Report on

Marketing strategy for North Punjab& HP(CHD-2)(STRATEGY FOR INCREASING PENETRATION IN RETAIL FOR RANGE OF SAINT GOBAIN GLASS INDIA LTD IN PUNJAB & HIMACHAL)

By

Gagandeep Singh Rollno- 08XPGDM21

Presented to Prof. P.C.Mehra

(IMI)

Mentor at Saint-Gobain Glass India LtdMr. .R .Subramaniam(Director Marketing)

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ACKNOWLEDGEMENT I will like to express my deep gratitude to Mr R.S.Suramaniam(Director Marketing) Saint Gobain Glass India Ltd, for his valuable inputs, that were instrumental in both initiation & completion of this project. I will also like to thank team members of Saint Gobain Group, Chennai(HR, Finance, Marketing) for providing important literature & inputs related to group activities, business & glass industry.

I will also like to thank Prof P.C.Mehra(faculty guide) and complete team of IMI for providing me great support & inputs making me competent enough to handle the project under study.

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Executive Summary:

Saint Gobain Glass is leader in Glass manufacturing in India with 42% market share followed by Ashai at 30% and ModiGaurd at 17%. In last few years variety in glass has increased tremendously moving from sheet glass to float glass (manufacturing process). Followed by clear to tined glass/colored glass, mirror & the new era of Sunban or reflective range of products. Saint Gobain glass pioneered glass marketing by trying to move it out from commodity to a customized need based solution. It provided industry with specification of each & every product, never heard before in glass trade. Introduced TV advertisements, shop display contests etc, first time by any glass company in India. Industry has been growing at an annual rate of 15% per anum. Till 2008 there was cartel among three players Saint Gobain, Ashai & Modigaurd. But after completion law came into force Saint Gobain moved out of cartel. Since then come has seen 30% growth in volume sales, but value sales has gone down by 25%. Future is tough with new players like Sejal, HNG, Gold plus entering into float glass manufacturing & marketing and all will be fully operational by 2010 Jan. To maintain its bottom line saint Gobain has been focusing on value added products sale like Sunban & Mirror.

About CHD-2Till now J& K, Punjab & Himachal was one region for SGGIL. With RM-Distribution (Chandigarh) with team of 4-5 officers was taking care of whole territory. Sale was mainly from wholesalers, who bargained high on price as due to competition material is sold on negotiated price on three month credit. With future Competition in view, & additional capacity of SGGI coming up at Bhiwadi (present plant in Chennai), company wishes to get out of the hands of Wholeselller & foray into retail (as retail is also a tool for getting volumes in value added product range).To achieve this company has created a new region named CHD-2, which is comprising of 10districts of Punjab & part of Himachal. With new team & office at jalandhar company wishes to increase its presence in retail as well as market share in the market where it is having 28% market share as compared to 40-42% in rest of India. In this region the 98% market share is with wholesale, hence company is looking forward to a planned strategy to decide how they can get into retail.

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TABLE OF CONTENTS Pageno

1. Introduction to Glass Industry 52. Indian Glass Industry 113. Introduction to Saint Gobain Group 154. Introduction to Saint Gobain Glass India Ltd 195. Problem Under study 20

a. Need for Problem Studyb. Present scenario/Problem Facedc. Expectations from the Study

6. Research Problem 21a. Objectivesb. Research Designc. Sampling Plan

1. Territory Map2. Towns Covered

d. Data Analysis Plan7. Findings( Based on Census) 24 9.Competitor Analysis 27 10. Arena Analysis 32

11. Product Market Battlefield 33 12 Product Scope Matrix 35 13Present picture of battlefield. 37 13 Advisable strategy 38 14 Appendix a).Town Wise Market Share b)District Wise Market Share c) Average Price Wholesale vs Retail d) Total Market Share e) Census Data(Respondents& Questionnaire) 15.Bibliography

(In soft copy Appendix data is in Excel Sheet aatached)

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INTRODUCTION TO WORLD GLASS INDUSTRY

Glass as a material to be used in buildings has been around for centuries. But the importance that it has assumed in modern architecture transcends its status as a building component and elevates it to a status that perhaps no other material has reached before. Today, glass is not just a means of letting light into a space and achieving protection from the elements, but a statement of style, awareness and an expression of the designer and the client's ideological stand on the environment

Global market for flat glass

Current scenario

The global market for flat glass in 2008was approximately 38 million

tones, which represents a value of EUR 15 billion at the level of

primary manufacture. An overwhelming 70 percent of the flat glass

manufactured in the world is used for windows and glazing for

buildings and another 20 percent is used for furniture and other

interiors applications in buildings. The remaining 10 percent is used

for automotive glazing.

In terms of usage within the building products market, about 40

percent of the glass demand is for new build, 40 percent is for

refurbishment and 20 percent is for interior applications.

Market players

Pilkington, Saint-Gobain, Asahi and Guardian are the four companies

that produce 61 percent of the world's high quality float glass. It is a

consolidated market. While Asahi is a Japan-based company,

Pilkington is based in the United Kingdom, Guardian in the United

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States and Saint-Gobain in France. There about 12 other organized

players besides the top four and several unorganized ones, mostly

situated in China and produced low quality products. The percentage

share of these in terms of capacity is illustrated in the following table.

Geographical markets and level of maturity

Europe, China and North America account for 75 percent of the

global demand for glass. Of these, Europe is the most mature market

followed by Japan and North America. Maturity of a market is

indicated by a higher demand for value-added glass, stringent

regulations for glass usage, and more than 40 percent of glass being

used for refurbishment projects. Mature markets also see a higher

per capita consumption of glass than less mature ones. Most Asian

markets are still low in maturity.

Source:Glazzette(Glass Portal-Managed by Saint Gobain Glass)

Growth in demand

The demand for glass has grown phenomenally in the last two

decades, outstripping the GDP growth in most countries. Largely

fuelled by China, the demand for glass is expected to grow at nearly

4 percent per annum

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.

The demand for glass is fuelled by legislation and regulations that

look at safety, noise control and energy conservation. Design trends

that favour glazed buildings that allow for maximum natural light will

ensure the growth of the glass industry.

Markets by type of glass

Of the total global demand of 38 million tonnes for flat glass, around

23 million tonnes is for high quality float glass. Around 3 million tones

of demand is satisfied by sheet glass, which is made by draining

molten glass vertically out of a furnace and then annealing it. Another

2 million tones is rolled glass where the molten glass is squeezed

between rollers to form sheets. The remaining 10 million tones of

demand is met by lower quality float, produced mainly in China

.

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It is encouraging to note that much of the low quality float glass is

being replaced by high quality products, mainly due to the efforts of

these organized and large players to educate the market,

demonstrate the advantages of better quality and facilitate the

adoption of high quality materials at not very much higher costs.

Another prominent trend is the growing popularity of value-added

glass products. While in 1995, flat glass accounted for 66 percent of

the industry's revenue, it now accounts for only about 42 percent.

These value-added products are made by further processing high

quality float glass by laminating, toughening, coating and silvering.

Further, these are used singly or in insulating glass units with

specialized inter layers that can give it added strength, heat

resistance, light transmission, sun control, etc. The value-added glass

market has a value of approximately EUR 44 billion.

Source: Glazzette (Portal of SGGI)

In fact today, the demand for value-added glass is growing at a faster

rate than demand for basic glass. Though the majority of the demand

is from North America and Europe, value-added glass is gaining

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ground in less mature markets as well, with safety, security and

energy conservation becoming priorities for building designers

worldwide.

Energy efficiency, in fact, has become a major criterion for glass

selection and has popularized the use of insulated glass units instead

of single glazing. This is advantageous from the manufacturer's point

of view as it is a higher value product hat used double the amount of

glass for each project. From the user's point of view, it saves of long-

term costs and increases the performance of the building. Energy

legislation has mandated low-e coated glass in most central and

northern European countries. Germany, UK, Poland and Ireland have

mandated low-e glass in replacement windows as well. Newer

members of the EU are working towards adopting these standards.

All these have been driven by the targets laid down by the Kyoto

Protocol. In fact, new EU directives require all 25 countries to work

towards improving energy regulations in general as well as introduce

together legislation to improve building stock.

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Organization and Structure

Market for float glass has always been driven by the demand for building glass and automotive glass, which in turn depend on economic growth. Both automotive and construction sector have been major contributor to float glass industry.

The global market for flat glass is dominated by Europe, China and North America. These three regions account for more than two-thirds of global market demand. Emerging markets, like India, with extremely low per capita consumption of glass present a potential growth opportunity.

The world’s top four companies are NSG Group, AGC, Saint-Gobain and Guardian Industries. In terms of geographic reach, NSG Group and AGC lead the rest. For automotive glazing, there are three major players – NSG/Pilkington, Asahi and Saint-Gobain.

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INDIAN GLASS INDUSTRY

Structural glazing and curtain walling were first seen in the United

States in the mid 40s. From North America, the technology spread

first to Europe, then to Australia and then to South East Asia. The first

building in India that had a curtain wall was the Le Meridian Hotel in

New Delhi, which was constructed in the early 80s in preparation for

the Asian Games. By the 90s, curtain walls were accepted as

standard technology for high-end buildings in the country, with an

explosion of projects in Mumbai and the NCR region, and later, in

Bangalore, Hyderabad and Chennai, driven by the IT boom. Today,

structural glazing is a norm rather than an exception for malls and

corporate structures across the nation.

The glass and glazing industry for architectural application in India for

the year 200 was estimated at a minimum of Rs 100 crores. Of this,

the glass component would be about 1.2 million square meters.

Indian and imported ACP would come to about 1 million square

meters and another 700,000 square meters would constitute

residential windows.

In geographical terms, the South Indian region dominated by

Bangalore, Chennai, Hyderabad and parts of Kerala, contributes to

30 percent of the glass consumption. West India follows with 29

percent. Here Mumbai, Pune and parts of Gujarat are big consumers.

The North Indian market, comprising mainly of Delhi and the National

Capital Region accounts for 20 percent of the total architectural glass

and glazing market. East India currently contributes only 7 percent of

the consumption. However, with a renewed focus on real estate in

West Bengal, this is set to change and this regional market is growing

very fast.

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Glazing market size: India

The growth of the Indian glazing market is impressive. While it was a

Rs 100 crore market in the year 2008, it is estimated to touch Rs

1000 crore by 2010. Even so, this is a very small market size

compared to other evolving market for the glass industry. For

instance, the Bangkok International Airport job, currently being

constructed, is using glass worth USD 84 million, which is nearly the

size of the entire Indian glass market! The total Thai Market for 2004

was estimated at USD 1.6 billion and is said to be the fastest growing

market in Asia.

The sheer capacity for production of glass in India is so low as

compared to other countries. India at present has about 3-4 float lines

and 14 glass processors. In comparison, China has 140 float lines

and over 800 glass processors. The Chinese glazing market for 2008

was estimated at between USD 4-5 billion.

Capacity addition in the future

At a global level, demand is growing steadily and the glass industry

will continue to grow at 3.9 percent per annum in the medium term.

To satisfy this growth, companies will add about 100 new float lines

worldwide by 2010.

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While China is adding about six float lines over 2009 and 2010, there

are at least 11 high quality float lines in various stages of planning

and execution around the world. A list of these is given below. Most

of these will start production in 2010. Besides these, about 15 lower

quality float lines are said to be coming up in China.

India will see an addition on at least 4 more float lines and at

least 10 more processors by mid 2010.

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Outlook for Indian glass industry

India is at an early stage in terms of market maturity at present, but

glass demand is growing steadily. Aggressive and organized efforts

on the part of manufacturers and processors are expected to achieve

higher levels of awareness among glass specifies and users. In the

next five years, the Indian architectural glass market will move to

higher maturity levels. However, policy and regulations including the

lack of standards and glass codes for India are a source of anxiety for

manufacturers and processors alike. The industry also needs

increased exposure. Followed the opening up of FDI for the real

estate sector, here appears to be more chance of foreign investors

coming in and a greater demand for international standards in

construction. This, and the ever-growing popularity of glass as a

material, will ensure growth. Further, constant technical innovations

by manufacturers are keeping customers constantly interested in

glass and glass products.

 

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SAINT GOBAIN GROUP

The future is made of Saint-Gobain

Saint-Gobain, the world leader in the habitat and construction markets, designs, manufactures and distributes building materials, providing innovative solutions to meet growing demand in emerging countries, for energy efficiency and for environmental protection"Developing new materials and services for the house of the future."Pierre-André de Chalendar, Chief Executive Officer(source:SGGI Portal)

In brief 43.8 billion Euros of sales. 209,000 employees. Presence in 59 countries. 20 research centers and 101 development units. European or world leader in all of its activities.

With a long international history, which began in France in 1665 when the Royal Glass Works was established, the Saint-Gobain group is now the world leader on habitat and construction markets, providing innovative solutions to save energy and protect the environment.

Source: Corporate HR, SGGI

 

Distribution of employees by countries

 

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European or world leader in each one of its activities

Construction Products cover Insulation, Gypsum, Exterior Products, Pipe and Industrial Mortars. Their complementary nature makes it possible to meet the needs of every part of the construction sector, for both new buildings and renovation work.

Innovative Materials cover Flat Glass (flat glass manufacturing, transformation and distribution of glass for the building sector, automotive glazing and specialties) as well as High-Performance Materials, consisting of Ceramics & Plastics, Abrasives and Textile Solutions activities, with applications applied in the housing, energy and environmental fields.

Building Distribution, made up of POINT.P and Lapeyre, acquired in 1996, makes Saint-Gobain the leading distributor for construction materials in Europe and the world's largest distributor of tiling. This distribution network of materials, with more than 4,000 outlets, stands out for the training in today's building standards it gives to tradesmen.

Packaging, the world’s second-ranking producer of glass containers, makes bottles and jars for foodstuffs and beverages.

Shareholders

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Ownership structure at September 30, 2009

 

Market capitalisation (on 31.12.2008): 12,853 million euros26th French market capitalisation

Innovation the core strategy

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Innovation is the driving of Saint-Gobain's strategy. This is why resources dedicated to Research have been increasing by 10% every year since 2004. Recruitment of researchers and technical staff has also gone up, rising in three years from 2,000 to almost 3,500 people in 2009.

Saint-Gobain works with over 200 universities and research laboratories worldwide. Every year the Group applies for more than 300 patents.

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SAINT GOBAIN GLASS INDIA LTD

Saint-Gobain established its presence in India by acquiring a majority stake in Grindwell Norton Ltd. in 1996, and thereafter went on to consolidate and strengthen its presence within the country.

Saint-Gobain Glass India Ltd., (SGGI) a 100 per cent subsidiary of Saint-Gobain France, manufactures and markets Architectural and Automotive Glass in India at the World Glass Complex at Sriperumbudur, a 2000-year old temple town, 46 kms from Chennai.

SGGI commenced commercial production in July 2000, with an investment of around Rs.600 crore in its first float line and raw material processing units. A 5 million sq.m Mirror line was commissioned in 2002. In a very short span of time, Saint-Gobain has become the market leader and is reckoned as a strong and significant brand in the Indian brandscape.

In 2005, SGGI set up its second float line within the same complex. With this new float line, the Company has the capacity to produce 1200 tons of international quality float glass per day to meet growing consumer demand. The expanded facility has become the single largest integrated glass complex in the Saint-Gobain Group to be set up in recent decades.

The new World Glass Complex at SGGI Sriperumbudur is spread over 177 acres of land and houses two float glass plants, two automotive processing lines, a 5 million sq.m state-of-the-art Mirror Processing Line, 5.5 million sq.m state-of-the-art Magnetron Coater line and a mega Roof Water Harvesting Reservoir with a 58 million litre capacity.

Today, SGGI is the leader in the Indian Flat Glass Industry. Its Mission is to be the Clear Choice for Glass Solutions. As a company that constantly looks at opportunities to reinvent itself, SGGI is in a unique position to take on the challenge of changing needs and greater demands of Designers, Architects and Consumers.

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5A)Problem Under StudyTill now J& K, Punjab & Himachal was one region for SGGIL. With RM-Distribution (Chandigarh) with team of 4-5 officers was taking care of whole territory.Sale is mainly from wholesalers, who bargained high on price as due to competition material is sold on negotiated price on three month credit.With future Competition in view ,& additional capacity of SGGIl coming up at Bhiwadi(present plant in Chennai), company wishes to get out of the hands of Wholeselller & foray into retail(as retail is also a tool for getting volumes in value added product range).To achieve this company has created a new region named CHD-2, which is comprising of 10districts of Punjab & part of Himachal. With new team & office at jalandhar company wishes to increase its presence in retail as well as market share in the market where it is having 28% market share as compared to 40-42% in rest of India. In this region the 98% market share is with wholesale, hence company is looking forward to a planned strategy to decide how they can get into retail.

5b)Present Problem Faced: Inspite of efforts of Saint-Gobain Glass India Ltd, the float glass still remains a commodity. With competition getting intense next year , with entry of new players like HNG, Sejal, there will be huge pressure on topline as well as bottomline. The current year has already witnessed the impact of price war. Topline has grown by 30%, whereas bottom line has gone down by 15% as compared to last year. Hence Saint-Gobain is looking forward to strategy of increasing retail penetration clubbed with product innovation. But clear path for market under study needs to be defined.

5c)Expectations from the Study: The study will provide a framework for :

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a) Deciding future strategy for retailb) Key SKU’s to be focused to improve bottom-linec) In this region the 98% market share is with wholesale, hence

company is looking forward to a planned strategy to decide how they can get out of clutches of wholesaler

d) Strategy for moving out from bargained/negotiated pricing to fixed pricing system.

Research Problem:The primary objective of the study is to have information of market share, retail penetration , spread & reach index, strength of wholesale network and classification of retailers into A, B , C classA class defined by avg lifting of 9 tons per monthB class defined by avg lifting of 5tons per monthC class defined by average lifting of 3 tons per month

Truck load is 9 tons & part shipment is not possible due to fragile nature of the product.

The results will help to define strategy for future & will also help to analyze margins provided by competitors to wholesaler as wholesaler sale in glass trade is more of margin driven rather than brand driven. This information is important as B & c class retailers can be tapped through wholesaler in present scenario.

Research Design:Descriptive design is the design strategy followed.

Sampling Plan:1. Census of Glass traders in the territory(Retail audit)

(Questionnaire to be used) 2. Market under study- Districts:- Jalandhar, Amritsar, Hoshiarpur, Taran- Taran, Kapoorthala, Nawashahar, Barnala, Bhatinda, Faridkot,Ferozpur,Una, kangra, hamirpur

(All traders /shops of glass at village, tehsil, subtown, town , district headquarter are being covered).

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Territory Map

Districts/Towns Covered

S.No Districts Town Covered

Area in Sq Kms

Population

1 Amritsar 3 5,075 2,503,165

2 Bathinda 3 3,377 979,566

3 Faridkot 3 1,472 451,406

4 Firozepur 5 5,865 1,606,092

5 Gurdaspur 1 3,570 1,757,808

6 Hoshiarpur 4 3,310 1,298,185

7 Jalandhar 10 2,658 1,647,492

8 Kapurthala 5 1,646 648,516

9 Muktsar 2 2,596 653,079

10 Nawan Shehar 3 1,258 531,253

11 Kangra 4    

12 Ropar 4    

13 Una 2    

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Data Analysis PlanData obtained from census will be used to obtain:

1. Total no of glass traders category wise A, B & C

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2. Identifying Dominant Whole sellers3. Average retail & Wholesale price determination4. Market share of various brands5. Determining town wise/territory wise penetration & market

share.

Findings:The Major findings from census carried out are:

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1. Market Size(No of traders) :

Description NosTotal Shops Available in the Area 375A-Class 22% 84B-Class 32% 120C-Class 45% 171

No of Direct Accounts9%

35No of Ship to Accounts 0

1.Out of total traders available in glass trade 77% are small belonging to B & C class category.

2.Only 9% are directly dealing with the company, 91% of traders are catered through wholseller’s.

2.Market Size(Volume/Value)(Tons/Lakhs)(Jan-Dec)Detail SGGI GGL AIS HSG GBL GP Imports Total

Vol 2008 4753 2880 3600 720 840 0 1260 14053

Mkt Share % 30% 20% 26% 5% 6% 0% 9% 100%

Vol 2009 4874 2640 3450 510 630 1740 960 14804

Mkt Share % 34% 20% 26% 5% 6% 0% 9% 100%

Volume Growth %

3% -8% -4% -29% -25% #DIV/0! -24% 5%

Value 2008 1262.8 647.52 718.68 115.2 140.28 0 216.48 3100.96

Mkt Share% 41% 21% 23% 4% 5% 0% 7% 100%

Value 2009 1302.1 567.24 791.97 94.92 99 292.32 220.56 3368.11

Mkt Share% 39% 17% 24% 3% 3% 9% 7% 100%

Value Growth % 3% -12% 10% -18% -29% #DIV/0! 2% 9%

In the given territory Saint Gobain Glass India Ltd is leader with 39% market share in value sales & 34% market share in volume sales.

2. Product Level Estimate for all : (sales yearly in Tons)

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PRODUCT AIS GGL SGGI HSG GBL GP IMPORTS TOTAL2MM 75 90 17.55 150 0 0 0 332.55Clear Thin 960 1560 881.27 360 360 1260 60 5441.27Clear Thick 540 600 639.55 0 270 480 0 2529.55TOTAL CLEAR 1575 2250 1538.37 510 630 1740 60 8303.37Bronze thin 240 0 137.45 0 0 0 0 377.45Bronze thick 75 0 158.29 0 0 0 0 233.29TOTAL BRONZE 315 0 295.74 0 0 0 0 610.74Dark Grey thin 960 0 1335 90 0 0 240 2625Grey thick 45 0 1.6 0 0 0 0 46.6Total Grey 1005 0 1336.6 90 0 0 240 2671.6Blue 6 0 4 0 0 0 0 10Green 24 0 73 0 0 0 0 97Total Tinted 1350 0 1709.34 90 0 0 240 3389.34Mirror 270 390 822.75 0 0 0 90 1572.75Sun Ban range 255 0 804 0 0 0 570 1629

Grand Total 3450 2640 4874.5 510 630 1740 960 14894

Saint Gobain Glass is clear leader in all segments barring clear glass where AIS & Gujrat guardian Limited is giving tough fight.

3.Avg Price w/s & retail: The average price in w/s & retail is as under for Saint Gobain& other companies based on data gathered through census:

  RETAIL W/S    

  AVG AVG AVGPRICE DIFF

Two MM 48.54 48.80 48.55 -0.3Clear Thin 49.21 48.93 49.07 0.1Clear Thick 53.07 52.49 52.82 0.3Blue 0.00 54.88 54.94 0.1Green 59.60 55.02 55.19 0.2Bronze Thin 66.13 65.03 65.36 0.3Bronze Thick 68.70 68.42 68.66 0.2DGrey Thin 66.57 65.43 65.76 1.1DGrey Thick 66.77 0.00 66.52 66.8Mirror 86.19 87.54 86.09 -1.4Planilaque 0.00 0.00 0 0.0Other Interior 0.00 0.00 0 0.0Ref Lt Gold 71.31 71.15 71.2 0.2Ref Blue 95.00 94.66 94.86 0.3

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Ref Bronze 81.25 80.99 81.11 0.3Ref DG 81.73 74.60 76.53 7.1Ref Green 85.54 86.41 86.31 -0.9Coater 127.65 135.21 133.83 -7.6

1.Data clearly shows w/s is a loss making proposition as compared to retail.

2.In clear glass even premium is not available in retail as most of the players are present in clear glass.

Qualitative Summary of findings:Huge PotentialBrand Strength – Quality ensures ReliabilityLargely Unexplored MarketBiggest hindrance – Geographic dispersion is very highLabour + Supply Prob. + Wholesaler’s average pricing modelSaint Gobain is having biggest rangeWholesaler’s are not promoting range to market

On the basis of data gathered & analysed the scenario/picture of the present market that comes out is:

1. Saint Gobain is leader with highest market share.2. Saint Gobain Glass is having highest range.3. Glass trade in CHD-2 is being controlled by 9% traders of total

market.4. Getting out of clutches of wholesaler is most important as total

market is controlled by 5-6 key wholesaler.

For developing strategy for the given market, we have to study competitive actions & strategy and combine with above made inferences to reach to a conclusive picture.

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Competitor Analysis:

Porter Model- Float Glass

The Indian glass industry is becoming intensely competitive, as more and more players are Vying for the same set of customers. The major players are Saint gobain, Gujrat Gaurdian, AIS, Gold Plus & HNG & Sejal entering within next two months.. The market is big and growing, but the space for new entrants will become tighter and companies should act quickly at this stage because glass manufacturers at this stage have limited time to explore, and also their margin for error is thin.

Supplier power Supplier concentration Importance of volume to supplier Differentiation of inputs Presence of substitute inputs Threat of forward integration Cost relative to total purchase in industry

Barriers to entry

Float line life:

The life of a float line plant is 16years & production once initiated can not be stopped at any stage of production process, else life of the float plant will be reduced to half. Economies of scale Capital requirement Brand identity- Glass is still more of a commodity rather than a brand,

hance tough to enter market on solely quality & brand pull, heavy pressure on bottomline.

Access to distribution channel

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Even companies has veered the distribution strategy from distributors, stockiest and shop keepers to retailer which is creating competition from a new dimension. But fragile nature of the product & high capital involved, small rtailers are keeping themselves away from the big platform. Expected retaliation.

Buyer power

Bargaining leverage Buyer volume Buyers incentive Price sensitivity

Threat of substitutes

Switching costs Buyer inclination to substitutes Degree of rivalry

The first challenge facing the float glass industry is the competition from Chinese imports & low cost sheet glass.. Top players like Saint Gobain, AIS & Gaurdian are on their toes on account of thin margins in clear glass.

Industry concentration Product differentiation Brand identity Diversity of rivals Corporate stakes

SWOT Analysis

Swot Analysis of Indian Float Glass Indistry:

1. Strengths:

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a. Abundant raw material availabilityb. Presence across the value chainc. Growing domestic market.

2.Weaknesses:a. Old & obsolete float technologyb. Limited rangec. Low productivity.

3, Opportunities:a.Real Estate boom in Indiab. Increase in per capita incomec. Introduction of green Buildings

4.Threats:a. Fragile nature of productsb. Limited life of float linec. Future competition from HNG & Sezal

External Factor Evaluation Matrix

Factors Weights Rating Weighted Score

Economic .15 3.5 .525

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ScenarioMarket Size .20 4 .8

Consumption trends

.15 3 .45

Growing high disposable

income (middle class and young)

.20 3 .60

Cost of operations

.15 1 .15

Infrastructure .10 1 .10

Government Regulation

.05 2 .10

Total 2.725

Competition Analysis:- Comments on competition

GGLBetter placed than AIS in terms of buyer’s preference for mirror, with SGGI as a leader

AISOpal series penetration increasing ,especially as a low cost branded reflective range.Traders promoting it as a branded & low cost product rather than a quality product.

Gold plusCompeting only on pricing

Sejal

Too early to comment. Dealers waiting anxiously to see how competition will shape up. No company representative movement in CHD-2

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HNGTraders waiting for launch, movement of HNG representatives noticeable in last two months.

Imports Position weakened badly after the launch of Opal Series by AIS

ARENA ANALYSIS:

ARENA SAINT GOBAIN OTHERS

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Customers Brand Conscious customers Price Senstive Customers

Manufacturing Latest float line in terms of technology & biggest float line in terms of production. Technology transfers directly from parent company San Goban

Small capacity floats operating on Chinese technology.

Geographic Pan India presence. Pan India presence but weak in South, due to location constraint of plant.

Retail Highest percentage in terms of retail penetration(spread & reach index)

Mainly through wholesaler’s

Products and marketing Highest range Tinted, Clear glass, Mirror,

SunBan, Low eglass,fire safety Glass

Product range includes- Clear, Tinted, Mirror & Low quality SunBan range products.

PRODUCT MARKET BATTLE FIELD FOR FLOAT GLASS IN CHD-2SAINT GOBAIN & OTHERS

SEGMENTS

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W/S RETAIL PROJECTS GOVT Projects

CLEAR GLASS

TINTEDPRODUCTS

MIRROR

SUN BAN RANGE

ANALYSIS OF PRODUCT MARKET BATTLE FIELD FOR FLOAT GLASS IN CHD -2

Clearly visible clear glass which accounts for 60% of demand of glass is the one having most fierce & intense competition where it sells more like a commodity rather than a specific solution & brand.

SAINT GOBAIN

AIS , GGL, GOLD PLUS

HSG, BOROSIL

SAINT GOBAIN

AIS , GGL, GOLD PLUS

HSG, BOROSIL

SAINT GOBAIN

AIS , GGL, GOLD PLUS

HSG, BOROSIL

AIS , GGL, GOLD PLUS

HSG, BOROSIL

SAINT GOBAIN

AIS

SAINT GOBAIN

AIS

SAINT GOBAIN

AIS

AIS

SAINT GOBAIN

AIS

GGL

SAINT GOBAIN

AIS

GGL

SAINT GOBAIN

AIS

GGL

AIS

GGL

SAINT GOBAIN

AIS, IMPORTS

SAINT GOBAIN

AIS, IMPORTS

SAINT GOBAIN

AIS

AIS

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1. Sun Ban, Tinted & Mirror have more breathing space.2. Government Projects show huge unexplored potential3. With new players coming in arena for clear glass will become

more occupied with competition4. Clear glass accounts for 60% demand so we are in red

ocean with frontal attack from all competitors5.In India clear glass is still a commodity hence low scope for product differentiation in the given category.

PRODUCT SCOPE CUSTOMER MATRIX-Saint Gobain Glass(Chd-2)

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Some important questions for the Saint Gobain Glass to answer for North Punjab& HP region (CHD-2) are as follows:

NICHE – specialists (Fire safety Glass, Low Eglass, High End Sun Ban Range)

SPREAD- narrow

(‘Sun Ban range especially for customers looking on more of

aesthetics)

PROLIFERATED-wide line to serve narrow group

Mirror

BLANKET – Tinted & clear to provide large no of thickness & shades.

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Keep focused on the increasing range or diversify to mass market competition like in clear glass?

Go for volume sales or value sales? Presence in up market locations or intense distribution? Target high income brand conscious segment or value seeking

customers or both? W/s vs retail? if retail how—small volume/no finance with

retailers/present truck load too big to handle for them? Play margin game or volume game? Focus on the future competition by opening depots & providing low

volume truck loads or not to reduce load volume on account of additional cost putting pressure on bottom line?

Whether to treat HP differently than Punjab in terms of marketing strategy?

Now answer to these questions will decide the strategy that Saint Gobain Glass need to take for CHD-2?

But before that we have to do decoding of competitor’s strategy:

Important Clues from news & market are:1. AIS entered into Sun Ban range.2. Modi Gaurdian going for clod repair in April093. HNG entering market with clear glass in Feb094. Gold Plus competing only in clear glass on price.

Data gathered through census gives us following clues:1. Trade controlled by 6-7 big wholesaler’s2. No wholesaler is interested in promoting Saint Gobain Glass on

account of low margins.3. Range of Saint Gobain is not promoted by saint Gobain Glass

dealers.4. Only 20% of total glass traders have a capacity to purchase full

truck load.5. Due to high bargaining power of dealers Saint Gobain is selling

on same price as that of competitors in spite of better quality.6.High pressure on margins in clear glass7. Clear glass accounting for 60% of float glass demand of the market.

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PRESENT PICTURE OF BATTLEFIELD-CHD2

1. In distribution Saint Gobain is engaged in frontal attack with all competitor’s for share from same set of wholesaler’s just on price.

2. AIS looking to use both frontal attack & encirclement by launching low cost sunban range to hit segment where Saint Gobain is having niche.

3. With more demand for clear glass , thin margins & new players entering the clear glass competition by just adopting frontal attack(low price strategy), the clear glass market has become red ocean for Saint Gobain.

4. Imports are following guerilla attack strategy

ADVISABLE STRATEGY FOR NORTH PUNJAB & HIMACHAL FOR SAINT GOBAIN GLASS INDIA LTD ̀

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Strategy has to be advised on two heads:

1. Generic Strategy What to choose?

a.) Cost Leadershipb.) Product Differentiationc.) Niche

2. Attack Strategy

Blue ocean Vs Red Ocean

In Generic strategy the framework given by corporate office have to be followed which is a combination of all three:

1. Cost Leadership in products like clear glass & mirror using WCM(world class manufacturing practices) reducing the pressure on bottomline.

2. Product differentiation in clear glass & tinted range by providing market with newer tints, thickness & customized sizes.

3. Niche in institutional sales with projects looking for green buildings concept and saint Gobain sole glass provider adhering to ECBC codes & LEEDS ratings.

Attack Strategy

The strategy has to be implemented on three heads:

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1. Product Mix2. Volume Vs Value sales3. Distribution Strategy w/s vs retail

The ultimate objective of strategy in all three heads is creating more of blue oceans & getting out of red oceans.

1. Product Mix:a) Creating demand for Sunban range & Mirror by doing

BTL activities like carpenter & fabricators meet.b) Converting demand for clear glass to tinted by giving

additional schemes to dealers.c) Reducing price gap between tinted & sunban to convert

tinted sale of competitor into Sunban range.

2.Volume Vs Value Sale: a.) Mirror & Sunban provide double the value as compared to clear glass. b). Competing in clear glass on price, and generating more volume c)Increasing the range of value added products in market by giving lucrative schemes on value added products like mirror.

3.Distribution Strategy: a). Getting away from wholesaler by creating backward demand from the market. b). Launch of associated retailer scheme. c.)Conducting retailer training programs d) Tapping small builders e)Incentive scheme fro carpenters & fabricators. f) Registration of B & C class retailers & enrolling them for quarterly schemes.(But schemes to focus on value added products like Sunban & Mirror only. g) Providing small loads by using vehicles like Tata Ace.With all companies focused on wholesale & clear glass production & marketing we can increase market share & penetration of Saint Gobain Glass in North Punjab & Himachal(CHD-2) by using Blue Ocean strategy both in product mix & distribution.

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Thus as a summary the strategy will be:1. Price competition (Red Ocean-clear Glass)2. Increasing Product Range3. Increasing Value Sale Vs Volume Sale.4. Getting associate with B & C class retailers.5. Providing small truck loads.

BIBLIOGRAPHY:

1. Saint Gobain Induction Kit2. Saint Gobain Portal- Glassreach

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3. E-Bridge, corporate newsletter of Saint Gobain Group.

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