afaqs!

ICI puts AOR account on review

By , agencyfaqs! | In | September 04, 2001
Paint company ICI India has put its Rs 6-7-crore AOR account on the block. In the fray are Universal McCann, Starcom, Mudra and incumbent RK SWAMY/BBDO



agencyfaqs!
NEW DELHI

Paint company ICI India has put its Rs 6-7-crore AOR account on the block. In the fray are Universal McCann, Starcom, Mudra and incumbent RK SWAMY/BBDO. If the grapevine is to be believed, Mindshare has also thrown its hat in the ring. Though no confirmation on this was available, Mindshare's interest in the account is understandable. The agency used to handle the media business of Asian Paints till it lost the paint industry leader's much-coveted AOR account to media independent Carat.

agencyfaqs! tried to speak to the concerned executives at ICI for details of the pitch but nothing much was forthcoming from 'the official sources'. There was confirmation on three things though - that there was a pitch, that there were four agencies in the running (besides the incumbent agency) and that a decision on the new agency will be taken in a month's time.

Informal talks with some of the agencies in the fray threw up the following details. The pitch for the ICI AOR account happened in the third week of August. It seems in the first round the agencies were asked to make a detailed presentation of their credentials including "the processes, tools and background information on the industry". In the second round, which will happen over September 5 and 6, agencies have been asked to present the company a more specific and clearly laid out media plan.

To put things in perspective, Delhi-based ICI is the third largest player in the Rs 430-crore Indian paint industry. ICI Plc, UK, has a major share holding in ICI India (50.8 per cent), and the Indian subsidiary's restructured operations consist of paints, speciality products, rubber chemicals, pharmaceuticals, surfactants, polyurethane, acrylics, catalysts and nitrocellulose. ICI hopes to achieve turnover of Rs 500 crore by the year 2005, according to a recent report on indiainfoline.com, which regularly tracks specific sectors of the Indian industry.

A look at the changing dynamic of the paint industry will show why the various paints companies are getting aggressive on the advertising and marketing front. Paints can broadly be classified as decorative and industrial on the basis of the end use. The Indian market is dominated by the decorative segment, which comprises almost 70 per cent of the consumption compared to developed countries where the industrial segment is more dominant. The three major brands of ICI in the decorative segment are Dulux, Velvet Touch and Maxilite. The ratio in India is also likely to shift more towards industrial segment, especially with the growth in the auto and white goods industry. The unorganised sector has historically been dominant here due to the high excise structure. Over the last five years, the excise rates have come down drastically from 40 per cent to 18 per cent resulting in an erosion of the unorganised sector's share.

Now, the introduction of tinting machines in the early 90s has significantly changed marketing technology. These machines are installed at the dealer outlets and they enable the customer to choose between any of several hundred shades. These are then generated by mixing dyes with the base paint, and delivered almost instantly. Prior to this technology, a major competitive advantage of a company was the range of colours it offered. For instance, Asian Paints offered almost 150 shades in its synthetic enamel range, which was unmatched in the industry. This has changed now as almost 2,000 shades can be created in seven minutes with the help of these machines. And anybody can do it.

The emerging trends in technology and marketing imply that the paint industry will consolidate over the next few years. While the marginal players will be wiped out, industry heavyweights will slug it out for market share. Thus, critical success factors will shift from manufacturing to marketing and distribution. Given this scenario, and the slowdown in the advertising industry, the ICI AOR will definitely prove a handsome gain for the agency that finally clinches it.

© 2001 agencyfaqs!