berger-strategies of colors

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Term Paper:

Berger

Strategies of Colors


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Submission of Term Paper:

Berger-Strategies of Colors

Course Title:

Business Strategy

Course Code:

MGT 401

Submitted to:

Md. Shawkat Kamal

Course Instructor

BRAC Business School

BRAC University

Submitted by:

Ashfaq Mustafa Anwar (05104124)

Labonee Ahmed (06304051)

Mofliha Masnoon (07104030)

Farzana Amin (07104077)

Section: 02

Date of Submission:

29 July,2010


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Letter of Transmittal

29th July, 2010

To

Md. Shawkat Kamal

Course Instructor

BRAC Business School

BRAC University

Subject: Submission of report for Busness Strategy (MGT-401)

Dear Sir,

It is a great pleasure that we are finally submitting our final report on Berger-Strategies of

Colors.

The practical exposure while working on this paper helped our team to bridge the academic

work and the practical knowledge. We were very fortunate to have worked with some

experienced professionals while gathering the relevant data for this report. We tried our best

to furnish this report with all the relevant information and facts and also tried to raise the

right questions. But we do acknowledge that many anomalies might arise, which we are

willing to change in light of further in-depth research or information. We will welcome any

clarification and suggestion regarding this report.

Thanking you.

Sincerely yours,

Ashfaq Mustafa Anwar (05104124)

Labonee Ahmed (06304051)

Mofliha Masnoon (07104030)

Farzana Amin (07104077)


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Acknowledgement

We would like to convey our sincerest thanks to our teacher, Md. Shawkat Kamal for thisreport; because this assignment helped us to apply the theoretical knowledge learned in the

classrooms to the real life situations. Without his guidance and support, this project work

would have been a lot more difficult. The thoughtful and focused guidance that our teacher has

provided us from the academic and professional perspective helped us immensely while

writing this report. We would also like to acknowledge Mr. Nahid Hasan, Planning

Assistant, Supply Chain Management of Berger, who furnished this report with all the

relevant information of the value chain process at Berger.


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Executive Summary

This report is based on the business strategies of Berger Paints. Thus we have named

this report as- Berger-Strategies of Colors. For the convenience of task we have

chosen one particular brand of Berger and tried to trace different steps in its value

chain process.

Berger Paints started its sailing into the sea of Bangladesh from pre-liberation era, to

be precise in 1950. The main business flourished in the post liberation phase. Over the

decades, Berger has evolved to becoming the leading paint solution provider in this

country and has diversified into every sphere of the industry - from Decorative Paints

to Industrial Coatings, from Marine Coatings to Powder Coating and what not.

Our selected brand is Robbialac Acrylic Plastic Emulsion. Under this brand there are

lots of shades and we have selected the shade Brilliant White. Throughout this

report we have tried to discover different strategies adopted by Berger Paints in

different stages of value chain process.

This was really a valuable experience for us to have an exclusive oppurtunity to workwith such a reputed company and observe their value chain process.


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Table of Contents

Topic No Name of Topic Page No

Chapter One

1.1 Introduction 07

1.2 Objective 07

1.3 Methodology 07

1.4 Scope 08

1.5 Limitation 08

Chapter Two

2.1 Company Overview 08

2.2 Financial Facts 11

2.3 Products 11

2.4 Selected Brands 12

Chapter Three

3.1 Procurement 123.2 Operation 14

3.3 Distribution 17

3.4 Marketing 19

Chapter Four

4.1 SWOT Matrix 19

4.2 Recommendation 19

4.3 Conclusion 20

References 20

Annex


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Chapter One

1.1 Introduction

This report is based on the business strategies of Berger Paints. Thus we have namedthis report as- Berger-Strategies of Colors. For the convenience of task we have

chosen one particular brand of Berger and tried to trace different steps in its value

chain process.

1.2 Objective

We have divided the objectives in to two different parts. These are-

General Objective was to observe the overall strategies that Bergers applies in order

to deliver their product to the end user.

Specific objectives include-

To identify and observe different stages of value chain process including

marketing strategies of Berger paints

To observe how the product is developed from raw materials to finished good

1.3 Methodology

To furnish this report with the relevant facts we have basically obtained a few specific

methodology. These are discussed below:

Company Visit:

For gathering information from direct source we have visited Bergers Head Office at

Dhaka which is situated at Uttara. There we have consulted with their professionals

and got valuable primary information.

Group Discussion:

For making a good synergy we arranged several group meetings with the group

members so that we can analyze the gathered information in a better way.


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Consultation with Course Instructor:

Time to time we have also took consultation of our course instructor, who actually

guided us and monitor our activities.

Methods Used:

Beside providing a literature overview we have also conducted a SWOT analysis to

scrutinize the overall findings.

Secondary Source of Information:

Besides primary source we also took help from Internet and text book as secondary

ource of information.

1.4 Scope

We belive that the scope of this report is very wide. This will give a comprehensive

and clear idea about the paint industry of Babgladesh. It will also provide knowledge

about the different stages of value chain process of a paint manufacturing company.

1.5 Limitation

The major limitation that we faced was the barrier to the access in to the factory. The

representatives of the company were unwilling to let us visit the factory. As a result

we missed the actual scenario of their operation. This is might be because they want

to protect their intellectual property and business secrets.

Chapter Two

2.1 Company Overview

Berger is one of the oldest names in paint industry tracing back to 1760. Lewis

Berger, a German national, founded dye and pigment making business in England.

Lewis Berger & Sons Limited grew rapidly with a strong reputation for innovation

and entrepreneurship. Berger Paints started its sailing into the sea of Bangladesh from

pre-liberation era, to be precise in 1950. The main business flourished in the post

liberation phase. Over the decades, Berger has evolved to becoming the leading paint


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solution provider in this country and has diversified into every sphere of the industry -

from Decorative Paints to Industrial Coatings, from Marine Coatings to Powder

Coating and what not.

To give a comprehensive and sustainable painting solution to the need of the industry,

Berger has invested more on technology and Research & Development (R & D) than

any other manufacturer in this market. The superior quality of Berger's products has

been possible because of support from its advanced plants and an international-

standard of strict quality. Berger's one of the prime objectives is to provide best

customer support-connecting consumers to technology through specialized services

like free technical advice on surface preparation, color consultancy, special color

schemes etc.

Vision:

Berger wants to remain as the benchmark in the Paint industry by:

We shall remain as the benchmark in the paint industry by: being an innovative and

technology driven Company consistently delivering world-class products ensuring best

consumer satisfaction through continuous value added services provided by highly

professional and committed team

Mission:

Berger Paints Bangladesh Ltd expresses their mission in following manner:

We shall increase our turnover by 100% in the next five years.

We shall remain socially committed ethical Company

Strategy:

The strategy of Berger can be summed as:

Our strategy is to build long-term partnership with the customers/consumers. With their

support, we aim to maximize the potential of our business- through a combination of

enhanced quality of product, service, creative marketing, competitive pricing and cost

efficiency.


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Market Share Analysis:

At present Bangladesh paint industry has 6 companies who have significant market share.

Berger Paints Bangladesh Ltd. is operating as the market leader and enjoying almost 53% of

national paint market share. The nearest competitor is Asian Paints who reside far below the

market leader in aspect of market share. The following Table shows the present market share

of different companies in paint industry of Bangladesh:

Companies Market share

BPBL 53.67%

Asian 8.20%

Roxy 6.80%

Elite 5.20%Pailac 4.30%

Sagar Chemical & Paint Ind. Ltd. 4.60%

Others 17.30%

Total 100%

Table 1: Market share of different Paint Companies

Source: Company

2.2 Financial Facts

Performance in last 5 years:

Table 2: Financial Facts

Source: Annual Report 09


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2.3 Products

Berger mainly provides 3 types of paints which is categorized according to the

purpose of use:

Decorative

Industrial

Marine

The well known brands of Berger are given below. It is to be noted that all these are

market leader in their respective category.

Brand Category Brand Category

Robbialac Decorative Seabore Marine

Parrot Decorative Weather Coat Decorative

Luxury

Silk

Decorative Walmasta Decorative

Jensolin Industrial Acrylic Emulsion Decorative

Table 3: Well Known Brands of Berger

Source: Company

Beside this Berger Color Bank introduces to the global way to paint with an

unlimited choice of shades to match different customers endless taste-instantly.

2.4 Selected Brand

Our selected brand is Robbialac Acrylic Plastic Emulsion. Under this brand there are

lots of shades and we have selected the shade Brilliant White. We have chosen this

brand because as per company it is very well known and highly sold brand.


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Competitive Analysis:

Brand Name Container Size

(litre)

Price (BDT)

Berger-Brilliant

White

18.2 3250

Ujala 18.2 2800

Pailac 18.2 2900

Romana 18.2 2800

Roxy 18.2 2750

Elite 18.2 2950

Table 4: Competitive Analysis

Source: Local Market

Chapter Three

3.1 Procurement

Raw Materials:

Paint is composed of pigments, solvents, resins, and various additives. The pigments

give the paint color; solvents make it easier to apply; resins help it dry; and additives

serve as everything from fillers to antifungicidal agents.

Berger selects the raw materials from some of the best known suppliers in the world.

MITSUI, MOBIL, DUPONT, HOECHST and BASF are a few to name.

Components of paints are described brifly below:

Pigment:

Pigments are granular solids incorporated into the paint to contribute color, toughness,

texture or simply to reduce the cost of the paint. Alternatively, some paints contain

dyes instead of or in combination with pigments. Hundreds of different pigments,

both natural and synthetic, exist. The basic white pigment is titanium dioxide, selected

for its excellent concealing properties, and black pigment is commonly made from


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carbon black. Other pigments used to make paint include iron oxide and cadmium

sulfide for reds, metallic salts for yellows and oranges, and iron blue and chrome

yellows for blues and greens.

Binder or vehicle:

The binder, commonly referred to as the vehicle, is the actual film forming

component of paint. It is the only component that must be present; other components

are included optionally, depending on the desired properties of the cured film. The

term "vehicle" is industrial jargon which is used inconsistently, sometimes to refer to

the solvent and sometimes to refer to the binder. The binder imparts adhesion, binds

the pigments together, and strongly influences such properties as gloss potential,

exterior durability, flexibility, and toughness.

Solvent:

Solvents are various low viscosities, volatile liquids. They include petroleum mineral

spirits and aromatic solvents such as benzol, alcohols, esters, ketones, and acetone.

The main purposes of the solvent are to adjust the curing properties and viscosity of

the paint. It is volatile and does not become part of the paint film. It also controls flow

and application properties, and affects the stability of the paint while in liquid state.

Its main function is as the carrier for the non volatile components. In order to spread

heavier oils (i.e. linseed) as in oil-based interior housepaint, thinner oil is required.

These volatile substances impart their properties temporarilyonce the solvent has

evaporated or disintegrated, the remaining paint is fixed to the surface.

Additives:

Besides the three main categories of ingredients, paint can have a wide variety of

miscellaneous additives, which are usually added in very small amounts and yet give

a very significant effect on the product. Some examples include additives to modify

surface tension, improve flow properties, improve the finished appearance, increase

wet edge, improve pigment stability, impart antifreeze properties, control foaming,

control skinning, etc.
http://wiki/Adhesionhttp://wiki/Viscosityhttp://wiki/Surface_tensionhttp://wiki/Antifreezehttp://wiki/Antifreezehttp://wiki/Surface_tensionhttp://wiki/Viscosityhttp://wiki/Adhesion


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3.2 Operation

Step 01: Making the paste

Pigment manufacturers send bags of fine grain pigments to paint plants. There, the

pigment is premixed with resin (a wetting agent that assists in moistening the

pigment), one or more solvents, and additives to form a paste.

Step 02: Dispersing the pigment

The paste mixture for most industrial and some consumer paints is routed into a sand

mill, a large cylinder that agitates tiny particles of sand or silica to grind the pigment

particles, making them smaller and dispersing them throughout the mixture. The

mixture is then filtered to remove the sand particles.

Instead of being processed in sand mills, up to 90 percent of the water-based latex

paints designed for use by individual homeowners are instead processed in a high-

speed dispersion tank. There, the premixed paste is subjected to high-speed agitation

by a circular, toothed blade attached to a rotating shaft. This process blends the

pigment into the solvent.

Step 03: Thinning the paste

Whether created by a sand mill or a dispersion tank, the paste must now be thinned to produce

the final product. Transferred to large kettles, it is agitated with the proper amount of solvent

for the type of paint desired.


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Figure 1: Paint Making Process

Step 04: Canning the paint

The finished paint product is then pumped into the canning room. For the standard 8 pint

(3.78 liter) paint can available to consumers, empty cans are first rolled horizontally onto

labels, then set upright so that the paint can be pumped into them. A machine places lids onto

the filled cans, and a second machine presses on the lids to seal them. From wire that is fed

into it from coils, a bail meter cuts and shapes the handles before hooking them into holes

precut in the cans. A certain number of cans (usually four) are then boxed and stacked before

being sent to the warehouse.

Figure 2: Canning Process


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Step 05: Design

Paint is generally custom-made to fit the needs of industrial customers. For example,

one might be especially interested in a fast-drying paint, while another might desire a

paint that supplies good coverage over a long lifetime. Paint intended for the

consumer can also be custom-made. Paint manufacturers provide such a wide range of

colors that it is impossible to keep large quantities of each on hand. To create colors

like "aquamarine," "canary yellow," or "maroon," Berger select a base that is

appropriate for the deepness of color required. (Pastel paint bases will have high

amounts of titanium dioxide, the white pigment, while darker tones will have less.)

Then, according to a predetermined formula, the manufacturer can introduce various

pigments from calibrated cylinders to obtain the proper color.

Step 06: Quality Control

Berger utilizes an extensive array of quality control measures. The ingredients and the

manufacturing process undergo stringent tests, and the finished product is checked to

ensure that it is of high quality.

Ensuring Functional Qualities: A finished paint is inspected for its functional

qualities like density, fineness of grind, dispersion, and viscosity. Paint is

applied to a surface and studied for bleed resistance, rate of drying, and

texture. For exampl, weathering is tested by exposing the paint to outdoor

conditions. Artificial weathering exposes a painted surface to sun, water,

extreme temperature, humidity, or sulfuric gases. Fire retardancy is checked

by burning the paint and determining its weight loss. If the amount lost is

more than 10 percent, the paint is not considered fire-resistant.

Ensuring Aesthetic Qualities: In terms of the paint's aesthetic components,

color is checked by an experienced observer and by spectral analysis to see if

it matches a standard desired color. Gloss is measured by determining the

amount of reflected light given off a painted surface.


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Step 07: Packaging:

Paint being sensitive item requires careful consideration while packing and for that

Berger pays sufficient attention on their packing material. Berger mainly outsource

the containers from reputed suppliers of Bangladesh. But for some of the sensitive

paints it outsource the containers from Indian suppliers.

3.3 Distribution

In the present context of our country, probably Berger has one of the most extensive and

efficient distribution networks. Bergers two Warehouses located inside Chittagong factory

and Dhaka factory complex. From there, products are supplied to Chittagong and Dhaka Sale

office. From their finished products are distributed to other five depots located at Comilla,Rajshahi, Sylhet and Bogra. And at the end from both the sales offices and also from the five

sales depots paints are distributed to the dealers and retailers and from there reaches to

customers. Berger has almost 800 dealers around the country. In some occasion both sales

office and depots also sell paints to the end users directly. But at recent time the practices are

being discouraged due to the companies arises out of it and also to reduce the work load of

those offices and depots. The figure drawn below shows the details of distribution

network of Berger.

Figure 3: Distribution Network of Berger Paints Bangladesh Ltd

Source: Company


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3.4 Marketing

Price Strategy:

Price strategy of Berger can be spelled out in following manner. Provide high quality product at

highly affordable price. At some places Berger had to charge higher price then that of their

competitor due to strict compliance of quality and government financial law.

Beside this Berger also consider commissions / discount to dealers and rretailers while preparing

the pricing strategy. Berger supplies their product to dealers through some establishes discount

basis. They also offer some special commission and discount rate for their premium dealers, who

can cross the benchmark, set by Berger.

Promotional Strategies:

For the kind of product like Robbialac Acrylic Plastic Emulsion Berger conducts mainly 3

types of promotional activities. These are discussed below:

Advertising:

Berger uses different types of media like TV, Newspapers, Magazines, Signboards and

billboards, Internet to promote their products and product related message to their customers.

Sales Promotion:

Involves the use of special short-term techniques, often in the form of incentives, to encourage

customers to respond or undertake some activity. Most of the sales promotion of Berger is trade

promotion which is given directly to the dealer like Commission, Discount, Gifts, Foreign tours,

Credit sales, Etc. But they also use some consumer sales promotion. This includes providing gift

items, scratch card facilities etc.

Public Relation:

Public relations involve the cultivation of favorable relations for organizations and products

with its key publics through the use of a variety of communications channels and tools.


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Favorable media coverage about a company or product often reaches these audiences as well

and may offer potential benefit to the marketer. For these Berger continues different types of

public relation activities. The examples are given below:

Young Painters Art competition

Young Architects Award

Sponsoring Delta Break Housing Fair

Chapter Four

4.1 SWOT Matrix

The major strength of Berger paints is their brand image and experience. Their huge distribution

network also works as their strength.

their weakness is that they dont concentrate on web based promotion, their website is

informative but not interactive. High price is also one of their major problems.

Their oppurtunities are mainly in the area of expansion of business by starting new service like

architechture firm or interior decoration firm.

They do have some threats like new competitor, poor quality raw material, harmful byproduct

etc.

4.2 Recmmendation

It is really very hard for us to recommend Berger as they are really very experienced in what they

re doing. It is very possible that they have covered all possible bases and the shortcomings that

we are observing is due to our gap of knowledge.

Though we would like to recommend them that they should re think of their price to remain

competitve. They also should focus on web based advertisements. They also should keep

contionous focus on quality.


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4.3 Conclusion

Robbialac Acrylic Plastic Emulsion is basically targeted towards the high middle class house

holds who wants to use high class qualityfull paints for their home decoration. For this purpose

Berger is charging pretty high than their competitors. Apart from this they are very quality

conscious manufacturer. We are very fortunate to work on this interesting topic with some

experiencedprofessional of a reputed organization. We are very hopeful that this report will be of

wider use for different purposes. We tried our best to furnish this report with all the relevant

information and facts and also tried to raise the right questions. But we do acknowledge thatmany anomalies might arise, which we are willing to change in light of further in-depth research

or information. We will welcome any clarification and suggestion regarding this report.

References

Nahid Hasan, Planning Assistant, Supply Chain Management, Berger Paints Bangladesh

Ltd.

http://www.bergerbd.com/


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Annex

SWOT Matrix:

Strength:

Huge distribution network

Brand image & Experience

Weakness:

Less web based promotion

Higher price than competitors

Oppurtunity:

To extend the business in related industry like architechture firm or interior decoration

house

Threat:

Substandard raw materials from suppliers which can decrease product quality

New Competitor

New innovation by competitor

regulatory issues can arise if any harmful byproduct is produced while manufacturing

paint

berger-strategies of colors

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