“Har Ghar Kuch Kehta Hai” (Every home says something) The vision and famous slogan given by Asian Paints in their advertisement campaign in the 80’s. A lot has changed from 80s to today, like in India, the paint industry is worth about ₹500 billion today, with decorative paints being the dominant segment.
- The market size of the Indian paints and coatings industry is estimated to be around USD 9.56 billion in 2024.
- According to Groww, it is projected to grow at a CAGR of 9.38% and reach USD 15.00 billion by 2029.
These figures have turned this slogan into reality. Although achieving this vision is the shared aspiration that drives every company in this industry, inspiring relentless efforts to turn it into reality. Despite the highly complex and tangled nature of the paint industry, the sector as a whole has managed to break through by embracing innovation, adapting to shifting market demands, and overcoming numerous challenges to carve out a sustainable and competitive path forward. Let’s see in detail how these brands unlocked their true potential and planning to sustain this in future by diving in through their hyperlocal strategies which is driving this vibrant transformation.
The Key Growth Drivers of Tier 2 and Tier 3 Cities:
The companies have been drawing up aggressive plan to tap the unorganised sector in non -metros of this industry. The industrial market has been sluggish as most segments have experienced slowdown due to the overall economic environment in the country, mainly because of the pandemic. The decorative market too is impacted but the extent has been limited. While growth in tier 1 towns has seen a slowdown, tier 2 & 3 towns have retained their buoyancy and are registering double digit growth rates. Over all the paint market tends to grow at 2-3 times GDP which is likely to be maintained.
- Urbanization: The rate of urbanization is one of the key factors as it has been progressing steadily, with urban population increasing from 32% in 2013 to 36% approx. In 2023, this urban expansion is significant in tier 2 and tier 3 cities because these cities are experiencing significant population shifts from rural areas.
- Government initiatives: Initiatives such as Smart City Mission, PMAY, and the AMRUT are playing a significant role, with major investments in roads, highways, public transportation, and even regional airports. These improvements enhance connectivity within these cities and link them to larger urban centres, making them far more accessible and appealing to prospective residents.
- Real Estate: ANAROCK’s recent Consumer Sentiment Survey reveals that 26% of property investors are now favouring Tier 2 and Tier 3 cities, highlighting a shift in real estate investment trends.
Consumer Behaviour: Preferences and Trends
According to a report by Fox40 and Adgully in 2024, the preferences and demands of the consumer have changed drastically from past few decades, owing to factors like rising disposable income which enable them with more money to spend on improving their home.
- Affordability: The single biggest factor in the non – metro cities to invest more is affordability due to fierce competition which also leads to move the industry from a oligopoly to a more competitive market.
- Quality & Cost Effectiveness: The desire of good quality paint is the next factor considered by consumers as that offer durability and longevity, as it ultimately reduces the need for frequent repainting, making them cost effective over time.
- Eco Friendly: The preference for eco – friendly paint is also increasing as consumers are looing for paints made from renewable materials, they are also becoming aware of how paints affect indoor quality and health.
- Brand Recognition: Brand recognition and trust always plays a crucial role in purchasing decision, the reason this industry invests so heavily in marketing.
Strategy for Localized Marketing and Distribution
Marketing is one of the pilar of a successful brand, the product will be sold if it has been marketed enough, it has reached to the masses but one campaign is not suitable especially in a diverse country like India where language and culture changes in every 100 km. So, the company should devise different localized campaigns for their targeted cities.
To identify the target market they will use data insights through surveys conducted in the cities to identify where they can penetrate faster.
With the help of survey reports they can take any form like online advertising through social media, and email marketing to campaign their products. Local networking is another way to connect to the masses as in tier 2 and tier 3 cities they value a personalized touch while buying something.
The features of a strong distribution network is to meet the small and specific needs of a consumer located in any corner of the city, along with the focus should be on faster product availability, consumer engagement and cost efficiency. The company should choose on the basis of consumer demographics, market size, product properties etc.
As of March 2024, Asian Paints was the leading paint company in India by net sales, with over 300 billion Indian rupees. Asian Paints has a market share of nearly 50% in the domestic paint market and over 60% in the decorative paints segment.
Over the past five years, Asian Paint has demonstrated the most significant growth compared to its competitors as shown.
If a list is made of the most successful companies in the history of Independent India, Asian Paints would find a place in the Top 10. One of the great fact about this company that it is the only company to show a CAGR of 20% since the past 60 years and
- If you just invested a lakh in this company in 1990, today your wealth would be worth at least around nine crores.
- It has been a market leader in the industry from the past 54 years.
The reasons attributed to this successful run are as follows:
- Efficient Logistics: While catering to Tier 2 and Tier 3 cities, their main focus was on efficient logistics as in order to reach in every corner of a city they need a strong distribution channel, a world class supply chain, which ultimately allows them to retain a high profit margin, optimize their inventory levels.
- Adaptability: COVID-19 hampered the paint industry market in India. But company realised one thing that in India, painters usually come from certain tier 3 cities or rural areas. As, after lockdown the demand went up in tier 2 and tier 3 cities and resulted in a huge recovery due to reverse migration of painters, so they saw the opportunity and ramped up their production capacity to meet the demand.
- Portfolio Diversification: They provide interior paints, exterior paints, wood finishes range, adhesives, water proofing along with every variant possible in each of them.
- Product Placement: Along with it the master stroke is product placement, like how they introduced water distemper bridging the gap between dry distemper and plastic emulsions.
- Marketing Campaign: The most important driver for them is their relation with the consumer of this country, they become a household name through their best marketing campaigns. They give the slogan: “Don’t lose the temper, use Tractor Distemper” in early 1950s. Another, successful campaign was with Bollywood celebrities as shown here.
The paint industry in Tier 2 and Tier 3 cities is have emerged as an important market to capture in order to sustain in this industry. The increasing urbanisation, supportive government policies, residential buildings demand is growing is what driving the short-term demand. Whereas, the country’s expanding population would be the main driver of long-term demand in the paint and coatings industry. Along with that the dynamic consumer preferences and market trends will force the companies to reinvent their hyperlocal strategies, leverage their tools more effectively. By collaborating and making strong relationships along the hyperlocal distribution network, help the brand to maintain trust and long-term standing in the industry.
The success stories of Asian Paints and other market leaders shows what is needed to thrive and dominate this industry despite the hurdles, and problems on the journey they overcame it with focusing on the right things.
As these cities tend to grow in the future, it ensures the bright future with beautiful walls, for this industry which will grow along with new companies entering the market it will make it more cutting edge, competitive, as everyone will thrive to survive.
