Castrol Case

Submitted by

Group- 4
Section- B
#Q1 Automobile Business Micro Environment
 Middle class population is increasing significantly, Expected to increase 10 times to 533 million people
5% - 20% from 2005 to 2015 Projection 40% by 2025
 Demand of motor cycle will increase with increasing middle class population
 India GDP growth rate increasing and expected to 10% (2007+)
 Exchange rate reducing (47.69 in 2001-02 to 44.25 in 2005-06) also import tariff reducing will impacting
foreign player will boost the foreign investment
 2 wheelers growth rate 42 million to 120 million people (2005 - 2015) – nearly 185%
 Expected, 2 wheelers contributed highest in automobile nearly 83% of overall automobiles
 2 wheelers growing at faster rate than population
 5 millions bike added on road each year hence potential market for lubricant oil
BPCL ,
IOCL,
23.4
 Market Share MCO: 20.8

BPCL 23.4%
Castrol ,
IOCL 20.8% HPCL,
20.4
CASTROL 20.4% (3rd largest) 16.3
HPCL 16.3%
Other 19% Others,
19
BPCL HPCL Others Castrol IOCL
#Q1 Competitive situation for lubricants

BPCL IOCL
Strength Strength
Forecourts Forecourts
Weakness Weakness
Limited only to pump stations Limited only to pump stations
Not present in after market Not present in after market

Castrol
Strength
HPCL • Dominated retail lubricant market, 70,000 + outlets
Strength • Placed as premium product
Forecourts
• Weakness
Weakness • Not present on Petrol pumps
Limited only to pump stations • Low coverage in after market channels
Not present in after market • Non dominance in low population areas
#Q3 Buying Behavior and process

Oil change essential for bike maintenance post 2000 to 2500 Kms

Trust on mechanic makes him the influencer as well as the consultant

A shift from shop to workshop behavior

The buying behavior is based more on trust, convenience and personal

attention from the mechanic

Because customers either bring their own oil or asks the trusted mechanic to
get it which he does from the nearest shop

Now this shop may or may not keep Castrol as it has cheaper options
available too
#Q4 Castrol SWOT Analysis
Strength: Weakness:
• Volume + Value focus • Volumes under pressure
• Intensive sales force • Low coverage across after-market channels
• Promotions though radio, print ads, and T.V.
ads
• Distribution drives execution
• Channel relationships

Opportunities: Threat:
• Focus on Volume and Value • Changing dynamics of lubricant channels
• Focus on growth through partnerships and technologies
• Focus on key growth segments • Newer technologies
• Relaxation of exchange control • Growing competition
• Shifting from selling products to selling • Giving oil to Non Franchised Workshop on
services credit
#Q5 Channels of Distribution
Company

Distributor Direct

Accessories & Large NFWs and company

Market/Stores branded workshops
Spares

Agri. Stores Institutional

Pure Lube Outlets Wholesalers

NFWs Forecourts FWs

#Q5 Analysis

Association with In the category of

OEMS was of Bazaar trade was Due to presence of town/city with
importance as it the most profitable various brands, the lesser population
reinforced distribution competition was the gap was
approval and usage channel highly fragmented substantially large

Stock-and-sell Castrol marketed Castrol had low Cities with

mechanic shops its products mainly coverage across population less
posed competition through bazaar key after-market than 500000 were
as they are not channel using channels predicted to have
being incentivized distributors and the great potential
by Castrol and they retailers
keep inventory
from other
competitors as well
#Q6 Channel which needed the greatest push

According to us, distribution Market potential forecast of

channel for Non-Franchised four-stroke oils in India have According to reports, NFW is
Workshops needed the CAGR of 30% in Non- expected to be the growth
greatest push Franchised workshops drivers of the future

Castrol India is projecting the

Market coverage of Castrol in
channel share to increase to
NFW is only 6.3% so they
23.8% from current 7.1% in 5
have huge potential left to tap
years
#Q7 Castrol’s Options To Expand The Distribution

Propose an innovative
channel Castrol Authorised
Ask Distributors to supply Create a parallel set of
Service associate by creating
directly to NFWs Motor Cycle Oil distributors
a cadre to service only these
new NFWs

Pros: 1. Financial support to

Pros: 1. Second highest growth Pros: 1. Focus on growth of 17 NFWs and decrease reliability
of 30% in NFWs to 18 million litres/year in on Large NFW for credit
2. Consumer trust the sales of 4T oil in motorcycles 2. 270 distributors catering to
knowledge of NFW mechanics 2. Tap maximum of the 20% 70000 retailers and 120 CASA
and take the oil growth in MCO 4T market catering to 12000 outlets will
increase market penetration

Cons: 1. Lubricant market is

Cons: 1. Hiring cost for the
Cons: 1. Direct sale will cause growing at 3% overall,
company and Credit cost for
decrease in sale to Spare part differentiating the Motorcycle
the new NFWs need to be bore
retail outlets Oil distribution will affect the
by the company
ROI of previous distributor
#Q8 Castrol’s New distribution strategy

Conduct gap analysis of MCO distribution

Understand the potential market (area with less than

500,000 people)

Create employment and economic empowerment by

deploying CASA agents in rural areas

Mechanics of rural area were apprentice under

ustaads, and comprise 50% of mechanic market

Financial support and fixed credit policy for these

NFWs

Incentive for stocking and displaying Castrol products

Allot 1 CASA for approximately 30 outlets