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Castrol Case Study Analysis

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Castrol case study

Castrol India Limited is the world's top lubricant specialist, offering a wide range of services to consumers all over the world. The business is well-known for its technological advancements and marketing expertise. Castrol India Limited's general manager of sales was concerned in January 2006. Castrol four-stroke motorcycle oil sales were significantly lower than they should have been, especially considering the five million motorcycles that are introduced to Indian roads each year. Castrol case study help offered by

The majority of motorcycle oil changes were performed in franchised shops during the warranty period and in non-franchised shops afterward. Castrol was doomed to lose not only market share but also market domination in this situation. They were also up against three huge PSUs that had the advantage of owning forecourts. Authentic oils posed a concern as well. Castrol, on the other hand, was able to maintain its market leadership and success because to technological advancements.

The general manager went over the market research studies again, this time identifying three unique consumer segments. He formed a project team to do a gap analysis of MCO distribution and to boost Castrol oil sales in spare parts shops and non-franchised workshops that serviced India's booming aftermarket. Existing Castrol India distributors, on the other hand, were wary about selling to those categories, which they saw as low-volume, high-cost, and hazardous. You might use plagiarism checker tool to check the duplicay of the content

With strong aftermarket coverage, it was clear that spare part stores and NFWs would be the best places to sell MCOs. In light of the current market position, the general manager required a distribution strategy that would appeal to existing distributors while also assisting Castrol Oil India in expanding sales without incurring additional costs.

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Castrol’s goals and objectives

Short-term: it will continue to use its worldwide technical resources and experience to help the transition to low-carbon lubricants for present cars as well as the 100 million additional vehicles expected to hit India's roads in the next five years – ready for the future by:

  • An ever-changing product portfolio
  • Providing consumers/customers with a premium brand experience
  • Improving efficiencies while continuing to invest in growth
  • Getting in on the ground floor of new trends

Mid-term: To Explore and invest in digital and advanced mobility solutions as the proportion of electrified and autonomous vehicles rises, developing new business models and collaborating with major OEMs and other partners to help define the future of mobility.

Long-term: offering superior mobility and maintenance solutions to consumers and businesses of the future. If you are looking for marketing assignment help providers in the United States, consider hiring our service.

Problems and challenges of Castrol

Castrol India Limited's general manager of sales was concerned in January 2006 because sales of Castrol motorcycle oil for four-stroke engines were dropping. Despite an annual growth in the number of motorcycles in India, it was lower than it should have been. People who get their motorcycle oil changed while their warranty is still valid can do it at franchised workshops. Outside of that time, people use non-franchised workshops to get this service. In order to improve Castrol oil sales, the general manager intends to target both workshops.

As a result, the general manager must devise a stronger distribution strategy that distributors would embrace and use to boost Castrol Oil sales. The case is about Mohit Rai, the general manager of sales for Castrol India Limited, who realised while returning from the annual sales conference in January 2006 that the market potential sales of Castrol MCO 4T were not making sense, despite the fact that every year 5 million bikes were added to the road and that the market for MCO 4T was growing by 17 million to 20 million at 3.5 ltr per bike per year. The average amount of MCO 4T added per year was far less than the need anticipated, at approximately 2.5 million litres per year.

The case also discusses the challenge posed by genuine oils, its market competitors, and how technological improvements have helped it maintain its leadership in the four-stroke category, as well as the primary consumer segments, which include minimalists, appreciators, and enthusiasts. Even though there was a 15-18% pricing premium over the competition, Rai organised a project team to undertake a gap analysis of MCO distribution. The data was used to help classify Non-Franchised Workshops.

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Who purchased MCOs?  Who are existing consumer segments of Castrol?

Consumers who saw oil changes as a vital element of their bike maintenance set the trend for consumption patterns. When their bikes were under warranty, they used to take them to motorcycle dealers or franchised workshops (FW) for service on a regular basis to take advantage of the dealer's warranty benefits. They must take their motorcycles to non-franchised workshops once the warranty period has expired (NFW), However, it was discovered in a research with the NFW that consumers' lubricant use patterns were inconsistent, with very few requests at times and a rapid rush in consumption by consumers requesting service at other times.

Castrol has established several consumer segments based on market research on requirements and insights: Truckers, tractor owners, vehicle drivers, motorcyclists, mechanics, original equipment manufacturers, and workshop owners are all target customers for Castrol, which controls about a fifth of the Indian auto lubricants industry.

Automobile manufacture, machinery manufacturing, metallurgy, and marine are the primary industrial segments in which Castrol operates. Castrol earns 15% of its income from industrial lubricants.

Convenience Trust the mechanics' personal attention

This shift in customer behaviour was fuelled by individual attention. These little mechanics were a reliable source of information when it came to recommending the proper motorcycle oil. The younger demographic, which was full of zeal and entrepreneurial fire, was the key growth driver. Rural demand was growing, as was the middle class, discretionary income, and the desire to acquire a motor vehicle. It was also distinguished by the ease with which it was possible to obtain funding, which had previously been unavailable.

Castrol recognized three main consumer segments:

  • Minimalists:People who want to get the most bangs for their buck while also getting reassurance from a reputable brand. They must "do the right thing."
  • Appreciators: They seek for trustworthy sources and are willing to pay a higher price if necessary. They are open to being led and counseled, and they value freedom and trust.
  • Enthusiasts:They aspire to be connected with the finest and will go to any length to seize previously untapped prospects. They are firm believers in getting the most out of the motorcycle engine.

Specific challenges for Castrol managers

Rai and his team aimed for a 30 percent market share in the MCO sector over the next five years. They could have grown organically, which would have resulted in a 24 percent gain in two-wheeler market share. However, how to obtain the remaining 6% remained an issue. Another alternative would have been to tap into NFW's market, which may have aided Rai and his team in achieving the remaining 6%. The Castrol distributor, on the other hand, was hesitant to apply the same for two reasons. The first was that mechanics were unlicensed and would only buy on credit, which might be very unsafe. They were then dispersed in far-flung locales. In terms of labor and transportation, delivering little quantities would not have been cost-effective.

Castrol’s option for expansion into distribution

Most bike owners tended to go from "shop to workshop," meaning that after the warranty period ended, they went to their favorite after-market specialists and trusted them to apply the proper oil for their vehicle.

According to forecasts, the after-market channel would drive the MCO 4T market's growth, which would be significantly faster than the market's rate. In the after-market zone, the number of outlets selling Castrol oil was much higher than the number of FWs selling Castrol oil.

However, the smaller mechanics in the aftermarket scenario had an air of unreliability about them. The majority of aftermarket mechanics required small-quantity supplies, which established distributors were unwilling to provide because it would result in losses for them.

Castrol could organically develop to a 24 percent market share in the two-wheeler sector. However, if disproportionate growth is taken into account, a 30 percent market share objective can be achieved by reaching out to these little mechanics. Because customer behavior was claimed to be shifting from "shop" to "workshop," getting these tiny mechanics to stock, sell, and display Castrol had a major potential first mover advantage.

In contrast, directly supplying these small mechanics would result in a drop in sales from the dealers from whom these mechanics previously purchased. The majorities of these mechanics are untrustworthy and could go out of business at any time.

But despite the disadvantages, the majority of these mechanics were dispersed and in various areas, so bringing the products directly to them would result in a considerable increase in delivery costs, and Castrol was not interested in raising its distribution or trade margins to fund this expansion. There was also a credit risk involved, as most of these small mechanics used to stock and buy products on credit from their local dealer, and no distributor wanted to take on that risk.

As you can see, when you avail our Castrol case study assignment help service, you get all-round assistance. Thus, if you want to stand out from the rest of the class, you can contact us. 


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