1. Name
Question 1
Write your answer for Part A here.
Period Rate of Growth
2000-2004 27.27%
2004-2010 90.47%
2010-2015 50%
Answer: 1B
India is a fast-growing economy with large middle class. The total number of two-wheelers in
India was expected to raise from 42 million units in 2004 to 80 million units by 2010. The
primary growth drivers were coming from the younger demographic market, that had an
entrepreneurial energy. This increase In demand driven by following factors.
1. Customers’ increasing disposable incomes: India is seeing consistent GPD growth,
and this results in increase of consumers. This opens door for consumers to find more
ways to purchased valued product and spend on it.
2. An aspiration to own a motorized vehicle: Consumer in India used bicycles as a
primary commute vehicle for years. Any motorized vehicle presents a smaller luxury
for middle or lower middle class. This way motorized vehicle also became a standard
as commuting vehicle.
2. 3. The availability of easy financing: As more and more banks are coming in market,
they started to provide easy finance for any purchase with fixed EMI. This also make
purchase of motorized 2-wheeler in the budget of consumers.
All above factors contributed to significant growth of 2 wheelers.
Answer 1C:
In US, the market for 2-wheeler is limited and consistent. There are multiple factors for this.
1. In US, weather is one of the prime factors for restricted usage of 2-wheeler. On
northern US, summer has 3–4-month max, and rest of the year weather is mostly cold.
Driving 2-wheeler in cold weather is risky and hazardous.
2. In southern US, weather is hot but still rain is very frequent. This also impact 2-wheel
drive.
3. Long distances travel: In Us, the locations are much far and daily travelling on 2-
wheeler is not comfortable.
In US, 2-wheeler is seen as a leisure driving vehicle.
Question 2
Answer 2A:
Following are private and public sector players in India market.
Private sector companies
1. Shell
2. Gulf
3. Valvoline
3. Public sector companies (PSUs)
1. Indian Oil Corporation Limited
2. Bharat Petroleum Corporation Limited.
3. Hindustan Petroleum Corporation Limited.
Answer 2B:
Following are the direct distribution channel for lubricant market in India.
1. Forecourt: Petrol pump and gasoline stations.
This is direct channel as Castrol company is directly supplying MCOs to petrol pumps
and gas stations.
2. Franchised workshop (FW): Authorized workshops that serviced vehicles under
warranty and provide all services related to the vehicles.
This is also direct channel as Castrol company directly passing MCOs and other
lubricants.
Following are channels through the distribution channels serviced through the distributor for
the lubricant market in India.
1. NFWs (Non-Franchised Workshops): Small mechanics who setup shop to servie
motorcycles.
2. Accessories and space parts: Stores that stocked and sold vehicle accessories and
space parts.
3. Pure Lubricant outlets: Stores that stocked and sold lubricants of all companies. They
did not stock or sell other products.
Question 3
4. Answer 3A:
Consumer buying behavior:
For most Indian consumers, a motorcycle was a first step on the journey to personal mobility.
It is an effective and economical mode of transport. Consumers consider Oil change as an
important part of their bike maintenance. Their behavior changes when bike is under warranty
period and when bike is not under warranty period as below:
During the warranty period, consumers go to motorcycle dealership or franchised workshop.
They performed maintenance required and covered in their warranty. Here consumer would
like to utilize dealership or authenticated service for their new investment.
Once the warranty period is over, their bike enters into after-warranty market or after-market.
During this phase, consumer behavior changes. Consumers take the bike directly to the
mechanic of non-franchised workshop and trust the mechanic to use right oil. This shift in
behavior caused by trust, convenience and personal attention provided from the mechanic.
This shift in behavior was termed as ‘From Shop to workshop” as per case study.
Answer 3B:
Technological advancements happening in two-wheeler industry:
1. Engine design is evolving with newer technologies. This results in smaller oil sump
sizes and the periods between oil changes were longer. This led to stagnation in
volume growth.
2. Newer engine technologies and shift from 2-stroke engine to four stroke engine impact
the consumer behavior and choices of distribution channels.
Answer 3C:
Impact of consumer buying behavior
5. - As consumer buying behavior changes from “shop to workshop”, there will be growth
of multiple NFWs(Non-franchised workshops), lubrication store and spare parts store.
These workshops need supply of MCOs, so can be targeted via proper distribution
channel. This way demand can be fulfilled.
Impact of technological advancements on motorcycle oil market.
- As engine design evolved from 2-stroke engine to 4-stroke engine, the oil need is no
longer can be fulfilled by PSUs at forecourts like gas stations. This leads for a need of
complete distribution channel for MCO. This way monopoly of PSU is ended in MCO
domain and multiple private sector companies increased their market share in MCO
domain.
Question 4
Answer 4A:
Channel Partner Channel Share (%) 2010
Franchised workshops 30.95%
Spare part outlets 42.86%
Oil shops 11.90%
Non-Franchised workshops 14.29%
6. Answer 4B:
Based on two metrics (one from ungraded question and other from 4A answer), following 2
channel share (2005) in % for the “four-stroke oil market” is greater than the “channel share
(2005) for “Castrol’s four-stroke oil sales”.
1. Franchised workshops
Here value for “four stroke oil market” is 39.47% while ‘Castrol 4-stroke oil sales’
has value of 29.8% for year 2005.
2. Non-Franchised workshops.
Here value for “four stroke oil market” is 10.52% while ‘Castrol 4-stroke oil sales’
has value of 7.1% for year 2005.
Answer 4C.
Channel Partner Sales (in litre) per channel outlet, 2005
Franchised workshops =30000000/4500
=6666.67
Spare part outlets =22000000/38000
=578.95
Oil shops =16000000/14500
=1103.45
Non-Franchised workshops =8000000/20000
7. =400
Answer 4D:
Channel Partner Sales (in litre) per channel outlet, 2005
Franchised workshops =3540000/665
=5323.31
Spare part outlets =3600000/6235
=577.39
Oil shops =3900000/4411
=884.15
Non-Franchised workshops =850000/1267
=670.88
Answer 4E:
Following channel(s) is the ‘sales (in litre) per channel outlet (for the four-stroke oil market)’
significantly greater than the ‘sales (in litre) per channel outlet (for Castrol)’
8. 1. Franchised Workshops (6666.67 liter per WS for all MCOs while 5323.31 liter for
Castrol)
2. Oil Shops (1103.45 liter per oil shop for all MCOs while 884.15 liter per oil shop for
Castrol)
For channel, spare parts outlets, it is marginally higher (578.95 > 577.39 in liters per outlet)
for the ‘sales (in litre) per channel outlet (for the four-stroke oil market)’ significantly greater
than the ‘sales (in litre) per channel outlet (for Castrol)’.
Write your answer for Part F here.
Answer 4F:
Following are the areas where Castrol is facing some issue and can do better.
1. The Franchised workshops channel has only 14.8% market share in outlets that is less.
Also, sales per outlet is also low compared to overall MCO market.
2. Oils shops have sales per outlet is higher for all MCOs while for Castrol it is less.
3. One major issue across all channels, I see the “Width issue”. Castrol is being sold
only in fractions of outlets. This WIDTH seems to be the bottleneck in sales and
revenue.
Question 5
Write your answer for Part A here.
Answer 5A:
In 2005, Total four-stroke oil market is 76 million liters. NFW’s market is for 8 million liters
that constitute 10.53%.
As per Castrol team, NFWs are categorized in three segments. Their characteristics as basis
on following parameters explained as below:
9. Segment#1 Stock and Sell mechanics
Segment Size 10% of mechanics
Share in oil change process 30%
Oil buying behavior They usually stock and sold the lubricants. They are
frequently serviced by distributor. They are highly skilled
and trusted by customers for major jobs on their bikes.
Financial condition They have years of experience. They are called
“USTAADs” (Champion) in the work they perform and so
they charge premium price and customer happily pays that
also. They are financially better also.
Segment#2 Mechanics who have worked at the franchised workshops and are ready to set
up their own business.
Segment Size 40% of mechanics
Share in Oil change process 50%
Oil buying behavior These mechanics normally received their supply of MCOs
from nearby spare parts shops. They were hesitant to
stock oil products for a couple of reasons. They worried
that their customers would ask for credit for the cost of
the MCO and they were reluctant to burden their current
spare parts suppliers with more requests.
10. Financial conditions This category of young mechanics required financial
support. They were short on finances Based on their
business relationships, they could usually manage to get
some credit on MCOs and spare parts, but such sales
were normally settled daily basis.
Segment#3 Mechanics who are approached for small/minor jobs.
Segment Size 50% of mechanics
Share in Oil change process 20%
Oil buying behavior Consumer buys their own bottle of MCO and take it to the
shop. Consumer only shows little trust on these mechanics
for minor issues such as clutch wire change and brake
adjustments.
Financial conditions They are struggling to build their clientele and
reputation. They are having issues with financials also as
the have limited knowledge of cash flows and payment
cycles.
Write your answer for Part B here
Answer 5B:
11. Parameter 1: Willingness of these channel partners to supply to the NFWs
Parameter 2: Channel partners’ preliminary knowledge of the local market that they are
operating in
Parameter 3: Potential of conflict(s) with other channel partners
Parameter 4: Capital investment required to set up this model
Parameter 5: Cost incurred by the channel partner to supply to the NFWs (delivery cost)
Module Parameter 1 Parameter 2 Parameter 3 Parameter 4 Parameter 5
1 Low High Low Low High
2 High Low High High High
3 High High Low Low Low
Question 6
Answer#6
1. CASA will report to distributor for better control on product attributes.
2. CASA serves NFW’s second segment mainly who has worked at franchised workshops
and ready to setup their own business. This segment is 50% of total oil change and it is
the best candidate.
