Name Himanshu Sidhpura

Question 1

1A. Based on the data provided in Exhibit 3, find out the rate of growth (in
percentage terms) of two-wheeler vehicles in India for the following periods:

Period Rate of Growth

2000-2004 27.27%

2004-2010 90.47%

2010-2015 50%

1B. Also, list down the three factors (mentioned in the case) responsible for
the growth (or decline) of the two-wheeler market in India.

The three factors responsible for the growth (or decline) of the two-wheeler market in India
are:

1. Income available to consumers, is rising.

2. Aspiration to own a motorized vehicle.
3. Finance is readily available.

Question 2
 2A. List down three private- and three public-sector players in the industry.

Private Sector companies:

1. Shell.
2. Gulf.
3. Valvoline.

Public sector companies:

1. Indian Oil Corporation Limited.

2. Bharat Corporation Limited.
3. Hindustan Petroleum Corporation Limited.

2B. Also, determine two direct distribution channels and three distribution
channels serviced through the distributor for the lubricant market in India.

Direct distribution channels:

1. Forecourts- Petrol pumps and Gasoline stations.

2. Franchised Workshops (FW)- Authorized workshops that serviced vehicles under
warranty.

Distribution channels serviced through a distributor:

1. Non-Franchised Workshops (NFW)- Small workshops set up by mechanics to service

vehicles.
2. Agri stores- Stores that sell seeds, fertilizers, and pesticides.
3. Pure Lubricant outlets- Stores that stocked and sold lubricants of all companies.

Question 3
 3A. Consumer buying behavior

Two-wheelers are seen as the first step toward success in Indian consumer purchasing
behavior, making the long-term upkeep of these vehicles crucial. For the sake of the vehicle's
warranty, the majority of consumers do maintenance at approved franchised facilities. Most
people switch to non-franchised workshops once the warranty expires for a variety of reasons,
including convenience, ties to the community, service costs, etc.

Three categories of consumers make up the customer base:

a. Minimalists: Consumers who are minimalists aim to get the most for their money by
receiving confidence from a reliable brand.
b. Appreciators: Customers who see their cars as a lifeline and are willing to pay a small
premium to ensure that they don't break down.
c. Enthusiasts: Consumers that view their car as their dream and who, as a result, want
the best for it, no matter the cost.

It is crucial for the business to create and market its items in line with its target market. Here
businesses must adhere to the STP philosophy. Classifying the customer base is the first step
in the segmentation and target consumer base processes. The business must now implement
the best positioning approach to boost sales.

3B. Technological advancements happening in the two-wheeler industry

The sizes of engines are getting smaller while they are changing in design. The consumption
of oil would decline as a result. PSUs no longer lead the pack and no longer enjoy the first-
mover advantage when two-stroke engines are replaced with four-stroke engines. Every
company in the sector has the same benefit to delve further. To get a competitive edge in the
market, businesses must look for improved distribution networks and innovate their products
in accordance with evolving technology breakthroughs.

Question 4
4A. Channel share (2010), in percentage terms, for the ‘four-stroke oil
Market’: For each channel given in the following table, find out its
contribution in ‘sales potential’ as a percentage of the ‘total sales potential’
in the year 2010.

Channel Partner Channel Share (%) 2010

Franchised workshops 30.95%

Spare part outlets 42.85%

Oil shops 11.90%

Non-Franchised workshops 14.28%

4B. Based on these two metrics, find out for which channel(s) the ‘channel
share (2005), in percentage terms, for the four-stroke oil market’ is greater
than the ‘channel share (2005), in percentage terms, for Castrol’s four-
stroke oil sales’.

Franchised shops and NFWs dominate the four-stroke oil market by a wide margin (in
percentage points) compared to Castrol's four-stroke oil.

Four-Stoke oil Castrol

market
 Franchised workshops 39.47% > 29.77%

NFWs 10.52% > 7.14%

4C. In exhibit 12, the data on the total number of outlets is given against
each distribution channel (Refer to the column named ‘outlet universe’).
You need to calculate the sales per channel outlet (for the four-stroke oil
market). For each channel, find out the sales (in litre) per ‘outlet universe’
for the four-stroke oil market industry (for the year 2005).

Channel Partner Sales (in litre) per channel outlet, 2005

Franchised workshops 6666.6

Spare part outlets 578.95

Oil shops 1103.45

Non-Franchised workshops 400

4D. Sales per channel outlet (for Castrol): For each channel, find out
‘Castrol’s four-stroke oil sales’ (in litre) per ‘outlet selling Castrol oil’
(2005) (Hint: In exhibit 12, the number of outlets selling Castrol’s four-
stroke oil is given in the column named ‘Outlet Selling Castrol Oil’.).
 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. In 2005, find out for which channel(s) is the ‘sales (in litre) per channel
outlet (for the four-stroke oil market)’ significantly greater than the ‘sales
(in litre) per channel outlet (for Castrol)’.

Channels where "sales (in litres) per channel outlet (for the four-stroke oil market)" are
considerably bigger than "sales (in litres) per channel outlet (for Castrol)".

Franchised workshops 6666.6 > 5323.30

Oil shops 1103.45 > 884.15

Spare part outlets 578.94 > 577.38

a. Franchised workshop: Castrol had limited access to this channel despite the fact that it
would play a significant role in future growth as a result of its few connections with
original equipment manufacturers and the effect of genuine oils.
 b. Oil Shops: Because of a change in consumer behavior, this channel was predicted to
grow at the slowest rate.
c. The future growth was predicted to be spare part stores and non-franchised workshops.

As a result, it is much greater for FWs and oil shops. For outlets that sell spare parts, it is
slightly higher.

4F. Based on these key metrics, determine the area(s) where Castrol is
facing a problem(s).

The following are the problem areas for Castrol:

a. Franchised workshops: In terms of channel share and sales per outlet, they are
underperforming in comparison to the rest of the market.
b. Low sales per outlet for oil retailers.
c. The benefit of owning forecourts allows three large PSUs—Indian Oil Corporation
Limited, Bharat Petroleum, and Hindustan Petroleum—to sell lubricants to customers
directly at the time of fueling, depending on whether they need to change their oil.
Businesses are not permitted to advertise at forecourts.
d. Apart from lubricant makers, Castrol also ran into issues with "genuine oil," such as
motorbike producers like Hero Honda Motors.

Question 5
5A. Determine the characteristics of the three segments of NFWs.

The three segments of NFWs are as follows:

1. Stock and sell mechanics.

2. Mechanics who have worked at the franchised workshops and are ready to set up their
own businesses.
3. Mechanics who are approached for small, minor jobs are likely to be apprenticed under
stock and sell mechanics.

Module Segment size Share in oil Oil buying Financial

change process behavior condition

Stock and sell 10% 30% Periodically Due to the ease

mechanics maintained by with which their
the distributor product was
sold and the
market's
acceptance of it,
stock and sell
mechanics have
a secure
financial
situation.

Mechanics who 40% 50% Received their As a group of

have worked MCO supplies young people
with Franchised from looking to
workshop and neighbouring launch a
are ready to set sources. business,
up their own mechanics were
businesses low on funds,
and the
distributors
lacked trust in
their ability to
make a profit.

Mechanics who 50% 20% Customers The mechanics

are approached would purchase who applied for
for small, minor their own tiny or minor
jobs are likely to bottles of MCOs jobs appeared to
be apprenticed and bring them be having
under stock and to the shop if financial
sell mechanics they needed any difficulties since
type of oil they lacked the
change. branding
necessary to
build a clientele.

5B.

Module Parameter 1 Parameter 2 Parameter 3 Parameter 4 Parameter 5

1 Low High Low Low High

2 High Low High High High

3 High High Low Low Low

Question 6

Who will these CASAs report to?

Distributors will get CASA's reports. The DSR in the headquarters sites will receive direct
reports from CASAs (Castrol Authorized Service Associates). They have access to these
markets as the qualified distributor sales representatives.

Who will these CASAs serve?

Non-Franchise Workshops will be provided by CASA. Small distributors will deliver the
product to CASAs (Castrol Authorized Service Associates), who will then deliver it to the
NFW's local small mechanics.