Name G Nikitha Nayak
Question 1
1A.
Period Rate of Growth
2000-2004 27.27%
2004-2010 90.47%
2010-2015 50.00%
1B.
The three factors of the growth of the two-wheeler market in India mentioned in the case are:
• Younger demographic market.
• Capital and financial market doing well in India.
• Growth in demand from rural India motorized vehicle.
• Consumer’s disposable income was increasing
• Increase in the aspiration on owning an affordable motorized vehicle
• Availability of easy financing
Question 2
2A. Indian MCO market was fragmented as below:
1. Private Players:
• Shell
• Gulf
• Valvoline
• Veedol
• Elf
2. Public Players
• IOCL (Indian Oil Corporation Limited)
• Bharat Petroleum Corporation Limited
• Hindustan Petroleum Corporation Limited.
2B.
• Direct Distribution Channel
o Forecourt (Petrol pumps and gasoline stations)
o Franchised workshops (FW)-Authorized workshops that serviced vehicles under warranty,
providing all services related to vehicles.
• Franchise workshops Distribution Channel through Distributors
o Wholesalers-Operations that bought directly from the distributors of all companies and sold
primarily in rural areas.
o Company branded workshops-company exclusive outlets that catered to all requirements of two-
wheeler servicing
o Non-franchised workshops (NFW)-small mechanics who set up shops to service motor cycles
o Pure lubricant outlets- Stores that sold only lubricant and not any other products
Question 3
3A.
Considering the below consumer buying behavior:
With the evolution of 4 stroke engines and a separate lubrication system, the need to change oil became once
every 2000 to 2500 km. This led to a complete shift of lubricant sales from forecourts to open market. The shift
from “shop to workshop” impacted the new demand for the Non – franchised workshops.
For most of the Indian consumers, a motorcycle was the first step to an economical personal mobility. Their level
of ownership towards their possession was very high. The feeling of an oil change as an important aspect to ensure
the health of the motorcycle and continuity in their mobility impacted a need for the change of the consumer
perception towards buying motorcycle oil.
Based on the needs and consumer segments, Castrol was able to identify three consumer segments in the market –
• Minimalists-Value for money with the re-assurance from a credible brand
• Appreciators-Wanted the bike to be reliable and willing to pay a slight premium amount to avoid
breakdowns.
• Enthusiasts- Passionate and wanted to uncover new opportunities and looking for the best
3B.
The advancements in technology have led the changes in engine design. The newer design has made the oil sumps
size smaller and has increased the time between oil changes for routine maintenance
Technological advancements are happening in the two-wheeler industry. New technology in enginer and shift from
two stroke engines to four stroke impacted:
1. Consumer behaviour
2. Distribution Channel
• Consumer behaviour: The shift from 2-stroke to 4-stroke engines has impacted consumer buying behavior and
choice of distribution channels. – In 2 stroke engines, the lubricant is poured in the fuel tank and it burn along
with the fuel. So this used to happen in the forecourts-gas stations. With the evolution of 4 stroke engines and
a separate lubrication system, the need to change oil became once every 2000 to 2500 km and this became an
event during servicing of the motorcycle. 4-stroke engine design with a separate lubrication system for the
engine cooling impacted the change in the demand for motorcycle oil from forecourts to workshops (FW or
NFWs).
• Distribution channel: Above said change in technology and consumer behaviour, distribution channel had to
be changed to suite new requirement from fueling station to workshop where vehicle will be serviced. This
led to shift of lubricant sales from forecourts to the open market. Whole strategy of distribution channel had
to change to new consumer behaviour.
Question 4
4A.
Channel Partner Channel Share (%) 2010
Franchised workshops 31%
Spare part outlets 42.9%
Oil shops 11.9%
Non-Franchised workshops 14.3%
4B.
Four Stroke oil Market Castrol Four stroke oil sale
Channel Partner Channel Share (%) 2005
Franchised workshops 39.47% 29.8
Spare part outlets 28.94% 30.3
Oil shops 21.05% 32.8
Non-Franchised workshops 10.52% 7.1
Based on above comparison Franchised workshop & Non-Franchised workshops are 2 channels where four
stroke oil market channel share great than Castrol four stroke oil sales channel share. Non-Franchised
workshop need high focus as CAGR is 30% for this channel.
4C.
Channel Partner Sales (in litre) per channel outlet, 2005
Franchised workshops 6666.66
Spare part outlets 578.94
Oil shops 1103.44
Non-Franchised workshops 400.00
4D.
Channel Partner Sales (in litre) per channel outlet, 2005
Franchised workshops 5323.30
Spare part outlets 577.38
Oil shops 884.15
Non-Franchised workshops 670.87
4E.
From the above table, Franchised workshops and oil shops are the 2 channel partners which has significantly
greater sales market than for the four stroke oil market compared to Castrol four stroke oil sales. These 2 channels
are great opportunity for Castrol to increase sales. Even when compared to coverage with respect to outlets it is
these areas Franchised and oil shops that shows Castrol has lot of potential to establish its presence in more
outlets and increase sales. But spare part outlet is marginally higher.
4F.
Following are the problem areas for Castrol:
Franchised Workshop
Oil Shops
Non – Franchised Workshops
Also, Based on key metrics comparison between MCO and Castrol’s sales its evident that Franchised and non-
franchised workshop has less presence/coverage and lower sales potential.
These 2 areas which are an opportunity for improvement:
1. Increasing market presence by increasing coverage in outlets where Castrol oil is not sold.
2. Focus more on sales strategy at the current outlets to sell more oil.
Unorganized sector which is Non franchised workshop is the main challenge for Castrol to focus where most of
the problem lies and, they need right strategy to increase channel utilization and increase sales
Question 5
5A.
Segment Segment size Share in the oil Oil buying behavior Financial condition
change process
1.Stock and 10% of total 30% Servicing routinely Stable on financials
sell mechanics mechanic done by the distributor- and their products got
market base others/castrol sold easily as they
were experienced and
trustworthy. Change is
price also did not
affect the sales
2.Mechanics 40% of total 50% They got MCOs from Young group, wanting
who have mechanic nearby spare parts to be entrepreneurs.
worked at the market base outlets. Distributors Managed to get some
franchised did not supply due to credit with business
workshops lack of relationships.
and are ready structure/process in
to set up their their payment modes
own business.
3.Mechanics 50% of total 20% Consumers buy their Struggling on finances
who are mechanic own MCO and take and generating
approached for market base them to the shop customer base.
small, minor
jobs are likely
to be
apprenticed
under stock
and sell
mechanics.
5B.
Module Parameter 1 Parameter 2 Parameter 3 Parameter 4 Parameter 5
1 LOW LOW HIGH HIGH HIGH
2 HIGH HIGH HIGH HIGH MEDIUM
3 HIGH HIGH LOW LOW LOW
Question 6
Castrol Authorized Service Associates (CASAs)
• CASA will report to distributors:
CASA’s would be reporting to Regional distribution Manager who is responsible for all the distributor in
that region. CASA’s would report sales progress to Regional distribution manager
• CASA will serve to Non – Franchise Workshops:
CASA’s would serve to distributors and the NFW’s by working as intermediate retailer in-between who
manages the short-term working capital to make distribution flow effective.
