Presentation & Case Study Analysis On

ZEN MICROGRIP TYRES

DATE:- 20th DEC 2011

. PRESENTED byRONAK (roll-47) MOHAN(roll-23)RiTU (roll-46)CHUMKi(roll-6)NEHA (roll-27)

Case developed by Dr.Rajan Saxena ,

Chair professor of marketing and general management.

- Narsee Monjee Institute Of Management Studies [ NMIMS ],Mumbai.

Tyre industry overview 2010-11Est. Turnover of Indian tyre industry Rs 30,000 crores

Tyre production (tonne) 14.88 lacs

Production All categories (NOS.) 1192 lacs tyres

Export from India Rs. 3600 crores

Number of tyre industries 39

Radialisation level- current (as a % of total tyre production)

Passenger car tyres 98%

Light commercial vehicles (LCV) 18%

Heavy vehicles (trucks & buses) 15%

TOTAL TYRE PRODUCTION IN INDIA

CATEGORY2004 - 05

2005 - 06

2006 - 07

2007 - 08

2008 - 09

2009 - 10

2010 - 11

Truck & Bus 11092 11941 12367 13137 12839 1481

1 15668

Passenger Car 11862 13605 14264 16437 16571 2004

7 26201

Jeep 1462 1272 1368 1467 1469 1402 1500

(L.C.V.) 3945 4529 4820 5320 5298 5739 6029

Scooter 9992 9519 9643 11604 10882 13558 20140

Motor Cycle 18127 21053 26079 27921 30148 3566

4 43118

Industrial 377 514 635 733 568 538 616

TOTAL 60082

66032

73545

81103

82107

97137

119197

(In 000 Nos.)

Market share of different tyres industry as per 2009-2010

Introduction – Zen India Pvt Ltd.

Name- Zen India Pvt. Ltd.Year of establishment - 1990Vice president- Mr. Suresh

MohnotGeneral manager- Mr.

Srinivasan. Product manager- Mr.Pradeep

SrivastavaSales manager- Mr. Jaspal Singh

Company structure:The company started in 1990, When it launched the state of

the art radial tyres. These tyres were used all over the world and the company thought of taking the advantage of this better feature packed tyres in india.

Zen was among the first few companies to introduce radial tyres in india in 1990’s.

What are ZEN microgrip tyres ?

It is a state of the art tyre that provides the vehicle driver a firm road grip, excellent braking , stability, smooth ride & longer life. Having a steel belt around the radial ply nylon carcass.

Advantages of ZEN microgrip tyre over others:-

Flexible sidewallsReduced fuel consumption due to less

rolling resistanceA softer ride because of the layout of

the tire's plies and because of the flex of the sidewalls, assuring more stable contact with the road service and a softer ride

Less vibrationExtended tire life due to less heat

generated by the tire

The tyre market is divided into 3 segments:-

1) Passenger car vehicles- The potential customers 2) LCV (light commercial vehicles) 3) The two wheelers.

The market for all these 3 type of buyers can be:-1) The replacement market, 2) The OEM (original equipment manufacturer) 3) And the export market. 

Microgrip had done well in the export area but there were serious issues in the replacement and the OEM markets. 

Market Classifications:-

Supply of tyres to various segment like replacement market, oems,

export.

Situational analysis: The automobile industry was growing at the rate

of 25% and the economy was also moving along at 6.5 %, but Microgrip has not been able to show the same kind of results.

In1992, Zen put up a manufacturing unit of 30,000 tyre capacity per month and targeyed to sell 10,000 in each segment [replacement, OEM, and exports].

Although they were able to sell 30000 tyres, the graph showed a different analysis. It sold 15000 tyres in exports,10000 in OEMs and only 5000 in replacement market.

Hurdles :- Zen Microgrip could not take the first

mover advantage in this case as they lacked some basic promotional and product awareness skills.

They did not promote the product that well, there were no informative campaigns to make the user aware of the benefits of the radial tyres over the conventional nylon tyres.

The company did not pass on the information to the dealers and they were left alone to use their own push tactics, which finally did not work

The depressed automobile industry,potholed roads added negativity to the situation

Problems in replacement market:- The basic problem in the LCV replacement

market is that the customers are very price sensitive.

The radial tyres are costing Rs. 4000 compared to the cost of conventional tyres that is Rs. 3000.

Also the tractor trailer tyre came in same size and was interchangeable, many of the customers preferred to use them as they were cheaper and also provided tax benefits.

The Indian customers are used to loading their vehicles, which adds on to the extra load per tyre. In reference to the LCV market, there were only a handful rivals to Zen.

SWOT Analysis:

Strength Weakness:

Strengths Weakness Opportunities ThreatsMore mileage Lack of

promotionMarket research

Competition from other brands

Low fuel consumption

Unawareness of the product to consumer

Understanding customers preferences

High comparativeCost

Steel belt holding

Price factor Chance of creating monopoly

Market trust

Superb breaking

Replacement factor

Lower profit=high sales

Failing of strategies

Long life-savings

High cost Increase promotion budget

If sidewall bulges it cause puncture.

Powerful road grip

Creat associations,Partnership

Smoother, stable,

Comfortable

Shift in OEMs preferences

4 P’sProduct :- Microgrip radial tyresPlace:- Indian marketPrice:- Rs.4000 per tyre.Promotion:- Initially company did soft launch but could not

achieve expected results. Relaunch- to promote the brand, the company launched an

advertising and sales promotion campaign.

The brand was positioned on the conventional features benefit platform.

The company made a punchline in there advertisement as “Drive home safely on Microgrip”

and “More miles at lower cost with Microgrip” .

SegmentationTargetingPositioningDistributing

Segmentation:-

1. Light commercial vehicles2. Passenger car segment3. Two wheeler market

STPD:-

Contd.. Targeting:-1. Replacement market2. OEM 3. Export market.Positioning:- 1. Indian market mainly at south west market

and2. Export market3. Positioning strategy was based on rational

motive of the cost-benefit ratio or the concept of economic value.

Distributing:- Through its agencies ,wholesellers and

retailers.

Demand projections of car tyres:-Particulars 1995-96 1996-97 2000-01

Replacement potential

1587 1653 2047

OE potential 1319 1430 2029

Others 5 5 5 0

Total domestic potential

2911 3096 4082

Export potential

55 60 70

Total projection

2966 3156 4152

Demand projections of light commercial vehicles tyres :-

Particulars 1995-96 1996-97 2000-01

Replacement potential

939 1073 1665

OE potential 595 682 1184

Others 5 14 14 0

Total domestic potential

1548 1769 1863

Export potential

64 71 104

Total projection 1612 1840 2967

Demand projections of utility vehicles tyres:-

Particulars 1995-96 1996-97 2000-01

Replacement potential

626 672 944.48

OE potential 279 318 538

Others 5 10 10 0

Total domestic potential

918 1000 1492

Export potential

0 0 0

Total projection

918 1000 149

Conclusion: o The company should have reduced

the cost of tyres to attract the price sensitive customers and to do this they have to segregate their product in 2 brands.

o In this way they can attract the customers that are ready to pay a little extra or almost the same price as the conventional tyres and get the added benefits that is offered by radial tyres.

o Zen also has to convince the OEMs to supply radial tyres as factory fitted tyres.

Contd…o Once the OEMs start using radial

tyres the demand for them would eventually increase to two folds or more.

o Zen has to offer after sales service to the customers and provide continuous discussion agendas as to how to improve on the product to suit their demand.

Bibliography

www.wikipedia.comwww.google.comhttp://www.michelinag.co

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