ABSTRACT

Value Intensive Marketing Strategies

in Automobile Tyre Industry (HCV
Segment) and Its Impact

Thesis submitted for the award of the Degree of Philosophy

from the Department of Business Administration under the
Faculty of Engineering, Technology and Management
University of Kalyani, Nadia,
West Bengal, India

Submitted by:

Soumitra Karan

Research Scholar
Department of Business Administration
University of Kalyani
Kalyani, Nadia
2014
 Table of Contents
Page No.
Chapter – 1: Introduction ..................................................................................................... 1-6
1.1 Origin of the Problem ........................................................................................................... 1
1.2 Literature Review ................................................................................................................. 2
1.3 Identifying Literature Gap..................................................................................................... 4
1.4 Importance of the Present Study in Changing Market Landscape .......................................... 4
1.5 Objectives of the Research .................................................................................................... 5
1.6 Research Plan ....................................................................................................................... 5

Chapter – 2: Research Methodology .................................................................................... 7-9

2.1 Process of Data Collection .................................................................................................... 7
2.2 Sampling Technique and Sample Size................................................................................... 7
2.3 Data Analysis ....................................................................................................................... 8
2.4 Designing Study under Objectives ........................................................................................ 9

Chapter – 3: An Overview of Indian Tyre Industry in the Light of Global

Perspectives .................................................................................................. 10-12
3.1 Introduction ........................................................................................................................ 10
3.2 Global Scenario .................................................................................................................. 10
3.3 Indian Scenario ................................................................................................................... 11
3.4 Conclusion.......................................................................................................................... 12

Chapter – 4: A Study on Value Enriching Factors in Automobile Tyre Marketing

to Address Value for Money Perspectives .................................................. 13-17
4.1 Introduction ........................................................................................................................ 13
4.2 Description of the Study ..................................................................................................... 13
4.3 Research Techniques Used in the Study .............................................................................. 13
4.4 Data Analysis and Findings ................................................................................................ 15
4.5 Managerial Implication ....................................................................................................... 17
4.6 Conclusion.......................................................................................................................... 17

Chapter – 5: A study on Factors Influencing Sales Promotion Strategy in

Automobile Tyre Marketing ........................................................................ 18-22
5.1 Introduction ........................................................................................................................ 18
5.2 Aim of the Study ................................................................................................................ 18
5.3 Curving out Marketing Strategy .......................................................................................... 18

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5.4 Research Techniques Used in the Study .............................................................................. 19
5.5 Hypothesis Formulation ...................................................................................................... 20
5.6 Data Collection, Analysis, Findings, and Interpretation ....................................................... 21
5.7 Managerial Implications ..................................................................................................... 22
5.8 Conclusion.......................................................................................................................... 22

Chapter – 6: Marketing Mix Elements Influencing Brand Equity and Brand

Selection in Automobile Tyre Industry ....................................................... 23-26
6.1 Introduction ........................................................................................................................ 23
6.2 Aim of the Study ................................................................................................................ 23
6.3 Research Technique Used in the Study ............................................................................... 24
6.4 A Conceptual Framework ................................................................................................... 24
6.5 Brand Equity Dimensions Influencing Tyre Buying ............................................................ 24
6.6 Hypothesis Formulation ...................................................................................................... 24
6.7 Data Collection, Analysis, and Interpretation ...................................................................... 25
6.8 Findings and Managerial Implications ................................................................................ 26
6.9 Conclusion.......................................................................................................................... 26

Chapter – 7: Conclusion .................................................................................................... 27-29

7.1 Findings of the Study and Managerial Implications ............................................................. 27
7.2 Recommendations .............................................................................................................. 28
7.3 Limitations of the Study...................................................................................................... 29
7.4 Scope of Future Research ................................................................................................... 29

References .......................................................................................................................... 30-31

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 Chapter - 1

Introduction
The Indian market is evolving very fast and one of the most promising markets in the world and

so is the Indian customers. They have become more open minded and experimental in disposing

goods and services. A discernable shift in value expectations leading to preference towards

higher value delivering, technologically superior products and services has been noticed. The

Indian market has a substantial middle class that is approximately estimated at 250 million

people with a sizeable disposable income. Hence, this mid market value segment significantly

contributes to changes in the market dynamics.

1.1 Origin of the Problem

A fundamental shift has been taken place in the market. Automobile tyre marketing is not an

exception. The product is subjected to dynamic atrocities in use. This makes customers more

value oriented. Automobile midmarket value seeking segment sets a price band where customers

aspire more benefits from tyre and service, and renders lower profit to tyre marketers. Over

capacity of tyre manufacturers, pile up inventories of bias nylon tyres, price war, raw material

price increase, sluggish demand of bias tyres, and creeping demand of new age steel radial tyres

have led customers more bargaining. The industry is on paradigm shift of technology transfer

from old technology cross ply tyres to more value offering steel radial tyres. Considering these

business criticalities it requires need of a change of business direction and implementation of

new marketing tools, practices or technologies to encounter challenges of changing demands or

create new business opportunities. With good quality tyres, a conducive value mix comprising

various customer value enriching factors would be a potent marketing strategy. Therefore, the

relevance of this research is to study on redesigning marketing strategies and find out a way

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forward in the light of increasing values to customer in to get a business solution. In this respect,

consumers‟ value seeking desires towards competing tyre brands and their relation with different

value enriching marketing mixes are the prime subject under this study.

1.2 Literature Review

Defining Value and Customer Value

Day (1990) gives the definition of customer value and stated that perceived customer value is the

difference of customer‟s perceived benefits and perceived costs.

Understanding Deep Customer Insights

Saha (2006) enumerates that in the new age of materialism people are more realistic and

patronizing value and value delivered in term of units of money. In a family today evidences of

„me-generations‟ are visible.

Marketing Strategy in the Light of Value Perspectives

Kaura (2009) has extensively studied Nirma‟s success story. Nirma has practiced flexible

operating system that has adapted the need of changing market circumstances. Selecting the best

suited market alternatives and incorporating changes in selective domains of business enable to

provide better products, better value, and better living to customers.

Ways of Creating Customer Value

Ketchen et al (2008) proposed that best value could be created through efficient supply chain.

Best value supply chains are to deliver superior total value to the customer in terms of speed,

cost, quantity, and flexibility.

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Factors Influencing Customer Value

• Level of Involvement and Associated Risk: Beatty et al (1988) stated that high involvement

may lead to extensive information search and low involvement may lead to higher exposure and

brand awareness.

• Customer Satisfaction: Pandey et al (2008) in their study of customer satisfaction have

showed that customer satisfaction is an important ingredient in the retention of an imperative of

all products and services.

• Price: Keller (1998) views that price of a brand is an important non-product feature since it

represents a necessary step in the purchasing process.

• Brand Name: Palmer (1997) introduced the concept of branding in the light of relationship

marketing. Brand becomes a potent substitute for personal relationship.

• Customer Relationship: Datta (2007) analyzed literatures on relationship marketing and its

effects on customer retention. He demonstrates that relationship marketing is one of the best

contemporary marketing strategies for all companies, irrespective of size, type, or location.

• Product Performance and Quality: Sarma et al (1986) have given clear distinction between

quality and reliability. Quality is a static descriptor, where as reliability is a dynamic one.

Reliability is measurable only in use.

• Technology: Mentioning new technology a major force in shaping people‟s lives, Kotler

(2004) states that at the same time, it is a creative destruction.

• Word of Mouth (WOM): Kapferer (1990) suggested WOM is to be more pervasive under

certain market conditions inclusive of evaluation of high involvement products and services.

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• Customer Service: Parasuraman (2000) has measured mean behavioural–intention scores.

The highest score demonstrates the importance of service reliability for fostering favourable

future behaviour by customers, and thereby strengthening the company‟s relationship with them.

• Store Image: Chattopadhyay et al (2010)showed that a positive store image increases a

brand‟s level of exposure in the market place which improves brand recognition and awareness.

1.3 Identifying Literature Gap

• Many studies are available on marketing strategies but fundamentally based on transactional

marketing approaches. The researcher attempts to bridge the gap by devising theoretical models

on marketing strategies and then integrating it with empirical studies to portray a complete

picturesque of the tyre market situation to guide marketers and strategists more effectively.

• The literature lacks having no such relevant studies on automobile tyre industry/ products,

though it bears significant value and contributes hugely in the progress of modern civilization.

The researcher seeks to fill up this literature gap by providing contextual study on this industry

and products in the light of modern marketing theories with empirical studies.

1.4 Importance of the Present Study in the Changing Market Landscape

To generate a meaningful research for examining tyre customers‟ value seeking desire with

respect to value for money, the researcher has proposed theoretical frameworks and discussions

and then sales data or survey data are analyzed. In this study, he has attempted to define

customer value in a techno-commercial aspect that creates value for both customers and the firm.

Exploring customers‟ tyre purchasing factors, their relationship, the effect of marketing activities

on customer value, and finally tyre brand choice will be the primary focus of the study.

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1.5 Objectives of the Research

The research objectives are given below-

(1) To understand and analyze overall Indian automobile tyre industry scenario in the light of

global perspectives with emphasis on its truck and bus (Heavy Commercial Vehicle) segment.

(2) To analyze whether tyre purchase is motivated by customers‟ value seeking desire hence,

whether tyre buyers are leaning to midmarket value buying aspects. Here, it is to identify

customer value seeking factors that influence buying decision by analyzing tyre sales data and

marketing survey data.

(3) To analyze the factors of promotion that influence customersseeking more value. It is also to

study the impact of conceptualized promotion strategy on tyre sales by analyzing sales data

before promotion and after promotion period.

(4) To analyze marketing mix elements that influence tyre brand equity and consequently impact

on customers‟ buying decision on tyre selection. Here, it is also to study the influence of point of

purchase i.e. location of tyre dealers on sales of different tyre brands.

1.6 Research Plan

The researcher has depicted the course of studies in a planned manner in line with the set

objectives. The first chapter is „Introduction‟. In this chapter, besides research plan, he has

discussed today‟s competitive marketing scenario highlighting customers‟ dominance. The next

section is literature review. Here, he surveyed literature related to the research topic. This section

has four subsections. These are: (1) definition of value and customer value and its importance,

(2) basic understanding of customer deep insights, (3) marketing strategies to offer best value to

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customerand ways of creating values, and (4) major value creating factors that influence

customer value. In the final section of this chapter, the gaps in the literature have been identified.

Literature survey is followed by the importance of the research topic which is further followed

by objectives of the research. The second chapter is research methodology. In this chapter,

process of data collection, analysis of questionnaire and hypothesis formulation are discussed.

Sampling techniques, sample size, and critical discussion on statistical tools and techniques used

in the study are also provided. The third chapter depicts an overview of Indian tyre industry in

the global perspectives with historical data and statistics. The fourth chapter is a study of

marketing strategies on tyre midmarket segment. With theoretical discussion on marketing, the

study provides an empirical study on sales data analysis of a mid value tyre brand and survey

data whether sales increase is happened due to the strategies undertaken on that tyre brand. The

fifth chapter has described a study based on models of tyre value chain and value delivery. With

the analysis of a conceptualized strategic marketing involving value chain-technology-value

proposition model, the study provides a promotional strategy and measured its effectiveness by

sales data analysison a premium mid value tyre brand. The sixth chapter has portrayed a study on

marketing mix elements that influence tyre brand equity and consumer‟s tyre brand selection.

Based on a model of marketing mix elements influencing brand equity and brand selection,a

market survey is done on influencing factors of brand equity to find any difference incustomer

perceived brand value towards varieties of tyre brands. The survey also reveals whether

customers‟ choice is independent of locations of dealer and dealer image.

Chapter seven is the “Conclusion”. In this chapter, the researcher mainly has stated managerial

implications of the study and recommendations. This chapter also includes limitation of the study

and scope of the future research.

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 Chapter -2

Research Methodology

2.1 Process of Data Collection

For the study, data used are secondary data and primary data.

(1) Secondary data are the monthly sales number oftyre SKUs (Stock Keeping Units) of

BirlaTyres, India considered for case study purpose. (2) Primary data have been collected from

two marketing surveys conducted at two specific market places through pretested questionnaires.

One survey is conducted at Barrackpore and BT road area, outskirt of Kolkata city in the period

January – March, 2009. Randomly 200 fleet owners of different age brackets engaged in

transport business are chosen. The other one is conducted at Kolkata, Howrah, and 24 Parganas

(north) areas wherein 07 numbers of different locations are chosen. Survey is done in May –

October‟12. Survey has been conducted at dealers‟ point randomly involving 176 male fleet

owners of different age brackets who are engaged in transport business.

Two sets of questionnaire are used in the entire study as two marketing surveys are conducted.

These two questionnaires were developed separately. Both questionnaires demonstrate that the

method is used to order the items along a dimension such as preference or importance using

interval scale. Some statements are framed on Likert scale.

2.2 Sampling Techniques and Sample Size

In the study of identifying the factors influencing customers‟ value seeking desire and buying

pattern in automobile tyre buying, convenience sampling technique was followed. Like-wise, in

the study of identifying the influencing factors of purchase on tyre brand value and factors of

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customer perception towards different competing tyre brands as well as making comparative

ranking of different tyre brands the same convenience sampling technique was followed. In both

the cases simple random sampling techniques was followed.

2.3 Data Analysis

Data have been analyzed through different statistical techniques to reach conclusion. Statistical

calculation and analysis is done by using Minitab 16 software. The researcher has taken 5% level

of significance. When p-value ≤ 0.05, the observed difference is significant. Small p-values

provide evidence against the null hypothesis.

2.3.1 Statistical Tools Used for the Research

The researcher has used 07 number statistical data analysis tools.

One way ANOVA One Way Test analyzes significant difference of sales means of selected tyre

brands after the brands are strategically treated by value enriching factors or they are promoted

by strategic value propositions with respect to previous sales means. On the other hand, two way

ANOVA analyzes customers‟ tyre purchase decision on competing tyre brands. Simultaneously,

it analyzes if there exists influence of tyre dealers‟ points on customers‟ tyre buying decision.

Paired T- Test analyzes the difference of sales means in a paired manner between two periods

before and after tyre brand‟s value enrichment strategies or before promotion and after

promotion measurement against each sales depot respectively.

Chi Square Goodness of Fit Test analyzes whether buyers are differed in value expecting

profiles and thus they are segmented into different clusters in terms of value seeking desire.

Likewise, it is to analyze significant difference between two period sales caused by value

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increasing strategy or strategizing brand value promotion to conclude that after strategic

measures sales patterns of the tyre brands has greatly changed. Phi Co-efficient has been used as

a measure of degree of strength of association between two variables.

One Variance Test analyzes variability of customers‟ preference towards various tyre brands

having different value positioning with respect to customers‟ value seeking profiles. If the

population variance is equal to or not less than the calculated value under sample observations

then it concludes that buyers are fragmented in their needs and preferences.

One Proportion Test analyzes that the proportion of tyre purchasers exhibiting middle of the

market value segment is more than the half of total population i.e. occupy the larger part of the

total value pie of domestic tyre market.

In“Paired Comparison” a matrix is developed on customer choice of a particular manufacturer

tyre brand over another particular manufacturer tyre brand in a paired manner.

With a view to make a“Thurstone Scale of Ranking”, after getting paired comparison among

different tyre brands of manufacturers, a relative matrix is obtained stochastically from where the

paired comparison data are converted to Z values to make Thurstone scale matrix. Finally, from

this scale a relative rank of tyre manufacturers is made.

2.4 Designing the study under objectives

To meet the inductive requirements of each objective in each chapter, the research objectives are

broken down into a number of hypotheses (given in individual chapters) in terms of null and

alternative hypotheses which are statistically tested through sample observations of collected

data by judicious selection of test statistic.

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 Chapter – 3

An Overview of Indian Tyre Industry in the Light of Global

Perspectives

3.1 Introduction

Indian tyre industry has been reporting good growth figures over the past few years. It has

emerged as one of the most competitive markets in the world and with the emergence of new

technology, ultra-modern production facilities and availability of raw materials, the sector is

poised to grow further. The Indian tyre industry has been quick in adopting the latest technology

i.e. radial tyre through foreign collaborations and tailoring these to Indian needs. As per ATMA,

(2011-12) report, in the medium and heavy commercial vehicle segment the current adoption

levels of radial tyres is around 18 per cent. In the light commercial vehicle segment, it is

estimated to be 20 percent. This segment will surely be the focus for Indian tyre manufactures as

it is expected to grow at about 15 per cent over the next few years to Rs 393 billion by 2015.

3.2 Global Scenario

As per www.ffmnag.com, (July, 2013) report, increasing sales of passenger and commercial

vehicles in developing countries and a strong demand for replacement tyres is providing

significant opportunities for players in the automotive tyre industry. A projected CAGR of

around 4 per cent over the next five years for the global tyre market means an estimated $ 187

billion by 2017. It is expected to see the strongest growth in rubber demand, reflecting the

strength of the tyre market in China, India. As per Plimsoll tyre manufactures‟ analysis,

(www.marketresearchreports.biz, 22.05.2014), there are 320 largest tyre manufacturers

10
(global) companies in 2013 of which the best trading partners winning in both financial strength

and sales is Bridgestone France.

3.2.1 Top 10 Global Tyre Giants of 2012: 1.Bridgestone 2.Michelin 3. Good-Year

4.Continental A G 5. Pirelli 6. Sumitomo Rubber Industries Ltd. 7.Hankook Tires 8.Yokohama

Rubber 9.Cheng Shin Rubber 10.Cooper Tire and Rubber. As per www.tyrereview.com ,

(22.05.2014) report, in 2012, China is emerging as a major tyre manufacturing destination. In

2012, sales revenue of the top 50 tyre enterprises totaled over USD $ 180 billion.

3.3 Indian Scenario

As per www.ffymnag.com, (July, 2013) report, in 2011-12, the Indian tyre industry recorded a

turnover of Rs 43000 crore, producing 1254 lakh tyre, amounting to 15 million metric tons.

Moreover, it has recorded 958.35 lakh tube production. Tyre export realisation by value is Rs.

4209 crore with steady CARG 15% which accounts 79.2 lakh tyres in 2011 – 12. India has 39

listed tyre manufacturing companies, of which the top 10 account for over 96 per cent of the

country‟s total tyre production. They are: Apollo Tyres Ltd., MRF India Ltd., J K tyres and`

Industries Ltd., Birla Tyres Ltd.(Kesoram Group of Industries), CEAT Ltd. Balkrishna Tyre Ltd.,

Good Year India Ltd., Falcon Tyres Ltd., TVS Srichakra Ltd., Bridgestone India Ltd. The tyre

export market in India is valued at Rs 3.6 billion. While the tyre industry is largely dominated by

the organized sector, the unorganized sector dominates the bicycle tyre market.

As per report of www.apollotyre.com (July, 2013), in 2011 – 12, among Indian tyre manufactures Apollo Tyre

Limited has the largest market share of 27%. MRF has second largest market share of 21% followed by J K Tyre of

19%, Birla Tyres 14%, and CEAT 11%. Import is having 4% share and others constitute 4%.As per ATMA,

2011-12 report, the domestic tyre companies have kept pace with the technological

improvements that radialisation in India is expected to reach 35% plus in the next years owning

11
to infrastructure development and OEM thrust. The world average radialisation level is 68% in

which Western Europe has reached 100% and India has got only 21%.

3.3.1 Raw Material Aspect of Tyre Industry

Tyre Industry is highly raw-material intensive. Raw materials cost accounts for approx. 72% of

tyre industry turnover (ATMA, 2011-12).

3.3.2 Presence of Gobal Tyre Firms in India

As per www.mydigitalfc.com, (Aug 01, 2011) report, companies like Michelin, Bridgestone and

Continental are chalking out new strategies for Indian market on the back of increasing

radialisation of truck and bus tyres.

3.3.3 Demand - Supply Gap of Medium and Heavy Commercial Vehicle Radial Tyres in
Domestic Market

www.tsmg.com (22.05.2014) reveals the following gaps in domestic tyre radialisation process.

• 25% radialisation levels in 2015 will require huge capacity additions.

• Planned capacities by domestic players may not cope with the surge in demand.

• Huge investments required to ramp up capacities will be a big challenge for domestic industry.

3.4 Conclusion

The study unveils that radialisation of tyte in commercial truck bus segment is picking up

momentum. Raw material cost is a very important that determines ultimate price of a tyre.

Within challenges and opportunities, the industry is poised to grow at faster rate riding on India‟s

economy‟s growth prospect, booming of auto sectors and hence, rising demand of OEMs, proven

benefits of radial tyres over cross ply bias tyres, Govt. investment on infrastructure and high way

development, overloading restriction, growth in multi - axle vehicles, strict Govt. norms on

pollution control measures, and overall end users‟ positive attitude towards radial tyres.

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 Chapter - 4

A study on Value Enriching Factors in Automobile Tyre Marketing

to Address Value for Money Perspectives
4.1 Introduction
In the pace of dynamic market environment a new paradigm is emerging where the upscale is

gradually phasing out and the down scale is coming up. The Indian tyre market is not an

exception which is traditionally value seeking segment. This compels to emphasize on value of

goods and services as customers want more benefits against what they pay. Therefore, enriching

customer value becomes central of global business competitiveness. Practice of existing strategic

tools is not fully effective to cope up price pressure. It is essential to understand market paradigm

shift and improve knowledge of marketing. It is also to measure market propensity to devise

conducive marketing strategies to abridge firm‟s offerings and customer needs.

4.2 Description of the Study

The study is to analyze automobile tyre market propensity as per customers‟ needs and

preferences. To get this, the researcher has devised marketing strategies and implemented action

plans to offer a value packed product. The study measures sales effectiveness of a mid-value tyre

brand, 10.00-20 BT 112 over the years through sales data analysis. This has been extended to

segment domestic tyre market by conducting survey with respect to customers‟ value seeking

desire and explore that mid-value market segment pie is increasing day by day.

4.3 Research Techniques Used in the Study

The type of research technique used is secondary data - Birla Tyres‟ in-house monthly sales

report and market survey data. Data used are from 2005 to 2012 to collect SKU (Stock Keeping

Unit) wise sales of 10.00-20 BT112, 16 PR (ply.rating).and its derivatives (flanker brands) and

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other 10.00-20 size tyres in 10.00-20 product category. The survey has been conducted by a

questionnaire. The product related and non-product related attributes used in questionnaire to

understand and catch tyre buying propensity and pattern are: (1) Product performance and

quality, (2) More benefits to price, (3) Price sensitiveness, and (4) Influence of reference group.

4.3.1 Hypothesis Formulation

H01: There is no change in mean scores between 2009-2012 sales and 2005-2008 sales of 10.00-

20 BT 112 tyre. There is no such positive impact of undertaken product and marketing value

enriching strategies on sales in the period of 2009 -2012.

Ha1: There is significant sales increase in 2009 -2012 period as the product and marketing offer

have positively impacted on customer value seeking desire that has been evidenced by the

increase in sales numbers of 10.00-20 BT 112 tyre brand.

H02: The observed frequency of different customer tyre buying factors associated to buying

decision is in agreement with hypothetical population of equal proportion (expected frequency).

Ha2: The observed frequency is not in agreement with hypothetical population of expected

frequency and tyre customers are well segmented in terms of their tyre buying factors.

H03: The proportion of fleet owners is the half of the population in the survey area possessing

“value for money” buying characteristics.

Ha3: The population proportion of the fleet owners seeking “value for money” in the survey area

is greater than half of the population and hence, it is to interpret that majority of the population is

associated with seeking more values from tyre and market offer.

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4.4 Data Analysis and Findings

4.4.1 Secondary Data Analysis

From the annual sales reports of Birla Tyres, year wise monthly average sales data are computed.

Year wise periods are arbitrarily considered from 2005 to 2012 to understand the sales

effectiveness of 10.00-20 BT 112 tyre brand. It is to observe any change in sales pattern between

2005- 08 and 2009 -12.It is to note that the product is re-engineered in 2009 in respect to

product‟s design to position 10.00-20 BT 112 tyre brand a better value offering tyre. It is seen

that there is 326% increase of 10.00-20 BT 112 sales in 2009-2012 over 2005-2008.

ANOVA Test: One Way: Observing important difference between two sales averages of two

periods with respect to total sales average of both periods, the researcher would like to test if the

difference is statistically significant.

Interpretation: Under sample observation at 95% confidence level, the researcher rejects null

hypothesis and concludes that the differences observed in the two column means compared to

total mean are statistically significant and not due to sampling variation i.e. 2005 - 2008 and

2009 - 2012 periods have variation in average sales.

Paired T-Test: It is to test whether the means of sales 2009 -2012 and sales 2005- 2008 under

zone to zone paired manner are equal or is greater than the average of the later period sales.

Interpretation: Under sample observation, the researcher rejects null hypothesis and accepts

that 326.53% sales increase of 10.00-20 BT 112 in 2009 – 2012 period over 2005–2008 period is

statistically significant in terms of 10.00-20 BT 112 tyre brand‟s sales effectiveness.

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Chi Square Test: The researcher would like to test that 10.00-20 BT 112 tyre brand sales period

of 2009-2012 shows a different sales pattern over period of 2005-2008.

Interpretation: As estimated Chi Square value is higher than the critical value and p-value is

less than 0.05, null hypothesis is rejected and concludes that the difference in sales patterns is

statistically significant indicating an upward shift in sales pattern tyre brand in 2009 – 2012.

4.4.2 Survey Data Analysis

The purpose of the study is to find out the possibility of market segmentation by analyzing

customers‟ purchasing factors based on their needs and value expectations.

One Variance Test: Under sample an observation, the researcher hypothesizes that the

population variance is equal to calculated variance and it will not be not less than that calculated

value. This hypothesis is tested at 5% level of significance.

Interpretation: P value is more than 0.05, therefore, alternative hypothesis is rejected and null

hypothesis is accepted. It is said that buyers differ in value seeking factors what they perceive.

Chi Square Test: It is required to test the observed difference of customers‟ tyre purchase

factors that there is a significant categorical difference in product preference. In other words, it is

to determine market segmentation of the entire population under the study.

Interpretation: As calculated Chi Square value at 95% confidence limit is greater than the

tabulated value and p-Value is less than 0.05, null hypothesis is rejected and conclude that

significant difference in purchase behaviour exists i.e. customers differ in distinct clusters.

One Proportion Test: It is found from survey that out of 200, 136 fleet owners are considered

as volume buyers who are more benefit seekers. It requires to examine statistically whether this

segment is a major market force populating more and more in coming years.

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Interpretation: Under sample observations, p-value is below of 0.05. Therefore, null hypothesis

is rejected and concluded that more than half of fleet owners are volume buyers who seek more

values from the product and market offer. Moreover, in the coming years this segment will

further grow along with phasing out of upscale customers who are coming down to this segment.

4.4.3 Findings of the Study

From preceding analysis it is evidenced that the tyre market is leaning towards value orientation

and customers are becoming more value seekers. Therefore, to gear up sales, marketers need to

incorporate competitive elements into other tyre brands in line with 10.00-20 BT 112 tyre.

4.5 Managerial Implication

● Increasing propensity of tyre buyers‟ value seeking desire has changed the market dynamics

i.e. tyre market is brewing up to mid-market value segment representing volume buyers who

need more benefits to price.

● New products/ brands or current products enriched with high value having improved pricing

strategy are required as a long run strategy.

4.6 Conclusion

This study gives a clear picturesque of customer proclivity towards value sensitive middle of the

market. This needs more attention and a comprehensive marketing plan through innovation in

product design and pricing strategies. The study provides a business direction and clear

understanding of market dynamics that helps to formulate a competitive, value packed, flexible

and long term business model.

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 Chapter – 5

A Study on Factors Influencing Sales Promotion Strategy in

Automobile Tyre Marketing
5.1 Introduction

In this era of hyper competition consumers are no longer willing to pay extra price for supplier‟s

inefficiencies. Conversely, supplier firm‟s differentiation efforts may add extra features which

customers may not perceive value to their needs. These opposing factors create a gap in value

exchange process. But business requires role of supplier firm to offer best value product and

service to its customers. Likewise, role of customer is to support supplier‟s continuous

persuasion of innovation by willing to pay premium price. This customer – supplier interaction

leads the entire value chain a balanced business model to get win – win situation. The researcher

has attempted to ideate a conceptual value chain model involving technology on which value

proposition strategy is formulated. The purpose is to study sales effectiveness of a high value

delivering tyre brand undergoing value proposition through brand promotion marketing efforts.

5.2 Aim of the Study

The aim of the study which is:

(1) To measure sales effectiveness of the formulated marketing promotion strategy.

(2) To examine before promotion and after promotion sales pattern and compliance of sales

effectiveness of a selected high value tyre brand with respect to customer‟s brand preference.

5.3 Curving out Marketing Strategy

The domestic truck and bus tyre market is a value seeking middle market. Within this vast

market segment, mileage segment (seeking more tyre mileage with moderate load bearing

18
capacity) is the most attractive one. Understanding this customer insight, 10.00-20 BT 112

Platinum, 16PR tyre is selected to cater this specific sub mid-market segment. In order to

increase value the following strategies are taken into consideration:

Value chain strategy is initiated on institutionalizing a captive quality system in which

production of this tyre will be supervised by a special quality task group. To reach tyre at

customer end an intensive distribution channel is adopted. Technology is upgraded by

developing improved tread rubber to get superior mileage and tyre dimension is redesigned to

enhance aestheticism and robustness. Marketing strategy is remodeled on product positioning

to focus on key product value parameters: outstanding tread mileage, better retread-ability, more

durability, reliability, and affordability. Value proposition is stressed by adopting the strategy of

minimizing customer perceived risks by providing unique service quality and service policy and

introducing customer perception change strategy through comparative advertisement.

5.4 Research Techniques Used in the Study

The study covers two phases: phase – I and phase - II. In phase -1, a test marketing of 10.00-20

BT 112 Platinum tyre has been conducted in the period April-July, 2009 in Madhya Pradesh and

Chhattisgarh under West zone II consisting eleven number of sales depots. The same has been

compared with April-July, 2008 (Y-o-Y) sales figure to measure sales effectiveness of the

formulated promotion strategy. In phase –II, a nationwide promotion of 10.00-20 BT 112

Platinum tyre involving all the sales depots has been initiated like phase-I as horizontal

application. It counts zone wise before promotion average sales of 2005 -2008 and after

promotion sales of 2009 – 2012 respectively.

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5.5 Hypothesis Formulation

H01: Sales increase of 10.00-20 BT 112 Platinum after test marketing is arisen due to sampling

fluctuation. There is no difference of sales means between before and after test marketing.

Ha1: The observed difference of sales means of 10.00-20 BT 112 Platinum under paired

observations between after test marketing and before test marketing is not due to sampling

fluctuation but shows significant difference of sales effectiveness in after promotion period.

H02: In nationwide promotion of 10.00-20 BT 112 Platinum, the average sales before promotion

and after promotion only represent sampling variation from overall mean sales and do not

provide real difference in sales effectiveness between two periods.

Ha2: The mean sales difference of 10.00-20 BT 112 Platinum before promotion and after

promotion is not due to sampling variation but represents significant difference in sales

effectiveness between two periods.

H03: There is no real difference in the sales pattern of 10.00-20 BT 112 Platinum sales before

and after execution of promotion treatment. It only represents sampling fluctuation.

Ha3: There is statistically real difference in sales pattern of 10.00-20 BT 112 Platinum sales

before and after execution of promotion treatment. It shows a different sales pattern of upward

shift reflected in sales territories where strategic promotion package has been implemented.

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5.6 Data Collection, Analysis, Test Findings, and Interpretation

5.6.1 Phase I: Test Marketing: Causal Study: Before Promotion and After Promotion
Design

Average sales numbers of before promotion and after promotion package are analyzed.

Effectiveness of promotion module is 55.33% increase in sales.

Paired T-Test: It is performed on the observed mean sales difference of 10.00-20 BT 112

Platinum tyre brand under depot to depot paired observations between April – September‟09 as

after promotion strategy and April - September ‟08 as before promotion strategy.

Interpretation: The p-value below 0.05 suggests the data are inconsistent with H0:µd = 0.

Therefore, null hypothesis is rejected and conclude that after promotion test market result of

55.33% increase in 10.00-20 BT 112 Platinum sales is significant in terms of sales effectiveness

of the formulated promotion strategy.

5.6.2 Phase II: Horizontal Application of Promotion Strategy for Entire Domestic Market

ANOVA Test: It is to test the observed sales difference between 2005-08 as before promotion

and 2009-12 as after promotion with respect to total mean reflects only sampling variation.

Interpretation: It interprets that the difference observed in two means compared to the total

mean is statistically significant and not due to sampling variation.

Paired T-Test: It is required to test whether the means of sales 2009 -2012 and 2005-2008 in the

population under paired manner are equal i.e. the null hypothesis is H0: (µ09 -12 - µ05-08) =0.

Interpretation: It concludes that the sales promotion treatment has caused the increase in sales

number in 2009 -2012 over 2005 -2008 as target customers have shown favourable buying

attitude towards 10.00-20 BT 112 Platinum tyre brand.

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Chi Square Test: If there is a statistically significant difference between two period data, the

researcher would conclude that 2009-12 period has caused a higher sales pattern of 10.00-20

BT112 Platinum undergoing sales promotion than that of 2005-08 period without promotion.

Interpretation: It is to conclude that the difference in sales pattern is statistically significant i.e.

there is a different sales pattern which shows an upward shift in 2009-12 period of 10.00-20 BT

112 Platinum sales on which strategic promotional package has been implemented. Value of Phi

Co-efficient is less. It indicates poor association between the two sales patterns which means

significant shift of 10.00-20 BT 112 Platinum sales in 2009 – 12.

5.7 Findings and Managerial Implications

The test findings show that sales of 10.00-20 BT 112 Platinum tyre has substantially increased as

an impact of brand specific promotional activities. The managers would lean to recognize that

producing only good quality products may not satisfy the business objectives; rather value chain

within a prevailing technology would be augmented by a conducive value proposition through

aggressive promotional strategy.

5.8 Conclusion

The route to establishing competitive advantage focusing on the real issues of customer

profitability through comprehensive plans involving value chain, technology and value

proposition strategy is the state of the art in gaining market share and profit. The study has

provided the marketing insights that in the changing market environment focused marketing

efforts aiming at fulfilling customer requirements by a product/ brand specific promotion

package enriched by the elements of customer value can be a potent business success strategy.

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 Chapter – 6

Marketing Mix Elements Influencing Brand Equity and Brand

Selection in Automobile Tyre Industry
6.1 Introduction

The tyre as a product class is of high involvement, high risk, high price and primarily a derived

demand from OEMs and subsequently goes into replacement market. Buyers are multi-brand

users and traditionally value sensitive and evaluate performance of various tyre brands according

to its performance and price perspectives through usage experience. Dealer point is the only

point of purchase. At the dawn of radialisation in truck and bus segment, Indian customers are

simultaneously using cross ply nylon tyres and steel radial tyres. In this chapter, the researcher

has attempted to analyse why and how a tyre customer decides to buy a specific tyre brand

among several competing tyre brands available in the same market place.

6.2 Aim of the Study

The aim of the study is:

(1) To develop a conceptual framework that deals with the marketing mix elements influencing

brand equity and brand selection.

(2) To explore various brand equity dimensions (factors) play in customer mind before taking

buying decision.

(3) To study the influence of different tyre brands on customer preference at point of purchase.

(4) To examine influence of different locations on tyre sales of various competing tyres brands.

(5) To study the current market position/ rank of different tyre brands available in the market.

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6.3 Research Technique Used in the Study

In this study research technique is survey at dealers‟ point by a questionnaire. For data analysis

statistical techniques used are: ANOVA – two way classification, paired comparison, and

Thurstone scale of ranking.

6.4 A conceptual Framework

The researcher exhibits a conceptual framework of brand equity. He has placed this construct

between the dimensions of brand equity under perceived value of customer and the firm. It

showed how individual value delivering dimensions are related to brand equity. Marketing

activities are assumed to have significant effect on the dimensions of brand equity. Ultimate

selection of a brand is due to the marketing activities as an effect of positive perceived customer

value towards a particular brand.

6.5 Brand Equity Dimensions (Factors) Influencing Tyre Buying

To determine brand equity dimensions among several purchase factors the researcher has

identified four key factors termed: past experience, price, and brand name and after sales service.

6.6 Hypothesis Formulation

H01: Automobile tyre buyers do not vary in their overall preference of different tyre brands

marketed by different tyre manufacturers. They do not consider significant variations in tyre

value dimensions among competing tyre brands available in the same market arena.

Ha1: Automobile tyre buyers significantly vary in preferences towards different tyre brands

available in same market place. They consider different tyre brands of different manufacturers

have disparities in value dimensions.

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H02: Dealers‟ locations i.e. points of purchase have no influence on sales of different tyre brands.

Ha2: Tyre dealers‟ locations have significant influence on sales of different competing tyre

brands. Customers‟ tyre buying decision and preference is dependent on dealers‟ point.

6.7 Data Collection, Analysis, and Interpretation

Data are collected through survey by a questionnaire.38% respondents consider past experience

is the most important tyre brand equity dimension. 35% respondents view price exhibits an

important value determining dimension of tyre selection. Factors like brand name (12%

respondents) and sales and service (15% respondents) are the fundamental aids to the 1st two

factors and help consumers evaluate products before buying.

ANOVA Test: Two Way: The researcher has intended to test the observed difference in sales of

different competing tyre brands. He also needs to test the influence of outlets on sales of

different competing tyre brands.

Interpretation: It shows that there exists significant difference of different competing tyre

brands on customer choice that is reflected in difference on tyre brand sales. It also shows that

there is significant influence of locations (dealer points) on sales of competing tyre brands i.e.

locations have significant influence on customer preference on choosing tyre brands.

Paired Comparison Matrix and Thurstone Scale of Ranking: The researcher wants to

analyze relative customer preference on tyre brands and hence, he likes to draw a relative

position or rank of those brands. Accordingly, a paired comparison matrix is made. From the

absolute data of paired comparison matrix a relative figure is derived from which a Thurstone

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scale has been made. From Thurstone scale a relative order of ranks of different tyre brands has

been made.

Interpretation: The Thurstone table shows that MRF tyre brands have ranked first followed by J

K Tyres ( 2nd rank ), Apollo Tyres ( 3rd rank ), Birla Tyres ( 4th rank ), CEAT (5thrank) and Modi

Continental (6th rank) respectively.

6.8 Findings and Managerial Implications

From this study, the tyre marketers would learn to emphasize on four critical tyre brand equity

parameters viz. past experience, price, brand name, and after sales service for strategizing

focused marketing. ANOVA shows customers have different preference on selecting tyre brands.

It has shown that point of purchase have significant influence on sales of tyre brands. Hence,

marketers have to adopt place specific promotional activities. From Thurstone scale of ranking

study, marketers get better understanding on their product/ brand‟s acceptability and ranking

position from which they can undergo various focused marketing programs to improve customer

acceptability or thus improve rank.

6.9 Conclusion

The study reveals that customer‟s role in terms of past experience and dealer‟s role in terms of

promoting tyre brands, price determination and after sales service are basic foundation of

automobile tyre business. The researcher has shown that though there are several look-like

competing tyre brands serving specific market segment/s but different customers of the same

segment have different choices. The researcher has made a relative tyre brand ranking on the

basis of customer choice. It gives the importance of customer value perception. Marketers can

shift focus from product to brand specific and place specific appeal.

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 Chapter - 7

Conclusion

7.1 Findings of the Study and Managerial Implications

It is understood from the preceding chapters that customer value is anything that increases

benefit to customers‟ goal fulfillment. Therefore, increasing values to customer can be a single

marketing instrument irrespective of company size, and market situations.

This study has considered tyre customers‟ choice as an outcome of customer value management

and tried to analyze the impact of different marketing mix strategies applied on consumers‟ tyre

brand choice.

The study has also considered categorization of customers as per their value perception and

segmented tyre market as per customers‟ value expectation.

India has poised to become a global tyre manufacturing hub from where tyres will be spread all

over the world representing „country of origin‟ attribute of brand India.

Both cost leadership and customization strategies can be practiced simultaneously to gain

competitive advantage in order to outsmart the competitors rather „stuck up in the middle‟.

A number of statistical techniques have captured the shift of tyre sales pattern towards value

seeking mid segment. Value contributing attributes influence over buyers‟ decision making to

buy products getting maximum benefits at reasonable price. The study has showed that more

than 50% customers are value seeking volume buyers which bolsters the hypothesis that the

market is leaning towards mid-value volume segment.

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The study has provided marketing insights: how a competitive value chain and technology and

value proposition work in synergy to offer greater value to customer.

The marketing implication of the study is that a sales promotion strategy should start with

choosing a small sales territory where brand equity can be enhanced by marketing efforts to

reinforce customers‟ perceived brand value that is reflected in increase in purchase rate. Once it

is understood that the devised promotional strategy has hit the target segment then the marketers

can go for a bigger event of horizontal application i.e. nationwide sales promotion aggressively.

Survey has provided that though different tyre brands are competing in a segment bearing

almost similar value offer but customers‟ perceived value are not same rather they differentiate

as per their own evaluations. Simultaneously, dealers‟ image and their locations have significant

influence on customers‟ tyre brand choice.

The researcher has made comparative ranking of different tyre brands. This provides a deep

marketing insight to tyre marketers to know about the competitive position of their tyre brands

that helps to formulate appropriate brand specific and place specific marketing strategies.

7.2 Recommendations

● The tyre company needs to continuously appraise its value chain system and operating

technology. The marketing planners should devise innovative promotion strategy that will be

based on brand specific marketing efforts to promote increased value offer and better meaning.

● Products‟ sales outlet i.e. dealers‟ location plays an important roles of tyre sales. Hence, point

of purchase is crucial for maintaining and gaining market share of a tyre company.

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● The customer segments are concentrating to the middle of the market and brewing on value for

money perspectives. Hence, company‟s rolling marketing strategy should be based on lowering

costs continuously.

● Strategic proportion of tyre supply to OEM with respect to replacement market makes a good

supply mix to improve value creation on company‟s overall business perspectives.

● Market changes over a period of time and thus customers‟ requirements and satisfaction also

change. Accordingly, products must be reengineered and nurtured time to time to pursue

changing customer needs.

7.3 Limitation of the Study

(1) In primary data collection, sample is limited geographically. Survey concentrating only at

Kolkata and its outskirts may not be representative to the whole Indian market. (2) For sales data

analysis, only Birla Tyres‟ data are taken as case study giving rise to suffering from data

inadequacy.(3) Only cross sectional data have been analyzed where stability or consistency of

consumer behaviour has not been reflected. The shortcomings are from not using longitudinal

perception data and longitudinal switching or panel survey data.

7.4 Scope of Future Research

While analyzing survey data, geographic limitation of sample collection can be overcome by

doing survey in other major sales territories across the Indian market. Sales data collected from

secondary source have been used for consecutive two periods of eight years. But over a longer

time period say, 12 - 15 years data may be analyzed to get more accurate trend of customers‟

value seeking desire. Besides cross sectional data, longitudinal or panel survey data can be

studied in determining customer preference trend.

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