name

15

7.5

7.5

59.0

Price

52

26.0

26.0

85.0

Coverage

1.5

1.5

86.5

After sale services

.5

.5

87.0

Warranty

1.0

1.0

88.0

the colour shades

availability

1.0

1.0

89.0

22

11.0

11.0

100.0

200

100.0

100.0

life of paint (durability)

Total

TABLE -10

INTERPRETATIONS
The above data indicates that the first factor which a customer looks into Paint is
quality which is favoured by 103 respondents. After that the customer looks for prices of
the paint favoured by 53 respondents and the third most important factor is the life of
the paint i.e. its durability.
All together we can say that a middle class person wants a combination of quality,
price and life of paint. A customer in purchasing paints wants a good value for his money.
These three factors are prime factors which a customer looks when he goes for
purchasing paint.

53 | P a g e

CHAPTER -5
CONCLUSION
SCOPE OF FURTHER RESEARCH
LIMITATIONS

54 | P a g e

CONCLUSION
The study of consumer behaviour leads us to many answers which a paint company
seeks and continues tries to find answers to these questions, i.e. how a customer
behaves in order to purchase the paints in order to paint his house, what are the
attributes, features a customer looks in a paint when he make purchase. A
customer always wants a best item which include all desirable qualities and
available in budget to the customers.
A customer always took suggestions from market i.e. the shopkeeper,
contractor, interior decorator, designer, in order to purchase good quality paint for
his house. He also focuses on how painting process is going in his house. A modern
customer is well aware about painting process, and application of paints on the
walls. He loves to closely monitor the painter or contractor. Nowadays customer
themselves want to paint their house as a fun activity. They found it easy to do.
We have several finding from the study and results which are derived, those results
are as follows
1. The customers are capable enough to buy good quality paint from market for their
house.
2. The customers are well aware and knowledgeable about, how painting process is
done on the walls. The majority is aware about the step by step procedure for
painting.
3. Customers now days paint their house in every 2-3 years. It means they love
refreshment and new colours in their houses.
4. Customer now does not rely completely on the painters for painting their house.
They them self take initiative and participate in painting procedure of their house.
5. Customer takes suggestions from painter and shopkeeper but they purchase that
paint which they trust.
6. A customer first of all seeks quality in paints and then prices, i.e. they want a
combination of quality and price. It simply means they want a good return value for
their money invested.

55 | P a g e

SCOPE OF FURTHER RESEARCH

In this field one can go beyond the study of consumer behaviour. This is a
very vast area of finding new things related to customer behaviour in the paint
industry. Because here in the field of colours, a customer can not differentiate
between the company for a same colour shade. A customer can not find the
performance of the paint when applied on the wall; it took long time for a customer
to trace performance of paint.
A paint company should focus on the services they offer to the customers
because pre sales services and post services are very important in this industry. In
future this industry will become a service driven industry. One can study the
importance of pre-sales services and post-sales services in this industry. Services
delight the customer.
In this industry a customer is not very much aware about the presales and
post sales services offered by the companies. Asian Paints offer presales services
like fore site, expert advice, shade guide and online helpline ASK APARNA etc, and
post sales services like reimbursement for poor performance of paint if found,
suggestions and expert advice if paint was wrongly applied. Here one can study and
find the way how to increase the awareness for these services.
This industry the customer is having more influence of an expert like painter,
shopkeeper, interior designer, and contractor. So this is another area needs to be
focused, one can go further to find the influence of painter, contractor or
shopkeeper on to the customer buying behaviour.
A researcher can go to find out with what creative and innovative ways a
paint company can reach to the customer. Here in this study we found out that
customers are more attracted by innovative brand.

56 | P a g e

Limitation of the study

Every study has some limitations. We can not exactly predict the market. A
customer changes his mind time to time with the situation. So it is difficult to predict
the behaviour of the customer in the market.
Here are some limitations of the study1. On answering the questionnaire, the respondent might not be interested in
answering.
2. The respondent sometimes does not answer questions with full attention.
3. Manual mistakes are possible in making data entry in the SPSS software.
4. A respondent might not be aware about all the companies offering paints in
the market.
5. A respondent might know about all the paint companies but do not experience
the performance of all the companies.
6. It is possible that a respondent is having a bad experience with a company.

57 | P a g e

CHAPTER -6
BIBLIOGRAPHY

58 | P a g e

Bibliography
1.
2.
3.
4.
5.
6.
7.
8.

http://www.nerolac.com/
http://www.bergerpaints.com/
http://www.akzonobel.com/paints/ (ICI Paints)
http://www.shalimarpaints.com/
http://www.jnpaints.com/ (Jenson and Nicolson Paints)
http://www.asianpaints.com/
http://www.asianpaints.com/applications/dealer_locator.aspx
http://server.iad.liveperson.net/hc/73865167/?
cmd=file&file=visitorWantsToChat&site=73865167&referrer=http://ww
w.apaints.com/AsianPaints.jsp
Asian Paints Ask Aparna
9. http://www.asianpaints.com/expert_help/foresite.aspx

Books Referred
10.Marketing Planning and Strategy, Seventh Edition in 2007 by Mr. Subhash C Jain
under Thompson Publication
11.Marketing Research-An Applied Orientation, fourth Indian reprint edition in 2005
by Mr. Nresh K. Malhotra under Pearson Education Publication.
12.Research Methodology Methods and Techniques, Second Edition in 1997 by Mr.
C.R. Kothari, under New Age International Publishers.
13.Marketing Management-Planning, Implementation and Control-Global Respective
Indian Context, third edition by V.S Ramaswamy and S. Namakumari under
Macmillan Business Book Publication
14.Organisation Behaviour by Stephen P. Robbins Eleventh Edition, under the
Prentice-Hall of India Private Limited, New Delhi

59 | P a g e

CHAPTER -7
QUESTIONNAIRE

60 | P a g e

ANNEXTURE
QUESTIONNAIRE
Dear Respondent,

We are conducting a research on Paint Industry in Indore city. You are requested to give
your fair opinion for the questions asked. We shall be obliged for your supportive
contribution in this purely academic Endeavour.
THANK YOU

A.

SECTION A

1. Age
15-25
25-35
35-45
Above 45
2. Gender
Male
Female
3.

4. Annual Income
1 lac
1-3 lacs
3-5 lacs
above 5 lacs
5. Occupation
Service
Business
Student

61 | P a g e

6.
7.
8.

B. SECTION - B

1. Do you know the painting procedure?

Yes Completely
Yes Somewhat
No Dont Know
Cant Say
9.
2. Which paint company first comes to your mind when you paint your home?
ICI
Berger
Kansai Nerolac Paints
Asian Paints
All
10.
11.
12.
13.
14.
3. Why you choose this company for painting your house?
Quality
Services
Availability of products
Affordable Prices
Colour Shade Availability
15.
4. When do you paint your house?
every year
2-3 years
3-4 years
4-5 years
16.
5. The NON-AVAILABILITY of your paint brand changes your preference?
Always
Some times
Never
Cant Say
17.

6. Whom you ask suggestions about the selection of the paint company?
Self
Family members
Friends
Contractor/Painter
Shopkeeper
18.
7. Does presence of celebrity in advertisements generates your interest in paint company?
Yes Of course
Sometimes
Never
Cant Say
19.

8. Would you like to take pre sale services and after sales services by company?
Yes, Of course
Sometimes When required
No, need of suggestions
Cant Say
20.
9. Which company provides you the after sale service?
Kansai Nerolac
Berger
Asian Paints
ICI
All
21.
10. Are you ready to pay a higher price for purchase of good quality paint?
Always
Sometimes
Never
Depends on Contractors/Painters suggestions
Cant Say
22.
11. Can you choose and trust a new paint company brand for painting your house?
Yes, I can trust
No, I cannot trust
May be as per advice/Suggestions
Cant Say
23.
12. Does availability of shade guide help you to select paint company brand?
Yes
No.
May Be
Cant Say
24.
13. Which brand generally a painter suggests you in order to paint your house?
Kansai Nerolac
Berger
Asian Paints
ICI
Other
25.
14. Which brand a shopkeeper suggests you when you purchase paints?
Kansai Nerolac
Berger
Asian Paints
ICI
Other
26.

27.

Please Rank (1 to 5) the following:

28.

35.
most?

29.

Asian
31.

30.

Paints

15. Which Paint company brand you trust the36.

most?
16. Which companys advertisements you remember
41.

46.
customers?

17. Which Company give innovative product47.

to

Nerolac
32.

37.

38.

39.

40.

42.

43.

44.

45.

48.

49.

50.

51.

52.
53.
54.Please Rank (1 to 8) the following factors according to your preferences:
55.
56.

18. What factors you look for when you decide paint for your house?
a. Quality

57.

b. Brand Name

58.

c. Price

59.

d. Coverage

60.

e. After Sale Services

61.

f.

62.

Warranty

g. The Colour Shades Availability 63.

h. Life of the Paint (Durability)
65.

66.
67.

68.

64.

Berger
33.
34.

Other