MARKETING STRATEGY OF

Submitted by: Under the guidance of:

Md Shahjahan Alam Prof. G. Pravin
PGDM (CM 4) (PIBM)
PRN No: DM18F26
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Indian Tyres Industry

The Indian Tyres Industry is an integral part of the Auto Sector – It contributes to ~3% of the manufacturing
GDP of India and ~0.5% of the total GDP directly. So, let’s understand the dynamics of the Tyres Industry in
India.
Indian tyres industry has almost doubled from Rs 30,000 crores in 2010-11 to Rs 59,500 crores in 2017-18 of
which 90-95% came from the domestic markets. The top three companies – MRF, Apollo Tyres and JK Tyres
have ~60% of the market share in terms of revenue. In terms of segmentation tyres can be divided in two ways
– based on end market and based on product.

Replacement, OEMs & Exports

Indian tyres market is clearly skewed towards the replacement segment which contributes ~70% of total
revenues. Whereas in volume (tonnage) terms the replacement segment contributes ~60% indicating
realizations in the after-market are clearly higher than OEMs (Original Equipment Manufacturer) market

Truck & Bus (T&B), Passenger Vehicle (PV), 2/3-Wheeler, Off-Highway Tyres
(OHT) & Others
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T&B tyres in India generates the major revenue i.e. 55% of total revenue whereas globally it’s the PCR
(Passenger Car Radials) contribute the largest portion of the revenue. This is mainly because of very low
penetration of passenger vehicles in India – below 20 per 1,000 people whereas in China the number is 69 per
1,000 people and 786 per 1,000 people in US..
Top 10 companies account for about 80 per cent of the market share. Top three companies -- MRF, Apollo
Tyres and JK Tyres -- have 55 per cent of the market share of the Indian tyre industry and figure among the
top 25 global companies in terms of revenue.

Reason for growth in this sector

• The industry is a major consumer of the domestic rubber market. Natural rubber constitutes 80 percent
while synthetic rubber constitutes only 20 percent of the material content in Indian tyres. Interestingly,
world-wide, the proportion of natural to synthetic rubber in tyres is 30:70.

• Indian tyre industry is manufacturing all categories of tyres (except some specialized categories like
Snow Tyres for which currently there is no requirement and Aero Tyres). Domestic demand for tyres
to the extent of 98 percent, including demand for tyres for all new vehicles being introduced in the
country, is being met domestically.

• Original Equipment Manufacturers This includes automobile manufacturers like – Hero Honda, Maruti
Suzuki, Ashok Leyland, Tata Motors etc. The demand from the OEM market fluctuates directly in line
with end-use demand for the automobile/construction equipment segment; it is thus prone to a high
degree of cyclicality. The total tyre sales to OEMs are on an average 40-45 percent of the total sales.
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Porter’s 5 Forces
Analysis Michael Porter’s model identifies the most powerful driving forces within industries and the
interactions between them to determine the competitive position and profit potential. The five driving forces
are:
1. Threat of substitute of products.
2. Bargaining power of suppliers.
3. Bargaining power of buyers.
4. Threat of new entrants.
5. Rivalry among existing competitors.

BARGAINING POWER OF BUYERS: HIGH

The Indian tyres sector has more than 40 players. Thus, the buyers have many options to choose from and can
clearly articulate their needs; also there are no switching costs involved. Due to the fragmented nature of the
market, tyres companies cannot pass on the increased raw material prices fully to the buyers. Thus, bargaining
power of buyers is high.

BARGAINING POWER OF SUPPLIERS: HIGH

The main raw material of the tyres industry is natural rubber. The production of rubber is not increasing as
much as the demand increasing. As a result of that, India is hort of natural rubber. Therefore, the bargaining
power is high for rubber manufacturer because of higher demand and lower production. Thus, bargaining
power of suppliers is High.

COMPETITIVE RIVALRY: MEDIUM

While there are more than 40 players in the market, the industry has relatively high concentration with the top
10 players holding 95 percent of the market share. Also, in every category like Passenger cars, 2 wheelers etc.
top 3-4 players command close to 80 percent of market share. However, the individual market share of
companies are quite close to each other. As a result, they cannot fully pass on any price rise to OEMs due to
fear of loss of market share. Concluding, we can say that competitive rivalry is Medium.

AVAILABILITY OF SUBSTITUTES: MEDIUM

If domestic tyres prices are dearer than the overseas market, the automobile players will start buying tyres from
overseas markets like China. This usually happens when rubber prices increase significantly in domestic
market. However, consumers who buy tyres in the replacement market do not have this liberty. Thus, threat of
substitution is Medium.

ENTRY BARRIERS: MEDIUM

It is a highly capital-intensive industry and margins are also very low. Therefore, it is very difficult for the new
players to sustain in this competitive industry. However, the automobile players have the ability to do backward
integration with ease because they have expertise, source of finance and brand image. TVS Srichakra is a prime
example of an auto player backward integrating into tyres manufacturing. Thus, entry barriers are Medium.
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Company Profile

Apollo Tyres Ltd is the leading tyres manufacturing

company in India. They are engaged in manufacturing
automobile tyres and tubes. They are the first Indian tyre
company to launch exclusive branded outlets for truck
tyres and also the first Indian company to introduce radial
tyres for the farm category. Apollo Tyres currently has
four manufacturing facilities in India -- two (including a
leased facility) in the rubber-producing state of Kerala,
and one each in Gujarat and Tamil Nadu. Outside India,
the company has a manufacturing facility each in The
Netherlands and Hungary. The company was incorporated
on September 28, 1972. They started their production in
the year 1977 at Perambra in Kerala. In the year 1991, the
company commissioned their second plant at Limda in
Gujarat. In the year 1995, they acquired Premier Tyres at Kalamassery in Kerala. In the year 1996, exclusive
tubes plant commissioned in Ranjangoan in Maharashtra and in the year 2000, they established exclusive radial
capacity in Limda. On November 17, 2003, the company entered into a strategic alliance Michelin, France for
setting up a joint venture company namely Michelin Apollo Tyres Pvt Ltd for producing dual branded truck
& bus radial tyres in India. In the year 2004, they produced Indias first H-speed rated tubeless passenger car
radial tyres.

SWOT Analysis of Apollo Tyres Ltd.

STRENGTHS:

➢ Strong Brand image: Apollo’s Brand diversity is one of its strengths. The manufacturing units
of the company are in India, Netherlands and South Africa and its sells tires under various brand
names in India, Africa and Europe. The presence of various strong brands in the portfolio gives
the company a credibility which gives the company a competitive advantage.
➢ Strong financial performance: Apollo’s net sales grew at a CAGR of 2% in the last 5 years and
its profit grew at a CAGR of 34% in the same period. Strong financial growth enhances
shareholder’s value and also provides room for further expansion plans and hence market share
also increases.
➢ Market share: As can be seen from the graph, Apollo has a high market share in India. It is the
2nd highest market share holder in LCV’s and the highest market share holder in Medium and
heavy commercial vehicles.
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WEAKNESS:
➢ Labor unrest effects production: In the recent past, the company has faced various issues of
labor unrest and lockouts in its plants in Durban, Vadodara etc. This affects company’s
production capabilities and hence also affects the financials of the company
➢ Heavy dependence on Indian market: Although the company has expanded globally but the
majority if the company’s revenue depends on in the Indian market (about 65.2% of its
revenues were from India in FY 2015). This makes the company vulnerable to economic and
political changes in India. The company needs to increase its revenues in other market in order
to mitigate the risks of depending heavily on one market.

OPPORTUNITIES:
➢ Growing Four Wheeler Industry in India: Four Wheeler Industry in India is growing
continuously and has shown growth of 4% CAGR from the period of 2015-18. Also, Indian
truck manufacturing has shown a growth of 7% CAGR in the same period. The growth ensures
growing opportunity in the 4-wheeler market as well as the commercial vehicle segment.

➢ Expansion in Two Wheeler segment: Apollo aims to cover 85% market considering its
current product range. With the growth in the 2-wheeler market, Apollo can enhance its
potential in this market.

➢ Global Expansion: From the past 3 years, the company is in an expansion mode with
expansion in countries like Lebanon, Qatar and Jordan. The company should continue the same
and foray into newer markets.

THREAT:

➢ Strong competition: Competition in the tire industry especially in India is very high with competitors
like MRF Tyres, JK Tire and Goodyear is present. Fierce competition can affect sales and the
company’s expansion plans.

➢ Cheaper Tyres in china: Imported Chinese tire products are cheaper and hence presents a stiff
competition in the market. Chines imports can adversely affect Apollo’s profitability.
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COMPETITOR ANALYSIS

A Quick Glance at A Few Indian Tyres Companies:

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Marketing mix of Apollo tyres

Product
Apollo tyres manufacture tyres, tubes and flaps and are a premier name in the Indian markets and it also
exports to Middle East countries, Europe and Africa. Apollo tyre’s introduced the maiden farm radials
and also India’s first range of high-speed tubeless car tyre’s. The types of tyre’s come according to the
category of the vehicles and major category of Apollo tyre’s products are as follows:

• Passenger car tyre’s include: Radial, Crossply and SUV

• Light Truck: Radial and Crossply
• Truck and Buses: Radial, Crossply and Kaizen
• Tractors: Dura Tread and Dura Tyre

Place
Offering the right product to the right customer is what has been the focus of Apollo tyre’s. Special
efforts are made to understand customer needs. It is perceived as the tyre of the masses and its average
price accompanied by good performance confirms that belief. It is a complete value for money deal due
to high-level technology, which is used in manufacturing of these tyre’s. Radial and tubeless tyre’s are
the main focus now for Apollo tyre’s.

• 4500 distributors in India including 1200 exclusive Apollo tyres distributors

• 19 state offices across India
• 160 sales and service offices
• 3700 outlets in Europe
• Can deliver anywhere within 24 hours.

Price
Apollo Tyre’s have been facing good competition from brands like JK tyre, MRF, Bridgestone, CEAT,
Continental and Goodyear. Like if we compare the prices of sedan car tyre’s tube less category Apollo
costs Rs 4300-4500 and JK tyre costs Rs 4000-4200 whereas Bridgestone costs Rs 5800-6000 per tyre.
Truck tyre’s prices if we compare Goodyear is in the range of Rs. 12500-13000 and Apollo HCV tyres
are in range of Rs 17000-17500 approximately and CEAT tyres are in range of Rs 18000-18500. Thus
Apollo tyre’s is clearly using Penetrative pricing to capture the market.
Therefore, there is very stiff competition in terms of price and there are some brands that have prices
close to Apollo so it has to be the quality and service of Apollo, which makes it stand apart from other
brands. Although MRF is the market leader overall, there are certain product segments where Apollo
has an edge over it. However, when compared to its competitors Apollo tyre’s has good business
to business market share, as it has more tie-ups with the automobile companies
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Promotion:
Apollo tied up with Manchester United Football club for promotions and branding. This has worked really
well for the company and has helped to increase its brand value. The company also engages in strategies like
running tyre loyalty programs, better contact with its customers to encourage them for better driving habits.
The advertisements of its product strikes a chord with its customer as it emphasizes on durability and long life
of product. Apollo Tyres ltd. brand Vredestein social media campaign #RockTheRoad (music video by DJ
Hhardwell) won Global Dolphin Award at Cannes in integrated communication category. Apollo also
promotes Indian tennis players and sponsoring tennis competition which brings brand awareness among
youngsters to the company.
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SEGMENTATION, TARGETING & POSITIONING

SEGMENTATION:
HIGH
WAY
VEHIC INDUSTRI
SEGME
PASSENGER COMMERCIAL LE/ AL/ TWO-
NT
CAR OWNERS VEHICLE OWNERS TRUC HEAVY WHEELER
NAME
KS VEHICLE
OWNE
RS

CONSUTR
BETWEEN CITIES:
UCTION BOTH
MIGHT NEED TO
GEOGR RURA STATES, RUAL AND
URBAN TAVEL THROUGH
APHY L MINE SEMI-
RURAL
EVALUAT URBAN
STRETCHES
ION

AGE 25-60 25-60 25-60 25-60 ABOVE 20

ABOVE NA(INDUSTR
INCOME ABOVE 10LAKHS ABOVE 10LAKHS 3LAKHS Y OWNED) ABOVE 50K

LOW
COST,SUPERI
RELIABILITY,DURABI SAFETY,RELIABILITY,DU LONG BETTER OR
BENEFIT LITY,FUEL RABILITY,VALUE FOR LIFE,QU GRIP,LONG GRIP,RELIABI
SOUGHT MILEAGE,PRICE MONEY ALITY, LIFE,QUALITY LITY

MODER HEAVY USE, MODERATE

ATE USED IN TO HEAVY
MODERATE TO HEAVY USED, USED ON USE, ROUGH USE, USED
HEAVY SMOOTH TERRAIN BUT USED TERRAIN FOR BOTH ON
USER,USUALLY CONTINOUSLY FOR FOR CONTINOUSL ROUGH AND
BEHAVIO USED ON SMOOTH LONGER PERIOD OF FARMIN Y PERIODIC NORMAL
UR TERRAIN TIME G INTERVAL TERRAIN
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PRIMARILY TIME
BASED GURDGE
SERVICING/REPLACEM GURDGE BASED
ENT BASED CHANGE ON PURCHASE:TI
OCCASIO GURDGE BASED OCCASIONALY/GURDG PURCHA REQUIREME ME BASED
N PURCHASE E BASED PURCHASE SE NT SERVICING
HIGH
SELF
INVOLM
ENT,
USUALL
Y HAVE MODERATE
BASIC TO HIGH
KNOWL HIGH- INVOLMENT,
EDGE OF INVOLMENT, MAY NOT
MODERATE SELF THE COST HAVE THE
INVOLMENT, LOYAL REPLACE DECISION,EX KNOWLEDGE
HIGH SELF TOWARD A MENT PERT HOW TO
PERSONA INVOLMENT(DEPTH PARTICULAR BRAND OF RECOMMEN CHOOSE
LITY INFO) OF TYRES TYRES DATION TYRES

BRAND MRF,CEAT,APOLLO, JK,APOL MRF,TVS,CEA

FAVORED BRIDGESTONE MRF,APOLLO,JK LO - T,APOLLO
GROWTH 20% 22% 35% 21% 2%

STATEMENT:
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POSITIONING-
HIGH PRICING

MRF

CEAT

TVS
LOW JK APOLLO
PERFORMANCE HIGH
PERFORMANC
FALCON E

LOW PRICING
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PROBLEMS & CHALLENGES PLANNED STRATEGY:

Major Challenges in implementing the planned strategy:

•Absence of a permanent presence in China.

•To target at organic and inorganic growth to enter African and Latin American markets.
•Need to set up manufacturing bases in China and ASEAN markets as it could not export more than
30% from any location considering the intensive bulkiness of the product.
•Due to stringent European market’s safety standards, the only way to access technology for
manufacturing regulated products is to acquire companies outside India.

Tarnishing of Brand Image

•Apollo-Cooper Deal going off-track

Apollo Tyres Ltd agreed to buy Cooper Tyre and Rubber Co. But now Apollo is having problems
with the United Steel Workers’ union in the US and in the Chinese joint venture, where workers are
objecting to the deal.

•Involvement in price fixing allegations has impacted the company's reputation

Fined by the South African Competition Commission in January 2012 for indulging in price fixing
and price hike and in 2011 by the Competition Commission of India (CCI) for possibility of
cartelization in the Indian tyre industry.

Increasing Competition

• Threat from cheap Chinese imports, especially in price-sensitive replacement market.

• Entry of MNCs such as Goodyear, Bridgestone and Michelin . Situation Analysis Consumer
Behavior Segmentation & Target Markets Brand Positioning Marketing Mix Problems & Challenges
Recommendations 17

Supply Chain related Challenges: Integrating IT and Innovation

• The critical supply chain component where IT can help is fitting RFID tags onto tyres. It will not
only help tracking the tyres within the supply chain but will also be helpful as an after-sales tool.

• People are no longer buying tyres but leasing them. Hence, the concept of cost per-kilometre. This
was an initiative started by Apollo which still poses a big challenge ahead.

Lack of presence in two and three-wheeler tyres segments: Untapped market

Labor unrest and lockouts – impact on financials and production
• In October 2012, the company faced a 19-day strike at its Waghodia plant in Gujarat, workers
demanding the recognition of a new union affiliated to the Bhartiya Mazdoor Sangh (BMS).
• Also, Apollo's Perambra plant based in Kerala, witnessed a production halt.
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Business Challenges:

• tyres is a difficult product from a brand loyalty perspective. When it comes to commercial vehicles
(trucks, fleet, and light commercial), performance and efficiency play a huge role. For passenger cars,
on the other hand, it is more of brand recall, at least in the Indian market.
• In the last two years, Apollo Tyres has moved towards a very high degree of customer centricity.
The efficiency of supply chain—including manufacturing and distribution—lies in its ability to
influence the customer.
• Also, once the acquisition of Cooper Tyres & Rubber Company fructifies, the US market will bring
its own challenges for the next two to three years with a different set of challenges and solutions.

Distribution formats and marketing channels

1. Through online
2.Own outlet (Apollo Tyres Outlet)
3.Distributer to retailer
4. OEM (Original Equipment Manufacturer)
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Conclusion:
• Apollo tyres is the market leader in the LCV&SCV segment followed by MRF, J.K.,
Birls, CEAT
• Apollo tyres is the first tyres company which has launched new scheme to solve the claim
within 2 days.
• Most of the customers are unsatisfied with this scheme. Because dealers do not provide
them this type of facility at their disposal.

Suggestions:
The suggestions from the consumers to the tyres company are following.
• Some consumer is unsatisfied with the price because competitor’s
p r o d u c t price is less than Apollo, so company should pay attention in their mind
on price.
• Company should provide more mileage of tyres because overloading has been
imposed by the government.
• Company should provide credit facility because customer demands this type of facility.
• The problem of Apollo consumers is lack of adequate promotional schemes.
Dealers don't provide adequate information in the support of the Apollo brands. They see
their margin of profit alone.
• Some schemes should be provided by company. It is good technique for
sales promotions.
• Company should give special attention after sales service of their customers.
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Reference:
https://economictimes.indiatimes.com/apollo-tyres-ltd/infocompanyhistory/companyid-63.cms

https://www.alphainvesco.com/blog/understanding-the-indian-tyre-industry/

http://www.firstresearch.com/Industry-Research/Tire-Manufacturing.html

https://www.business-standard.com/article/companies/boom-in-automobile-sales-drives-tyre-industry-
s-growth-into-high-speed-lane-118080701499_1.html

https://www.moneycontrol.com/competition/apollotyres/comparison/AT14

https://www.moneycontrol.com/stocks/company_info/print_main.php