MS6720: INDUSTRIAL & SERVICES MARKETING

PINTURA CORPORATION: THE LENA LAUNCH

DECISION

GROUP 7
Jegannath U MS21A027
Naresh Babu MS21A040
Sharath Ram MS21A053
Samarth Johnson Prasad MS21A056
 PINTURA CORPORATION – A OVERVIEW

Company Overview Business Structure

 Pintura Corporation was one of the leading players in the
Painting & Coating Industry in the USA.

 It developed, manufactured & distributed paints, coating &

similar products across and outside USA.

 Its customers profile was wide ranging from Industrial,

commercial, professional & retail customers.

 Its product line had 20 brands & 600 items with an annual
revenue of $4 Billion.

 Industry Finishes group contributed the least out of the three

major division in terms of sales.

Key Objectives
 Ensure that IFG meets 5% annual revenue growth

 To create a business case with a marketing mix strategy for

the launch of a new product called Lena into the market.

 Address Lena’s profitability and cannibalization aspect –

decide b/w powder based over water based?

 Maintain leadership in technologically advanced and

environment friendly paints and coatings
 LAUNCHING LENA – A DILEMMA!

EXECUTIVES HAVE TO MAKE A CALL

 Pintura executives are split on whether or not to launch Lena.

 Some believe the product is too expensive and that the market for high-end paints is too small to support it.

 Others believe Lena represents a significant opportunity for the company to differentiate itself and capture a new market
segment

KEY FACTORS OF CONSIDERATION CONCERNS REGARDING LAUNCH

 Potential demand for the product  Has the company got enough resources to successfully launch Lena?

 Production costs  Some are concerned that the company's sales force is unprepared to sell a premium
product.
 Pricing strategy
 Some fear that the company will be unable to manage the logistics of producing and
 Competitive landscape distributing the product.

CHALLENGES
 Company may face some marketing and advertising challenges for Lena.

 Some executives are concerned that the product's high price point will deter potential customers.

 Others are concerned that the company will struggle to effectively communicate the product's value proposition
BUSINESS ENVIRONMENT – INDUSTRIAL COATINGS INDUSTRY IN USA
Market Description Market Size
Product Global USA USA Share
Paints & Coatings $130 Billion $27 Billion 20%
Industrial Coatings $24 Billion $6 Billion 25%
 Almost 80% of these revenues in the USA came from large 50 companies with the rest
being fragmented across smaller companies.
 Pintura with revenue of $4 Billion annually had a market share of 15% in the USA and
was one of the top manufacturer.

US & IFG Sales by Annual Growth Rate Forecast for the Wood
Substrate Customer Groups
US Sales IFG Sales IFG % Customer Group AGR (2017-2022)
Substrate
% $ % $ of Wood Furniture Manufacturing 0.00%
Total Annual Revenue $6 Billion $1 Billion 16.67%
Plastic 40% $2.4 Billion 15% $150 Million 6.25%
Wood Flooring Manufacturing 4.20%
Metal 20% $1.2 Billion 20% $200 Million 16.67% Wood Cabinetry Manufacturing 1.40%
Wood 40% $2.4 Billion 65% $650 Million 27.08% Other Wood Products Manufacturing 0.50%

 IFG’s current Industrial Coatings Customer Groups for Wood as substrate include
End User Applications Furniture (30%), Flooring (25%), Cabinetry (20%) & Other Wood Products (25%)
 Industrial coatings were sold through the Industrial
Finishes group (IFG)  The coatings were sold in three main Product categories:
 Automotive Parts & its accessories, Paper Appliances,  Solvent-Based
Wood Furniture, Cabinetry, Machinery, Electronics,  Water-Based
etc.  Powder-Based
 The major growth drivers were Construction &
Manufacturing
Market Sectors.
Considerations  Solvent-Based Coatings accounted for the most when it came to Pintura’s Industrial
 Quality, Reliability & Efficiency Coatings sale but at the same time its Water-based Coating’s Market share increased
 Technical Expertise to 47.5% of total sales towards Wood Coating.
 EXTERNAL ENVIRONMENT ANALYSIS PRODUCT LIFECYLE – INDUSTRIAL COATINGS
LEGAL
• In US, the coating industry is subject to strict state & federal
regulations that monitor Workplace safety & Environment
Pollution Water Based
• Regulations regarding the Safety & Environment standards are to Coatings

be adhered to. LENA/Powder

Based
• Possibility of facing legal obstacles if found indulging in practices Coatings Solvent Based
Coatings
ENVIRONMENTAL
of using components like lead as is the case with few players.
• Environment Friendly Paints were fast becoming catalysts for
Market growth & improved profitability
• It is important to ensure that waste released do not contaminate
ground water in the neighbouring areas.  Solvent Based Coatings are the most used ones but have reached a decline
stage with manufacturers looking for alternatives due to wastage, quality
• The emissions from Manufacturing plants shouldn’t be poisonous issues & limited versatility.
and should be treated before release.
 Water Based Coatings had a flat growth rate indicating that they had reached
TECHNOLOGY the Maturity Stage with issues similar to that of Solvent coatings.
• To have sustainable growth, players in the industry were focusing
 Powder Based Coatings & LENA in particular were in the Introduction stage
on new age products which require special Knowledge. with a Expected growth rate of 10% annually for several years.
• IFG’s development of Lena which released negligible Volatile  Durability and Versatility along with being with environment friendly &
meeting standards added to their advantage.
Organic Compounds and their formula to powder coat hardwoods  But to move into the growth stage, it was important to look into the high
is an example of technology aspects being given importance costs and devise effective Marketing Strategies
 SEGMENTS / SUB-SEGMENTS TO BE TARGETED
Assuming revenue target, for Lena coating, to reach 20% of IFG’s sales to the Wood segment within the first 3 years

Growth rate Forecasts – For 3 years

Overall Sales –
    Growth Rate + Base year Y1 Y2 Y3
Lena's estimate Substrate split-up IFG’s Wood Coating’s Sales

Annual Revenue     650 680.26 712.01 745.33

Furniture 30% 0%+5% 195 204.75 214.99 225.74

Flooring 25% 4.2%+1% 162.5 170.95 179.84 189.19

Cabinetry 20% 1.4%+1% 130 133.12 136.32 139.59

Other Wood Products 25% 0.5%+5% 162.5 171.44 180.87 190.81

Customer
Needs Other info
Groups
IFG Sales – Substrate split-up Wood Coating’s split-up
Flooring Protective model of coatings.
Very few are willing to
Business model focussed on Cost
increase their costs of
Cabinetry leadership and production
production
efficiencies over high volumes
Focus on Product differentiation Innovations in shape,
Involves innovation and colours and textures that
Furniture
manufactures has an opportunity can allow charging
to charge higher price points higher price confirming
Other wood Focus on Product Differentiation superior design, quality
products & durability
 SEGMENTS / SUB-SEGMENTS TO BE TARGETED

Market Research firms Demand Forecast using Lena's Product Description

  Split % Base year Water W.C. Sales Powder Switch Est. Potential Solvent S.C.Sales Powder Switch Est.Potential  Total

Annual Legend – Based on Market research data

  650                  
Revenue Unfavourable Favourable

Furniture 30% $ 195.00 70% $ 136.50 60% $ 81.90 30% $ 58.50 40% $ 23.40 $ 105.30

Flooring 25% $ 162.50 20% $ 32.50 20% $ 6.50 80% $ 130.00 20% $ 26.00 $ 32.50

Cabinetry 20% $ 130.00 20% $ 26.00 20% $ 5.20 80% $ 104.00 20% $ 20.80 $ 26.00

Other
Wood 25% $ 162.50 70% $ 113.75 60% $ 68.25 30% $ 48.75 40% $ 19.50 $ 87.75
Products

Total $161.85 Total $ 89.70 $ 251.55

Percentage Segments – Furniture & Other Sub- Segments – Both Water &
  Share  CAGR
Annual Revenue   4.7%
Wood Products Solvent
Both have a CAGR above 5% and also the customers in Considering the market research it is better to
Furniture 30% 5.04%
that specific market are willing to spend more to attain target both Solvent and Water coating users
Flooring 25% 5.24%
the superior benefit that Lena’s powder based coat since they have a higher probability to switch
Cabinetry 20% 2.5%
Other Wood provides. Also this would help us to surpass the 20% of to powder coating. On the other hand we
25% 5.43%
Products IFG’s sales in the Wood segment would also get a first mover advantage
 VALUE PROPOSITION FOR SELECTED SEGMENTS

Segments – Furniture & Other Wood Products

• Since both segments allow a lot of customizations, innovations in shape, colours and textures – the customers to this segment are ready to pay
the premium price that we charge them for the superior offerings
• It is wise to focus more on functional value and service value than economical value
• Key value to be proposed is the environmental friendly factor that the powder coating provides than the solvent/ water; is one of the main
advantage to differentiate our product offering to create a better brand perception among customers

Attributes/ Features Benefits

Durability One-time purchase of powder coated household furniture can have a better lifetime period compared to
other coating methods.(say 2X higher)

Versatility Since the coating can be used in wide range of wood products and also the time to dry is comparably less,
we can use it for wide portfolio of products and also serve immediate customers(less lead time to serve)

Scratch resistance The service value is less since it reduces the defection rate and also the products are resistant to scratch
makes it to have less service needs.

Anti – Microbial Property Much needed property in Hospitals and also in Home Kitchens

Aesthetic finish Looks and beauty of the product can be enhanced which helps in premium look and feel.
 MARKETING STRATEGY: INTRODUCTION TO GROWTH STAGE
First listing down the STP and pricing before coming into the strategy
Segmentation Targeting Positioning
Furniture and Others Introduction Stage Focus: • It should market its product under the
parent company Pintura as it is more
• High-end furniture & other wood products widely known
• Basic Needs: Protective & Aesthetics • Focus on differentiation o Reduced Risk
• Average Switch: ~50% o Technological image of Pintura will
• Interested in: Shape & Coating Versatility, Focus areas to keep in mind: also grow
Environmental Impact, Antimicrobial • Benefits of Lena should be the frontpage
• Flooring & Cabinetry material
Properties • Necessity to educate to the end consumer o Antimicrobial
about the benefits
o Durable
Flooring and Cabinetry
o Shape & Coating Versatility
o Environmental impact
• Basic Needs: Protective o Cost Effective (Yes, it is)
• Average Switch: 20%
• Interested in: Lower Costs, Increased
Durability, Antimicrobial Properties Why is it Cost effective?
Per Unit Solvent Water Lena
STRATEGY TO BE FOLLOWED Based Based
• Switching Cost Risk: Provide curing instrument in the trail period along with monetary and Purchase $28 $34 $38
warranty guarantees. Deploy Sales people in factories for training & communication Cost
• Cost Effective: Considering the perceived functional superiority, the cost of $38 is effective Waste 20% 18% 3%
taking the waste estimated, economic and environmental factors into account Estimated
• Multi-channel of distribution: The current network of 3100 distributors which IFG holds Real Cost $35 $41.46 $39.17
and skewed in multiple geographic location along with in-house sales force of 100 sales
experts reaching out to large customers should be exploited Considering the perceived functional
• Promotional Effort: Volume based bonuses to sales team during the launch year. For superiority, the above cost is effective taking
distributors monetary incentives on volume sales and rebate incase of NMI. Display in the waste estimated, economic and
Industry Exhibitions and word of mouth from Top Management of every company is needed environmental factors into account
 PINTURA SHOULD DEPEND ON “DIRECT SALES” OR “DISTRIBUTORS”
Information given are as follows
Verdict
Direct Sales Distributors
• Even with the higher selling costs as
• 49% of wood coatings sales • 51% of wood coatings sales shown here and distributors limitations,
• Help distributors in planning inventories, • 300 distributors IFG needs them for broadest market reach
demos, testing, etc. • One-stop shopping for buyers for Lena launch and avoid additional cost
• Charges 7% to 8% as commission • Charges 21% selling & fulfillment fee of hiring new salespersons and training
Wood Coating Sales’16 Direct Sales Distributors them.
• Distributors would need persuasion to
Total Sales Selling Selling
Segments Sales % Sales $ Sales % Sales $ carry Lena in terms of market
$ Costs Costs
development allowances, volume rebates,
Furniture $195 60% $117 $8.19 40% $78 $16.40
exclusive regional selling rights, etc.
Flooring $162.50 35% $56.88 $3.98 65% $105.63 $22.2 • Sales-people would need to have
architectural capabilities to promote
Cabinetry $130 30% $39 $2.73 70% $91 $19.1
kitchen hardwood sales.
Other $162.50 65% $105.63 $7.39 35% $56.88 $11.9 MIX OF BOTH WITH % OF
FY1: DISTRIBUTOR > DIRECT SALES
TOTAL $650 318.50 $22.30 $331.50 $69.62 FY6: DIRECT SALES > DISTRIBUTORS

SUMMARY ANALYSIS
• Segment to be chosen is FURNITURE AND OTHER WOOD PRODUCTS
• Under the above, we chose the following sub-segment: BOTH WATER & SOLVENT USERS
• Considering the functional superiority and waste estimated, Lena is a commendable product in terms of real cost
• Mix of Both the Distribution channels should be considered. Initial years distributors should be considered more than direct sales. Once,
business picks up the Direct Sales can be preferred as primary for its low commission cost of 7-8%
• Promotional and Incentive Effect matter with sales and distributors should be awarded for their efforts and communication about the product
should be passed, throughout the industry through the help of top management and their connections, best for B2B company
 KEY TAKEAWAYS

MARKET RESEARCH IS ESSENTIAL PRICE POINT IS CRITICAL DISTRIBUTION STRATEGY MATTERS

The company conducted extensive market Price of the Lena brush must be set at a The company needs to determine the most
research for understanding : level that appeals to customers while also effective Lena brush distribution strategy.
allowing the company to meet its financial This could include selling through retail
• Lena Brush’s Potential Demand objectives outlets or online channels.
• Customer Preference
• Competitive Landscape

This assisted them in identifying the

product's strengths and weaknesses, as
well as potential market opportunities and
challenges

MARKETING & BRANDING ARE KEY COMMUNICATION & TEAMWORK

The company needs to develop a strong brand The company must ensure that all team members are
identity for the Lena brush, which could include on the same page and working effectively together.
creating a logo, marketing materials, and Clear communication, collaboration, and decision-
establishing a social media presence. making are all required.
THANK YOU