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ASSIGNMENT ON CONJOINT ANALYSIS OF ASIAN PAINTS, KANSAI

NEROLAC AND ICI DULUX

SUBJECT-CONSUMER BEHAVIOR

7/15/2009

Submitted to - PROF.ROHIT PARASH

Submitted by-

THE “INVINCIBLE”AMULYA PATTOJOSHI PGPM (B)-64

A.NEELAM RAO PGPM (B)-61

ASHA KUMARI PGPM (B)-69

CHETANDIPTA SWAIN PGPM (B)-75

JAYA PRAKASH NAYAK PGPM (B)-80

NEELAM PANDA PGPM (B)-92

SIBA PRASAD MISHRA PGPM (B)-107

SHAILY JAIN PGPM (B)-106

ASIAN SCHOOL OF BUSINESS MANAGEMENTASIAN SCHOOL OF BUSINESS MANAGEMENT

INTRODUCTION-

Satisfying customers’ wishes is a challenge for many companies in the today’s rapidly changing and keenly competitive environment. A thorough knowledge of customer needs is even considered to be the foundation on which a company is built. In pursuit of continuously offering better products and at the same time making profit, companies have to implement well thought-out strategies. Given price and cost constraints, a company can’t completely satisfy all its customers’ wishes. Consequently an important task of a company’s marketing department is to create a profit maximizing bundle of product or service attributes or in another word a profit maximizing value proposal. The main question which has to be answered is — how to use the limited resources of the company in product and service design and development to maximize its profit.

Marketing specialists refer to conjoint analysis as one of the best methods for investigating and analyzing customer needs. Conjoint analysis means constructing and conducting particular experiments among consumers in order to model their decision making process. As the name suggests, potential customers are asked to make judgments about the attributes that affect their purchase decisions conjointly, rather than evaluate each attribute individually. Analysis allows finding out which product attributes create most value to a customer and how customers are likely to react to different product configurations. This information can lead to the creation of optimal value propositions.

THE CONCEPT OF CREATING VALUE TO THE CUSTOMER

For understanding customer needs and studying them systematically it is necessary to be familiar with the concept of creating value to the customer. Walters and Lancaster (1999) have stated that value is created by any product or service attribute, which motivates the customer to buy the product and takes him closer to achieving his goals. Attributes of a product or service that create value to customers can be divided into (Woodall, 2003):1) Factors that enhance customer’s benefits or help to satisfy his needs, 2) Factors that decrease customer’s costs.Cost can be defined in the broadest sense as everything the customer has to give up in order acquiring the benefits offered by the supplier. Costs can be monetary

as well as non-monetary (time spent, aggravation, risk). Benefits can be affected by a variety of factors. Ferrell (1998) brings out the following main factors as benefits: product quality, customer service quality and experience based quality (table 1). Band’s approach (1991) is essentially the same, but he also includes customer service personnel compliance to customer expectations because it is often found that customers can easily perceive the difference between the adequacy of company’s processes and the behavior of service personnel Additionally it is also often pointed out that brand can create value to customers (Best, 2002). And of course there usually are industry specific factors that customers perceive as valuable.

Customers usually name many factors as needs. It is reasonable to organize them into a hierarchic structure — as the first order, secondary and if necessary also the third level needs. The first level captures the five to ten most general factors or customer needs. The second level shows in further detail what it takes to

satisfy the first order needs. Although customers wish all their needs would be satisfied at once, it is company’s objective to understand which needs are most important for the customer. This understanding enables a company to use its scarce resources in an optimal way, thus creating the most value for the customer. Clearly company has to make tradeoffs in the performance levels of attributes which are related to each other.

Conjoint analysis allows defining customer needs more accurately than it is possible with using simple questionnaires. Rather than ask about the importance of attributes individually, the research setting is made quite close to actual decision making in a real market: where the customer’s task is to rank the different product alternatives which are offered to him and pick out the one that creates most value for him. Whereas ranking is based on personal preference to different attributes of every product alternative.USING CONJOINT METHOD FOR ANALYZING VALUE CREATED TO CUSTOMER

Conjoint analysis uses customer’s preference-estimations towards a set of experimental product concepts as an input. Hypothetical product concepts are presented as the descriptions of the products in the form of a bundle of particular product attributes. Concepts are shown on “concept cards”. Based on data gathered with conjoint analysis it is possible to find the utility of the examined product attributes to a particular customer and thereby calculate the relative importance of different product attributes.

Because of the complexity of the conjoint method there are various approaches to data gathering as well as to data analysis available. In order to construct the appropriate framework and substantiate the chosen approach for investigating Asian paints, Kansai Nerolac and ICI Dulux customers’ needs the different conjoint techniques and phases are next analyzed. A more detailed discussion about the conjoint method is presented In table 3 the main conjoint analysis phases are pointed out together with the most commonly used alternative approaches. It is important to clarify that the stages are not independent; decisions made in every phase affect the next phases and next decisions.

Attributes and Levels- Any product or service can be modeled as an entity with a set of attributes. Here as we are making analysis between different paint industries so the most preferred attributes are –

1. Price2. Durability

3. Beauty

4. Anti-algal

5. Shade Range

6. Usage

The Number of Levels Effect: -

Holding all else constant, attributes defined on more levels than others will be biased upwards in importance. For example, price defined as (10-20, 150, 250, 300, above 300) will receive higher relative importance than when defined as (100, 250, above 300) even though the same price

range was measured. This hold true for quantitative (Price, shade range etc.) as well as categorical (Brand, durability etc.)

The above 8 attributes and 31 levels can be defined as the competitive market for paints between Asian paints, Kansai Nerolac and ICI Dulux. If you can define a market using this model, you can use conjoint analysis for consumer behavior and preference.

Choice Based Conjoint

Choice based or Discrete Choice Conjoint is by far the most preferred model for a conjoint questionnaire. This is primarily because it models after consumer behavior in real-life. Most purchases that consumers make today are basically trade-off based. Will you buy a Rs.250 per ltr color paint 5 year durability having high anti-algal or a Rs.80 per ltr having no durability and having no anti-algal protection?

Product Name: Asian Paints Apex

Description: Apex Weatherproof Exterior Emulsion is a water-based 100% acrylic, exterior wall finish. A high performance, long-lasting exterior paint specially formulated to withstand extreme tropical conditions of high rainfall, humidity and heat, Apex provides excellent resistance against the growth of algae and fungi on the walls. It offers excellent protection against alkali and UV degradation too.

Cost Range: Mid-RangeFinish: Rich SheenAvailability: Across all Colour World DealersFeatures:Weather Proof Exterior Emulsion, Exterior cement plaster, false ceilings, asbestos sheets, concrete, not to be applied on Mangalore tiles, 50 - 60 sq ft / ltr Soft Sheen 5 year’s 2 coat Apex application @ 40% dilution 4 hrs between coats .

Product Name: Asian Paints Royale Play

Description: Asian Paints Royale Play is a water-based special effects paint designed to create a variety of special effects on interior walls.

Cost Range: PremiumFinish: Faux FinishAvailability: Across all Colour World DealersFeatures: Royale Play Special Effects Paint Royale Luxury Emulsion basecoat (chosen shade) 100 sq ft per ltr (1 coat) Soft Sheen 3 years Asian Paints Deco prime ST/WT + Asian Paints Acrylic Putty + Asian Paints Deco prime ST/WT + Royale 40% dilution (2-3 coats).

Product Name: Asian Paints Premium Semi Gloss Enamel

Description: Premium Semi Gloss Enamel is safe and healthy water-based enamel which can be applied on suitably prepared masonry surfaces, wooden and metal surfaces. It has features like odour and fumes free, meets EN 71 standards, has low VOC, and is quick-drying such that 2 coats can be completed in the same day.

Cost Range: PremiumFinish: Semi GlossAvailability: Available through Asian Paints Project Sales or Asian Paints Home Solutions Only. Features: Premium Semi Gloss Enamel can be applied on  wood, metal surfaces and walls 90-110 Semi Gloss 3 years with 2 coats of Premium Semi Gloss Enamel.

Nerolac Impression 24 Carat Premium Luxury Emulsion

Product Description

Nerolac Impression 24 Carat Premium Luxury Emulsion is a premium quality Architectural coating specially formulated by using  pure acrylic latex, and high opacity micronized pigments so as to impart smooth velvet finish, with excellent washability.

Technical Data

Coverage** On Smooth and non-absorbent surface.  220 - 240 sq. ft/ltr/coat.Drying Time Surface Dry : 30 minutes@27 ± 2°C &  RH 60 ± 5% Recoating : After 4 - 6 hoursGloss Levels/ Sheen levels SheenThinning 50% by volume using waterFlash Point NAStability of Thinned Paint Use within 24 hrs.Shelf-life          1 year from date of manufacture in original tightly closed

containers away from direct sunlight and excessive heat.

Nerolac Impression Excel Anti Peel Acrylic Exterior Paint

Product Description

Nerolac Impression Excel Anti Peel Acrylic Exterior Paint is premium water based, high performance, long lasting exterior paint, formulated to suit the extreme tropical conditions of high rainfall, humidity and heat. The product is based on 100% Acrylic resin and hence it forms a tough and flexible protective film, with an excellent bonding to the substrate, which prevents peeling off or

cracking for years together. Nerolac Impression Excel Anti Peel Acrylic Exterior Paint contains a unique combination of surface protect ants, which are released slowly.

Technical Data

Coverage** On normal masonry surface by brushing:  130 - 150 sq. ft/ltr/coat.Drying Time Surface Dry :  30 minutes

@27° ± 2°C &  RH 60 ± 5% Recoating     :   4 - 6 hrs.Gloss Levels/ Sheen levels SheenThinning Self Priming – Thin 100% by volume with  Water  Top Coat – Thin 40% by Volume with WaterFlash Point NAStability of Thinned Paint Use within 24 hrs.Shelf-life          1 years from date of manufacture in original tightly closed

containers away from  direct sunlight and excessive heat.

Nerolac Impression Hi-Performance Enamel

Product Description

Nerolac Impression Hi-Performance Enamel is a specially designed coating having a judicious blend of high quality resin & light fast pigments. It is recommended for suitably primed interior & exterior wooden, masonry and metal surfaces

Technical Data

Coverage**     On Smooth non absorbent surface.210 - 270 sq. ft/ltr/coat.

Drying Time    Surface Dry  : Max 5 hrs.@27 ± 2°C &  RH 60 ± 5% 

Recoating     :   Min. 16 hrs.

Gloss Levels/ Sheen levels

Glossy

ThinningUpto 50% by volume using Nerolac Gereral Purpose Thinner &For one coat finish upto 20% by volume using Nerolac Gereral Purpose Thinner

Flash Point Not below 30°CStability of Thinned Paint

     Use within 24 hrs.

Shelf-life      1 year from date of manufacture in original tightly closed containers away from direct sunlight and excessive heat.

Dulux Velvet Touch is specially formulated to give a Pearl Glow finish with a unique soft sheen and velvety smoothness to walls and ceilings.

Dulux Weather Shield Max

Ordinary exterior emulsions cannot protect exterior walls from patches of dampness, algae, and fungus caused by rain. Dulux Weather Shield Max is especially formulated to give long lasting protection and beautiful looks.

Dulux Water White Melamine

High performance two component system that has excellent decorative properties and forms a hard colorless transparent protective layer. It is suitable for use as a coating to all interior and sheltered exterior wooden surfaces. It is available in gloss and matt variant.

Sl. No

CompanyAttributes

Shade range

Coverage in sq ft/ltr (1 Coats)

Anti-algal Durability

Price range per

1ltr In Rs.

01 Asian paints

Above 1000

Average 225 sq ft/ltr

Excellent Average 5 years

20 to 500

02 Kansai Nerolac

500-700 Average 200 sq ft/ltr

good Average 4 years

30 to 300

03

ICI-Dulux

700-1000 Average 250 sq ft/ltr

good Average 3.5 years

40 to 300

Ranking as per Shade range Attribute:COMPANY ATTRIBUTE RANK

ASIAN PAINTS Shade range A

Kansai Nerolac Shade range C

DULUX Shade range B

Ranking as per Coverage in sq ft/ltr (1 Coats) attributes:COMPANY ATTRIBUTE RANK

ASIAN PAINTS Coverage in sq ft/ltr (1 Coats) B

Kansai Nerolac Coverage in sq ft/ltr (1 Coats) C

DULUX Coverage in sq ft/ltr (1 Coats) A

Ranking as per Anti-algal attribute:COMPANY ATTRIBUTE RANK

ASIAN PAINTS Anti-algal A

Kansai Nerolac Anti-algal B

DULUX Anti-algal B

Ranking as per Anti-algal attribute:COMPANY ATTRIBUTE RANK

ASIAN PAINTS Durability A

Kansai Nerolac Durability B

DULUX Durability C

COMPANY ATTRIBUTE RANKASIAN PAINTS Price range per 1ltr In Rs. C

Kansai Nerolac Price range per 1ltr In Rs. A

DULUX Price range per 1ltr In Rs. B

FINDINGS-

From the above analysis we find that Asian paints are the most preferred brand in terms of paint and colors followed by Dulux and Kansai Nerolac paints.

CONCLUSIONKnowing customer needs and designing accordingly appealing value proposals is a crucial success factor in today’s competitive markets. The aim of consumer research is to shape such a value proposal that would maximize the market share or profit of the product, giving guidance to the company about how to best use its limited resources. Conjoint analysis consists of planning and implementing experiments among consumers in order to model the consumer purchasing

decision and to understand which factors create value for the customer. Conjoint analysis embodies more than seven major phases: it starts by selecting the product attributes or factors which fulfill customer needs and finishes with stating the relative importance of different attributes to customer. All the major phases were discussed in the paper, to point out the alternative approaches that a researcher could take, with the aim of creating a suitable framework for implementing the research in the case of Asian paints, Kansai Nerolac and ICI dulux. For performing the conjoint analysis in the study of Asian paints, Kansai Nerolac and ICI dulux customer’s needs, the full concept approach was chosen. As the result of preliminary analysis and structuring of customer needs, the six most important product and service attributes were selected for further analysis.