GOBIS PAINT LTD
A Research Report
submitted in partial fulfilment of the requirements
for the course of Methods of Business Research
to Sir Amir Saeed
at the Institute of Business Management,
Karachi, Pakistan
Submitted by:
Joham Nasir Virk – 24769
Shahrukh Alaya – 22140
December, 2020
ACKNOWLEDGEMENTS
We have put in efforts in this report and worked hard for its completion. However
it would not have possible without the kind support and help of many individuals.
We would like to extend our sincere thanks to all of them.
We are grateful to all the people who helped take part in the survey and gave us
their responses for the topic at hand.
We would also like to express our gratitude towards Sir Amir Saeed for his kind
cooperation and encouragement which helped us in the completion of the report.
We respect our mentor for giving us such an opportunity.
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ABSTRACT
Gobi’s Paints is the one of the top 5 paint company in the South Asian region and
No.1 in the Pakistan’s paint sector. With the major competitors such as Berger
Paints, Master Paints, Nippon Paints, Diamond Paints and Sparco Paints.
The purpose of this research is to find out why Gobi’s Paints has been losing its
market share. As recently, the paint sector has been facing the challenges of the
high cost of raw materials, extreme competition posed by foreign players and an
unorganized sector. So we conducted this research to analyze and find the factors
behind the loss of market share. To do so, we constructed the questionnaire and
gathered sufficient data for analysis. SPSS was used for the analysis of the data.
Various secondary sources were also used to derive hypothesis and theories.
The report includes recommendations to the problem in question along with the
references and figures for a clear explanation and analysis.
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TABLE OF CONTENTS
1. Introduction---------------------------------------------------------------------- 5
Company History------------------------------------------------ 5
Background of the study----------------------------------------------- 7
Rationale of the study---------------- 7
Scope of the study---------------------------- 7
Statement of the problem---------------------------- 7
2. Review of Secondary Data--------------------------------------------------- 8
3. Hypothesis------------------------------------------------------------ 10
4. Methodology---------------------------------------------------------------------- 11
Sources of Data ------------------------------------------------ 11
Instruments of Data Collection --------------------------------------- 11
Sample Design----------------------------- 11
Sampling Technique ---------------- 12
Sample Size----------------------------- 12
5. Limitations of the Research------------------------------------------------ 12
6. Hypothesis Testing and Analysis of the Results------------ 13
Reliability testing------------------- 13
Results---------------- 14
7. Conclusion----------------------------------------------- 19
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8. Recommendations--------------------------------------------------------- 20
9. References------------------------------------------------21
INTRODUCTION
Company History:
Allied paints was established in 1981 by its Established in 1981 by its renowned
name “GOBI’S”. It is a very much preferred choice in paints for millions of people
in Pakistan and Afghanistan. The founder, Mr. Asif Malik (late) along with his
partner Mr. Muhammad Farooq Abbassi started this journey towards the
establishment of this homegrown company almost 3 decades ago. They embarked
on this journey with an aspiring dream to establish a premier paint organization
that would outshine the other multinational and national players in the paint sector.
Their dream was to become the leading brand among the South-Asian region.
Through its consistency with quality products, Allied paints have established itself
among top 5 decorative coating companies in South Asian Region. In Pakistan, it
is the No.1 Quality Paint Company with a turnover of Rs. 1.25 billion (around 7.8
million USD) per annum. The vision of the late founder Mr. Asif Malik is still
followed at Allied Paint Industries by producing the best quality paints and finishes
and delivering then to the customers through their strong nationwide web of well-
informed, knowledgeable and customer-friendly distribution network.
The reason behind its Gobi’s paints performance coatings is assurance to expertise
a specific product to deliver the mentioned benefits:
Amazing application properties
Long-Lasting
wipe ability,
Longevity.
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And due to this, Gobi’s Paints keeps in investing in their people, innovation,
business improvement and technologies.
Gobi’s paint follows the British Standard specifications; therefore, to monitor the
quality control, highly seasoned technical staff makes sure to maintain the strict
quality assurance.
Gobi’s Paints’ Focus:
Promise to accomplish total customer satisfaction.
Commitment to make the company ethically and socially responsible.
Commitment to remain as the market leader through unfailing sales growth,
increasing efficiency and developing new products according to the
customer needs.
Guaranteeing consistent improvement in operations through employment of
highly professionals and dedicated team, proper process management and
participation of the stakeholders.
To set the measurable targets at proper stages and endlessly monitoring
them.
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Background of the study:
Recently, the paint sector has been facing the issue of the high cost of raw
materials, due to high regulatory duty on imported raw materials which causes the
high cost in production the paints and coating. Some companies have been trying
to use less imported raw materials cause the low quality products. Either that or
some companies have raised their price to cover their production cost. As this
market is price sensitive market, the companies lose their customers. The
customers have high expectations regarding the quality of paints from the
renowned companies like Gobi’s paints. So if the quality is not delivered as
promised, the company can lose the customer base. Some threats to the paint
sector are the inflationary pressure and rupee devaluation and economic slowdown
of Pakistan, since this industry is not export oriented.
Rationale of the study:
This research discusses the factors behind the loss of market share in the paint
sector specifically the brand Gobi’s paints. The research ventures forth into various
possible issues the company faces for the decrease in market share. In an effort to
do so, we have scrutinized the paint sector, looked through the possible issues,
opportunities and the factors effecting the market share. We have looked into the
data of other paint companies along with the data collected from Gobis Paint.
Scope of Study
The aim of the study is to find the reason behind the loss of market share for
Gobi’s Paints. The geographic scope of this research is confined within Karachi
city. Information was drawn from the of Gobi’s Paints Pakistan, its employees and
their customers.
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Statement of the problem:
As Gobi’s paints have lost its market share in Pakistan, this research is conducted
to find out the reason behind it.
REVIEW OF SECONDARY DATA
The paint industry has a huge unorganized sector that
accounts for almost 36% of the textile industry. This
unorganized sector consists of many players with
different estimates. The unorganized sector captures the
huge market of most semi-urban and rural areas. These
markets are made up of price sensitive consumers. Due
to the unorganized sector, the organized sector not only
loses market share but suffers due to lowered quality
bar in the paints industry.
Custom duty on finished
goods i.e. Paints and
Emulsions is 20%. The
companies have to pay high
regulatory duty on imported
raw materials. The high
production costs raise the
actual prices of the paints.
Since the paint market is
highly price sensitive,
consumers bearing the cost
burden shift to other
alternatives. Economic slowdown, inflationary pressure and rupee devaluation are
also major threats to the industry.
Paints Sector – an overview by Parca
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H1: Increased cost of the raw materials has lead to increase in the prices of
the paint, consumers are not willing to pay more.
H2: The quality of Gobi’s Paint has decreased, resulting in less customers and loss
of market share.
The competition Commission of Pakistan (CCP) issued show cause notices to 16
paint companies, for prima facie, violation of Section 10 of the Competition Act,
2010 pertaining to deceptive marketing practices. These notices were issued when
CCP noticed that the paint manufacturers were hiding token or coupon of
redeemable nature in their paint packs. These tokens were used as a monetary
incentive to the painter, who would find the coupons in the end of the pack after
painting and would cash them later while the end consumers would bear the full
price of the pack without having any information in this regard. The non-disclosure
of this important information were taken as deceptive marketing techniques.
These notices were issued to ICI Pakistan, Nippon Paint Pakistan (Pvt) (Ltd),
Kansai Paint, Berger Paints Pakistan, Brighto Paints, Diamond Paint Industries,
Mansoor Paint Industries, UP Paint Industries, Nelson Paint Industries, Chawla
Chemical and Metal Industries, Brolac Paints, Karss Paints Industries, Allied Paint
Industries (Gobis Paint), Sika Paint Industries, Rafiq Polymer Industries and Black
Horse Paints. The companies were asked to submit arguments.
CCP Reprimands 16 Paint Companies to Shun Deceptive Marketing Practice of
Inserting Tokens in Paint Packs
H3: The token controversy has lead to the end consumer losing trust in the brand,
hence the company has lost its market share due to bad image.
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HYPOTHESIS
Research: The research question for this report was about why did Gobi’s Paint
loss its market share. We developed the following hypothesis based on the
secondary data to observe the cause leading to less market share for the firm.
H1: Increased cost of the raw materials has lead to increase in the prices of the
paint; consumers are not willing to pay more.
H2: The quality of Gobi’s Paint has decreased, resulting in less customers and loss
of market share.
H3: The token controversy has lead to the end consumer losing trust in the brand;
hence the company has lost its market share due to bad image.
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METHODOLOGY
The data collection is done through a questionnaire that was sent by an online
medium, i.e. Google forms. Information was acquired from 25 respondents. It was
collected anonymously to fulfill ethical principles. The research was conducted in
two sets of population. The first set represented the demand side of the paint
sector, whereas the second set was a representation of the supply side of the
business sector. For the demand side, the population mainly consisted of the
existing and the potential users of Gobis Paints. (15 respondents) For the supply
side, the population consisted of the employees of the company. (10 respondents)
The data were then run through the SPSS for the accuracy and reliability of results.
Sources of Data
The research was based on both primary and secondary data. Secondary data
was required mainly to study the background of the paint sector. It also was
used to gain information about the main competitors in the paint industry.
Some secondary sources like some scale research reports will be used in the
report. Primary data will be mainly from the existing and potential clientele
of Gobi’s Paint. Primary information was obtained through survey and
questionnaires conducted for the research.
Instruments of Data Collection:
Necessary secondary information was taken into account from newspapers,
websites and various articles. Information from the company’s website and
the competitors’ data was also used. Questionnaires enabled us to gather
specific information relating to the loss of market share and internal as well
as external factors behind it.
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Sample Design
As mentioned already, the research was conducted on two sets of population,
where one set represented the demand side and the other set represented the
supply side of the paint industry.
Sampling Technique
The complete sampling frame for the target population of this research that
is essential to conduct the probabilistic sampling methods was not available.
Therefore, a non-probability sampling method was selected for this research.
Apart from this, limited time and budget constraints also favored non
probability sampling. To assess the results, analytical techniques will be
used to come to a conclusion and recommendations. This will include the
use of SPSS.
Sample Size
The sample for the questionnaire was small, due to time limit and the recent
lockdown imposed. The samples however, provided adequate information
required for the research.
LIMITATIONS OF THE RESEARCH
There were some criticalities that were faced while conducting the research.
Certain limitation can affect the accuracy and effectiveness of the research.
The employees may have been hesitant to give out accurate company
information; this may have led to false or less information.
The accuracy of the information provided by the company may be doubted.
Pakistan does not have proper and organized secondary data for the paint
sector. Secondary information was mostly derived from articles and
newspapers; their authenticity maybe challenged.
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Our sample size was limited due to certain technicalities; it may not be
large enough to represent the entire population.
HYPOTHESIS TESTING AND ANALYSIS OF THE RESULTS
Reliability testing:
We used SPSS to check the reliability of the responses for the most accurate
results. As shown all 25 responses were valid and thus considerable for the
research.
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Results:
A total of 25 respondents were selected for the survey, among them for 10
employees of Gobi’s paint and 15 customers of Gobi’s Paint. The results were as
followed. SPSS was used to generate cross bars to find the correlation and the
difference between the employee point of view and the customer point of view.
When asked about whether they think the prices of Gobi’s paint products
have gone up or
down during the
recent years
almost all the
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respondents bar one agreed that the prices increased.
The employees all agreed to the increase in prices, except one employee who
might be giving a false response in the favour of his firm.
The respondents were also asked about the cause behind the increase in
costs. The most common answer we got was got due to the increased cost of
the raw materials. 64% of the respondents agreed that the import duty on the
raw materials increased the cost which was passed on to the end consumer
by the firm.
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All the employees agreed that the cost of the products was raised due to
increased import duties and the inflationary pressure. Since the employees
are knowledgeable about the company’s internal affairs the response was
accurate.
The respondents were asked about the quality of the products of Gobi’s
Paints products to access whether they thought the quality had decreased or
increased over the time. 44% of the sample, that is 11 respondents all of
them the customers said that the quality has decreased. Whereas 48%
respondents including 8 employees said that the quality remained constant.
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The responses of the customers for this question should be considered more
as they are ones actually using the product. On the other hand it is obvious to
except that the employees of the firm might not accept that the quality of
their products have gone down. The responses of the employees may have
been programmed.
The questionnaire included a
questions asking the respondents
how they thought Gobi’s Paint is
doing when compared to the
competitors and what brands
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they will prefer over Gobi’s Paints. The results were as shown by the pie
chart.
What should be noted however is that the responses that should be
considered for these questions should be the ones given by the customers, as
they are ones actually using the products. As mentioned above the
employees might be hesitant to say anything against their own firm or even
considering any other
firm over Gobi’s Paint.
All the employees
(44% of the sample)
selected Gobi’s Paint
and no other brand.
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These brands are the main
competitors in the paint
industry. The results show
how strong the competition
in the market is and the
consumers tend to prefer
the giants of the industry
more. Berger Paints is the
biggest competitor and the
market leader.
The respondents were asked the cause as to why they left Gobi’s Paint what
were the factors that made them switch to the competitors. While the 44%
employee sample choose to reply with ‘did not leave’ and ‘did not switch’,
the consumers answers are the ones that would be used for the research.
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The most common response
of the customers was to
leave because of the
inflated prices. The paint
market is highly price
sensitive market. With a lot
alternative to choose from,
consumers react to the
smallest of the changes in
the prices.
24% of the consumers said
that they switched to other
brands because of the
affordable prices. Some
consumers also switched to
get better quality and very few
switched because of the
tokens.
Hypothesis 1 was retained.
Increased cost of the raw materials has lead to increase in the prices of the
paint; consumers are not willing to pay more.
As per the findings of the study, it was established that the high cost of raw
materials was one of the reasons behind the increases cost which led to
higher prices and the price sensitive consumers shifted from the brands for
cheaper substitutes resulting in Gobi’s Paint to lose market share.
Hypothesis 2 was retained.
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The quality of Gobi’s Paint has decreased, resulting in less customers and
loss of market share.
The results of the survey found that some of the consumers believed that the
quality of the product of Gobi’s paint has decreased. The consumers decided
to leave the firm because of the quality and shifted to brands with better
quality product. This loss in demand led to loss of market share.
Hypothesis 3 was rejected.
The token controversy has lead to the end consumer losing trust in the brand;
hence the company has lost its market share due to bad image.
The consumers were found to care less about the tokens and the brand image
did not suffer because of the court notices. The consumers shifted from the
brand for various other reasons.
CONCLUSION
It was found that the highly competitive paint market is very dynamic in nature.
The competitions keeps increasing and the major brands take up most of the
customers hence decreasing the market share of Gobi’s Paint. Apart from this, due
to Covid 19 situations, not only Gobi’s Paint but the whole paint industry is not
only losing market share but the market size itself is shrinking as many projects are
halted. The main reason for the loss of market share however was the inflated
prices of the products.
RECOMMENDATIONS
Gobi’s Paint should focus more on customer demand. The dealers should be
able to satisfy the customers and product availability should be arranged.
The firm needs to pay attention to the dealer’s growth rate, their activities
should be monitored and initiatives should be taken to recover the
losses/gap.
Gobi’s Paint should ensure a strong sales system. This can happen by
managing the day to day sales and delivery system. End-user activities
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should be enriched; market visits should be made frequently. Effective
communication with the distribution should be encouraged. .
Marketing system of Gobi’s Paint needs improvement.
The company should focus on maintain the quality of their products and
increasing the value offered by their products to keep the consumers
engaged and complain free. Quality control methods should be developed.
The company can initially take up some cost on itself instead of passing it all
to the consumers to increase the overall revenue as the demand will increase
if the prices are lowered.
The company should employ cost cutting methods without sacrificing the
quality of the products.
REFERENCES
[Link]
coatings-market
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