Distribution and Channel

Management

A Channel System Report

on
Berger Paints India Ltd. (BPIL)

Under the Supervision of

Dr. S R Singhvi

Submitted by
Team 4

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 TABLE OF CONTENTS
Serial Topic Page No.
No.
1. About the Company 3
2. Product Mix 3
3. Distribution Network of Berger Paints 4
4. Channel Environment 6
5. Competitor Analysis on Channel Offering 6
6. Improving Channel Effectiveness 7
7. Seeking Cooperation from Channel Members 9
9. Manufacturer-Retailer Relationship 13
10. Evaluating Channel Member Performance 13
11. Product and Related Issues 14
12. Pricing and Related Issues 17
13. Promotion and Related Issues 17
14 Logistics 18
15 References 19

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About the Company
Berger Paints Ltd. Is a company based in Kolkata. Currently it has thirteen manufacturing
plants. It also has international presence with two manufacturing plants in Nepal, one in
Russia and one in Poland. The total employee strength of the company is more than 3500
and follows an intensive distribution network close to 181 depots and approximately 25000
authorized dealers. Currently it has famous personalities as brand ambassadors like Akshay
Kumar.
The company financials as of latest financial reports are:
1. Paid up Capital (INR) – 97.13 crore (as on 31.03.2021)
2. Total Turnover (INR) – 6,021.41 crores (2020-2021)
3. Total Profit after taxes (INR) – 680.78 crore (2020-2021)
4. Total spending on Corporate Social Responsibility (CSR) as percentage of profit after tax
(PAT) – 2.29% of PAT

Product Mix
The company has a wide range of product ranging from distempers to luxury paints. It also
has the product range for industrial customers. As shown in the Exhibit-1.0.

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 Distribution Network of Berger Paints
Berger Paints has an intensive distribution network which comprises of:

Manufacturer Warehouse Depots CFA Dealers End Customer

1. Warehouse: These are company owned warehouses where the products are stocked
in huge quantities directly from the manufacturing plant through company owned
logistics and transportation.
2. Depot: After the stock has reached warehouses, it is then transported to different
depots located in different cities.
3. Carrying and Forwarding Agent: CFAs usually work on contractual basis and perform
tasks of stocking and transporting the stock in smaller quantity for order made by
dealers.
4. Dealers: They are usually the point of contact for end customers where sales happen
and hence, play a very important role in the distribution channel of Berger Paints as
they give market information to the company and also provide feedback from
customers.
Appointment of Dealers
Criteria:

 Applicant should have completed the age of 21 years.

 Applicant qualification should be 10th
 The applicants should free from any criminal cases.
 Should Knowledge about the Paint Business
 Proper Investment
 Proper Space
 Important Documents
 Staff Required
 Equipment required
 Vehicle (optional)
 You need approximate INR 10-15 lakhs to start Berger Paint dealership. It totally
depends on you that in which scale you are going to start this dealership.
 Initial Stock Purchase & Fee 2.5 lakh to 3 lakhs (including GST)
 Colour mixing machine 1.5 lakh to 2 lakhs (Semi- automatic and fully automatic)
 Shop Interior – 1 lakh to 1.5 lakh (Racks, interior, signage boards, furniture etc.)
 Computer system & printer = 50,000/-
 Other Expenses = 20,000/-
 Shop deposit and first month rent (Depends on area)

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Personal Documents Required:

 ID Proof: Aadhaar Card, PAN Card, Voter Card

 Address Proof: Electricity Bill/Ration Card
 Qualification Certificate
 Photograph, Email Id, Mobile Number
 Current A/C and cancel Cheque.

Exhibit 1

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Channel Environment of Berger Paints

Economical Socio Economical Technological Legal Competitive

Pandemic induced The younger Most of the work Duplicate Well established
inflation has generation is regarding orders is products with business houses of
caused significant focused towards still done on calls similar packaging India are now also
price hikes which sustainibility and and whatsapp are now more and entering in the
has worsen the natural messages and more prevalent in paint industry and
already hit environmen as although remote markets. leveraging their
demand demand for eco- applicatons like already
conditions in the friendly products berger shakti exist established
market. have increased but a very few distribution
The reforms in the and hence. dealers use it for channel.
GST for the paint The pandemic has this purpose For Ex- Grasim by
products has now made the The advent on 5G Aditya Birla
reduced from 28% companies to in India could Group, JSW Paints
to 18%. bring in more bring in more by Jindal Group.
innovative innovations and
solutions in help in fastening
distribution up the functions
management. of channel
members.

Competitor Analysis
In terms of market share Asian Paint is having a market share of 39%, Berger paints has a
market share of 19% and Kansai Nerolac has a market share of 11%. Other companies
comprise of 38% of the remaining market share.

 Profit Margin: Berger Paints channel partners possess the highest profit margin in
the paint industry which is approx. 12% to 15%, followed by Kansai Nerolac which
provides a profit margin of 6% to 12% and followed by Asian Paints that provides its
channel partners with a profit margin of 4 to 6%.
 Trade Discounts: Berger Paints is the second largest paint company in terms of
market share after Asian paints and the functional discount given by Asian paints is
3% so the company has kept their discount at 3.5-5% which is higher than Asian
paints so as to get better market coverage through its dealerships. But Asian paints is
still the market leader because of its 39% market share in India irrespective of
providing lesser trade discounts. Nerolac has even lesser market share so it has kept
its trade discount between 5-7 %.
 Payment Discount: Asian paints has a competitive advantage because of the
discounts provided to the dealerships and distributorships over its competitors
because Asian paints gives its dealers 5% discount if paid all at once otherwise they
still can avail a discount of 1.5% which both Berger and Nerolac does not provide.
 Order Delivery and Inventory Management: Berger paints has a better online
platform for inventory management and order delivery and payment management
for its distributors than Asian paints or Nerolac. Because both other competitors are
having issues in their platform which their distributors have complained about.

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 Capability Building Initiatives: In Covid-19, Berger paints increased the credit period
for its dealers and waived of the penalty fees for non-payment of the due amounts.
Asian paints provided Rs. 50,000 insurances to their dealers and also increased the
payment deadlines just like Berger and have also provided additional 5% discount on
the repayment within a time frame. Kansai Nerolac Extended the payment deadline
and distributed sanitizers and masks to its channel members. In a Covid-affected
world, painters are exposed to risk every day in the course of providing services to
consumers. To protect them and mitigate the effects of any adverse exposure, some
30,000+ painters were extended the benefit of a Rs. 50,000 Covid protection that
covered all expenses incurred in their treatment and securing them financially.

Improving Channel Effectiveness

 Promotional Schemes: As we can see in the below exhibit, the company has
come up with a scheme for the month of December, where there is a certain
criterion for qualification if the dealer buys paint in a certain volume slab which
allows him to avail specific rewards in terms of discounts for every extra litre of
paint the dealer buys.

7 Exhibit 2
 Training of Company Channel Manager: The company trains its channel
manager to improve the channel effectiveness by training him on the following
aspects:

1. How to maintain and expand the dealer network

2. How to increase the visibility, market share and reach of the brand.
3. How to handle the issues faced by dealers, painters and customers?
4. How to place the new products and increase the spread of existing
products.
5. How to increase the overall Volume and Value sales.
6. How to perform any other special task assigned by the company as and
when required.
 Catering to the needs of channel members – The sales officers makes a visit
to every dealer once in a week on average. They are meant to provide
genuine date and guide the dealer about the right time and quantity to
purchase stocks at the best price and also lets the dealer know about new
product launches, new schemes and also to resolve his problems.

 Training to company enlisted painters: Berger Paint’s CSR initiative which is

known as iTrain, is conducted for training of unskilled and semi-skilled
persons in painting, water-proofing and polishing. Trainees are trained
regarding various products, processes and techniques and trained on soft
skills and customer handling for better efficiency and to make a positive
impact on their earnings. Painters with enhanced skills are trained to become
entrepreneurs and employ other painters under them, thereby ensuring that
painters implement all-round betterment and growth in their profession.
Mobile iTrain launched are also actively taken part in imparting such training
skills.

Berger’s team of trainers utilised 43 iTrain training academies to conduct

nearly 120,000 training sessions to more than 75,000 painters. Apart from
skill upgradation, special training on safe work practices, health and hygiene
was imparted to more than 40,000 painters.

Days Tasks
Day 1 Introduction to the company, product categories and sub-categories
Day 2 Trained for Primer under Coat which constitutes its mixing ratio and
suitable application
Day 3 Trained on the Interior emulsion
Day 4 Trained on the Exterior emulsion
Day 5 Trained on Wood and Metal cover
Day 6 & 7 Calculation of ROI, exact pricing, training of products which require
attention, usage of machines and tools and special products training

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To increase effectiveness and to motivate the painter to bring in additional customers,
• The dealer requests to create an account of these painters in the company.
• These painters are given 7-day training to advocate Berger Paints whenever they get
any painting contract.
• These painters in return get special points which can be redeemed in the end of the
year with cash.
• Also, they are given gifts if they achieve higher points during any festive seasons like
TV, Fridge, cooler, etc.
• For Ex – 10,000 Points = 10,000 Rupees or 50,000 points for a bike.

Exhibit 3

Seeking Cooperation from Channel Members

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 Motivating Channel Members: Berger Paints comes up with several initiatives for
motivating its channel members. It categorises its dealers into 3 different clubs
namely Stallion, Silver and Gold.

This is an example of a Berger

Paint Dealer named Maruti
Traders who received this
certificate on the achievement of
Gold Card Membership.

Exhibit 4

 Support offered by Berger for acquiring new dealers: Whenever a new dealer is
appointed, he is provided with following items-
o Computer Set
o Colour Bank Machine
o Colour Mixing Machine

The dealer is also trained on how to operate the machines, the computer and the
colour mixing software on its system.

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 Display and Selling Aids: Berger Paints provides its dealers with promotional aids
such as:
Exhibit 5
1. Flex boards for Dealer’s shop with Dealer’s name on it.

Exhibit 6

2. Gates with newly launched product’s advertisement to attract customers.

Exhibit 7

 Quota Specification by Berger Paints (monthly basis):

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 • Berger Paints specifies purchasing quotas for its dealers and according to that it
provides its dealers with cash discounts or gifts. The dealer has the choice to avail
any one of these two choices either gifts or cash.
1. If the monthly order amount for the dealer is greater than 1 lakh, then
the dealer can avail for a cash discount of Rs. 5000 or else can avail gifts
worth the same price such as bed sheets, table, fan, etc.
2. If the monthly order amount for the dealer is between 7 to 11 lakhs, then
the dealer can avail for a cash discount of Rs 50,000 or else can avail for
gifts such as domestic trips to destinations like Goa. (two persons)
3. If the monthly order amount for the dealer is between 12 to 17 lakhs,
then the dealer can avail for a cash discount of Rs 1 lakh or an
international trip to destination like Bangkok. (two persons)
4. If the monthly order amount for the dealer is greater than 18 lakhs, then
cash discount would be 1.5 lakhs or an international trip to Europe. (two
persons)
Aim of the Scheme: To increase sales even though prices soared up by giving them gifts and
rewards.
Target: Dealers
Plan: National and International trips, electronic products, furniture, etc. to the dealers for
achieving the value slabs given below. The exhibit provided above is an example of the
quota specification pamphlet provided by Berger Paints to its dealers for the duration of 3
months. The offer states that it was valid from 1 st December to 19th December, 2021. Trips
redemption by Feb-March 2022.
Challenges: when the offer was announced, the situation of the pandemic had slowed down
back in December’21. Seeing this as an opportunity the dealers purchase more stocks to sell
in order to avail such offers. But as from January’22, the pandemic has stricken back
affecting the expected sale of dealer and therefore might lead to stale inventory.

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 Exhibit 8: Abbreviations: LY: Last Year; CN: Credit Note

• Evolution of Manufacturer-Dealer Relationship

YEAR BENCHMARKS
Before 1991 It was mostly a network of large number of dealers.
More channel partners were involved including a distributor where
After 1991
distributorship was given to other independent businesses.
The distributor network did not give expected results and more cost was
1995 incurred so they removed distributors from the channel and again started
growing their dealership network.
Company started targeting untouched remote locations to make their
2015 presence by acquiring dealers who were already in the paint industry by
giving them higher margins.
Berger introduced Berger Shakti Mobile Application to enhance and
automate most of the functions like real time sales transactions between
2016
manufacturer and dealers, painter performance, product information,
payment dues, etc.
Due to Covid-19, the firm realized that it needs to push its online sales
2020 through its official site and other e-commerce websites while keeping the
prices close to the dealer prices so as to avoid conflict.

• Evaluating Channel Member Performance

Monitoring Sales Performance Degree of Control Inventory

Berger keeps a track Evaluating the sales Berger has higher Checking the shelf
on the sales made to performance degree of control space of dealer and
each dealer in terms regularly. over its dealers in evaluating the
of quantity, value 15% growth target y- terms of higher product placements
and type of products o-y basis for dealers. margins than Asian and recommending
on a periodical basis Compares sales of Paints and Nerolac. the need for
given below and is dealers of similar size products not present
evaluated on the from similar in the shelf.
same at the end of territories Replenishment
the year. Check billings of period of stock also
Weekly channel members. determines the level
Monthly of inventory which in
Quarterly turn helps evaluating
Yearly dealer performance.

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 Product Issues
• Product Quality Issues:
1. While speaking to the Berger Paints Dealers, we have got to know about
some of the issues faced by customers who have used the Berger Paints
Bison Wall Putty.
2. The dealer stated that there had been a negative review regarding the
product quality of Bison Wall Putty.
3. Customers have come up with complaints to them regarding the fact that the
putty started peeling off in 2 to 3 months.
4. Spending 850-650 rupees over this product has taken a toll on the product
experienced by the customers.
5. This has indirectly affected the dealers or retailer’s reputation in the minds of
the customers as the customers have a perception that the retailer might sell
them outdated or defective products.
6. The second product issue was seen for its paint product where customers
come up with several complaints.
7. Customers have claimed that within 4 months of painting, the walls have
caught fungus in it.
8. There was lack of support from Berger Paint executives even after a
complaint being lodged.
9. This therefore harmed the firm’s reputation which indirectly also harmed the
reputation of the dealers and retailers who are loyal distributors of Berger
Paints.

Exhibit 9

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• Product Issues for New Product Launch
Exhibit 9
Product Name: Berger Silk Breathe Easy
1. During the onset of Covid-19 in the year 2020, irrespective of the rising
lockdowns and worst economic conditions in India, Berger Paints came up
with an idea of launching a new product.
2. The product was Berger Paints Silk Breathe Easy, a luxury interior emulsion
kills bacteria, viruses (including Covid-19) present on the wall and reduces
indoor pollution. The company also launched Breathe Easy Safe 24 to give
assured 24-hour protection from viruses (including Covid-19 viruses) and
bacteria on a variety of surfaces.
3. Introducing this product might have been an advantage for the firm as tier 1
city consumers were looking for safer options in paints and therefore the
dealers could replenish its stocks successfully but for low tier cities and semi
urban areas, consumers had lower preference for such products as there
were job losses and consumers were moving more towards increasing
savings.
4. Therefore, they looked for lower priced products and eventually this lead to
very slow movement of stocks of dealers and retailers for this specific
product. The dealers state that until mid-2021, they had left out stocks due to
lack of consumer demand.
5. From this we can conclude that the firm should have kept in mind the aspect
of consumer demand in low tier cities. Therefore, before launching this
product, Berger could have asked for a suggestion from its top level
distributors if it’s a good decision or not.

Exhibit 10
Product Name: Berger Easy Clean Fresh

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 1. The company launched an upgraded version of Berger Easy Clean, named as
Berger Easy Clean Fresh which had a pleasant fragrance and it was priced 100
rupees more than its predecessor.
2. But consumers complained to the dealers that the fragrance lasted only for only
20 to 25 days, after which it was like the older version of the product only.
3. The consumers stopped buying it and hence dealers were left with unsold stocks
of Berger Easy Clean Fresh.
4. Dealers returned all the unsold stocks directly to the company.

Exhibit 11
• Product Life Cycle of Berger Paint Products:

Weather Coat Long Life

Weather Coat Anti Dust
Easyclean Fresh
Introductory Stage Royal Classic Interior Emulsion
Ace Exterior Emulsion
Breathy Easy

Imperia Water Based Luxury PU (Floor Coat)

Skill Illusion Design Metallica (Wall)
Growth Stage Imperia Luxury PU Colour Zone (Wood)
Imperia Epoxy Block Primer (Wood)

Construction Chemicals – Weather Coat Kool & Seal

Berger wood coatings
R & D Stage Berger glass coatings
Berger protection

Decline Satge Berger Butterfly Paint

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Pricing Issues:
• Dual Channel Pricing:
1. Many time dealers as well as customers faces problems as there are difference in
the prices of dealers and the prices through online channel. The prices of online
are less compared to dealer’s price.
2. As the prices online are evidently less than the dealer price, therefore it becomes
a price issue for the dealers as both retailers and the customers can order paints
directly online at a much lower price.

As the product is listed in the official website of Berger

Paints which is www.bergerpaints.com the price of
product is Rs.4908 and the dealer price of the product is
Rs. 6360 as show in the exhibit below. There is a
difference of 29.6 % in prices, so it is a huge difference
which creates dual channel pricing issues for Berger
Paints. Therefore, customers are complaining the dealers
that the price at which the dealers are selling is very
much higher as compared to lower prices of the same
product available at company’s site. So it is affecting the
goodwill of the dealer.

This information is taken from the dealer’s price list

Exhibit 12
• The company gives special discounts for different card holders of dealer category
and hence margin of each dealer depending upon the size and usual quantity bought
the margins differ.

Promotion Issues
• The manufacturer when comes up with a new product and advertises it in all
mediums, following which consumers comes to the dealer looking for the particular

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 product but they don’t find it. Therefore, the firm must first understand the
availability of the product at every locations and according to their availability,
should advertise in such locations.

Exhibit 13

So recently Berger Paints have launched this DIY product and advertised it on
national level but when we visited the dealers at different locations the product was
not available with the dealers and some of the dealers even said that they have
ordered it from the manufacturers but still the orders have not been fulfilled due to
unavailability.
• When the dealer looks for extra promotional benefits such as Gates for newly
launched products, boards for festive seasons such as Durga Puja in West Bengal. For
achieving such benefits, the dealer has to achieve purchase of minimum level of
stocks.
• The amount of support given to the painters are not provided for the dealers. So,
dealers demand for promotional schemes that are equally attractive as they are for
the painters.
• Some dealer has to say that they are also not provided guidance for how to shelf
their products so that the products which are more attractive to the customers sell
easily.

Logistics in Berger Paints

• After manufacturing, the products are transported to the nearest warehouse by their
own trucks in large quantities for storage and further transported to different depots
in different cities.
• From these depots, products are sent to dealers in small quantities as demanded by
the dealers with the help of independent transportation businesses who work for
the company on contractual basis. They act as carrying and forwarding agents.
• Normally carried in various sized tins and/or drums with smaller sized tins being
packing in cartons and/or open crates.

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Exhibit 14: Berger Paints Warehouse, Plot No - 40, Sector 6, Faridabad, Haryana 121006,
India

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