B2B Tyre Industry

MARKETING

Business to Business Marketing

Definition

“Business Marketing is the practice of individuals, or

organizations, including commercial businesses,

governments and institutions, facilitating the sale of their

products or services to other companies or organizations

that in turn resell them, use them as components in

products or services they offer, or use them to support their

operations”

Industrial Vs Consumer Marketing

Areas of Difference Business Market Consumer Market

Market Characteristics Geographically Concentrated Geographically Disbursed

Relatively Fewer Buyer Mass Market

Product Characteristic Technical Complex Standardize

Customized

Service Characteristic Service , timely Availability extremely Important

Somewhat Important

Buying Behavior Involvement of Various functional area from both the ends

Involvement of family members

Purchase Decisions are performance based and rational

Purchase decisions are mostly based on Physiological /social/psychological needs

Technical Expertise Relatively less technical expertise is required

Industrial Vs Consumer Marketing

Areas of Difference Industrial Market Consumer Market

Channel Characteristic More Direct Indirect

Fewer Intermediaries Multiple layer of Intermediaries

Promotional Characteristic Emphasis on Personal Selling Emphasis on Mass Media (Advertising)

Price Characteristic Competitive Bidding and Negotiated Prices

List Price or MRP

List Price for Standard Products

TYPES OF INDUSTRIAL CUSTOMERS

• COMMERCIAL ENTERPRISES• GOVERNMENT CUSTOMERS• INSTITUTIONAL CUSTOMERS• COOPERATIVE SOCIETIES

BUYPHASES IN THE INDUSTRIAL BUYING-DECISION PROCESS

1. Recognition of a problem

2. Determination of the appliccation & qty.

3. Development of specifications

4. Search for & qualifications of potential suppliers

5. Obtaining & analysing supplier proposals

6. Evaluation of proposals & selection of suppliers

7. Selection of an order routine

8. Performance feedback & post-purchase evaluation

STRENGTHS

• More than 70% turn over is from top 4 Companies.

• Well established brand names and distribution network by Existing players.

• High Capital Expenditure creates barriers to new entrants.

• Tyre and tubes Import/Export Freely allowed

WEAKNESS

• Fortune depends on process of key raw material such

as rubber and crude oil, any Sharpe rise can impact

profitability significantly.

• Tyre industry industry is unable to pass on majority

of price hike to end consumer due to high competitive

pressure.

OPPORTUNITY

• Strong Growth

• Infrastructure Development especially roads

• Shift to redialization can increase profitability in future

THREATS

• Prices of raw material

• Prices of Diesel and Petrol are high.

• Imported tyres from china is a challenge for Indian manufacturers.

ENTRY BARRIERS-HIGH

• Large Capital Required

• High Raw material cost

• High risk

BARGAINING POWER OF SUPPLIER-HIGH

• Raw materials cost accounts for approx. 70% of Tyre Industry Turnover.

• 63% of total Natural Rubber consumption is by the Tyre Sector, balance by rubber based non-tyre industries.

• Number of supplier is less.

THREAT OF SUBSTITUTE-MEDIUM

• Imports from chinese market.

• Entry of international players.

BARGAINING POWER OF THE BUYER-HIGH

CEAT Apollo MRF

Tata Motors Tata Motors Tata Motors

Ashok Leyland FIAT Honda

M&M M&M M&M

Swaraj Mazda,, Maruti Suzuki Maruti Suzuki

Caterpillar Hyundai

Hero Honda Audi

INTER FIRM RIVALRY-HIGH

Tyre Market SegmentationIndian Tyre Industry

Commercial Vehicles

MHCV HCV LCV

Passenger Vehicles

Cars Motorcycles

Scooters

Others

Farm OTRIndust

rial Vehicl

es

MHCV - Medium Heavy Commercial VehiclesHCV - Heavy Commercial VehicleLCV - Light Commercial VehicleOTR - Off the Road

Market Targeting

MRF : Compete Market Coverageo MRF holds a diversified portfolio of products spanning the entire

tyre market.

M1 (Cars)

M2 (Trucks)

M3 (2-wheelers)

P1 Touring Tyres Economy Tyres High Grip Tyres

P2 Sport Tyres Mileage Tyres Touring Tyres

P3 Economy Tyres Endurance Tyres Best Fit Tyres

Bridgestone – Market Specialization

• Bridgestone India has focused on the Passenger Car Segment exclusively as it offers only radial tyres.

M1 (Cars)

M2 (Trucks)

M3 (2-wheelers)

P1 Touring Tyres

P2 Sport Tyres

P3 Economy Tyres

• High Performance, Top Quality & International standard.• Punch line: Passion for Excellence.• This communication is substantiated by association to F1

racing

Positioning

• Superior Endurance, Strength, Sporty & Home-Grown• Punch line: Tyres with Muscle• Sponsors Cricket & Rally racing to position as high

endurance and sporty

Differentiation

• Being a homogeneous product, there is not much difference in products offered by competing tyre manufacturer. However,companies do try to differentiate themselves by outdoing one another insome

(POP): Points of Parity such (POD):-Point Of Differentiation

Quality High Endurance Tyres

Safety High Performance Tyres

Durability

Grip

Economy etc.

4P’s

Product

Product

• Core

Tyre a customer vehicle can run on• Basic

Tyre that fits customer vehicle• Expected

Quality, Safety, Durability, Mileage, Grip, Concerning to breaking, Ride Comfort

Augmented Benefits

Bridgestone MRF

Value PropositionQuality, Comfort and Value

for Money

Value PropositionQuality and Endurance

Quality- International Standards

Comfort- Smooth and QuiteValue for Money

Quality- International Standards

Endurance- Durability on tough Indian roads

Product Mix Dimensions

Passenger Cars

Two Wheelers Trucks-Buses Farm Services

LCV SCV

ZVTV(7) Zapper FV(1) Super Miller99(4)

Shakti Super-(12)

Superlug 50 plus-R(1)

Steel Master(1)

ZLO(4) Zapper FM(1) Steel Muscle SIT4(2)

Shakti Life(12)

Superlug 505(2)

Steel MuscleR(1)

VTM(1) Zapper FS(3) Steel Muscle (3) Rib(7) Supermiler 99 (3)

Zigma(2)

SLM(2) Rib Plus(6) The Lug Plus(4) Trailer707(2) Supermiler 95 (1)

Savari Trek(1)

ZQT(8) Meteor(2) Muscle rokx(4) Power Tiller(1)

Superlug(1) Savari Lug(1)

ZTX(5) Zapper YM(1) Muscle rok(1) Fork Lift Solid(10)

Superlug-R(1)

Savari (1)

ZSLK(4) Zapper Y(8) M-77(5) Pneumatic(5)

Steel Master (1)

ZEL(3) Zapper Q(8) Superlug 50 plus R(1)

ZVRL(2) Zapper Vyde(3) Superlug 555(1)

Passenger Cars Two Wheelers Trucks-Buses Farm Service

LCV SCV

ZV2K(20) Zapper C(5) Superlug 50 plus (2)

ZVT(20) Moto-D(4) Superlug 50(3)ZCC(2) Moto-C(3)ZGT(2) Nylogrip - ST Plus(1)

ZGP(5) Nylogrip – Plus(7)

ZVTS(40) Nylogrip – Plus FE(1)

NDMS(10) Zapper D (1)

Safari(10) Nylogrip – Plus(2)

Twintread(2) Nylogrip – Scooter(2)

Product Mix=304

Passenger Cars

Two Wheelers

Truck-Buses Farm Services

LCV

Big Rover (2)

Estate(1)

Swgg(4)

SM-12(4)

Legend(3)

Place

First Identify the Customer Base

• Replacement

• OEM

• Exports

Distribution Channels (Direct and Indirect)

• Direct ChannelsOEM Direct Supply to Automobile Manufacturer - Bulk Quantity - Exclusive Channel - Cater Just In Time for OEM - Sometimes may use C & F agents

Indirect Channel

One or more intermediaries between tyre manufacturer and final consumer

Channel Length

No of intermediaries between Manufacturer and end user

Channel Management

• Selection of Dealer

• Training and motivating Channel Members

• Effective Consumer Response Practice

Pricing

• Highly Raw Material Intensive Industry• Mark Up pricing strategy is used - Tyre market not very Price sensitive - More concern about functionality• Bridgestone Uses Price- Quality inference• Dealer Discounts and allowances

- Less in MRF compared to Bridgestone

Promotion

• Huge Investment in Print , TV and outdoor Media by MRF• Slogan “Tyres with Muscles”• Celebrity Endorsement

The official blimp sponsor of IPL 2010 the MRF blimpat the Chinnaswamy Stadium in Bangalore.

The blimp is 19 metres long, 400 cubic metres of Helium, maximum height of 1000 feet

TATA STEEL

• Amoung top 10 global steel companies• Annual steel capacity over 28 mtpa• Oprations in 26 countries and commertial presence in

more than 50 countries• Turnover of 26.13 billion US $ in FY 2011 12

Customer Value Management CVM

• Shortlisting of customers• Set up cross functional team• Joint team formation• Study the entire value chain of oprations

Customer Value Management CVM

• Key performance indices• Brainstorming• Shortlisting of ideas

Hygiene ideas Oprational improvement ideas Joint study ideas

• Further evaluation

CVM Benefits

• Saving cost across value chain of oprations• Deep insight and appreciation of customer’s problems• Changed focus• Strong bonding with customers

Industry Analysis

• Industry: Internet services and technologies

• Major Sectors: – Advertising– Search engine– Cloud computing

• Primary Revenue Source: Advertising (97%)

• Constantly evolving Industry

Google Product Offerings

B2B Tyre Industry

Documents

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