3.2.

Chapter 1 ‐Indian Tyre Industry: A Brief Analysis 5 1 Overview of the Indian Tyre Industry 5
Chapter 1 ‐Analyzing the Marketing Environment 15 1 The Mind of the Consumer 15
Section I ‐Bridgestone India & MRF: An Introduction
3.2.1 Bridgestone India 27

1.1 An Introduction 5
1.2 Key Influencers 5
1.3 Role of Marketing 6
1.4 Sales and Profitability 6
1.5 Trends in the Past Years 6
1.6 Current Status and Future Trends 7
1.7 Towards the Future‐"Radialisation in India" 8
1.8 Major Players and Market Shares 9
1.9 Environment Analysis 9
1.10 Swot Analysis for the Tyre Industry 10
1.11 The Companies and Major Product Lines 11

Section II ‐Marketing Strategies

2 MR
1.1 Who is the Consumer? 15
1.2 Radial Tyres: Meeting the Indian Drivers "Unsatisfied Need" 16
1.3 Buying a Radial Tyre: Key Decision Makers 16
1.4 Consumer Behaviour 17 2 The Company 18

2.1 Core Competencies 18

2.1.1 Bridgestone India 18
2.1.2 MRF India 18
2.2 Company Resources 20
2.2.1 Bridgestone India 20
2.2.2 MRF India 22
2.3 Concern Areas 24
2.3.1 Bridgestone India 24
2.3.2 MRF India 25 3 The Competitors 27
F Indi
3.1 Principal Competitors 27
3.2 Salient Strengths & Weaknesses 27

a2

8
5.3.3 Shifting Away from Savings, to EMI Culture 36 Chapter 2 ‐Segmentation, Targeting & Positioning 37
1 Basis for Segmentation ‐Vehicle Types 37 2 Selecting the Target Segment 38

2 3.5.
3.3 Basis of Competition 29 4 Important Collaborators 30

4.1 Upstream Collaborators 30

4.1.1 Bridgestone India 30
4.1.2 MRF India 30
4.2 Collaborator Incentives 31
4.2.1 Assured Supply 31
4.2.2 Assured Quality 31
4.2.3 Just in Time Supplies 31 5 Context ‐Trends Shaping the Tyre Industry 32
MRF
5.1 Economic Environment 32
5.1.1 Unresolved Tax Issues 32
5.1.2 Increasing Cost of Raw Materials 32
5.1.3 Import Restrictions 32
5.1.4 Road and Support Infrastructures 33
5.1.5 Sources of Demand 33
5.2 Technological Environment 35
5.2.1 Indigenous Development of Radial Technology 35
5.2.2 Market Entry by International Players 35
5.2.3 Improved Capacity Utilization Techniques 35
5.3 Socio‐cultural Environment 35
5.3.1 Explosion in the Number of Nuclear Families 35
5.3.2 Higher Car Density Per Family 35

2.1 Bridgestone: The Market Specialization Approach 38

2.2 MRF: The Complete Market Coverage Approach 39 3 Differentiating and Positioning
Strategies 39
3.1 Establishing Category Membership 39
3.1.1 Bridgestone ‐High Performance with Value for Money 39
3.1.2 MRF ‐Tyres with Muscle 40
3.2 Points of Parity 40
3.3 Points of Difference 41
3.3.1 Bridgestone ‐Quality & Value for Money 41
3.3.2 MRF ‐High Endurance Tyres 41
3.4 Value Proposition 42
3.4.1 Bridgestone ‐Quality & Value for Money 42
3.4.2 MRF ‐Endurance Guaranteed 42
3.5 Positioning Statements 42
3.5.1 Bridgestone ‐Passion for Excellence 42

Tyre

wit
h

Muscl

Chapte

Analyzin

th

Marketin

Mi

Th

Produc

4
1.1 Product Levels ‐The Customer Value Hierarchy 44
3.2 Dealer Discounts and Allowances 55 4 Product Promotion 56
Chapter 1 ‐Analyzing the Overall Market Strategies 76 1 Analysis of the Overall Marketing Strategies 76
1.7 Rating the Marketing Strategies of Bridgestone & MRF 82

1.1.1 Core Benefit 45

1.1.2 The Basic Product 45
1.1.3 The Expected Product 45
1.1.4 The Augmented Product 45 2 The Place 47

2.1 Push and Pull Strategies in Channel Marketing 47

2.2 Channel Design 48
2.2.1 Direct and Indirect Channels 48
2.2.2 Single and Multiple Channels 50
2.2.3 Channel Length 50
2.3 Channel Management Practices 50
2.3.1 Selecting Channel Members 50
2.3.2 Training and Motivating Channel Members 51
2.3.3 Efficient Consumer Response (ECR) 52 3 Pricing Strategies 54

3.1 Basic Pricing Strategies in the Tyre Industry 54

4.1 The Marketing Communication Mix 56

4.2 Developing Effective Communications 59
4.2.1 Identifying the Target Audience 59
4.2.2 Determining the communication Objectives 59
4.2.3 Designing the Communication 60 Chapter 4 ‐Market Feedback and
Control Mechanisms 62

Section III ‐Marketing Strategies: A Relative Analysis

1.1 Marketing Strategy Analysis 76

1.2 Porter's Generic Strategy Analysis 78
1.3 Creating Value 80
1.3.1 Bridgestone ‐Quality and Value for Money 80
1.3.2 MRF ‐Endurance Guaranteed 80
1.4 Communicating the Value 80
1.5 Capturing the Value ‐Pricing Philosophies 81
1.6 Sustaining the Value ‐Building Relationships 81
 CHAPTER 1 

BRIDGESTONE INDIA&MR
FAN INTRODUCTION 
THE
 
INDIAN
 
TYRE
 
INDUSTRY
 
 
The level of economic activity, performance of domestic automotive industry, and the faring of
the transport sector directly influence the performance of the tyre industry in India. With the
replacement segment dominating the
overall tyre demand, the industry remains
inherently vulnerable to economic cycles. While radialisation has become the norm in the
year. A major relief for tyre manufacturers was provided by the government by reducing
A BRIEF ANALYSIS
the excise duty on tyres from 14% to 10% in December 2008, and further to 8% in
February 2009
1. OVERVIEW OF THEINDIAN TYRE INDUSTRY: 
passenger car segment, in the bus and truck tyre segment, its acceptance is still limited. Bus
and truck radialisation could emerge in the long term as the quality of roads improves and the
restrictions on overloading are better enforced. The practice of re-treading, which is gaining
increasing acceptance, could pose a challenge to replacement demand in the medium term. The

1.1 An Introduction to the Indian Tyre

Industry

The Rs.20,000 crore Indian Tyre Industry, is highly raw material intensive and predominantly a
Cross Ply (or Bias) tyre manufacturing industry. It is highly concentrated wherein 10 large
manufacturers account for over 95% of the total tonnage production of 11.35 lakh M.T. It produces
all categories of tyres, except Snow Tyres and Aero Tyre for which there is no demand
domestically.

1.2 Key
Influencers
ability of the re-treading sector to capture potential replacement demand would depend on the
awareness among customers (of the benefits of retreading) and also the quality of retreading
done. Given the low levels of penetration of two-wheelers and passenger cars in the country,
OEM demand is likely to increase, which in turn would push up replacement demand with a lag.
Slowdown in automotive industry and global economy in general negatively impacted the Indian
tyre industry in 2009. The industry tonnage growth was only 2.19% during first nine months of
FY 2009, compared to 7.38% growth experienced during the same period last year. Demand
side was also severely affected as almost all auto manufacturers were forced to adjust their
production last
Off the Road (OTR) tyre category (customized tyres) which fetches a higher margin compared to other
tyre categories, was the fastest growing. The OTR tyre category had registered a 5 year CAGR of over
8.85% in the last five years. Most of the top players increased their capacity for the production of OTR
tyres so as to improve their product mix, this being a high margin

product. Also in the face of global slowdown and stiff Chinese competition, the export market off
take declined by 9.82% during this period.

1.3 Role of
Marketing
Over the years, tyre manufacturers have developed a vast marketing network using dealers and
depots and as such all types of tyres are now easily available even in the remotest corners of the
country. No doubt, international auto majors in India now roll out their vehicles using Indian
manufactured tyres.

1.4 Sales and

Profitability

The Indian Tyre Industry produced 821 lakh units of tyres garnering approximately Rs. 21,000
crore in FY 2009 -2010. The top players are now focusing on branding their products and
strengthening their distribution network so as to increase their market share. The industry derives
its demand from the automobile Industry. While the OEM (Original Equipment Manufacturers)
market off take is dependent on the new vehicle sales, replacement market demand depends on the
total population of vehicles on road, road conditions, vehicle scrapping rules, overloading norms
for trucks, average life of tyres and prevalence of tyre retreading.

1.5 Trends in the Past

Years
As the economy in general; and automobile industry in specific slowed down in FY 2009, the tyre
demand too came under pressure. The industry production registered a 5 year CAGR of 6.44%
between FY 04-09. The largest category of Truck & Bus tyres recorded a 5 year CAGR of 2.96%
(slower than the industry average) while Light Commercial Vehicle (LCV), motorcycle and car tyre
categories grew at 6.07%, 10.70% and 6.90% respectively (relatively faster than the industry
average).
7 |Page

On the face of demand-side pressures, the tyre industry saw production adjustments from all the
major players in the last couple of months. The government too tried to provide external stimulus
by effecting 6% excise duty cut across industries (the excise duty for tyres was brought down from
14% to 10% w.e.f. December 7, 2008, and then further reduced to 8% w.e.f. February 25, 2009). In
all the gloom; one silver lining for the industry was the easing of the raw material prices from
September 2008 onwards. However, their future movement still remains uncertain. Based on data
from the Rubber Board, natural rubber prices have risen about 50% in the last 6-7 months. In fact,
prices in the Indian market are presently ruling 5-6% higher than the same in international markets.
As a result, tyre makers are facing significant rise in cost production. This has forced the industry
to begin hiking prices in an attempt to keep the already thin margins intact.

Tyre majors have already hiked prices. Moreover, due to shortfall in domestic supply and increasing
gap between domestic and international prices of rubber, the tyre manufacturers have increased
the import of natural rubber. According to estimates by Automotive Tyre Manufacturers
Association (ATMA), tyre producers are likely to import 50% of their total natural rubber
consumption due to tight domestic supply. With profitability of tyre companies having a strong
correlation to raw material prices and as these companies operate on thin margins, this would
remain an area of concern.

1.6 Current Status & Future

Trends
As regards to the demand scenario, the poor demand growth in FY 2009 - 2010 was primarily on
account of decline in OEM production. Continuation of poor volume growth could affect the
profitability further. Despite these challenges, according to CARE (Credit Rating & Research) Ltd.,
while the industry may register a low tonnage growth in FY 2009, the long term prospective seems
to be bright. They expect the industry to experience a CAGR of approximately 8.21% between
FY08 to FY13. Automotive companies have started experiencing increasing sales and raw material
prices are stabilizing which will boost tyre sales over the coming months. However, experts suggest
there will be some time lag before profitability picks
up as tyre manufacturers are still carrying high cost inventories. Though the outlook in the
immediate term is uncertain, the long term outlook for the sector remains positive.
Radialisation can be aptly classified as the most important innovation in tyre technology. Despite its
several advantages (additional mileage; fuel saving; improved driving) radialisation in India earlier did not
catch on at a pace that was expected, since its introduction way back in 1978. This could be attributed due
to several factors, viz. Indian roads generally not being suitable for ideal plying of radial tyres; (older)

vehicles produced in India not having suitable geometry for fitment of radial tyres (and hence the general,
and wrong, perception that radial tyres are not required for Indian vehicle; unwillingness of consumer to

1.7 Towards the Future – “Radialisation”

in India
Radialisation in India though in its infancy in T&B tyre category; is making inroads. Most
manufacturers have capex plans for radial T&B tyres with no new capacity being added for bias
tyres. This indicates that the industry foresees radialisation to take further hold in the T&B tyre
category. "Rate of radialisation is actually an index of the status of road development, vehicle
engineering and the economy in general". Notwithstanding the problem areas, constraints and
limitations, the tyre companies have kept pace with the technological improvements that
radialisation signifies and offer state-of-the-art product (tyres), comparable to the best in the
world.
pay higher price for radial tyres etc.
However, the situation has radically changed in recent years, especially for the passenger car tyre segment
where radialisation has crossed 98% mark and is expected to reach 100% in two to three years. In the
Medium and Heavy Commercial vehical segment current level of radialisation is upto 8%, and that in the
LCV segment is estimated at 18%. A few years back a beginning was made in Radialisation of truck and
bus and LCV tyres and this process is gaining momentum.
1.8
Ma
j
j
or Players
a
a
nd Market
S
S
hares
major pplayers incclude MRF Ltd. whicch is the
market leader (222% markeet share) followed MMRF Tyres

closely by Apolloo Tyres Ltdd. (21%). TThe other 5 AApollo Tyres

major pplayers aree JK Tyre & Industtries Ltd. 7 JJ.K. Tyres CCeat BBirla GGoodyear BBridgestone

OOthers
(18%), Ceat Ltd.. (13%), BBirla Tyress (10%),
Goodyeear (7%) aand Bridgesstone (5%)). On an
averagee, 55% of thhe productioon is for
repplacement market,, followed bby 29.8% soold to
OEMMs directly and the remaining is exported .

1.9 Envvironment a nalysis – Maajor forces sshaping the trajectory

oof the tyre inndustry
1.10
Swot Analysis for the Tyre
Industry
Strengths

. Established brand names (key in the replacement market) . Extensive distribution

networks -For example, Apollo Tyres has more than 118 district offices, 12 distribution
centres and 4,250 dealers. . Good R&D initiatives by top players.

Weaknesses

. Cost Pressures - The profitability of the industry has high correlation with the prices
of key raw materials such as rubber and crude oil, as they account for more than 70% of the
total costs.
. Pricing Pressures – The huge raw material costs have resulted in pressure on the
realisations and hence, the players have been vouching to increase the prices, although, due
to competitive pressures, they have not been able to pass on the entire increase to the
customer.
. Highly capital intensive - It requires about Rs 4 billion to set up a radial tyre plant
with a capacity of 1.5 million tyres and around Rs 1.5-2 billion, for a cross-ply tyre plant of
a 1.5 million tyre-manufacturing capacity.

Opportunities

. Growing Economy leads to Growing Automobile Industry leads to Increasing OEM

demand that in turn leads to Subsequent rise in replacement demand
. With continued emphasis being placed by the Central Government on development
of infrastructure, particularly roads, agricultural and manufacturing sectors, the Indian
economy and the automobile sector/ tyre industry are poised for an impressive growth.
Creation of road infrastructure has given, and would increasingly give, a tremendous fillip
to road transportation, in the coming years. The Tyre industry would play an important role
in this changing road transportation dynamics.
.
Access to global sources for raw materials at competitive prices, due to economies of scale.
.
Steady increase in radial Tyres for MHCV
’
s and LCV
’
s.
 Threats

. Continuous increase in prices of natural rubber, which accounts for nearly one third
of total raw material costs.
. Cheaper imports of Tyres, especially from China, selling at very low prices, have
been posing a challenge. The landed price is approximately 25% lower than that of the
corresponding Indian Truck/ LCV tyres. Imports from China now constitute around 5% of
market share.
. With crude prices scaling upwards, added pressure on raw material prices is expected . Ban
on Overloading, leading to lesser wear and tear of tyres and subsequent slowdown in
demand. However, this would only be a short-term negative. . Cyclical nature of automobile
industry.

1.11 The Companies and Major Product Lines

Bridgestone India Private Limited

Bridgestone Corporation, Japan was established in the year 1931. Today, the company is a
US $23.2 billion Corporation with its headquarters at Tokyo. It controls 18.2% of global
market and sells products in over 150 nations. The company has 47 tyre plants and 93 non-
tyre plants, 3 technical research and development centres and 10 proving grounds. Today,
Bridgestone has a worldwide work force of more than 110,000 employees. It is a global tyre
manufacturing company, which emphasizes on Japanese traditions. It is still growing and
expanding and aiming at increasing its share in the world tyre and tubes, industrial rubber
products like belts, hose, chemical products, sporting goods, automotive parts, electro
materials and marine products etc.

Bridgestone India Private Limited (BSID) is one of the leading tyre manufacturers in India.
It began as a joint venture between Bridgestone Corporation of Japan (BSJ) and The
Associated Cement Companies of India Ltd. (ACC), in 1996.
th
Their first plant 1998.
was established at Kheda (Madhya Pradesh) with a paid up capital of Rs.
of November
2753 million. With the latest technology from Bridgestone, Japan, the plant at Kheda,
covering 265,500 sq. mts. was officially inaugurated on 12

Presently BSID has a state-of-the-art manufacturing facility near Indore, Madhya Pradesh
and is continuously increasing the production capacity in order to meet market requirements.
Here they manufacture the widest range of steel belted radial tyres for almost all the cars &
multi-utility vehicles, produced in India. These manufacturing facilities are backed by the
highly sophisticated Bridgestone Technical Centre at Tokyo, the main out of the 4 Technical
Centers worldwide, which performs rigorous research & development activities to offer
most appropriate tyres for Indian roads.

Over a period of time the company has established a distinct culture with various HR
principles and systems. With a strong work force of around 900 employees, it has
continuously strived to contribute to the Indian Society and realize happiness by achieving
targets with mutual trust and understanding.

Products

BSID has come a long way in establishing itself as a leader in Radial tyres segment,
producing around 2.7 million tyres per year. The products include Passenger steel belted
radial tyres and tubes and Light commercial vehicle steel belted radial tyres and tubes.
These tyres are used for passenger cars in India and are supplied to almost all the major
Original Equipment Manufacturers. Tyres are the strength and passion of BSID, a force that
has driven them to be one of the best in the business. As a premier player in the Indian tyre
market, Bridgestone continues to give its customers a range of innovative products and
services.

Recent Forays

Bridgestone India launched two new tyre range B250 and ER 300 which is likely to help
cement its place as a leading tyre supplier in the Original Equipment Manufacturers and
replacement market in the country. The performance or comfort tyre range ER300 has
capabilities for running in wet and dry conditions. The B250 variants received approvals
from OEMs like Honda and Hyundai for its Civic and Verna models respectively.

Bridgestone has around 30 percent market share (radial tyre segment) in OEM and
replacement market, in the country. The company expanded its facility near Pune from
around 10,500 tyres per day to more than 11,000 tyres per day to be achieved by the end of
the 2008. The company was in the process of upgrading its facility and automating its
manufacturing process to optimise efficiency to ensure consistent and steady supply to
customers.
MRF
Established in 1946 as a small toy balloon manufacturing unit in a shed at Tiruvottiyur, Madras
(now Chennai), MRF ventured into the manufacture of tread rubber in the year 1952. The quality of
the product was so high that by close 1956 MRF had become the market leader with 50% share of
the tread-rubber market in India. In 1961, MRF entered into tyre manufacturing in collaboration
with the Mansfield Tire & Rubber Company of USA. Since then MRF has come a long way towards
achieving greater heights in the automotive tyre industry, with 6 manufacturing units in India. It has
a huge distribution network of 2,500 outlets within India and exports to over 65 countries
worldwide. .

Today, MRF is the market leader among tyre manufacturers in India, with a 24% share terms of
revenues. Its leadership position, coupled with its strong brand recall and high quality, MRF
commands the price-maker status. MRF has a strong presence in the T&B segment, the largest
segment of the tyre industry, and commands around 19% market share in the segment. It is the
leader in the two/ three-wheeler segment (including motorcycles) and tractor front tyres, and holds
second place in the passenger cars and tractor - rear tyres. Exports account for around 12% of the
gross sales in MRF.

Products

MRF is the leading manufacturer of tyres for almost all segments. Being driven by technology and
product innovation, every tyre that comes out is of the highest standards and tested to weather the
toughest conditions on any road. With more than 85 tyre variants, MRF holds the highest market
share of 22% in terms of sales volume in the tyre industry.

Apart from tyre manufacturing tyres, MRF also manufactures its MUSCLEFLEX brand of
Conveyor Belting at one of the most advanced, 'State of the Art', Facilities in India. Incorporating
the latest manufacturing techniques, MUSCLEFLEX-Conveyor Belting has gained rapid acceptance
in markets worldwide.

MRF PRETREADS is yet another innovation from MRF Industries which is the most advanced
precured retreading system in India. MRF forayed into retreading as far back as 1970. Today, MRF
has perfected the art of recured retreading with its extensive knowledge in tyres and rubber. MRF’s
diverse business interests also include Paint and Coats, and Toys.

Recent Forays

Became the first domestic company to venture into the niche area of developing and manufacturing
of aviation tyres branded ''Aero Muscle'' for helicopters and aircrafts which targeted the defence
sector. The critical raw materials were sourced from overseas suppliers. It is estimated that the
company invested more than Rs 150 crore to set up the new production facility at its existing plant
in Medak district of Andhra Pradesh.
CHAPTER
 
2
 
ANALYZINGTHE
 
C
KET
 
EN
 N
MAR K
THEFOUR A PP
PROACH 

1.

THEMINDOOFTHE CC ONSUMMER: 

1.1 Whho is the Coonsumer?

While MMRF has esstablished aa wide footpprint and ann overall leaad across thhe entire tyrre
market inn India, BBridgestone has emergeed as a clearr market leaader in the nniche Passenger
Car Seegment. Forr comparrative purpooses betweeen these commpanies in this study, we shall
coonfine ourseelves to thee niche seegment of RRadial tyres in the Pass enger Car ssegment.

The typpical consummer in thisreport is aan Indian P assenger Car owner, wwho is lookking for
thee best-fit tyre for his car.

Also, siince Bridgeestone and MRF supplly tyres to OEM (Origginal Equippment
Manuufacturers)** and Tyrre dealers, these businness-to-busiiness partneers are anotther target
consumer ssegment forr the commpanies.

Target ccustomers:

1) The Indian passenger ccar owner

2) OEMs
3) Tyre dealerrs
1.
2
Radia
l
Tyres
:
Meetin
g
th
e
India
n
driver
’
s
“
unsatisfied
”
nee
d
As with consumers across all markets in India, the Indian driver’s mind has always been
preoccupied with “value for money”. The Indian driver measures this value for money in many
ways: through improved mileage, lower maintenance cost, improved safety, higher average life,
or even improved drive comfort.

The Indian driver had for long put up with poor road infrastructure, unreliable traditional nylon
threaded cross-ply tyres, higher maintenance costs and a very uncomfortable driving experience.
There was a clear need for a better tyre technology. Radial tyres, with their promise of far better
ride comfort, mileage and product life, seemed like the logical choice. However, though radial
tyres were introduced into Japanese and American markets way back in 1960, It was not until
1998 (when Bridgestone entered the Indian market with its line of radial tyres), that Indian car
owners were finally able to lay their hands on radial tyres.

The OEMs were quick to adopt the technology and started rolling out their new cars on radial
tyres. What followed was a “mass radialization” of the passenger car market. So much so, that
today, radial tyres have a 98% market share in the Indian passenger car tyre market. It was
clearly a case of bringing in the right product to address the “unsatisfied need” of the customer.

1.3Buying a Radial Tyre: Key decision makers

Unlike FMCG products, buying a radial tyre is usually not done on impulse. At an average price
of Rs.12,000/- , radial tyres are not a cheap buy for the average Indian middle-class family. Some
amount of research and thought goes, before deciding on the ideal tyre.

Studies show that an average car tyre buyer looks for reviews from different sources such as
mechanics, dealers, OEM endorsements and also from close friends and family. These sources
hold a lot influence over which brand of tyre the consumer decides to buy.

Key decision influencers in buying a tyre:

1) The local mechanic 2) Tyre dealers 3)
OEM endorsements 4) Close friends and
family
1.4Consume
r
Behavio
r
 Frequency of purchase in the passenger car tyre industry is solely decided by the life of an
average tyre. Depending on the kind of usage, an average radial tyre can last anywhere between
one to five years.

Taxi (commercial)
1
Average business
2 ‐3
traveler

Average family
4 ‐5

Quantity of purchase in the car tyre industry varies within a given year. The passenger car tyre
market displays moderate seasonality in sales. Higher sales usually correspond with periods when
there is an increased use of passenger vehicles, such as during school vacations (family outings),
school reopening, and local festivals and occasions (for example, the Sabarimala pilgrimage season
drives up the sale of tyres significantly in and around Coimbatore).

Since Tyres are a derived-demand product (its demand is derived from the demand for automobiles)
government policies such as a drop in duties and taxes on car manufacturers, also indirectly
contribute to higher tyre sales.

Given the high amount of product homogeneity in the tyre market; prices do not vary greatly
between companies. However, international players such as Bridgestone do markup their prices
slightly higher on account of their superior quality and the extended warranties. On an average, the
buyer is usually more concerned about the performance of the tyres than its price.
2
.
THE
C
OMPANY
:
 
2.1 Core Competencies:

2.1.1 Bridgestone India:

International Quality and

pedigree:
Quality counts as the number one reason why OEMs prefer Bridgestone over other tyre
manufactures. Bridgestone has always banked on its quality USP to capture market share.
The Japanese attention to quality seems to have percolated down to Bridgestone India
from its parent company. World over, the Bridgestone brand has been synonymous with
cutting-edge technology and quality.
The globalbrand awareness that Bridgestone Corporation’s collaboration withF1has
The F1
earned and its recognition as a leader inthe global tyreindustry has helpeditsIndianarm
association:
, BSID, position itself asa premium tyre manufacturer intheIndian market. 

Channel
reach:
With over 3000 distributors and dealers, Bridgestone India has one of the largest reach
across the country. A Bridgestone dealer is never far away from you, no matter where you
are.

2.1.2 MRF India

Undisputed overall market

leader:
With a 24% share in the overall tyre
industry MRF is the king of tyres on the
Indian road. Its Leadership position,
coupled with its strong brand recall and
high quality, MRF commands the price-
maker status. MRF has a strong presence
in the T&B segment, the largest segment
of the tyre industry, and commands around
19% market share in the segment. It holds
the second place in the passenger cars.
Complete market
coverage:
Over the years, MRF has created a formidable product line, length and breadth to serve
every segment of the industry. Its complete market coverage is one of the reasons why it
is the undisputed market leader today.

MRF offers tyres for the following vehicle segments in the tyre industry:
1) Passenger Cars 2) Two wheelers 3) Heavy Commercial Vehicles
(HCV) 4) Light Commercial Vehicles (LCV) 5) Of the Road Vehicles
(OTR) 6) Farm Vehicles (FV)

Brand recognition and brand

recall:
When it comes to top-of-mind brand recall, MRF beats
the rest of the competition hands down. Unlike
Bridgestone India, MRF has for long concentrated on
aggressive brand promotion. Sports celebrities and event
endorsements have been a major vehicle for their brand
promotion activities. From signing on three sports
heavyweights at one go (Sachin Tendulkar, Brian Lara,
and Steve Waugh), to endorsing national rally circuits, to
founding the MRF pace foundation, MRF has been at the
forefront of aggressive brand building: one reason why
MRF commands more brand recognition than
Bridgestone India, despite the latter’s superior quality
and international credentials.
Strong
exports:
Exports account for around 12% of the gross sales in MRF. The company exports to
over 65 countries worldwide. It is largest tyre exporter in South Asia. Over the past
decade, MRF has improved its technologies and tyre quality significantly, to compete
effectively with other players in the international market. Most of its exports are non-
radial, nylon cross-ply tyres, and are exported to other developing countries such as
Sri Lanka.
2.
2
Compan
y
Resource
s
2.2.1 Bridgestone India
Source: Automotive Digest          

A high volume game:

The Tyre industry is driven more by
volumes than by margins. Bridgestone
being one of the big five players in the
global tyre industry, generates an annual
tyre production equivalent to the total
demand of the Indian market.
20 |Page

Pedigree:
Bridgestone India Pvt. Ltd (BSID) is a fully owned subsidiary of Bridgestone Corporation
headquartered in Tokyo, Japan. The global company employs over 133,500 people
worldwide and has offices, factories or continental headquarters in more than 150
[1]
countries.
MNCs likeBridgestone Corporation have deeppocketsandcan
easily withstandlossesfor acoupleof years ormore. Theirfinancial muscles also perm
it themtoinvest in R&D, which is beyond the reach of the average Indiantyre manufa
cturer. 

Resources:
Bridgestone India set up base in India in February 1996 and set up the factory two years
later at Kheda near Indore in Madhya Pradesh. The company is one of the leading tyre-
makers in both the OEM and replacement markets in the country.The company has a
production facility at Pithampur near Indore and has announced an investment of Rs259
crore for expansion. This will increase production capacity by over 40% to 15,000 tyres
[2]
per day by the middle of next year.

Workforce:
As a part of the expansion plans, Bridgestone plans to hire 300 more people to its 700
hundred strong Indian workforce in the coming financial year.

Technology:
The name Bridgestone has been synonymous with cutting edge technology for some time
now. Over the years, the company has benefited directly from its involvement in Formula
One racing. The lessons learned through Bridgestone’s successful participation at F1
circuits have translated into innovations that can be applied to the design and manufacture
of high performance tyres. The global brand awareness that
Bridgestone Corporation
’
s collaboration with F1 has contributed and its recognition as a leader in the global tyre
industry has helped its Indian arm, BSID, position itself as a premium tyre manufacturer
in the Indian market.
Also, this formidable reputation for quality and high-end technology has helped BSID
emerge as the most preferred tyre supplier to OEMs, which accounts for 24% of the total
[3]
passenger car tyre market in India.

Financial health:
The long term debt equity ratio seems to be very healthy but the reason for that is because
it’s a 100% fully owned subsidiary Co. The same can also be said about the interest
coverage ratio. The raw material costs form a major chunk of overall operating expenditure
and so any fluctuation in that area could affect the Cos overall prospects adversely. This is
also visible from the fact that the operating margin is very low as can be deduced from the
PAT/Total income percentage. The current ratio and the quick ratio are pretty decent.
However the average inventory days seems to be a cause for concern. This could be due to
the recession which has also hit overall demand for automobiles in general. Yet the growth
in total operating income and PAT are welcome signs.
2.2.2 MRF India

Infrastructu
re
MRF primarily produces tyres at its seven plants located in various places in South India.
The company’s installed tyres capacity as on September 2008 was 25.3 mn tyres. Tubes
capacity stood at 26 mn numbers as on Sep’08. Other business operations of the company
(account for 6% of sales) consist of manufacturing pre-cured treads, tread rubber,
conveyor belts, specialty surface coatings etc. The details of capacity utilization in respect
of tyres in the last few years are given below:

Strong demand growth particularly in the passenger car and LCV tyres segment over the
last five years has assisted MRF’s capacity utilisation staying well above 90% (except
FY05). The high capacity utilisation is despite company’s installed capacity of tyres
having grown from 17.4 mn tyres p.a. in Sep’04 to 25.3 mn p.a. in Sep’08. In tonnage
terms, truck & bus tyres accounted for more than 50% of the production followed by tyres
for passenger cars, motorcycles and LCVs. MRF also manufactures tyres for Tractors,
Scooters, Off The Road vehicles etc.
Market Leader in overall Indian tyre
market
MRF has the advantage of being the undisputed leader in the overall tyre market. MRF
has with its portfolio of tyres for the complete automobile market, has made its presence
felt in all segments of the tyre market. While it is the leader in 2 wheeler and Light
Commercial Vehicle tyre markets, it comes a close second in the Heavy Commercial
Vehicle and Passenger Car tyre markets.

Strong
exports:
Exports account for around 12% of the gross sales in MRF. The company exports to over
65 countries worldwide.
Financial
health:
23 |Page

The long term debt equity ratio is pretty healthy. The raw material costs form a major chunk
of overall operating expenditure and so any fluctuation in that area could affect the Cos
overall prospects adversely. This is also visible from the fact that the operating margin is
very low as can be deduced from the PAT/Total income percentage. There has been a
decline in PAT over the last year and that is a cause for concern but it could be attributed to
the recession that hit the economy .The current ratio and the quick ratio are
pretty decent. The intense competition in the sector has also had its impact on the Co going
by its PAT/Total Income percentage.
          Source: ATMA 

2.3Concern Areas:

2.3.1 Bridgestone India

Low market coverage:

Though Bridgestone has been in India for over a decade now, it has restricted itself almost
entirely to the passenger car radial tyre segment. Even though Bridgestone is the
undisputed leader in this segment with a market share of over 30%, the passenger car
segment accounts for a meager 21% of the total tyre market in India. There is a huge
untapped tyre market outside this segment, especially in the Heavy Commercial Vehicles
segment.

Brand recognition and recall:

Bridgestone is one of the leading brands world over. Its association with the F1 racing
event has given it a very high visibility and a formidable reputation of being a technology
leader.

Yet, when it comes to the Indian market, MRF seems to have beaten it at the brand
promotion game. While Bridgestone is the preferred tyre supplier to OEMs (due to its
superior quality and durability), customers in the Replacement market (market for
replacement of worn out OEM tyres) seem to recall the MRF brand more often than
Bridgestone.
This is mainly due to the fact that while MRF pursues a
pull strategy
 through aggressive brand promotion activities to gain top-of-mind recall, Bridgestone
banks on a
push strategy
by maintaining close Channel relations, heavy dealer incentives and quality as a value
proposition, to push its tyres through to the customer.
 When we consider the fact that the replacement market accounts for nearly 54% of the
passenger car tyre market as seen below, we see the huge opportunity that Bridgestone
seems to be missing here.

2.3.2 MRF India

Late entrant into the Radial tyre market:

With a current market share of 24% MRF has a firm grip over the tyre Passenger
Car Tyre Segment market in India. However, back in 1998, when Bridgestone
entered the Indian market, none of the Indian

MRF
manufactures including MRF had a
JK Tyres
radial tyre product portfolio. Bridgestone
seized the first-mover Bridgestone
advantage and quickly capitalized on Others
the trend of passenger car OEMs adopting the radial tyre technology. By the year 2000,
Bridgestone India had consolidated its position as the No.1 leader in the passenger car
tyre market, which was by now almost entirely radialized.
Though MRF had introduced the ZIGMA CC Radial tyre way back in 1989, it lacked the
technology and expertise to produce a good product line-length of radial tyres for all car
types. But MRF has taken up the challenge in a big way and indigenously developed its
radial technology. Today, it has succeeded in capturing a market share of 18% in the
passenger radial car tyre market, second only to Bridgestone India.
Dealer relations:

MRF has aggressively pursued a Pull marketing strategy to sell its tyres. In a pull strategy,
the manufacturer uses advertising, promotions and other forms of communications to
induce the consumers to demand the product from the dealers. MRF therefore almost
exclusively concentrates on brand awareness exercises, such as advertisements and
endorsements. Compared to other tyre manufacturers, MRF pays little attention to
incentivizing the dealers. This is reflected in the low margins it offers, and the complete
absence of dealer incentives such as compliments, free trips, cash rewards, discounts, etc.
Yet, dealers are motivated to stock MRF tyres simply because they have high brand-recall
and so the customer demands it.
3
.
THE
C
OMPETITORS
:
 
Passenger Car Tyre Segment

MRF
27 |Page

3.1 Principal Competitors:

The Passenger Car Radial tyre segment is a

highly concentrated one. The top 4 players
together hold almost 77% of the market share.
Bridgestone is the clear leader in this
segment, with a market share that is twice
that of its nearest competitor, MRF.
JK Tyres
Bridgestone India leads the pack with a Bridgestone
market share of 31%. Its closest competitor,
Others
MRF, is far behind with a market share of
18%. JK Tyres follows close at the heels of
MRF with a market share of 17%, while
Apollo tyres has a market share of 11%.

3.2 Salient strengths and weaknesses:

3.2.1 Bridgestone India

International Quality and

pedigree:
World over, the Bridgestone brand is synonymous with top quality and F1 class
performance. This brand image seems to have percolated down to its Indian subsidiary
too.

Channel
reach
With over 3000 distributors and dealers, Bridgestone India has one of the largest reach
across the country. A Bridgestone dealer is never far away from you, no matter where you
are.

The F1
association:
The global brand awareness that Bridgestone Corporation’s collaboration with F1 has
contributed and its recognition as a leader in the global tyre industry has helped its Indian
arm, BSID, position itself as a premium tyre manufacturer in the Indian market.

Bridgestone being one of the big five players in the global tyre industry, generates an

Financial
annual tyre production equivalent tothe total demand of the Indian market. 
muscle:
Niche
player:
 One of its major weaknesses id that Bridgestone India has restricted itself almost entirely
to the passenger car radial tyre segment. Even though Bridgestone is the undisputed leader
in this segment with a market share of over 30%, the passenger car segment accounts for a
meager 21% of the total tyre market in India. There is a huge untapped tyre market outside
this segment, especially in the Heavy Commercial Vehicles segment.

3.2.2 MRF

Brand recognition and brand

recall:
MRF with its aggressive marketing campaigns is has established itself the top brand in
terms of brand-recognition and recall. A study suggests that 9 out of every 10 tyre
customer across all segments of the tyre market, are aware of the MRF brand.

Complete market
coverage:
MRF with its portfolio of tyres for the complete automobile market, has made its presence
felt in all segments of the tyre market. While it is the leader in 2 wheeler and Light
Commercial Vehicle tyre markets, it comes a close second in the Heavy Commercial
Vehicle and Passenger Car tyre markets.

Strong
exports:
Exports account for around 12% of the gross sales in MRF. The company exports to over
65 countries worldwide

Dealer
relations:
MRF almost exclusively concentrates on brand awareness exercises, such as
advertisements and endorsements. It believes in making the customer demand its products
through brand-awareness and brand-recall. Therefore, compared to other tyre
manufacturers, MRF pays little attention to incentivizing the dealers. Yet, dealers are
motivated to stock MRF tyres simply because they have high brand-recall and so the
customer demands it.

Late entrant to the Radial tyre

market:
MRF was a late entrant into the radial tyre market. Bridgestone capitalized on its first-
mover advantage in the radial tyre segment, to capture a 31% market share. MRF has
been working hard to catch up, by aggressively developing its radial tyre technology. As a
result, today it holds 18% of the radial car tyre market share.
3.
3
Basi
s
o
f
competition
:
Touring tyres offer the twin advantage of endurance with superior ride comfort. These

Being a homogenous product, there is not much difference in products offered by competing tyre
manufacturers. However, companies do try to differentiate themselves by outdoing one another in
some Points of Parity, such as quality, safety, tread design, economy, etc.

Some important parameters that consumers look out for, and that form a basis for differentiation
between tyre companies are:

1) High performance tyres

(sports)
Both MRF and Bridgestone offer high performance tyres that are meant for sports and other
high endurance activities.

2) Comfort tyres
(touring)
class of tyres are a favorite amongst long distance car drivers such as business travelers.

3)
Mileage
One of the biggest value propositions of radial tyres is the improved mileage that it brings
with it. Mileage is the top priority for the Indian middle class buyer.

4) Price
Tyre prices play a much smaller role in the passenger car tyre industry, compared to tyre
features. Consumers are more concerned about the attributes of the tyre (quality, durability,
etc) than its price.

5) Wear
life The wear life of a tyre determines the life if the tyre. The more durable a tyre, the higher
will be its wear life.

6) Grip
Given the high seasonal differences in India, consumers typically look for tyres that suit
their local climate. Thus, while consumers in Rajasthan look for tyres that can endure high
temperatures; consumers down south prefer tyres that can grip the road even in the worst of
monsoon seasons.

7) Cornering and
braking
Cornering and braking refers to the way a tyre handles the extreme shear and frictional
forces it experiences when the vehicle cuts corners or brakes at high speeds. Superior
braking and cornering performance is always desired by sports and highway drivers.
4
.
IMPORTANT
 
C
OLLABORATORS
:
 
4.1Upstream Collaborators:

4.1.1 Bridgestone India

Bridgestone India is the most preferred Tyre manufacturer to most of the car OEMs in
India. This is clear from the formidable list of OEMs that source their tyres from MRF. In
fact, some OEMs like Skoda source their tyres exclusively from Bridgestone, and no
other tyre manufacturer.

Automobile OEMs who source their tyres from Bridgestone India are:
1) Toyota 2) Hyundai 3) Skoda (exclusive customer. 100% Bridgestone
tyres) 4) Mercedes 5) BMW 6) Genral Motors 7) Ford

4.1.2 MRF India

When compared to Bridgestone, MRF has a shorter list of tie-ups with OEMs in the car
segment. But it more than makes up for this shortage by supplying to almost every kind
of Automobile OEMs, be it two-wheelers, cars, buses, trucks, tractors, or OTR (Off The
Road) vehicles.

Automobile OEMs who source their tyres from MRF India are:

8) Maruti 9) Mahindra
&Mahindra 10) TATA
motors 11) Gneral Motors
4.2Collaborato
r
Incentives
:
 Automobile OEMs tie-up with well-established tyre manufacturers for three major reasons:

4.2.1 Assured
supply
Automobile OEMs have huge production schedules. They required very large amounts of
inputs, including tyres. They therefore look for large tyre manufacturers such as MRF or
Bridgestone, who can supply them large quantities with any break in supply schedules.

4.2.2 LargeAssured
reputed tyre manufacturers such as MRF and Bridgestone adopt very
Qualitystringentquality assurance measures.One of themajor parameters that OEMsuse
todecidetheirtyre suppliersisthequalityofthetyrestheyproduce.Bridgestone
is a clearleader inthis parameter. 

4.2.3 Given the largeproductionvolumes,automobileOEMsdonotholdinventoriesfortoolon
Just In Time (JIT)
supplies
g.They prefertyre manufacturerswho can supplythemtyres in realtime,
i.e.as and when theneed arises.This is possibleonly for largetyremanufacturers who i
ncorporate JIT methods in their supply logistics.
5
.
TH
E
C
ONTEX
T
‐
 
TRENDS
 
SHAPING
 
THE
 
TYRE
 
INDUSTRY
 
 Being a raw-material intensive and a derived-demand product, tyre sales are highly dependent
on external factors that lie outside the purview of the manufacturers. A number of raw materials
go into the making of a tyre, the prices of which affect the price of the tyre. Similarly, since
tyres complement Automobiles, sales figures of Automobile manufacturers have a direct bearing
on tyre sales. These, and many other factors decide the price, quantity and frequency of tyres
demanded and supplied in the market.

5.1Economic Environment:

5.1.1 Unresolved Tax

issues:
The issue of inverted tax structure, where the import duty on natural rubber is as high as
20% but import duty on finished tyres is as low as 10% still remains unaddressed. Other
taxation issues have also been denting the competitiveness of Indian tyres.

5.1.2 Increasing costs of Raw

Materials:
The tyre industry is highly raw material intensive. Any change in the prices of raw
materials affects the profitability of tyre companies.

Raw materials primarily comprise of natural rubber, crude and steel based materials which
have historically experienced volatility in prices. In the last few months, price of domestic
natural rubber has increased by almost 40%. Given the fact that raw materials constitute
around 70% of the cost of production, combined with the manufacturers "inability to pass
on the increased cost to their customers due to intense competition”, rise in prices of these
materials have had a huge impact on profitability.

5.1.3 Import
restrictions
The Indian tyre industry is suffering intense competition from low priced tyres from China
and other South East Asian countries. Despite being of a better quality, Indian
manufactured tyres loose ground when it comes to pricing. Moreover, slowing automotive
demand from developed countries has made India a lucrative market for cheap tyres, thus
resulting in increased dumping of cheap tyres from China.

Although the Government has imposed a restraint on the import of used tyres into India,
occasionally there are reports of import of such tyres in a clandestine manner, sometimes
as new tyre at low value, since there is no restriction on import of new tyres or as tyres
under the "others" category.
5.1.4
Road and support infrastructure
 While poor road conditions have a positive impact on replacement demand, by
reducing the life of the tyre, improved roads can act as a catalyst to increased
purchase and use of personal vehicles, thus driving up the demand for tyres.

Also, poor road and support infrastructure act as a barrier to radialisation in the
commercial vehicle segment.

5.1.5 Sources of
Demand:
1) Industrial and freight
activity
The truck and bus tyre segment accounted for 19% of tyres produced in India in
FY2008. Every truck/bus manufactured generates a demand for seven tyres. In
addition, the price of a truck tyre is significantly higher than that of a passenger car
tyre (roughly 10 times). Thus the demand multiple emanating from the commercial
vehicle segment is highest in value terms.

2) Personal purchasing
power
As the economy booms and disposable incomes in the hands of the Indian middle-
class burgeon, the sale of passenger cars has been witnessing an upward swing over
the past decade. Since tyre sales are directly linked to car sales, both through OEMs
and the replacement market, the tyre industry has witnessed a corresponding increase
in its sales figures.

3) Automobile
sales
The demand from the OEM segment is a derived one and directly correlated to the
level of automotive production. The recent Slowdown in automotive industry and
global economic in general negatively impacted the Indian tyre industry in 2009. The
industry growth was only 2.19% during first nine months of FY09, compared to
7.38% growth experienced during the same period last year

4)
Exports
Due to the slowdown in the domestic market brought about by the recession, most
India tyre manufacturers have taken to exports to reduce inventory build-ups. Indian
companies have currently entered into sourcing agreements (for tyres) with
neighbouring countries like Sri Lanka and China.
There is a trend of increasing exports of bus and truck tyres (crossply variety) from
India to developing countries. This is because of the fact that developing
countries are unable to source them from developed countries as these are no more
produced there.
The product focus of tyre exports from India has been Traditional Truck Tyres.
Globally this segment of tyre export is shrinking due to greater acceptance of radial
tyres. Moving towards radialization will be vital if tyre producers want to protect their
share in international markets.
5.2Technologica
l
Environment
:
 5.2.1 Indigenous development of radial
technology
The runaway success of Bridgestone India in the passenger radial car market was mainly
due to the fact that a decade ago, none of the Indian tyre companies had good radial
technology know-how. But all that seems to be changing at scorching pace now. Major
Indian players such as MRF, JK tyres and Apollo tyres are pumping in a lot of money in
R&D to upgrade their technologies indigenously. MRF has already succeeded in capturing
a market share of 18% in the radial car tyre market.

5.2.2 Market entry by international

players
The market entry of Bridgestone is a classic example of what a foreign firm’s entry can
do to the Indian tyre market. Before Bridgestone entered the Indian market, there was
almost no usage of radial tyres in India. Besides, customers had to put up with sub-
standard tyres since in the face of no competition, Indian tyre manufacturers were slow in
developing their technologies. Al that changed when Bridgestone entered the market.
Quality and brand value suddenly became the new buzzwords, and Indian companies
finally woke up to the huge technological gap between the International and domestic
players. Passenger car OEMs embraced radial technology and the car tyre maeket was
almost completely radialzed.

5.2.3 Improved Capacity-utilization

techniques
In the face of increasing input prices, and competition from international players such as
Michellin and Bridgestone, Indian tyre companies are desperately searching for ways to
cut costs and improve their production efficiencies. This has resulted in adoption of
improved capacity-utilization techniques across all major Indian tyre manufacturers.

5.3SocioCultural Environment

5.3.1 Explosion in the number of nuclear

families
As the joint-family system crumbles and the number of nuclear families explode, more
small families seem to be demanding a two/four wheeler for themselves. This has directly
resulted in higher sales of tyres in the past decade.

5.3.2 Higher car density per

family
The number of upper-class and upper-middle class families with more than one car per
family seems to be increasing exponentially. This is especially true in cities where
35 |Page
working couples find it difficult to survive without more than one car for transportation.
With higher disposable incomes, these families are finally able to afford this need.
5.3.3 Shifting away from Savings, to EMI
culture
Another notable trend that seems to be fuelling car sales (and therefore tryre sales) is the
shift in the middle-class consumers saving habits. The Indian middle-class family has long
been known for its savings frenzy. But with a younger workforce, higher disposable
incomes, lower unemployment and the influence of globalization, the average Indian
middle-class family is slowly warming up to the idea of EMI and buying on credit. This
has helped in furthering the sales of passenger cars significantly.
EGMENNTATIOON,
T
A
A
ARGETIING
 
ANND
 
POSSITIONNING
 
 NNSTP ANAALY
SIS

1. BASSIS FOR SS EGMENNTATIONN VEHICLLE TYPE:

In the tyyre industry, there is ve ry little direcct interactionn between thhe company and
the cusstomer. Tyree compan ies sell most ly to dealers in the replaccement mark et and
to OEEMs.
As a ressult, market segmentatioon for the tyree industry is based more on the type of
vehicle s erved, ratherr than on the individuaal customer.

e, LCV: Light Co
 MHCV: Meedium heavy commmercial vehicle, HCV: Heavy Commmercial Vehicle mmercial
Vehiclee, OTR: Off The RRoad vehicle
2
.
SELECTIN
G
TH
E
T
ARGE
T
SEGMENT
:
Once the market has been divided into segments, Tyre manufacturers need to decide the
segments they are going to service. This requires a deep analysis of each segment and
matching the manufacturer’s capabilities (finances, core-competency, brand image, labor,
etc) with the demands of these segment(s).

2.1Bridgestone: The Market Specialization Approach

 Brand Strategy Analysis 
2.2MRF: The Complete Market Coverage Approach

MRF holds a diversified portfolio of products that span across the entire tyre market. It
manufactures tyres for all segments of the tyre market including Passenger Vehicles,
Commercial Vehicles, Farm Vehicles ad Off-The-Road and Industrial Vehicles. This
complete market coverage of its products has made MRF the undisputed leader in the
overall Indian tyre industry.

3. DIFFERENTIATION AND P OSITIONING STRATEGIES:

Being a homogenous product, there is not much difference in products offered by competing tyre
manufacturers. However, companies do try to differentiate themselves by outdoing one another in
some Points of Parity, such as quality, safety, tread design, economy, etc.
Bridgestone India currently concentrates exclusively on the Passenger Car Radial Tyre
segment. Within this segment, it offers a wide range of tyres to suit the needs of the
entire segmentCategory
3.1Establishing of car tyre buyers. Bridgestone is the Market leader in this segment, with
Membership
a market share of over 30%.
OneCategory
major Membership
reason why refers to the set
Bridgesotne hasof stuck
products thatPassenger
to the a brand competes with. It isdefines
Car segment the
because
it market
offers only Radial
that the brandtyres.
is in. While the Passenger Car segment is 98% Radialised, other
segments in the tyre industry are yet to
3.1.1 Bridgestone – High Performance with Value
for Money
Bridgestone communicates its category membership as a top quality, high performance
tyre, with an international pedigree. In order to ride home this message, it has associated
itself with F1 racing events and widely publicizes its success on the F1 racetrack.
39 |Page
Customers have come to associate Bridgestone tyres with the exacting performance
standards required in F1 racing.
Some important parameters that consumers look for, in every tyre brand, and which therefore form the
basis of POP in the tyre industry are: 1) Quality: Material quality of the tyre must be very good. 2)
Safety: The tyre must meet national/international safety standards under high stress conditions. 3)
Durability: The tyre must survive wear and tear for a decent period of life. 4) Mileage: The tyre must
offer improved mileage (especially true for Radial tyres). 5) Grip: The tyre grips the road firmly under
all
weather
conditions. 6) Cornering and braking: The tyre must perform well while cutting corners and braking at
3.1.2 MRF – Tyres with
Muscle
The MRF mascot, the MRF muscleman, clearly states the category membership MRF
subscribes to. MRF communicates to the customer its superior endurance and strength.
The company sponsors a number of sports such as cricket and rally racing, to position its
tyres as high endurance and sporty. Its slogan “Tyres we race, are the tyres you buy”
stands testimony to their category membership.
high speeds. 7) Ride comfort: The tyre must offer a smooth and quite riding experience.

3.2Points of Parity (POP):

POP refers to associations that are not necessarily unique to the brand, but may in fact be
shared by other brands. For a product to achieve POP on a particular attribute, a sufficient
number of customers must think that the brand is “good enough” on that dimension.

Put simply, POPs are the minimum parameters a product must possess to be considered a good
enough to compete within its membership category.
3.
3
Point
s
o
f
Differenc
e
(POD)
:
 PODs attributes that consumers strongly associate with a brand, positively evaluate it, and
believe that they could not find it to the same extent in other competing brands.

Simply put, PODs are those attributes that make a product stand out from the competition. It
is the winning proposition.

Though tyres are a highly homogenous products, and differentiation is very difficult, tyre
manufacturers have come up with innovative ways to demonstrate their superiority in certain
parameters such as quality, endurance, value for money, and additional services.

3.3.1 Bridgestone – Quality and Value for

Money
Bridgestone prides itself for manufacturing some of the highest quality tyres on the
globe. Customers perceive the brand to be associated with F1 quality and performance.

1) Value for Money:

Bridgestone customers perceive their tyres as a good buy, despite their premium
pricing. This is because Bridgestone is known for high quality, long lasting tyres
that give the customers value for their money in the long run.

2) Perfectly balanced wheels:

Another major benefit that customers associate with Bridgestone tyres is the
perfectly balanced tyres that they get fitted on purchase. Bridgestone makes this
possible by making it mandatory that its dealers possess computerized wheel
balancing equipment. Every customer who walks out of a dealer store with a
Bridgestone tyre is thus assured of an additional service: perfectly balanced wheels.

3) International quality and high performance:

Most Bridgestone customers are aware of the international quality and the
impeccable pedigree that Bridgestone enjoys worldwide. International Quality and
high performance are the major reasons why most automobile OEMs prefer to
partner with Bridgestone.

3.3.2 MRF – High endurance

tyres
MRF has for log concentrated on the high performance its tyres offer in trying conditions.
To further this image, it has partnered with many sports events and created a mascot that
reflects the toughness it claims in it tyres: the MRF muscleman.
1) High endurance
tyres:
 Brand Strategy Analysis 
3.5.2
MRF – Tyres with muscle:

Tyre consumers, especially heavy truck and bus owners, consider MRF tyres to be one
the toughest in the market. This explains why MRF is amongst the top market leaders
and in the heavy commercial vehicles category (second only to Apollo tyres).

2) High performance
tyres:
MRF is the clear leader in the Two Wheeler tyre market. This is because of its image
as a high endurance and high performance tyre, in the minds of Two Wheeler owners.
Brand recognition and recall has also played an important role in its emergence as the
market leader.

3.4Value proposition:

Value propositions are a set of benefits that companies offer to satisfy customer needs. It
answers the customer’s question, “what is in it for me?”

3.4.1 Bridgestone – Quality and Value for

money:
Bridgestone’s main value proposition is its international quality and value for money.
Every Bridgestone customer is assured of a tyre that is of international standards and will
give him trouble-free service for a long time, thus giving him value for his money.

3.4.2 MRF – Endurance

guaranteed:
MRF prides itself in making tyres that go into some of the most trying conditions on
Indian roads: onto Heavy Vehicles on rough Indian roads. Consequently, MRF offers a
compelling value proposition to heavy vehicle owners as well as passenger car and two
wheeler owners: Quality tyres that endure in the worst of conditions. It drives home this
macho message through its mascot, the MRF muscleman.

3.5Positioning statements:

3.5.1 Bridgestone - passion for

excellence:
ANALYZING
 
THE
 
MARKETING
 
MI
X
 THE4P ANALYSIS

1. THE P RODUCT:

The basic definition of a product is anything that can be offered to a market to satisfy a want or
need.

Tyre companies in India have been fulfilling this need for over half a century now, through tyres
that endure on rough Indian roads. The entry of Multinationals like Bridgestone and Goodyear has
added two more flavors to this mix: Quality and ride comfort. Today, Indian tyre manufacturers are
racing against each other to introduce tyres that assure impeccable quality, endurance and ride
comfort.

1.1Product levels –The customer value hierarchy:

While devising market offerings, marketers address five product levels:

Basic Product
 CORE BENEFIT
Expected Product

Augmented
Product

Potential Product
1.1.1
Core Benefit:
 This is the service or benefit the customer is customer is really buying. In the tyre
industry, the core benefit that a customer is looking for is a tyre that his vehicle can run
on.

1.1.2 The Basic

product:
The basic product that all tyre manufacturers offer, is a tyre that fits the customer’s
vehicle

1.1.3 The Expected

product:

The expected product defines the basic features that a buyer assumes in the product

offering. In a way, this is the POP for the product in its membership category. In the tyre

industry, the basic product would be a tyre that meets the following criteria: 1) Quality:

Material quality of the tyre must be very good. 2) Safety: The tyre must meet

national/international safety standards under high stress conditions. 3) Durability: The

tyre must survive wear and tear for a decent period of life. 4) Mileage: The tyre must

offer improved mileage (especially true for Radial tyres). 5) Grip: The tyre grips the

road firmly under all weather conditions. 6) Cornering and braking: The tyre must

perform well while cutting corners and braking at high speeds. 7) Ride comfort: The

tyre must offer a smooth and quite riding experience.

1.1.4 The Augmented

product:
Augmented products exceed customer expectations. They offer a value proposition that
the customer may not have thought about, or was not expecting.

The Augmented product stage is where the competition begins in the tyre industry. This is
where tyre manufacturers try to differentiate themselves from the competition
1) Bridgestone: Quality, Comfort, Value for
Money
 Bridgestone differentiates itself from the competition, by offering tyres that exceed
the customer’s quality requirements, ride comfort and value for money. Bridgestone
ensures that its tires meet international quality standards, last much longer (thus
giving more value for money), and performs smoothly and quietly (ride comfort).
These are the three pillars that Bridgestone differentiates itself on.

2) MRF: Quality,
Endurance
MRF differentiates itself from the competition, on its two pillars of Quality and high
endurance. Given the fact that a major portion of its sales come from Heavy truck and
bus categories, it stresses on the durability of its tyres on rough Indian roads.
2
.
TH
E
P
LACE
:
 Brand Strategy Analysis 
2.2 Channel Design:

To decide on the channel design, the marketer must

Once thescan
first product has been
the target decided
customer base.upon and the
Different market segmented, targeted and the product
types
positioned, it is time to decide how and where the
of customer segments may require different types marketer can deliver the value (product) to the
customer. This is done through marketing channels that make the product available for consumption
of channels.
to the customer.
The following figure shows the break-up of car
tyre sales according to customer segments:
2.1Push and Pull strategies in channel
marketing:
As the figure shows, there are three main
customer
In a Pushsegments
strategy,inthe
themanufacturer
car tyre market:
uses his sales force, trade promotion, money or other
means to induce intermediaries to carry promote and sell its products to end users.
1) Original Equipment Manufacturers (OEMs) 2) The Replacement Market
(replacement of old, worn
Ina Pull strategy, the out or defectiveuses
manufacturer tyres)advertising,
3) Exports promotion and other forms of
communication to persuade the customer to demand the product from intermediaries, thus
inducing the intermediaries to order it.
1) Bridgestone: Pursuing a Push
strategy
2.2.1 Direct and Indirect
Bridgestone pursues a strong push strategy in its channel marketing. The advertising layout
channels:
for1) BridgestoneDirect
India is minimal. Bridgestone spends very little on advertising and
promotion.
channels: Instead, they concentrate on incentivizing the dealer to stock, promote and sell
their products. As a result,
Direct channels consistBridgestone
of a marketerregularly introduces
selling directly sell-in
to the final schemes
customer.(promotional
schemes for dealers), gold vouchers, international holiday vouchers, OE camps, etc.
Of the three types of customer segments in the Passenger Car Tyre market, two
customer segments call for a direct channel:
2) MRF: Masters at Pull
strategya)
MRF OEMs
follows
Given: exactly thequantities
the huge opposite strategy. MRFthehas
required and mastered
Just In Timethe art of employed,
logistics Pull strategy.
OEMsIt
pioneeredsource
the practice of heavy
their tyre advertising
supplies and promotion
directly from in theTyre
manufacturers. tyremanufacturers
industry. So much so,
therefore
that today,most
MRF commands top-of-mind recall and top brand recognition
set up exclusive distribution channels to service these OEMs. amongst all tyre
manufacturers in India. There is hardly any tyre customer who hasn’t heard of the MRF
brand. MRF achieved this remarkable feat by adopting a multi-pronged marketing strategy
that involved
b) endorsements by sports celebrities like Sachin Tendulkar, Brian Lara and
Steve Exports:
Waugh, promoting
To minimize popular
logistical sports like
complexities andcricket
supply and car Tyre
delays, rallyexports
races, are
andhandled
even
introducing its own
directly by mascot: the MRF muscleman,
the manufacturers. that reflected
Tyre manufacturers set upthedirect
toughdistribution
image it
projected channels
for its tyres.
that supply tires directly to export destinations

While MRF has tyre

Note: pulled out all stops sometimes
manufacturers in advertising and promoting
employ its products,
Carry & Forward agentsit to
gives very
transport
little attention to incentivizing its channel partners. This is clear from the very low
their tyres from the factory to OEM sites or export destinations. However this margins
it offers its dealers
varies fromand the complete
company absence of other dealer incentives. Yet, dealers look
to company.
forward to stock MRF tyres because customers demand it.
2) Indirect
channels:
Indirect channels consist of one or more intermediaries between the manufacturer and
the final customer.

The Replacement market segment of the tyre industry caters to individual customers.
It therefore requires wide reach and deep market penetration. The distribution channel
for replacement market comprises of the manufacturer, warehouses/ C&F (carry &
forward) agents, and the dealers. The Tyre is finally sold to the customer by the dealer.

INDIRECT CHANNEL (FOR THE

TYRE REPLACEMENT SEGMENT)

2.2.
2
Single and multiple channels:
 2.3.1 Selecting channel members: 1)
Bridgestone:
Most organizations today employ multichannel marketing i.e. selling to different consumer
segments through different channels. The tyre industry too follows this method. There are three
different channels dedicated to handle the three different kinds of consumers:
b) Experience: The dealer should have relevant experience of a few years in the field of stocking
and selling tyres.

OEMs
Direct
Exports
Direct
Replacement

2.2.3 Channel
length:
Channel length refers to the number of channel intermediaries between the manufacturer
and the end user. In the tyre industry, based on the target customer, the channel length
differs as follows:

OEMs 0 (Direct) Exports 0

(Direct) Replacement 2 level

2.3Channel Management practices:

Once the manufacturer has selected a channel system, it must select, train, motivate and
evaluate the individual intermediaries for each channel. This is a multi step process.

Bridgestone selects channel partners after a careful evaluation and analysis.

Bridgestone selects dealers based on the following criteria:

a) Credit history: The dealer should have a clean credit history with a
good repayment record.
c
)
Exclusive dealers Vs Multi-brand Dealers:
Though Bridgestone sells its tyres through both exclusive and multi-brand dealers, it
gives very little attention to building exclusive dealer strength. Instead, it only requires
that Multi-brand dealers offer Bridgestone an 80% share in stocking space.
 d) Mandatory Tyre changing equipment: One major dealer criterion that is
exclusive to Bridgestone is its insistence that all dealers must possess automatic tyre
changing and wheel balancing equipments. This severely restricts the number of
dealers who can apply for Bridgestone’s dealership. But it also increases the overall
buying experience of a Bridgestone customer.

2)
MRF:
a) Credit history: The dealer should have a clean credit history with a good
repayment record.

b) Experience: The dealer should have relevant experience of a few years in

the field of stocking and selling tyres.

c) Exclusive dealers Vs Multi-brand Dealers: Though MRF also sells its

tyres through both exclusive and multi-brand dealers, it gives a lot of attention to
setting exclusive showrooms for its tyres. It also mandates a very high stocking share
from multi-brand dealers.

2.3.2 Training and motivating channel

members:
1) Training and
motivation:
Both Bridgestone and MRF undertake regular dealer trainings for their exclusive
dealers. These trainings include modules that teach the dealers how to identify
customer needs and respond to them. While Bridgestone regularly introduces dealer
schemes, holiday packages, gold vouchers, etc to motivate its dealers, MRF focuses
exclusively on brand promotion at the customer level.

2) Channel
Power:
Channel power refers to the kind of power Manufacturers hold over channel partners.
It is the ability of the manufacturer to alter the behavior of a channel member.
Bridgestone follows
reward power
with its dealers. The company offers additional incentives such as discounts, free gifts,
gold vouchers, holiday trips, etc and encourages them to stock, promote and sell their
tyres.
)

Enablers 3 and
Integrators:

MRF on the other hand, pays very little attention to channel power. They focus
exclusively on a Pull strategy by heavily advertising its products and capturing topof-
mind recall and brand recognition amongst customers. This automatically results in
demand for its tyres from customers, which in turn incentivizes the dealer to stock
MRF tyres. In that way, we can say that MRF influences referent power over its
dealers. Dealers like to be associated with MRF because it is the most sought after
brand by consumers.

2.3.3 Efficient Consumer Response (ECR)

practices:
Many companies, including Bridgestone, have adopted ECR practices to streamline their
supply chain and logistics and also to cut overhead costs.
Enabler and integrators are collaborative IT and process improvement tools to support joint activities that
ECR requires close coordination between the manufacturer and the dealer in three areas:
reduce operational problems and allow greater standardization. Though Bridgestone uses IT based SCM
tools to track its inventory internationally, it is yet to introduce these practices in its Indian operations. In
1) Demand Side
management:
Demand side management deals with collaborative practices between the manufacturer
and its dealers to stimulate consumer demand by joint marketing and sales activities.
As a part of these activities, Bridgestone offers free sops to customers through its
dealer outlets such as:
fact in 2005, Satyam was chosen to implement IT solutions for Bridgestone, at its headquarters in Japan.
a) Free Provogue T-shirts b) Free tyre and battery check-ups every 4-6 months for
Bridgestone customers c) 50% discount on alignment and balancing d) Free F1
racing trip tickets
This included consulting, implementation and operations for SAP and Siebel CRM, Cognos business

All these are done at the dealer store, where the customer interaction happens.
Therefore the dealer’s cooperation is crucial.
2) Supply Side
management:
Supply Side Management deals with collaborative practices between manufacturer and
its dealers to optimize supply. Both Bridgestone and MRF practice joint logistics and
Supply Chain Management methods to ensure adequate stocking of its tyres at dealer
outlets. The manufacturers do this by closely working with dealers to track their shelf
spaces and replenish stocks on time.
intelligence and content management.
3
.
P
RICIN
G
STRATEGIES
:
 Pricing a product is a function of many factors. A number of factors affect the pricing of a
product directly. Some among them are brand value, competition, input costs, quality,
government policies, macroeconomic developments, etc.

3.1 Basic pricing strategies in the tyre industry:

The tyre market is not very price sensitive. Consumers are more concerned about the tyres
functionality, than its price. Besides, being a homogenous product, most tyre companies price
their tyres at more or less the same levels. International players such as Bridgestone price their
tyres slightly higher than the rest of the market. This is partially to demonstrate its superior
quality and pedigree.

Bridgestone and MRF: Price

leaders
Bridgestone and MRF have long been leaders in the Passenger Car tyre segment. By virtue of
their market share, they have traditionally been price makers. The rest of the tyre industry has
followed the pricing cues set by these leaders.

Bridgestone- Using Price-Quality inference to its

advantage:
Many consumers use price as an indicator of quality. Bridgestone understands this subtle
connection very well. Being world leaders in quality and reliability, Bridgestone actively tries to
remind the superior quality factor to its customers by pricing its tyres a little higher than the
competition. Consumers are ready to pay this price because they perceive Bridgestone tyres to
be value-for-money. The high prices in turn reaffirm the perception of quality product in the
consumer’s mind. Thus, higher prices induce a continuous cycle of quality reaffirmation.

Bridgestone: Low Total Cost of

ownership
Another reason why Bridgestone is able to price its products higher is the value-for-money that
consumers associate with it. Bridgestone tyres last longer and perform better over the long run.
Thus the Total cost of ownership over the long term is very low. There is hardly any
maintenance, repair or replacement cost for a long time after purchase.

Bridgestone and MRF-using the Markup

pricing
The tyre method
industry being a very raw material intensive industry, the input costs mainly decides
the price of tyres. In fact, 90% of a tyres cost comprises of its raw material costs. Markup
pricing is the common pricing method followed across the tyre industry. This involves adding a
standard markup to the tyre’s production cost.
3.2Deale
r
discount
s
an
d
allowances
:
While MRF (in keeping with its Pull strategy of concentrating on end consumers), does not
indulge the dealer with too many discounts and allowances, Bridgestone has mastered the art of
incentivizing the dealers with heavy discounts and allowances.

Some of the dealer discount schemes used by Bridgestone include: 1) Credit

discounts for quick credit repayments 2) Quantity discounts on large volumes (based
on discount slabs) 3) Seasonal discounts in the form of sell-in schemes for the dealers
during festivals.
4
.
PRODUC
T
P
ROMOTION
:
Marketing communications help a firm to inform, persuade and remind customers about its
products, directly or indirectly.

While Bridgestone India has traditionally followed a subdued promotion strategy to let its tyre’s
reputation for quality do the talking, MRF has gone all out to woo the consumer to its tyres. MRF
continually looks to improve its Brand Equity by maximum mediums of brand contact (consumer’s
exposure to the brand name). Today, MRF command top-of-mind recall excellent brand recognition
in all categories of vehicles in the tyre market.

4.1The Marketing Communication mix:

Communication mix refers to the major mediums that companies use to promote their products.
There are eight major modes of market communication: Advertising, Sales Promotion, Events and
Experiences, Public Relations, Direct Marketing, Word-of-Mouth marketing, and Personal selling.

1) MRF: Gods of
Advertising
MRF uses advertising as the primary medium to reach out to its customers. The company
invests heavily on print, TV and outdoor media, to drive its brand into the minds of the
customer. MRF is credit with devising some of the most creative ads ever made for an
Indian tyre company. It allots a huge budget outlay for advertisements and other promotional
activities. Its mascot, the MRF muscleman along with its slogan “Tyres with muscle” was
once one of the most recognizable advertising campaign in Indian advertising history. It was
specially devised at Lintas by its CEO, Alyque Padamsee himself. Allyque and his team
painstakingly surveyed scores of truck drivers at road side dhabas to understand their needs
and wants.

MRF takes care to promote its tyres as tough, reliable and high endurance. This is because
its main share of customers comes from the Light and Heavy Commercial Vehicles segment.
Truck and bus owners in this segment consider strength and endurance as the No.1 factor
desirable in a tyre. For the passenger and two-wheeler segment, MRF promotes itself as a
high quality and high performance tyre manufacturer.

2) Bridgestone: Driving Sales Promotions through

its dealers
Sales promotions are used more by Bridgestone than MRF. Bridgestone regularly introduces
festival offers, consumer discounts and other sops through its dealer outlets. These offers to
customers are called sell out schemes.
Some recent offers and incentives that Bridgestone has provided its potential customers
include:
 a) Free Provogue T-shirts worth Rs. 1,200/- for every car tyre purchase b) Free tyre and
battery check-ups every 4-6 months exclusively for Bridgestone customers c) 50%
discount on alignment and balancing exclusively for Bridgestone customers d) Free F1
racing trip tickets through lucky draw

Bridgestone constantly works with its dealers, to give its customers a unique experience
while shopping for its tyres. As a part of achieving this enhanced experience, Bridgestone
has made it mandatory that only dealers with automatic wheel alignment and balancing
equipment can apply for its tyre dealerships. This ensures that when customers buy a
Bridgestone tyre, they also get an added benefit of perfectly aligned wheel fitting.

3) MRF: spin doctors of publicity

campaigns
Over the years, MRF has perfected the art of publicizing
its brand through highly visible events and celebrity
endorsements. MRF has consciously aligned itself with a
number of sporting events in India. Its most memorable
association with sports and celebrity endorsements was the
MRF label that adorned Sachin Tendulkar’s bat for many
years. MRF is also well known for founding the MRF
Pace Foundation, which is today one of the
premier training institute for India’s budding pace bowlers. Though
cricket, given its cult like status, gave MRF a lot of publicity, it was
its sponsorship of auto-racing projected its slogan, “Tyres with
Muscle” and outlined the quality of its tyres and allied products .
 customers have had little reason for complaining about their tyre and have always
perceived it to b a value for money buy. This trust and user satisfaction seems to
have generated a large following of customers who strongly recommend
Bridgestone tyres. Most new Bridgestone customers purchase the tyre because
their close relatives, mechanics, or friends recommended it.

The biggest asset in Bridgestone’s marketing arsenal is the goodwill it has created for itself
amongst its thousands of satisfied customers and OEMs. Bridgestone tyres are known for their
international quality, ride comfort and durability. OEMs prefer Bridgestone over other
manufacturers for its reliability and quality. Similarly, Bridgstone

4) Bridgestone: Riding the wave of Word-of-Mouth

marketing
5) Bridgestone: Banking on Below-The-Line (BTL)
promotional activities
“Below The Line" promotion refers to forms of communication that do not include the
media. Below the line sales promotions are short-term incentives, largely aimed at
consumers. Put simply, BTL promotions are a very good way to achieve communication
objectives more efficiently when the budget is limited. BTL is especially suitable for
products whose target groups are limited and specific.

Bridgestone uses BTL in a big way. It indulges in sales promotion activities such as
encouraging dealers to promotion their tyres, and regularly introduces festival offers,
consumer discounts and other sops through its dealer outlets. These offers to customers are
called sell out schemes.

Some recent offers and incentives that Bridgestone has provided its potential customers
include:

a) Free Provogue T-shirts worth Rs. 1,200/- for every car tyre purchase b) Free tyre and
battery check-ups every 4-6 months exclusively for Bridgestone customers c) 50%
discount on alignment and balancing exclusively for Bridgestone customers d) Free F1
racing trip tickets through lucky draw

6)MRF: Banking on Above-The-Line (ATL) promotional

activities
Above-The-Line is a type of advertising that uses the media to promote a brand. This type
of communication is conventional and impersonal in nature. MRF invests heavily on print,
TV and outdoor media, to drive its brand into the minds of the customer. MRF is credited
with devising some of the most creative ads ever made for an Indian tyre company. It allots
a huge budget outlay for advertisements and other promotional activities. Its mascot, the
MRF muscleman along with its slogan “Tyres with muscle” was once one of the most
recognizable advertising campaigns in Indian advertising history.
4.2
:
Developin
g
Effectiv
e
communication
s
Original Equipment Manufacturers (OEMs)
The Replacement Market (replacement of old, worn out or defective tyres) Exports

4.2.1 Identifying the target audience:

The first step to designing an effective communication strategy is identifying the target
audience. As the figure below shows, there are three main customer segments in the car
tyre market:

For each of these segments a appropriate communication strategy needs to be developed.

4.2.2 Determining the Communication Objectives

There are four possible communication objectives for a company:

Category Need: Establishing a product or service as belonging to a particular category

of products. Especially used for new-to-the-world products.

Brand Awareness: Building brand recognition and Brand Recall through promotional
activities. Brand Awareness forms the foundation for building Brand Equity.

Brand Attitude: Evaluating a brand with respect to its perceived ability to meet a
relevant need.
Brand Purchase Intention:
Self-instructions to purchase a brand or to take purchase related action.
 1) MRFcreating Brand Awareness:

MRF has mastered the art of creating lasting impressions in the mind of the consumer.
It pioneered the practice of heavy advertising and promotion in the tyre industry. So
much so, that today, MRF commands top-of-mind recall and top brand recognition
amongst all tyre manufacturers in India. There is hardly any tyre customer who hasn’t
heard of the MRF brand. MRF achieved this remarkable feat by adopting a multi-
pronged marketing strategy that involved endorsements by sports celebrities like
Sachin Tendulkar, Brian Lara and Steve Waugh, promoting popular sports like cricket
and car rally races, and even introducing its own mascot: the MRF muscleman, that
reflected the tough image it projected for its tyres. Today, dealers look forward to
stock MRF tyres because customers demand it.

2) Bridgestoneshaping Purchase Intention through Sellout schemes

Sell out schemes refer to the promotional offers and discounts that companies offer to
positively impact the buyer’s purchase decision. Bridgestone, in collaboration with its
dealers, offers a variety of discounts, special deals and compliments to influence the
customer into buying its tyres.

Some recent offers and incentives that Bridgestone has provided its potential
customers include:

a) Free Provogue T-shirts worth Rs. 1,200/- for every car tyre purchase b) Free tyre
and battery check-ups every 4-6 months exclusively for Bridgestone customers c) 50%
discount on alignment and balancing exclusively for Bridgestone customers d) Free F1
racing trip tickets through lucky draw

4.2.3 Designing the communication

To design a communication strategy that achieves the desired response, the marketer
needs to solve three problems: what to say? (message strategy), How to say it? (creative
strategy) and who should say it? (message source)
Since Bridgestone India does not advertise its tyres much but instead depend on Push
strategies at the dealer level and reputation at the OEM level to gain sales, let us instead
look at how MRF has designed its communication strtategy.
MRF – Using Sports and Muscle as Message Strategies
The MRF mascot, the MRF muscleman, clearly states the category membership MRF
subscribes to. MRF communicates to the customer its superior endurance and strength
through its advertisments. The company sponsors a number of sports such as cricket and
rally racing, to position its tyres as high endurance and sporty. Its slogan, “Tyres we race
are the tyres you buy” stands testimony to their category membership. MRF takes care to
promote its tyres as tough, reliable and high endurance. This is because its main share of
customers comes from the Light and Heavy Commercial Vehicles segment. Truck and bus
owners in this segment consider strength and endurance as the No.1 factor desirable in a
tyre.

MRF – Implementing Creative Strategy through informational appeal

The creative strategy (How to say it?) for a communication channel can be realized
through Informational Appeals.

Informational Appeals elaborate on a product’s attributes and benefits. MRF communicates

its brand value to the customer by emphasizing on the toughness and durability of its tyres.
The benefit it offers the consumer is increased endurance and performance under the most
testing condition.

MRF – Using celebrities as Message Sources MRF has mastered the art of effectively
using sports celebrities to endorse its products. The list of celebrities who have endorsed
the MRF brand is formidable. The list includes sporting greats such as Sachi Tendulkar,
Brian Lara, Steve Waugh and Gautam Gambhir. One of the most enduring images of MRF
brand is the MRF logo that adorned Sachin Tendulkar’s bat over a decade.
 
 
MARKET
 
FEEDBACK
 
AND
 
CONTROL
 
MECHANISM
S
1. Details of the firm and proprietor.
Brand Strategy Analysis 
2. 5. Dealer For
1.
Best selling pattern and size.
A PRIMARY DATA ANALYSIS 
Facilities available in your shop.
MRF
3. Dealer For
JK Tyres
Dealer
As Number
a part of our primary data exercise, we visited 10 tyre dealers in Coimbatore who stocked
MRF
MRF and Bridgestone brand of tyres. We prepared a closed-ended questionnaire for them and
Goodyear
Apollo
took
Ceattheir feedback on various parameters involving the tyres they sell. The results provided us
with Apollo
JK a deep insight into a typical dealer’s mind.
4. Which
GDY Brand is more profitable?
BS 6. Which brand is more preferred by customers?
Michelin A Marketing Survey of Tyre Dealers (2009-2010)
Birla MRF
Others Apollo Questionnaire
1 Ceat
Y

MRF
Apollo
Ceat
Brands
Total
MRF
6
MRF
Apollo
7. Price of
6 different brand products?
Wheel Alignment
Apollo
CeatWheel Balancing
Ceat
Tyre Changing
8. Which4company is providing better after sales service?
JK Nitrogen Gas
9. Which4companies sell out scheme is more effective?
Goodyear
3 MRF
10. Which companies
Bridgestone
Apollo
sell out scheme is effectively reached to customers?
MRF
3 Ceat
Apollo
Michelin
Ceat
1
Birla
5 MRF
Others
Apollo
5 Ceat
MRF Apollo Ceat JK Goodyear
1

Brand Strategy Analysis 
2. Which brand is more profitable?

Dealer Number
Bridgestone Michelin Birla Others
MRF
Apollo
Ceat
JK
GDY
BS
Michelin
Birla
Others
1
Y

Y
Brands
Total Which brand is most
Percentage profitable?
MRF Dealer for
6
28.57 % MRF Apollo
Apollo
3 Ceat JK
14.28 % Goodyear
Ceat
1 Bridgestone
4.76 % Michelin
JK
2 Birla Others
9.52 %
Goodyear
4
19.04 %
Bridgestone
2
9.52 %
Michelin
0
0.00 %
3.
Which Brand is more preferred by customers?
 Brand Strategy Analysis 
4. Price of different brand products

High Priced

Dealer Number
MRF
Apollo
Ceat
JK
GDY
BS
Michelin
Birla
Others
1
Y
L
H

M
Y

22
M

Brands
High
Moderate
Brands
LowTotal Which brand is most
MRFPercentage
  MRF preferred by
56 customers?
3 25 %
Apollo Bridgestone Michelin
Apollo
Apollo
13
4 12.5 %
 ‐ Ceat
Ceat
1
  4.16 %
2 JK
12
JK8.33 %
  Goodyear
41
Goodyear
1 4.16 %
Goodyear
Bridgestone
  7
29.16 %
Michelin
1
4.16 %
Moderately Priced

MRF Apollo
Ceat JK
Goodyear
Bridgestone
Michelin
Birla

Low Priced

MRF Apollo
Ceat JK
Goodyear
Bridgestone
Michelin
5.
Which company provides better after sales service?
 M
RF
Dealer
1 Apollo Number
Ceat JK Goodyear
1 MRF
Apolloe
Bridgeston
Ceat
JK
GDY
1. BS
69 |Page
Michelin
Birla
Others
1
Y

Y
2

Y Brands
Total
Which company provides better after Percentage
MRF
sales service? 4
19.05 %
Apollo
3
14.28 %
Ceat
1
4.76 %
JK
2
9.52 %
Goodyear
2
9.52 %
Bridgestone
4
19.05 %
Michelin
2
9.52 %
Birla
1
4.76 %
Others
2
Which company
’
s sell out scheme is most effective?
MRF Apollo Ceat

Dealer Number
MRF
Apollo
Ceat
JK
GDY
BS
Michelin
Birla
Others
1
Y

Y
Y

Y Brands
Total
Percentage
MRF
4
Which company's 17.39 %
sellout schemes are Apollo
3
more effective? 13.04 %
Ceat
2
8.69 %
JK
4
17.39 %
Goodyear
2
8.69 %
Bridgestone
6
26.08 %
Michelin
1
4.34 %
Birla
0
0.00 %
Which company
’
s sell out schemes effectively reach the customer?
MRF Apollo Ceat

Dealer Number
MRF
Apollo
Ceat
JK
GDY
BS
Michelin
Birla
Others
1
Y

Y
Brands
Which company's sellout Total
schemes effectivley Percentage
MRF
reach the customer? 5
23.81 %
Apollo
3
14.28 %
Ceat
1
4.76 %
JK
3
11 14.28 %
Goodyear
1
4.76 %
Bridgestone
7
33.33 %
Michelin
0
0.00 %
Birla
0
Best selling pattern and size.
MXTE
NameR13
165/65
Birla
PatternTyres
All
SizeT & B tyre models.
900/20 1000/20 1100/20
MRF Tyres
Other Tyrescar segments.
All passenger
Nexen
175/80 SB802
R13 92H N5000 SB652 N7000 CP661 Falken
255/70/16 165/65 R13 155/70 R13 145/80 R12 P205/65 R15 175/70 R12 145/80 R13 235/70 R16
ZCL
145/70 R12

ZUL
145/80 R12

ZUTS
235/75 R15

ZCT
165/65 R13

All T & B tyre models.

175/70 R13

900/20

1000/20

1100/20
Apollo Tyres
Amezer XL
145/70 R12

Aspire
145/80 R12

Sigma Steel (All Models)

165/65 R13

Amargold (T&B)
900/20

All T & B tyre models.

1000/20

1100/20
Ceat Tyres 72 |Page
All truck & bus tyre.
900/20 1000/20 1100/20
JK Tyres
All rally models.
145/70 R12

JK Ultima-XP
145/80 R12
CHAPTER
 
3
 
MARKETING STRATEGIES:A RELATIV
E ANALYSIS
ANALYZING
 
THE
 
MARKET
 
STRATEGIE
S
75 |Page

A RELATIVE ANALYSIS 

1. ANALYSIS OFTHE OVERALL MARKETING STRATEGIES: 

1.1Marketing Strategy
Analysis

1) Bridgestone: Pursuing a Push strategy, reputation, and BTL (Below

the line ) promotion strategies

Bridgestone pursues a strong push strategy in its channel marketing. The advertising layout
for Bridgestone India is minimal. Bridgestone spends very little on advertising and
promotion. Instead, they concentrate on incentivizing the dealer to stock, promote and sell
their products. As a result, Bridgestone regularly introduces sell-in schemes (promotional
schemes for dealers), gold vouchers, international holiday vouchers, OE camps, etc.

Bridgestone uses BTL promotional activities in a big way. It indulges in sales promotion
activities such as encouraging dealers to promotion their tyres, and regularly introduces
festival offers, consumer discounts and other sops through its dealer outlets. These offers to
customers are called sell out schemes.

Some recent offers and incentives that Bridgestone has provided its potential customers
include:

a) Free Provogue T-shirts worth Rs. 1,200/- for every car tyre purchase b) Free tyre and
battery check-ups every 4-6 months exclusively for Bridgestone customers c) 50%
discount on alignment and balancing exclusively for Bridgestone customers d) Free F1
racing trip tickets through lucky draw

The biggest asset in Bridgestone’s marketing arsenal is the goodwill it has created for itself
amongst its thousands of satisfied customers and OEMs. Bridgestone tyres are known for
their international quality, ride comfort and durability. OEMs prefer Bridgestone over other
manufacturers for its reliability and quality. Similarly, Bridgestone customers have had little
reason for complaining about their tyre and have always perceived it to b a value for money
buy. This trust and user satisfaction seems to have generated a large following of customers
who strongly recommend Bridgestone tyres. Most new Bridgestone customers purchase the
tyre because their close relatives, mechanics, or friends recommended it.
Analysis:
MRF has been immensely successful in creating a brand that has become a household name today. Its
marketing campaign has been one of the most innovative ever in the history of Indian advertising, thus
wooing the customer completely. However, MRF Achilles heel seems to be its dealer relations. MRF so
heavily concentrates on its

customer promotion activities, that it hardly pays any attention to incentivizing the dealers.
This is reflected in the very low margins it offers its dealers and the almost complete
’ absence of promotional activates such as discounts, gifts, compliments, etc for the dealers
(called
ThoughSell in schemes).
Bridgestone has Dealers
succeededstock
in MRF
almosttyres simply because
completely wooing customers demandwith
the OEM market them.its
s favor. They do not seem to be very keen on promoting the product, since the company does
focus on quality, reliability and international pedigree, the Replacement market still seems not
incentivize them to do
to give it sleepless so. AThe
nights. better incentive
Push scheme
channel for adopted
strategy the dealers
by could change might
Bridgestone this have
situation in MRF
made it popular with the dealers (who receive numerous incentives from Bridgestone), but
the end customer still considers MRF as the natural choice, thanks to its high visibility
campaigns. Bridgestone needs to take a leaf out of MRF’s aggressive ATL promotional
1.2Porter’s
campaigns Generic
and start Strategy
targeting the customer directly. With its international reputation, parent
Analysis
company’s brand equity and strong financial outlay, Bridgestone has all it takes to launch a
Michael Porter proposes
strong promotional campaignthree generic its
to increase strategies that form
brand equity in the the foundation
minds for strategic
of the consumer.
thinking:

2) MRF: Masters at Pull strategy, Publicity campaigns and ATL

promotional methods
MRF follows exactly the opposite strategy. MRF has mastered the art of Pull strategy. It
pioneered the practice of heavy advertising and promotion in the tyre industry. So much so,
that today, MRF commands top-of-mind recall and top brand recognition amongst all tyre
manufacturers in India. There is hardly any tyre customer who hasn’t heard of the MRF
brand. MRF achieved this remarkable feat by adopting a multi-pronged marketing strategy
that involved endorsements by sports celebrities like Sachin Tendulkar, Brian Lara and
Steve Waugh, promoting popular sports like cricket and car rally races, and even
introducing its own mascot: the MRF muscleman, that reflected the tough image it
projected for its tyres.

Over the years, MRF has perfected the art of publicizing its brand through highly visible
events and celebrity endorsements. MRF has consciously aligned itself with a number of
sporting events in India. Its most memorable association with sports and celebrity
endorsements was the MRF label that adorned Sachin Tendulkar’s bat for many years. MRF
is also well known for founding the MRF Pace Foundation, which is today one of the
premier training institute for India’s budding pace bowlers. Though cricket, given its cult
like status, gave MRF a lot of publicity, it was its sponsorship of auto-racing projected its
slogan, “Tyres with Muscle” and outlined the quality of its tyres and allied products

Analysis
1) Overall Cost Leadership strategy: Achieving lowest production and
distribution costs so that they can price lower than the competitor.

This strategy does not work in the tyre industry for the simple reason that tyres are a
highly raw material-intensive industry. More than 90% of the total cost of
production stems from raw material costs. Given this fact, it becomes extremely
difficult to produce tyres at costs that are significantly lower than that of the
competitors, since raw materials cost the same to all industry players.

2) Differentiation strategy: The business concentrates exclusively on achieving a

superior performance in an important customer benefit area.
Bridgestone -Quality and Value for Money
 Bridgestone has achieved a high degree of differentiation in the market by
positioning its tyres as international quality with value for money. The success of this
positioning is amply clear from the fact that Bridgestone is the preferred tyre supplier
to a majority of Automobile OEMs. OEMs generally select suppliers based on the
products quality and reliability. Bridgestone’s main value proposition is its
international quality and value for money. Every Bridgestone customer is assured of
a tyre that is of international standards and will give him trouble-free service for a
long time, thus giving him value for his money.

MRF-Tyres with Muscles

MRF has for log concentrated on the high performance its tyres offer in trying
conditions. To further this image, it has partnered with many sports events and
created a mascot that reflects the toughness it claims in it tyres: the MRF
muscleman.

MRF prides itself in making tyres that go into some of the most trying conditions on
Indian roads: onto Heavy Vehicles on rough Indian roads. Consequently, MRF offers
a compelling value proposition to heavy vehicle owners as well as passenger car and
two wheeler owners: Quality tyres that endure in the worst of conditions. It drives
home this macho message through its mascot, the MRF muscleman.

3) Focus strategy: In a focus strategy the business focuses on one or more narrow
market segments

Bridgestone India- Leaders in the Passenger Car Tyre market

Bridgestone India has for the past one decade, focused exclusively on the Passenger
Car Tyre segment. One major reason for restricting itself to this segment was that
Bridgestone manufactures only radial tyres. While the rest of the Indan tyre market
still runs mostly on non-radial tyres, the Passenger Car market has almost
completely been radialised. This gave Bridgestone an opportunity to capture market
share with its international quality and value for money proposition. Today,
Bridgestone is the market leader in this category with a share of 31% of the Indian
passenger car tyre market.

MRF- Focusing on heavy duty vehicles

Unlike Bridgestone, MRF has a product portfolio that covers the entire tyre industry.
However, MRF’s promotional strategy focuses moreon the need of the Heavy duty
truck and bus driver. This is mainly because a majority i=of its sales happe in the
Heavy and Light Commercial Vehicles market. In order to tap this market further,
MRF positions its tyres as “tyres with muscle”, to highlight its high endurance and
strength.
1.
3
Creating Value:
 1.3.1 Bridgestone – Quality and Value for
money:
Bridgestone’s main value proposition is its international quality and value for money.
Bridgestone prides itself for making tyres that incorporate the international standards that
people world over have come to associate with it.

Bridgestone delivers this value by ensuring that every customer is assured of a tyre that is
of international standards and will give him trouble-free service for a long time, thus
giving him value for his money.

1.3.2 MRF – Endurance

guaranteed:
MRF prides itself in making tyres that go into some of the most trying conditions on
Indian roads: onto Heavy Vehicles on rough Indian roads. Consequently, MRF offers a
compelling value proposition to heavy vehicle owners as well as passenger car and two
wheeler owners: Quality tyres that endure in the worst of conditions. It drives home this
macho message through its mascot, the MRF muscleman.

MRF delivers this value to the customers by guaranteeing that their tyres are designed to
endure in the most trying of Indian weathers and roads. To achieve this MRF regularly
tests its tyres in cross-country rallies and other extreme conditions.

1.4Communicating the
Value:
MRF takes care to promote its tyres as tough, reliable and high endurance. MRF has mastered
the art of creating lasting impressions in the mind of the consumer. It pioneered the practice of
heavy advertising and promotion in the tyre industry. So much so, that today, MRF commands
top-of-mind recall and top brand recognition amongst all tyre manufacturers in India. There is
hardly any tyre customer who hasn’t heard of the MRF brand. MRF achieved this remarkable
feat by adopting a multi-pronged marketing strategy that involved endorsements by sports
celebrities like Sachin Tendulkar, Brian Lara and Steve Waugh, promoting popular sports like
cricket and car rally races, and even introducing its own mascot: the MRF muscleman, that
reflected the tough image it projected for its tyres. Today, dealers look forward to stock MRF
tyres because customers demand it.

Bridgestone on the other hand banks more on its ability to incentivize dealers and also on
Word-of-Mouth marketing from its thousands of satisfied customers to promote its tyres.
OEMs prefer Bridgestone over other manufacturers because of their positive experience with
Bridgestone tyres. Its international links with F1 racing also adds a halo of pedigree around the
brand.
1.5
Capturing the Value
–
pricing philosophies:
 The tyre market is not a very price sensitive market. Consumers are more concerned about
the tyres functionality, than its price. Besides, being a homogenous product, most tyre
companies price their tyres at more or less the same levels. International players such as
Bridgestone price their tyres slightly higher than the rest of the market. This is partially to
demonstrate its superior quality and pedigree.

Bridgestone and MRF: Price

leaders
Bridgestone and MRF have long been leaders in the Passenger Car tyre segment. By virtue of
their market share, they have traditionally been price makers. The rest of the tyre industry has
followed the pricing cues set by these leaders.

Bridgestone- Using Price-Quality inference to its

advantage:
Many consumers use price as an indicator of quality. Bridgestone understands this subtle
connection very well. Being world leaders in quality and reliability, Bridgestone actively tries to
remind the superior quality factor to its customers by pricing its tyres a little higher than the
competition. Consumers are ready to pay this price because they perceive Bridgestone tyres to
be value-for-money. The high prices in turn reaffirm the perception of quality product in the
consumer’s mind. Thus, higher prices induce a continuous cycle of quality reaffirmation.

1.6Sustaining the Value – Building

relationships:
While MRF banks on its aggressive advertising campaigns to attract customers to its tyres,
Bridgestone pays more attention to the customer’s experience while buying its tyres.
Bridgestone ensures that its potential customer encounters a positive experience at every touch
point (point of contact between the customer and its product).

To ensure this Bridgestone even goes to the extent of insisting that its its dealers must
compulsorily posses automatic wheel alignment and balancing equipments. This ensures that its
customers walk away not only with a good quality tyre, but also a set of perfectly aligned
wheels.

Bridgestone regularly holds camps for its dealers, where the dealers are trained in identifying
customer needs and catering to them.

Bridgestone also introduces special schemes and services for its customers regularly, such as
free car checkups, gifts and complements, and special discounts on services susch as alignment
and balancing.

\
1.7
Rating the Marketing Strategies of Bridgestone
and MRF:
This exhaustive study of the marketing strategies of Bridgestone and MRF has made it very
clear that the two companies follow a very different approach to marketing its products. While
Bridgestone appears to prefer the subdued BTL form of promotions, MRF has gone all out on
its aggressive ATL promotion tactics.

Both the strategies seem to be working, though in very different fundamental ways. While
MRF’s aggressive advertising, celebrity endorsements and event sponsorships seem to have
earned it top-of-mind recall and high brand recognition amongst individual customers,
Bridgestone’s focus on quality and dealer incentives seem to have made it extremely popular
with the other two customer segments in the car tyre market: The OEMs and the replacement
dealer’s market.

Both companies can learn a lot from each other’s marketing strategies. While MRF can
improve its dealer incentive programs and also focus on communicating its tyre’s endurance
and strength to OEMs, Bridgestone needs to adapt aggressive ATL promotional methods to
improve its brand recall and brand equity in the minds of individual customers.
REFERENCE
S
o SBI capital Markets Limited, ”Indian Tyre Industry: An overview”, (2007)
o “Bridgestone Has Helped In Faster Radialisation Of Indian Market””, (2007). Retrieved
Dec 3, 2010 from http://www.financialexpress.com o
CRISIL ratings, “MRF financials” ,(2008) o “Indian tyre
industry: An overview“ (2009). Retrieved Jan 2, 2010 from
攀 Ⰰ 䰀䌀嘀㨀䰀椀最栀琀䌀漀

o “Bridgestone tyres: value for money“ (2009). Retrieved

Janhttp://www.bridgestonemotorsport.com/Bridgestone/en-
2, 2010 from
gb/About+Us/
http://www.livemint.com/2009/11/13142836/Bridgestone‐bullish‐on‐India.html
o “Tyre input costs soar“(2009). Retrieved Jan
2, 2010 from

o “Tyre-Industry“ (2009). Retrieved Jan

2, 2010 from
http://www.scribd.com/doc/6739519/Tyre-Industry

http://www.articlesnatch.com/Article/Overview‐Of‐Indian‐Tyre‐Industry/866789
o “Overview of the tyre Industry “ (2009). Retrieved
Jan 2, 2010 from

Http://www.domain‐b.com/tyres/ introduction