Succeeding on the pillars of failure – Successful repositioning of two and three-wheeler automotive appearance (convenience range) category by Trade Mines.

Abstract

Trade Mines (pvt) Limited, acts as the sole agent for the import, distribution, promotions and sales of Waxpol automotive & industrial Lubricants, polishes and waxes in Sri Lanka. Incorporated in 2010, TM’s initial monthly sale was less than LKR one million a month, with a mere distribution network covering 68 sales outlets in metropolitan of Colombo. Waxpol is one of India’s regionally known niche players in the state of east & west Bengal, but has considerable presence in around 18 states including Delhi & Tamil Nadu. Waxpol has six product lines which include automotive and industrial lubricants, hydraulic fluids, grease, coolants, Automotive appearance and hardware & household. The entity was established in 1946 as a manufacturer of automotive polishes but have expanded their portfolio throughout the years. Members of leading car forums in India, regard Waxpol paste wax and polishes as the choice of hard core car detailers who prefer a reasonably priced product as against the pricier high quality imports.Waxpol is also known in India as a supplier of cheap synthetic lubricants for two and three wheelers, where the product is sourced from China but is badged in India. From 2011 to 2015 the total population of two & wheelers have had an exponential growth as per department of Motor Traffic Sri Lanka which hit almost 15% markin Sri Lanka in turn creating a boost in the demand for lubricants being used for two wheelers and three wheelers. As per the local regulator, there are 13 licensed lubricant importers to Sri Lanka (importing almost 15,900 Kilo Litres of lubricants in 2015 as per the Public Utilities Commission), where the highest volume and market leadership is being held by Chevron Lubricants (close to 26,000 Kilo Litres of lubricants) popularly known as Caltex. For some two and all three wheelers, the prices of oil become a key element especially if they are two stroke engines, as for each refuelling 2T oil should be used as an additive. Predominantly, for three wheelers this will be loose oil supplied by Lanka lubricants (owned by CEYPETCO), Lanka IOC or LAUGFS, but unbranded. Few years ago, Caltex tried to brand this market with Revtex range but it was not well picked up by the market. In 2011 TM decides to enter this market via importing and supplying Waxpol synthetic engine oils for two wheelers and three wheelers. The primary decision behind this was to make use of a market space which was uncontested by any of the existing players with synthetic products. The product supplied by Waxpol was 10-15% increased than the conventional oil, but due to the synthetic oil having a dedicated pack, branding, technical specifications and being a product of India itself where over 90% of the two & three-wheeler engines are originated from the product started taking off in the shelves.From 2011, TM’s most successful range under the Waxpol umbrella was, the synthetic oil range for two and three wheelers. From a mere monthly turnover of LKR 200K a month within two years the revenues shot up to over LKR 10Mn a month. The sales teams predominantly focussed at the low-end service stations for two wheelers & three wheelers, by specifying that this is a synthetic oil but only a fraction of difference of the price. Even the colour of the oil was red in line with some of the high-quality performance oils, which further increased the acceptability of the oil and from at a fraction of price premium a branded seal packed product was made available to the two & three wheelers.Although it was a popular perception that two and three-wheeler owners are not very much concerned about the quality of the oil, the recent fragmentation of the market & the ATL advertising effort being put up by some of the new players in the industry, the interest for a proper branded lubricant was evident. Especially after the contamination issue of 90 octane petrol in 2011, many trishaw and two-wheeler owners became much cautious about the fuels and lubricants they use. The fact of being able to get a sealed pack, branded and above all it being a synthetic Waxpol two and three-wheeler oils gained immense popularity among the target users. The association of lubricant importers has been continuously pressurizing the government and their regulator the public utilities commission to regulate the non-conventional lubricant market as well. The collective argued on the fact that there should be control & regulation over the quality of the synthetic lubricants which are being used in the market. However, the small-time importers counter argued the fact mentioning that it was a more by the big players to further consolidate the synthetic oil market to further increase their profits. The petroleum minister Hon Chandima Weerakkody in a statement to the Daily Mirror,mentioned that the appeal from the collective of lubricant importers has been considered by him, and he will call for regulation of all conventional and synthetic oil importers. In view of the statement of the Hon minister, Trade Mines made a policy decision to appeal for an import license to the Department of Import Control under a copy to The Public utilities commission. A considerable time was involved in the decision-making process and subsequently after a period of over three months, the government responded that a license cannot be granted to Trade Mines for the import of synthetic oils. It is believed that the government has taken a policy decision to limit the number of licenses being issued to lubricant importers to further regulate and consolidate the market. With the government decision in play the BoD immediately decided to curb all imports of synthetic lubricant and greases from Waxpol. By the time the decision was made, Waxpol lubricants were contributing to almost 70% of the total turnover figure. The entity was relying heavily on the lubricant part of Waxpol, that it had lost interest on the primary set of products which were meant for automobile appearance enhancement. At the board meeting, immediately after the decision to withdraw the synthetic oil was taken in to consideration two key elements were being discussed by the Board. A) To have a bridging plan to recover the lost revenue due to the discontinued sale of synthetic oils in the portfolio and B)To consider the portfolio of product mix being mismatched between Sri Lanka and India. After the BCG portfolio analysis, the management wanted to critically relook at the relative product positioning in the market in retrospect to the brand repositioning principles by Martin Lindstrom. However, the product being badged under the convenience range actually in Sri Lanka started to repel the consumers as they were unaware of Waxpol’ s proficiency in the hardcore wax and polish market. The full campaign which took flight under the slogan of “Painters trust Waxpol convenience” kind of backfired where the local consumers did not trust the convenience range to provide performance up to the hardcore level. Waxpol was continuously trying to pitch the product to professional auto painters and detailers pressing them to use the product, but the concept of “convenience” was driving this category away. The casual user did not want to risk using the product as it was positioned as a professional detailer’s material. They did not prefer to use a professional use product and then risk any unanticipated damages to their paintwork, and even the channel was not encouraging casual users to try it. The primary damage was done at the activation point itself. The management immediately noted that there has been a fatal flaw in the original positioning of the product category at the inception. Due to the confusion caused at the activation point the product was not taking off from the shelves. The positioning was decided to be immediately changed to the quadrant where appearance conscious clients who were beginners / casual users of the product. The tagline for AA convenience was changed from “painters trust Waxpol convenience” to “Waxpol- professional level detailing in minutes”. As accordingly the Waxpol convenience range was introduced to the modern trade channel and the advertising material was changed to reflect vehicle owners using the product in contrast to previous representations with professional painter characters. To better support the everyday user, the packs were equipped with a hand sprayer and the bottle shape was aligned to ensure it could fit in the door pockets of an average car, with a free distributed polishing mitt. The pack sizes were made smaller from the traditional 01 litre packs to 100ml & 250 ml packs, and the package branding and graphics were upgraded to suit the casual consumer. The trade channels were modified with new activations done at automotive consumable sales outlets, professional service stations, modern trade outlets, vehicle agent sales outlets and pop ups stores activated during exhibitions. Special interest was focused on increasing the online sales where proposals were made to Wow.lk, Mydeal.lk and Retailgenius.lk to promote the product online with a dedicated delivery service. By early 2016, AA convenience range obtained traction in the local market. More and more casual users were looking at purchasing Waxpol and the trade volumes have been showing a mom growth of around 2%. The smaller pack sizes jump started an entirely new SKU which occasionally had stock out situations due to the high demand. By end of 2016, the convenience category was performing a highly satisfactory level, recording a turnover representation of almost 35% out of the total category mix, signing one of the most successful repositioning conducted for the entire Waxpol range.