Treading The Market Place

An unexpected business slump, overcapacity and a drop in sales. How does an industry cope with all of this simultaneously? Simple, it tries and masters the art of selling. The tyre industry is doing just that.

The pressures: sales have dropped by over 20 per cent since the end of last year, from 4 lakh car tyres a month to 3.5 lakh. Also, growth has slowed from almost 25 per cent over the past three fiscals to little more than 10 per cent this year.

Naturally, with a market marked by oversupply and the threat of multinationals like Bridgestone ACC and Michelin, tyre players are working twice as hard. For instance, Goodyear India now plans to adopt a more high-profile strategy, specially after its low-key stance backfired. With the entry of the global auto majors, Goodyear seems to have realised that sidelining the Indian market could cost it dearly.

 

As its first step, the company has been trying to increase consumer interaction with employees. The company has launched the Operation Consumer Oriented Thinking (COT) programme to help its employees to gain deeper insight into the consumer's psyche. Under COT, the functional heads of Goodyear regularly visit dealers and customers.

The competition, on its part, has not been idle either. As J B Khodaiji, executive director, Ceat, says: We realise that a passenger car tyre customer has to be treated very differently from a commercial vehicle tyre customer. For instance, we cannot expect to reach out to the truck drivers and farm vehicle owners through the mass media. In these segments it becomes vital to establish direct marketing links.

In mid-1995, Ceat flagged off a Consumer Aid programme that requires Ceat executives to meet users across the country once a month. More than 45 people in the company interview 15 end-users per head based on a rough questionnaire to solicit feedback. Ceat has a mobile van in each of the four divisions.

For the remoter areas, the company has the now well-known Video on Wheels. A Ceat executive accompanies these vans and helps the consumer know more about what the company has on offer. We go to them at their workplaces and explain the benefits our tyres provide. Also, a truck driver is comparatively much more rigid in what he expects from a tyre and it requires technical expertise and marketing skills to convince him," Khodaiji says.

Ceat also organises what they term consumer meets. Each regional office has about three meets each year for which consumers are invited to gain more technical knowledge and deal with queries and grievances.

Ceats advertising budget ranges from Rs 7 crore to Rs 17 crore and the marketing budget from about Rs 11 crore to Rs 34 crore for every 18-month period. This has been the range over the past three years.

Media wars, in fact, have dominated the image-building process of all the companies. The Ceat Cricket Ratings (CCR) have been a successful marketing venture so far. Earlier Ceat would place its spots in between cricket matches. "But soon we realised that we ended up being an inconspicuous advertiser among the major sponsors," says Commissariat.

The concept of CCR was developed by Sumedh Shah of Professional Managing Group (PMG). The CCR has helped us become part of the game. Now Ceat Ratings have developed as a unanimous part of the game and has also given the company a lot of mileage, he adds.

MRF has on its part is reported to have spent Rs 1.5 crore to get its label on Sachin Tendulkar's bat in 1996.

But distribution and dealership networks have to be built up as well. The feisty breed of multinationals has already displayed their intentions to muscle their way into the market. Goodyear, for instance, acquired rival Dunlop's prestigious tyre shop Premji's at Mahim in Mumbai, adding a feather to their cap. While Ceat claims to provide no special incentives to exclusive dealers, Goodyear offers upto an additional four per cent above the usual margin if its exclusive dealers meet a certain target.

Lalit Jogani of Premji's says: There has been a total turnaround in dealer attitude. Now, the focus has shifted from multibrand to exclusive dealership. First-generation dealers felt that the showroom should be loaded with tyres to attract customers; the emphasis has now shifted to more customer-friendly, comfortable showrooms where the customer is allowed to know more about tyres before buying it. There are about six Goodyear service centres across Mumbai, all of which came up in the last couple of years. Three years ago, the ratio between multibrand and exclusive dealers was 90:10. Goodyear plans to change that to 50:50.

Whats in it for the dealer? Jogani explains that it makes better business sense to sell 160 tyres of a single company instead of selling 50 tyres each of four different companies. It makes you a priced dealer of that company. The company will offer you more discounts and higher margins," he adds.

Other competitors are also consolidating distribution networks. Ceats 150-strong Ceat Shoppe network, a concept it started in 1987, will be expanded to 250 outlets by the end of this year. The concept: selling not just tyres, but tyre care and services as well," according to Rohinton Commissariat, senior manager, advertising, Ceat Ltd.

Planning to enter the market by April 1998, Bridgestone ACC has similar plans to set up exclusive showrooms in India. These will be modelled on the Bridgestone Cockpits worldwide with a concept that is broadly similar to the Ceat Shoppe.

Another important feature of tyre-makers marketing strategies is their emphasis on sub-brands. Ceat, for instance, launched a year-long market research effort to gather more information on consumer preferences before it launched the Maestro steel-belted radial tyres for passenger cars last October.

A nationwide campaign to launch a new brand alone is estimated to cost around Rs 4 crore. But most are yet to forge that all-important bond with the consumer.

This is because a branding exercise often degenerates into an advertising gimmick. Dunlop, for instance, marketed the same tyres with three different names within a span of seven years. The Radial 2001 was renamed Radial Class. Radial Class, which was an under-performer, was again replaced with Glider," says a one-time Dunlop dealer.

Experiments with various brands have continued ever since. In early 1994, Apollo launched BlackCat, an anti-skid scooter. Unlike most tyre brands BlackCat was launched without much emphasis on the mother brand. The BlackCat did not prove to be a Surf, which stormed the market even without Hindustan Lever's name, and had to be withdrawn soon. Being under the umbrella of the mother brand is vital," says K G Shenoy, project director, Bridgestone ACC India Ltd.

Even as global majors adapt their products to suit Indian roads and weather conditions, they face a dilemma over whether they should stick to their international brands or develop country-friendly brandnames.

Bridgestone, for instance, has the Desert Dueller tyre for heavy duty vehicles in Saudi Arabia. It is likely to come out with brands that will be tailormade to attract the Indian mental framework. Goodyear, on the other hand, has launched its GPS 2, a successful international brand in car radials. Instead of localising its name, Goodyear prefers to stick to the global brandname.

But even as companies weave metaphors around their brand names and fight their media wars, the essential fact is that they still need to work much harder at developing truly different products for new needs.