Established in 2001 from a joint venture agreement between Akzo Nobel, Netherlands and PT Bina Propertindo Edikarya, PT Akzo Nobel Dekorina (AND) was set up to manufacture and distribute decorative paint in Indonesia. Akzo Nobel, a global company that specializes in paint products, is the world's largest paint producer as well as a market leader of decorative paints in Europe.

Indonesia has been on a road to recovery since the economic crisis in 1998, the improving financial condition and the less volatile political situation enable one such company as Akzo Nobel to make a foreign investment in Indonesia. Akzo Nobel saw an opportunity in Indonesia's current 145,000 tons per year decorative paint industry that is expected to increase. As a leader in paint products, Akzo Nobel felt positive in competing with the existing players in this lucrative market.



The objective of this paper is to evaluate the effectiveness of the distribution strategy of PT AND. We will analyze the company's current strategy and hopes to makes improvement on the strategy to obtain the target market share.



We will begin with PT AND's initial4P (penetration, Pricing, Place, Promotion) Strategy. We will then examine the product availability, store displays and promotion in comparison with its competitors. This will be done through interview with PT AND's general manager and marketing manager, market survey on the paint store outlet and interview with PT CSA's sales manager and sales force. We have limited the research to Jakarta for this study.



From our study, we found that Flora was perceived as brand that offers a wide range of colors but were not yet popular and higher priced than its competitor. Added to this fact, the new product was not attractive to the retailers because of smaller discounts and shorter credit terms. In-store promotion was proven more effective than advertising as in the case during launching. The advertisement will not be practical at this moment as there is no support from the retailer who are not yet confident with Flora. In terms of distribution, we found the penetration of Flora was low owing to low availability. The problem originates from the assignment of the sole distributor PT CSA who handles numerous other principal products.



In order to succeed, we believe that PT AND needs to focus on improving the distribution system of Flora. First step is to make sure that the selected distributors' activities towards customers, retailers and the principal are effective and under control. Second, we suggest that the distributor penetrate larger number of outlet so those outlet that sell competitors' products for ego Catylac and Vinilex, should also sell Flora. This will help Flora's brand awareness to larger audience. Finally, there should be extensive promotional activities by both the distributor and principal. This includes educating the retailers on the benefits of tinting machines and color syringes.



Research Location: P.T. Akzo Nobel Dekorina (AND)

Supervisor: L.I.A. Mudzaffar Daud

Accepted: 19 September 2003



This document contain confidential informaformation untill 29 September 2008.