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B and

Bra d Strattegy
y A
Anaalyssis

             A
Amrita Viveka
anand          (09
9005) 

             D
Divya  Kiron    
                       (09
9035) 

             Ja
aisurya Pavith
hran           (09
9043) 

             Jo
ose Robin Patthrose        (09
9045) 

             K
K. Mridula        
                       (09
9047) 

             N
Neethu Jose     
                        (09
9063) 
Brand Strategy Analysis        

 
 

Table of Contents 
Section I ‐ Bridgestone India & MRF: An Introduction 
Chapter 1 ‐ Indian Tyre Industry: A Brief Analysis  5 
1  Overview of the Indian Tyre Industry  5 
1.1      An Introduction  5 
1.2      Key Influencers  5 
1.3      Role of Marketing  6 
1.4      Sales and Profitability  6 
1.5      Trends in the Past Years  6 
1.6      Current Status and Future Trends  7 
1.7      Towards the Future‐ "Radialisation in India"  8 
1.8      Major Players and Market Shares  9 
1.9      Environment Analysis 9 
1.10      Swot Analysis for the Tyre Industry 10 
1.11      The Companies and Major Product Lines 11 

Section II ‐ Marketing Strategies 
Chapter 1 ‐ Analyzing the Marketing Environment  15 
1  The Mind of the Consumer 15 
1.1      Who is the Consumer? 15 
1.2      Radial Tyres: Meeting the Indian Drivers "Unsatisfied Need"  16 
1.3      Buying a Radial Tyre: Key Decision Makers  16 
1.4      Consumer Behaviour  17 
2  The Company  18 
2.1      Core Competencies  18 
2.1.1          Bridgestone India  18 
2.1.2          MRF India  18 
2.2      Company Resources 20 
2.2.1          Bridgestone India 20 
2.2.2          MRF India  22 
2.3      Concern Areas  24 
2.3.1          Bridgestone India  24 
2.3.2          MRF India  25 
3  The Competitors  27 
3.1      Principal Competitors 27 
3.2      Salient Strengths & Weaknesses 27 
3.2.1          Bridgestone India 27 

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3.2.2          MRF India  28 
3.3      Basis of Competition  29 
4  Important Collaborators  30 
4.1      Upstream Collaborators 30 
4.1.1          Bridgestone India 30 
4.1.2          MRF India  30 
4.2      Collaborator Incentives  31 
4.2.1          Assured Supply  31 
4.2.2          Assured Quality  31 
4.2.3          Just in Time Supplies  31 
5  Context ‐ Trends Shaping the Tyre Industry   32 
5.1      Economic Environment 32 
5.1.1          Unresolved Tax Issues 32 
5.1.2          Increasing Cost of Raw Materials 32 
5.1.3           Import Restrictions  32 
5.1.4          Road and Support Infrastructures  33 
5.1.5          Sources of Demand  33 
5.2      Technological Environment  35 
5.2.1          Indigenous Development of Radial Technology  35 
5.2.2          Market Entry by International Players  35 
5.2.3          Improved Capacity Utilization Techniques 35 
5.3      Socio‐cultural Environment 35 
5.3.1          Explosion in the Number of Nuclear Families  35 
5.3.2          Higher Car Density Per Family  35 
5.3.3          Shifting Away from Savings, to EMI Culture  36 
Chapter 2 ‐ Segmentation, Targeting & Positioning  37 
1  Basis for Segmentation ‐ Vehicle Types  37 
2  Selecting the Target Segment  38 
2.1      Bridgestone: The Market Specialization Approach  38 
2.2      MRF: The Complete Market Coverage Approach  39 
3  Differentiating and Positioning Strategies  39 
3.1      Establishing Category Membership  39 
3.1.1          Bridgestone ‐ High Performance with Value for Money  39 
3.1.2          MRF ‐ Tyres with Muscle  40 
3.2      Points of Parity  40 
3.3      Points of Difference  41 
3.3.1          Bridgestone ‐ Quality & Value for Money  41 
3.3.2          MRF ‐ High Endurance Tyres  41 
3.4      Value Proposition  42 
3.4.1          Bridgestone ‐ Quality & Value for Money  42 
3.4.2          MRF ‐ Endurance Guaranteed  42 
3.5      Positioning Statements  42 
3.5.1          Bridgestone ‐ Passion for Excellence  42 

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3.5.2          MRF ‐ Tyres with Muscle  43 
Chapter 3 ‐ Analyzing the Marketing Mix  44 
1  The Product  44 
1.1      Product Levels ‐ The Customer Value Hierarchy  44 
1.1.1          Core Benefit  45 
1.1.2          The Basic Product  45 
1.1.3          The Expected Product  45 
1.1.4          The Augmented Product  45 
2  The Place  47 
2.1      Push and Pull Strategies in Channel Marketing  47 
2.2      Channel Design  48 
2.2.1          Direct and Indirect Channels  48 
2.2.2          Single and Multiple Channels  50 
2.2.3          Channel Length  50 
2.3      Channel Management Practices  50 
2.3.1          Selecting Channel Members  50 
2.3.2          Training and Motivating Channel Members  51 
2.3.3          Efficient Consumer Response (ECR)  52 
3  Pricing Strategies  54 
3.1      Basic Pricing Strategies in the Tyre Industry  54 
3.2      Dealer Discounts and Allowances  55 
4  Product Promotion  56 
4.1      The Marketing Communication Mix  56 
4.2      Developing Effective Communications  59 
4.2.1          Identifying the Target Audience  59 
4.2.2          Determining the communication Objectives  59 
4.2.3          Designing the Communication  60 
Chapter 4 ‐ Market Feedback and Control Mechanisms   62 

Section III ‐ Marketing Strategies: A Relative Analysis  
Chapter 1 ‐ Analyzing the Overall Market Strategies    76 
1  Analysis of the Overall Marketing Strategies 76 
1.1      Marketing Strategy Analysis 76 
1.2      Porter's Generic Strategy Analysis  78 
1.3      Creating Value  80 
1.3.1          Bridgestone ‐ Quality and Value for Money  80 
1.3.2          MRF ‐ Endurance Guaranteed  80 
1.4      Communicating the Value  80 
1.5      Capturing the Value ‐ Pricing Philosophies 81 
1.6      Sustaining the Value ‐ Building Relationships 81 
1.7      Rating the Marketing Strategies of Bridgestone & MRF 82 
   

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                      CHAPTER 1                        
 
 
 

BRIDGESTONE INDIA 

MRF 
     AN INTRODUCTION 
 
   

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THE INDIAN TYRE INDUSTRY                                                                   
A BRIEF ANALYSIS 

 
1. OVERVIEW OF THE INDIAN TYRE INDUSTRY: 
 
 
1.1 An Introduction to the Indian Tyre Industry
 

The Rs.20,000 crore Indian Tyre Industry, is highly raw material intensive and predominantly a
Cross Ply (or Bias) tyre manufacturing industry. It is highly concentrated wherein 10 large
manufacturers account for over 95% of the total tonnage production of 11.35 lakh M.T. It
produces all categories of tyres, except Snow Tyres and Aero Tyre for which there is no demand
domestically.

1.2 Key Influencers

The level of economic activity, performance of domestic automotive industry, and the faring of
the transport sector directly influence the performance of the tyre industry in India. With the
replacement segment dominating the overall tyre demand, the industry remains inherently
vulnerable to economic cycles. While radialisation has become the norm in the passenger car
segment, in the bus and truck tyre segment, its acceptance is still limited. Bus and truck
radialisation could emerge in the long term as the quality of roads improves and the restrictions
on overloading are better enforced. The practice of re-treading, which is gaining increasing
acceptance, could pose a challenge to replacement demand in the medium term. The ability of
the re-treading sector to capture potential replacement demand would depend on the awareness
among customers (of the benefits of retreading) and also the quality of retreading done. Given
the low levels of penetration of two-wheelers and passenger cars in the country, OEM demand is
likely to increase, which in turn would push up replacement demand with a lag. Slowdown in
automotive industry and global economy in general negatively impacted the Indian tyre industry
in 2009. The industry tonnage growth was only 2.19% during first nine months of FY 2009,
compared to 7.38% growth experienced during the same period last year. Demand side was also
severely affected as almost all auto manufacturers were forced to adjust their production last

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year. A major relief for tyre manufacturers was provided by the government by reducing the
excise duty on tyres from 14% to 10% in December 2008, and further to 8% in February 2009

1.3 Role of Marketing

Over the years, tyre manufacturers have developed a vast marketing network using dealers and
depots and as such all types of tyres are now easily available even in the remotest corners of the
country. No doubt, international auto majors in India now roll out their vehicles using Indian
manufactured tyres.

1.4 Sales and Profitability

The Indian Tyre Industry produced 821 lakh units of tyres garnering approximately Rs. 21,000
crore in FY 2009 -2010. The top players are now focusing on branding their products and
strengthening their distribution network so as to increase their market share. The industry derives
its demand from the automobile Industry. While the OEM (Original Equipment Manufacturers)
market off take is dependent on the new vehicle sales, replacement market demand depends on
the total population of vehicles on road, road conditions, vehicle scrapping rules, overloading
norms for trucks, average life of tyres and prevalence of tyre retreading.

1.5 Trends in the Past Years

As the economy in general; and automobile industry in specific slowed down in FY 2009, the
tyre demand too came under pressure. The industry production registered a 5 year CAGR of
6.44% between FY 04-09. The largest category of Truck & Bus tyres recorded a 5 year CAGR of
2.96% (slower than the industry average) while Light Commercial Vehicle (LCV), motorcycle
and car tyre categories grew at 6.07%, 10.70% and 6.90% respectively (relatively faster than the
industry average).

Off the Road (OTR) tyre category (customized tyres) which fetches a higher margin compared to
other tyre categories, was the fastest growing. The OTR tyre category had registered a 5 year
CAGR of over 8.85% in the last five years. Most of the top players increased their capacity for
the production of OTR tyres so as to improve their product mix, this being a high margin

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product. Also in the face of global slowdown and stiff Chinese competition, the export market
off take declined by 9.82% during this period.

On the face of demand-side pressures, the tyre industry saw production adjustments from all the
major players in the last couple of months. The government too tried to provide external stimulus
by effecting 6% excise duty cut across industries (the excise duty for tyres was brought down
from 14% to 10% w.e.f. December 7, 2008, and then further reduced to 8% w.e.f. February 25,
2009). In all the gloom; one silver lining for the industry was the easing of the raw material
prices from September 2008 onwards. However, their future movement still remains uncertain.
Based on data from the Rubber Board, natural rubber prices have risen about 50% in the last 6-7
months. In fact, prices in the Indian market are presently ruling 5-6% higher than the same in
international markets. As a result, tyre makers are facing significant rise in cost production. This
has forced the industry to begin hiking prices in an attempt to keep the already thin margins
intact.

Tyre majors have already hiked prices. Moreover, due to shortfall in domestic supply and
increasing gap between domestic and international prices of rubber, the tyre manufacturers have
increased the import of natural rubber. According to estimates by Automotive Tyre
Manufacturers Association (ATMA), tyre producers are likely to import 50% of their total
natural rubber consumption due to tight domestic supply. With profitability of tyre companies
having a strong correlation to raw material prices and as these companies operate on thin
margins, this would remain an area of concern.

1.6 Current Status & Future Trends

As regards to the demand scenario, the poor demand growth in FY 2009 - 2010 was primarily on
account of decline in OEM production. Continuation of poor volume growth could affect the
profitability further. Despite these challenges, according to CARE (Credit Rating & Research)
Ltd., while the industry may register a low tonnage growth in FY 2009, the long term
prospective seems to be bright. They expect the industry to experience a CAGR of
approximately 8.21% between FY08 to FY13. Automotive companies have started experiencing
increasing sales and raw material prices are stabilizing which will boost tyre sales over the
coming months. However, experts suggest there will be some time lag before profitability picks 

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up as tyre manufacturers are still carrying high cost inventories. Though the outlook in the
immediate term is uncertain, the long term outlook for the sector remains positive.

1.7 Towards the Future – “Radialisation” in India

Radialisation in India though in its infancy in T&B tyre category; is making inroads. Most
manufacturers have capex plans for radial T&B tyres with no new capacity being added for
bias tyres. This indicates that the industry foresees radialisation to take further hold in the
T&B tyre category. "Rate of radialisation is actually an index of the status of road
development, vehicle engineering and the economy in general". Notwithstanding the problem
areas, constraints and limitations, the tyre companies have kept pace with the technological
improvements that radialisation signifies and offer state-of-the-art product (tyres),
comparable to the best in the world.

• Radialisation can be aptly classified as the most important innovation in tyre technology.
Despite its several advantages (additional mileage; fuel saving; improved driving)
radialisation in India earlier did not catch on at a pace that was expected, since its
introduction way back in 1978. This could be attributed due to several factors, viz. Indian
roads generally not being suitable for ideal plying of radial tyres; (older) vehicles
produced in India not having suitable geometry for fitment of radial tyres (and hence the
general, and wrong, perception that radial tyres are not required for Indian vehicle;
unwillingness of consumer to pay higher price for radial tyres etc.

• However, the situation has radically changed in recent years, especially for the passenger
car tyre segment where radialisation has crossed 98% mark and is expected to reach
100% in two to three years. In the Medium and Heavy Commercial vehical segment
current level of radialisation is upto 8%, and that in the LCV segment is estimated at
18%.

• A few years back a beginning was made in Radialisation of truck and bus and LCV tyres
and this process is gaining momentum.

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1.8 Majjor Players aand Market Shares
S
 

major players
p incclude MRF Ltd. whicch is the
market leader (222% markeet share) followed
M
MRF Tyres
closely by Apolloo Tyres Ltd
d. (21%). The
T other 5 A
Apollo Tyres
7
major players
p aree JK Tyre & Industtries Ltd. 4 22 J
J.K. Tyres
(18%), Ceat Ltd.. (13%), Birla
B Tyress (10%), 10
C
Ceat
Goodyeear (7%) aand Bridgesstone (5%)). On an 13 21
18 B
Birla
averagee, 55% of thhe productio
on is for repplacement G
Goodyear
market,, followed bby 29.8% soold to OEM
Ms directly B
Bridgestone
and the remaining is exported. O
Others

1.9 Envvironment analysis – Maajor forces shaping


s the trajectory of
o the tyre inndustry

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1.10 Swot Analysis for the Tyre Industry

Strengths

™ Established brand names (key in the replacement market)


™ Extensive distribution networks - For example, Apollo Tyres has more than 118
district offices, 12 distribution centres and 4,250 dealers.
™ Good R&D initiatives by top players.

Weaknesses

™ Cost Pressures - The profitability of the industry has high correlation with the prices
of key raw materials such as rubber and crude oil, as they account for more than 70%
of the total costs.
™ Pricing Pressures – The huge raw material costs have resulted in pressure on the
realisations and hence, the players have been vouching to increase the prices,
although, due to competitive pressures, they have not been able to pass on the entire
increase to the customer.
™ Highly capital intensive - It requires about Rs 4 billion to set up a radial tyre plant
with a capacity of 1.5 million tyres and around Rs 1.5-2 billion, for a cross-ply tyre
plant of a 1.5 million tyre-manufacturing capacity.

Opportunities

™ Growing Economy leads to Growing Automobile Industry leads to Increasing OEM


demand that in turn leads to Subsequent rise in replacement demand
™ With continued emphasis being placed by the Central Government on development of
infrastructure, particularly roads, agricultural and manufacturing sectors, the Indian
economy and the automobile sector/ tyre industry are poised for an impressive
growth. Creation of road infrastructure has given, and would increasingly give, a
tremendous fillip to road transportation, in the coming years. The Tyre industry
would play an important role in this changing road transportation dynamics.

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™ Access to global sources for raw materials at competitive prices, due to economies of
scale.
™ Steady increase in radial Tyres for MHCV’s and LCV’s.

Threats

™ Continuous increase in prices of natural rubber, which accounts for nearly one third
of total raw material costs.
™ Cheaper imports of Tyres, especially from China, selling at very low prices, have
been posing a challenge. The landed price is approximately 25% lower than that of
the corresponding Indian Truck/ LCV tyres. Imports from China now constitute
around 5% of market share.
™ With crude prices scaling upwards, added pressure on raw material prices is expected
™ Ban on Overloading, leading to lesser wear and tear of tyres and subsequent
slowdown in demand. However, this would only be a short-term negative.
™ Cyclical nature of automobile industry.

1.11 The Companies and Major Product Lines

Bridgestone India Private Limited

Bridgestone Corporation, Japan was established in the year 1931. Today, the company is
a US $23.2 billion Corporation with its headquarters at Tokyo. It controls 18.2% of
global market and sells products in over 150 nations. The company has 47 tyre plants and
93 non-tyre plants, 3 technical research and development centres and 10 proving grounds.
Today, Bridgestone has a worldwide work force of more than 110,000 employees. It is a
global tyre manufacturing company, which emphasizes on Japanese traditions. It is still
growing and expanding and aiming at increasing its share in the world tyre and tubes,
industrial rubber products like belts, hose, chemical products, sporting goods, automotive
parts, electro materials and marine products etc.

Bridgestone India Private Limited (BSID) is one of the leading tyre manufacturers in
India. It began as a joint venture between Bridgestone Corporation of Japan (BSJ) and
The Associated Cement Companies of India Ltd. (ACC), in 1996.

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Their first plant was established at Kheda (Madhya Pradesh) with a paid up capital of Rs.
2753 million. With the latest technology from Bridgestone, Japan, the plant at Kheda,
covering 265,500 sq. mts. was officially inaugurated on 12th of November 1998.

Presently BSID has a state-of-the-art manufacturing facility near Indore, Madhya Pradesh
and is continuously increasing the production capacity in order to meet market
requirements. Here they manufacture the widest range of steel belted radial tyres for
almost all the cars & multi-utility vehicles, produced in India. These manufacturing
facilities are backed by the highly sophisticated Bridgestone Technical Centre at Tokyo,
the main out of the 4 Technical Centers worldwide, which performs rigorous research &
development activities to offer most appropriate tyres for Indian roads.

Over a period of time the company has established a distinct culture with various HR
principles and systems. With a strong work force of around 900 employees, it has
continuously strived to contribute to the Indian Society and realize happiness by
achieving targets with mutual trust and understanding.

Products

BSID has come a long way in establishing itself as a leader in Radial tyres segment,
producing around 2.7 million tyres per year. The products include Passenger steel belted
radial tyres and tubes and Light commercial vehicle steel belted radial tyres and tubes.
These tyres are used for passenger cars in India and are supplied to almost all the major
Original Equipment Manufacturers. Tyres are the strength and passion of BSID, a force
that has driven them to be one of the best in the business. As a premier player in the
Indian tyre market, Bridgestone continues to give its customers a range of innovative
products and services.

Recent Forays

Bridgestone India launched two new tyre range B250 and ER 300 which is likely to help
cement its place as a leading tyre supplier in the Original Equipment Manufacturers and
replacement market in the country. The performance or comfort tyre range ER300 has
capabilities for running in wet and dry conditions. The B250 variants received approvals
from OEMs like Honda and Hyundai for its Civic and Verna models respectively.

Bridgestone has around 30 percent market share (radial tyre segment) in OEM and
replacement market, in the country. The company expanded its facility near Pune from
around 10,500 tyres per day to more than 11,000 tyres per day to be achieved by the end
of the 2008. The company was in the process of upgrading its facility and automating its
manufacturing process to optimise efficiency to ensure consistent and steady supply to
customers.

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MRF

Established in 1946 as a small toy balloon manufacturing unit in a shed at Tiruvottiyur, Madras
(now Chennai), MRF ventured into the manufacture of tread rubber in the year 1952. The quality
of the product was so high that by close 1956 MRF had become the market leader with 50%
share of the tread-rubber market in India. In 1961, MRF entered into tyre manufacturing in
collaboration with the Mansfield Tire & Rubber Company of USA. Since then MRF has come a
long way towards achieving greater heights in the automotive tyre industry, with 6
manufacturing units in India. It has a huge distribution network of 2,500 outlets within India and
exports to over 65 countries worldwide. .

Today, MRF is the market leader among tyre manufacturers in India, with a 24% share terms of
revenues. Its leadership position, coupled with its strong brand recall and high quality, MRF
commands the price-maker status. MRF has a strong presence in the T&B segment, the largest
segment of the tyre industry, and commands around 19% market share in the segment. It is the
leader in the two/ three-wheeler segment (including motorcycles) and tractor front tyres, and
holds second place in the passenger cars and tractor - rear tyres. Exports account for around 12%
of the gross sales in MRF.

Products

MRF is the leading manufacturer of tyres for almost all segments. Being driven by technology
and product innovation, every tyre that comes out is of the highest standards and tested to
weather the toughest conditions on any road. With more than 85 tyre variants, MRF holds the
highest market share of 22% in terms of sales volume in the tyre industry.

Apart from tyre manufacturing tyres, MRF also manufactures its MUSCLEFLEX brand of
Conveyor Belting at one of the most advanced, 'State of the Art', Facilities in India.
Incorporating the latest manufacturing techniques, MUSCLEFLEX-Conveyor Belting has gained
rapid acceptance in markets worldwide.

MRF PRETREADS is yet another innovation from MRF Industries which is the most advanced
precured retreading system in India. MRF forayed into retreading as far back as 1970. Today,
MRF has perfected the art of recured retreading with its extensive knowledge in tyres and rubber.
MRF’s diverse business interests also include Paint and Coats, and Toys.

Recent Forays

Became the first domestic company to venture into the niche area of developing and
manufacturing of aviation tyres branded ''Aero Muscle'' for helicopters and aircrafts which
targeted the defence sector. The critical raw materials were sourced from overseas suppliers. It is
estimated that the company invested more than Rs 150 crore to set up the new production facility
at its existing plant in Medak district of Andhra Pradesh.

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             CHAPTER 2                      
 
 
 
 

  MARKETING STRATEGIES 
 
 
   

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ANALYZING THE MARK
KET EN
NVIRON
NMENT
T                                        
THE FOUR C AP
PPROACH 

   

1. THE MIND O
OF THE  C ONSUM
MER: 
 
1.1  Wh
ho is the Co
onsumer?   

While MRF
M has esstablished a wide footpprint and ann overall leaad across thhe entire tyrre market in
n
India, Bridgestone
B has emergeed as a clearr market leaader in the niche
n Passenger Car Seegment. Forr
comparrative purpooses betweeen these com mpanies in this study, we shall coonfine ourseelves to thee
Radial tyres in the Passenger Car segment.
niche seegment of R s

The typpical consum mer in this report is an


a Indian Passenger Car owner, w
who is look
king for thee
best-fit tyre for his car.

Also, siince Bridgeestone and MRF supplly tyres to OEM (Origginal Equippment Manuufacturers)**
and Tyrre dealers, these businness-to-busiiness partneers are anotther target consumer segment
s forr
the com
mpanies.

Target customers:
c

1) The Indian passenger car


c owner
2) OEMs
3) Tyre dealerrs

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1.2  Radial Tyres:  Meeting the Indian driver’s “unsatisfied” need 

As with consumers across all markets in India, the Indian driver’s mind has always been
preoccupied with “value for money”. The Indian driver measures this value for money in many
ways: through improved mileage, lower maintenance cost, improved safety, higher average life,
or even improved drive comfort.

The Indian driver had for long put up with poor road infrastructure, unreliable traditional nylon
threaded cross-ply tyres, higher maintenance costs and a very uncomfortable driving experience.
There was a clear need for a better tyre technology. Radial tyres, with their promise of far better
ride comfort, mileage and product life, seemed like the logical choice. However, though radial
tyres were introduced into Japanese and American markets way back in 1960, It was not until
1998 (when Bridgestone entered the Indian market with its line of radial tyres), that Indian car
owners were finally able to lay their hands on radial tyres.

The OEMs were quick to adopt the technology and started rolling out their new cars on radial
tyres. What followed was a “mass radialization” of the passenger car market. So much so, that
today, radial tyres have a 98% market share in the Indian passenger car tyre market. It was
clearly a case of bringing in the right product to address the “unsatisfied need” of the customer.

 
1.3 Buying a Radial Tyre: Key decision makers 
 
Unlike FMCG products, buying a radial tyre is usually not done on impulse. At an average
price of Rs.12,000/- , radial tyres are not a cheap buy for the average Indian middle-class
family. Some amount of research and thought goes, before deciding on the ideal tyre.

Studies show that an average car tyre buyer looks for reviews from different sources such as
mechanics, dealers, OEM endorsements and also from close friends and family. These sources
hold a lot influence over which brand of tyre the consumer decides to buy.

Key decision influencers in buying a tyre:


1) The local mechanic
2) Tyre dealers
3) OEM endorsements
4) Close friends and family
 
 
 
 
 
 
 
 
 

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1.4 Consumer Behavior 
 
Frequency of purchase in the passenger car tyre industry is solely decided by the life of an
average tyre. Depending on the kind of usage, an average radial tyre can last anywhere
between one to five years.

Car user type   Average tyre   
life (years) 
Taxi (commercial)  1 
 
Average business  2 ‐ 3 
traveler 
 
Average family  4 ‐ 5 
   
 

Quantity of purchase in the car tyre industry varies within a given year. The passenger car tyre
market displays moderate seasonality in sales. Higher sales usually correspond with periods
when there is an increased use of passenger vehicles, such as during school vacations (family
outings), school reopening, and local festivals and occasions (for example, the Sabarimala
pilgrimage season drives up the sale of tyres significantly in and around Coimbatore).

Since Tyres are a derived-demand product (its demand is derived from the demand for
automobiles) government policies such as a drop in duties and taxes on car manufacturers, also
indirectly contribute to higher tyre sales.

Given the high amount of product homogeneity in the tyre market; prices do not vary greatly
between companies. However, international players such as Bridgestone do markup their prices
slightly higher on account of their superior quality and the extended warranties. On an average,
the buyer is usually more concerned about the performance of the tyres than its price.

   

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2. THE  C OMPANY: 
 
2.1  Core Competencies:   
 
2.1.1 Bridgestone India: 
 
International Quality and pedigree:
Quality counts as the number one reason why OEMs prefer Bridgestone over other tyre
manufactures. Bridgestone has always banked on its quality USP to capture market
share. The Japanese attention to quality seems to have percolated down to Bridgestone
India from its parent company. World over, the Bridgestone brand has been
synonymous with cutting-edge technology and quality.

The F1 association:
The global brand awareness that Bridgestone Corporation’s collaboration with F1 has 
earned and its recognition as a leader in the global tyre industry has helped its Indian 
arm, BSID, position itself as a premium tyre manufacturer in the Indian market. 

Channel reach:
With over 3000 distributors and dealers, Bridgestone India has one of the largest reach
across the country. A Bridgestone dealer is never far away from you, no matter where
you are.
 
2.1.2 MRF India  

Undisputed overall market leader:

With a 24% share in the overall tyre


industry MRF is the king of tyres on
the Indian road. Its Leadership
position, coupled with its strong brand
recall and high quality, MRF
commands the price-maker status.
MRF has a strong presence in the T&B
segment, the largest segment of the
tyre industry, and commands around
19% market share in the segment. It
holds the second place in the passenger
cars.

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Complete market coverage:

Over the years, MRF has created a formidable product line, length and breadth to serve
every segment of the industry. Its complete market coverage is one of the reasons why
it is the undisputed market leader today.

MRF offers tyres for the following vehicle segments in the tyre industry:
1) Passenger Cars
2) Two wheelers
3) Heavy Commercial Vehicles (HCV)
4) Light Commercial Vehicles (LCV)
5) Of the Road Vehicles (OTR)
6) Farm Vehicles (FV)

Brand recognition and brand recall:

When it comes to top-of-mind brand recall, MRF


beats the rest of the competition hands down. Unlike
Bridgestone India, MRF has for long concentrated on
aggressive brand promotion. Sports celebrities and
event endorsements have been a major vehicle for
their brand promotion activities. From signing on
three sports heavyweights at one go (Sachin
Tendulkar, Brian Lara, and Steve Waugh), to
endorsing national rally circuits, to founding the MRF
pace foundation, MRF has been at the forefront of
aggressive brand building: one reason why MRF
commands more brand recognition than Bridgestone
India, despite the latter’s superior quality and
international credentials.

Strong exports:

Exports account for around 12% of the gross sales in MRF. The company exports to
over 65 countries worldwide. It is largest tyre exporter in South Asia. Over the past
decade, MRF has improved its technologies and tyre quality significantly, to
compete effectively with other players in the international market. Most of its
exports are non-radial, nylon cross-ply tyres, and are exported to other developing
countries such as Sri Lanka.

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2.2  Company Resources 
 
2.2.1 Bridgestone India 
 
                                                                                  Source: Automotive Digest                    
A high volume game:  
The Tyre industry is driven more by
volumes than by margins. Bridgestone
being one of the big five players in the
global tyre industry, generates an
annual tyre production equivalent to
the total demand of the Indian market.
 
 
 
Pedigree: 
Bridgestone India Pvt. Ltd (BSID) is a fully owned subsidiary of Bridgestone
Corporation headquartered in Tokyo, Japan. The global company employs over
133,500 people worldwide and has offices, factories or continental headquarters in
more than 150 countries. [1]
 
MNCs  like  Bridgestone  Corporation  have  deep  pockets  and  can  easily  withstand 
losses for a couple of years or  more. Their financial muscles also permit them to 
invest in R&D, which is beyond the reach of the average Indian tyre manufacturer.  
 
Resources: 
Bridgestone India set up base in India in February 1996 and set up the factory two years
later at Kheda near Indore in Madhya Pradesh. The company is one of the leading tyre-
makers in both the OEM and replacement markets in the country.The company has a
production facility at Pithampur near Indore and has announced an investment of Rs259
crore for expansion. This will increase production capacity by over 40% to 15,000 tyres
per day by the middle of next year. [2]
 
 
Workforce: 
As a part of the expansion plans, Bridgestone plans to hire 300 more people to its 700
hundred strong Indian workforce in the coming financial year. 
 
 
Technology:    
The name Bridgestone has been synonymous with cutting edge technology for some
time now. Over the years, the company has benefited directly from its involvement in
Formula One racing. The lessons learned through Bridgestone’s successful
participation at F1 circuits have translated into innovations that can be applied to the
design and manufacture of high performance tyres. The global brand awareness that

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Bridgestone Corporation’s collaboration with F1 has contributed and its recognition as
a leader in the global tyre industry has helped its Indian arm, BSID, position itself as a
premium tyre manufacturer in the Indian market.

Also, this formidable reputation for quality and high-end technology has helped BSID
emerge as the most preferred tyre supplier to OEMs, which accounts for 24% of the
total passenger car tyre market in India. [3]

Financial health: 

Y.E. / as on Dec.31 2008


Working Results
Total operating income 626
PBILDT 138
Interest 10
Depreciation 38
PBT 91
PAT (after deferred tax) 56
Gross cash accruals 110
Financial Position
Equity share capital 275
Net worth 329
Total capital employed 481
Key Ratios
Growth in Total operating income (%) 21.69
Growth in PAT (%) 15.68
Profitability
PBILDT/Total Op. income (%) 21.97
PAT/Total income (%) 9.01
ROCE (%) 24.22
Solvency
Long-term debt equity ratio (times) 0.14
Interest coverage (times) 10.04
Liquidity
Current ratio (times) 1.16
Quick ratio (times) 0.44
Turnover
Average collection period (days) 36
Average creditors (days) 60
Average inventory days 103
Total operating cycle (days) 79

The long term debt equity ratio seems to be very healthy but the reason for that is because
it’s a 100% fully owned subsidiary Co. The same can also be said about the interest

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coverage ratio. The raw material costs form a major chunk of overall operating
expenditure and so any fluctuation in that area could affect the Cos overall prospects
adversely. This is also visible from the fact that the operating margin is very low as can
be deduced from the PAT/Total income percentage. The current ratio and the quick ratio
are pretty decent. However the average inventory days seems to be a cause for concern.
This could be due to the recession which has also hit overall demand for automobiles in
general. Yet the growth in total operating income and PAT are welcome signs.
 
 
2.2.2 MRF India 
 

Infrastructure
MRF primarily produces tyres at its seven plants located in various places in South
India. The company’s installed tyres capacity as on September 2008 was 25.3 mn tyres.
Tubes capacity stood at 26 mn numbers as on Sep’08. Other business operations of the
company (account for 6% of sales) consist of manufacturing pre-cured treads, tread
rubber, conveyor belts, specialty surface coatings etc. The details of capacity utilization
in respect of tyres in the last few years are given below:

Strong demand growth particularly in the passenger car and LCV tyres segment over
the last five years has assisted MRF’s capacity utilisation staying well above 90%
(except FY05). The high capacity utilisation is despite company’s installed capacity of
tyres having grown from 17.4 mn tyres p.a. in Sep’04 to 25.3 mn p.a. in Sep’08. In
tonnage terms, truck & bus tyres accounted for more than 50% of the production
followed by tyres for passenger cars, motorcycles and LCVs. MRF also manufactures
tyres for Tractors, Scooters, Off The Road vehicles etc.

Market Leader in overall Indian tyre market


MRF has the advantage of being the undisputed leader in the overall tyre market. MRF
has with its portfolio of tyres for the complete automobile market, has made its
presence felt in all segments of the tyre market. While it is the leader in 2 wheeler and
Light Commercial Vehicle tyre markets, it comes a close second in the Heavy
Commercial Vehicle and Passenger Car tyre markets.

Strong exports:
Exports account for around 12% of the gross sales in MRF. The company exports to
over 65 countries worldwide.

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Financial health:

 
Y.E. / as on Sep 30  2008 
 
Working Results    
  Net sales   5047 
Total operating income   5150 
 
PBILDT   422 
Interest  66 
Depreciation   170 
PBT   211 
PAT (after deferred tax)  142
Gross cash accruals   311 
Financial Position    
Equity share capital   4 
Net worth   1121 
By Total capital employed   2380 
Key Ratios    
Growth in Total income (%)   14.77 
Growth in PAT (%)   ‐17.35 
Profitability    
PBILDT/Total Op income (%)   8.2 
PAT/Total income (%)   2.76 
ROCE (%)   14.35 
Solvency    
Long term debt equity ratio 
(times)   0.65 
Interest coverage(times)   3.82 
Liquidity    
Current ratio(times)   1.31 
Quick ratio(times)   0.67 
Turnover    
Average collection period (days)  37 
Average creditors (days)   61 
Average inventory (days)  69 

The long term debt equity ratio is pretty healthy. The raw material costs form a major
chunk of overall operating expenditure and so any fluctuation in that area could affect the
Cos overall prospects adversely. This is also visible from the fact that the operating
margin is very low as can be deduced from the PAT/Total income percentage. There has
been a decline in PAT over the last year and that is a cause for concern but it could be
attributed to the recession that hit the economy .The current ratio and the quick ratio are

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pretty decent. The intense competition in the sector has also had its impact on the Co
going by its PAT/Total Income percentage. 
 
2.3 Concern Areas: 
 
2.3.1 Bridgestone India 
 
Low market coverage: 
 
Though Bridgestone has been in India for over a decade now, it has restricted itself
almost entirely to the passenger car radial tyre segment. Even though Bridgestone is the
undisputed leader in this segment with a market share of over 30%, the passenger car
segment accounts for a meager 21% of the total tyre market in India. There is a huge
untapped tyre market outside this segment, especially in the Heavy Commercial
Vehicles segment.

 
                                                                                  Source: ATMA 
 
 
Brand recognition and recall: 
 
Bridgestone is one of the leading brands world over. Its association with the F1 racing
event has given it a very high visibility and a formidable reputation of being a
technology leader.

Yet, when it comes to the Indian market, MRF seems to have beaten it at the brand
promotion game. While Bridgestone is the preferred tyre supplier to OEMs (due to its
superior quality and durability), customers in the Replacement market (market for
replacement of worn out OEM tyres) seem to recall the MRF brand more often than
Bridgestone.

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This is mainly due to the fact that while MRF pursues a pull strategy through
aggressive brand promotion activities to gain top-of-mind recall, Bridgestone banks on
a push strategy by maintaining close Channel relations, heavy dealer incentives and
quality as a value proposition, to push its tyres through to the customer.
 
 
When we consider the fact that the replacement market accounts for nearly 54% of the
passenger car tyre market as seen below, we see the huge opportunity that Bridgestone
seems to be missing here.

             
                                                                              Source:  Way 2 Wealth, investment guide 
 
 
2.3.2 MRF India 
 
Late entrant into the Radial tyre market: 
   
With a current market share of 24%
MRF has a firm grip over the tyre Passenger Car Tyre Segment
market in India. However, back in
1998, when Bridgestone entered the
Indian market, none of the Indian MRF
18%
manufactures including MRF had a 34% JK Tyres
radial tyre product portfolio.
17%
Bridgestone seized the first-mover Bridgestone
advantage and quickly capitalized on Others
31%
the trend of passenger car OEMs
adopting the radial tyre technology. By
the year 2000, Bridgestone India had
consolidated its position as the No.1 leader in the passenger car tyre market, which was
by now almost entirely radialized.

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Though MRF had introduced the ZIGMA CC Radial tyre way back in 1989, it lacked
the technology and expertise to produce a good product line-length of radial tyres for
all car types. But MRF has taken up the challenge in a big way and indigenously
developed its radial technology. Today, it has succeeded in capturing a market share of
18% in the passenger radial car tyre market, second only to Bridgestone India.

 
 
Dealer relations: 

MRF has aggressively pursued a Pull marketing strategy to sell its tyres. In a pull
strategy, the manufacturer uses advertising, promotions and other forms of
communications to induce the consumers to demand the product from the dealers.
MRF therefore almost exclusively concentrates on brand awareness exercises, such as
advertisements and endorsements. Compared to other tyre manufacturers, MRF pays
little attention to incentivizing the dealers. This is reflected in the low margins it offers,
and the complete absence of dealer incentives such as compliments, free trips, cash
rewards, discounts, etc. Yet, dealers are motivated to stock MRF tyres simply because
they have high brand-recall and so the customer demands it.

   

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3. THE  C OMPETITORS: 
 
3.1  Principal Competitors: 
 
The Passenger Car Radial tyre segment is a
highly concentrated one. The top 4 players Passenger Car Tyre Segment
together hold almost 77% of the market
share. Bridgestone is the clear leader in this
segment, with a market share that is twice MRF
that of its nearest competitor, MRF. 18%
34% JK Tyres
17%
Bridgestone India leads the pack with a Bridgestone
market share of 31%. Its closest competitor,
31% Others
MRF, is far behind with a market share of
18%. JK Tyres follows close at the heels of
MRF with a market share of 17%, while
Apollo tyres has a market share of 11%.
 
      
3.2  Salient strengths and weaknesses: 
 
3.2.1 Bridgestone India 
 
International Quality and pedigree:
World over, the Bridgestone brand is synonymous with top quality and F1 class
performance. This brand image seems to have percolated down to its Indian subsidiary
too.
 
Channel reach
With over 3000 distributors and dealers, Bridgestone India has one of the largest reach
across the country. A Bridgestone dealer is never far away from you, no matter where
you are.

The F1 association:
The global brand awareness that Bridgestone Corporation’s collaboration with F1 has
contributed and its recognition as a leader in the global tyre industry has helped its
Indian arm, BSID, position itself as a premium tyre manufacturer in the Indian market.

Financial muscle:
Bridgestone  being  one  of  the  big  five  players  in  the  global  tyre  industry,  generates  an 
annual tyre production equivalent to the total demand of the Indian market.  

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Niche player: 
One of its major weaknesses id that Bridgestone India has restricted itself almost
entirely to the passenger car radial tyre segment. Even though Bridgestone is the
undisputed leader in this segment with a market share of over 30%, the passenger car
segment accounts for a meager 21% of the total tyre market in India. There is a huge
untapped tyre market outside this segment, especially in the Heavy Commercial
Vehicles segment.
 
 
3.2.2 MRF 
 
Brand recognition and brand recall:
MRF with its aggressive marketing campaigns is has established itself the top brand in
terms of brand-recognition and recall. A study suggests that 9 out of every 10 tyre
customer across all segments of the tyre market, are aware of the MRF brand.

Complete market coverage:


MRF with its portfolio of tyres for the complete automobile market, has made its
presence felt in all segments of the tyre market. While it is the leader in 2 wheeler and
Light Commercial Vehicle tyre markets, it comes a close second in the Heavy
Commercial Vehicle and Passenger Car tyre markets.

Strong exports:
Exports account for around 12% of the gross sales in MRF. The company exports to
over 65 countries worldwide
 
Dealer relations:
MRF almost exclusively concentrates on brand awareness exercises, such as
advertisements and endorsements. It believes in making the customer demand its
products through brand-awareness and brand-recall. Therefore, compared to other tyre
manufacturers, MRF pays little attention to incentivizing the dealers. Yet, dealers are
motivated to stock MRF tyres simply because they have high brand-recall and so the
customer demands it.

Late entrant to the Radial tyre market:


MRF was a late entrant into the radial tyre market. Bridgestone capitalized on its first-
mover advantage in the radial tyre segment, to capture a 31% market share. MRF has
been working hard to catch up, by aggressively developing its radial tyre technology.
As a result, today it holds 18% of the radial car tyre market share.

   

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3.3  Basis of competition: 

Being a homogenous product, there is not much difference in products offered by competing tyre
manufacturers. However, companies do try to differentiate themselves by outdoing one another
in some Points of Parity, such as quality, safety, tread design, economy, etc.

Some important parameters that consumers look out for, and that form a basis for differentiation
between tyre companies are:

1) High performance tyres (sports)


Both MRF and Bridgestone offer high performance tyres that are meant for sports and
other high endurance activities.
 
 
2) Comfort tyres (touring)
Touring tyres offer the twin advantage of endurance with superior ride comfort. These
class of tyres are a favorite amongst long distance car drivers such as business travelers.
 
 
3) Mileage
One of the biggest value propositions of radial tyres is the improved mileage that it brings
with it. Mileage is the top priority for the Indian middle class buyer.
 
4) Price
Tyre prices play a much smaller role in the passenger car tyre industry, compared to tyre
features. Consumers are more concerned about the attributes of the tyre (quality,
durability, etc) than its price.

5) Wear life
The wear life of a tyre determines the life if the tyre. The more durable a tyre, the higher
will be its wear life.
 
6) Grip
Given the high seasonal differences in India, consumers typically look for tyres that suit
their local climate. Thus, while consumers in Rajasthan look for tyres that can endure
high temperatures; consumers down south prefer tyres that can grip the road even in the
worst of monsoon seasons.
 
7) Cornering and braking
Cornering and braking refers to the way a tyre handles the extreme shear and frictional
forces it experiences when the vehicle cuts corners or brakes at high speeds. Superior
braking and cornering performance is always desired by sports and highway drivers.
 

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4. IMPORTANT  C OLLABORATORS: 
   
4.1 Upstream Collaborators: 
 
 
4.1.1 Bridgestone India 

Bridgestone India is the most preferred Tyre manufacturer to most of the car OEMs in
India. This is clear from the formidable list of OEMs that source their tyres from MRF.
In fact, some OEMs like Skoda source their tyres exclusively from Bridgestone, and no
other tyre manufacturer.

Automobile OEMs who source their tyres from Bridgestone India are:
1) Toyota
2) Hyundai
3) Skoda (exclusive customer. 100% Bridgestone tyres)
4) Mercedes
5) BMW
6) Genral Motors
7) Ford
 
 
4.1.2 MRF India 
 
When compared to Bridgestone, MRF has a shorter list of tie-ups with OEMs in the car
segment. But it more than makes up for this shortage by supplying to almost every kind
of Automobile OEMs, be it two-wheelers, cars, buses, trucks, tractors, or OTR (Off The
Road) vehicles.

Automobile OEMs who source their tyres from MRF India are:

8) Maruti
9) Mahindra &Mahindra
10) TATA motors
11) Gneral Motors
 
   
 
 
 
 
 

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4.2 Collaborator Incentives: 
 
Automobile OEMs tie-up with well-established tyre manufacturers for three major reasons:
 
4.2.1 Assured supply

Automobile OEMs have huge production schedules. They required very large amounts
of inputs, including tyres. They therefore look for large tyre manufacturers such as
MRF or Bridgestone, who can supply them large quantities with any break in supply
schedules.
 
4.2.2 Assured Quality

Large  reputed  tyre  manufacturers  such  as  MRF  and  Bridgestone  adopt  very 
stringent quality assurance measures. One of the major parameters that OEMs use 
to decide their tyre suppliers is the quality of the tyres they produce. Bridgestone 
is a clear leader in this parameter. 
 
4.2.3 Just In Time (JIT) supplies

Given the large production volumes, automobile OEMs do not hold inventories for 
too long. They prefer tyre manufacturers who can supply them tyres in real time, 
i.e. as and when the need arises. This is possible only for large tyre manufacturers 
who incorporate JIT methods in their supply logistics. 

   

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5. THE  C ONTEXT ‐ TRENDS SHAPING THE TYRE INDUSTRY 
 
Being a raw-material intensive and a derived-demand product, tyre sales are highly
dependent on external factors that lie outside the purview of the manufacturers. A number of
raw materials go into the making of a tyre, the prices of which affect the price of the tyre.
Similarly, since tyres complement Automobiles, sales figures of Automobile manufacturers
have a direct bearing on tyre sales. These, and many other factors decide the price, quantity
and frequency of tyres demanded and supplied in the market.

5.1 Economic Environment: 
 

5.1.1 Unresolved Tax issues:

The issue of inverted tax structure, where the import duty on natural rubber is as high as
20% but import duty on finished tyres is as low as 10% still remains unaddressed.
Other taxation issues have also been denting the competitiveness of Indian tyres.

5.1.2 Increasing costs of Raw Materials:

The tyre industry is highly raw material intensive. Any change in the prices of raw
materials affects the profitability of tyre companies.

Raw materials primarily comprise of natural rubber, crude and steel based materials
which have historically experienced volatility in prices. In the last few months, price of
domestic natural rubber has increased by almost 40%. Given the fact that raw materials
constitute around 70% of the cost of production, combined with the manufacturers
"inability to pass on the increased cost to their customers due to intense competition”,
rise in prices of these materials have had a huge impact on profitability.

5.1.3 Import restrictions

The Indian tyre industry is suffering intense competition from low priced tyres from
China and other South East Asian countries. Despite being of a better quality, Indian
manufactured tyres loose ground when it comes to pricing. Moreover, slowing
automotive demand from developed countries has made India a lucrative market for
cheap tyres, thus resulting in increased dumping of cheap tyres from China.

Although the Government has imposed a restraint on the import of used tyres into
India, occasionally there are reports of import of such tyres in a clandestine manner,
sometimes as new tyre at low value, since there is no restriction on import of new tyres
or as tyres under the "others" category.

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5.1.4 Road and support infrastructure

While poor road conditions have a positive impact on replacement demand, by


reducing the life of the tyre, improved roads can act as a catalyst to increased
purchase and use of personal vehicles, thus driving up the demand for tyres.

Also, poor road and support infrastructure act as a barrier to radialisation in the
commercial vehicle segment.

5.1.5 Sources of Demand:

1) Industrial and freight activity

The truck and bus tyre segment accounted for 19% of tyres produced in India in
FY2008. Every truck/bus manufactured generates a demand for seven tyres. In
addition, the price of a truck tyre is significantly higher than that of a passenger car
tyre (roughly 10 times). Thus the demand multiple emanating from the commercial
vehicle segment is highest in value terms.

2) Personal purchasing power

As the economy booms and disposable incomes in the hands of the Indian middle-
class burgeon, the sale of passenger cars has been witnessing an upward swing over
the past decade. Since tyre sales are directly linked to car sales, both through
OEMs and the replacement market, the tyre industry has witnessed a corresponding
increase in its sales figures.

3) Automobile sales

The demand from the OEM segment is a derived one and directly correlated to the
level of automotive production. The recent Slowdown in automotive industry and
global economic in general negatively impacted the Indian tyre industry in 2009.
The industry growth was only 2.19% during first nine months of FY09, compared
to 7.38% growth experienced during the same period last year

4) Exports

Due to the slowdown in the domestic market brought about by the recession, most
India tyre manufacturers have taken to exports to reduce inventory build-ups. Indian
companies have currently entered into sourcing agreements (for tyres) with
neighbouring countries like Sri Lanka and China.

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There is a trend of increasing exports of bus and truck tyres (crossply variety) from
India to developing countries. This is because of the fact that developing countries
are unable to source them from developed countries as these are no more produced
there.

The product focus of tyre exports from India has been Traditional Truck Tyres.
Globally this segment of tyre export is shrinking due to greater acceptance of radial
tyres. Moving towards radialization will be vital if tyre producers want to protect
their share in international markets.

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5.2 Technological Environment: 

5.2.1 Indigenous development of radial technology

The runaway success of Bridgestone India in the passenger radial car market was
mainly due to the fact that a decade ago, none of the Indian tyre companies had good
radial technology know-how. But all that seems to be changing at scorching pace now.
Major Indian players such as MRF, JK tyres and Apollo tyres are pumping in a lot of
money in R&D to upgrade their technologies indigenously. MRF has already succeeded
in capturing a market share of 18% in the radial car tyre market.

5.2.2 Market entry by international players

The market entry of Bridgestone is a classic example of what a foreign firm’s entry can
do to the Indian tyre market. Before Bridgestone entered the Indian market, there was
almost no usage of radial tyres in India. Besides, customers had to put up with sub-
standard tyres since in the face of no competition, Indian tyre manufacturers were slow
in developing their technologies. Al that changed when Bridgestone entered the market.
Quality and brand value suddenly became the new buzzwords, and Indian companies
finally woke up to the huge technological gap between the International and domestic
players. Passenger car OEMs embraced radial technology and the car tyre maeket was
almost completely radialzed.

5.2.3 Improved Capacity-utilization techniques

In the face of increasing input prices, and competition from international players such
as Michellin and Bridgestone, Indian tyre companies are desperately searching for ways
to cut costs and improve their production efficiencies. This has resulted in adoption of
improved capacity-utilization techniques across all major Indian tyre manufacturers.

 
5.3 Socio­Cultural Environment 

5.3.1 Explosion in the number of nuclear families

As the joint-family system crumbles and the number of nuclear families explode, more
small families seem to be demanding a two/four wheeler for themselves. This has
directly resulted in higher sales of tyres in the past decade.

5.3.2 Higher car density per family

The number of upper-class and upper-middle class families with more than one car per
family seems to be increasing exponentially. This is especially true in cities where

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working couples find it difficult to survive without more than one car for transportation.
With higher disposable incomes, these families are finally able to afford this need.

5.3.3 Shifting away from Savings, to EMI culture

Another notable trend that seems to be fuelling car sales (and therefore tryre sales) is
the shift in the middle-class consumers saving habits. The Indian middle-class family
has long been known for its savings frenzy. But with a younger workforce, higher
disposable incomes, lower unemployment and the influence of globalization, the
average Indian middle-class family is slowly warming up to the idea of EMI and
buying on credit. This has helped in furthering the sales of passenger cars significantly.

   

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SE
EGMEN
NTATIO
ON, TA
ARGETIING AN
ND POSSITION
NING                             
AN
N STP ANA
ALYSIS 

1. BASSIS FOR  S EGMEN
NTATION
N ­ VEHICL
LE TYPE:

In the tyyre industry, there is very little direcct interactionn between thhe company and the cusstomer. Tyree
companies sell mostly to dealers in the replaccement market and to OE EMs.

As a ressult, market segmentatioon for the tyree industry is based more on the type of vehicle served, ratherr
than on the individuaal customer.

              TY
YRE MAR
RKET SE
EGMENT
TATION  

 
MHCV: Meedium heavy com
mmercial vehicle, HCV: Heavy Com
mmercial Vehiclee, LCV: Light Commercial Vehiclee, OTR: Off The Road
R vehicle

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2. SELECTING THE  T ARGET SEGMENT: 

Once the market has been divided into segments, Tyre manufacturers need to decide the segments they
are going to service. This requires a deep analysis of each segment and matching the manufacturer’s
capabilities (finances, core-competency, brand image, labor, etc) with the demands of these segment(s).

2.1 Bridgestone: The Market Specialization Approach 
 
 

 
 
Bridgestone India currently concentrates exclusively on the Passenger Car Radial Tyre segment. Within
this segment, it offers a wide range of tyres to suit the needs of the entire segment of car tyre buyers.
Bridgestone is the Market leader in this segment, with a market share of over 30%.

One major reason why Bridgesotne has stuck to the Passenger Car segment is because it offers only
Radial tyres. While the Passenger Car segment is 98% Radialised, other segments in the tyre industry
are yet to

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2.2 MRF: The Complete Market Coverage Approach 
 

 
MRF holds a diversified portfolio of products that span across the entire tyre market. It manufactures
tyres for all segments of the tyre market including Passenger Vehicles, Commercial Vehicles, Farm
Vehicles ad Off-The-Road and Industrial Vehicles. This complete market coverage of its products has
made MRF the undisputed leader in the overall Indian tyre industry.

3. DIFFERENTIATION AND  P OSITIONING STRATEGIES: 

Being a homogenous product, there is not much difference in products offered by competing tyre
manufacturers. However, companies do try to differentiate themselves by outdoing one another
in some Points of Parity, such as quality, safety, tread design, economy, etc.

3.1 Establishing Category Membership 
 
Category Membership refers to the set of products that a brand competes with. It defines the
market that the brand is in.

3.1.1 Bridgestone – High Performance with Value for Money

Bridgestone communicates its category membership as a top quality, high performance


tyre, with an international pedigree. In order to ride home this message, it has
associated itself with F1 racing events and widely publicizes its success on the F1 racetrack.

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Customers have come to associate Bridgestone tyres with the exacting performance
standards required in F1 racing.

3.1.2 MRF – Tyres with Muscle

The MRF mascot, the MRF muscleman, clearly states the category membership MRF
subscribes to. MRF communicates to the customer its superior endurance and strength.
The company sponsors a number of sports such as cricket and rally racing, to position
its tyres as high endurance and sporty. Its slogan “Tyres we race, are the tyres you
buy” stands testimony to their category membership.

3.2 Points of Parity (POP): 

POP refers to associations that are not necessarily unique to the brand, but may in fact be
shared by other brands. For a product to achieve POP on a particular attribute, a sufficient
number of customers must think that the brand is “good enough” on that dimension.

Put simply, POPs are the minimum parameters a product must possess to be considered a
good enough to compete within its membership category.

Some important parameters that consumers look for, in every tyre brand, and which therefore
form the basis of POP in the tyre industry are:

1) Quality: Material quality of the tyre must be very good.

2) Safety: The tyre must meet national/international safety standards under high stress
conditions.

3) Durability: The tyre must survive wear and tear for a decent period of life.

4) Mileage: The tyre must offer improved mileage (especially true for Radial tyres).

5) Grip: The tyre grips the road firmly under all weather conditions.

6) Cornering and braking: The tyre must perform well while cutting corners and
braking at high speeds.

7) Ride comfort: The tyre must offer a smooth and quite riding experience.
 
 
 
 
 

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3.3 Points of Difference (POD): 
 
PODs attributes that consumers strongly associate with a brand, positively evaluate it, and
believe that they could not find it to the same extent in other competing brands.

Simply put, PODs are those attributes that make a product stand out from the competition. It
is the winning proposition.

Though tyres are a highly homogenous products, and differentiation is very difficult, tyre
manufacturers have come up with innovative ways to demonstrate their superiority in certain
parameters such as quality, endurance, value for money, and additional services.
 
3.3.1 Bridgestone – Quality and Value for Money

Bridgestone prides itself for manufacturing some of the highest quality tyres on the
globe. Customers perceive the brand to be associated with F1 quality and performance.

1) Value for Money:


Bridgestone customers perceive their tyres as a good buy, despite their premium
pricing. This is because Bridgestone is known for high quality, long lasting tyres
that give the customers value for their money in the long run.

2) Perfectly balanced wheels:


Another major benefit that customers associate with Bridgestone tyres is the
perfectly balanced tyres that they get fitted on purchase. Bridgestone makes this
possible by making it mandatory that its dealers possess computerized wheel
balancing equipment. Every customer who walks out of a dealer store with a
Bridgestone tyre is thus assured of an additional service: perfectly balanced wheels.

3) International quality and high performance:


Most Bridgestone customers are aware of the international quality and the
impeccable pedigree that Bridgestone enjoys worldwide. International Quality and
high performance are the major reasons why most automobile OEMs prefer to
partner with Bridgestone.

3.3.2 MRF – High endurance tyres

MRF has for log concentrated on the high performance its tyres offer in trying
conditions. To further this image, it has partnered with many sports events and created
a mascot that reflects the toughness it claims in it tyres: the MRF muscleman.

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1) High endurance tyres:

Tyre consumers, especially heavy truck and bus owners, consider MRF tyres to be
one the toughest in the market. This explains why MRF is amongst the top market
leaders and in the heavy commercial vehicles category (second only to Apollo
tyres).

2) High performance tyres:

MRF is the clear leader in the Two Wheeler tyre market. This is because of its
image as a high endurance and high performance tyre, in the minds of Two Wheeler
owners. Brand recognition and recall has also played an important role in its
emergence as the market leader.

3.4 Value proposition: 
 
Value propositions are a set of benefits that companies offer to satisfy customer needs. It
answers the customer’s question, “what is in it for me?”
 
3.4.1 Bridgestone – Quality and Value for money:

Bridgestone’s main value proposition is its international quality and value for money.
Every Bridgestone customer is assured of a tyre that is of international standards and
will give him trouble-free service for a long time, thus giving him value for his money.

3.4.2 MRF – Endurance guaranteed:

MRF prides itself in making tyres that go into some of the most trying conditions on
Indian roads: onto Heavy Vehicles on rough Indian roads. Consequently, MRF offers a
compelling value proposition to heavy vehicle owners as well as passenger car and two
wheeler owners: Quality tyres that endure in the worst of conditions. It drives home this
macho message through its mascot, the MRF muscleman.
 
3.5 Positioning statements: 
 
3.5.1 Bridgestone - passion for excellence:

                                 

 
 

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3.5.2 MRF – Tyres with muscle:
 
  
 

                      
 
 
 

   

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    ANALYZING THE MARKETING MIX                                                 
THE 4 P ANALYSIS 

   

1. THE  P RODUCT: 

The basic definition of a product is anything that can be offered to a market to satisfy a want or
need.

Tyre companies in India have been fulfilling this need for over half a century now, through tyres
that endure on rough Indian roads. The entry of Multinationals like Bridgestone and Goodyear
has added two more flavors to this mix: Quality and ride comfort. Today, Indian tyre
manufacturers are racing against each other to introduce tyres that assure impeccable quality,
endurance and ride comfort.

1.1 Product levels –The customer value hierarchy: 
 
While devising market offerings, marketers address five product levels:

CORE  BENEFIT

Basic Product

Expected Product

Augmented 
Product

Potential Product

 
 
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1.1.1 Core Benefit:

This is the service or benefit the customer is customer is really buying. In the tyre
industry, the core benefit that a customer is looking for is a tyre that his vehicle can run
on.

1.1.2 The Basic product:

The basic product that all tyre manufacturers offer, is a tyre that fits the customer’s
vehicle

1.1.3 The Expected product:

The expected product defines the basic features that a buyer assumes in the product
offering. In a way, this is the POP for the product in its membership category.

In the tyre industry, the basic product would be a tyre that meets the following criteria:

1) Quality:  Material quality of the tyre must be very good.

2) Safety:  The tyre must meet national/international safety standards under high


stress conditions.

3) Durability:  The tyre must survive wear and tear for a decent period of life.

4) Mileage:  The tyre must offer improved mileage (especially true for Radial tyres).

5) Grip:  The tyre grips the road firmly under all weather conditions.

6) Cornering and braking: The tyre must perform well while cutting corners and


braking at high speeds.

7) Ride comfort: The tyre must offer a smooth and quite riding experience.

1.1.4 The Augmented product:

Augmented products exceed customer expectations. They offer a value proposition that
the customer may not have thought about, or was not expecting.

The Augmented product stage is where the competition begins in the tyre industry. This
is where tyre manufacturers try to differentiate themselves from the competition

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1) Bridgestone: Quality, Comfort, Value for Money

Bridgestone differentiates itself from the competition, by offering tyres that exceed
the customer’s quality requirements, ride comfort and value for money. Bridgestone
ensures that its tires meet international quality standards, last much longer (thus
giving more value for money), and performs smoothly and quietly (ride comfort).
These are the three pillars that
Bridgestone differentiates itself on.

2) MRF: Quality, Endurance

MRF differentiates itself from the competition, on its two pillars of Quality and
high endurance. Given the fact that a major portion of its sales come from Heavy
truck and bus categories, it stresses on the durability of its tyres on rough Indian
roads.

   

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2. THE  P LACE: 

Once the product has been decided upon and the market segmented, targeted and the product
positioned, it is time to decide how and where the marketer can deliver the value (product) to the
customer. This is done through marketing channels that make the product available for
consumption to the customer.

2.1 Push and Pull strategies in channel marketing: 

In a Push strategy, the manufacturer uses his sales force, trade promotion, money or other
means to induce intermediaries to carry promote and sell its products to end users.

Ina Pull strategy, the manufacturer uses advertising, promotion and other forms of
communication to persuade the customer to demand the product from intermediaries, thus
inducing the intermediaries to order it.
1) Bridgestone: Pursuing a Push strategy

Bridgestone pursues a strong push strategy in its channel marketing. The advertising
layout for Bridgestone India is minimal. Bridgestone spends very little on advertising and
promotion. Instead, they concentrate on incentivizing the dealer to stock, promote and
sell their products. As a result, Bridgestone regularly introduces sell-in schemes
(promotional schemes for dealers), gold vouchers, international holiday vouchers, OE
camps, etc.

2) MRF: Masters at Pull strategy

MRF follows exactly the opposite strategy. MRF has mastered the art of Pull strategy. It
pioneered the practice of heavy advertising and promotion in the tyre industry. So much
so, that today, MRF commands top-of-mind recall and top brand recognition amongst all
tyre manufacturers in India. There is hardly any tyre customer who hasn’t heard of the
MRF brand. MRF achieved this remarkable feat by adopting a multi-pronged marketing
strategy that involved endorsements by sports celebrities like Sachin Tendulkar, Brian
Lara and Steve Waugh, promoting popular sports like cricket and car rally races, and
even introducing its own mascot: the MRF muscleman, that reflected the tough image it
projected for its tyres.

While MRF has pulled out all stops in advertising and promoting its products, it gives
very little attention to incentivizing its channel partners. This is clear from the very low
margins it offers its dealers and the complete absence of other dealer incentives. Yet,
dealers look forward to stock MRF tyres because customers demand it.

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2.2  Channel Design: 
 
To decide on the channel design, the marketer
must first scan the target customer base.
Different types of customer segments may
require different types of channels.

The following figure shows the break-up of car


tyre sales according to customer segments:

As the figure shows, there are three main


customer segments in the car tyre market:

1) Original Equipment Manufacturers (OEMs)


2) The Replacement Market (replacement of old, worn out or defective tyres)
3) Exports

2.2.1 Direct and Indirect channels:

1) Direct channels:

Direct channels consist of a marketer selling directly to the final customer.

Of the three types of customer segments in the Passenger Car Tyre market, two
customer segments call for a direct channel:

a) OEMs :
Given the huge quantities required and the Just In Time logistics employed,
OEMs source their tyre supplies directly from manufacturers. Tyre
manufacturers therefore most set up exclusive distribution channels to service
these OEMs.

b) Exports:
To minimize logistical complexities and supply delays, Tyre exports are
handled directly by the manufacturers. Tyre manufacturers set up direct
distribution channels that supply tires directly to export destinations

Note: tyre manufacturers sometimes employ Carry & Forward agents to


transport their tyres from the factory to OEM sites or export destinations.
However this varies from company to company.

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2) Indirect channels:

Indirect channels consist of one or more intermediaries between the manufacturer


and the final customer.

The Replacement market segment of the tyre industry caters to individual


customers. It therefore requires wide reach and deep market penetration. The
distribution channel for replacement market comprises of the manufacturer,
warehouses/ C&F (carry & forward) agents, and the dealers. The Tyre is finally
sold to the customer by the dealer.

INDIRECT CHANNEL

(FOR THE TYRE REPLACEMENT SEGMENT)

Manufacturer

Warehouse/ C & F
agent

Dealer

Consumer

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2.2.2 Single and multiple channels:

Most organizations today employ multichannel marketing i.e. selling to different consumer
segments through different channels. The tyre industry too follows this method. There are
three different channels dedicated to handle the three different kinds of consumers:

Customer  Channel type 
OEMs  Direct 
Exports  Direct 
Replacement  Indirect 

2.2.3 Channel length:

Channel length refers to the number of channel intermediaries between the


manufacturer and the end user. In the tyre industry, based on the target customer, the
channel length differs as follows:
 

Customer  Channel length 
OEMs  0 (Direct) 
Exports  0 (Direct) 
Replacement  2 level 

2.3 Channel Management practices: 
 
Once the manufacturer has selected a channel system, it must select, train, motivate and
evaluate the individual intermediaries for each channel. This is a multi step process.

2.3.1 Selecting channel members:

1) Bridgestone:
Bridgestone selects channel partners after a careful evaluation and analysis.
Bridgestone selects dealers based on the following criteria:

a) Credit history: The dealer should have a clean credit history with a good
repayment record.

b) Experience: The dealer should have relevant experience of a few years in the
field of stocking and selling tyres.

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c) Exclusive dealers Vs Multi-brand Dealers: Though Bridgestone sells its tyres
through both exclusive and multi-brand dealers, it gives very little attention to
building exclusive dealer strength. Instead, it only requires that Multi-brand
dealers offer Bridgestone an 80% share in stocking space.

d) Mandatory Tyre changing equipment: One major dealer criterion that is exclusive
to Bridgestone is its insistence that all dealers must possess automatic tyre
changing and wheel balancing equipments. This severely restricts the number of
dealers who can apply for Bridgestone’s dealership. But it also increases the
overall buying experience of a Bridgestone customer.

2) MRF:

a) Credit history: The dealer should have a clean credit history with a good
repayment record.

b) Experience: The dealer should have relevant experience of a few years in the
field of stocking and selling tyres.

c) Exclusive dealers Vs Multi-brand Dealers: Though MRF also sells its tyres
through both exclusive and multi-brand dealers, it gives a lot of attention to
setting exclusive showrooms for its tyres. It also mandates a very high stocking
share from multi-brand dealers.

2.3.2 Training and motivating channel members:

1) Training and motivation:

Both Bridgestone and MRF undertake regular dealer trainings for their exclusive
dealers. These trainings include modules that teach the dealers how to identify
customer needs and respond to them. While Bridgestone regularly introduces dealer
schemes, holiday packages, gold vouchers, etc to motivate its dealers, MRF focuses
exclusively on brand promotion at the customer level.

2) Channel Power:

Channel power refers to the kind of power Manufacturers hold over channel
partners. It is the ability of the manufacturer to alter the behavior of a channel
member.

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Bridgestone follows reward power with its dealers. The company offers additional
incentives such as discounts, free gifts, gold vouchers, holiday trips, etc and
encourages them to stock, promote and sell their tyres.

MRF on the other hand, pays very little attention to channel power. They focus
exclusively on a Pull strategy by heavily advertising its products and capturing top-
of-mind recall and brand recognition amongst customers. This automatically results
in demand for its tyres from customers, which in turn incentivizes the dealer to
stock MRF tyres. In that way, we can say that MRF influences referent power over
its dealers. Dealers like to be associated with MRF because it is the most sought
after brand by consumers.

2.3.3 Efficient Consumer Response (ECR) practices:

Many companies, including Bridgestone, have adopted ECR practices to streamline


their supply chain and logistics and also to cut overhead costs.

ECR requires close coordination between the manufacturer and the dealer in three
areas:

1) Demand Side management:


Demand side management deals with collaborative practices between the
manufacturer and its dealers to stimulate consumer demand by joint marketing and
sales activities. As a part of these activities, Bridgestone offers free sops to
customers through its dealer outlets such as:

a) Free Provogue T-shirts


b) Free tyre and battery check-ups every 4-6 months for Bridgestone customers
c) 50% discount on alignment and balancing
d) Free F1 racing trip tickets

All these are done at the dealer store, where the customer interaction happens.
Therefore the dealer’s cooperation is crucial.

2) Supply Side management:


Supply Side Management deals with collaborative practices between manufacturer
and its dealers to optimize supply. Both Bridgestone and MRF practice joint
logistics and Supply Chain Management methods to ensure adequate stocking of its
tyres at dealer outlets. The manufacturers do this by closely working with dealers to
track their shelf spaces and replenish stocks on time.

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3) Enablers and Integrators:  
Enabler and integrators are collaborative IT and process improvement tools to
support joint activities that reduce operational problems and allow greater
standardization. Though Bridgestone uses IT based SCM tools to track its inventory
internationally, it is yet to introduce these practices in its Indian operations. In fact
in 2005, Satyam was chosen to implement IT solutions for Bridgestone, at its
headquarters in Japan. This included consulting, implementation and operations for
SAP and Siebel CRM, Cognos business intelligence and content management.

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3. P RICING STRATEGIES:    
 
Pricing a product is a function of many factors. A number of factors affect the pricing of a
product directly. Some among them are brand value, competition, input costs, quality,
government policies, macroeconomic developments, etc.

3.1  Basic pricing strategies in the tyre industry: 
 
The tyre market is not very price sensitive. Consumers are more concerned about the tyres
functionality, than its price. Besides, being a homogenous product, most tyre companies price
their tyres at more or less the same levels. International players such as Bridgestone price
their tyres slightly higher than the rest of the market. This is partially to demonstrate its
superior quality and pedigree.

Bridgestone and MRF: Price leaders


Bridgestone and MRF have long been leaders in the Passenger Car tyre segment. By virtue of
their market share, they have traditionally been price makers. The rest of the tyre industry has
followed the pricing cues set by these leaders.

Bridgestone- Using Price-Quality inference to its advantage:


Many consumers use price as an indicator of quality. Bridgestone understands this subtle
connection very well. Being world leaders in quality and reliability, Bridgestone actively
tries to remind the superior quality factor to its customers by pricing its tyres a little higher
than the competition. Consumers are ready to pay this price because they perceive
Bridgestone tyres to be value-for-money. The high prices in turn reaffirm the perception of
quality product in the consumer’s mind. Thus, higher prices induce a continuous cycle of
quality reaffirmation.

Bridgestone: Low Total Cost of ownership


Another reason why Bridgestone is able to price its products higher is the value-for-money
that consumers associate with it. Bridgestone tyres last longer and perform better over the
long run. Thus the Total cost of ownership over the long term is very low. There is hardly
any maintenance, repair or replacement cost for a long time after purchase.

Bridgestone and MRF- using the Markup pricing method


The tyre industry being a very raw material intensive industry, the input costs mainly decides
the price of tyres. In fact, 90% of a tyres cost comprises of its raw material costs. Markup
pricing is the common pricing method followed across the tyre industry. This involves
adding a standard markup to the tyre’s production cost.

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3.2 Dealer discounts and allowances: 

While MRF (in keeping with its Pull strategy of concentrating on end consumers), does not
indulge the dealer with too many discounts and allowances, Bridgestone has mastered the art
of incentivizing the dealers with heavy discounts and allowances.

Some of the dealer discount schemes used by Bridgestone include:


1) Credit discounts for quick credit repayments
2) Quantity discounts on large volumes (based on discount slabs)
3) Seasonal discounts in the form of sell-in schemes for the dealers during festivals.

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4. PRODUCT  P ROMOTION: 

Marketing communications help a firm to inform, persuade and remind customers about its
products, directly or indirectly.

While Bridgestone India has traditionally followed a subdued promotion strategy to let its tyre’s
reputation for quality do the talking, MRF has gone all out to woo the consumer to its tyres.
MRF continually looks to improve its Brand Equity by maximum mediums of brand contact
(consumer’s exposure to the brand name). Today, MRF command top-of-mind recall excellent
brand recognition in all categories of vehicles in the tyre market.

4.1 The Marketing Communication mix: 

Communication mix refers to the major mediums that companies use to promote their products.
There are eight major modes of market communication: Advertising, Sales Promotion, Events
and Experiences, Public Relations, Direct Marketing, Word-of-Mouth marketing, and Personal
selling.

1) MRF: Gods of Advertising

MRF uses advertising as the primary medium to reach out to its customers. The company
invests heavily on print, TV and outdoor media, to drive its brand into the minds of the
customer. MRF is credit with devising some of the most creative ads ever made for an
Indian tyre company. It allots a huge budget outlay for advertisements and other
promotional activities. Its mascot, the MRF muscleman along with its slogan “Tyres with
muscle” was once one of the most recognizable advertising campaign in Indian
advertising history. It was specially devised at Lintas by its CEO, Alyque Padamsee
himself. Allyque and his team painstakingly surveyed scores of truck drivers at road side
dhabas to understand their needs and wants.

MRF takes care to promote its tyres as tough, reliable and high endurance. This is
because its main share of customers comes from the Light and Heavy Commercial
Vehicles segment. Truck and bus owners in this segment consider strength and endurance
as the No.1 factor desirable in a tyre. For the passenger and two-wheeler segment, MRF
promotes itself as a high quality and high performance tyre manufacturer.

2) Bridgestone: Driving Sales Promotions through its dealers

Sales promotions are used more by Bridgestone than MRF. Bridgestone regularly
introduces festival offers, consumer discounts and other sops through its dealer outlets.
These offers to customers are called sell out schemes.

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Some recent offers and incentives that Bridgestone has provided its potential customers
include:

a) Free Provogue T-shirts worth Rs. 1,200/- for every car tyre purchase
b) Free tyre and battery check-ups every 4-6 months exclusively for Bridgestone
customers
c) 50% discount on alignment and balancing exclusively for Bridgestone
customers
d) Free F1 racing trip tickets through lucky draw

Bridgestone constantly works with its dealers, to give its customers a unique
experience while shopping for its tyres. As a part of achieving this enhanced
experience, Bridgestone has made it mandatory that only dealers with automatic wheel
alignment and balancing equipment can apply for its tyre dealerships. This ensures that
when customers buy a Bridgestone tyre, they also get an added benefit of perfectly
aligned wheel fitting.

3) MRF: spin doctors of publicity campaigns

Over the years, MRF has perfected the art of publicizing


its brand through highly visible events and celebrity
endorsements. MRF has consciously aligned itself with a
number of sporting events in India. Its most memorable
association with sports and celebrity endorsements was
the MRF label that adorned Sachin Tendulkar’s bat for
many years. MRF is also well known for founding the
MRF Pace Foundation, which is today one of the
premier training institute for
India’s budding pace
bowlers. Though cricket, given
its cult like status, gave MRF a lot of publicity, it was its
sponsorship of auto-racing projected its slogan, “Tyres with
Muscle” and outlined the quality of its tyres and allied products .

4) Bridgestone: Riding the wave of Word-of-Mouth marketing

The biggest asset in Bridgestone’s marketing arsenal is the goodwill it has created for
itself amongst its thousands of satisfied customers and OEMs. Bridgestone tyres are
known for their international quality, ride comfort and durability. OEMs prefer
Bridgestone over other manufacturers for its reliability and quality. Similarly, Bridgstone

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customers have had little reason for complaining about their tyre and have always
perceived it to b a value for money buy. This trust and user satisfaction seems to have
generated a large following of customers who strongly recommend Bridgestone tyres.
Most new Bridgestone customers purchase the tyre because their close relatives,
mechanics, or friends recommended it.

5) Bridgestone: Banking on Below-The-Line (BTL) promotional activities

“Below The Line" promotion refers to forms of communication that do not include the
media. Below the line sales promotions are short-term incentives, largely aimed at
consumers. Put simply, BTL promotions are a very good way to achieve communication
objectives more efficiently when the budget is limited. BTL is especially suitable for
products whose target groups are limited and specific.

Bridgestone uses BTL in a big way. It indulges in sales promotion activities such as
encouraging dealers to promotion their tyres, and regularly introduces festival offers,
consumer discounts and other sops through its dealer outlets. These offers to customers
are called sell out schemes.

Some recent offers and incentives that Bridgestone has provided its potential customers
include:

a) Free Provogue T-shirts worth Rs. 1,200/- for every car tyre purchase
b) Free tyre and battery check-ups every 4-6 months exclusively for Bridgestone
customers
c) 50% discount on alignment and balancing exclusively for Bridgestone
customers
d) Free F1 racing trip tickets through lucky draw

6) MRF: Banking on Above-The-Line (ATL) promotional activities

Above-The-Line is a type of advertising that uses the media to promote a brand. This
type of communication is conventional and impersonal in nature. MRF invests heavily on
print, TV and outdoor media, to drive its brand into the minds of the customer. MRF is
credited with devising some of the most creative ads ever made for an Indian tyre
company. It allots a huge budget outlay for advertisements and other promotional
activities. Its mascot, the MRF muscleman along with its slogan “Tyres with muscle” was
once one of the most recognizable advertising campaigns in Indian advertising history.

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4.2 : Developing Effective communications 
 
4.2.1 Identifying the target audience: 
 
The first step to designing an effective communication strategy is identifying the target
audience. As the figure below shows, there are three main customer segments in the car
tyre market:

a. Original Equipment Manufacturers (OEMs)


b. The Replacement Market (replacement of old, worn out or defective tyres)
c. Exports
 

 
 
For each of these segments a appropriate communication strategy needs to be
developed.
 
 
4.2.2 Determining the Communication Objectives 
 
There are four possible communication objectives for a company:

a. Category Need: Establishing a product or service as belonging to a particular


category of products. Especially used for new-to-the-world products.

b. Brand Awareness: Building brand recognition and Brand Recall through


promotional activities. Brand Awareness forms the foundation for building Brand
Equity.

c. Brand Attitude: Evaluating a brand with respect to its perceived ability to meet a
relevant need.

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d. Brand Purchase Intention: Self-instructions to purchase a brand or to take
purchase related action.
 
 
1) MRF­ creating Brand Awareness: 
 
MRF has mastered the art of creating lasting impressions in the mind of the
consumer. It pioneered the practice of heavy advertising and promotion in the tyre
industry. So much so, that today, MRF commands top-of-mind recall and top brand
recognition amongst all tyre manufacturers in India. There is hardly any tyre
customer who hasn’t heard of the MRF brand. MRF achieved this remarkable feat
by adopting a multi-pronged marketing strategy that involved endorsements by
sports celebrities like Sachin Tendulkar, Brian Lara and Steve Waugh, promoting
popular sports like cricket and car rally races, and even introducing its own mascot:
the MRF muscleman, that reflected the tough image it projected for its tyres. Today,
dealers look forward to stock MRF tyres because customers demand it.
 
2) Bridgestone­ shaping Purchase Intention through Sellout schemes 
 
Sell out schemes refer to the promotional offers and discounts that companies offer
to positively impact the buyer’s purchase decision. Bridgestone, in collaboration
with its dealers, offers a variety of discounts, special deals and compliments to
influence the customer into buying its tyres.

Some recent offers and incentives that Bridgestone has provided its potential
customers include:

a) Free Provogue T-shirts worth Rs. 1,200/- for every car tyre purchase
b) Free tyre and battery check-ups every 4-6 months exclusively for Bridgestone
customers
c) 50% discount on alignment and balancing exclusively for Bridgestone
customers
d) Free F1 racing trip tickets through lucky draw

   
 
4.2.3 Designing the communication 
 
To design a communication strategy that achieves the desired response, the marketer
needs to solve three problems: what to say? (message strategy), How to say it? (creative
strategy) and who should say it? (message source)

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Since Bridgestone India does not advertise its tyres much but instead depend on Push
strategies at the dealer level and reputation at the OEM level to gain sales, let us instead
look at how MRF has designed its communication strtategy.
 
MRF – Using Sports and Muscle as Message Strategies 
The MRF mascot, the MRF muscleman, clearly states the category membership MRF
subscribes to. MRF communicates to the customer its superior endurance and strength
through its advertisments. The company sponsors a number of sports such as cricket
and rally racing, to position its tyres as high endurance and sporty. Its slogan, “Tyres
we race are the tyres you buy” stands testimony to their category membership. MRF
takes care to promote its tyres as tough, reliable and high endurance. This is because its
main share of customers comes from the Light and Heavy Commercial Vehicles
segment. Truck and bus owners in this segment consider strength and endurance as the
No.1 factor desirable in a tyre.
 
MRF – Implementing Creative Strategy through informational appeal 
The creative strategy (How to say it?) for a communication channel can be realized
through Informational Appeals.

Informational Appeals elaborate on a product’s attributes and benefits. MRF


communicates its brand value to the customer by emphasizing on the toughness and
durability of its tyres. The benefit it offers the consumer is increased endurance and
performance under the most testing condition.
 
 MRF – Using celebrities as Message Sources 
MRF has mastered the art of effectively using sports celebrities to endorse its products.
The list of celebrities who have endorsed the MRF brand is formidable. The list
includes sporting greats such as Sachi Tendulkar, Brian Lara, Steve Waugh and
Gautam Gambhir. One of the most enduring images of MRF brand is the MRF logo
that adorned Sachin Tendulkar’s bat over a decade.

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Brand Strategy Analysis        

  MARKET FEEDBACK AND CONTROL MECHANISMS                                
A PRIMARY DATA ANALYSIS 

As a part of our primary data exercise, we visited 10 tyre dealers in Coimbatore who stocked
MRF and Bridgestone brand of tyres. We prepared a closed-ended questionnaire for them and
took their feedback on various parameters involving the tyres they sell. The results provided us
with a deep insight into a typical dealer’s mind.

A Marketing Survey of Tyre Dealers (2009-2010)


Questionnaire

1. Details of the firm and proprietor.

Name and Address of the Firm/Branch Name of the Proprietor/Partner

2. Facilities available in your shop.


Wheel Wheel Tyre
Nitrogen Gas Alloys Others
Alignment Balancing Changing

3. Dealer For

MRF Apollo Ceat JK Bridgestone Birla Goodyear Michelin Others

4. Which Brand is more profitable?

MRF Apollo Ceat JK Bridgestone Birla Goodyear Michelin Others

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5. Best selling pattern and size.


MRF JK Tyres Goodyear

Apollo Bridgestone Michelin

Ceat Birla Tyres Others

6. Which brand is more preferred by customers?

MRF Apollo Ceat JK Bridgestone Birla Goodyear Michelin Others

7. Price of different brand products?


High Moderate Low

8. Which company is providing better after sales service?

MRF Apollo Ceat JK Bridgestone Birla Goodyear Michelin Others

9. Which companies sell out scheme is more effective?

MRF Apollo Ceat JK Bridgestone Birla Goodyear Michelin Others

10. Which companies sell out scheme is effectively reached to customers?

MRF Apollo Ceat JK Bridgestone Birla Goodyear Michelin Others

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Brand Strategy Analysis        

1. Dealer For

Dealer Number  MRF   Apollo   Ceat  JK  GDY  BS  Michelin  Birla  Others 

1  Y  Y  Y 

2  Y 

3  Y  Y 

4  Y  Y  Y  Y  Y  Y  Y  Y 

5  Y  Y  Y  Y 

6  Y 

7  Y  Y  Y  Y  Y 

8  Y  Y  Y 

9  Y  Y 

10  Y  Y  Y  Y  Y  Y  Y  Y 

Brands  Total 
Dealer for
          MRF  6 
MRF
          Apollo  6 
Apollo
5 6
          Ceat  4  Ceat

          JK  4  4 JK
6 Goodyear
          Goodyear  3  1
Bridgestone
3
          Bridgestone  3  Michelin
3 4
          Michelin  1  4 Birla
Others
          Birla  5 

          Others  5 

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2. Which brand is more profitable?

Dealer Number  MRF   Apollo   Ceat  JK  GDY  BS  Michelin  Birla  Others 

1  Y  Y 

2  Y  Y 

3  Y  Y  Y 

4  Y  Y  Y 

5  Y 

6  Y  Y  Y 

7  Y  Y 

8  Y 

9  Y 

10  Y  Y  Y 

Brands  Total  Percentage 


Which brand is most 
          MRF   6  28.57 % 
profitable?
          Apollo  3  14.28 % 
MRF
          Ceat   1  4.76 % 
Apollo
1
          JK  2  9.52 %  0 2
Ceat
6
          Goodyear  4  19.04 %  2 JK

          Bridgestone  2  9.52 %  Goodyear


Bridgestone
          Michelin  0  0.00 %  4 3
Michelin
2 1
         Birla  1  4.76 %  Birla
          Others  2  9.52%  Others

          Total  21  100 % 

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3. Which Brand is more preferred by customers?

Dealer Number  MRF   Apollo   Ceat  JK  GDY  BS  Michelin  Birla  Others 

1  Y  Y 

2  Y  Y 

3  Y  Y 

4  Y  Y  Y 

5  Y  Y  Y 

6  Y  Y 

7  Y  Y 

8  Y  Y  Y 

9  Y  Y 

10  Y  Y  Y 

Brands  Total  Percentage


Which brand is most 
          MRF    6   25 % 
preferred by 
          Apollo   3   12.5 %  customers?
          Ceat    1   4.16 %  1 MRF
1 2
          JK   2   8.33 %  6
Apollo
          Goodyear   1   4.16 % 

          Bridgestone   7   29.16 %  7 3 Ceat

          Michelin   1   4.16 %  1 2 JK


1
          Birla   1   4.16 % 
Goodyear
          Others   2   8.33 % 

          Total  24  100 % 

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4. Price of different brand products

Dealer Number  MRF   Apollo   Ceat  JK  GDY  BS  Michelin  Birla  Others 

1  L   H      M      M           

2  M           M      H      L  

3  M            H     M     

4   M     L   M               L  

5  L   M         M       H     L  

6  M      M     L            M  

7     M      M      H     L     

8  M     M   L      M   H      L  

9  L        M   M              

10  M   M             H  H      L  

Brands  High  Moderate  Low 

MRF  ‐  5  3 

Apollo  1  4  ‐ 

Ceat  ‐  2  1 

JK  ‐  4  1 

Goodyear  ‐  3  1 

Bridgestone  3  2  ‐ 

Michelin  4  ‐  ‐ 

Birla  ‐  1  1 

Others  ‐  1  5 

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High Priced

Apollo
4 Bridgestone
Michelin
3

Moderately Priced

MRF
1 1 Apollo
5
2
Ceat
JK
3
Goodyear
4 Bridgestone
4 Michelin
2
Birla

Low Priced
MRF

3 Apollo

5 Ceat
JK
1
Goodyear
1 Bridgestone
1 1
Michelin

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5. Which company provides better after sales service?

Dealer Number  MRF   Apollo   Ceat  JK  GDY  BS  Michelin  Birla  Others 

1  Y               Y         Y  

2     Y      Y   Y              

3                            

4  Y   Y               Y        

5              Y   Y           

6                          Y  

7  Y   Y            Y        

8           Y      Y           

9                            

10  Y      Y         Y      Y     

Brands  Total  Percentage 

           MRF    4   19.05 % 


Which company provides better after 
sales service?           Apollo   3   14.28 % 

MRF           Ceat    1   4.76 % 


1
2 4 Apollo           JK   2   9.52 % 
2 Ceat
          
3  2   9.52 % 
JK Goodyear 
4
Goodyear
2 2 1           
 4   19.05 % 
Bridgestone Bridgestone 

           1.
 2   9.52 % 
Michelin 

          Birla   1   4.76 % 

          Others   2   9.52 % 

          Total  21  100 % 

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Which company’s sell out scheme is most effective?

Dealer Number  MRF   Apollo   Ceat  JK  GDY  BS  Michelin  Birla  Others 

1  Y            Y   Y           

2     Y      Y               Y  

3                 Y           

4  Y   Y      Y      Y           

5              Y      Y        

6     Y      Y                 

7  Y               Y           

8        Y         Y           

9  Y               Y           

10        Y   Y                 

Brands  Total  Percentage 

          MRF    4   17.39 % 

          Apollo   3   13.04 % 


Which company's 
          Ceat    2   8.69 % 
sellout schemes are 
more effective?           JK   4   17.39 % 

01           
1 MRF  2   8.69 % 
Goodyear 
4
          
6 Apollo  6   26.08 % 
3 Bridgestone 

Ceat           Michelin   1   4.34 % 


4 2
2
          Birla   0   0.00 % 

          Others   1   4.34 % 

          Total  23  100 % 

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Which company’s sell out schemes effectively reach the customer?

Dealer Number  MRF   Apollo   Ceat  JK  GDY  BS  Michelin  Birla  Others 

1  Y               Y           

2     Y            Y         Y  

3        Y                    

4  Y            Y  Y           

5     Y            Y           

6  Y   Y                       

7           Y      Y           

8  Y               Y           

9           Y                 

10  Y         Y      Y           

Brands  Total  Percentage


Which company's sellout 
          MRF    5   23.81 % 
schemes effectivley 
reach the customer?           Apollo   3   14.28 % 

001 MRF           Ceat    1   4.76 % 


5           JK   3   14.28 % 
7 Apollo
          Goodyear   1   4.76 % 
3
3 Ceat           
 7   33.33 % 
1 1 Bridgestone 

          Michelin   0   0.00 % 

          Birla   0   0.00 % 

          Others   1   4.76 % 

          Total  21  100 % 

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Best selling pattern and size.

Name Pattern Size


MRF Tyres All passenger car segments. 175/80 R13
ZCL 145/70 R12
ZUL 145/80 R12
ZUTS 235/75 R15
ZCT 165/65 R13
All T & B tyre models. 175/70 R13
900/20
1000/20
1100/20

Apollo Tyres Amezer XL 145/70 R12


Aspire 145/80 R12
Sigma Steel (All Models) 165/65 R13
Amargold (T&B) 900/20
All T & B tyre models. 1000/20
1100/20

Ceat Tyres All truck & bus tyre. 900/20


1000/20
1100/20

JK Tyres All rally models. 145/70 R12


JK Ultima-XP 145/80 R12
Elanzo Crusero 165/65 R13
Ultima-NXT 165/60 R13
Brute 235/70 R16
Tornado 155/65 R13

Goodyear Maruti (All Models) 145/70 R12


G28 145/80 R12
GPS2 165/65 R13
T & B Models 195/70 R14
175/70 R14
155/70 R13
900/20
1000/20
1100/20
Bridgestone S322 & B350 145/70 R12
S248 145/80 R12
S322 & B250 145/70 R13
B390 155/65 R13
All passenger car segments. 205/80 R13
155/80 R14
165/80 R14

Michelin Tyres XM (Models) 175/75 R12


Energy 195/70 R12
En XM 235/70 R16
LTX A/T 155/80 R13

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MXTE 165/65 R13
Birla Tyres All T & B tyre models. 900/20
1000/20
1100/20
Other Tyres Nexen 255/70/16
SB802 165/65 R13
92H 155/70 R13
N5000 145/80 R12
SB652 P205/65 R15
N7000 175/70 R12
CP661 145/80 R13
Falken 235/70 R16

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CHAPTER 3                      
 
 
 

     MARKETING STRATEGIES: 
              A RELATIVE ANALYSIS                                 
 

 
 
   

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ANALYZING THE MARKET STRATEGIES                                                   
A RELATIVE ANALYSIS 

   

1. ANALYSIS OF THE OVERALL MARKETING STRATEGIES: 
 
1.1 Marketing Strategy Analysis 
 

1) Bridgestone: Pursuing a Push strategy, reputation, and BTL (Below the line ) promotion
strategies

Bridgestone pursues a strong push strategy in its channel marketing. The advertising
layout for Bridgestone India is minimal. Bridgestone spends very little on advertising and
promotion. Instead, they concentrate on incentivizing the dealer to stock, promote and
sell their products. As a result, Bridgestone regularly introduces sell-in schemes
(promotional schemes for dealers), gold vouchers, international holiday vouchers, OE
camps, etc.

Bridgestone uses BTL promotional activities in a big way. It indulges in sales promotion
activities such as encouraging dealers to promotion their tyres, and regularly introduces
festival offers, consumer discounts and other sops through its dealer outlets. These offers
to customers are called sell out schemes.

Some recent offers and incentives that Bridgestone has provided its potential customers
include:

a) Free Provogue T-shirts worth Rs. 1,200/- for every car tyre purchase
b) Free tyre and battery check-ups every 4-6 months exclusively for Bridgestone
customers
c) 50% discount on alignment and balancing exclusively for Bridgestone
customers
d) Free F1 racing trip tickets through lucky draw

The biggest asset in Bridgestone’s marketing arsenal is the goodwill it has created for
itself amongst its thousands of satisfied customers and OEMs. Bridgestone tyres are
known for their international quality, ride comfort and durability. OEMs prefer
Bridgestone over other manufacturers for its reliability and quality. Similarly,
Bridgestone customers have had little reason for complaining about their tyre and have
always perceived it to b a value for money buy. This trust and user satisfaction seems to
have generated a large following of customers who strongly recommend Bridgestone
tyres. Most new Bridgestone customers purchase the tyre because their close relatives,
mechanics, or friends recommended it.

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Analysis:

Though Bridgestone has succeeded in almost completely wooing the OEM market with
its focus on quality, reliability and international pedigree, the Replacement market still
seems to give it sleepless nights. The Push channel strategy adopted by Bridgestone
might have made it popular with the dealers (who receive numerous incentives from
Bridgestone), but the end customer still considers MRF as the natural choice, thanks to its
high visibility campaigns. Bridgestone needs to take a leaf out of MRF’s aggressive ATL
promotional campaigns and start targeting the customer directly. With its international
reputation, parent company’s brand equity and strong financial outlay, Bridgestone has
all it takes to launch a strong promotional campaign to increase its brand equity in the
minds of the consumer.

2) MRF: Masters at Pull strategy, Publicity campaigns and ATL promotional methods

MRF follows exactly the opposite strategy. MRF has mastered the art of Pull strategy. It
pioneered the practice of heavy advertising and promotion in the tyre industry. So much
so, that today, MRF commands top-of-mind recall and top brand recognition amongst all
tyre manufacturers in India. There is hardly any tyre customer who hasn’t heard of the
MRF brand. MRF achieved this remarkable feat by adopting a multi-pronged marketing
strategy that involved endorsements by sports celebrities like Sachin Tendulkar, Brian
Lara and Steve Waugh, promoting popular sports like cricket and car rally races, and
even introducing its own mascot: the MRF muscleman, that reflected the tough image it
projected for its tyres.

Over the years, MRF has perfected the art of publicizing its brand through highly visible
events and celebrity endorsements. MRF has consciously aligned itself with a number of
sporting events in India. Its most memorable association with sports and celebrity
endorsements was the MRF label that adorned Sachin Tendulkar’s bat for many years.
MRF is also well known for founding the MRF Pace Foundation, which is today one of
the premier training institute for India’s budding pace bowlers. Though cricket, given its
cult like status, gave MRF a lot of publicity, it was its sponsorship of auto-racing
projected its slogan, “Tyres with Muscle” and outlined the quality of its tyres and allied
products

Analysis

MRF has been immensely successful in creating a brand that has become a household
name today. Its marketing campaign has been one of the most innovative ever in the
history of Indian advertising, thus wooing the customer completely. However, MRF
Achilles heel seems to be its dealer relations. MRF so heavily concentrates on its

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customer promotion activities, that it hardly pays any attention to incentivizing the
dealers. This is reflected in the very low margins it offers its dealers and the almost
complete absence of promotional activates such as discounts, gifts, compliments, etc for
the dealers (called Sell in schemes). Dealers stock MRF tyres simply because customers
demand them. They do not seem to be very keen on promoting the product, since the
company does not incentivize them to do so. A better incentive scheme for the dealers
could change this situation in MRF’s favor.

1.2 Porter’s Generic Strategy Analysis 

Michael Porter proposes three generic strategies that form the foundation for strategic
thinking:

1) Overall Cost Leadership strategy: Achieving lowest production and distribution


costs so that they can price lower than the competitor.

This strategy does not work in the tyre industry for the simple reason that tyres
are a highly raw material-intensive industry. More than 90% of the total cost of
production stems from raw material costs. Given this fact, it becomes extremely
difficult to produce tyres at costs that are significantly lower than that of the
competitors, since raw materials cost the same to all industry players.

2) Differentiation strategy: The business concentrates exclusively on achieving a


superior performance in an important customer benefit area.

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Bridgestone -Quality and Value for Money
Bridgestone has achieved a high degree of differentiation in the market by
positioning its tyres as international quality with value for money. The success of
this positioning is amply clear from the fact that Bridgestone is the preferred tyre
supplier to a majority of Automobile OEMs. OEMs generally select suppliers
based on the products quality and reliability. Bridgestone’s main value
proposition is its international quality and value for money. Every Bridgestone
customer is assured of a tyre that is of international standards and will give him
trouble-free service for a long time, thus giving him value for his money.

MRF-Tyres with Muscles


MRF has for log concentrated on the high performance its tyres offer in trying
conditions. To further this image, it has partnered with many sports events and
created a mascot that reflects the toughness it claims in it tyres: the MRF
muscleman.

MRF prides itself in making tyres that go into some of the most trying conditions
on Indian roads: onto Heavy Vehicles on rough Indian roads. Consequently, MRF
offers a compelling value proposition to heavy vehicle owners as well as
passenger car and two wheeler owners: Quality tyres that endure in the worst of
conditions. It drives home this macho message through its mascot, the MRF
muscleman.

3) Focus strategy: In a focus strategy the business focuses on one or more narrow
market segments

Bridgestone India- Leaders in the Passenger Car Tyre market


Bridgestone India has for the past one decade, focused exclusively on the
Passenger Car Tyre segment. One major reason for restricting itself to this
segment was that Bridgestone manufactures only radial tyres. While the rest of
the Indan tyre market still runs mostly on non-radial tyres, the Passenger Car
market has almost completely been radialised. This gave Bridgestone an
opportunity to capture market share with its international quality and value for
money proposition. Today, Bridgestone is the market leader in this category with
a share of 31% of the Indian passenger car tyre market.

MRF- Focusing on heavy duty vehicles


Unlike Bridgestone, MRF has a product portfolio that covers the entire tyre
industry. However, MRF’s promotional strategy focuses moreon the need of the
Heavy duty truck and bus driver. This is mainly because a majority i=of its sales
happe in the Heavy and Light Commercial Vehicles market. In order to tap this
market further, MRF positions its tyres as “tyres with muscle”, to highlight its
high endurance and strength.

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1.3 Creating Value: 

1.3.1 Bridgestone – Quality and Value for money:

Bridgestone’s main value proposition is its international quality and value for money.
Bridgestone prides itself for making tyres that incorporate the international standards
that people world over have come to associate with it.

Bridgestone delivers this value by ensuring that every customer is assured of a tyre that
is of international standards and will give him trouble-free service for a long time, thus
giving him value for his money.

1.3.2 MRF – Endurance guaranteed:

MRF prides itself in making tyres that go into some of the most trying conditions on
Indian roads: onto Heavy Vehicles on rough Indian roads. Consequently, MRF offers a
compelling value proposition to heavy vehicle owners as well as passenger car and two
wheeler owners: Quality tyres that endure in the worst of conditions. It drives home this
macho message through its mascot, the MRF muscleman.

MRF delivers this value to the customers by guaranteeing that their tyres are designed
to endure in the most trying of Indian weathers and roads. To achieve this MRF
regularly tests its tyres in cross-country rallies and other extreme conditions.

1.4 Communicating the Value: 

MRF takes care to promote its tyres as tough, reliable and high endurance. MRF has
mastered the art of creating lasting impressions in the mind of the consumer. It pioneered the
practice of heavy advertising and promotion in the tyre industry. So much so, that today,
MRF commands top-of-mind recall and top brand recognition amongst all tyre manufacturers
in India. There is hardly any tyre customer who hasn’t heard of the MRF brand. MRF
achieved this remarkable feat by adopting a multi-pronged marketing strategy that involved
endorsements by sports celebrities like Sachin Tendulkar, Brian Lara and Steve Waugh,
promoting popular sports like cricket and car rally races, and even introducing its own
mascot: the MRF muscleman, that reflected the tough image it projected for its tyres. Today,
dealers look forward to stock MRF tyres because customers demand it.

Bridgestone on the other hand banks more on its ability to incentivize dealers and also on
Word-of-Mouth marketing from its thousands of satisfied customers to promote its tyres.
OEMs prefer Bridgestone over other manufacturers because of their positive experience with
Bridgestone tyres. Its international links with F1 racing also adds a halo of pedigree around
the brand.

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1.5 Capturing the Value – pricing philosophies: 

The tyre market is not a very price sensitive market. Consumers are more concerned about
the tyres functionality, than its price. Besides, being a homogenous product, most tyre
companies price their tyres at more or less the same levels. International players such as
Bridgestone price their tyres slightly higher than the rest of the market. This is partially to
demonstrate its superior quality and pedigree. 

Bridgestone and MRF: Price leaders


Bridgestone and MRF have long been leaders in the Passenger Car tyre segment. By virtue of
their market share, they have traditionally been price makers. The rest of the tyre industry has
followed the pricing cues set by these leaders.

Bridgestone- Using Price-Quality inference to its advantage:


Many consumers use price as an indicator of quality. Bridgestone understands this subtle
connection very well. Being world leaders in quality and reliability, Bridgestone actively
tries to remind the superior quality factor to its customers by pricing its tyres a little higher
than the competition. Consumers are ready to pay this price because they perceive
Bridgestone tyres to be value-for-money. The high prices in turn reaffirm the perception of
quality product in the consumer’s mind. Thus, higher prices induce a continuous cycle of
quality reaffirmation.

1.6 Sustaining the Value – Building relationships: 

While MRF banks on its aggressive advertising campaigns to attract customers to its tyres,
Bridgestone pays more attention to the customer’s experience while buying its tyres.
Bridgestone ensures that its potential customer encounters a positive experience at every
touch point (point of contact between the customer and its product).

To ensure this Bridgestone even goes to the extent of insisting that its its dealers must
compulsorily posses automatic wheel alignment and balancing equipments. This ensures that
its customers walk away not only with a good quality tyre, but also a set of perfectly aligned
wheels.

Bridgestone regularly holds camps for its dealers, where the dealers are trained in identifying
customer needs and catering to them.

Bridgestone also introduces special schemes and services for its customers regularly, such as
free car checkups, gifts and complements, and special discounts on services susch as
alignment and balancing.

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1.7 Rating the Marketing Strategies of Bridgestone and MRF: 

This exhaustive study of the marketing strategies of Bridgestone and MRF has made it very
clear that the two companies follow a very different approach to marketing its products.
While Bridgestone appears to prefer the subdued BTL form of promotions, MRF has gone all
out on its aggressive ATL promotion tactics.

Both the strategies seem to be working, though in very different fundamental ways. While
MRF’s aggressive advertising, celebrity endorsements and event sponsorships seem to have
earned it top-of-mind recall and high brand recognition amongst individual customers,
Bridgestone’s focus on quality and dealer incentives seem to have made it extremely popular
with the other two customer segments in the car tyre market: The OEMs and the replacement
dealer’s market.

Both companies can learn a lot from each other’s marketing strategies. While MRF can
improve its dealer incentive programs and also focus on communicating its tyre’s endurance
and strength to OEMs, Bridgestone needs to adapt aggressive ATL promotional methods to
improve its brand recall and brand equity in the minds of individual customers.

 
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REFERENCES 

o “Bridgestone tyres: value for money“ (2009). Retrieved Jan 2, 2010 from
http://www.bridgestonemotorsport.com/Bridgestone/en-gb/About+Us/

o “Tyre input costs soar“(2009). Retrieved Jan 2, 2010 from


http://www.livemint.com/2009/11/13142836/Bridgestone‐bullish‐on‐India.html

o “Tyre-Industry“ (2009). Retrieved Jan 2, 2010 from


http://www.scribd.com/doc/6739519/Tyre-Industry

o “Overview of the tyre Industry “ (2009). Retrieved Jan 2, 2010 from


http://www.articlesnatch.com/Article/Overview‐Of‐Indian‐Tyre‐Industry/866789 
 
 
o SBI capital Markets Limited, ”Indian Tyre Industry: An overview”, (2007) 
 
 
o “Bridgestone Has Helped In Faster Radialisation Of Indian Market””, (2007). Retrieved Dec
3, 2010 from http://www.financialexpress.com 
 
 
o CRISIL ratings, “MRF financials” ,(2008)

o “Indian tyre industry: An overview“ (2009). Retrieved Jan 2, 2010 from


Http://www.domain‐b.com/tyres/ introduction 
 

 
 

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