Asian Paints - Colours for Everyone

K. Shriram | IIM Bangalore

Asian Paints has been India’s largest paint company for more than four decades; its nearest competitor is less than half of its size. The journey from a garage startup whose name was randomly picked by its founders from the telephone directory to its pre-eminent position today has been made possible through excellence in every step of the value delivery process. It is interesting to note the evolution of its strategy over the decades, especially since many of the leaders in consumer products from the days of the license raj have failed to remain relevant and face competition of the post-liberalization era.

The analysis is based upon the value chain mentioned below:-

Choose the value

• Segmentation
• Targeting
• Positioning

Provide the value

• Product development
• Service development
• Pricing
• Manufacturing
• Distributing

Communicate the value

• Sales force
• Sales Promotion
• Advertising

Choose the value
The target segment for Asian Paints has changed over a period of time in response to the changing demographics and strategies of its competitors. When it entered the market in the 1940s the space was dominated by multinational companies like Jenson & Nicholson. The foreign companies appointed a few traders as their wholesale distributors and allowed them to perpetuate a situation of monopoly. These distributors had neither the compulsion nor the motivation to invest in distribution infrastructure and expand into semi-urban and rural areas. As a result, paint dealers concentrated on big cities where they could make the sales without much investment in distribution infrastructure and market development. Seeing that this bulk buyer segment although huge at that point of time was stagnating, Asian Paints decided to ignore this segment for the present and go to individual consumers. Asian Paints positioned itself to serve the rural markets with small pack sizes, allowing it to reach the remote parts of the country.
After successfully capturing the rural markets, Asian paints successfully expanded to target the mid-tier and premium segment over the course of the next few decades. The strategy of creating sub-brands with a distinct promise for each segment allowed it cover the entire market. So while the Utsav and Tractor Acrylic in the economy segment offered protection and adhesion, the Royale Play offered superior finish, color range and special effect finish.

Provide the value
Asian Paints has been at the forefront of innovation, reaching the markets with new products before its competitors. At the time of Asian Paint’s entry, paint companies were supplying paints in containers of 500 ml or larger. Asian Paints saw that there was a felt need in the market for paints in smaller packs and harnessed the business opportunity by supplying paints in small packs sizes of 200 ml, 100 ml and 50 ml. This proliferation in pack sizes contributed immensely to its success in rural markets.
In the early 90s, Asian Paints was the first to offer 150 shades to consumers, this soon expanded to over 1500 shades in the mid 90s. This was made possible through a tinting mechanism that allowed it to offer innumerable shades to the customer with only a limited set of bases and colorants that were manufactured and transported throughout the supply chain. Being in the business of ‘colors’, Asian Paints utilized color to achieve differentiation.
Asian Paints also innovated to offer services such as “HOME SOLUTIONS” that offer painting services in select cities. It carries out intensive research with interior designers, architects and the fashion community to arrive at trend movements in color. This study has gone a long way in helping various industries decide their color combinations for a range of products ranging from furnishings, floorings to home accessories, while also ensuring that Asian Paints is in-tune with the latest trends.
Along with product launches, Asian Paints focused on distribution, as it realized that distribution and service were the keys to success in the paints industry. Right from the start, apart from the urban markets, it also focused on small towns with population of up to 10,000, and on rural markets. Unlike other companies, field officers dealt directly with the dealers in small towns. With 22,000 dealers, Asian Paints has the largest network of distributors among the paint companies. It has a service level of more than 85 per cent whereas that of other large paint companies falls between 50 and 60 per cent. Asian Paints has been able to keep costs low while maintaining the high service levels through a strong commitment to manage inventory and dealer credit.

Communicate the Value
Asian Paints has managed to garner a huge mindshare of the consumer in an industry that has been traditionally commoditized. It has done this by remaining consistent to its core purpose of continuously rejuvenating the living and working space of people and bringing joy to their lives, even while the message might have evolved over a period of time.
The communication from Asian Paints centered on festivity and joy till the early 90s. This was born from the observation that demand for paints was highly seasonal and peaked around Diwali. However, by the mid 90s, the consumers had changed with festivals losing importance in the overall scheme of things and demand for paint itself becoming less seasonal.
In the year 1999, Asian Paints revamped the brand when it was found that it currently lacked some of the values like contemporariness and global outlook. The old mascot ‘Gattu’ was discarded to adopt a more contemporary brand personality. A revamp was undertaken in the entire packaging and visual identity of the brand to be attractive to the growing middle-class in urban markets.
Asian Paints has always been more successful in striking a chord with the consumer and clearly conveying the functional and self-expressive benefits. It consistently remained a step ahead of the competition in its communication, such as the ‘Mera waala cream..’ campaign to covey the wide color range , and while its competitors were busy talking about the color range, Asian Paints saw the increasing involvement in home making to come up with the ‘Har ghar yeh kehta hai….’ campaign.
With its superior performance in all aspects of the value delivery process, it is not difficult to see why it has been a success. More important however is the lesson in the success of Asian Paints for all companies to constantly rejuvenate themselves in the face of changing environment while remaining loyal to their core purpose.