Nerolac nets a new hue

Marketing experts have often said: You either be number one or two or merge with the crowd. But what do you do when the number one leads by a clear margin and both two and three are part of the crowd?

Ask Kansai Nerolac, the number three player in the decorative paints market in India. It has a share of 13 per cent to leader Asian Paints’ 47 per cent, and number two player, Berger Paints’ 18 per cent.

Conventional wisdom would demand that Kansai should be taking on Berger rather than Asian Paints. But Kansai has its sights at the top, putting in place a three-pronged strategy that includes focusing on differentiated products, greater brand-building and more retail initiatives on the ground. “If you have to improve share, you have to go that extra mile,” says Anuj Jain, vice president, sales & marketing, Kansai Nerolac.

 

This enthusiasm to wrest market share from rivals, especially Asian Paints, does not appear to be completely misplaced, since Kansai leads the pack in the Rs 4,000-crore industrial paints market. It has a share of 62 per cent in the automotive segment - a key one under industrial paints. Overall, it has over 40 per cent share in industrial paints to Asian Paints’ 13 per cent. “It is the undisputed leader in industrial paints,” says an executive with a rival firm.

This leadership in industrial paints then is clearly goading it to take on its archrival on the decorative side. But it certainly won’t be easy.

That is because Asian Paints has ensured there are no chinks in its armour on the decorative side at least. The decorative segment accounts for almost 70 per cent of the Rs 13,000 crore overall paints market.
 

MARKET SHARE
Players	Decorative	Industrial
Asian Paints	47%	13%
Berger	18%	18%
Kansai Nerolac	13%	40%+
Source: Industry

Rivals such as Kansai, Berger, Dulux and Nippon, have been trying hard to wrest market share from Asian Paints for some time now. But the latter’s formidable grip over the paint distribution network in the country, its ability to churn out new products, as well as its high-decibel ad campaigns have ensured that it stays ahead of the curve.

Sample this: Asian Paints has over 25,000 dealers to Berger’s 9,500 and Kansai’s 6,500. Its overall marketing budget for the last financial year was Rs 244 crore as against Berger’s over Rs 70 crore and Kansai’s Rs 68 crore.

“So no matter how much you shout, Asian Paints simply outshouts you,” admits Berger Paints’ senior vice-president, sales & marketing, Abhijit Roy. “Tell me one gap in their marketing strategy and I would be ready to attack them,” he says.

In contrast, Jain of Kansai strikes a positive note. “There is no denying Asian Paints’ domination in the decorative market. But how do you stand out? You have to do something different. We rather benchmark ourselves to international standards.”

In the last one year, Kansai has launched products such as lead-free paints and paints with a heat guard keeping the objective of differentiation in mind. It is now in the process of rolling a low VOC or volatile organic compound (VOC) paint. Low VOC paints are low-odour paints. “They are designed to perform like conventional paints without the harmful ingredients,” Jain says.

But are these initiatives really that different? Not exactly, say rivals. Asian Paints has had a low VOC portfolio for about five to six years now, says the company's vice-president, sales & marketing, Amit Syngle. “Our lead-free portfolio has been around for the last two and a half years,” he says. Berger, meanwhile, is in the process of introducing its low VOC range in a month or two. Lead-free is also something that it already has in its portfolio, says Roy.

Syngle says “Lead-free is a standard that the industry moved to some time ago. It is a moral obligation to take it up because these products are not harmful to the human body.” But Jain of Kansai insists these trends were actually introduced by it in the industry. “We were the first ones to introduce lead-free paints last year. The others have followed us,” he insists.

The one-upmanship doesn’t end here. Jain says that as far as retail initiatives go, each company has a different model. “Asian Paints has a dealer-centric network of stores, while we are doing shop-in-shops.” Kansai, for the record, is in the process of rolling out about 100 mini-stores in 35 cities. Asian Paints, in contrast, already has some 3,000 critical stores that act as colour select outlets. It is also rolling out high-end concept stores called Colour Ideas in different cities. It is here that prospective buyers/customers will get a glimpse of what the company has to offer in terms of colour and share. Berger, meanwhile, is experimenting with franchisee stores. It has 45 such franchisee outlets at the moment.

“There is nothing unusual with a retail footprint. It’s an industry norm,” says Syngle.

So can Kansai really beat Asian Paints at its game?