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Marketing Strategy of Apollo Tyres
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Marketing Strategy of Apollo Tyres

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Marketing Strategy of Apollo Tyres

Marketing Strategy of Apollo Tyres

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  • CompanyApollo Tyres Ltd is the world's 17th biggest tyre manufacturer and was established in 1972. A turnover of USD 2.34 billion as of FY 12-13.Over 16,000 employees and manufacturing presence in Asia, Europe and Africa. Available in over 100 countries with 9 manufacturing facilities.6 Key brands: Apollo, Dunlop, Kaizen, Maloya, Regal and Vredestein. Consumer Increasing sales of passenger and commercial vehicles in developing countries and a strong demand for replacement tyres is driving factor. Consumers generally are interested in mileage offered, price, type of technology used, product presence in market and services like Re-treading and tire balancing.Deciding Factor is cost v/s benefit and generally based on word of mouth purchase. Tire buyers are “typically” the primary decision maker, and they often are married, educated and skew only slightly maleTire buyers are looking for durability and price, they research on the go, and they usually buy within a week. People also use online or digital means to research about the product but mainly it is on the basis of word of mouth recommendation of family and friends. The main consumers of Apollo tyres are in heavy vehicles sectors where the main deciding factor is durability and tyre buying decision is influenced by transport companies. In passenger vehicles the technology factor plays a huge role and hence Apollo tyre is stressing on technological upgradation in continuous manner with their India’s most technologically advanced manufacturing unit in Chennai. Also their latest product “4G” is one the most advanced products in the Indian market competing with global brands like Michelin, etc.ContextImport duty on natural rubber is as high as 20% but import duty on finished tyres is as low as 10%, thus affecting Competitiveness.Increasing sales of passenger and commercial vehicles in developing countries Govt policies like Local Body Tax (LBT) and other factors like decrease in rainfall reduces demands in agricultural sector vehicles also increase in natural rubber costs in last few yearsSocio economic factors like high disposable income drives salesTechnological advancement like self inflation, Green Tyres, Run Flat tyres is influencing the market.Collaborators It has a network of over 4,000 dealerships in India, of which over 2,500 are exclusive outlets. Apollo operates through a network of branded, exclusive or multi-product outlets. In South Africa the branded outlets are called Dunlop Zones, while in India they are variously named Apollo Tyre World (for commercial vehicles) and Apollo Radial World (for passenger cars). Partners for raw material : Aditya Birla,Exxon Mobil,Styron,Arcelor Mittal,Performance fibres USA COMPETITORSMRF –Market leader for 21 years, First Indian Tyre company to reach turnover of 50 Billion ,Strong association with sports , Good Brand Image.CEAT - by RPG group ,most visible face of Indian Tyre industry, it reached 10 billion export benchmark in 2012,strong advertising campaigns leads to good brand image.JK Tyres : market leader in truck/bus segment ,all radial plant coming up in Chennai . Other competitors include Bridgestone,Continental,Goodyear ,Pirelli
  • DECISION MAKING UNIT:Initiators: The need to replace tyres is perceived by the driver/owner of the vehicle.Information gatherers: Case 1: Sudden requirement – Considering the constraints in time to reach out to other sources who could assist with the information seeking procedure, The buyer alone gathers the information Case 2: Planned replacement by a passenger car vehicle owner – The buyer himself as well as his friends and family members.Case 3: Planned replacement in case of commercial vehicles – Majorly, the decision is taken by the firm/person owning the vehicle. The driver could also have high involvement in the decision making process.Influencers: Two situations are possible:-Sudden requirement of tyre replacement: Majorly, information is obtained via the person servicing the vehicle at the time of breakdown. Information can also be sought over long distance communication or via online searches. Typically, the time available to acquire information before taking a decision is constrainedPlanned Replacement of Tyres in passenger car vehicle owner: Involves an extensive research before deciding on which brand of tyres to go with since this is a high involvement decision. Sources of gathering information are friends and family members who have replaced their tyres before, extensive online searches that includes reading numerous reviews, blogs etc, consultation with a trusted service engineer at a trusted automobile service center.replacement in case of commercial vehicles: Consultation from Technical teams could be sought; the driver of the vehicle and the firm/person owning the vehicle could also be influencers in the decision making processDecision Makers: Typically, is the person owning and/or driving the vehicle. In case commercial vehicles, the final decision makers could be the technical team responsible for the vehicles.Purchasers: Does the person/firm own the vehicle.Users: Person driving the vehicle; could be others involved as well as in case of passenger car (family and friends) and public transport vehicles. Consumer Buying Behavior:The consumer decision in case of purchasing a tyre for an automobile is typically a high-involvement decision. Depending upon the circumstances in which a customer decides to buy a tyre, the consumer buying behavior could vary. In a planned decision to replace a tyre a consumer puts forth a Complex buying behavior as his or her decisions are backed by extensive research wherein even the consumer might have delved even into the minutest details of the brands.In unprecedented situations that call for urgent replacement of tyres, the customer exhibits a dissonance reducing buying behavior since he does not have much options to choose from, is satisfied with the basic functional benefits of the tyre being replaced with, without willing to differentiate between tyres based on the minute differences between brands, the consumer.  CONSUMER INSIGHTSBRAND PERCEPTIONThe Brand Image of Apollo Tyres is that of Value for Money. Brand Equity for International brands like Michelin and Bridgestone was higher compared to that of Apollo.Consumers consider that they provide performance, reliability and quality at a price that is not very high but affordable. Given a choice, consumers are more likely to choose Michelin and MRF over Apollo. They would prefer Apollo to Ceat and Good Year CONSUMER BEHAVIOURMost of the consumers consider 4k to 5k to be an optimum amount to invest in replacement of tyres. Only 19% have the willingness to pay above 5k. This indicated a lack of awareness of the fair price of the product.Consumers tend to purchase tyres either in sets of even multiples or in single units, as in case of an emergency.The primary reason leading consumers to replace their tyres was treads of tyres being worn out or insufficient grip of tyres making wear and tear of tyres the main reason for its replacement.Only 7% of the respondents changed their tyres proactively, indicating that the consumers see it as a forced expense.Our primary research reinforced our understanding of tyre purchase being a high involvement decision with 85% of the respondents agreeing that their tyre purchases are highly based on their own judgment.At the same time, the consumers also try their best to make a highly informed decision by sourcing information from friends, family, service center owners etc.The main criteria for consumers making a purchase are Durability of the tyre (cost-per-km) followed by quality, reliability and traction.Consumers are most comfortable buying the products from authorized tyre shops of their preferred brand.   
  • CONSUMER BEHAVIOURConsumers tend to purchase tyres either in sets of even multiples or in single units, as in case of an emergency.The primary reason leading consumers to replace their tyres was treads of tyres being worn out or insufficient grip of tyres making wear and tear of tyres the main reason for its replacement.Only 7% of the respondents changed their tyres proactively, indicating that the consumers see it as a forced expense.Our primary research reinforced our understanding of tyre purchase being a high involvement decision with 85% of the respondents agreeing that their tyre purchases are highly based on their own judgment.At the same time, the consumers also try their best to make a highly informed decision by sourcing information from friends, family, service center owners etc.The main criteria for consumers making a purchase are Durability of the tyre (cost-per-km) and followed by quality, reliability and traction – Safety Parameters.
  • BRAND PERCEPTIONThe Brand Image of Apollo Tyres is that of Value for Money. Brand Equity for International brands like Michelin and Bridgestone was higher compared to that of Apollo.Consumers consider that they provide performance, reliability and quality at a price that is not very high but affordable. Given a choice, consumers are more likely to choose Michelin and MRF over Apollo. They would prefer Apollo to Ceat and Good Year
  • Tyre supplies are divided into the broadly to the following segments:Replacement Market (aftermarket)Original Equipment Manufacturers (OEMs), i.e. vehicle manufacturersExportState Transport Undertakings (STUs) (primarily for Bus tyres)Government PurchasesThe tyre market can be segmented in terms of the product categories:Truck/ BusPassenger Car/JeepLight Commercial VehicleSmall Commercial VehicleScooter/MopedTractor FrontTractor RearTractor TrailerMotorcycleOff the Road Industrial
  • Brand Architecture1)House of Brands / Branded House / Sub brandsIt is a house of brands. 6 key brand names under its umbrella.Apollo (primarily in Asia)Dunlop (in 32 countries of Africa)Vredestein (major player in Europe)Kaizen (specifically for truck-bus segment)Maloya (Specifically for passenger vehicle segment)Regal (specifically for truck-bus segment)PoPs -Diverse product portfolio.Huge distribution network and selling across all major markets.Great performance at affordable pricing.Various sub-brands created over different geographies of the world.PoDs - Strong product brands in its specific markets like AMAR in bus-truck segment and Amazer in Passenger car vehicles.Constant innovation in products, changing ahead of market trends.Major part of sales coming from OEM with major automobile companies like Audi, Skoda, Fiat, etc.Focussed on consumer’s safety and comfort.4) Brand CommunicationApollo tyres with “YOU-FIRST” technology. Go the Distance.Their brand communication is mainly about “YOU FIRST” which clearly depicts that their primary focus is on consumers and their safety. Also it shows that it goes a long way, i.e. providing great performance.5) Brand ImageThe perception of Apollo tyres in people’s mind is that of a not-so-expensive brand that provide latest and performance-oriented solutions.Building Brand Identity:The focus on brand identity by Apollo is in line with their vision of creating long term bond with their customers. Three major factors helping Apollo build up its brand image are:1) Providing world-class quality standards.2) By lasting much longer.3) By providing customers with best value for money, and by providing a smooth comfortable ride. Also they primarily focus on awareness spreading through word of mouth as consumers discuss with their friends and relatives before making a purchase of tyres.
  • Product Life CycleLike any other product, tyres have low demand in the beginning part of the cycle, and then with the advancement of cycle it gains momentum with incremental sales. After reaching a stable growth peak, it usually stays in the market for a while and then the declining stage begins. Generally the total lifespan is around 3 years, however few classic products are there in market for more than a decade with small improvements now and then.
  • Product Portfolio & MixIn commercial vehicles,Amar, Anchor and Cargo in Buses-TrucksIn passenger car vehicles,Hawkz for SUVsAcelere, Amazer, Alnac and Aspire for light-medium passenger carsQuantum and Amazer for VansIn Off-highway category,Dhruv, Krishak, FarmKing and Powerhaul for agricultural and Haulage
  • 2) PlaceChannel Choice + Distribution IntensityApollo supplies its products directly to the dealers from its warehouse / manufacturing facilities. Also a major chunk of sales comes from sale to OEMs like Audi, Skoda, Volkswagen, etc.It has a network of over 4,000 dealerships in India, of which over 2,500 are exclusive outlets. Apollo operates through a network of branded, exclusive or multi-product outlets. In South Africa the branded outlets are called Dunlop Zones, while in India they are variously named Apollo Tyre World (for commercial vehicles) and Apollo Radial World (for passenger cars). push strategy and/or Pull StrategyPush strategy only applicable for new products in its initial stages. Otherwise Pull strategy comes into force due to the brand image created over a period of time. However for few latest products, even ‘push’ action is not required much as the required ‘pull’ is created by the usage of new and latest technologies itself. channel alternativesThe alternative channel being followed by Apollo is that of direct marketing to large players in Transportation business.
  • RECENT STRATEGY: Aims to be amongst top 10 glob al top 10 tire companies by 2015-2016.Challenges: Establish a permanent presence in China.To target at organic and inorganic growth to enter African and Latin American.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.European markets have very stringent safety standards. The only way to access technology to manufacture safety-regulated products was to acquire companies outside India.Increase in demand for green tyres and hence would require dependency on renewable sources rather than oil.Tarnishing of Brand ImageApollo Cooper Deal going off-track :Apollo Tyres Ltd agreed to buy Cooper Tyre and Rubber Co. to gain access to the American and Chinese auto markets. 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 impacts the company's reputationFined by  the South African Competition Commission in January 2012 for indulging in price fixing and price hike.During 2011, the Competition Commission of India (CCI) investigated the possibility of cartelization in the Indian tyre industry .This has harmed its image substantially.Competition: Threat from cheap Chinese importsThe Indian tyre manufacturing industry is facing a threat due to cheap import of tyres from China.Price sensitive replacement market in India for truck and bus tyre and hence a very low brand and quality awareness. Chinese tyres, low on the quality scale, competing in the Indian market on the basis of low prices. They enjoy the benefits of lower manufacturing costs and higher employee productivity. MNCs - The entry of multinational companies (MNC) such as Goodyear, Bridgestone and Michelin into the domesticmarket may also create an intense pressure to Apollo margins.
  • Supply Chain related Challenges: Integrating IT and Innovation-After-sales toolAbsence of large 3PL players in India(third-party logistics) and the need for structured warehouses.Struggle to locate trucks as GPS is not provided in the supply chain by the service providersThe critical supply chain component where IT can help is fitting RFID tags onto tyres. It will not only track 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, introduced the concept of cost per-kilometre. People can now use mobility-as-a-service in terms of usage of the tyre and other specs than a pure capex buy of a tyre. This is an initiative started by them which still poses a big challenge ahead.Lack of presence in two and three wheeler tyre segments : Untapped market: ChallengeUnlike CEAT and MRF ,no presence in two wheeler product segment. absence in two and three wheeler tyre segments deprive Apollo an opportunity to capitalize on this market and expand its revenues and profits.Labour unrest and lockouts hits financials and productionIn 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).As well as retract suspension of two employees. Moreover, Apollo's Perambra plant based in Kerala,Southern part of India, witnessed a production halt.Business Challenges:Product lifecycles will be much smaller. Tyre is a grudge buy and never a happy buy, 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. Many processes will continue to ensure bringing customers into the process map, understanding their buying patterns, and getting customers closer to the organization. The efficiency of supply chain—including manufacturing and distribution—lies in its ability to influence the customer. Also, once the acquisition of Cooper Tyre & 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.

Marketing Strategy of Apollo Tyres Marketing Strategy of Apollo Tyres Presentation Transcript

  • MARKETING PLAN TYRES 1
  • SITUATIONAL ANALYSIS COMPANY CUSTOMER COLLABORATORS Situation Analysis • Apollo Tyres Ltd is the world's 17th biggest tyre manufacturer and was established in 1972. • A turnover of USD 2.34 billion as of FY 12-13. • Over 16,000 employees and manufacturing presence in Asia, Europe and Africa. • Available in over 100 countries with 9 manufacturing facilities. • 6 Key brands: Apollo, Dunlop, Kaizen, Maloya, Regal and Vredestein . • Generally interested in mileage offered, price, type of technology used, product presence in market and services offered. • Deciding Factor is cost v/s benefit and generally based on word of mouth purchase. • Network of over 4,000 dealerships in India. • Operates through a network of branded, exclusive or multi-product outlets. • Partners for raw material : Aditya Birla, Exxon Mobil, Styron, Arcelor Mittal, Performance Fibers USA. Consumer Behaviour Segmentation & Target Markets Brand Positioning COMPETITION MRF –Market leader for 21 years, First Indian Tyre company to reach turnover of 50 Billion , Strong association with sports , Good Brand Image.  CEAT - by RPG group, most visible face of Indian Tyre industry, it reached 10 billion export benchmark in 2012, strong advertising campaigns leads to good brand image.  JK Tyres - Market leader in truck/bus segment, all radial plant coming up in Chennai .  Other competitors include Bridgestone, Continental, Goodyear. CONTEXT • Import duty on natural rubber is as high as 20% but import duty on finished tyres is as low as 10%. • Increasing sales of passenger and commercial vehicles in developing countries mainly due to socio economic factors. • Govt policies like Local Body Tax (LBT) and other factors like decrease in rainfall has reduced demand in agricultural sector vehicles. Also increase in natural rubber costs in last few years. • Technological advancement like self inflation, Green Tyres, Run Flat tyres is influencing the market. Marketing Mix Problems & Challenges Recommendations 2
  • SITUATIONAL ANALYSIS HELPFUL INTERNAL • • • • • HARMFUL Excellent Geographical coverage across Asian, European and African markets Good financial position and Wide product variety Good Brand awareness about the product Over 4000 dealerships in India, and over 900 in South Africa Has manufacturing plants at India, SA, Zimbabwe and Netherlands • Low presence in latest car models • Absent in two/three wheeler segment • Brand yet to establish itself like the market leaders STRENGTH WEAKNESSES SWOT EXTERNAL OPPORTUNITIES • Emerging markets and improved lifestyle • More tie-ups with Automobile companies as it’s mainly into B2B market • Improved Infrastructure has fuelled more and more transportation • Emergence of India as a hub for small car production • Apollo is set to acquire the US based Cooper Tire & Rubber Co. which is expected to be completed at the end of the year Situation Analysis Consumer Behaviour Segmentation & Target Markets Brand Positioning THREATS • • • • • Price wars Stiff competition from national and international brands Cheaper technologies and less rubber production Volatility in prices and availability of raw material Government Policies w.r.t export duties, import duties, tax levied on automobile industries • Cooper Tire & Rubber Co. deal may backfire if not executed properly Marketing Mix Problems & Challenges Recommendations 3
  • CONSUMER BEHAVIOUR A complex buying behavior backed by extensive research DECISION MAKING UNIT Planned Purchase Initiators 2 Information Gatherers • Sudden Requirement - Alone • Planned (Passenger Car Vehicle) – Self + Friends/Family • Planned (Commercial) – Firm owner with driver’s consent 3 Influencers Service engineer, Friends / Family, Research by self, technical teams, firm owners. 4 Decision Makers 5 Purchasers 6 Less likely 1 Users HIGH INVOLVEMENT More likely Urgent Replacement Dissonance reducing buying behavior with inclination towards brands with high awareness Situation Analysis Consumer Behaviour Segmentation & Target Markets Brand Positioning Need to replace perceived by the driver of the vehicle Driver + Technical Team (in case of commercial) Owner of firm / Owner of Vehicle Need to replace perceived by the driver of the vehicle Marketing Mix Problems & Challenges Recommendations 4
  • CONSUMER BEHAVIOUR (Passenger Car Owners) Either 3 or 5 4% Set of 4 35% Single 19% No. of Tyres Purchased Treads worn out 43% Except cases of emergency requirement, most tyre purchases in even numbers Place of Purchase Authorised Reseller of Multi Brands… My car dealer 15% Major reason for replacement is wear & tear of tyres. Very few due it on a routine basis 100% 80% Authorise 60% tyre shop of 40% any brand 20% 12% 0% Closest tyre retail outlet 19% Most consumer prefer purchasing from authorised resellers of favoured brands Situation Analysis Consumer Behaviour Routine activity (every year) 7% Reasons for Replacement Set of 2 42% Authorised reseller of favoured brand… Tyres got damaged from the sides 25% Punctures 25% Reliability 1 - Low Value for Cost per Money Tyre 2 - Somewhat Quality Good Amount 35% Opinion of Tyre Retailer 19% Just friends/ family. 46% Research involved In spite of being a grudge purchase, some consultation is involved. Warranty Durability / Traction / Brand Longeavity Grip 3 - Important 4 - Very Important High Emphasis on Reliability, Quality and Traction since these are Safety Parameters. As well as emphasis on durability since it ensures economical viability. (Data is based on responses of 26 respondents) Segmentation & Target Markets Brand Positioning Marketing Mix Problems & Challenges Recommendations 5
  • CONSUMERS PERCEPTION (Passenger Car Owners) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Do respondents want to buy Apollo next time? PERCEPTION ABOUT APOLLO TYRES • Not perceived as the premium brand, tyre of the masses (average price & good performance, reliable) • Seemingly Value for money Price Performance Reliability 4 - High 3 2 1 - Low Area of Concern • 60% 40% • 20% 0% Havn't Heard of it Superior to Apollo Tyres Situation Analysis Good Year Inferior to Apollo Tyres Consumer Behaviour pollo 38% PERCEPTION ABOUT COMPETITORS 80% Ceat 0% Yes, A No, Ot hers 62% Quality 100% Michelin 0% Segmentation & Target Markets • 20-29 50-59 Greater brand perception of 23% 19% International players like Michelin. Apollo has a much better perception than good 30-39 40-49 year, Bridgestone, Ceat. 23% 35% Among Indian Age profile of respondents competitors, MRF has greater (Data is based on responses of 26 respondents) brand value. Brand Positioning Marketing Mix Problems & Challenges Recommendations 6
  • SEGMENTATION & TARGET MARKETS Segment Name Passenger Car Owners Commercial Vehicle Owners Off Highway Vehicle/Tractor Owners Industrial & Heavy Vehicle Two Wheelers Geographic Characteristic Urban Cities Between Cities; Might need to travel through rural stretches Predominantly in rural India At industrial sites, eg: construction sites, mine excavations Both rural, urban and semi-urban Demographic Factors (Age) 25 – 60 25 – 60 25 – 60 25 – 60 Above 20 Above 3 lakhs Above 10 lakhs Above 3 lakhs NA (Industry Owned) Above 50,000 13% 60% 10% 4% 13% Principal Benefit Sought Reliability, Durability, Fuel Mileage, Price Safety, reliability, Durability, Value for Money Long Life; Quality; Easy maneuverability Better Grip; Long life; Quality Low Cost, Superior Grip, Reliability Special Behavior Moderate to Heavy use; Usually used on smooth terrain Moderate Use; Used for farming purposes Heavy Use; Used in rough terrain for continuous periodic intervals Moderate to heavy use; Used both on rough and normal terrain Occasion Grudge based purchase Grudge-based purchase Changed on requirement Grudge based purchase; Time based servicing Personality Characteristic High self-involvement in purchase though might not have indepth information Heavy Use; Used on smooth terrain but continuously for longer period of time Primarily Time-based servicing/ replacement; Occasionally Grudge based purchase Moderate self-involvement; usually get the vehicle serviced at the same service center; loyal towards a particular brand of tyres High self- involvement; usually have basic knowledge for the replacement of tyres; High-involvement; Cost intensive decision; Expert Recommendations taken before working on a decision Moderate to High involvement; may not have the know-how for choosing tyres. Brands favored MRF; Bridgestone; Apollo; Continental; Ceat Apollo Tyres Michelin; Pirelli; Bridgestone MRF; Bridgestone; Ceat Demographic Factors (Income) Overall product mix MRF; Apollo; Continental; MRF CURRENT FOCUS Situation Analysis Consumer Behaviour INITIAL FOCUS Segmentation & Target Markets Brand Positioning NO PRESENCE Marketing Mix Problems & Challenges Recommendations 7
  • B2B Industry (majorly consists of the OEM market): •Passenger Car Manufacturers •Off Highway Vehicle Manufacturers •Light Commercial Vehicle Manufacturers •Medium to Heavy Commercial Vehicle Manufacturers SEGMENTATION & TARGET MARKETS TYPES OF TYRES (OEM Market) B2C Industry (Replacement Market) Passenger Car Manufacturers Passenger Car Owners Off Highway Vehicle Manufacturers Off Highway Vehicle Owners Light Commercial Vehicle Manufacturers Light Commercial Vehicle Owners Medium to Heavy Commercial Vehicle Manufacturers Medium to Heavy Commercial Vehicle Owners B2B Industry Flat-less Cross-Ply Radial Tubeless CURRENT FOCUS Situation Analysis Consumer Behaviour CURRENT FOCUS Segmentation & Target Markets Brand Positioning Passenger Car & Vehicle Segment Entry through OEM companies Targeted towards the Truck & Bus Segment. Extension in Replacement market Marketing Mix Attention to Detail & Quality Problems & Challenges No Credit Policy Recommendations 8
  • POSITIONING Positioning Statement: For Passenger and commercial Vehicle Owners Our product/brand provides a wide range of tyres catering to varied needs That provides high performance, safety and quality Because of the Highest level of technology employed into the products and delivered at a Value for Money price Positioning Strategy: The strategy Apollo Tyres use is Benefit Positioning. They highly emphasize on the functional benefits of their tyres in their communication by stressing upon the stability, long life, high quality, high level of after sales service and long life of their tyres. They constantly stress that on their aim to ensure that every customer gets the best from their tyres. Situation Analysis Consumer Behaviour Segmentation & Target Markets BRAND LADDER CORE VALUE • Delivering Quality Product & High service level EMOTIONAL BENEFIT • Enjoying a Comfortable & Safe Driving Experience FUNCTIONAL BENEFIT • Stability, Long Life, High Performance • Maneuverability, Low Noise, Steering Precision Brand Positioning ATTRIBUTES Marketing Mix • • • • Optimal gauges for supreme cushioning Visual Alignment Indicator on tyres Reinforced Tyre construction; Best Quality tests on supreme test drives Problems & Challenges Recommendations 9
  • POSITIONING High Pricing Points of Similarity Michelin • • Good Year PERCEPTUAL MAP • • MRF Diverse product portfolio. Huge distribution network and selling across all major markets. Great performance at affordable pricing. Various sub-brands created over different geographies of the world. Points of Differences Ceat Low Performance TVS JK • Apollo High Performance Falcon • • • Low Pricing Situation Analysis Consumer Behaviour Segmentation & Target Markets Brand Positioning Marketing Mix Strong product brands in its specific markets like AMAR in bus-truck segment and Amazer in Passenger car vehicles. Constant innovation in products, changing ahead of market trends. Major part of sales coming from OEM with major automobile companies like Audi, Skoda, Fiat, etc. Focussed on consumer’s safety and comfort. Problems & Challenges Recommendations 10
  • BRAND POSITIONING BRAND PRISM Comfortable, Performance guaranteed, Innovative (Irfan Khan) Trendy, Variety, Durable PHYSIQUE Reliability, Family RELATIONSHIP USER IMAGE Competent, Latest, Affordable Situation Analysis HOUSE OF BRANDS PERSONA CULTURE Growth, Safety The Communication - “YOU-FIRST” + Go the Distance. Primary focus is on consumers, their safety and great performance. SELF IMAGE Evolving, world-class, Tough Consumer Behaviour Segmentation & Target Markets Brand Positioning Marketing Mix Problems & Challenges Recommendations 11
  • MARKETING MIX Product Place POTENTIAL Height-to-Width ratio AUGMENTED PRODUCT LIFE CYCLE High Elasticity, Low Steering Force, Low Maintenance, High Safety Most Products in Industry BASIC Traction, Durability, Reliabili ty CORE (tyre) 3 years Successful products followed by revisions Comfortable Ride CORE (wheel) Situation Analysis Price Rapid Acceleration, Multi Terrain, Superior Control at High Speeds EXPECTED Promotion Ease of movement of a vehicle Consumer Behaviour Segmentation & Target Markets Brand Positioning Marketing Mix Problems & Challenges Recommendations 12
  • MARKETING MIX Product Place Promotion Price PASSENGER CARS RADIAL PORTFOLIO Acelere Acelere Maxx Alnac 4G Aspire Aspire 4G Hawkz Quantum TRUCKS & BUSES PORTFOLIO OFF HIGHWAY PORTFOLIO Krishak Situation Analysis Amazer 3G Amazer 3G Maxx Amazer 4G Amazer XL Consumer Behaviour Powerhaul Segmentation & Target Markets Dhruv Brand Positioning Amar Marketing Mix Problems & Challenges Anchor Cargo Recommendations 13
  • MARKETING MIX Product Place Multi Retail Mega-Chains Promotion CHANNEL INTENSITY • • • • 4,000+ dealerships in India Incl. 2,500 exclusive outlets. Network of branded, exclusive or multi-product outlets. Branded outlets called Apollo Tyre World (for commercial vehicles) and Apollo Radial World (for passenger cars). e.g. Reliance Autozone OEM (about 40%) Price PUSH STRATEGY Automobile Production Units • Initial Stages for new products. • Driving sales for moderately successful products • To Clear out accumulated stock of tyres PULL STRATEGY Replacement Market (about 50%) e.g. Audi, Skoda • Existing successful products • New products but as an improvement of previous successful product • Products with latest technology at value for money prices ALTERNATIVE CHANNELS Authorised Dealers Situation Analysis Consumer Behaviour The alternative channel being followed by Apollo is that of direct marketing to large players in Transportation business. Segmentation & Target Markets Brand Positioning Marketing Mix Problems & Challenges Recommendations 14
  • MARKETING MIX Product Place Promotion MARKET Communication is based on the consideration that their market consists of both end consumers (replacement) and also B2B channel. MISSION Mission is to strengthen their brand awareness and improvement of perception. MEASURE Metrics used are response rate at consumer level and loyalty rate at OEM level. 6M MESSAGE Main focus is on communicating their vision of providing best value to customers in terms of quality, durability and value for money. Situation Analysis Consumer Behaviour Segmentation & Target Markets Price MONEY About 2-3 % of company’s net profit is used for advertisement and product promotion. MEDIA A mix of advertising, public relations, direct marketing and relationship marketing. Brand Positioning Marketing Mix Problems & Challenges Recommendations 15
  • MARKETING MIX Product Place Promotion Almost all companies in the tyre industry have similarly priced products. The operating margins are maintained by cartel behaviour of the organisations which prevent excessive price wars. Price Major Determinants of Tyre Price Pricing Strategy: Providing good quality products at relatively cheaper prices. Cost of Natural Rubber Pricing is a mixture of Cost-based and Competitive Pricing Model No Credit Policies for Sale. Only Cash! Competitive Pricing Demand PRICE HIGH DEPENDENCE ON PRICE OF NATURAL RUBBER Low Operating Margins + High Effect of Raw Material Costs Material costs form 81% of total operating costs Situation Analysis Consumer Behaviour Cost of Natural Rubber forms 43% of total material costs Segmentation & Target Markets Brand Positioning Source: CRISIL Research Marketing Mix Problems & Challenges Recommendations 16
  • PROBLEMS & CHALLENGES PLANNED STRATEGY: Aims to be amongst the top 10 global tyre companies by 2015-2016. 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 Behaviour Segmentation & Target Markets Brand Positioning Marketing Mix Problems & Challenges Recommendations 17
  • PROBLEMS & CHALLENGES 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 tyre segments : Untapped market Labour 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. Business Challenges: • Tyre 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 Tyre & 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. Situation Analysis Consumer Behaviour Segmentation & Target Markets Brand Positioning Marketing Mix Problems & Challenges Recommendations 18
  • RECOMMENDATIONS 1) Apollo should devise a strategy to enter the two-wheeler market as there is a huge market size which it has not been able to tap currently. 2) Apollo should utilize its current brand awareness and the present market opportunity to become a global brand and improve its brand perception on similar lines. If Cooper deal is finalized successfully, it will provide a great push for this. 3) Apollo should increase its spend on advertising and promotion, as currently the major mean of communication is by word of mouth. They should be more aggressive in their product promotion. 4) Apollo should be more flexible in its credit policies, to cater to the changing market behaviour. Currently they follow strictly no-credit policy. This will also allow them to bag the opportunities of various big government contracts. 5) Apollo should capitalize more on its points of differences (PODs). Specifically speaking, they should tie-up with more OEMs and help themselves achieve a more wider market share. Also at the same time improve their brand awareness. 6) Should invest in researching for alternate materials in place of natural rubber to significantly reduce material costs. 7) One other major point to be considered while planning their future expansion strategy will be to aim for low-cost production facilities to help overcome the increasing competition from less expensive products. Situation Analysis Consumer Behaviour Segmentation & Target Markets Brand Positioning Marketing Mix Problems & Challenges Recommendations 19
  • REFERENCES • • • • • • • • CRISIL Research Apollo Tyres Website Industry Insights from Mr. Jeetpal Singh Bisht (Apollo Tyres, Andheri (W)) Customer Survey of 26 Respondents in Age group 25-60 yrs owning a 4-wheeler and having a prior experience of tyre purchase. CIO.in IndiaInfoLine Website (IIFL) Business Today FirstPost 20