Name Shubha

Question 1

The following questions will be graded. The submission needs to be done using the
template in the next segment.

Question 1 (15 marks)
The case indicates that the Indian two-wheeler market was expected to grow from
2004 to 2015.

Question 1A - 6 marks: 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:

Between 2000 and 2004 (2 marks)

Between 2004 and 2010 (2 marks)
Between 2010 and 2015 (2 marks)

Write your answer for Part A here.

Period Rate of Growth

2000-2004 27.27%

2004-2010 90.47%

2010-2015 50%

Question 1B - 6 marks: Also, list down the three factors (mentioned in the case)
responsible for the growth (or decline) of the two-wheeler market in India. (2 + 2 +
2 marks)

Reasons for growth of two wheeler segment

1. Consumes increasing disposable income

2. Aspiration to own a motorized vehicle
3. Availability of easy financing

Question 1C - 3 marks: In the country where you are currently residing, is the two-
wheeler market growing or declining? Support your answer with one reason. (1.5 +
1.5 marks)

Currently I am residing in Bangalore. In Bangalore two wheeler market is growing. Due to

heavy traffic majority of the people are opting two wheeler.

Question 2

Question 2 (10 marks)

The case indicates that the Indian MCO market was highly fragmented.

Question 2A - 5 marks: List down two private- and two public-sector players in

the industry as mentioned in the case. (2 + 3 marks)

Private sector companies are Shell, Gulf and Valvoline

Public sector companies are Indian Oil Corporation Ltd, Bharat Petroleum Corporation
Ltd. , Hindustan Petroleum Corporation Ltd.

Question 2B - 5 marks: Also, determine two direct distribution channels and three

distribution channels serviced through the distributor for the lubricant market in
India. (2 + 3 marks)

Direct Distribution Channel : Forecourt petrol Pumps and Gasoline Stations,

Franchised Workshops Authorized workshops that serviced vehicles under warranty.

Distribution channel serviced through distributors

1. Non franchised workshops -small workshops set up by mechanics to service vehicles
2. Agri stored that sells seed, fertilizers and pesticides
3. Intuitional-large sellers such as co-operative stores, associations etc.
Question 3

Question 3 (9 marks) 
Read the given case carefully and answer the questions about the motorcycle oil
market (MCO market). Determine the impact of the following
parameters  (Question 3A and 3B) on the Indian motorcycle oil market (MCO
market).

Question 3A - 3 marks: Consumer buying behaviour (Hint: Think about consumer

buying behaviour during the after-warranty period and the factors driving the
behavioural change.) (1.5 + 1.5 marks)

In India long term maintenance of two wheelers is considered important as owing them is
regarded as the first step of achievement. During the warranty period of the vehicle, most
customers do service with the authorized franchised workshops for the sake of warranty, After
period most change over non franchised workshops for the sake of convenience personal
relationships service costs etc.

Shift in shop to workshop impacted the new demand for the non franchised workshops.
Considering oil change as an important aspect to ensure continuity in their personal mobility
impacted a need for the change of the consumer perception towards buying the motorcycle oil.
Based on the buying behavior and consumer segments Castrol was able to identify three
consumer segments in the market minimalists, appreciators, and enthusiasts. To elaborate

Minimalists – the consumer who seek maximum value for the money spent through the
reassurance from a credible brand. Appreciators – the consumers who regard their vehicles
as their lifeline and are ready to pay a single premium so that vehicles don’t break down.
Enthusiasts- the consumers who regard vehicles as their dream and therefore, want the best
for their vehicle irrespective of the price. It is important for the company to develop and
position the products according to the consumer base. Here company has to follow the
concept of STP base, Now, company has to follow the apt positioning strategy and thereby
increase the sales.
Question 3B - 3 marks: Technological advancements happening in the two-
wheeler industry (Hint: Think about the oil requirements during the 2T technology
phase and during the shift to 4T technology.) (1.5 + 1.5 marks)

Answer B :

Question 3C - 3 marks: Can you list down atleast one impact of consumer buying
behaviour and technological advancement on the motorcycle oil market in your
country? (1.5 + 1.5 marks)

Write your answer for Part C here.

Question 4

Question 4 (30 marks)

In order to understand how Castrol is performing as compared with the MCO
industry, we need to identify how it is benchmarking against the industry on key
metrics. Taking help from exhibits 11,12 and 13, find out the following for each of
the distribution channels:
Is Castrol distributing to the right mix of channel partners in the right amount? To find the
answer to this question, calculate the channel share of each channel partner for Castrol and
compare it with that of the entire MCO industry.
Question 4A - 4 marks: 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. (Hint: Refer to exhibit
11 in order to answer this particular question.). (1+1+1+1 marks)

Write your answer for Part A here.

Channel Partner Channel Share (%) 2010

Franchised workshops 30.95%

Spare part outlets 42.85%

Oil shops 11.90%

Non-Franchised workshops 14.28%

Question 4B - 6 marks: 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’. (6 marks)

Is Castrol effectively utilising its channel partners? To find out, you need to calculate the

channel utilisation rate of each channel for Castrol and compare it with that of the entire MCO

industry. You need to solve this problem in the following stepwise manner. Refer to exhibit 12

for this particular question.

Answer for Part B here. – Franchised workshops and NFW’s for overall four stroke oil market
is significantly greater in percentage than the castrol four stroke oil. For Castrol it is higher
for spare parts outlet and oil shops.

Four Stroke
  Oil Market   Castrol
Franchised
Workshops 39.47 > 29.77
NFW's 10.52 > 7.14

Question 4C - 4 marks: Step 1: 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). (1+1+1+1 marks)
Sales in liter per outlet universe for the four stroke oil market industry 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

Question 4D - 4 marks: Step 2: 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’.). (1+1+1+1 marks)

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

Franchised workshops 5323.30

Spare part outlets 577.38

Oil shops 884

Non-Franchised workshops 671

Question 4E - 6 marks: 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)’. (6 marks)

Channels for which the sales per channel outlet for the four stroke oil market significantly
greater than sales per channel outlet for castrol.

Franchised workshops – 6666.66 > 5323.30

Oil Shops – 1103.44 >884
Spare Part outlet – 578.94>577

Franchised workshops – While this channel would have a large part to play in future growth
Castrol has restricted access due to limited tie ups with original equipment manufacturers and
the influence of genuine oils.
Oil shops – This channel was slated to have the lowest growth rate due to a shift in consumes
behaviors.
Spare part outlet and non franchised workshops these channels were expected to be the
growth drivers of the future. Therefore its significantly higher for FWs and Oil shops It is
marginally higher for spare part outlets.

Question 4F - 6 marks: Based on these key metrics, determine the area(s) where Castrol is

facing a problem(s). (6 marks)

Following are the problem areas for Castrol

Franchised workshops They are underperforming as compared to rest of the market in terms
of channel share and sales per outlet.
Oil Shops low sales per outlets
Non Franchised workshops Giving oil to NFWs on credit.

Question 5

Question 5 (31 marks)

As per the findings of Rai’s project team, the future disproportionate growth in the
MCO market would come from NFWs.

Question 5A - 16 marks: Determine the characteristics of the three segments of

NFWs (answered in the section on ungraded questions) based on the following
parameters:

Segment size (4 marks)

Share in the oil change process (4 marks)
Oil buying behaviour (4 marks)
Financial condition (4 marks)

Now, the challenge was how to distribute the products to the NFWs. The team
identified the following three major distribution models that can be incorporated to
cater to these NFWs.

Model 1: Ask the existing distributor network to supply directly to these NFWs.

Castrol’s distributors have been loyal to the company for years, but they originally needed to
be convinced of the great potential that was available to them, albeit with its share of issues
and challenges.
NFWs are scattered across the country, leading to complications in coverage, service and
collections for the existing distributors.

Model 2: Create a parallel set of exclusive distributors for the MCO product
category. These distributors would solely cater to the MCO products and would
supply directly to the NFWs.

Instead of creating new territory, distributors can be divided by product category.

Multiple channels have worked for some companies, by providing access to new markets that
were unreachable or partially covered. A completely new channel could give Castrol the
freedom to design new schemes and to experiment. However, the company will need to
persuade the current distributors to give up MCO, a product category that has been growing.

Model 3: Create a new channel partner of intermediaries between existing

distributor networks and NFWs who will supply exclusively to these NFWs.

This option would create another first-mover advantage in the industry, by developing a
rapport with the larger NFW base, and by using a business model that is scalable and
sustainable.
It may be difficult to find these new intermediaries who are willing to work hard and invest
their income for a starting salary that could also be earned by working in a comfortable
environment, in big retail malls for fixed hours.

Answer for Part A here. The 3 NFW segment are as follows

1.

Question 5B - 15 marks: Evaluate these three models on the following parameters

(Answer as ‘High’ or ‘Low’.):

Parameter 1: Willingness of these channel partners to supply to the NFWs (1 + 1 + 1 marks)

Parameter 2: Channel partners’ preliminary knowledge of the local market that they are
operating in (1 + 1 + 1 marks)

Parameter 3: Potential of conflict(s) with other channel partners (1 + 1 + 1 marks)

Parameter 4: Capital investment required to set up this model (1 + 1 + 1 marks)

Parameter 5: Cost incurred by the channel partner to supply to the NFWs (delivery cost) (high,

medium, low) (1 + 1 + 1 marks)

Use the following format to answer the question:

Write your answer for Part B here.

Module Parameter 1 Parameter 2 Parameter 3 Parameter 4 Parameter 5

1 Low High Low Low Medium

2 High Low High High high

3 High High Low Low Low

Question 6

Question 6 (5 marks)
After taking into consideration the advantages and disadvantages of each of the
alternatives, Rai and his team decided to proceed with the third option (i.e., create a
new channel partner of intermediaries between existing distributor networks and
NFWs who will supply exclusively to these NFWs).

The new channel partners between distributors and NFWs were called Castrol
Authorized Service Associates (CASAs). A typical CASA representative would be
a young entrepreneur who owns a motorcycle or a moped and who has
approximately ₹25,000 to 30,000 in cash as working capital for five or six days.
The ideal candidate would be a driven entrepreneur who is first trained and then
directed by the distributor.

You have been tasked to strategise the important aspects of this option. You have to
fit these CASAs within the existing distribution model. Based on the knowledge
that you have gained so far, answer the following questions:

Who will these CASAs report to? (2 marks)

Who will these CASAs serve? (3 marks)

1.. CASA will report to distributors. CASA’s will direct report to the DSR in the headquarters
locations. They are the trained distributor’s sales representatives with access to these
markets.

2. CASA will serve Non franchise workshops. CASA’s will pick up the product from small
distributors and they will serve the NFW’s small mechanics who set up shop to serve here.