Disclaimer: This is an example of a student written essay.
Click here for sample essays written by our professional writers.

Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com.

Industry Analysis Porters Five Forces Model

Paper Type: Free Essay Subject: Marketing
Wordcount: 1999 words Published: 27th Apr 2017

Reference this

Supplier Power: Owing to its highly diversified product range, Pidilite has a variety of suppliers and a large number of suppliers. Due to this, suppliers are not able to exercise much control over the prices they can demand from the company. Hence, supplier power is low

Threat of new entry: The Company has enjoyed monopoly over the years as most of the products in market today are their inventions. But recently, a number of international companies have entered into specific market segments in the country and Pidilite faces considerable threat from them. These companies are:

3M India: poses competition to Pidilite in areas of Polyurethane, epoxy products and tapes.

Henkel: is a world-market leader and is offering adhesives for consumer use in India and already has a market presence.

HB Fuller: Another world market leader in industrial adhesives, it has already set up its plant in Maharashtra and poses strong threat to Pidilite.

The main reason why these companies pose a threat to Pidilite is the high profit margins that Pidilite has kept for itself over the years. In case these new entrants offer a better percentage to the retailers, Pidilite risks losing market share.

Buyer Power: When it comes to the consumer and bazaar products, consumers don’t have a say on the price of products. When it comes to industrial adhesives, consumers lose out on price bargaining power as Pidilite enjoys the superior quality advantage. So buyer power is low. In fact, Pidilite charges a premium of 10-25 % over its competitors because of superior quality that customers don’t want to let go off. 1

Brand

Company

Price(Rs.)/unit

Fevicol

Pidilite

50/250gm

Carpenter

Huntsman

45/250gm

Jivanjor

Jubilant Organosys

44/250 gm

Threat of Substitution: Usually, an adhesive is not a difficult thing to manufacture and can be done in one’s home with little pain. But this is practiced only in rural areas where purchasing power is low or product marketing is not feasible. In other markets, consumers prefer buying adhesives from the market as product quality is good and it is readily available. So threat of substitution is also low.

Get Help With Your Essay

If you need assistance with writing your essay, our professional essay writing service is here to help!

Essay Writing Service

Competitive Power: Pidilite enjoys near monopoly in all consumer and bazaar segment products. It has competition from local players at regional level but none of them have the scale to compete with it nationally. Even at the local level, it outdoes these brands on grounds of quality. Higher margin in between 30-40 percent offered by local manufacturers is a small threat but since Pidilite products enjoy an immense brand recall value, retailers stock up on their products to satisfy customers’ demands.

Major competitors:

Branded adhesives and sealants: In the glue stick market, Fevi kwik has 82% market share and in the Craft Glue segment, Fevicol MR has 86% market share. With these figures, it can be safely said that, Pidilite does not have threatening competitors in India at the moment.

Future competitors:

3M India, Henkel India, HB Fuller

Market size:

There are no uniform estimates available for the market size of the adhesives and sealants market in India as the market is highly diversified and players are fragmented. However, one industry review report estimates it to be 5000 tonnes per month.2

PESTEL

Political and Legal: the Government of India has come out with some rules and regulations that have positively affected the adhesive and sealant industry:

The government increased the benchmark adhesive quality required for government infrastructure projects. Due to its already superior quality, Pidilite emerged the sole contender for many of these tenders.

Investments worth Rs.2, 300,000 crores are expected in infrastructure in India, particularly in construction of roads, bridges, river-linking projects, airports and power plants. This will result in a demand of around Rs. 250 crores for adhesives.3

Economic: India’s per capita income has risen by over 85 percent in the last decade.3 This rise in income has led to increased spending on furniture, housing, automobiles and packaging. Adhesive sales grow more than the GDP of the country and in Pidilite’s case; they have been growing at a rate of 14.6% since 2001 (Exhibit 1), i.e. almost double the rate of India’s GDP. 1

Technological factors: Technological advances have been the cornerstone of Pidilite’s success over the years. With a strong focus on R&D and innovation, it has been immensely successful in coming out with path-breaking products since 1959. It established a state-of the-art research facility in Singapore too.

Another technical aspect that has factored in the orgainsation’s success is the implementation of the ICICI Orion ERP solutions package that the company started in the 1990’s. This resulted in simplified work processes, reduced cycle-times., optimum manpower utilisation and reduced inventory levels amongst many other benefits.4

Social Factors:

Economic prosperity has a positive correlation with changes in the social milieu of a nation. People have become increasingly brand conscious and are willing to spend more on art education of their children. This has resulted in increased demand for Pidilite’s Fevicol MR and Fevi kwik products among others for craft purposes. Lifestyle changes translate into increased use of furniture and cupboards by people.

Critical Success Factors:

Customer-centric company policy: The company’s founders and management continue to have a vision of making new products for customers, instead of just making profits. This policy has led them to be pioneers in almost everything they do.

Strong focus on R&D: 60 percent of the company’s sales come from products that they have introduced in the market. It is probably the only adhesive company in India to have a R&D center.

Strong connect with consumers: Through various initiatives like the Fevicol Champions Club for carpenter, Fevicol Furniture Book for designs, CSR activities like rural development, health and educational initiatives, the company has maintained a strong connect with its consumers and has developed a strong trust relationship with them.

Industry Attractiveness: The Adhesive and Sealant industry is poised to grow by leaps and bounds in the future. This is directly linked to India’s growth story which translates into growth equal to or more than the GDP for these sectors where adhesives are used extensively.

1. Amnish Aggarwal, Harit Kapoor ( 2011, June ). Pidilite industries, Growth Buzz. Motilal Oswal.

2The power of Adhesives (2010, April). Retrieved from www.indianpurchase.com/1308051068-IR%20-%20Adhesives%2

3Chandrashekhar Modi (2010, May 6). Sticking on a Fast Track. Projects Info. Retrieved from http://www.projectsinfo.in/News.aspx?nId=8FGzw/uhiBI4HmtBe9HhXA==

4Shashi Bhagnari ( 2003, February 6). Pidilite: Getting glued to technology. The Economic Times. Retrieved from : http://articles.economictimes.indiatimes.com/2003-02-06/news/27563654_1_pidilite-industries-erp-solution-chemical-industry.

Exhibit

Product

Pidilite manufactures wide variety of products in the adhesives and sealants segment and holds a major chunk of the market share in India. It has a total of 400 industrial and consumer products spread across various brands. Adhesives and sealants account for 49% of Pidilite’s total sales.

The product mix of Pidilite consists of the following,

Home, School, and Office – Fevicol MR, Fevigum, Fevistick, Fevicol Glue Drops, Fevi Bond, Fevicol All Fix, Fevicol Nailfree

Automotive Sector – Fevitite Rapid, FeviKwik

Plumbing – M-Seal, MSeal Plumber, Silicone Sealants

Wood Working – Fevicol SH, Fevicol SWR(D3), Woodlok, Woodgrip, Fevicol Marine, Fevicol SpeedX, Fevicol Heatshield, Fevicol SR 998, Fevicol Membrane Press Adhesive, Fevicol 1K Pur (D4), Fevicol Hotmelt 388, Fevicol Membrane PU, Fevicol Hotmelt 382

Foam & Flooring – Fevicol SP4, Fevicol Foamfix, Fevicol SP5, Fevicol SR 505, Fevicol VC 31

Insulation – Fevicol AC Duct King, Fevicol AC Duct Supreme, Steelgrip PVC tapes, Dr. Fixit Silicone Sealant GPS, USPRO Construction Foam

Since 1959 Pidilite focused on manufacturing products which targeted construction companies, carpenters, and other industries which have a very high usage and therefore their packaging was done in large quantities. They identified the potential in Home, School, Office and other small market segments and entered consumer segment early 1970’s. They introduced a 30-gram collapsible tube and many other existing products with different packaging sizes, which helped Pidilite transition from industrial image to retail image. The expansion of their product portfolio recognized them as a leading FMCG company.

According to Nilesh Mazumdar, President – Sales and Marketing (Maintenance Products), they have found that many women carry FeviKwik in their handbags. The “instant one-drop adhesive” is used for gluing their handbags and sandals that are coming apart, it would cost them only Rs.5.

All of its products are locally available to the customers’ at all leading hardware, cement, tile and paint shops, and stationery shops.

Though there are big competitors like 3M, Henkel entering the market and many other regional competitors like Anabond, Dendrite; Pidilite’s products are the most preferred ones. Pidilite is able to defend its market share by following Position Defense approach by building superior brand power which could not be destroyed by its competitors.

But at the same time, Pidilite frequently introduces new products in adhesives segment. Its recent products are Dr.Fixit Kwikflor Cementitious flooring solutions and Wudfil, a cynoacrylite adhesive.

Branding

The Fevicol logo has been very popular for decades and the brand’s ability to deliver quality products to consumers resulted in word of mouth publicity due to which the brand enjoys high trust among its target segments.

Premier Brands like Fevicol are recognized by customers as Fevicol rather than as a product of Pidilite. Fevistick is one of the brands of Pidilite, but most of the customers call any glue stick as Fevistick irrespective of their brands. Due to its individual-names strategy the products are not tied with the reputation of the company, even though a particular product fails Pidilite’s image is not hurt in the market.

Find Out How UKEssays.com Can Help You!

Our academic experts are ready and waiting to assist with any writing project you may have. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs.

View our services

Most of the Pidilite’s products are Cash Cows which are capitalized by the existing brand equity of Pidilite’s individual brands. Fevicol was ranked 4th in the household category for the most trusted brands in ET Brand Equity survey. Fevicol was also awarded as the Star Brand of the Year by Planman Marcom based on brand awareness, trust, image, innovations and reach.

Products of Pidilite are popular due to their creative advertising campaigns developed by Ogilvy & Mather. The fishermen advertising campaign of FeviKwik has been awarded with the concerned communicator award as the commercial of the century.

Pidilite has successfully positioned its brands as high quality adhesives at affordable pricing. Even though these products are slightly expensive, the customers are ready to pay the extra cost.

Pidilite has been successful by having individual branding strategies for different brands. They can demonstrate these individual brands as a collective set of brands, the less popular new brands can leverage on the brand equity of the existing brands.

 

Cite This Work

To export a reference to this article please select a referencing stye below:

Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.

Related Services

View all

DMCA / Removal Request

If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: