Elements of AP’s Distribution Strategy AP bypassed the bulk buyer segment and went to individual consumers of paints. AP went slow on urban areas and concentrated on semi-urban and rural areas. AP went retail. AP went in for an open-door dealer policy. AP voted for nationwide marketing / distribution AP BYPASS THE BULK BUYER SEGMENT AND GOES TO INDIVIDUAL CONSUMERS Bulk buyer segment was the major segment of the paint business in the earlier days and any paint company needed a share of this major segment for sheer survival.
Though, this segment was dominated totally by foreign companies and their wholesale distributors, a new entrant to the business like AP would normally have rushed to this segment and tried to garner a share of it. AP, however, had a totally different game plan. Seeing that this segment was not a growth segment, though it was certainly the major segment at that point of time, AP decided to ignore this segment for the present and go to individual consumers. And that was a crucial decision. It influenced every subsequent decision AP took in the realm of distribution.
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Over time, AP proved to the paint industry that there existed a large and bottomless segment in the paint business of India, outside the bulk buyer segment, comprising of individual consumers. AP went slow on urban areas and concentrated on semi-urban and rural areas. Along with the decision to go to individual consumer segment leaving aside the bulk buyer segment, AP also decided that within the individual consumer segment, semi-urban and rural areas would constitute AP’s priority market. APclearly saw that a large market for paints was emerging in the semi-urban and rural areas, and felt it wise to tap this market.
AP found it difficult to attract the wholesalers in the cities to deal in its products. It had to necessarily turn to the semi-urban and rural areas for support. AP wisely decided against committing all its resources on a head on collision by launching its own Sales Force who will to the ground level . AP GOES RETAIL Going directly to retail dealers was the next major strategic decision of AP in the realm of marketing and distribution. Here too, AP totally broke with the prevailing distribution practice.
The foreign companies, who were the main players, were practisinga wholesale distributor-dependant marketing system. AP did not see any great merit in the system. It totally bypassed the well-entrenched wholesale distributors and went directly to the retailers. While AP’s competitors remained content with their linkage with a handful of wholesale distributors, AP preferred direct contact with hundreds of retail dealers. AP GOES IN FOR AN OPEN-DOOR DEALER POLICY AP followed an open-door policy in the matter of adding retail dealers to its network.
The prevailing trend in those days was to limit the number of dealers to the barest minimum. AP broke this trend and chose to use practically everyone in the trade, who was willing to function as its dealer. It was as a combined result of the policy of going directly to retailers and the policy of open door to dealership that AP’s dealer network swelled rapidly. Even after achieving stability and maturity in distribution, AP continued to follow a policy of continuous expansion of dealer network. By 1990, AP was having a 7,000 strong dealer network. By the year 2000, the number had swelled to 12,000.
And even now, on an average, AP is adding 200 to 250 new dealers every year. AP VOTES FOR NATIONWIDE MARKETING/ DISTRIBUTION AP took yet another important and strategic decision in the realm of distribution. Those days nationwide distribution/marketing was not the standard practice in the paint business. On the one side, there were the 1,000 odd small paint companies who, as a class, believed in marketing their paints in limited territories in and around their point of production. On the other side were the big companies, who as a class, believed in limiting their distribution to the big cities.
In contrast to both these existingpractices. AP voted for a nationwide distribution/marketing. It wanted to have an active presence throughout the country, in all the geographical zones, states and territories. *How technology has given them Competetive* Advantage AP’s success is the combined result of its strong corporate and marketing strategies. Maximum credit should, however, go to its marketing strategy. Within marketing, it was distribution excellence that took AP to the enviable position, that it holds today in the Indian paint industry