Paint Industry

CHAPTER III
OVERVIEW OF PAINT INDUSTRY IN INDIA AND MARKETING

THEORIES ON CONSUMER BUYING BEHAVIOUR
This Chapter of the study is divided into two sections. Section I contains
theoretical discussion on paint industry in India, its growth and marketing
practices. Section II of the study contains an overview on marketing theories on
consumer buying behaviour.
SECTION -1
OVERVIEW OF PAINT INDUSTRY IN INDIA
3.1 Overview of Paint Industry in India
India is the second largest paint market in Asia with an annual demand
of over two million tonnes. The Indian paint industry has been growing
constantly over the last decade. Growth has been consistent with the GDP
growth rate and in some years even higher. Over the past few years, the Indian
paint market has substantially grown and caught the attention of many
international players. The country continues to enjoy a healthy growth rate
compared to other economies, backed by the increasing level of disposable
income, and demand from infrastructure, industrial and automotive sectors. On
the back of such advocacy, it is anticipated that the sector will post a CAGR
(Compound Annual Growth Rate) of around 15per cent during 2012 to 2015,
according Indian paint industry expert forecast.
Indian paint industry at `.26,040 crore (in 2011-12). Share of decorative
paint share is `.18,490 Crores (71per cent) and share of industrial paint is
`.7,550 Crores (29 per cent). In volume terms, the size of the industry is 3.1
million tonnes with decorative paints being 2.4 million tonnes and industrial
paints being 0.7 million tonnes. The per capita paint consumption has been
estimated to be 2.57 kilograms. The paint market is estimated to double to
`.50,000 crore by 2016 with per capita consumption increasing to over 4
kilograms. Industry leaders are hopeful of achieving the ambitious growth over
the next four years.
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3.1.1 Segmentation of the Industry

India's paint industry can be classified into decorative paints, which
account for 75per cent of the market, and industrial paints, which make up the
remaining 25per cent. Decorative paint markets were further segmented into
sub-segments, such as emulsions, enamel paints, distemper and cement paints.
Decorative paint market can be further classified by product class which
includes premium paints, mid-tier paints and economy paints. The industrial
paint market covers sub-segments such as automotive coating, high
performance coating, powder coating and coil coating. The demand for paints
is both derived and direct. The demand for decorative paints is a direct demand
whereas the demand for industrial paints is a derived demand.
Decorative paints account for the bulk of the market in terms of volume
and value. The unorganized segment plays a huge role in the decorative paints
segment due to low technical know-how and a highly scattered market. The
industrial paints segment is dominated by the organized sector due to its high
technology
orientation.
It
is
also
the
more
profitable
segment.
Most of the organized companies have a nationwide presence with multilocation manufacturing facilities. The companies in the unorganized sector are
mostly regional, spread in and around their manufacturing facilities and deal in
low value products.
3.1.2 Market Status
Presently, the growth of the Indian paint industry is being witnessed
from new demand pockets, especially in Tier-II and Tier-III cities, thus,
signaling the growing acceptance of quality products among the masses. The
growing popularity of quality paints and increasing income levels of people
residing in Tier-II and Tier-III cities have pushed the growth in premium paint
market of Indian decorative paint industry. The growth in the market is going
to be driven by emergence of the middle class in India, increase in the
propensity to spend and growing young population tending to stay in nuclear
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families. The demand for industrial paint is going to be driven by the pick-up in
the automobile industry and growth in infrastructure in a country like India.
Infrastructure is at the lowest level in the country today, hence the industry
experience sustained growth in paints business
3.1.2.1 Factors Influencing Buying Behaviour of Consumers
As a consumer product that is being sold to a young, increasingly more
affluent customer, key success factors in decorative paints are as below:
Brand: Paints are becoming a high involvement purchase for the end use
consumer, hence the brand plays a key role in determining his choice, both for
new construction and repainting activities
Product portfolio: It is essential for paints companies to have a judicious mix
of targeted products for its core customer along with a complete product
portfolio across product categories and price points for the entire customer
universe
Distribution: Sales of decorative paints requires extensive dealer networks,
especially in the rural and semi-urban markets; hence a strong supply chain and
pan-India distribution presence is essential
3.1.2.2Reason for the Growth of Domestic Players

Indian climatic conditions are not conducive for foreign formulations
and modification cost in product formulation is quite high. As a result, imports
are not much of a threat to Indian players. In the case of industrial paints, major
players already have a tie-up with global players for the latest technology and
markets accessible to them. It negates the further supply from the international
markets even after reduction of import duty from 40per cent to 15.3per cent in
the last eight years.
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3.1.2.2Product Ranges
Most companies have an identical range of products for the decorative
paint market. In the industrial segment, the range is more customized and
guided by the technology support provided by the collaborators. In the case of
decorative products, the technology has been mostly indigenously perfected
over the years and the products can be divided on the basis of interior and
exterior applications or in categories such as water-based and solvent-based.
Moreover, most companies have been advertising their products in the
interior/exterior emulsions category, which has expanded the market and
triggered a shift from distempers and cement paint. While solvent-based
enamels are still popular in India, there is a clear shift from solvent- to waterbased glossy enamels in overseas markets, India will take some time to switch
over to water-based coatings. For the decorative range, it is difficult for
international companies to set up shop on a stand-alone basis because of
existing barriers such as the strong network of established players, brand
image, range of products (Indian context) and required distribution logistics.
Therefore, the safer route has been and will be to tag along with existing
companies. For industrial products, however, this may not apply and based on
their tie-ups in home countries and their original equipment manufacturer
(OEM) customers, the required range can be produced and sold.
There is, however, room for niche players, with radical and unique ranges of
products properly conceived and marketed in the Indian context and supported
with machines.
3.1.2.3Conventional Paints
One more concept that is being adopted in India is the use of ecofriendly paints. Conventional paints have more than 1,000 chemicals and
substances such as formaldehyde and benzene. These chemicals may lead to
health problems. Low level exposure to paint, based on lead-based pigments
may irritate or burn the eyes, nose, throat and skin and cause reactions such as
headaches, dizziness or nausea while high levels of exposure to some of the
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elements in paint, even for a short period, can cause severe and lasting impact
such as kidney or liver damage or respiratory problems.
Some of the paint companies have proactively worked towards the
elimination of lead-based pigments and have substituted non-toxic raw
materials. Thus eco-paints are non-toxic with low VOCs (Volatile Organic
Compounds), have no odor and can be tinted to any color with non-toxic tints.
They are produced from fewer than 250 chemical components and more than
98per cent of these chemicals are derived from plant sources and minerals. The
raw materials are also low in toxic substances, renewable and feature a low
environmental footprint.
3.1.2.4 Major Players in the Market
The leaders in the organized paint industry in India are Asian Paints
with over 40per cent market share, Kansai Nerolac (20per cent), Berger Paints
(19per cent) and AkzoNobel (12per cent). Asian Paints is a market leader in the
decorative segment while Kansai Nerolac dominates the industrial and
automotive segment. The share of industrial paints in the total paint
consumption is very low when compared to global standards. It accounts for
25per cent of the paint market with 75per cent of the paints sold in India for
decorative purposes.
Currently all key players in the Indian paint market are in expansion
mode. Asian Paints has enhanced its capacity at its facility in Himachal
Pradesh (for powder coatings) and Maharashtra (industrial coatings) and
Berger's facility in Jammu started contributing to its top line performance,
albeit on the lower side. Kansai Nerolac is putting up a green field plant at
Hosur in Tamil Nadu and is carrying out expansion at its Lote Parshuram and
Bawal plants.
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3.1.5 Primary Reasons for the Growth of Decorative Paint Industry in

India
The Indian paint and coatings industry was riding high on the growth in
the Indian automobile industry, new construction in the housing segment and
improving infrastructure throughout the country. Thus, there has been a higher
growth of emulsion paints for interiors vise-versa distempers. There is
increasing use of economy emulsion in place of lower-priced distempers.
Similar is the trend for exteriors where emulsion-based coatings are now
preferred against conventional cement-based coatings.
In spite of economic slowdown, the Indian paint industry is growing
though at a slower rate. It has tremendous potential for growth in the coming
years. The decorative segment has outpaced the industrial segment in growth
rate but the industrial segment has the greater potential for growth, as and when
the automobile industry business improves. The players with aggressive
marketing strategies and comprehensive product portfolios will grow at a faster
rate. The emerging trends in technology and marketing indicate that the
industry is likely to consolidate in the coming years with industry leaders
improving their market share.
Consumers are looking forward to new product launches some for
application in special areas. Companies are increasing the value-added services
available to customers by offering a variety of finishes through specialized and
trained applicators, well supported by back end support of specialized service.
Moreover, consumers are continuously looking for better products, more and
more consumers are switching to marginally higher-priced emulsions where
they get more durable and better-looking finishes in a wider range of colours.
Disposable income plays a critical role in the decorative paint market.
Thus, increase in peoples income will help the industry to grow. Moreover, the
rural sector has a major share of the decorative paints segment. Thus, any
benefit to the rural sector for improving the dispensable income is directly co40
related to the growth of the paint industry. Besides, decorative paints are
marketing savvy products backed by large advertisement campaigns and
dealership networks. Huge investments required in setting up a vast marketing
and dealership network, to advertise and develop a brand over a period of time
will also help the industry to reach new heights.
The supporting speculations for infrastructure, commercial and
industrial consumers are like increased repainting activity, globalisation
resulting in mega projects managed by international consultants, Boom in the
Indian Housing Sector, increasing urbanisation, Shift from semi-permanent to
permanent housing structures. In a similar way strong industrial growth and
heavy infrastructure spending, new projects pertaining to roads, ports and
industrial segments is a positive sign for encouraging industrial coat segments.
3.1.6 Changing Marketing Practices
The decorative paints industry, one of the main two categories (the other
being industrial paints), constitutes a significant part of the total paint market in
India, and been making rapid strides too. There is a great silver lining for the
industry. With the boom in the construction industry, the demand for
decorative paint is growing approximately at 17-18 per cent per annum. This
figure sounds challenging, but this is the fact. Currently, two types of demand
are witnessed in decorative paints sector - from new projects and recoating.
TABLE: 3.1
PRODUCTION OF PAINTS & VARNISHES
Particulars
February
February
February
08
09
10
In tonne
66511.72
63526
86200
Y0Y percentage
-4.7
35.7
Source: Central Statistical Organisation
Courtesy: Boston Decorative Painting Service
February 11
943324
994.34
With the revival of the economy in India, both segments are thriving,
and hence the growth rate is high too. Interior paint sector (in decorative
segment) has been witnessing a significant change in the coating system.
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Earlier, interior paint constituted various paint processes like putty, primer
coat, emulsion coat/enamels coat, etc. Today, the whole putty application is
changing: on top coat, the enamel (coat) is no more popular with the customers,
rather they prefer emulsion coat more.
Similarly, exterior paints segment has undergone several changes as
well. Innovation, value addition, etc. make the segment a vibrant one. Today,
painting a house is no more considered a luxury, rather it has become a
necessity. There has been a significant growth in the exterior coatings segment,
and paint manufacturers have introduced premium products having superior
quality with increased durability. The exterior coatings market is also growing
fast. There exists a high margin in this segment, and the customers perception
about the quality of major companies helps them realise a higher margin.
Like many other segments, SMEs (Small Medium Scale of
Entrepreneurs) have emerged competitive and offer good quality. The changes
certainly augur well. However, the industry has to traverse a long distance. The
per capita paint consumption in India is only around 2.5 liter. The industry is
less than half the size compared to the Chinese market, and about one fifth of
the US market by volume. Even Sri Lanka and Pakistan have higher per capita
paint consumption. This is surely a strong reason to be optimistic about the
continued growth potential of this sector
3.15.1 Promotion of Complete Home Solution
Lately, the dynamics of many industries have changed due to the
increase in disposable income of the people. It is because they seek innovative
products. It has been reflected in the paint industry as well. For example, paint
companies in the past were supplying only their products, whereas now they
offer a complete solution (i.e., material and labour) to paint a house. The new
concept, Home Solution, is likened by the customers though they have to
spend more. Designer and textured finishes, coupled with washable and scratch
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resistance properties are in vogue. Besides, feature walls in deep shades are
now preferred by urban consumers.
Today, consumers are ready to experiment with choice of shades. One
may select Mediterranean yellow on the outside of a building, accentuated by
red on parapets. In the interiors, metallic shades are used and so are gold and
copper.
Further,
trends
are shifting from conventional
painting to
aluminium/glass exteriors, especially in commercial complexes. This could

positively affect and impact exterior coatings market. Another important
change is the growth of darker shades vis--vis white and pastels. This is a sign
of changing decor styles and consumers willingness to experiment. The
increasing popularity of textures and fashion finishes further illustrates this
point. It has been observed that painting of houses is generally done during the
festive season, and mostly for an available budget. Hence, a very small
segment of customers use high and expensive paints (with high value addition).
In smaller cities, products manufactured by SMEs are more popular.
3.1.5.2 Eco-Friendly Paints
Due to the environment-friendly preferences by paint consumers, of late
paint companies have taken several measures to promote environment-friendly
paints. For example, Nerolac is offering solutions and products for lead-free
and low-Volatile Organic Compounds (VOC) coatings. This in turn is helping
the key customers to formulate and provide eco-friendly decorative paints in
the market. There is a great silver lining for the decorative paint industry. With
the boom in the construction industry, the demand for decorative paint is
growing approximately at 17-18 per cent per annum. The growth has just
begun, and the demand will rise in 2015. So there is a need for increasing
awareness of safe and eco-friendly paints. People do not have any knowledge
of what paints they opt for, or whether it could become a potential hazard
affecting their health. While spending on such products, customers tend to
prefer low-quality paints.
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FIGURE: 3.1
ASIA-PACIFIC PAINTS & COATINGS MARKET SPLIT COUNTRYWISE
14%
9%
46%
9%
17%
9%
Austrlia
China
Japan
Korea
India
Others
Source: Frost & Sullivan, July 2010

Note: Others include Indonesia (3%), Taiwan (2%), Malaysia (2%), Thailand
(2%), Singapore (1%), Hong Kong (1%), Phillipines (1%), New Zealand (1%)
and Vietnam (1%)
Industry experts feel that there is a need for increasing awareness of safe
and eco-friendly paints. People do not have any knowledge of what paints they
opt for, or whether it could become a potential hazard affecting their health.
While spending on such products, customers tend to prefer low-quality paints.
However, there are some who are prepared to pay a higher price. Taking due
knowledge of the fact, all household or decorative products of Paint companies
have started to promote lead, mercury, arsenic and chromium free products.
SMEs are also leaving no stone unturned to play a significant role in making
environment-friendly paints. SME sector is the market leader in the waterbased segment (environment-friendly paint). Last year, growth of the SMEs in
water-based paints was above 20 per cent, and it was more than 5 per cent in
the case of solvent-based paints. Growth in large companies comes mainly
from the solvent-based sector. Like countries in the West, people in India are
moving towards water-based paints for both interiors and exteriors. Thus, in all
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probability, the demand for water-based products should remain robust in the
coming years.
3.1.5.3 Technology Adoption
The paint industry is a growing sector in future. The broad product
ranges and the advanced technology is helping substantially. The refining of
paint products in terms of environmental concern and aesthetic aspect started
long back and now the decorative paints segment contributes more than 75per
cent of industry. However some surveys predict that in few years the ratio of
industrial to decorative sector will be same. This is good news for those who
are pioneers in industrial coat segment, since the current industrial coating
market size is estimated around 30per cent. The requirement of premium
products in paint and coating technology is the future demand. There are
companies manufacturing bio-paints by using less harmful materials like chalk,
china clay, plant oils and tree resins, which are healthier than synthetic
components. The other technologies are like zero VOC, water-based, lead,
mercury and chromium free shades. Few more advancements are like IR (InfraRed Rays) reflective, UV resistance, Fleuroscenes, Texture and high heat
resistance coatings.
3.1.5.4 Cost factor
In a recent survey published by McKinsey, it summarised the consumer
behaviour, with respect to green products. It identified five barriers preventing
Consumers from purchasing green products - lack of awareness, negative
perceptions, distrust, high prices and low availability. Before buying green
products, consumers must know that there exist such products in the market,
which live up to their expectations. A few consumers buy these only because
they are green, which comes with many advantages. The survey also states that
price is one of the largest obstacles in purchasing green products. These are not
necessarily more expensive than the so-called standard products. Cost is
commensurate to the value provided. Perhaps, the paint industry has not been
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successful in convincing the consumers that these are good products worth the
expense.
3.1.6 Challenges Faced by the Industry
Some of the prominent challenges for Indian paint industry are:
Seasonal Demand: Paint Industry is a seasonal industry. The demand
shoots up during the Diwali season or other festive seasons and it will be
low in the rainy season.
Inventory Management at Dealer Level: The product differentiation is
minimal in paint industry. The very close substitutes are readily
available (e.g. ICI Dulux can be a very close substitute for Asian Paints
Royale). Hence the inventory management at the dealer level is of a
prime importance. It is also important for brand visibility and occupying
the shelf space.
Distribution Costs: Distribution costs are important for a lower price
product like Distemper. The Distemper is a stiff paint and is sold on
weight basis. It is called as the Bread and Butter of the paint industry
as the consumption is highest for this product. Hence, the cost associated
with distribution of it is of prime importance.
Shade Offerings: As the shades offered by the paints companies are
very high in number, (e.g. Asian paints offers more than 1200 own
shades), the problem of distribution becomes very significant. The
demand for a particular shade may peak up suddenly in a particular
region. The inventory management at the distributor and dealer level is
of great importance.
Low Per Capita Consumption: As mentioned earlier, the per capita
paint consumption in India is in one of the lowest. It stands at mere 815
gms per person per annum as compared to the 25 kg per person per
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annum in US. This shows the lower penetration of the paint industry in
the country. The paint companies have to educate the customers that
they should go for the repainting of their houses frequently. This is a
very unique feature of the industry that the Indian people will go for
repainting either for some festival such as Diwali or occasions like
Marriage or when the repainting is absolutely unavoidable.
Competition from the Unorganised Players: A critical challenge in the
paints industry was the competition from the unorganised players; who
were not liable for excise as well as other taxes. Reduction of excise
duties over the last few years, from 40per cent to the present level of
12per cent, has helped to create a level playing field between the
unorganised and organised segments.
3.1.7 Future Outlook for the industry
Companies are unanimous in saying that the future of the industry is
bright. The Indian paint industry has grown by 1.5-2 times of Indias GDP
growth on a year-on-year basis. With the revival and upswing of economic
activities in the country, the paint industry is expected to witness double digit
growth in the current fiscal. Many feel that the growth has just begun, and the
demand will rise in 2015. The per capita consumption of paint in India is
estimated to be more than 800 grams compared to 10 kg in other Asian
countries, and above 20 kg in the developed countries. Against the backdrop of
a rapidly changing scenario, even if the per capita consumption is 2.5 kg, which
in all probability is likely to happen in the coming five years, the industry
should witness 100 per cent growth - from approximately `. 25,000 crore to `.
50,000 crore by 2015. Further, the market share of SMEs will remain
approximately 50 per cent, as the customers are gradually recognizing their
quality.
The prospect of the industry further brightens with setting up of shops
by prospective global paint manufacturers in India. The outlook is promising,
47
and the industry is estimated to grow by 15 per cent on an annual basis.

Prediction of normal monsoon has provided further momentum to the sector.
The industry should continue to grow handsomely, as the monsoon is projected
to be normal, and GDP is being projected to grow in touching 8 per cent in the
coming months. However, there exists a risk factor due to sharp increase in raw
material prices from the beginning of the current financial year. This could
affect the margins of paint companies substantially. Going by the current trend
and customers attitude, the future augurs well for the industry. What is
positive for the industry is that today people in rural India also feels it a
necessity rather than a luxury to paint their houses every year, which is indeed
a significant change of thought.
SECTION II
MARKETING THEORIES ON CONSUMER BUYING BEHAVIOUR
(CONSUMER ATTITUDE PREFERENCES AND SATISFACTION)
3.2Overview of Consumer Buying Behaviour
Consumer behavior involves the psychological processes that consumers
go through in recognizing needs, finding ways to solve these needs, making
purchase decisions (e.g., whether or not to purchase a product and, if so, which
brand and where), interpret information, make plans, and implement these
plans (e.g., by engaging in comparison shopping or actually purchasing a
product). Sources of influence on the consumer, the consumer faces numerous
sources of influence.
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EXHIBIT: 3.2
INFLUENCES ON AND OF CONSUMER BEHAVIOR
Perception/
Sensation
Market Research
Info search
Cognition
Affect
Strategy
Beliefs
Choice
Preferences
Consumer
Social and other

influence
Communication
Often, we take cultural influences for granted, but they are

significant. An American will usually not bargain with a store owner. This,
however, is a common practice in much of the World. Physical factors also
influence our behavior. We are more likely to buy a soft drink when we are
thirsty, for example, and food manufacturers have found that it is more
effective to advertise their products on the radio in the late afternoon when
people are getting hungry. A persons self-image will also tend to influence
what he or she will buyan upwardly mobile manager may buy a flashy car to
project an image of success. Social factors also influence what the consumers
buyoften, consumers seek to imitate others whom they admire, and may buy
the same brands. The social environment can include both the mainstream
culture (e.g., Americans are more likely to have corn flakes or ham and eggs
for breakfast than to have rice, which is preferred in many Asian countries) and
a subculture (e.g., rap music often appeals to a segment within the population
that seeks to distinguish itself from the mainstream population). Thus, sneaker
manufacturers are eager to have their products worn by admired
athletes. Finally, consumer behavior is influenced by learningyou try a
hamburger and learn that it satisfies your hunger and tastes good, and the next
time you are hungry, you may consider another hamburger.
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3.2.1 Consumer Choice and Decision Making

Consumer choice of product and decision making processes are:
i. Problem Recognition
Consumer involvement will tend to vary dramatically depending on the
type of product. In general, consumer involvement will be higher for products
that are very expensive (e.g., a home, a car) or are highly significant in the
consumers life in some other way (e.g., a word processing program or acne
medication).
It is important to consider the consumers motivation for buying
products. To achieve this goal, we can use the Means-End chain, wherein we
consider a logical progression of consequences of product use that eventually
lead to desired end benefit. Thus, for example, a consumer may see that a car
has a large engine, leading to fast acceleration, leading to a feeling of
performance, leading to a feeling of power, which ultimately improves the
consumers self-esteem. A handgun may aim bullets with precision, which
enables the user to kill an intruder, which means that the intruder will not be
able to harm the consumers family, which achieves the desired end-state of
security.
In advertising, it is important to portray the desired end-
states. Focusing on the large motor will do less good than portraying a
successful person driving the car.
EXHIBIT: 3.2
PROBLEM RECOGNITION
Problem Recognition
Information search
Evaluation of
Alternatives
Purchase
Post Purchase
Emulation/behaviour
Theory
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Complicatio
ii. Information Search and Decision Making

Consumers engage in both internal and external information
search. Internal search involves the consumer identifying alternatives from his
or her memory. For certain low involvement products, it is very important that
marketing programs achieve top of mind awareness. For example, few
people will search the Yellow Pages for fast food restaurants; thus, the
consumer must be able to retrieve ones restaurant from memory before it will
be considered. For high involvement products, consumers are more likely to
use an external search. Before buying a car, for example, the consumer may
ask friends opinions, read reviews in Consumer Reports, consult several web
sites, and visit several dealerships. Thus, firms that make products that are
selected predominantly through external search must invest in having
information available to the consumer in neede.g., through brochures, web
sites, or news coverage.
EXHIBIT: 3.3
INTERNAL AND EXTERNAL
Internal
Memory Thinking
Catalog
External
Word of mouth, media,
store visits, trial
A compensatory decision involves the consumer trading off good and

bad attributes of a product. For example, a car may have a low price and good
gas mileage but slow acceleration. If the price is sufficiently inexpensive and
gas efficient, the consumer may then select it over a car with better acceleration
that costs more and uses more gas. Occasionally, a decision will involve a noncompensatory strategy. For example, a parent may reject all soft drinks that
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contain artificial sweeteners. Here, other good features such as taste and low
calories cannot overcome this one non-negotiable attribute.
Two interesting issues in decisions are:
1. Variety seeking (where consumers seek to try new brands not because
these brands are expected to be better in any way, but rather because the
consumer wants a change of pace, and
2. Impulse purchasesunplanned buys. This represents a somewhat
fuzzy group. For example, a shopper may plan to buy vegetables but only
decide in the store to actually buy broccoli and corn. Alternatively, a person
may buy an item which is currently on sale, or one that he or she remembers
that is needed only once inside the store.
A number of factors involve consumer choices. In some cases,
consumers will be more motivated. For example, one may be more careful
choosing a gift for an in-law than when buying the same thing for one
self. Some consumers are also more motivated to comparison shop for the best
prices, while others are more convenience oriented. Personality impacts
decisions. Some like variety more than others, and some are more receptive to
stimulation and excitement in trying new stores. Perception influences
decisions. Some people, for example, can taste the difference between generic
and name brand foods while many cannot. Selective perception occurs when a
person is paying attention only to information of interest. For example, when
looking for a new car, the consumer may pay more attention to car ads than
when this is not in the horizon. Some consumers are put off by perceived
risk. Thus, many marketers offer a money back guarantee. Consumers will
tend to change their behavior through learninge.g., they will avoid
restaurants they have found to be crowded and will settle on brands that best
meet their tastes. Consumers differ in the values they hold (e.g., some people
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are more committed to recycling than others who will not want to go through
the hassle). We will consider the issue of lifestyle under segmentation.
iii. The Family Life Cycle
Individuals and families tend to go through a "life cycle:" The simple
life cycle goes from.
EXHIBIT: 3.4
FAMILY LIFE CYCLE
Young Single
Young Couple
Empty Nest I/II
Full Nest I/II/III
Older Single
For purposes of this discussion, a "couple" may either be married or

merely involve living together. The breakup of a non-marital relationship
involving cohabitation is similarly considered equivalent to a divorce. In real
life, this situation is, of course, a bit more complicated. For example, many
couples undergo divorce. Then we have one of the scenarios:
EXHIBIT: 3.5
FAMILY LIFE CYCLE
Young Single
Young Couple
Full Nest I/II/III

Single Parent
Single parenthood can result either from divorce or from the death of
one parent. Divorce usually entails a significant change in the relative wealth
of spouses. In some cases, the non-custodial parent (usually the father) will not
pay the required child support, and even if he or she does, that still may not
leave the custodial parent and children as well off as they were during the
marriage. On the other hand, in some cases, some non-custodial parents will be
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called on to pay a large part of their income in child support. This is

particularly a problem when the non-custodial parent remarries and has
additional children in the second (or subsequent marriages). In any event,
divorce often results in a large demand for:
Low cost furniture and household items
Time-saving goods and services

Divorced parents frequently remarry, or become involved in other non-
marital relationships; thus, we may see.
EXHIBIT: 3.6
INVOLVED IN OTHER NON-MARITAL RELATIONSHIPS
Full Nest I/II/III
Single Parent
Blended
Generally, there are two main themes in the Family Life Cycle, subject
to significant exceptions:
As a person gets older, he or she tends to advance in his or her career
and tends to get greater income (exceptions: maternity leave, divorce,
retirement).
Unfortunately, obligations also tend to increase with time (at least until
ones mortgage has been paid off). Children and paying for ones house
are two of the greatest expenses.
Note that although a single person may have a lower income than a
married couple, the single may be able to buy more discretionary items.
54
iv. Family Decision Making

Individual members of families often serve different roles in decisions
that ultimately draw on shared family resources. Some individuals are
information gatherers/holders, who seek out information about products of
relevance. These individuals often have a great deal of power because they may
selectively pass on information that favors their chosen alternatives. Influencers
do not ultimately have the power decide between alternatives, but they may
make their wishes known by asking for specific products or causing
embarrassing situations if their demands are not met. The decision maker(s)
have the power to determine issues such as:
Whether to buy;
Which product to buy (pick-up or passenger car?);
Which brand to buy;
Where to buy it; and
When to buy.
Note, however, that the role of the decision maker is separate from that
of the purchaser. From the point of view of the marketer, this introduces some
problems since the purchaser can be targeted by point-of-purchase (POP)
marketing efforts that cannot be aimed at the decision maker. Also note that the
distinction between the purchaser and decision maker may be somewhat
blurred:
The decision maker may specify what kind of product to buy, but not
which brand;
The purchaser may have to make a substitution if the desired brand is
not in stock;
The purchaser may disregard instructions (by error or deliberately).
55
It should be noted that family decisions are often subject to a great deal
of conflict. The reality is that few families are wealthy enough to avoid a strong
tension between demands on the familys resources. Conflicting pressures are
especially likely in families with children and/or when only one spouse works
outside the home. Note that many decisions inherently come down to values,
and that there is frequently no "objective" way to arbitrate differences. One
spouse may believe that it is important to save for the childrens future; the
other may value spending now (on private schools and computer equipment) to
help prepare the children for the future. Who is right? There is no clear answer
here. The situation becomes even more complex when more partiessuch as
children or other relativesare involved.
Some family members may resort to various strategies to get their way.
One is bargainingone member will give up something in return for someone
else. For example, the wife says that her husband can take an expensive course
in gourmet cooking if she can buy a new pickup truck. Alternatively, a child
may promise to walk it every day if he or she can have a hippopotamus.
Another strategy is reasoningtrying to get the other person(s) to accept ones
view through logical argumentation. Note that even when this is done with a
sincere intent, its potential is limited by legitimate differences in values
illustrated above. Also note that individuals may simply try to "wear down" the
other party by endless talking in the guise of reasoning (this is a case of
negative reinforcement as we will see subsequently). Various manipulative
strategies may also be used. One is impression management, where one tries to
make ones side look good (e.g., argue that a new TV will help the children see
educational TV when it is really mostly wanted to see sports programming, or
argue that all "decent families make a contribution to the church"). Authority
involves asserting ones "right" to make a decision (as the "man of the house,"
the mother of the children, or the one who makes the most money). Emotion
involves making an emotional display to get ones way (e.g., a man cries if his
wife will not let him buy a new rap album).
56
v. The Means-End Chain

Consumers often buy products not because of their attributes per se but
rather because of the ultimate benefits that these attributes provide, in turn
leading to the satisfaction of ultimate values. For example, a consumer may not
be particularly interested in the chemistry of plastic roses, but might reason as
follows.
EXHIBIT: 3.7
MEANS-END CHAIN
Self Esteem
Significant other will

continue to love one
Significant other will
appreciate the roses
longer
Roses will stay in original
condition for a long time
Highly reliable
synthetic content of
roses
The important thing in a means-end chain is to start with an attribute, a

concrete characteristic of the product, and then logically progress to a series of
consequences (which tend to become progressively more abstract) that end
with a value being satisfied. Thus, each chain must start with an attribute and
end with a value. An important implication of means-end chains is that it is
usually most effective in advertising to focus on higher level items. For
example, in the flower example above, an individual giving the flowers to the
significant other might better be portrayed than the flowers alone.
57
3.2.3 Consumer Attitudes

Consumer attitudes are a composite of a consumers (1) beliefs about,
(2) feelings about, (3) and behavioral intentions toward some objectwithin
the context of marketing, usually a brand, product category, or retail
store.
These components are viewed together since they are highly
interdependent and together represent forces that influence how the consumer
will react to the object.
i. Beliefs
The first component is beliefs. A consumer may hold both positive
beliefs toward an object (e.g., coffee tastes good) as well as negative beliefs
(e.g., coffee is easily spilled and stains papers). In addition, some beliefs may
be neutral (coffee is black), and some may be differ in valance depending on
the person or the situation (e.g., coffee is hot and stimulates--good on a cold
morning, but not good on a hot summer evening when one wants to
sleep). Note also that the beliefs that consumers hold need not be accurate
(e.g., that pork contains little fat), and some beliefs may, upon closer
examination, be contradictory.
ii. Affect
Consumers also hold certain feelings toward brands or other
objects. Sometimes these feelings are based on the beliefs (e.g., a person feels
nauseated when thinking about a hamburger because of the tremendous amount
of fat it contains), but there may also be feelings which are relatively
independent of beliefs. For example, an extreme environmentalist may believe
that cutting down trees is morally wrong, but may have positive affect toward
Christmas trees because he or she unconsciously associates these trees with the
experience that he or she had at Christmas as a child.
58
iii. Behavioral intention

The behavioral intention is what the consumer plans to do with respect
to the object (e.g., buy or not buy the brand). As with affect, this is sometimes
a logical consequence of beliefs (or affect), but may sometimes reflect other
circumstances--e.g., although a consumer does not really like a restaurant, he or
she will go there because it is a hangout for his or her friends. Changing
attitudes is generally very difficult, particularly when consumers suspect that
the marketer has a self-serving agenda in bringing about this change (e.g., to
get the consumer to buy more or to switch brands). Here are some possible
methods:
1. Changing affect
One approach is to try to change affect, which may or may not involve
getting consumers to change their beliefs. One strategy uses the
approach of classical conditioning try to pair the product with a liked
stimulus.
For
example,
we
pair
car
with
beautiful
woman. Alternatively, we can try to get people to like the advertisement

and hope that this liking will spill over into the purchase of a
product.
For example, the Pillsbury Doughboy does not really
emphasize the conveyance of much information to the consumer;

instead, it attempts to create a warm, fuzzy image. Although
Energizer Bunny ads try to get people to believe that their batteries last
longer, the main emphasis is on the likeable bunny. Finally, products
which are better known, through the mere exposure effect, tend to be
better likedthat is, the more a product is advertised and seen in stores,
the more it will generally be liked, even if consumers to do not develop
any specific beliefs about the product.
2. Changing behavior
People like to believe that their behavior is rational; thus, once they use
our products, chances are that they will continue unless someone is able
59
to get them to switch. One way to get people to switch to our brand is to
use temporary price discounts and coupons; however, when consumers
buy a product on deal, they may justify the purchase based on that deal
(i.e., the low price) and may then switch to other brands on deal later. A
better way to get people to switch to our brand is to at least temporarily
obtain
better
shelf
space
so
that
the
product
is
more
convenient. Consumers are less likely to use this availability as a

rationale for their purchase and may continue to buy the product even
when the product is less conveniently located.
3. Changing beliefs
Although attempting to change beliefs is the obvious way to attempt
attitude change, particularly when consumers hold unfavorable or
inaccurate ones, this is often difficult to achieve because consumers tend
to resist. Several approaches to belief change exist.
4. Change currently held beliefs
It is generally very difficult to attempt to change beliefs that people
hold, particularly those that are strongly held, even if they are
inaccurate. For example, the petroleum industry advertised for a long
time that its profits were lower than were commonly believed, and
provided extensive factual evidence in its advertising to support this
reality. Consumers were suspicious and rejected this information,
however.
5. Change the importance of beliefs
Although the sugar manufacturers would undoubtedly like to decrease
the importance of healthy teeth, it is usually not feasible to make beliefs
less important--consumers are likely to reason, why, then, would you
bother bringing them up in the first place? However, it may be possible
to strengthen beliefs that favor us--e.g., a vitamin supplement
60
manufacturer may advertise that it is extremely important for women to

replace iron lost through menstruation. Most consumers already agree
with this, but the belief can be made stronger.
6. Add beliefs
Consumers are less likely to resist the addition of beliefs so long as they
do not conflict with existing beliefs. Thus, the beef industry has added
beliefs that beef (1) is convenient and (2) can be used to make a number
of creative dishes. Vitamin manufacturers attempt to add the belief that
stress causes vitamin depletion, which sounds quite plausible to most
people.
7. Change ideal
It usually difficult, and very risky, to attempt to change ideals, and only
few firms succeed. For example, Hard Candy may have attempted to
change the ideal away from traditional beauty toward more unique selfexpression.
8. One-sided vs. two-sided appeals
Attitude research has shown that consumers often tend to react more
favorably to advertisements which either (1) admit something negative
about the sponsoring brand (e.g., the Volvo is a clumsy car, but very
safe) or (2) admits something positive about a competing brand (e.g., a
competing supermarket has slightly lower prices, but offers less service
and selection). Two-sided appeals must, contain overriding arguments
why the sponsoring brand is ultimately superiorthat is, in the above
examples, the but part must be emphasized.
3.2.4 Consumer Perception
Consumer perception is an approximation of reality. Our brain attempts
to make sense out of the stimuli to which we are exposed. This works well, for
61
example, when we see a friend three hundred feet away at his or her correct
height; however, our perception is sometimes offfor example, certain
shapes of ice cream containers look like they contain more than rectangular
ones with the same volume.
i. Perception
Knowledge of how consumers acquire and use information from
external sources is important to marketers in formulating communication
strategies. Marketers are particularly interested in (1) how consumers sense
external information, (2) how they attend to various sources of information, (3)
how this information is interpreted and given meaning, and (4) how the
information is retained. These four processes are all part of perception, the
process by which an individual receives, attends to, interprets, and stores
information to create a meaningful picture of the world.
Perception is an individual process; it depends on internal factors such
as a persons beliefs, experiences, needs, moods, and expectations. The
perceptual process is also influenced by the characteristics of a stimulus (such
as its size, colour, and intensity) and the context in which it is seen or heard.
Selectivity occurs throughout the four stages of the consumers perceptual
process. Perception may be viewed as a filtering process in which internal and
external factors influence what is received and how it is processed and
interpreted. The sheer number and complexity of the marketing stimuli a
person is exposed to in any given day require that this filtering occur.
Selective perception may occur within all four stages of the perceptual
process, as shown in the exhibit.
EXHIBIT: 3.8
SELECTIVE PERCEPTION PROCESS
Selective Exposure
Selective Attention
Selective
Comprehension
62
Selective
Retention
ii. Sensation
Sensation is the immediate, direct response of the senses (taste, smell,
sight, touch, and hearing) to a stimulus such as an ad, package, brand name, or
point-of-purchase display. Perception uses these senses to create a
representation of the stimulus. Marketers recognize that it is important to
understand consumers physiological reactions to marketing stimuli. For
example, the visual elements of an ad or package design must be designed so
that consumers sense their existence. This is one reason why many TV ads start
with a particular sound effect or visual movement.
Marketers sometimes try to increase the level of sensory input so that
their advertising messages will get noticed. For example, marketers of colognes
and per-fumes often use strong visuals as well as scent strips to appeal to
multiple senses and attract the attention of magazine readers. Some advertisers
have even inserted microcomputer chips into their print ads to play a song or
deliver a message. Selective exposure occurs as consumers choose whether or
not to make themselves available to information. For example, a viewer of a
television show may change channels or leave the room during commercial
breaks.
iii. Selecting Information
Sensory inputs are important but are only one part of the perceptual
process. Other determinants of whether marketing stimuli will be attended to
and how they will be interpreted include internal psychological factors such as
the consumers personality, needs, motives, expectations, and experiences.
These psychological inputs explain why people focus attention on some things
and ignore others. Two people may perceive the same stimuli in very different
ways because they select and attend to messages differently. An individuals
perceptual processes usually focus on elements of the environment that are
relevant to his or her needs and tune out irrelevant stimuli. Think about how
much more attentive you are to advertising for personal computers, tires, or
stereos when you are in the market for one of these products.
63
Selective attention occurs when the consumer chooses to focus attention

on certain stimuli while excluding others. One study of selective attention
estimates the typical consumer is exposed to nearly 1,500 ads per day yet
perceives only 76 of these messages. Other estimates range as high as 3,000
exposures per day. This means advertisers must make considerable effort to
get their messages noticed. Advertisers often use the creative aspects of their
ads to gain consumers attention. For example, some advertisers set their ads
off from others by showing their products against a vibrant colour background.
Marketers also place ads in certain times or locations so that consumers will
notice them more easily. For example, a consumer may pay more attention to a
commercial that is heard alone at home than to one heard in the presence of
friends, at work, or anywhere distractions may be present. If advertisers can
isolate a particular time when the listener is likely to be attentive, they will
probably earn his or her undivided attention.
iv. Consumer Motivation
While need recognition is often a basic, simple process, the way a
consumer perceives a purchase situation and becomes motivated to resolve it
will influence the remainder of the decision process. For example, one
consumer may perceive the need to purchase a new watch from a functional
perspective and focus on reliable, low-priced alternatives. Another consumer
may see the purchase of a watch as more of a fashion statement and focus on
the design and image of various brands.
To better understand the reasons underlying consumer purchases,
marketers devote considerable attention to examining motives-that is, those
factors that compel a consumer to take a particular action. One of the most
popular approaches to understanding consumer motivations is based on the
classic theory of human motivation popularized many years ago by
psychologist Abraham Maslow. His hierarchy of needs theory postulates five
basic levels of human needs, arranged in a hierarchy based on their importance.
As shown in the exhibit, the five needs are (1) physiologicalthe basic level of
64
primary needs for things required to sustain life, such as food, shelter, clothing,
and sex; (2) safetythe need for security and safety from physical harm; (3)
social/love and belongingthe desire to have satisfying relationships with
others and feel a sense of love, affection, belonging, and acceptance; (4)
esteemthe need to feel a sense of accomplishment and gain recognition,
status, and respect from others; and (5) self-actualizationthe need for selffulfillment and a desire to realize ones own potential.
EXHIBIT: 3.9
CONSUMER BEHAVIOUR AND TARGET AUDIENCE DECISIONS
Selfactualization needs
(self-development
and realization)
Esteem needs
(self-esteem,
recognition, status)
Social needs
(sense of belonging, love)
Safety needs (security, protection)
Physiological needs (hunger, thirst)
According to Maslows theory, the lower-level physiological and safety

needs must be satisfied before the higher-order needs become meaningful.
Once these basic needs are satisfied, the individual moves on to attempting to
satisfy higher-order needs such as self-esteem. In reality, it is unlikely that
people move through the needs hierarchy in a stair step manner. Lower-level
needs are an ongoing source of motivation for consumer purchase behaviour.
However, since basic physiological needs are met in most developed countries,
marketers often sell products that fill basic physiological needs by appealing to
consumers higher-level needs. For example, in marketing its wipes, Huggies
65
focuses on the love between parent and child (social needs) in addition to the
gentleness of the product a sense of accomplishment and gain recognition,
status, and respect from others and self-actualization-the need for selffulfillment and a desire to realize ones own potential.
While Maslows needs hierarchy has flaws, it offers a frame-work for
marketers to use in determining what they needs want their products and
services to be shown satisfying. Advertising campaigns can then be designed to
show how a brand can fulfill these needs. Marketers also recognize that
different types of consumers have different need levels. For example, a young
single person may be attempting to satisfy social or self-esteem needs in
purchasing a car, while a family with children will focus more on safety needs.
Chrysler used ads like the one to communicate that its cars meet the security
needs of consumers with children.
v. Information Search
The second stage in the consumer decision-making process is
information search. Once consumers perceive a need that can be satisfied by
the purchase of a product, they begin to search for information needed to make
a purchase decision. The initial search effort often consists of an attempt to
scan information stored in memory to recall past experiences and/or knowledge
regarding various purchase alternatives. This information retrieval is referred
to as internal search.
For many routine, repetitive purchases, previously
acquired information that is stored in memory (such as past performance or

outcomes from using a brand) is sufficient for comparing alternatives and
making a choice. If the internal search does not yield enough information, the
consumer will seek additional information by engaging in external search.
External sources of information include:
Personal sources, such as friends, relatives, or co-workers.
Marketer-controlled (commercial) sources, such as information from
advertising, salespeople, or point-of-purchase displays and the Internet.
66
Public sources, including articles in magazines or news-papers and

reports on TV.
Personal experience, such as actually handling, examining, or testing the
product.
Determining how much and which sources of external information to
use involves several factors, including the importance of the purchase decision,
the effort needed to acquire information, the amount of past experience
relevant, the degree of perceived risk associated with the purchase, and the time
available. For example, the selection of a movie to see on a Friday night might
entail simply talking to a friend or checking the movie guide in the daily
newspaper. A more complex purchase such as a new car might use a number of
information sources-perhaps a review of Road & Track, Motor Trend, or
Consumer Reports: discussion with family members and friends; and testdriving of cars. At this point in the purchase decision, the informationproviding aspects of advertising are extremely important.
The Internet influences consumers external search patterns significantly
for many products. For the travel industry, 60 percent indicated in 2006 that the
Internet is very or extremely important for making travel plans, compared to
one-third in 2002. TNS Canadian Facts research also noted that website
satisfaction reached 36 percent, compared with 27 percent previously. The type
of information sought involved significant moves from simple things like
researching the weather or the destination to more complex comparisons of
travel costs and accommodations.
67
3.3Conclusion
Today, consumers are ready to experiment with choice of shades. Before
buying paint products consumers must know that there exist such products in
the market and must be able to take correct decision about which live up to
their expectations. A few consumers buy paints only because they as easy to
use, recommend by the painters, cost effective are green, which comes with
many advantages etc. their buying decisions should be rational than emotional.
This study aims to analyse the consumers attitude, preferences and satisfaction
towards selected brands of paints. The study focuses on both household and
commercial users/consumers of paints in Coimbatore city. Well recognised as
Tire III, developing city of the nation. The following chapters provided an
empirical discussion of the data collected and analysed during the filed survey.
68
References
Understand
Consumer
Integrated
Marketing
Behaviour
and
Communications,
Target
Audience
Chapter
3,
Decisions,
http://highered.mcgraw
hill.com/sites/dl/free/0070974284/605841/sample_ch03.pdf
Consumer
Behavior,
University
of
South
California
http://www.consumerpsychologist.com/intro_Consumer_Behavior.html
Perceived
product
and
quality,
http://www.oxbridgewriters.com/essays/management/perceivedproduct-and-quality.php
Shridhar,
http://www.linkedin.com/groups/Paint-vibrant-future-
4097066.S.139442379
RNCOS Industry Research Solution report, Indian Paint Industry
Forecast to 2015, Sep, 2012, http://www.rncos.com/Report/IM408.htm
http://articles.economictimes.indiatimes.com/2013-0118/news/36415645_1_paint-industry-paint-market-kansai-nerolac-paints
http://www.coatingsworld.com/contents/view_breaking-news/2013-0121/indian-paint-market-expected-to-reach-49-545-inr-c/
http://www.reportbuyer.com/chemicals/paints/profile_indian_paint_indu
stry.html
http://www.coatingsworld.com/issues/200908/view_features/encouraging-growth-potential-for-the-indian-paint-/
Sector Watch, Decorative Paints-Depicting greener opportunities,
Chemical World, July 2010
Rushina Singhi, Dewyani Kawale and Yogesh Chaudhari (2009), Asian
Paints: Changing Rules Of The Game, Indian Journal of Marketing, pg:
14-20, April
http://www.sapientindore.org/sm/mba/semiv/405M/Rural%20Consumer
%20Behavior.pdf, T405M Consumer Behavior and Rural Marketing
69

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CHAPTER III

OVERVIEW OF PAINT INDUSTRY IN INDIA AND MARKETING

3.1.1 Segmentation of the Industry

3.1.2.2Reason for the Growth of Domestic Players

3.1.5 Primary Reasons for the Growth of Decorative Paint Industry in

are shifting from conventional

aluminium/glass exteriors, especially in commercial complexes. This could

Source: Frost & Sullivan, July 2010

and the industry is estimated to grow by 15 per cent on an annual basis.

Social and other

Often, we take cultural influences for granted, but they are

3.2.1 Consumer Choice and Decision Making

In advertising, it is important to portray the desired end-

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ii. Information Search and Decision Making

A compensatory decision involves the consumer trading off good and

Empty Nest I/II

Full Nest I/II/III

For purposes of this discussion, a "couple" may either be married or

Full Nest I/II/III

called on to pay a large part of their income in child support. This is

Low cost furniture and household items

Time-saving goods and services

marital relationships; thus, we may see.

iv. Family Decision Making

Which product to buy (pick-up or passenger car?);

Which brand to buy;

Where to buy it; and

v. The Means-End Chain

Significant other will

The important thing in a means-end chain is to start with an attribute, a

3.2.3 Consumer Attitudes

These components are viewed together since they are highly

iii. Behavioral intention

woman. Alternatively, we can try to get people to like the advertisement

For example, the Pillsbury Doughboy does not really

emphasize the conveyance of much information to the consumer;

convenient. Consumers are less likely to use this availability as a

manufacturer may advertise that it is extremely important for women to

Selective attention occurs when the consumer chooses to focus attention

Safety needs (security, protection)

Physiological needs (hunger, thirst)

According to Maslows theory, the lower-level physiological and safety

For many routine, repetitive purchases, previously

acquired information that is stored in memory (such as past performance or

Public sources, including articles in magazines or news-papers and

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