Bain Asian Lubricants

Bain case: Asian lubricants producer
Solved 115.4k times
Difficulty: Beginner | Style: Real Case, Candidate-led (usual style) | Topics: Market entry, Market
analysis, Growth strategy
Problem Definition
LubricantsCo, a very successful Asian premium producer of lubricants in their
native region, would like to further increase their revenue and profit. The product
range ranges from lubricants in the automotive sector (e.g. motor and gear oil)
to industrial applications (e.g. fats, heavy-duty oils).

According to preliminary examinations, further growth potentials in the Asian core
market are rather limited. Thus LubricantsCo would like to investigate options
to internationalize in the passenger car business – also outside the premium
segment which is given priority.

Therefore your consulting firm was instructed to elaborate a market entry
strategy for the European market.
Comments
The case has two project phases:

Project phase 1 aims at prioritizing a test market within Europe and its
neighbouring countries with the help of a structured selection process on the basis
of typical evaluation criteria.

During project phase 2 the interviewee should - based on qualitative standards and
on the basis of relevant dimensions - outline a possible market entry strategy for
the market, which has been prioritized during phase 1.
Short Solution (Expand)

Detailed Solution
Paragraphs highlighted in green indicate diagrams or tables that can be shared in
the “Case exhibits” section.
Paragraphs highlighted in blue can be verbally communicated to the interviewee.
The following framework/structure would be a good approach for the problem at

hand:

I. Background

At this point the interviewee should understand the situation and structure
the problem solving strategy.
Information that can be shared if inquired:
 Project phase 1 aims at prioritizing a test market within Europe and its

neighbouring countries with the help of a structured selection process on
the basis of typical evaluation criteria.
 Germany, Turkey and Russia can be internally chosen.
 In order to identify the test market that is the most appropriate for
LubricantsCo, the two typical dimensions market
attractiveness and probability of success should basically be analysed.
 Market attractiveness is composed of the following dimensions:

o Market size
o Market growth
o Market profitability
 The prioritization of a test market as well as the relevant dimensions of
a market entry strategy should be summarized in a convenient design for
the discussion with the management board of the client.
II. Prioritization

At this point the interviewee should locate the test market. To do so the interviewee
needs to determine market attractiveness with the help of market size and
profitability.
Share table 1 about a market review with the interviewee.
Market size
In Germany each of the approximately 40 million households has on average one

car. This corresponds to a stock of approximately 40 million cars and accordingly
a density of 500 cars per 1.000 inhabitants (population: 80 m.).

Market growth
 Russia and notably Turkey are countries with a relative high market

growth compared to Germany.
 This information can be used to estimate the market growth of car oils,
since more motor oil will be used in growing economies in the future.
 Russia and Turkey also have a growing market of premium motor
vehicles.
Market profitability
 Profitability cannot be calculated directly, since no data is available.

 Germany and Russia:
o High intensity of competition
o Low profitability
 In Russia the percentage of old vehicles is higher than in Turkey.
The profitability is lower than Turkey, since used motor
oils generate barely any margins for old vehicles.
 Due to growing demand of high-quality oils as well as
moderate competitive conditions, Turkey has the highest qualitative
profitability.
Main conclusion
The interviewee should set up a comparison matrix.

Share table 2 with a template with the interviewee. Share table 3 with the solution if
the interviewee has difficulties with the task or has already set up the matrix.
Chart 2 shows an overview of the analysis.
It becomes obvious that Turkey is the most promising market and should therefore

be selected as test market. Germany drops back due to low growth, Russia due
to the difficult competitive environment and structural disadvantages.

III. Strategy

Here the interviewee should set up a possible strategy for the market in Turkey. The
5 classic dimensions of a how-to-win strategy should be addressed:
 Product
 Production / Supply Chain
 Channels of distribution
 Brand
 Price
Product
 The product range that is offered in the domestic market ranges

from lubricants in the automotive sector (e.g. motor and gear oil)
to industrial special oils and fats.
 There are high regulatory guidelines for individual products for the European
market.
Production / Supply Chain
 In a best case scenario, LubricantsCo continues to produce

its lubricants in Asia only and transports them to Turkey.
 In this case they can, on the other hand, only react very slowly to
local fluctuations in demand in Turkey or they need to have large stocks.
Channels of distribution
 The sale of lubricants to automobile manufacturers (OEMs) for the first

fill during production is an important channel.
 Another channel are the numerous chains of workshops, which sell a large
amount of motor oils to car owners.
 Furthermore there are smaller local workshops.
 An additional channel of distribution are gas stations, which, however, only
offer their own brands (e.g. Shell).
Brand
 In order to lend the marketing campaign the necessary credibility and to

emphasize the attractiveness of the brand from the beginning, an important
automobile OEM should be won as so-called lead customer for the Turkish
market.
 Next to the B2C-marketing, the B2B-marketing on the lubricant market also
has however a very important role including for example workshops.
Price
 LubricantsCo presents itself as premium supplier in Asia and wants

to pursue this strategy in Turkey.
Main conclusion
 Product: In order to keep the complexity to a minimum, you recommend

LubricantsCo to focus on motor and engine oils for the market entry
phase, since this product domain not only represents the largest volume of
the Turkish market, but also promises profit margins above average.
 Production: As soon as you calculate the costs for transportation and stock-
keeping you will realize that production in Asia for the Turkish market no
longer makes sense – also if only small amounts are produced. As the
market entry in Europe should not continue to be in a subcritical domain, you
suggest a local production which will be supported by the smaller
production costs in Turkey compared to other European countries.
 Distribution: OEMs generally have a preferred or exclusive supplier who
covers a large part of the volumes. However, this channel is
very important for the branding and for this reason for the perception of
the end customer.Consequently, the OEM channel has
significant impacts on the business in the aftermarket which is dominant in
terms of volume. Not only does the value of an oil brand grow by connecting
it with a popular car brand, but it is also easier to win the authorised
workshops of these OEM contract customers as customers – at
much higher margins.
 Brand: In order to win a lead client, negotiations should commence
with AsiaAutoCo, a client who has been successfully supplied on the Asian
market over the past years and who is already active on the Turkish
market. An essential component for the success in the B2B area is
to convince the mechanics in the workshops. This will be guaranteed by
the quality and intense customer relations with the help of the Key
Account Manager as well as the local sales team.
 Price: That is why the price strategy should be adjusted to the upper
segment of the Turkish market. This strategy will be supported by the
planned partnership with AsiaAutoCo and the high quality product offer for
the premium as well as the middle quality segment.
IV. Conclusion

The interviewee should draw a conclusion from the analysis:
 Turkey is the most the most promising market and should therefore be

chosen as test market.
 The dimensions product, production, channels of distribution, brand and
price strategy should be analysed more closely for the market entry
strategy.

Bain Asian Lubricants

Uploaded by

Copyright:

Available Formats

Bain Asian Lubricants

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Bain Asian Lubricants

Uploaded by

Copyright:

Available Formats

Bain case: Asian lubricants producer

Paragraphs highlighted in blue can be verbally communicated to the interviewee.

The following framework/structure would be a good approach for the problem at

 Project phase 1 aims at prioritizing a test market within Europe and its

 Market attractiveness is composed of the following dimensions:

In Germany each of the approximately 40 million households has on average one

Information that can be shared if inquired:

 Russia and notably Turkey are countries with a relative high market

Information that can be shared if inquired:

 Profitability cannot be calculated directly, since no data is available.

The interviewee should set up a comparison matrix.

It becomes obvious that Turkey is the most promising market and should therefore

 Production / Supply Chain

 The product range that is offered in the domestic market ranges

 In a best case scenario, LubricantsCo continues to produce

 The sale of lubricants to automobile manufacturers (OEMs) for the first

 In order to lend the marketing campaign the necessary credibility and to

 LubricantsCo presents itself as premium supplier in Asia and wants

 Product: In order to keep the complexity to a minimum, you recommend

 Turkey is the most the most promising market and should therefore be

You might also like