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    Q4. What Are The Castrol Options For Expanding Distribution? Discuss The Advantages and Disadvantages of Each Option

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    Maddy Aku
    Castrol has four options to expand distribution: 1) Increase tie-ups with franchised workshops (FWs) to gain access to new vehicles under warranty and increase consumer trust, but OEMs may seek other partners and FWs may resist. 2) Ask distributors to directly supply non-franchised workshops (NFWs), which have high growth but may reduce spare parts sales and increase delivery costs due to remote locations. 3) Create parallel distributors focused on motorcycle oil to tap projected market growth but could reduce ROI for existing distributors. 4) Innovate a new "Castrol authorized service associate" channel by financially supporting new NFWs, which could increase market penetration but would

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    Q4. What Are The Castrol Options For Expanding Distribution? Discuss The Advantages and Disadvantages of Each Option

    Uploaded by

    Maddy Aku
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    Castrol has four options to expand distribution: 1) Increase tie-ups with franchised workshops (FWs) to gain access to new vehicles under warranty and increase consumer trust, but OEMs may seek other partners and FWs may resist. 2) Ask distributors to directly supply non-franchised workshops (NFWs), which have high growth but may reduce spare parts sales and increase delivery costs due to remote locations. 3) Create parallel distributors focused on motorcycle oil to tap projected market growth but could reduce ROI for existing distributors. 4) Innovate a new "Castrol authorized service associate" channel by financially supporting new NFWs, which could increase market penetration but would

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    This is for the R&Real life for Lakhsya JJ Q4

    Original Title

    Q4 Castrol India

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    Castrol has four options to expand distribution: 1) Increase tie-ups with franchised workshops (FWs) to gain access to new vehicles under warranty and increase consumer trust, but OEMs may seek other partners and FWs may resist. 2) Ask distributors to directly supply non-franchised workshops (NFWs), which have high growth but may reduce spare parts sales and increase delivery costs due to remote locations. 3) Create parallel distributors focused on motorcycle oil to tap projected market growth but could reduce ROI for existing distributors. 4) Innovate a new "Castrol authorized service associate" channel by financially supporting new NFWs, which could increase market penetration but would

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    44 views2 pages

    Q4. What Are The Castrol Options For Expanding Distribution? Discuss The Advantages and Disadvantages of Each Option

    Uploaded by

    Maddy Aku
    Castrol has four options to expand distribution: 1) Increase tie-ups with franchised workshops (FWs) to gain access to new vehicles under warranty and increase consumer trust, but OEMs may seek other partners and FWs may resist. 2) Ask distributors to directly supply non-franchised workshops (NFWs), which have high growth but may reduce spare parts sales and increase delivery costs due to remote locations. 3) Create parallel distributors focused on motorcycle oil to tap projected market growth but could reduce ROI for existing distributors. 4) Innovate a new "Castrol authorized service associate" channel by financially supporting new NFWs, which could increase market penetration but would

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Q4. What are the Castrol options for expanding distribution?

    Discuss the advantages and


    disadvantages of each option.

    Sol: Following are the options available to Castrol for expanding distribution-

    a. Tying-ups with FWs (Franchised Workshops). There are 4500 outlets and Castrol has
    captured 665 out of them. In terms of percentage, it holds 14.8% of the total market share.
    By increasing more number of outlets, Castrol can potentially increase their market share
    and this will result in direct increase in their sales.
    Advantages –
    i. With FWs & OEMs selling Castrol, it would help them capture the first 2 years of
    warranty month market of two-wheelers.

    ii. In order not to void the warranty, the owners prefer giving their vehicles to
    authorized service station during the warranty period and thus all the new vehicles
    will be exposed to Castrol.

    iii. Since the authorized service station uses Castrol, it will help increase the trust of
    consumers to buy Castrol from outside market as well.

    Disadvantages –

    i. Genuine Oils introduced from other bike manufacturers could totally disrupt the
    market.
    ii. OEMs due to lack of better margin with Castrol (15-18% premium) might seek to tie-
    up with competitors.
    iii. It will be difficult to convince the franchised workshop dealers as the OEM also
    supplies their own oil under their packaging.
    iv. Castrol might be forced to reduce their profit margin to attract the authorized
    dealers in buying and using their product.
    b. Asking Distributors to supply directly to the NFWs. (Non-Franchised Workshops)
    Advantages –
    i. This category has the second highest growth rate (30%) among NFWs.
    ii. Consumers trust the knowledge of NFW mechanics (category 1 “the ustaad
    mechanics & segment 2 “the young-skilled, short on finance mechanics) and opt for
    oil change.
    Disadvantages –
    i. Asking Distributors to supply directly to the NFWs might cause decrease in sales to
    spare part sales outlet.
    ii. Significant increase in delivery cost since the NFWs were highly scattered & remotely
    located
    iii. Credit risk as these NFWs might close shop & risk of non-payment of daily credit
    from the distributors.

    c. Creating a parallel set of MCO (Motor Cycle Oil) Distributors.


    Advantages –
    i. Focus on growth of 17 to 18 million litres/year in sales of 4TO in motorcycles.
    ii. Potential to tap into maximum of the 20% projected growth in the MCO 4T market.

    Disadvantages –
    i. Lubricant market is growing at 3% overall, differentiating the Motorcycle Oil
    distribution will affect the ROI of previous distributors which can result in loss of
    business with these distributors.
    d. Innovating a new channel for distribution “Castrol authorized service associate” by creating
    a cadre to service only these new NFWs.
    Advantages –
    i. Financial Support can be given to the new NFWs to decrease reliability on Large
    NFW/ Distributors for daily credits, making them the immediate customers.
    ii. 270 distributors catering to 70000 retailers and 120 CASA catering to 12000 outlets
    will increase the market penetration & significantly contribute to achieve 30%
    market share.

    Disadvantages –

    i. Hiring cost for the company and Credit cost for the new NFWs need to be bore by
    Castrol.

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