Industry and Customer segment Identification

Technology generation in the Indian tyre industry has witnessed a fair amount of
expertise and versatility to absorb, adapt and modify international technology to
suit Indian conditions. This is reflected in the swift technology progression from
cotton (reinforcement) carcass to high-performance radial tyres in a span of four
decades. Globalization has led to the linking of the economies of all the nations
and therefore major Indian players in the tyre industry are pursuing global
strategies to enhance their competitiveness in world markets. The present
section broadly undertakes an overview of Tyre industry in which the products
are sold to both FMCG consumer and industrial customer segments.I have taken
JKTyres company so later in the document you find the effective sales process
,sales force requirements, effective sales organization, sales executive
requirements (qualification, skill-sets, experience etc) and motivating programs
related to the company.

Key Features of the Tyre industry

• At present there are 40 listed companies in the tyre sector in India.

• Major players are MRF, JK Tyres, and Apollo Tyres & CEAT, which
account for 63 per cent of the organized tyre market. The other key players
include Modi Rubber, Kesoram Industries and Goodyear India, with 11 per
cent, 7 per cent and 6 per cent share respectively. Dunlop, Falcon, Tyre
Corporation of India Limited (TCIL), TVS-Srichakra, Metro Tyres and
Balkrishna Tyres are some of the other significant players in the industry.
• While the tyre industry is largely dominated by the organized sector,
the unorganized sector is predominant with respect to bicycle tyres.
• The industry is a major consumer of the domestic rubber market.
Natural rubber constitutes 80% while synthetic rubber constitutes only 20%
of the material content in Indian tyres. Interestingly, world-wide, the
proportion of natural to synthetic rubber in tyres is 30:70
• The sector is raw-material intensive, with raw material accounting for
70% of the total costs of production
• Total production figures in tonnage: 11.35 lakh MT & total production
of tyres in all categories: 811 lakh (2007-08)
• Current level of radialization includes 95% for all passenger car tyres,
12% for light commercial vehicles and 3% for heavy vehicles (truck and bus)
• Restrictions were placed on import of used /retreaded tyres since April
2006
• Import of new tyres & tubes is freely allowed, except for radial tyres in
the truck/bus segment which has been placed in the restricted list since
November 2008
• Total value of tyre exports form India is approximately Rs 3000 crore
(2007-08)
• The major factors affecting the demand for tyres include the level of
industrial activity, availability and cost of credit, transportation volumes and
network of roads, execution of vehicle loading rules, radialization, retreading
and exports.
 Source: ATMA & CMIE
Production

Fig 1: Category-wise tyre production in India for 2007-08 & 2008-09 with
percentage of change
Source: Automotive Tyre Manufacturers’ Association (ATMA). Data available
only for two years

Figure 1 displays production figures for different categories of tyres in the year
2007-08 and 2008-09 (April-September). It shows a relatively significant increase
in percentage of production of tyres in the segments related to passenger cars,
tractors, light commercial vehicles and motorcycles. On the other hand,
production of tyres for scooters and mopeds declined by nearly 8 per cent.
 Exports

Fig 2: Segment-wise exports in different categories for the year 2007-08 & 2008-09
Source: Automotive Tyre Manufacturer’s Association (ATMA). Data available only for
two years

Figure 2 shows the tyre export figures in different categories for the year 2007-
08 and 2008-09. The figure shows a significant decline in exports in the truck
and bus, tractor, ADV and industrial tyre categories. On the other hand, the
figure shows a significant increase in exports in the tyre categories of jeeps and
trailers.

Sales
 Fig 3: Supply of key tyre categories to various segments like replacement
market, original equipment market (vehicle manufacturers) and export
market for the year 2007-08
Source: Automotive Tyre Manufacturer’s Association (ATMA). Data available
only for two years

Tyre supplies are targeted and marketed primarily to the following categories:
Replacement market, Original Equipment Manufacturers’, Export, Government
Supplies and State Transport Undertakings. The replacement market is
significant for manufacturers of tyres in the category of motor cycles,
scooters/mopeds and tractors, while the OEM segment is significant for the
category of passenger cars and jeeps.

Sales process

Effective Sales organization for JK Tyre

As of March 31, 2008, JKTyre have over 134 sales, service and stock points
located throughout the country. There sales and distribution network, which
reaches across India, is managed through 13 regional offices at New Delhi,
Jalandhar, Kanpur, Meerut, Jaipur, Jamshedpur, Kolkata, Chennai, Hyderabad,
Bangalore, Mumbai, Indore and Ahmedabad and 58 area offices located across
the country. As of March 31, 2008, JKTyre have over 3,500 dealerships across
India, of which over 500 are dealers stocking JK tyres exclusively. In addition,
JKTyre have over 100 steel wheel outlets which also provide certain value added
services including wheel balancing, wheel alignments, tyre checking and tyre
rotation along with selling tyres for our passenger car range of tyres and 18 tyre
care centres located at the highways to focus and provide exclusive sales and
after sales service to truck radial customers. JKTyre care centres are open 24
hours a day which provide the following facilties including inflation pressure
check-ups, tyre fitment and rotation, repair of tyre cuts, service tyre facility,
front alignment check-up.

Extensive Sales and Distribution Network

For extensive Sales and Distribution Network, they have a fleet management
programme for nurturing,educating and caring the needs of transporters, the
ultimate customer of JKTyre commercial tyres. The fleet management
programme also comprises of the fleet management software, a tool to manage
JKTyre customer’s vehicles and tyre maintenance including maintaining data
records related to tyres, spareparts, fuel and servicing. In order to bring further
efficiencies and promptness in servicing to there customers, They have also
implemented the ERP in their regional offices as of October 1, 2007.

Marketing and Distribution Arrangements

JKTyre have entered into certain arrangements to expand reach and promote
their products including alliances with Reliance Industries Limited, Indian Oil
Corporation Limited, Sundaram Finance Limited and Haryali Kisaan Bazaar.
Brief summaries of these agreements are as under:

(a) Reliance Industries Limited

JKTyre have entered into an alliance with Reliance Industries Limited (“RIL”)
vide an agreement dated July 1, 2003 and have agreed to consider an
arrangement to provide JKTyre products to RIL at its various fuel stations,
retail and other outlets. Such products would be offered at a discount that
would depend upon a particular product segment. Under the terms of the
agreement, both parties are currently exploring the feasibility of entering into
a definitive agreement to foster such an arrangement. The agreement is
terminable by either party upon a prior written notice of ninety days.

(b) Indian Oil Corporation Limited

JKTyrr executed an MoU with Indian Oil Corporation Limited (“IOCL”) on
October 20,
2004 (further supplemented by an agreement dated July 5, 2007) to promote
there products and services. Our Company has agreed to provide customers
of IOCL at their various sales outlets with loyalty rewards and discounts on
purchase of JKtyre from IOCL outlets by extending IOCL retail outlets with the
same benefits as given to there exclusive dealers. In addition, to discounts on
products, IOCL customers shall also be entitled to discounts on services such
as wheel alignment and balancing at JKTyre steel wheel outlets and at radial
tyre care centers spread across the country. Company has also agreed to
provide special discounts to IOCL for purchase of tyres for vehicles owned by
them. Further, under the terms of the arrangement, JKTyre are permitted to
put up various publicity materials and promotional offers at IOCL’s retail
outlets, subject to the prior approval of IOCL. The arrangement is valid for a
period of three years effective until October 20, 2010.

(c) Sundaram Finance Limited

JKTyre have entered into an arrangement with Sundaram Finance Limited
(“Sundaram Finance”) on July 30, 2007 whereby Sundaram Finance has
agreed to extend finance, for purchase of JKTyre , to their customers.
Accordingly, customers of Sundaram Finance would be entitled to get finance
up to 85% for various brands of tyres manufactured by our Company. JKTyre
agreed to pay Sundaram Finance a fixed amount of incentive on the sale of a
certain number of tyres on a quarterly basis in order to promote JKTyre
products and enhance sales. The arrangement is renewable at the end of
every quarter.

(d) Hariyali Kisaan Bazaar

JKtyre have executed an MoU with Hariyali Kisaan Bazaar (promoted by DCM
Shriram
Consolidated Limited) on January 1, 2008 to market and promote JKTyre
products through Hariyali Kisaan Bazaar centres. JKTyre aim to target the
rural markets through this alliance. Under the terms of the MoU and in order
to effectively market products, they provide technical support to the Haryali
Kisaan Bazaar outlets. As consideration for distribution of products, Company
has agreed to offer certain discounts and benefits to Haryali Kisaan Bazaar.
also be entitled to participate in field activities, farmer education programs to
educate farmers about JKTyre products in association with Haryali Kisaan
Bazaar. The arrangement is valid for a period of two years w.e.f January 1,
2008, renewable on mutually accepted terms and may be terminated by both
parties pursuant to a 60 day notice.
Additionally, JKTyre have a number of marketing programmes and initiatives
for our distribution network designed for various tyre segments that help to
create brand awareness and customer and dealer interactions to promote
JKTyre products. For instance, company have consumer contact programmes
and consumer information programmes, fitters training, road and car safety
awareness programme. Furthermore, company have also recently entered
into an alliance with Shriram Transport Finance Company (“STFC”) to offer
discount coupons on some of the products to STFC customers availing loans
for tyre finance. Company believe that such a value added service shall
increase sales targets and improve existing market share of the company.
• Sales in the replacement market are carried out through dealers
(including steel wheels outlets) from company stocking points.
• Sales to OEMs are made against contracted volumes and sizes directly
from company plants.
• Sales to STUs and Defence are mostly from the plants and some
quantities are also distributed from sales, service and stock points.
• Goods are transported from the plants to various sales, service and
stock points, original equipment locations and STU locations by road
transport through arrangements with transporters.
• The local distribution from sales, service and stock points to the
dealers are by local handling/carting agents.
 • In the international markets, goods are shipped from plants to the
distributor from the Mumbai or Chennai ports.
• Company have a network of distributors who supply company tyres to
various retailers for onward sales to the consumers.

• Company have been continuously offering and innovating new

products in the market to meet the changing demands of our
customers in the replacement market. For instance, in the last one
year, company has introduced about 18 new tyres for sale in the
replacement market across different product categories to enhance
company presence in the consumer replacement market.

Sales Executive requirements (qualification, skill-sets, experience etc)

Recruitment means finding potential job applicants telling them about

the company and getting them t o apply. It is the process of finding
good people and ultimately selecting them for the organisation. The
entire sales organisation ultimately depends on a successful recruiting
approach. It is the discovering of potential applicants for actual on
anticipated organizational vacancies. It is the linking activity of those
with job and those seeking job.

The recruitment process consists of various steps which are as

follows:-

Conduct
Job
Analysis

Prepare Job
Description

Identify
Sales
Job

Qualificatio
n
Attract
Pool
Of Sales
Recruits

Select Best
Recruits
1 Job Analysis : It is conducted to identify the duties, requirements,
responsibilities and conditions involved in the job. It is most
essential to give a complete idea of the job profile to the applicants
so that they don’t have any problem in accepting that profile in
future. It involves these steps :

• Analysis of the environment in which the sales person is

going to work
• Determining the duties and responsibilities expected from
the sales person.
• Observing and recording the various tasks of job actually
performed.

2 Job Description : Job description is the result of a formal job

analysis. It is the most important tool in managing the sales force. It
helps in following ways:

• Preparing description of sales person duties.

• Developing training programs to help them perform better.
• Developing compensation plans.
• In supervision and motivation.
• Help the management to decide whether each salesman has
a reasonable work load.

3 Identify sales job qualification : Job description should be

converted to the job qualification a recruit should have in order to
perform the sales job satisfactorily. Qualification a sales person
needs to perform satisfactorily are following :

• Personality traits such as self-confidence, aggressiveness, job

commitment, persistence, etc.
• Level of qualification such as ability to make decisions under
stress, specific product knowledge, little work experience,
etc.

4 Attract pool of sales recruits : Companies with a large sales

force need to identify, locate and attract potentially effective
candidates. The recruitment process always furnishes the
organisation with a pool of organisation from where to choose. The
most frequent used sources are:

• Persons within the company: Some of the organisations often

recruit sales people from the non-selling section of the sales
department or from other departments.
• Competitions: Sales people recruited from the competitors
firm are already trained in selling the similar product and
don’t need much of training.
 • Non-competing companies: Non competing firms can provide
a well-trained sales force. The only thing required is to train
them in the product range.
• Educational institutions: High schools, evening classes,
business colleges and universities are all excellent sources of
sales recruits.
• Advertising and Employment agencies, etc.

5 Select the best recruits : The importance to assess a candidate’s

selling skills and technical background, hiring decision is also based
on temperament, suitably to our culture, creativity, ability to
visualize, ambition, etc. The selection processes involves choosing
the candidates who best meets the qualification and have greatest
aptitude for the job.
Procedures followed in selection of a sales person are as follows :

1. Initial Screening
Interviews : It should be brief just to eliminate undesirable recruits.

2. Application Forms :
It is the most widely used selection tool. It is an easy means of
collecting information necessary for determining an applicant’s
qualification. It gives an initial impression of the applicant.

3. In-depth
interviews: It is used to help determine if a person is right for the
job or not. It can bring out the personal characteristics and also
serves as a two way channel of communication, which means both
the company and applicant can ask questions and learn about each
other.

4. Reference Checks:
A company cannot be sure it has all the information on an applicant
until references have been thoroughly checked. It allows a company
to secure information not available from other sources.

5. Physical
examination: It require a degree of physical activity and stamina.
Poor physical condition can hinder a sales person’s job
performance, therefore, a company should insist on thorough
medical examination.

6. Tests: these are

the most controversial tool used in the selection process. Test
profile data can be useful to management in process of selecting
and classifying sales applicants who are likely to be high
performers. Different types of tests can be used in selection
process like intelligence test, knowledge test, etc.
 .

Motivating programs.

Sales Compensation Plan is an essential part of the total sales program

to motivate roles personnel. A properly designed sales compensation
plan fulfills a company’s special needs and problems and from it flows
attractive returns for both the company as well as the sales personnel.
A good sales compensation plan meets the following requirement:

 It provides a living wage in form of a secure income so that the

individual concentrate more on the job rather than on the financial
gains.

 It does not conflict with the other motivational factors.

 It does not penalize personnel on factors, which are beyond their

control. The plan must be same for all the personnel for the similar
performance.

 It must be easily understood by the sales personnel so that they are

always aware of their earnings.

 The plan must adjust change in pay on the basis of the performance
of sales personnel.

 The plan is economical to administer. It should not incur much cost.

 It helps in attaining the objectives of sales organisation.

http://www.nistads.res.in/indiasnt2008/t4industry/t4ind13.htm
http://www.jktyre.com/directors-report.html
http://www.careratings.com/scripts/TransactionForm1.aspx?docid=436
http://www.careratings.com/scripts/TransactionForm1.aspx?docid=436

http://www.fadaweb.com/indiantyresindustry.htm
http://www.sebi.gov.in/dp/jktyrelof.pdf