Castrol and BP: Can brands co-exist?

Purvita Chatterjee

EARLY this year, the Regal Room at the Oberoi in Mumbai was booked for the employees of nine business units of Castrol from across the world. It was in this room that Project Alchemy got underway whereby the employees of BP and Castrol came together to define how to market their global brands in their respective markets after the takeover of Castrol by the energy giant, BP.

This takeover is expected to have its own ramifications for Castrol in India. As the joint venture company, Tata-BP, dissolves in India, Castrol India would have to distinctly position its lubricant brands vis-a-vis those of BP to avoid overlaps in their respective positionings and thus business. Project Alchemy has addressed these needs for each market and in India the outcome of this exercise is there to see.

The 80-year-old Castrol is almost a heritage brand in the company, especially its popular sub-brands such as CRB Plus (for trucks and tractors), GTX (for passenger cars) and Super TT (for two-wheelers), while BP has brands such as Vanellus (diesel engine oil for trucks and tractors), Visco (for passenger cars) and Vistra (for two-wheelers).

The BP brand has already been launched in the diesel engine segment to target truck and tractor owners with its Vanellus sub-brand. It is the umbrella brand of BP which is being built more than its sub-brands - a reverse of Castrols branding strategy whereby the sub-brands have always been made more popular than the mother brand of Castrol.

Moreover, Vanellus is targeting the truck segment where Castrols brand of CRB Plus has a marginal market share compared to the other segments like passenger cars and two-wheelers.

Addressing the largest segment of the lubes market where diesel engine oils account for nearly 50 per cent of the total automotive lubricant sales, Castrol is addressing a section which has hitherto been dominated by PSU lube brands.

Says Ravi Pisharody, Vice-President, Marketing, CIL, We have the lowest share in the truck segment and believe there is an opportunity to gain additional volumes and share through a new international brand with a different imagery.

BP would thus serve as an economy brand for the truck segment with a target to garner at least a 10 per cent additional share in the next five years. Castrol now has a 20 per cent share in the truck segment with its CRB Plus brand of diesel engine oil and the additional shares would give a welcome respite in spite of a certain degree of cannibalisation which is bound to happen.

As Pisharody admits, We are trying to keep the brands apart but there is bound to be some eating into shares. As long as we can contain these levels and there are users from the other brands, we will be the gainers.

The positioning has been kept distinctly apart. While CRB Plus is offering longer engine life, Vanellus is assuring 5.1 per cent less diesel consumption.

This distinct positioning is being offered by BP for truckers who have been facing tough times with increasing diesel prices coupled with flat freight rates. BP is offering 5.1 per cent less consumption, thereby taking care of an imperative need for most truckers. This is being highlighted in all its communication developed by Ogilvy & Mather - a feature which has been indigenously developed specifically for the Indian market.

Besides, for the first time in the Indian lubes market, BP is offering its Vanellus sub-brand in a transparent container whereby the consumers would get the reassurance of getting the right amount of lubricant they were buying in comparison to the opaque colourful packs.

Even pricewise, BP brands will be pegged lower than the Castrol brands but at a premium of 7-8 per cent to the PSU brands. This will help it in getting into the mass-priced segment, pitting itself against Servo from IOC and other cheap brands such as Lal Ghoda from HPCL.

Investing Rs 10 crore into building the BP brand, Castrol has made sure that the distribution channels remain distinct between the two brands. This is to ensure that the new brand of BP gets the right amount of attention and service by the distributors.

As K.R. Venkataraman, General Manager (Marketing & sales), BP, states, A new brand always requires focus and dedication, so we have decided to have separate distributors for the new international BP brand. Taking on the old set of distributors belonging to Tata-BP, Castrol is using the same set of 325 distributors to handle the BP brands who in turn reach out to 15,000 outlets in the bazaar segment of the lubes market. Castrol, meanwhile, continues with its 220 distributors servicing almost 50,000 outlets.

Meanwhile, BP is still holding on to its other two brands, waiting for the right time to launch these brands. While Vanellus may have fulfilled a need, the other segments such as passenger cars and two-wheelers are Castrol-dominated areas where BP would not like to tread immediately. We will launch the other BP brands as and when we find an area which Castrol is not catering to and find a distinct positioning. It should be at least risk to the existing Castrol brands, states Pisharody.

In fact, this was what Project Alchemy was all about. It was a marketing exercise about how to distinguish between all the brands in the portfolio (apart from Castrol and BP, there is Duckhams and Veedol, also part of the BP). However, it was not possible to arrive at a single solution for all these brands as in India there was no distinct positioning found for the BP brand in the passenger and two-wheeler segments. But, considering that the lubes business has not been registering healthy growth rates (estimated between 2.5 to 4 per cent), is there room for another international brand like BP in a cluttered market?

Explains Shyamal Banerjee, Regional Manager, Lubes, Bharat Petroleum, It will be difficult for BP to sustain itself unless it come out with promotional schemes. Besides, the PSUs also have deep pockets and BPs parent company may not be interested in investing too much in India.

Besides, in this price-sensitive segment, the PSU brands will continue to enjoy both refining and marketing margins because they would be manufacturing their own base oil and have their extensive network to push their respective lube brands. Sporting a new logo (a helion symbolising the Greek Sun God) the BP corporate brand is meant to stand for values such as innovation, progression, performance-driven nature and environment-friendliness. Meanwhile, Castrol worldwide is also in the process of undergoing a logo change. Keeping the brands distinct in every possible way is now the task on hand for the company.

With Project Alchemy defining how to market the world class brands within BPs portfolio, Castrol India is now getting geared up to actually give some world class competition to the other lubes manufacturers in the country. With BPs ambition of being a market leader in every category that it enters, fulfilling this goal in India could just be a matter of time.