Mak on a slippery slope

A donkey wins a horse race and a cricketer suddenly bowls a brilliant spell. The secret of their success? Mak Lubricants. These two advertisements "" with the tagline "Mak makes it possible" "" were launched last year and still draw high recall from viewers.

But ask Bharat Petroleum Corporation Ltd (BPCL) officials and they are likely to say that Mak hasn't made it possible "" at least, not yet. BPCL's lubricants are still only in the fourth place in the Indian lubricants market. Although brand awareness is up after a rebranding exercise undertaken last year, the company is yet to see results in terms of marketshare.

In February 2003, BPCL brought its nine lubricant brands under one umbrella brand "" Mak. Earlier, the company's portfolio comprised brands that catered to different consumers. For instance, Glide was meant for two-wheelers, Automol for cars and Mak for heavy vehicles. "The company settled on Mak because it already had a successful run with its product before the rebranding exercise. Besides, the name is easy to recall and is suited for universal appeal," explains Niraj Seth, brand manager, lubricants, BPCL.

Making a mark is particularly difficult in the Indian lubricants market. The Rs 5,500-crore market (volumes: 1,200 thousand metric tonnes, or TMT) is made up of more than 32 players. Indian Oil Corporation Ltd (IOCL) is the leader, with its Servo brand accounting for 38 per cent of the market. Castrol is next with a 20 per cent market share, followed by Hindustan Petroleum (HP), with an 18 per cent share.

BPCL is a distant fourth with 10 per cent of the market. In 2002-03, BPCL clocked volume sales of 117 TMT in lubes, compared to 105 TMT the previous fiscal. This accounts for 0.6 per cent of its total petroleum products sales of 19,856 TMT (in volumes).

It doesn't help that the market isn't expanding "" the growth rate has stagnated for the past two years. That's because although the number of vehicles has increased, newer lubricant formulations are more efficient "" the minimum drain period (the time frame in which the oil has to be replenished) for most engines is at least 10,000 km "" which means they do not have to be replaced as frequently as earlier. And with most taxis and auto-rickshaws switching over to compressed natural gas (CNG), the usage of lubricants has been further reduced.

That may also be one reason why BPCL's earlier strategies to push its lubricants didn't work too well. Initially, for instance, the company concentrated on diversified segments to capture the market at different levels. "However, since lubricants is a low-involvement category, it is difficult to achieve major gains even though sales in terms of volumes can make it profitable in some segments," says Seth.

There was another problem with the earlier branding strategy. All Mak's competitors operate under a single brand name. Their products, therefore, have a company brand image to fall back on. And, as Seth explains, "Consumers associate lubricants with the brand name. They do not get into specifics." For instance, in the 4T (meant for four-stroke engines) segment if customers want Castrol 4T or HP Racer 4, they ask for Castrol or HP. Before rebranding, although Glide 4T (now Mak 4T) was a popular brand, it was not associated with BPCL. The rebranding was a bid to change that.

To retain the earlier brand association and yet drive home the changed name, BPCL made some superficial changes to its packaging as well. Although it retained the package colours of its brands like Glide, Automol and Mak as red, yellow and blue respectively, it also added visuals to its labels while renaming the products under the Mak brand. Mak 4T has a racer bike on the label, Mak 2T has a scooter and so on, which also helps specify the product's usage.

The packaging has also been made relatively uniform, to enable customers to associate the product with the Mak brand. At the same time, the company took care to leverage advantages where it could. For instance, earlier products like Superkool, Redikool and the Spirol series already had some brand value. Instead of changing their names altogether, the company simply prefixed Mak to each brand.

Changes were also made to the distribution network. Over the last year, BPCL's lubricants division has increased the number of exclusive outlets from 300 to over 500. And in the open market, the company has pushed up its presence by 66 per cent, from about 5,000 shops to over 8,000 shops outside its retail outlets. That's still minuscule compared with IOCL, which has over 8,000 retail outlets, and Castrol, which is present in over 50,000 outlets.

Of course, the target customer, too, is changing. BPCL now plans to focus mainly on the diesel and the 4T segments because both are fast-growing segments of the lubes market. Diesel automobiles already account for 325 to 350 TMT of the total lubes market. Recent developments such as the completion of the national highways project and the increasing demand for cars and sports utility vehicles that run on diesel are likely to see this segment expand.

In two- and three-wheeler passenger vehicle engine oils, the 4T segment (mainly motorcycles, at present) is a better-recognised brand category than the 2T segment (meant for two-stroke engines). And increasingly, newer models of motorcycles and scooters are switching to the four-stroke engines as they are more fuel-efficient. Of the 55-odd products in the engine oil market for two- and three-wheel vehicles, only 3 to 4 per cent of volume sales is accounted for by two-stroke bikes.

Implementing these changes hasn't been easy. One major issue was familiarising the staff across the company with the rebranding. "It had to be an easy transition for the distributors as well as the consumers," Seth explains. Distributors and dealer, too, remain sceptical of the value of the rebranding exercise. Says one dealer, "I sell about 3,000 to 4,000 kilolitres of oil every month at my petrol pump and this has remained steady even after BPCL rebranded its lubricants. Competition from other brands is still high in terms of price and brand awareness. The market is very price conscious and the sales will improve only after the brand gains popularity at par with its competitors."

Competitors, though, do take BPCL's changed image seriously. Says Shankar Subramoni, senior manager, lubricants division, IOCL, "There will always be competition. We may not perceive it as a threat but we definitely take notice. There should be constant re-engineering of your product."

A year into the rebranding, BPCL "" and Mak "" is still to see concrete results. Market share remains unchanged at 10 per cent. But the company remains unfazed. The advertising blitzkrieg during the World Cup last year has improved brand visibility "" and BPCL is satisfied with that, at least, for now. According to an all-India survey conducted in November 2003 by TNS Mode, unaided awareness of the lubricants in a span of eight months after the consolidation of the entire portfolio under Mak has gone up to 46 per cent, while total awareness has gone up to 94 per cent.

BPCL considers the extensive brand building measure as an investment for the future. Company officials claim it is not looking for immediate returns and is confident about a successful breakthrough in the market. It plans to capture new segments by producing customised oils and is looking for corporate tie-ups.

In the last two years, BPCL has entered co-branding arrangements with Telco for gear oils and coolants and Hindustan Motors for engine oils. Mak has been fortunate in establishing its brand image.

And, says Seth, the company expects a growth of 12 to 15 per cent this year. Will Mak make that possible?