The Oligopoly of Asian Paints
This week we will discuss Asian Paints, the Paint Business, the competitors in the industry, and finally, learn about the position of Asian Paints in the future.
17/01/2022
Thank you to the people who have joined!❤️ If you are new to Product Analytica, please subscribe and help us spread this crucial analysis of convoluted products.
Also, you all can follow us on Instagram, we have fun posts and reels uploaded there as well !!
If you are new, here’s what Product Analytica is all about.
You can describe Product Analytica as a playbook of numerous strategies of top companies across the globe. We research finances, marketing strategies, strengths, and position of companies in the market and thus manifest their position in the share market. We intend to give you an insight into the company for helping you to research and invest shortly.
Let’s get started 🚀
The oligopoly of Asian Paints
Introduction
Based in Mumbai, Asian Paints Ltd is an Indian multinational paint company. Paints, coatings, bath fittings, and home decor products are among the products the company manufactures, sells, and distributes. The company is India's largest and Asia's third-largest paint manufacturer. Asian Paints is the holding company of Berger International. In the financial year 2019-20, the company generated revenues of 17,194.1crores and profits of ₹2,654 crores. A significant presence in the Indian subcontinent and the Middle East is part of the company's manufacturing operations in 15 countries around the world, including India.
History of Asian Paints
Founded in a garage in Gaiwadi, Girgaum, Mumbai by four friends Champaklal Choksey, Chimanlal Choksi, Suryakant Dani, and Arvind Vakil, the company currently operates worldwide. Founded in 1942, the company is owned by all Jain families. In World War II and during the Quit India Movement of 1942, the only paint companies left in the market were foreign companies and Shalimar Paints. In 1952, Asian Paints established itself on the market and reported an annual turnover of Rs 23 crore, but only a 2% profit margin. By 1967, it had become the country's leading paint manufacturer.
The majority of the shares of the company were owned by the four families collectively. As the company expanded outside of India, disputes arose over rights to the global market. Choksey eventually sold their 13.7% shares and left in 1997 following the disputes. Atul Champaklal succeeded him after Champaklal died in July 1997. As a result of failed collaboration talks with Imperial Chemical Industries, Choksey's shares were jointly acquired by the remaining three families and the Unit Trust of India. As of today, Choksi, Dani, and Vakil have a 47.81% share.
Asian Paint brand analysis:
a) Parent Company: Asian Paints
b) Category: Paints Industry
c) Sector: Industrial products and chemicals
d) Taglines: Merawala Blue / Haar ghar kuch kehta hai ki
e) USP: India’s biggest brand with the widest reach
f) Asian Paints Competitors
Below are the top 6 competitors of Asian Paints:
1. Jenson & Nicolson India Limited.
2. Kansai Nerolac Paints
3. AkzoNobel
4. Sherwin-Williams
5. Nippon Paint
6. PPG Industries
Competitive Analysis
Asian Paints is the market leader with over almost 30% market share. Its biggest competitors are- Kansai Nerolac, Indigo Paints, Akzo Nobel, Sirca Paints, and Shalimar Paints. Asian Paints’ competitive advantage is its distribution strength.
Its product portfolio, comprising the exhaustive list of painting needs, is also a competitive advantage along with its visibility and geographical reach.
The company’s stand-out feature is its range of exclusive signature stores providing consumers with expert assistance from trained professionals offering customized furnishing and decoration solutions. Many such measures are taken by the company to reduce the influence of painters over the customers’ choice of brands, in a novel way over the years.
Prospective customers can even directly call the company’s helpline to check out the product offerings and get a direct quote.
But ultimately, these advantages are imitable. What the company needs to do for long-term leadership, is generate more demand by way of intermediaries.
In the paint business, intermediaries like painters, contractors, designers, decorators, etc have a high influence over consumers’ purchase decisions.
Asian Paints could use these intermediaries to their benefit, by either utilizing them as a marketing arm to promote their products as spokespersons directly to the end-user.
Or, the company could sideline intermediaries and open up a service arm, cutting costs for consumers via bundling services and thus, increasing demand via value addition.
SWOT Analysis of Asian Paints:
PESTLE Analysis of Asian Paints:
Asian Paints Marketing Strategies:
A marketing mix is the collection of strategies or initiatives that a company uses to promote the demand for its brand or product. A standard marketing mix- Product, Price, Promotion, and Place – comprises the 4Ps. Let us take a look at Asian Paints’ Marketing Mix:
· Product Strategy
Asian Paints’ core product is decorative and industrial paint. Along with that, the company offers solutions and services for home paintings. Instead of having one homogenous target audience, the company uses a differentiating targeting strategy to cater specific products to different segments of customers, as explained below:
– Asian Paints Royale targeted at the premium segment
– A polite, tractor emulsion, tractor distemper targeted at the economy segment
Asian Paints also provides protective coatings, undercoats, primers, and putties. The products in the marketing mix of Asian Paints, hence, provide complete painting solutions including accessories and tools.
· Price Strategy
Asian Paints follows different pricing strategies according to the targeted segment. As mentioned above, the Royale product range is marketed towards high-income groups and hence, is priced higher.
Asian Paints follows a value-based pricing approach for the medium and economic segments. As per the exclusive features in the product category, the price also varies.
The pricing decisions are often influenced by the raw material used to manufacture paints and competitors’ prices.
The company’s success can also be attributed to its high incentives for distributors. Summed up, Asian Paints has adopted a flexible pricing policy.
· Promotion Strategy
Over the years, Asian Paints has carried out various highly successful promotional activities. One of its most notable being the brand mascot Gattu, a cartoon created by R.K Laxman in 1954 that went on to become a popular and recognized figure for more than four decades.
The company’s main focus is being all about families, and emotionally connecting with the customers.
Many famous public figures have been Asian Paints brand ambassadors such as Akshay Khanna, Ranbir Kapoor, brother-sister duo Saif Ali Khan and Soha Ali Khan, with the most recent being Deepika Padukone.
A major promotional tool used by them is providing incentives to their distribution network.
Presently, a lot of their promotion is also executed through their social media, touched upon in detail later, when speaking of their digital media presence.
· Place Strategy
Asian Paints has operations around the world.
They are carried out through a network of five regions worldwide, via the Caribbean region, the Middle East region, the South Pacific region, South-East Asia and South Asia, with large resources spent on R&D centers.
Asian Paints’ major competitive advantage is its well-established, extensive distribution network. The organization targets all semi-urban, rural, and urban areas.
It launched an open-door policy for dealers after entering the retail market and began a national marketing and distribution operation.
It has different manufacturing locations and is India’s largest.
This dynamic network, along with sales managers, executives, and the sales team, manages all development and delivery phases.
Asian Paints is a massive organization and faces competition from all sides. Now that we have covered their marketing mix in-depth, let us understand their competitors.
Asian Paints Stock
Asian Paints share price today:
Asian Paint’s share price was Rs 3,364.40 as of 14 Jan 2022, 03:59 PM IST. Asian Paint’s share price was down by 2.66% based on the previous share price of Rs 3,543.8. Asian Paints share price trend:
· Last 1 Month: Asian Paints share price moved up by 7.54%
· Last 3 Months: Asian Paints share price moved up by 7.67%
· Last 12 Months: Asian Paints share price moved up 37.05%
· Last 3 Years: Asian Paints Share price moved up by 152.56%
What are 52 weeks high/low of Asian Paints share price?
Asian Paints share price saw 52 weeks high of Rs 3,590.00 and 52 week low of Rs 2,260.00.
Key metrics to analyze Asian Paints Share Price:
Asian Paints share can be quickly analyzed on the following metrics:
· Stock's PE is 104.64
· Price to Book Ratio of 25.17
· Dividend Yield of 0.50
· EPS (trailing 12 months) of Asian Paints share is 33.93
The market capitalization of Asian Paints:
Asian Paints share has a market capitalization of Rs 3,22,712 Cr. Within the Building Materials sector, its market cap rank is 1.
Conclusion:
Tell us whether or not you intend to invest in Asian Paints in the comments.
Looking at financials and the plans, it does seem like a good long-term buy!
Also, this was a long post, if you have made it here then congratulations, and thanks a lot!
Also, Please Like and Share this newsletter with as many people as possible!!
Do drop us feedback 😉
Disclaimer: All this information is only meant for educational purposes and is not meant to be taken as investment advice. Do your research before you invest anywhere.