Summer Training Report

On

Customer Pulling Schemes

(Evolution & Impact)

For

INDIAN OIL CORPORATION LTD.

Submitted in the partial fulfillment of

Master Degree In Business Studies

(Session 2004-06)

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ACKNOWLEDGEMENT

Success is any endeavor for co-operations & guidance from all, especially dear

ones, seniors, colleagues and environment. This was amply brought to me while

undergoing this project.

I grateful acknowledge the inspiration; encouragement, guidance help and

valuable suggestion received from .my faculty members

I would like to give my heartiest thanks to xxxxxxxxxxx, UP State Office, Indian

Oil Corporation Ltd. For providing me an opportunity to undertake this project

with IOCL. I owe a deep sense of gratitude to xxxxxxxxxx, Lucknow, Indian Oil

Corporation Ltd. For his valuable help and cooperation from time to time. He was

always there to help me through his valuable guidance, suggestion and constant

encouragement throughout my summer training.

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INDIAN OIL CORPORATION LIMITED

Indian Oil Corporation limited is the largest commercial enterprises in India by

sales turnover and is the only Indian company to find a place in “Fortune Global

500”the listing of worlds largest companies. Indian oil ranks 189 in “2004 fortune

Global 500” listing among petroleum refining companies.

LUBRICANT

Very few vehicle owners know what are lubricants, what is the main function of

lubricants and why we use lubricants. These are the question, which never

comes in our mind. Development of new technology in the auto sector, there are

increased refinement and performance in engine and other parts. advanced

lubricants have been developed by IOC to fulfil to these demands.

Lubricants are used to reduce friction between moving parts, thus

resulting in lower wear and tear. In many machines, lubricants also play a role in

cooling, rust prevention and help to avoid deposition of solids between closely

fitting parts. Liquid lubricants are most commonly used. A lubricant is a blend of

base oils and performance-enhancing additive as required by engine, gearbox

and other applications areas. At the refinery, the crude oil is refined into gasoline,

diesel, kerosene, LPG, and base stock (Lube). This base stock is further

processed, blended and strengthened with required properties to make different

kind of lubricants.

SERVO The Leader In India

SERVO has completed 30 years serving the lubrication needs of the Indian

industry. SERVO is India’s No.1 lubricants brand not only in terms of sales but

also in terms of quality and range. Servo has a range of over 470 grades of

lubricants-oil and greases. Our well-equipped R&D center at Faridabad, perhaps

one of Asia’s most advanced, is also India’s first in the petroleum industry to

have received the ISO ())! Accreditation. This together with the fact that our lube

blending plants at Mumbai, Calcutta, Chennai and grease plant at Vashi which

produce SERVO, are also ISO 9002 certified ensures that SERVO lubricants

meet international standards Servo has an excellent spread to meet the

requirement of various automotive, industrial, marine, aviation and railroad

applications .It is India’s largest selling lubricants brand and enjoys approvals

from major Original Equipment Manufacturers (OEM’s) including new generation

cars. In India, SERVO is the unquestioned leader, with a 42% share in a market

estimated at Rs. 55 billion comprising approximately one million metric tones of

lubricants. Servo’s fundamental strength is its extensive spread of production

units and distribution bases across the country. These include six lubricant

blending plants and a grease manufacturing plant – all of which are ISO

accredited. SERVO also has a formidable marketing reach, thanks to its

exclusive network of nearly 16,600 outlets/stockists and thousands of other multi-

brand Lube Bazaar shops.

SERVO offers a staggering range of lubricants for the automobile, industrial and

marine industries. It is the lubricant of choice for most of the latest international

automobiles that have been launched on the Indian roads. Another testimony to

Servo’s reliability and quality is its extensive use by heavy-duty trucks, battle

tanks of the Indian Army and the latest guided missile destroyers of the Indian

Navy. SERVO has a notable presence in the highly competitive markets of the

UAE, Nepal, Malaysia, Sri Lanka, Bangladesh and Mauritius. The company’s

aggressive marketing and advertising thrust together with state-of the-art

packaging has enabled SERVO to emerge as a truly global brand from India.

ACHIEVEMENTS

SERVO’s striking achievement is a steadily rising customer approval for its

products in India. The widespread popularity cuts across various customer

segments and automobile user communities. Whether it is Hyundai Santro,

Mitsubishi Lancer, Opel Astra, Daewoo Cielo, Fiat Uno or the Maruti family,

SERVO serves them all. On its part, SERVO woos and wins its retail customers

with a seductive combination of vehicle service, grocery shops and engine oil tie-

ups with leading international automobile manufacturers.

PRODUCT

SERVO primarily caters to three segments: automotive, industrial and marine.

There are more than 450 different grades of lubes and oils, which cater to these

sectors. The products for the automotive sector include 2T/4T oils, gasoline

engine oils, diesel engine oils, gear and transmission oils, coolants and brake

fluids and automotive greases. IOC is a major supplier to auto original equipment

manufacturers (OEMs) like Tata Motors, Hyundai, Mahindra & Mahindra, Maruti

and state transport undertaking like BEST, APSRTC, and RSRTC etc.

SERVO provides more than 350 lubricants and greases to the industrial

segment. The marine sector, too, has a broad range of products to choose from.

This includes marine engine oils, hydraulic oils, gear oils, turbine oils,

compressor oils and stern tube oils. SERVO is also meeting the lubricants

requirements of the Indian defence forces.

Notable among automobile products, SERVO 2T Supreme, is a new generation

two-stroke engine oil recommended for two-stroke engines in motorbikes,

scooters, mopeds and outboard engines. Others in the category are Kinetic Ultra

2T, Bajaj SERVO Gen. 2T Zoom. SERVO 4T is a new generation four-stroke

engine oil specially recommended for four-stroke engines in motorbikes and

scooters.

Indian oil’s state of the art R&D center t Faridabad, one and only of ts kind,

keeps pace with international standards. This is also India’s first in the petroleum

industry to have received the ISO 9002 certified lube- blending plants at Mumbai,

Calcuttta,Chennai and Grease and at vashi of IOC ensure that SERVO lubricant

produced there meet international standards.

SEGMENTATION OF AUTOMOTIVE LUBRICANTS

Automotive lubricant

Engine oil Gear oil Break oil Grease Coolants

Petrol engine oil Diesel engine oil Gas engine oil

Engine oil

Vehicle

2/3 Wheeler

2-Stroke 4-Stroke CarsMUV/SUV LCV/HCV Tractors

4 Wheeler

INDIAN LUBRICANT MARKET

INDIAN OIL CORPORATION

Market Share: 42%

Indian Oil Corporation is the largest manufacturer of lubricants in India and is

also the only Indian company to figure in Fortune’s Global 500 list. Its Servo

brand is the most recognized brand in the country. The company operates six

refineries, with a total capacity of 24.55 t. and enjoys a market share of 42 per

cent in the industry. Incidentally, it is one of the three companies, which has a

refining capacity for lube oil base, an input in the manufacture of lubricants. In

order to increase its presence IOC has aimed at improving the image of the retail

outlets. Despite making a loss with superior industry network and superior

backing of infrastructure the company sees no problem in maintaining its status

as the leader in the lubricant industry.

TIE UPS:

Hyundai Santro, Mitsubishi Lancer, Opel Astra, Daewoo Cielo, Fiat Uno or the

Maruti family.

CASTROL INDIA

Market Share: 22%

Castrol India is the largest player in the lubricants segment. The company has

achieved an overall market share of 22 per cent in the lubricants market. The

company has seven plants in the country with a capacity of 3 lakh KL and on the

financial front too the company’s performance has been impressive. The

company has set up a new unit in Silvassa, which manufactures 150 different

types of products. The company is also modernizing its other plants.

TIE UPS:

Company has partnership with leaders like mahindra and Mahindra, Tatas, JCB,

Escorts. For the marketing of its lubricants it has tied up with the petrol pump

chain of Reliance and Essar, thereby gaining access to a new channel of

distribution.

HINDUSTAN PETROLEUM CORPORATION LIMITED

Market share:16 %

HPCL is the largest player in the lubricants segment. The company has achieved

an overall market share of 22 per cent in the lubricants market The HP engine oil

product rang covers 300 brands of lubricants, grease and specialties catering to

the automotive as well as the industrial sector. The brand names are Milcy and

Lal Ghoda. HPCL market now extends to countries like Nepal, Sri Lanka,

Bangladesh, and Malaysia.

BHARAT PETROLEUM CORPORATION LIMITED

Market Share: 7%

BPCL another strong competitors in the lube industry. At present, BPCL sell 125

thousand tones and aims to increase its sale volume to 250 TMT within the next

two years. The company offers its lubricants under the brand name “MAK”

GULF OIL

Market share: 3%

Gulf Oil International was the first multinational to enter the lubricants market in

India. In collaboration with the Hinduja group, Gulf Oil India created a significant

presence in a short time; Gulf Oil has grown to be one of the largest corporations

in the world, with operations ranging from oil exploration to retailing. On the

financial front, the company’s performance has been satisfactory. The company

has setup its own 75000 tonne blending plant has Silvassa which blends 200

quality lubricants with international formulations. It believes that product and

packaging development to be its area of strength. The Gulf Oil plans to tap the

market in the east and north-east, and for this it has entered into an exclusive

contract with the private blender.

MARKET SHARE OF LUBRICANT IN INDIA

source:

DISTRIBUTION NETWORK OF SERVO

Indian Oil Blending Ltd (IOBL) is a fully owned subsidiary of Indian Oil,

engaged in the manufacturing of lubricants and greases and catering to the

defense, railways, state transport among others.

Where blending of lubricants (mixing of base oil with additives) is done

at blending plants.

After blending of lubricants, then filling of barrel, bulks work has to be

done. And dispatched to SCFP.

SCFP then moves the lube to Dealer Operated Godowns (DFOLG)

and carrying and Forwarding Agent (CFA) .

After that, product has dispatched to the following:

Servo Stockist automotive (SSA)

Servo Stockist Industrial (SSI)

Direct Institutional Customers (such as Defence, Railways,

Govt. customers and large industrial customer

SSA deals with sales and promotion of product’s and supplies products

in the market

DISTRIBUTION NETWORK

Indian Oil Blending Ltd.

Servo Stockist Automotive

(SSA)

Servo Stockist Industry(SSI)

Original EquipmentManufacturer

(OEM)

Carrying and Forwarding Agent

(CFA)

Dealers Operated Godowns

(DOLG’s)

Institutional Customers

Retail outlets(RO’s)

Small Can Filling Plant(SCFP)

Bazaar Traders Fleet Operation (Transporters)

End customer

SWOT ANALYSIS

STRENGTH

Indian Oil Corporation (IOC), India’s largest commercial enterprise and the

only global Fortune 500 Company, ranked 189 by revenue in the year

2004, owns SERVO.

Servo has been designated as a Super Brand.

India’s no. 1 lubricant brand in term of Sales (42% market shares)

Servo oil has wide range of over 400 grades for automotive, industrial and

marine use.

Distribution network with 204 Servo Stockist all over India.

Strong presence of more than 11,000 retailers, beside a countrywide

network of bazaar traders.

Indian Oil modern and well-equipment R&D center at Faridabad, One of

the most advanced in Asia, keeps pace with international standards.

ISO 9002 certified lube-blending plants of IOC at Asaoti, Mumbai,

Calcuttta, Chennai and grease plant at Vashi (near Mumbai) ensure that

SERVO lubricants produced their meet International Standards.

SERVO range of lubricants is fast emerging as a Global brand with wide

acceptance in UAE, Malaysia, Mauritius, Bangladesh, Bahrain, Sri Lanka,

Nepal, Yemen, Kenya, Kuwait, Burkina Faso, Reunion Island and other

markets.

Genuine Oil tie ups with Hyundai motors, Maruti Udyog Ltd., kinetic

Motors and Equipments Ltd., Mitsubishi Lancer, L&T Kumatsu, CKD

Skoda, Elgi Air compressor etc.

OPPORTUNITY

Overseas market.

Foray into the untapped Rural Market, which constitutes 85% of the

market.

Leverage its financial strength for expansion of customer base through

strategic alliance with Original Equipment manufacturers.

Continuous improvement in the technology in the end user industry

because of continued growth of the light commercial vehicle (LCV),

Passenger Car Motor Oil (PCMO’s) and Multi Utility Vehicle (MUV)

segments and rapid shift to 4-stroke engines in the 2-wheeler segments.

Opportunities for growth are likely to result from Foreign Direct Investment

particularly in the Transport Equipment Manufacturing (TEM) and

Machinery manufacturing segments.

WEAKNESS

Lags behind in promotional activities.

Being a PSU’s, decision-making process is slow.

Significant improvements are requirement in packaging of lubes as often

there are complaints of leakage or the quantity being short.

Spurious equivalent of servo on market.

THREAT

An increase in base oil price with no corresponding increase in product

price coupled with additional advertising expenditure is likely to keep

margins under pressure.

Government has already given permission to Reliance, Essar Oil, ONGC,

Shell and Numaligargh Refinery to set up retail marketing stations thereby

giving rise to stiff competition.

Due to lack of promotional activities competitors like BP and Castrol etc.

are gradually taking away the market.

Tie ups of players in the market with automotive companies and OEM’s

like the tie up of Castrol with mahindra & mahindra for supply of the diesel

engine oil for its tractors is gradually eroding the market share of SERVO.

IMPACT AND EVALUATION OF CUSTOMER

PULLING SCHEMES

DATA COLLECTION

My research project was descriptive as well as analytical one.

Descriptive research includes surveys and fact-finding enquiries of different

kinds. Its major purpose is description of state of affairs, as it exits at present. As

I collected primary data from different Retail shops and SSA. So my research

was descriptive one.

On the other hand some secondary data about the product and it position in the

market was also available so I used secondary data for comparing and fact-

finding, so my research is also analytical.

Data can be either be collected through census method or through sampling

method. In my case only sampling method was useful, as I have to gather data

about the satisfaction level of customers and market position of Servo. and what

schemes should be launched to attract customer toward servo lubricants.

I need both primary and secondary data for my project. And also what made me

to collect primary data were the recent discoveries& changes in the market

position of servo lubricants.

For the collection of data a questionnaire was framed which was to be filled by

End customers and mechanics. The questions asked were highly structure one

and objective type, in order to take the least time of the respondents.

RESEARCH PROCESS STAGE

Stage one: Formulation of Research Objective

The first week I was spent time on knowing about the company and its product

name, quality, price etc. I also come to know about the company’s objective and

deciding about the research problem.

Stage two: Extensive literature survey

Company website and experts were contacted before deciding the research

project.

Stage three: Desk research

Then I spent time on preparing and formulating questionnaire deciding sample

and collecting information about different customers.

Stage four: Fieldwork

After data was prepared the next step to meet customer and mechanic. The data

as collected by personal interview as per questionnaire prepared. I had cover

Lucknow district with help of SSS of Lucknow. About 100 direct customer and

mechanic were contacted in Lucknow district.

Stage five: Analyze the data

The data collected was then classified and analyzed. Simple stoical tools such as

percentage, graph etc were used to analyze and interpret.

Stage six: Interpretation of data and preparation of report

To explain and summaries the finding of the study interpretation was done and

finally the report was prepared

Response received

I visited many places around 40 km in Lucknow district. Where I met different

type of mechanic and end customer of lubricants. The feedback and the

information I received from customers I was filled in the questionnaire. Persons I

met in the field they give me good response about the servo lubricants and gave

me some valuable schemes.

I analyzed in the market that there were different types of lubricants users in the

market. I observed that 60% of customers are quality based. They don’t want any

schemes. Most of customers are well influenced from Castrol and bp brand. I

made visits to Lucknow city along with one of the sales executive of SSA. Who

had a better knowledge of routs? I received mix views of customers.

(RESPONSE FROM CUSTOMER)

VEHICLE USED BY

DIFFERENT CATEGORY OF PEOPLES

LUBRICANTS USED BY

DIFFERENT CATEGORY OF PEOPLES

WHY CUSTOMER USING PARTICULAR LUBRICANT

STUDENT TREND

Finding

65% Student using Castrol, because of quality

They are concentrate on quality.

IN JOBS

Finding:

50% persons are using Castrol brand, because of quality.

50% says if you improve your quality, then we try to use servo.

Less the price and grab the market

AUTO/TAXI DRIVERS

Finding:

They are price conscious

If you decrease your price then we wish to use

Give good quality at low price

HOW MANY CUSTOMERS SWITCH TO SERVO BRAND

In market survey I found that many customers wish to use servo. Almost 60

percent of people say “yes “and 40% people say “no”. In the market I realize that

people are not aware from servo brand. They are well influenced from Castrol

and BP product. The reason behind the non-awareness of servo is improper

marketing in bazaar trade hence company must try to improve it’s services.

SCHEMES

STUDENTS

Free some food items with purchasing of 1-lit oil.

Some long term discount schemes on one lit pack, whenever a

customer change his oil then he will get some discount on purchasing

One cold drink with purchase of one litre pack

Gift items like key chain, pen set with one lit pack

IN JOBS

Free coupon schemes while purchasing oil.

Buy 2-liter lube and get half litre free.

Purchasing of 3 lit of multigrade engine oil and get 500ml gear oil free.

AUTO/TAXI DRIVERS

Price reduction with maintenance of quality

Discount schemes on accessories of 3/4 wheelers

Free gift with every pack such as key rings, t-shirts, caps. Etc. it will

attract customer

Purchasing of 3 lit of multigrade engine oil and get 500ml gear oil free.

(RESPONSE FROM MECHANIC)

LUBRICANT USED BY 2/3 AND 4-WHEELER MECHANIC

HOW MANY CUSTOMERS SWITCH TO SERVO BRAND

SCHEMES

Introduce some cash coupon schemes for mechanic. In which buy 1-lit

pack, and mechanic will get some amount.

Free gifts for mechanic such as t-shirts, caps, etc

Time to time promotion schemes.

Some discount for mechanic for purchasing mechanical tools

While purchasing oil from SERVO Shoppe then he will get some

petrol/diesel coupons

SUGGESTION; -

Company should try to open-minded, attracts customers.

Being a PSU’s decision-making process is slow, need to improvement in

services.

Need strong marketing campaign

Awareness about the servo product to every class peoples

Company must try to improve its packaging because some time customer

are facing problem of leakages

Glamorous packing, which attract customers

Free gifts serves for mechanics, then mechanic will attract customer to

buy the product. This may change brand loyalty of the customer for ever

Attract mechanic to give them some discount card schemes.

More concentration on bazaar retailer.

Company should open servo Shoppe in cities also because any bazaar

retailer can’t keep all the variety and grades of oil.

Company ‘s sales or technical executive must make regular visits to

market and check out new trend and problem of the customer as well as

mechanic.

Proper feedback must be taken at regular time from the customers as well

as mechanics

Increase in activities of customer and mechanic awareness through more

advertisement and mechanics meet at regular interval

There should be profit margin for every mechanic

Good schemes should be provided for end customers.

Must keep in touch with the market

QUESTIONNAIRE CUSTOMER

1. Which vehicle you have?

a) Two-wheeler

b) Four wheeler

c) Others

2. Which brand of lubricant you are using?

a) Servo

b) Castrol

c) Mak

d) Pennzoil

c) Shell

d) Others

3. Which grade of oil you are using?

a)…………………………………………………….

b)……………………………………………………

4. For how long period you are using this particular brand?

a) 0-2 years

b) 2-5 years

c) Above 5 years

5. Which factor influences you to using particular brand?

a) Price

b) Quality

c) Incentive price

d) Free gifts

e) Belief in brand image

f) Advertising

g) Others

6. While purchasing lubricating oil, who takes decision?

a) You

b) Mechanic

c) As recommended by the manufacturer

7. Where do you go for the servicing of your two/wheeler/four wheeler?

a) Authorized dealer

b) ASC (authorized service center)

c) Local mechanic

8. Would you like to switch to Servo brand?

a) Yes

b) No

If yes, then why………………………………………………………………….

If no, then why…………………………………………………………………….

9. What kind of schemes you expect from Servo lubricating oils?

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

10.How can we improve our schemes/services? Give suggestion?

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

PERSONAL INFORMATION

Name …………………………………………………………………..………….

Address…………………………………………………………………………..

…………………………………………….…………………………………...…

MECHANIC QUESTIONNAIRE

1. Name of workshop……………………………………………………………….

2. Address…………………………………………………………………………..

…………………………………………….…………………………………...

3. Experience (no of years)……………………………………………………..….

4. Average monthly consumption of lubes……………………………………....

5. No of vehicle service in a day…………………………………………………

6. No of vehicle service per month………………………………………………

7. Which type of vehicle you are servicing?

a) Two-wheeler

b) Four wheeler

c) Others

8. Which brand of lubricant you are using?

a) Servo

b) Castrol

c) Mak

d) Pennzoil

c) Shell

8. Which grade of oil you are using?

a)…………………………………………………….

b)……………………………………………………

9. For how long period you are using this particular brand?

a) 0-2 years

b) 2-5 years

c) Above 5 years

10.Which factor influences you to using particular brand?

a) Price

b) Quality

c) Incentive price

d) Free gifts

e) Belief in brand image

f) Others

11.Would you like to switch to Servo brand?

a) Yes

b) No

If yes, then why………………………………………………………………….

If no, then why…………………………………………………………………….

12. What kind of schemes you expect from Servo lubricating oils?

………………………………………………………………………………………

………………………………………………………………………………………

13.How can we improve our schemes/services? Give suggestion?

………………………………………………………………………………………

………………………………………………………………………………………

LEARNING

The organization can utilize the talent of student with the difficulties faced at

actual working environment to prepare them to face the future challenges and

provide practical exposure.

I completed my summer training in the lube department of marketing division of

IOCL, Lucknow. I got great experience in my 8-weeks training period in IOCL.

During training I got opportunity to interact with the people in the top

management of the company. I had learnt a lot during this training and I think

these learning experiences would be great helping me future.

CONCLUSION

.

The lubricants industry in India is one of the few sub-sectors of the petroleum

industry, which was opened out completely to private and foreign companies.

SERVO is India’s No.1 lubricants brand not only in terms of sales but also in

terms of quality and range..

In urban market, whenever a customer goes to the retail shop, he is facing many

brand lubricants, and then customer is confused. Some times he purchase

duplicate lubricant. So company has to spend more on promotional schemes,

advertisement campaign and awareness programs. There is another problem in

lube industry is facing competition from local brands which is easily available in

the market, so servo need to Increase in activities of customer and mechanic

awareness through more advertisement and mechanics meet at regular interval.

Which helps customer to choose original product.