1

SUMMER TRAINING PROJECT REPORT

ON
SUCCESS STORY OF MRF TYRE IN INDIA
(Ms BY MRF)

A report submitted to Ishan Institute of Management & Technology, Greater Noida as
a partial fulfillment to full time post graduate diploma in Business management.

Under the Guidance of
Raushan kumar( Marketing manager)

Submitted To: Submitted By:
Dr.D.K.Garg, DILIP KUMAR JHA
Chairman, ENR No: BM18022
IIMT.Gr. .Noida Batch: 2012-2014


Ishan Institute of Management &Technology
1A, Knowledge Park -1,Greater Noida, Dist.-G.B.Nagar (U.P.)
Website:www.ishanfamily.com
E-Mail: student@ishanfamily








2

PREFACE

I DILIP KUMAR JHA student of Ishan Institute of Management and Technology is
pursuing PGDM (BM) course. And towards the partial fulfillment of it, I have
undergone a summer project for the period of two months (8 weeks) & I am pleased
to present the summer project Report on SUCCESS STORY OF MRF TYRE IN
INDIA
I have put my endeavor to make the objective accomplished in the stipulated time.
Being a neophyte in the highly competitive world of business and in cooperate world,
I have come across difficulties to make the objective a reality. Anyhow with the kind
help and genuine interest formally supported by extreme support of my guide and
college authorities, I am presenting this hand carved efforts.

The purpose of this project is to test the level of competency of an employee based on
the above aspects. Competencies comprise the knowledge, skills, values, and
attributes demonstrated through behavior that results in competent and superior
performance. Competency describes what superior performance actually does on a
job that produces superior results.
Guidance, cooperation, and inspiration are the important factors in the
accomplishment of an assigned task. I am most indebted to those mentioned below for
their moral and active support.
Firstly, I would like to express my deepest sense of gratitude to my parents for
rendering their moral support.

I acknowledge my heartiest thanks to Mr. raushan kumar for his support and esteemed
suggestions during the making of this project.

I would also like to acknowledge my immense gratitude to our honorable chairman
sir, Dr. D.K Garg who has given us this opportunity to work on this summer project.






3

ACKNOWLEDGMENT

I take the opportunity to express my gratitude to all of them who in some or the other
way helped me to accomplish this project. The study cannot be completed without
your guidance, assistance, inspiration and co-operation.
First and foremost, I am very thankful to all the officers who really helped a lot and
guided me throughout my training session, without their help I would have been
unable to complete my project. These people have really been kind enough in
providing me all kind available data and information.
I also express my thanks to the officers and staff of the Training Institute, Bokaro
Steel Plant.
I would also like to thank with my deep sense of gratitude to the chairman of Ishan
Institute Of Management & Technology Dr. D.K. GARG who throughout my session
of training helped me to achieve my desirable goal to perfection.

DILIP KUMAR JHA
Enr. No: - BM18022














4

DECLARATION


The summer training Project on SUCCESS STORY OF MRF TYRE IN INDIA
under the guidance of Mr. raushan kumar is the original work done by me. This is the
property of Ishan Institute of Management and Technology, and use of this report without
prior permission of the institute will be considered illegal and actionable.


Date: Signature
(DILIP KUMAR JHA)
Enr. No: - BM18022


















5

EXECUTIVE SUMMARY

Dealers network and customer relationship is very crucial for every business
organization. Every product produced within an industry has to be marketed otherwise
it will remain as unsold stock, which will be of no value. I have realized this fact after
completion of my summer training project. During my training my objective of
project was to analyze and go-through the entire DEALERS NETWORK AND
CUSTOMER RELATIONSHIP OF MRF in which, I studied the distribution
network of cement, the inventory management process, the production process, the
logistics cost, the warehousing and the market segmentation.

The results of the study reveal that the products distribution process activities in tyre
industries are very important and airs in tyre industry there is large number of
manufacturer of cement thats why proper distribution of products within time is very
much needed for building the brand image among customers. These all are done
through the activities like order received from market, raw material demand, order
placed for production, and dispatch of finished goods to the customers through dealers
and distributors. Hence, tyre industries requires proper products distribution and
marketing activities for increasing the sales volume in competitive environment.
In todays scenario, marketing is acknowledged as one of the most potent sources in
contributing directly and significantly in the growth of any organization. This project
attempts to explore the most effective products distribution process for smoothly
achieving organizational objective.
The main research objective was to understand the relevance of wide variety of
methods and techniques that can be explored towards performance of the
organizational goal. In todays competitive world every organization is geared
towards maximum return with minimum investment. Marketing plays a vital role
towards planning & controlling cost effective manpower support.
Canalizing human energies in a predetermined desirable direction are not possible
unless harmonious relations are maintained among team members involved in
business development. The way adopted by companies to manage grievances and
stress and thereby motivating the employees and reducing employee turnover were
studied through the project.


6

LITERATURE REVIEW

Doing training was really an opportunity before me when I could convert my
theoretical knowledge into practical and of real world type. Fortunately, the company
I got is a true follower of the various principles of management and also is the largest
company in its segment of the industry. The working environment that I was being
provided was extraordinary and helped me a lot in delivering my work properly and
with full potency of mine.
. I did my summer training in the Marketing Department of MRF, where I found all
the professionals are very much committed to their work as well as they were all
professionals enough. This helped me a lot in getting a good deal of exposure. As I
had to consult the chief, Managers and Supervisors, I felt myself, in the beginning, in
a bit problem. But the cooperation of my superiors at the work induced Confidence in
me to deal with my problems whenever they came. After this I was able to move my
project to correct and effective direction.
Since I had to complete my project within a limited time frame, this made me
experience the actual stress of the workplace. This I think will work as real booster
when I will go to work after the completion of the PGDM (BM) course at IIMT,
Greater Noida. The way the boss supported me and his other subordinates was a good
example of co ordination and good manager. This shows that in the corporate world
the superior officer should not only take care of the target fulfilled but also the
behavioral aspect of the subordinates.
Working with the colleagues was a great experience as I came to know that how a
person can work as a team in a multifarious industry to achieve the organizational
goal. Many a times, while working, I had to sacrifice my personal feelings and
aspirations just to keep the organizational interests in my mind by giving it the top
most priority. Indeed, I always tried to do justice with my duties even at the cost of
my personal life for the time being. But this could be a success, as I got continuous
support from my guide as well as other officers &Colleagues.
So, at last I would like to thank my institution for providing me with the opportunity
to do summer training am also grateful to the MRF for providing me all the assistance
in completing my project.


7

INDEX
SERIAL NO. TOPIC PAGE NO.
1 Preface 02
2 Certificate 03
3 Acknowledgement 04
4 Declaration 05
5 Executive summary 06
6 Literature review 07-08
Chapter 1 Introduction Of Tyre Industry in India

9-119
Chapter 2 An Overview Of MRF
Historical Background
Mission & Vision
Objective Of The Company
120-145
Chapter 3 Products Of MRF 147-194
Chapter 4 Target Customers Of MRF

195-198
Chapter 5

Supply Chain Management In MRF 199-205
Chapter 6 Pricing Strategy Of MRF 206-207
Chapter 7 Advertisement and Sales Promotion
Of MRF
208-214
Chapter 8 Marketing Strategy Of MRF 215-220
Chapter 9 Scope Of Radial Tyres In India 221-225


8

Chapter 10 Exports of Tyres from India 226-229
Chapter 11 Failure Of Radial Tyres 230-236
Chapter 12 Findings & Suggestions
Conclusions
Bibliographie
237-240
241
242-243






















9




Chapter 1
INTRODUCTION OF TYRE INDUSTRY IN INDIA

TYRE



A tire (in American English and Canadian English) or tyre (in some Commonwealth
Nations such as UK, Australia and New Zealand) is a ring-shaped covering that fits
around a wheel rim to protect it and enable better vehicle performance by providing a
flexible cushion that absorbs shock while keeping the wheel in close contact with the
ground. The word itself may be derived from the word "tie," which refers to the outer
steel ring part of a wooden cart wheel that ties the wood segments together (see
Etymology below).
The fundamental materials of modern tires are synthetic rubber, natural rubber, fabric
and wire, along with other compound chemicals. They consist of a tread and a body.
The tread provides traction while the body ensures support. Before rubber was


10

invented, the first versions of tires were simply bands of metal that fitted around
wooden wheels to prevent wear and tear. Today, the vast majority of tires are
pneumatic inflatable structures, comprising a doughnut-shaped body of cords and
wires encased in rubber and generally filled with compressed air to form an inflatable
cushion. Pneumatic tires are used on many types of vehicles, such as cars, bicycles,
motorcycles, trucks, earthmovers, and aircraft.


The Oxford English Dictionary suggests that the word derives from "attire", while
other sources suggest a connection with the verb "to tie". From the 15th to the 17th
centuries the spellings tire and tyre were used without distinction; but by 1700 tyre
had become obsolete and tire remained as the settled spelling. In the UK, the spelling
tyre was revived in the 19th century for pneumatic tires, though many continued to
use tire for the iron variety. The Times newspaper in Britain was still using tire as late
as 1905. The 1911 edition of the Encyclopdia Britannica states that "[t]he spelling
'tyre' is not now accepted by the best English authorities, and is unrecognized in the
US", while Fowler's Modern English Usage of 1926 says that "there is nothing to be
said for 'tyre', which is etymologically wrong, as well as needlessly divergent from
our own [sc. British] older & the present American usage". However, over the course
of the 20th century tyre became established as the standard British spelling.


HISTORY OF TYRE

The earliest tires were bands of iron (later steel), placed on wooden wheels, used on
carts and wagons. The tire would be heated in a forge fire, placed over the wheel and
quenched, causing the metal to contract and fit tightly on the wheel. A skilled worker,
known as a wheelwright, carried out this work. The outer ring served to "tie" the
wheel segments together for use, providing also a wear-resistant surface to the
perimeter of the wheel. The word "tire" thus emerged as a variant spelling to refer to
the metal bands used to tie wheels.


11

The first practical pneumatic tire was made by John Boyd Dunlop while working as a
veterinarian in May Street, Belfast, Ireland in 1887 for his son's bicycle, in an effort to
prevent the headaches his son had while riding on rough roads (Dunlop's patent was
later declared invalid because of prior art by fellow Scot Robert William Thomson).
Dunlop is credited with "realizing rubber could withstand the wear and tear of being a
tire while retaining its resilience". The development of this technology hinges on
myriad engineering advances. In terms of materials, the vulcanization of natural
rubber is credited to Charles Goodyear and Robert William Thomson. Synthetic
rubbers were invented in the laboratories of Bayer in the 1920's. Today, over 1 billion
tires are produced annually in over 400 tire factories, see List of Tire Companies.
MANUFACTURING OF TYRE
Pneumatic tires are manufactured in around 450 tire factories in the world. Over 1
billion tires are manufactured annually, making the tire industry the major consumer
of natural rubber. In 2015 1.72 billion tires are expected to be sold globally. Tire
production start with bulk raw materials such as rubber, carbon black, and chemicals
and produce numerous specialized components that are assembled and cured. Many
kinds of rubber are used, the most common being styrene-butadiene copolymer. This
article describes the components assembled to make a tire, the various materials used,
the manufacturing processes and machinery, and the overall business model.


Styrene-butadiene copolymer is the most popular material used in the production of
rubber tires.
In 2004, $80 billion of tires were sold worldwide, in 2010 it was $140 billion.
The top five tire manufacturing companies by revenue are Bridgestone, Michelin,
Goodyear, Continental, and


12


COMPONENTS OF TYRE
TREAD
The tread is the part of the tire that comes in contact with the road surface. The
portion that is in contact with the road at a given instant in time is the contact patch.
The tread is a thick rubber, or rubber/composite compound formulated to provide an
appropriate level of traction that does not wear away too quickly. The tread pattern is
characterized by the geometrical shape of the grooves, lugs, voids and sipes. Grooves
run circumferentially around the tire, and are needed to channel away water. Lugs are
that portion of the tread design that contacts the road surface. Voids are spaces
between lugs that allow the lugs to flex and evacuate water. Tread patterns feature
non-symmetrical (or non-uniform) lug sizes circumferentially to minimize noise
levels at discrete frequencies. Sipes are valleys cut across the tire, usually
perpendicular to the grooves, which allow the water from the grooves to escape to the
sides in an effort to prevent hydroplaning.
Treads are often designed to meet specific product marketing positions. High
performance tires have small void ratios to provide more rubber in contact with the
road for higher traction, but may be compounded with softer rubber that provides
better traction, but wears quickly. Mud and snow (M&S) tires are designed with
higher void ratios to channel away rain and mud, while providing better gripping
performance. Specialized tires will always work better than general/all purpose/all
weather tires when being used in the conditions the specialized tires are designed for.
TREAD LUG
Tread lugs provide the contact surface necessary to provide traction. As the tread lug
enters the road contact area, or footprint, it is compressed. As it rotates through the
footprint it is deformed circumferentially. As it exits the footprint, it recovers to its
original shape. During the deformation and recovery cycle the tire exerts variable
forces into the vehicle. These forces are described as Force Variation
TREAD VOID


13

Tread voids provide space for the lug to flex and deform as it enters and exits the
footprint. Voids also provide channels for rainwater, mud, and snow to be channeled
away from the footprint. The void ratio is the void area of the tire divided by the
entire tread area. Low void areas have high contact area and therefore higher traction
on clean, dry pavement.
RAIN GROOVE
The rain groove is a design element of the tread pattern specifically arranged to
channel water away from the footprint. Rain grooves are circumferential in most truck
tires. Many high performance passenger tires feature rain grooves that are angled
from the center toward the sides of the tire. Some tire manufacturers claim that their
tread pattern is designed to actively pump water out from under the tire by the action
of the tread flexing. This results in a smoother ride in different types of weather.
SIPE
Tread lugs often feature small narrow voids, or sipes, that improve the flexibility of
the lug to deform as it traverses the footprint area. This reduces shear stress in the lug
and reduces heat build up. Testing of identical siped and unsiped tires showed
measurable improvements in snow traction and ice braking performance, however
diminishing and extending braking distances on wet and dry pavement by a few feet
on siped tires. Off-road tire enthusiasts have been siping tires for years for greater
traction, as many manufacturers now offer already siped off-road-tires.
WEAR BAR
Wear bars (or wear indicators) are raised features located at the bottom of the tread
grooves that indicate the tire has reached its wear limit. When the tread lugs are worn
to the point that the wear bars connect across the lugs, the tires are fully worn and
should be taken out of service. Most wear bars indicate a remaining tread depth of 1.6
millimetres (0.063 in) and are deemed "worn out" at that point.
BEAD


14

The bead is that part of the tire that contacts the rim on the wheel. The bead is
typically reinforced with steel wire and compounded of high strength, low flexibility
rubber. The bead seats tightly against the two rims on the wheel to ensure that a
tubeless tire holds air without leakage. The bead fit is tight to ensure the tire does not
shift circumferentially as the wheel rotates. The width of the rim in relationship to the
tire is a factor in the handling characteristics of an automobile, because the rim
supports the tire's profile.
SIDEWALL
The sidewall is that part of the tire that bridges between the tread and bead. The
sidewall is largely rubber but reinforced with fabric or steel cords that provide for
strength and flexibility. The sidewall transmits the torque applied by the drive axle to
the tread to create traction. The sidewall, in conjunction with the air inflation, also
supports the load of the vehicle. Sidewalls are molded with manufacturer-specific
detail, government mandated warning labels, and other consumer information, and
sometimes decorative ornamentation, like whitewalls.

SHOULDER

The shoulder is that part of the tire at the edge of the tread as it makes transition to the
sidewall.

PLY

Plies are layers of relatively inextensible cords embedded in the rubber to hold its
shape by preventing the rubber from stretching in response to the internal pressure.


15

The orientations of the plies plays a large role in the performance of the tire and is one
of the main ways that tires are categorized.

ASSOCIATED COMPONENTS

WHEEL

Tires are mounted onto wheels that have most often have integral rims on their outer
edges to hold the tire. Automotive wheels are typically made from pressed and welded
steel, or a composite of lightweight metal alloys, such as aluminum or magnesium.
These alloy wheels may be either cast or forged. The mounted tire and wheel
assembly is then bolted to the vehicle's hub. A decorative hubcap and trim ring may
be placed over the wheel.

RIM

The beads of the tire are held on the rim, or the "outer edge" of a wheel. These outer
edges are shaped to obtain a proper shape on each side, having a radially cylindrical
inclined inner wall on which the tire can be mounted. The wheel's rim must be of the
proper design and type to hold the bead of the appropriately sized tire. Tires are
mounted on the wheel by forcing its beads into the channel formed by the wheel's
inner and outer rims.




INNER TUBE
Most bicycle tires, many motorcycle tires, and many tires for large vehicles such as
buses, heavy trucks, and tractors are designed for use with inner tubes. Inner tubes are
torus-shaped balloons made from an impermeable material, such as soft, elastic
synthetic rubber, to prevent air leakage. The inner tubes are inserted into the tire and
inflated to retain air pressure.Large inner tubes, which are large inflatable toruses, can
be re-used for other purposes, such as swimming and rafting (see swim ring), tubing


16

(recreation), sledding, and skitching. Purpose-built inflatable toruses are also
manufactured for these uses, offering choice of colors, fabric covering, handles,
decks, and other accessories, and eliminating the protruding valve stem.
VALVE STEM
The valve stem is a tube made of metal or rubber, through which the tire is inflated,
with a check valve, typically a Schrader valve on automobiles and most bicycle tires,
or a Presta valve on high-performance bicycles. Valve stems usually protrude through
the wheel for easy access. They mount directly to the rim, in the case of tubeless tires,
or are an integral part of the inner tube. The rubber in valve stems eventually
degrades, and, in the case of tubeless tires, replacement of the valve stem at regular
intervals or with tire replacement reduces the chance of failure.

Schrader valve stem with its cap removed
CONSTRUCTIONS TYPES

BIAS

Bias tire (or cross ply) construction utilizes body ply cords that extend diagonally
from bead to bead, usually at angles in the range of 30 to 40 degrees, with successive
plies laid at opposing angles forming a crisscross pattern to which the tread is applied.
The design allows the entire tire body to flex easily, providing the main advantage of
this construction, a smooth ride on rough surfaces. This cushioning characteristic also
causes the major disadvantages of a bias tire: increased rolling resistance and less
control and traction at higher speeds.


17


BELTED BIAS

A belted bias tire starts with two or more bias-plies to which stabilizer belts are
bonded directly beneath the tread. This construction provides smoother ride that is
similar to the bias tire, while lessening rolling resistance because the belts increase
tread stiffness. The plies and belts are at different angles, which improves
performance compared to non-belted bias tires. The belts may be cord or steel.


A cross-section of a tire showing ply orientations

RADIAL

Radial tire construction utilizes body ply cords extending from the beads and across
the tread so that the cords are laid at approximately right angles to the centerline of
the tread, and parallel to each other, as well as stabilizer belts directly beneath the
tread. The belts may be cord or steel. The advantages of this construction include
longer tread life, better steering control, and lower rolling resistance. Disadvantages
of the radial tire include a harder ride at low speeds on rough roads and in the context
of off-roading, decreased "self-cleaning" ability and lower grip ability at low speeds.

SOLID

Many tires used in industrial and commercial applications are non-pneumatic, and are
manufactured from solid rubber and plastic compounds via molding operations. Solid
tires include those used for lawn mowers, skateboards, golf carts, scooters, and many
types of light industrial vehicles, carts, and trailers. One of the most common


18

applications for solid tires is for material handling equipment (forklifts). Such tires are
installed by means of a hydraulic tire press.

SEMI-PNEUMATIC
Semi-pneumatic tires have a hollow center, but they are not pressurized. They are
light-weight, low-cost, puncture proof, and provide cushioning. These tires often
come as a complete assembly with the wheel and even integral ball bearings. They are
used on lawn mowers, wheelchairs, and wheelbarrows. They can also be rugged,
typically used in industrial applications, and are designed to not pull off their rim
under use.
Tires that are hollow but are not pressurized have also been designed for automotive
use, such as the Tweel (a portmanteau of tire and wheel), which is an experimental
tire design being developed at Michelin. The outer casing is rubber as in ordinary
radial tires, but the interior has special compressible polyurethane springs to
contribute to a comfortable ride. Besides the impossibility of going flat, the tires are
intended to combine the comfort offered by higher-profile tires (with tall sidewalls)
with the resistance to cornering forces offered by low profile tires. They have not yet
been delivered for broad market use.
SPECIFICATIONS
TYRE PRESSURE MONITORING SYSTEM

Tire pressure monitoring systems (TPMS) are electronic systems that monitor the tire
pressures on individual wheels on a vehicle, and alert the driver when the pressure
goes below a warning limit. There are several types of designs to monitor tire
pressure. Some actually measure the air pressure, and some make indirect
measurements, such as gauging when the relative size of the tire changes due to lower
air pressure.


INFLATION PRESSURE



19

Tires are specified by the vehicle manufacturer with a recommended inflation
pressure, which permits safe operation within the specified load rating and vehicle
loading. Most tires are stamped with a maximum pressure rating. For passenger
vehicles and light trucks, the tires should be inflated to what the vehicle manufacturer
recommends, which is usually located on a decal just inside the driver's door or in the
vehicle owners handbook. Tires should not generally be inflated to the pressure on the
sidewall; this is the maximum pressure, rather than the recommended pressure. High
performance and dynamic drivers often increase the tire pressure to near the
maximum pressure as printed on the sidewall. This is done to sacrifice comfort for
performance and safety. It is definitely very dangerous to allow tire pressure to drop
below the recommended placard vehicle pressure, although this is commonly done
temporarily when driving on sand to reduce chance of bogging. The reason for this is
that it increases the amount of tire wall movement as a result of cornering forces.
Should a low pressure tire be forced to perform an evasive maneuver, the tire wall
will be more pliable than had it been of a higher pressure, and thus it will "roll" under
the wheel. This increases the entire roll movement of the car, and diminishes tire
contact area on the negative side of the vector. Thus only half the tire is in contact
with the road, and the tire may deform to such an extent that the side wall on the
positive vector side becomes in contact with the road. The probability of failing in the
emergency maneuver is thus increased.
Further, with low tire pressuredue to the side wall being more pliablethe tire will
absorb more of the irregular forces from normal driving, and with this constant
bending of the side wall as it absorbs the contours of the road, it heats up the tire wall
to possibly dangerous temperatures, as well as degrades the steel wire reinforcement;
this often leads to side wall blow-outs. In an extreme case of this phenomenon, the
vehicle may drive into a pot-hole, or a hard elevation in the road. Due to the low tire
pressure, the side wall at the contact area will temporarily collapse, thereby wedging
the tire between the wheel and road, resulting in a tire laceration and blow-out, as well
as a damaged wheel. High tire pressures are more inclined to keep its shape during
any encounter, and will thus transmit the forces of the road to the suspension, rather
than being damaged itself. This allows for an increased reaction speed, and "feel" the
driver perceives of the road. Modern tire designs allow for minimal tire contact
surface deformity during high pressures, and as a result the traditional wear on the


20

center of the tire due to reasonably high pressures is only known to very old or poorly
designed tires.
Feathering occurs on the junction between the tire tread and side wall, as a result of
too low tire pressures. This is as a result of the inability of the tire to perform
appropriately during cornering forces, leading to aberrant and shearing forces on the
feathering area. This is due to the tire moving sideways underneath the wheel as the
tire pressures are insufficient to transmit the forces to the wheel and suspension. It
may be, that very high tire pressures have only two downsides: The sacrifice in
comfort; and the increased chance of obtaining a puncture when driving over sharp
objects, such as on a newly scraped gravel road. Many individuals have maintained
their tire pressures at the maximum side wall printed value (inflated when cold) for
the entire lifetime of the tire, with perfect wear until the end. This may be of negative
economic value to the rubber and tire companies, as high tire pressures decrease wear,
and minimize side wall blow outs.
Many pressure gauges available at fuel stations have been de-calibrated by
manhandling and the effect of time, and it is for this reason that vehicle owners should
keep a personal pressure gauge with them to validate the correct tire pressure.
During the early stages of tire engineering, and with current basic tires, the tire
contact patch is readily reduced by both over-and-under inflation. Over-inflation may
increase the wear on the center contact patch, and under-inflation will cause a concave
tread, resulting in less center contact. Most modern tires will wear evenly at very high
tire pressures, but will degrade prematurely due to low (or even standard) pressures.
An increased tire pressure has many benefits, including decreased rolling resistance. It
has been found, that an increased tire pressure almost exclusively results in shorter
stopping distances, except in some circumstances that may be attributed to the low
sample size. If tire pressure is too low, the tire contact patch is changed more than if it
were over-inflated. This increases rolling resistance, tire flexing, and friction between
the road and tire. Under-inflation can lead to tire overheating, premature tread wear,
and tread separation in severe cases.
Tires are not completely impermeable to air, and so lose pressure over time naturally.
Some drivers inflate tires with nitrogen, instead of simple air, which is already 78%


21

nitrogen, in an attempt to keep the tires at the proper inflation pressure longer, though
the effectiveness of this is debatable.
LOAD RATING
Tires are specified by the manufacturer with a maximum load rating. Loads exceeding
the rating can result in unsafe conditions that can lead to steering instability and even
rupture.
SPEED RATING
The speed rating denotes the maximum speed at which a tire is designed to be
operated. For passenger vehicles these ratings range from 99 to 186 miles per hour
(159 to 299 km/h).
SERVICE RATING
Tires (especially in the U.S.) are often given service ratings, mainly used on bus and
truck tires. Some ratings are for long haul, and some for stop-start multi-drop type
work. Tires designed to run 500 miles (800 km) or more per day carrying heavy loads
require special specifications.
TREADWEAR RATING
The treadwear rating or treadwear grade describes how long the tire manufacturers
expect the tire to last. A Course Monitoring Tire (the standard tire that a test tire will
be compared to) has a rating of "100". If a manufacturer assigns a treadwear rating of
200 to a new tire, they are indicating that they expect the new tire to have a useful
lifespan that is 200% of the life of a Course Monitoring Tire. The "test tires" are all
manufacturer-dependent. Brand A's rating of 500 is not necessarily going to give you
the same mileage rating as Brand B's tire of the same rating. The testing is non-
regulated and can vary greatly. Treadwear ratings are only useful for comparing
Brand A's entire lineup against itself. Tread wear, also known as tire wear, is caused
by friction between the tire and the road surface. Government legal standards
prescribe the minimum allowable tread depth for safe operation.


22

ROTATION
Tires may exhibit irregular wear patterns once installed on a vehicle and partially
worn. Furthermore, front-wheel drive vehicles tend to wear the front tires at a greater
rate compared to the rears. Tire rotation is the procedure of moving tires to different
car positions, such as front-to-rear, in order to even out the wear, thereby extending
the life of the tire. However care must be taken with unidirectional tires (tires that are
designed to rotate in one direction only, for a vehicle that is going forward) so that the
correct rotational direction - indicated on the side wall with an arrow-like symbol - is
maintained after the swap.
WHEEL ALIGNMENT
When mounted on the vehicle, the wheel and tire may not be perfectly aligned to the
direction of travel, and therefore may exhibit irregular wear. If the discrepancy in
alignment is large, then the irregular wear will become substantial if left uncorrected.
Wheel alignment is the procedure for checking and correcting this condition through
adjustment of camber, caster and toe angles. These settings also affect the handling
characteristics of the vehicle.
RETREAD
Tires that are fully worn can be re-manufactured to replace the worn tread. This is
known as retreading or recapping, a process of buffing away the worn tread and
applying a new tread. Retreading is economical for truck tires because the cost of
replacing the tread is less than the price of a new tire. Retreading passenger tires is
less economical because the cost of retreading is high compared to the price of new
cheap tires, but favorable compared to high-end brands.
Worn tires can be retreaded by two methods, the mold or hot cure method and the pre-
cure or cold one. The mold cure method involves the application of raw rubber on the
previously buffed and prepared casing, which is later cured in matrices. During the
curing period, vulcanization takes place and the raw rubber bonds to the casing,
taking the tread shape of the matrix. On the other hand, the pre-cure method involves


23

the application of a ready-made tread band on the buffed and prepared casing, which
later is cured in an autoclave so that vulcanization can occur.
During the retreading process, retread technicians must ensure the casing is in the best
condition possible to minimize the possibility of a casing failure. Casings with
problems such as capped tread, tread separation, unrepairable cuts, corroded belts or
sidewall damage, or any run-flat or skidded tires, will be rejected.
In most situations, retread tires can be driven under the same conditions and at the
same speeds as new tires with no loss in safety or comfort. The percentage of retread
failures should be about the same as for new tire failures, but many drivers, including
truckers, are guilty of not maintaining proper air pressure on a regular basis, and, if a
tire is abused (overloaded, underinflated, or mismatched to the other tire on a set of
duals), then that tire (new or recapped) will fail.
Many commercial trucking companies put retreads only on trailers, using only new
tires on their steering and drive wheels. This procedure increases the driver's chance
of maintaining control in case of problems with a retreaded tire.
PERFORMANCE CHARACTERISTICS
The interaction of a tire with the pavement is a very complex phenomenon. Many of
the details are modeled in Pacejka's Magic Formula. Some are explained below.
BALANCE
When a wheel and tire rotate, they exert a centrifugal force on the axle that depends
on the location of their center of mass and the orientation of their moment of inertia.
This is referred to as balance, imbalance, or unbalance. Tires are checked at the point
of manufacture for excessive static imbalance and dynamic imbalance using
automatic tire balance machines. Tires are checked again in the auto assembly plant or
tire retail shop after mounting the tire to the wheel. Assemblies that exhibit excessive
imbalance are corrected by applying balance weights to the wheels to counteract the
tire/wheel imbalance.


24

To facilitate proper balancing, most high performance tire manufacturers place red
and yellow marks on the sidewalls to enable the best possible match-mounting of the
tire/wheel assembly. There are two methods of match-mounting high performance tire
to wheel assemblies using these red (uniformity) or yellow (weight) marks.
CAMBER THRUST
Camber thrust and camber force are terms used to describe the force generated
perpendicular to the direction of travel of a rolling tire due to its Camber angle and
finite contact patch.
CENTRIFUGAL GROWTH
A tire rotating at higher speeds tends to develop a larger diameter, due to centrifugal
forces that force the tread rubber away from the axis of rotation. This may cause
speedometer error. As the tire diameter grows, the tire width decreases. This
centrifugal growth can cause rubbing of the tire against the vehicle at high speeds.
Motorcycle tires are often designed with reinforcements aimed at minimizing
centrifugal growth.
CIRCLE OF FORCES
The circle of forces, traction circle, friction circle, or friction ellipse is a useful way to
think about the dynamic interaction between a vehicle's tire and the road surface.
CONTACT PATH
The contact patch, or footprint, of the tire, is the area of the tread that is in contact
with the road surface. This area transmits forces between the tire and the road via
friction. The length-to-width ratio of the contact patch affects steering and cornering
behavior.
CORNERING FORCE
Cornering force or side force is the lateral (i.e. parallel to the road surface) force
produced by a vehicle tire during cornering.


25

DRY TRACTION
Dry traction is measure of the tire's ability to deliver traction, or grip, under dry
conditions. Dry traction is a function of the tackiness of the rubber compound.
FORCE VARIATION
The tire tread and sidewall elements undergo deformation and recovery as they enter
and exit the footprint. Since the rubber is elastomeric, it is deformed during this cycle.
As the rubber deforms and recovers, it imparts cyclical forces into the vehicle. These
variations are collectively referred to as tire uniformity. Tire uniformity is
characterized by radial force variation (RFV), lateral force variation (LFV) and
tangential force variation. Radial and lateral force variation is measured on a force
variation machine at the end of the manufacturing process. Tires outside the specified
limits for RFV and LFV are rejected. Geometric parameters, including radial runout,
lateral runout, and sidewall bulge, are measured using a tire uniformity machine at the
tire factory at the end of the manufacturing process as a quality check. In the late
1990s, Hunter Engineering introduced the GSP9700 Road Force balancer, which is
equipped with a load roller similar to the force variation machine used at the factory
to grade tire uniformity. This machine can find the best position for the tire on a given
wheel so that the over-all assembly is as round as possible.
LOAD SENSITIVITY
Load sensitivity is the behaviour of tires under load. Conventional pneumatic tires do
not behave as classical friction theory would suggest. Namely, the load sensitivity of
most real tires in their typical operating range is such that the coefficient of friction
decreases as the vertical load, Fz, increases.
PNEUMATIC TRAIL
Pneumatic trail of a tire is the trail-like effect generated by compliant tires rolling on a
hard surface and subject to side loads, as in a turn. More technically, it is the distance
that the resultant force of side-slip occurs behind the geometric center of the contact
patch.


26

RELAXATION LENGTH
Relaxation length is the delay between when a slip angle is introduced and when the
cornering force reaches its steady-state value.
ROLLING RESISTANCE
Rolling resistance is the resistance to rolling caused by deformation of the tire in
contact with the road surface. As the tire rolls, tread enters the contact area and is
deformed flat to conform to the roadway. The energy required to make the
deformation depends on the inflation pressure, rotating speed, and numerous physical
properties of the tire structure, such as spring force and stiffness. Tire makers seek
lower rolling resistance tire constructions to improve fuel economy in cars and
especially trucks, where rolling resistance accounts for a high proportion of fuel
consumption.
Pneumatic tires also have a much lower rolling resistance than solid tires. Because the
internal air pressure acts in all directions, a pneumatic tire is able to "absorb" bumps
in the road as it rolls over them without experiencing a reaction force opposite to the
direction of travel, as is the case with a solid (or foam-filled) tire. The difference
between the rolling resistance of a pneumatic and solid tire is easily felt when
propelling wheelchairs or baby buggies fitted with either type so long as the terrain
has a significant roughness in relation to the wheel diameter.
SELF ALIGNING TORQUE
Self aligning torque, also known as the aligning torque, SAT or Mz, is the torque that
a tire creates as it rolls along that tends to steer it, i.e. rotate it around its vertical axis.


STOPPING DISTANCE


27

Performance-oriented tires have a tread pattern and rubber compounds designed to
grip the road surface, and so usually have a slightly shorter stopping distance.
However, specific braking tests are necessary for data beyond generalizations.
WORK LOAD
The work load of a tire is monitored so that it is not put under undue stress, which
may lead to its premature failure. Work load is measured in ton kilometre per hour
(TKPH). The measurement's appellation and units are the same. The recent shortage
and increasing cost of tires for heavy equipment has made TKPH an important
parameter in tire selection and equipment maintenance for the mining industry. For
this reason, manufacturers of tires for large earth-moving and mining vehicles assign
TKPH ratings to their tires based on their size, construction, tread type, and rubber
compound. The rating is based on the weight and speed that the tire can handle
without overheating and causing it to deteriorate prematurely. The equivalent measure
used in the United States is ton mile per hour (TMPH).
TREAD WEAR
There are several types of abnormal tread wear. Poor wheel alignment can cause
excessive wear of the innermost or outermost ribs. Gravel roads, rocky terrain, and
other rough terrain causes accelerated wear. Over-inflation above the sidewall
maximum can cause excessive wear to the center of the tread. Modern tires have steel
belts built in to prevent this. Under-inflation causes excessive wear to the outer ribs.
Often, the placard pressure is too low and most tires are under-inflated as a result.

Unbalanced wheels can cause uneven tire wear, as the rotation may not be perfectly
circular. Tire manufacturers and car companies have mutually established standards
for tread wear testing that include measurement parameters for tread loss profile, lug
count, and heel-toe wear.
WET TRACTION
Wet traction is the tire's traction, or grip, under wet conditions. Wet traction is
improved by the tread design's ability to channel water out of the tire footprint and
reduce hydroplaning. However, tires with a circular cross-section, such as those found


28

on racing bicycles, when properly inflated have a sufficiently small footprint to not be
susceptible to hydroplaning. For such tires, it is observed that fully slick tires will give
superior traction on both wet and dry pavement.
MARKING

DOT CODE
In the United States, the DOT Code is an alphanumeric character sequence molded
into the sidewall of the tire for purposes of tire identification. The DOT Code is
mandated by the U.S. Department of Transportation. The DOT Code is useful in
identifying tires in a product recall.
The DOT Code begins with the letters "DOT" followed by a plant code (two numbers
or letters) that identifies where it was manufactured. The last four numbers represent
the week and year the tire was built. A three-digit code was used for tires
manufactured before 2000. For example, 178 means it was manufactured in the 17th
week of 8th year of the decade. In this case it means 1988. For tires manufactured in
the 1990s, the same code holds true, but there is a little triangle () after the DOT
code. Thus, a tire manufactured in the 17th week of 1998 would have the code 178.
In 2000, the code was switched to a 4-digit code. Same rules apply, so for example,
3003 means the tire was manufactured in the 30th week of 2003.
Other numbers are marketing codes used at the manufacturer's discretion.
E-MARK
All tires sold for road use in Europe after July 1997 must carry an E-mark. The mark
itself is either an upper case "E" or lower case "e" followed by a number in a circle
or rectangle, followed by a further number. An (upper case) "E" indicates that the tire
is certified to comply with the dimensional, performance and marking requirements of
ECE regulation 30. A (lower case) "e" indicates that the tire is certified to comply
with the dimensional, performance and marking requirements of Directive
92/23/EEC. The number in the circle or rectangle denotes the country code of the


29

government that granted the type approval. The last number outside the circle or
rectangle is the number of the type approval certificate issued for that particular tire
size and type.
MOLD SERIAL NUMBER
Tire manufacturers usually embed a mold serial number into the sidewall area of the
mold, so that the tire, once molded, can be traced back to the mold of original
manufacturer.
VEHICLE APPLICATIONS

Tires are classified into several standard types, based on the type of vehicle they
serve. Since the manufacturing process, raw materials, and equipment vary according
to the tire type, it is common for tire factories to specialize in one or more tire types.
In most markets, factories that manufacture passenger and light truck radial tires are
separate and distinct from those that make aircraft or off-the-road (OTR) tires.
PASSENGER VEHICLES AND LIGHT TRUCK
High performance
High performance tires are designed for use at higher speeds, and more often, a more
"sporty" driving style. They feature a softer rubber compound for improved traction,
especially on high speed cornering. The trade off of this softer rubber is shorter tread
life.
High performance street tires sometimes sacrifice wet weather handling by having
shallower water channels to provide more actual rubber tread surface area for dry
weather performance. The ability to provide a high level of performance on both wet
and dry pavement varies widely among manufacturers, and even among tire models of
the same manufacturer. This is an area of active research and development, as well as
marketing.


30


Mud And Snow

Mud and Snow, (or M+S, or M&S), is a designation applied rather arbitrarily by
manufacturers for all-season and winter tires designed to provide improved
performance under low temperature conditions, compared to summer tires. The tread
compound is usually softer than that used in tires for summer conditions, thus
providing better grip on ice and snow, but wears more quickly at higher temperatures.
Tires may have well above average numbers of sipes in the tread pattern to grip the
ice. There are no traction performance requirements which such a tire has to meet;
M&S relates to the percentage of tread void area.
Dedicated winter tires will bear the "Mountain/Snowflake Pictograph" if designated
as a winter/snow tire by the American Society for Testing & Materials. Winter tires
will typically also carry the designation MS, M&S, or the words MUD AND SNOW
(but see All-season tires, below).


Studded, highly siped, winter tire
Some winter tires may be designed to accept the installation of metal studs for
additional traction on icy roads. The studs also roughen the ice, thus providing better
friction between the ice and the soft rubber in winter tires. Use of studs is restricted in


31

most countries with the notable exception of the Nordic countries where they are
commonly used during the winter season outside metropolitan areas, and even
prohibited in some locales due to the increased road wear caused by studs. Typically,
studs are never used on heavier vehicles, except ice resurfacers. The upper tier classes
of ice racing

and rallying mandates the vehicles be equipped with studded tires.
Other winter tires rely on factors other than studding for traction on ice, e.g. highly
porous or hydrophilic rubber that adheres to the wet film on the ice surface.
Some jurisdictions may require snow tires or tire chains on vehicles driven in certain
areas during extreme weather conditions.
Mud tires are speciality tires with large, chunky tread patterns designed to bite into
muddy surfaces. The large, open design also allows mud to clear quickly from
between the lugs. Mud terrain tires also tend to be wider than other tires, to spread the
weight of the vehicle over a greater area to prevent the vehicle from sinking too
deeply into the mud. However in reasonable amounts of mud and snow, tires should
be thinner. Being thinner, the tire will have more pressure on the road surface, thus
allowing the tires to penetrate the snow layer and grip harder snow or road surface
beneath. This does not compensate when the snow is too deep for such penetration,
where the vehicle will sink into the snow and plough the snow in front and eventually
pack it beneath it until the wheels no longer have traction. In this case, wider tires are
preferred, as they have a larger contact patch and are better able to 'float' on top of the
mud or snow.
All Season

The All Season tire classification is a compromise between one developed for use on
dry and wet roads during summer and one developed for use under winter conditions.
The type of rubber and the tread pattern best suited for use under summer conditions
cannot, for technical reasons, give good performance on snow and ice. The all-season
tire is a compromise, and is neither an excellent summer tire nor an excellent winter
tire. They have, however, become ubiquitous as original and replacement equipment


32

on automobiles marketed in the United States, due to their convenience and their
adequate performance in most situations. Even so, in other parts of the world, like
Germany, it is common to have a designated tire set for winter and summer. All-
Season tires are also marked for mud and snow the same as winter tires but rarely
with a snowflake. Owing to the compromise with performance during summer, winter
performance is usually poorer than a winter tire.
All Terrain

All-terrain tires are typically used on SUVs and light trucks. These tires often have
stiffer sidewalls for greater resistance against puncture when traveling off-road, the
tread pattern offers wider spacing than all-season tires to remove mud from the tread.
Many tires in the all-terrain category are designed primarily for on-road use,
particularly all-terrain tires that are originally sold with the vehicle.
Spare

Some vehicles carry a spare tire, already mounted on a wheel, to be used in the event
of flat tire or blowout. Minispare, or "space-saver spare" tires are smaller than normal
tires to save on trunk/boot space, gas mileage, weight, and cost. Minispares have a
short life expectancy and a low speed rating, often below 60 miles per hour (97 km/h).
Run-Flat
Several innovative designs have been introduced that permit tires to run safely with
no air for a limited range at a limited speed. These tires typically feature strong, load-
supporting sidewalls. An infamous example of an alternate run-flat technology has
plastic load-bearing inserts attached to the rim instead of the reinforced sidewalls.
A disadvantage is that run-flat tires cannot be repaired if a puncture occurs, this is due
to manufacturer's informing the automotive industry that you cannot tell what kind of
state the sidewall is in due to the compacted sidewall of rubber.


33

Heavy Duty Truck
Heavy duty tires are also referred to as Truck/Bus tires. These are the tire sizes used
on vehicles such as commercial freight trucks, dump trucks, and passenger buses.
Truck tires are sub-categorized into specialties according to vehicle position such as
steering, drive axle, and trailer. Each type is designed with the reinforcements,
material compounds, and tread patterns that best optimize the tire performance. A
relatively new concept is the use of "Super Singles" or Wide Singles. Generally in a
dual configuration, there are 2 tires per position, each between 275 mm-295 mm wide.
The Super Single replaces these with a single tire, usually 455 mm wide. This allows
for less tread to be contacting the ground and also eliminates 2 sidewalls per position.
Along with the weight savings of about 91 kilograms (200 lb) per axle, this enables
vehicles using these to improve fuel economy.

Heavy load may require multiple tires
Off-The-Road
Off-the-road (OTR) tires include tires for construction vehicles such as wheel loaders,
backhoes, graders, trenchers, and the like; as well as large mining trucks. OTR tires
can be of either bias or radial construction although the industry is trending toward
increasing use of radial. Bias OTR tires are built with a large number of reinforcing
plies to withstand severe service conditions and high loads.
Dramatically increasing commodity prices has led to shortages of new tires. As a
consequence, multi-million dollar trucks can be idled for lack of tires, costing mines
millions of dollars in lost productivity. This has led to a stronger effort to recycle old
OTR tires. As of 2008, a new OTR tire can cost up to $50,000; retread tires are sold at


34

half the price of new tires, and last 80% as long. Retreading an OTR tire is labor
intensive. First, the retreading technician must place the old tire in a buffing machine
to remove what remains of the old tread; "skiving" follows this, which is the removal,
by hand, of material the buffing misses. Next, the technician must inspect the tire,
repairing defects. Lastly, the technician fills holes in the tire with rubber, applies a
cement gum adhesive, and places the tire on a machine that will apply a new tread.

Off-the-road (OTR) tires being transported

Agricultural
The agricultural tire classification includes tires used on farm vehicles, typically
tractors and specialty vehicles like harvesters. Driven wheels have very deep, widely
spaced lugs to allow the tire to grip soil easily. High flotation tires are used in
swampy environments and where soil compaction is a concern, featuring large
footprints at low inflation pressures.
Racing

Racing tires are highly specialized according to vehicle and race track conditions.
This classification includes tires for drag racing, Auto-x, drifting, Time Attack, Road
Racing as well as the large-market race tires for Formula One, IndyCar, NASCAR,


35

rallying, MotoGP and the like. Tires are specially engineered for specific race tracks
according to surface conditions, cornering loads, and track temperature. Racing tires
often are engineered to minimum weight targets, so tires for a 500 miles (800 km)
race may run only 100 miles (160 km) before a tire change. Some tire makers invest
heavily in race tire development as part of the company's marketing strategy and a
means of advertising to attract customers.
Racing tires often are not legal for normal highway use.

NASCAR tires
Industrial

The Industrial tire classification is a bit of a catch-all category and includes pneumatic
and non-pneumatic tires for specialty industrial and construction equipment such as
skid loaders and fork lift trucks.

Airless tyre


36

Bicycle
This classification includes all forms of bicycle tires, including road racing tires,
mountain bike tires, snow tires, and tubular tires, used also with other human-powered
vehicles (see Category:Human-powered vehicles).

A bicycle tire in the style of a cruiser

Aircraft

Aircraft tires are designed to withstand extremely heavy loads for short durations. The
number of tires required for aircraft increases with the weight of the plane (because
the weight of the airplane has to be distributed better). Aircraft tire tread patterns are
designed to facilitate stability in high crosswind conditions, to channel water away to
prevent hydroplaning, and for braking effect. Aircraft tires are usually inflated with
nitrogen or helium to minimize expansion and contraction from extreme changes in
ambient temperature and pressure experienced during flight. Dry nitrogen expands at
the same rate as other dry atmospheric gases, but common compressed air sources
may contain moisture, which increases the expansion rate with temperature. Aircraft
tires generally operate at high pressures, up to 200 pounds per square inch (14 bar;
1,400 kPa) for airliners, and even higher for business jets. Tests of airline aircraft tires
have shown that they are able to sustain pressures of maximum 800 pounds per square
inch (55 bar; 5,500 kPa) before bursting. During the test the tires have to be filled


37

with water, instead of helium or nitrogen, which is the common content of aircraft
tires, to prevent the test room being blown apart by the energy when the tire bursts.
Aircraft tires also include heat fuses, designed to melt at a certain temperature. Tires
often overheat if maximum braking is applied during an aborted takeoff or an
emergency landing. The fuses provide a safer failure mode that prevents tire
explosions by deflating in a controlled manner, thus minimizing damage to aircraft
and objects in the surrounding environment.
The requirement that an inert gas, such as nitrogen, be used instead of air for inflation
of tires on certain transport category airplanes was prompted by at least three cases in
which the oxygen in air-filled tires combined with volatile gases given off by a
severely overheated tire and exploded upon reaching autoignition temperature. The
use of an inert gas for tire inflation will eliminate the possibility of a tire explosion.

Changing a tire on a P-3C Orion aircraft
SOUND AND VIBRATION CHARACTERISTICS
The design of treads and the interaction of specific tire types with the roadway surface
type produces considerable effect upon sound levels or noise pollution emanating
from moving vehicles. These sound intensities increase with higher vehicle speeds.
The acoustic intensity produced varies considerably depending on the tire tread design
and the road surface type. There is a study "under development" that aims predict the
interior noise due to the vibrations of a rolling tire structurally transmitted to the hub
of a vehicle".
SAFETY


38

Proper vehicle safety requires specific attention to inflation pressure, tread depth, and
general condition of the tires. Over-inflated tires run the risk of explosive
decompression (they may pop). On the other hand, under-inflated tires have a higher
rolling resistance and suffer from overheating and rapid tread wear particularly on the
edges of the tread. Excessive tire wear will reduce steering and braking response and
tires worn down past their safety margins and into the casing run the very real risk of
rupturing. Also, certain combinations of cross ply and radial tires on different wheels
of the same vehicle can lead to vehicle instability, and may also be illegal. Vehicle
and tire manufacturers provide owners' manuals with instructions on how to check
and maintain tires.
Flat
A flat tire occurs when a tire deflates. This can occur as a result of normal wear-and-
tear, a leak, or more serious damage. A tire that has lost sufficient pressure will impair
the stability of the vehicle and may damage the tire further if it is driven in this
condition. The tire should be changed and/or repaired before it becomes completely
flat. Continuing to drive a vehicle with a flat tire will damage the tire beyond repair,
possibly damage the rim and vehicle, and put the occupants and other vehicles in
danger. A flat tire or low-pressure tire should be considered an emergency situation,
requiring immediate attention. Some tires, known as "run-flat tires", have either
extremely stiff sidewalls or a resilient filler to allow driving a limited distance while
flat, usually at reduced speed, without permanent damage or hazard.
A modern radial tire may not be visibly distorted even with dangerously low inflation
pressure. (This is especially true of tires with a low aspect ratio, sometimes known as
"low profile" tires.) Thus maintenance of adequate tire pressure can have important
safety implications despite the fact that most car owners neglect it. Tire designers
have tried to make new tires fail-safe so that the failure of the operator to maintain the
tire pressure won't cause a major safety concern, but there are limitations on this.


39


A flat tyre
Hydroplaning (or Aquaplaning)
Hydroplaning, also known as aquaplaning, is the condition where a layer of water
builds up between the tire and road surface. Hydroplaning occurs when the tread
pattern cannot channel away enough water at an adequate rate to ensure a semi-dry
footprint area. When hydroplaning occurs, the tire effectively "floats" above the road
surface on a cushion of water and loses traction, braking and steering, creating a
very unsafe driving condition. When hydroplaning occurs, there is considerably less
responsiveness of the steering wheel. The correction of this unsafe condition is to
gradually reduce speed, by merely lifting off the accelerator/gas pedal.
Hydroplaning becomes more prevalent with wider tires (because of the lower weight
per contact area) and especially at higher speeds; it is of virtually no concern to
bicycle tires under normal riding conditions largely because of the lower speeds. The
chance of car hydroplaning is also minimal at bicycle speeds as the weight per contact
area of car tires is not much lower if any than bicycle tires.
Dangers of Aged Tyres
Research and tests show that as tires age, they begin to dry out and become potentially
dangerous, even if unused. Aged tires may appear to have similar properties to newly
manufactured tires, but rubber degrades over time, and once the vehicle is traveling at
high speeds (i.e. on a freeway) the tread could peel off, leading to severe loss of
control. In tropical climates, such as Singapore, tires degrade sooner than in temperate
climates, and more care should be taken in these climates to ensure that tires do not


40

fail.

Also, tires on seldom-used trailers are at the greatest risk of age-failure, but some
tires are built to withstand idleness, usually with nylon reinforcement.
Many automakers recommend replacing tires after six years, and several tire
manufacturers (Bridgestone, Michelin) have called for tires to be removed from
service 10 years after the date of manufacture. However, an investigative report by
Brian Ross on ABC's 20/20 news magazine found that many major retailers such as
Goodyear, Wal-Mart, and Sears were selling tires that had been produced six or more
years ago. Currently, no law for aged tires exists in the United States.
Scrap Tyres And Environmental Issues
Once tires are discarded, they are considered scrap tires. Scrap tires are often re-used
for things from bumper car barriers to weights to hold down tarps. Some facilities are
permitted to recycle scrap tires through chipping, and processing into new products,
or selling the material to licensed power plants for fuel. Some tires may also be
retreaded for re-use. One group did "a study to evaluate the possibility of using scrap
tires as a crash cushion system. The objective of this study was to evaluate the
material properties of used tires and recycled tire-derived materials for use in low-
cost, reusable crash cushions".
An interesting use, developed over 30 years back but not yet universally used, is to
process scrap tires as raw material for roads. The process is removing the metal,
granulating the rubber and then a chemical process where it is mixed with other usual
materials for macadamised roads. The resulting roads have proved to have better
waterproofing, more resilent resulting in a smoother ride and also longer tire life.
Several countries (for example, South Korea) have regulations requiring its use, but
most do not.
Americans generate about 285 million scrap tires per year. Many states have
regulations as to the number of scrap tires that you may have on site, due to concerns
with dumping, fire hazards, and mosquitoes. In the past, millions of tires have been
discarded into open fields. This creates a breeding ground for mosquitoes, since the
tires often hold water inside and remain warm enough for mosquito breeding.
Mosquitoes create a nuisance and may increase the likelihood of spreading disease. It


41

also creates a fire danger, since such a large tire pile is a lot of fuel. Some tire fires
have burned for months, since water does not adequately penetrate or cool the burning
tires. Tires have been known to liquefy, releasing hydrocarbons and other
contaminants to the ground and even ground water, under extreme heat and
temperatures from a fire. The black smoke from a tire fire causes air pollution and is a
hazard to down wind properties.
The use of scrap tire chips for landscaping has become controversial, due to the
leaching of metals and other contaminants from the tire pieces. Zinc is concentrated
(up to 2% by weight) to levels high enough to be highly toxic to aquatic life and
plants. Of particular concern is evidence that some of the compounds that leach from
tires into water, contain hormone disruptors and cause liver lesions.


ASYMMETRIC TYRE
An asymmetric tire is a term used to describe some specific stabilization methods
used in cars.
TYRE TREAD
An asymmetric tire may refer to a tire whose tread pattern does not form in line
symmetry or point symmetry vis--vis its central line, thus having a distinct inside and
outside edge. They may be mounted on either side of the vehicle. Since the tread
pattern of many ordinary tires do not form symmetry in relation to design or pattern
noise, the method of mounting tires is specially prescribed. This type of tires is used
in many cases to promote tire performance, braking performance, and turning
performance, since tread contact changes according to the change in alignment during
travel.
Tires may also be directional, where the tread pattern favors operation in one
direction. This usually takes the form of v-shaped grooves that help to disperse water
from the center to the edge of the tread. Symmetric directional tires can be used on


42

both sides, but once mounted on a rim cannot be moved to the other side, since the
tread pattern will be in the wrong direction. This restricts tire rotation. Some
directional tires are also asymmetric, in which case there will be specific left and
right-handed versions.
STABILIZING BELTS
An asymmetric tire may refer to a passenger car radial tire in which asymmetric
structure stabilizing belts are built. Generally the stabilizing belts give a self-aligning
torque when a motor vehicle is running straight ahead as well as when it is cornering.
However, the sidewalls of the radial tire are so flexible that there will be a delay in the
lateral reaction between the tread of the tire and the rim of its wheel as the vehicle is
being steered positively. The lateral force will be transmitted from the front wheel to
the rear of the vehicle, which will tend to be steered off course. Whereas the
asymmetric belts bring a gradual change in the lateral displacement of the tire tread
corresponding to the rim while the cornering load grows. The progressive change will
harden the sidewalls to produce an immediate response to steering, which results in
safer driving.
MARKET CHARACTERISTICS OF TYRE
DEMAND
The demand for tyres can be classified in terms of:

Type: Bus and Truck; Scooter; Motorcycle; Passenger Car; Tractor
Market: OEM; Replacem


43




INDIAN TYRE INDUSTRY

Indian tyre industry exports stood at $ 834 million in 2008 showing a growth CAGR of 15.1%
during 2005 to 2008. Indian tyre manufacturers remain bullish about the export prospects of
the industry. Indian manufacturers plan to increase their European footprint through both
organic and inorganic growth strategies.
Other important markets for Indian tyres are Middle-East, Africa and US. While African
share of Indian exports averaged at 17% of the market, US averaged at only 5% during 2005
to 2008. However the growth of Indian exports in European market has beenvery quick as
compared to US and African markets. European markets remain high on the radar of Indian
tyre manufacturers.

Tyre Exports

The developments in European market will therefore have an important bearing on the
Indian tyre manufacturers. There are developments on this front beyond European and
American markets also. Possible adoption of standards similar to EU standards by UN GTR
(Global Technical Regime) is also likely. UN GTR for wheeled vehicles, equipments and parts


44

is a global forum that aims to standardize global technical standards to facilitate trade. This
development would further increase the necessity of adapting to the EU technical standards.
EU standards compliance needs a manufacturer to convey full information about some
aspects of his product to the consumer. This doesnt necessitate that a manufacturer
upgrades his manufacturing technology also, although it would be advisable in the wake of
the labeling development. The presence of such information in market would lead to
increased competitiveness in the market place based on this information which may lead to
technology upgradation needs also.
One of the possible effects of this regulation would be that the low cost manufacturers or non
compliant manufacturers would now focus more on the markets that do not have such
regulations. This could shift some exporters from Europe to African or middle-eastern
regions. This could possibly create some market space for the compliant tyre manufacturers
within European or US markets.

VEHICLE MANUFACTURER OR OEMs
The demand from the OEM segment is a derived one and directly correlated to the level of
automotive production. The OEMs demand varies significantly across categories from
between 8% for truck and bus tyres to over 50% for some other segments like, jeeps and
mopeds.

REPLACEMENT MARKET

The replacement market, including State transport undertakings and Government buying,
accounted for around 59% of the total tyre demand in FY2003. The demand in the
replacement market depends on the vehicle population, the level of economic activity, life of
the products transported, kilometreage per vehicle, the price of the tyres and the quality of the
existing road infrastructure. Additionally, the replacement market, which offers better
margins, is extremely competitive. The replacement market is dominated by the truck and
buses segment, which accounted for 22% of all tyre sales in the replacement market in


45

FY2003.The large size of the replacement in turn is determined by the interplay of
various factors as discussed below:

The replacement demand may be lower because of longer replacement intervals
and lower business mileage if the economic activity slows down.

Replacement demand in India is higher because of a low vehicle scrappage rate.

Poor road conditions by lowering the life of tyres, have a positive impact on
replacement demand.

Stricter enforcement of the MV Act, which seeks to prevent overloading of vehicles,
will result in an increase in the life of tyres and thus impact replacement demand
negatively.

Applying a new tread or "re-treading" can extend the life of the tyre at a significantly
lower cost, thereby lowering replacement demand. In India, re-treading finds greater
acceptance in the commercial segment.

Radialisation of tyres is likely to result in lower replacement demand. While car
radialisation in the country has reached a level of 65%, truck and bus radialisation
stands at just 2-10%. Poor road and support infrastructure as well as traditional
vehicle designs act as a barrier to radialisation in the commercial vehicle segment.
Radial technology for trucks and buses would help increase operating efficiencies by
delivering better mileage and minimising wear and tear. According to ATMA, even if
only 25% of the truck and bus segment is radialised, the savings in fuel costs would
be around Rs. 7,500 million.

Introduction of tubeless tyres in the passenger car segment is also likely to affect
replacement demand adversely.

Introduction of eco-friendly radial tyres such as hyper-bonding silica technology in
the passenger car segment may affect replacement demand adversely.


46


EXPOTTS
In the light of the prevailing domestic market situation, most of the tyre manufacturers
have taken to exports to reduce inventory build-ups. In FY2003, Indian tyre exports
stood at Rs. 10.8 billion (10% of the total industry) in value terms and 3.1 million in
unit terms (6.5% of total production). Indian companies have currently entered into
sourcing agreements (for tyres) with neighbouring countries. For instance, Ceat and J
K Tyres have sourcing agreements with tyre producers in Sri Lanka and China. This
is likely to have a positive impact on tyre exports from India.

MARKET PLAYERS
Some of the major players in the Indian tyre industry are MRF, Ceat, JK Industries,
Apollo Tyres, Bridgestone India, Goodyear India, Falcon Tyres and TVS Srichakra.
The tyre industry in India is fairly concentrated, with the sample of eight companies
(as in the text) accounting for 82% of production in FY2002. Besides, not all
companies have a diversified product portfolio.

KEY ISSUES

HIGH TAX USAGE
The high tax content on tyres can be gauged from the fact that the percentage of total
tax to the tax excluded price for various categories of tyres is - 44% for Truck Tyre;
41% for Passenger Car Radial Tyre, 35% for Tractor Rear Tyre and 76% for Truck
Tyre Tube.



47

INCREASE IN RAW MATERIAL COSTS
Apart from being capital intensive, the tyre industry is highly raw material intensive.
Any change in the prices of raw materials affects the profitability of tyre companies.
The raw materials used in the manufacture of tyres are rubber and petroleum
derivatives like nylon tyre cord, carbon black, styrene butadiene rubber and poly
butadiene rubber. The most important raw material is rubber-natural and synthetic.
Natural rubber (NR), with 29% weightage in the cost of raw materials used by tyre
industry, is the highest cost item. Annual consumption of NR by tyre industry is 3.50
lakh tonnes, valued at Rs. 14 billion. Over 85% of NR consumed' by the industry is
procured domestically. 15% is imported.

In the 2003-04 fiscal, as against the Minimum Statutory Price of Rs. 32.0 per kg, the
ruling domestic price of NR had been over Rs. 50 per kg. This is higher than the
world rubber prices. However, this does not entail the tyre industry players to import
as a number of restrictions are imposed on the import of NR. NR can be imported
only through two ports-Kolkata & Visakhapatnam. The customs duty on import of
natural rubber is 20%, with 10% under Bangkok Agreement. However, this is not
relevant, as NR is not cultivated in South Korea, Bangladesh & China (signatories
under the Bangkok Agreement). Hence, NR can be sourced only from Sri Lanka
(under the Indo-Sri Lanka Agreement), which is of bad quality. Thus, the options of
rubber import are restricted and the manufacturers have to rely on the domestic
market for procuring rubber.

IMPORT OF TYRES
During the FY2002, over 1,10,000 passenger car tyres were imported. Although this
constitutes a small percentage (1.5%) of total passenger car tyre production in the
country, since total imports are of radial passenger car tyres, the percentage is higher
when compared against domestic production of radial passenger car tyres. A large
percentage of imports are from South Korea at a concessional rate of customs duty
(i.e. 15%) under the Bangkok Agreement - as against 20% normal rate of customs
duty.


48


Even though 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. Many countries such as Japan,
Bangladesh, Pakistan, Philippines, Thailand, Kenya, South Korea, etc. have either put
a complete ban on import of used tyres or have placed stringent conditions on such
imports.

TYRE EXPORT
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. Over the years,
China has emerged as a major exporter in bias tyre category. Additionally, export of Indian
tyres to select countries is subjected to non-tariff barriers (NTBs) by way of standards, tests,
etc. Export of cheaper tyres from China to major tyre importing markets, like US, is adversely
affecting Indian tyre exports to these markets. India's share in exports to these countries
(especially USA) is progressively declining. If the trend is not reversed, Indian tyre industry
will find it extremely difficult to regain its erstwhile position in these markets. Low rate of
interest, cheaper electricity tariff, hidden subsidies by the Chinese Government, better
infrastructure facilities and lower transaction costs are factors favourable to Chinese tyre
industry.

TRENDS IN PRODUCTION, CONSUMPTION,PRICE & CAPACITY UTILIZATION

The total tyre produced in the country was 51.58 million units in FY2003 - a 19% growth rate
over FY2002.




49

CAGR of tyre production (in %)
FY 1993-2003 9%
FY 1993-1998 7%
FY 1999-2003 9%
FY 2002-2003 19%


Currently, the size of the Indian tyre industry is estimated at Rs. 128 billion (0.5% of Indian
GDP), as of FY2003. The total installed capacity of the Indian tyre industry is around 60.5 mn
units, and the capacity utilisation is around 85%. The capacity utilisation improved in FY2003
following improved demand from the automotive segment (75% in FY2001). Additionally, in
FY2003, the price realisation of tyre manufacturers also registered an increase by 8%, as
against a 0.6% increase in FY2002.

DEMAND SUPPLY GAP
The demand for tyres is either in the domestic market or in the export market. As far as
domestic demand is concerned, the OEM and the replacement segments are likely to witness
strong growth given the current performance of the automotive sector. Given the strong
linkages of tyre industry with automotives, its demand is likely to be strong over the short to
medium term. As for the export demand for tyres, the outlook is positive, even though some
downsides remain.

As regards supply of tyres, currently, the major players are in the process of expanding their
capacities, in anticipation of uptrend in sales. For instance, Apollo Tyres has set up a joint
venture with Michelin for manufacture and sale of bus and truck radials. JK is expanding its
Mysore truck and bus radial facility along with eyeing acquisitions of smaller units. Ceat has
increased its offtake by 3 times from Pirelli. However, a characteristic of the Indian tyre
industry is that most of the tyre manufacturers in the past had increased capacities in
anticipation of a surge in demand, but when it did not materialise, they reduced their addition
to capacities. Thus, the demand-supply gap is likely to be an important issue for the Indian
tyre industry over the short to medium term.



50





REVIEW OF PERFORMANCE

OVERALL PERFORMANCE
The operating margin of the representative sample of tyre companies improved during
FY2003. However, the net profit margin of the tyre companies even though improved, was
still at 3%.

PERFORMANCE IN FY2004
The tyre industry continues to be driven by good demand growth, propelled by
sustained uptrend in demand and sales of automobiles in general, and commercial
vehicles and passenger cars in particular. However, this does not get translated into
improved margins for the industry, as it is witnessing sustained rise in prices of raw
materials like natural rubber. Additionally, the customs duty on imports has been
brought down from 25% to 20% and Special Additional Duty of 4% has been
dispensed with.

OUTLOOK
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 in India, the
industry remains inherently vulnerable to economic cycles. While radialisation has


51

become the norm in the 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 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.

The prospects of tyre exports from India appear healthy, following efforts by Indian
companies to increasingly enter into outsourcing agreements with tyre producers in
Southeast Asia, Eastern Europe and Latin America. Overall, tyre manufacturers are
likely to tap the export market in an effort to boost sales. The increasing exports of
bus and truck tyres (crossply variety) from India to developing countries is because of
the fact that developing countries are unable to source them from developed countries
as these are no more produced there. Tyre imports are unlikely to pose a threat to the
domestic industry, given that domestic prices are lower than international tyre prices.

In the domestic market, tyre manufacturers are expected to increasingly focus on
expanding their dealership networks & explore possibilities of tie-ups among
themselves to penetrate the growing customer base. They are also likely to pursue
innovative measures (such as "dial-a-tyre service and road shows) to improve
customer awareness.

The consolidation of the Indian tyre industry is likely to continue in the coming years
through mergers among existing players. The industry is likely to expand through a
combination of organic and inorganic growth. While organic growth would come
from raising efficiency levels, inorganic growth would be achieved through alliances
and M&As.




52

AN OVERVIEW OF INDIAN TYRE INDUSTRY

Raw Materials of Tyre Industry - Overview (FY 2011-12)
Tyre Industry is highly raw-material intensive. Raw materials cost accounts for
approx. 72% of Tyre Industry Turnover.
Given below is the composition of raw-materials as a percentage (%) of Total Raw
Material Cost:
Natural Rubber 44%
Nylon Tyre Cord
Fabric
19%
Carbon Black 12%
Rubber Chemicals 5%
Butyl Rubber 4%
PBR 5%
SBR 5%
Others 6%

65% of total Natural Rubber consumption is by the Tyre Sector, balance by rubber
based non-tyre industries.
Total weight of raw-materials consumed by tyre industry 18 Lakh M.T.
Total Cost of Raw Materials consumed by tyre industry Rs.30,000 Crores









53




Environment Analysis - Porter's Model

Entry Barriers: High

The entry barriers are high for
the tyre industry. It is a highly
capital intensive industry. A
plant with an annual capacity
of 1.5 million cross-ply tyres
costs between Rs. 4,000 and
Rs. 5,000 million. A similiar
plant producing radial tyres
costs Rs. 8,000 million.


Bargaining Power of the Buyers:
High



The OEMs have total control over
prices. In fact, the OEMs faced
with declining profitability have
also reduced the number of
component suppliers to make the
supply chain more efficient.




Bargaining Power of the
Suppliers: High

The tyre industry consumes nearly
50% of the natural rubber
produced in the country. The price
of natural rubber is controlled by
Rubber Control Board and the
domestic prices of natural rubber
have registered a significant
increase in recent times.


Inter Firm Rivalry: Low

The tyre industry in India is
fairly concentrated, with the
top eight companies
accounting for more than 80%
of the total production of
tyres.






Threat of Substitutes: Low
but Increasing

During the FY2002, over
1,10,000 passenger car tyres
were imported. This
constitutes over 2% of total
radial passenger car tyre
production in the country.
However, with the reduction
of peak custom duty, the
import of tyres is likely to
increase.





54



Financial Year 2011-2012
Turnover of Indian Tyre Industry Rs. 43,000 Crores
Tyre Production (Tonnage) 15 lakh M.T.
Tyre Production All Categories (Nos.) 2254 Lakh
Tyre Export from India (Value) : Rs. 4209 crores
Number of tyre companies: 39
Industry Concentration 10 Large tyre companies account for over 95% of total
tyre production.
Radialisation Level - Current
(as a % of total tyre production)
Passenger Car tyres: 98%
Light Commercial Vehicles: 20%
Heavy Vehicles ( Truck & Bus ): 18%

Government Policy
Tyre Industry Delicenced since 1987
Export (of tyres and tubes) Freely allowed
Import (of new tyres and tubes) Freely allowed.
Import Policy for Used / Retreaded tyres: Restricted from April, 2006











55






SALIENT FEATURES OF


SALIENT FEATURES OF INDIAN TYRE INDUSTRY

Indian Tyre industry provides the .vital link. in movement of common man
(through buses and public transportation) andgoods (through trucks, LCVs etc.);

Truck and bus tyres account for over 65% of tyre industry turnover in India (in
terms of value and tonnage). Hence, demand for truck and bus tyres is a true indicator
of the performance of Indian economy in general and also the tyre industry in India;

Indian Tyre Industry provides direct and indirect employment
to nearly 1 million persons, taking into account dealers,
retreaders, growers of Natural Rubber, employment in raw material sector etc.

. Truck and bus tyre segment is critical for Indian Tyre
Industry. Truck operation, in turn, is run by over 2.6 million
small truck owners/operators;

. Tyres are readily available and easily serviced even in
remotest corners in India;

. Indian Tyre companies also follow a unique warranty system
whereby .pro-rata. adjustment is given for manufacturing defects


56

through the dealers;

. There is a vast population and production of two-wheelers
in India for which different sizes of tyres are required and
produced.

Tyre companies have built a vast and vibrant marketing
network through dealers and depots as a result of which all
categories of tyres are readily available even in remotest parts
of the country, including villages;
The total number of tyre dealers, geographically spread all
over the country is over 5,000 - serviced through over 500
depots of tyre companies. A vast majority of dealers handle
multi-brands of tyres. Tyre companies also have exclusive retail
distribution outlets;
Indian tyres are meant, and expected to perform, under
different and extreme road conditions, from unmetalled
village roads to newly constructed national highways, from
extreme cold to hot and wet conditions prevailing in different
geographical parts of the country;


MAJOR CONCERNS OF INDIAN TYRE INDUSTRY

1) Radialization in the Commercial Vehicle Segment

. Indian Tyre Industry hitherto is predominantly a cross
ply/bias tyre manufacturing industry, particularly in the
commercial vehicle segment (truck, bus, LCV) whereas in the
developed countries radialization level is much higher.

In comparison to normal (Bias) tyres, Radial tyres offer higher
life/mileage, lower fuel consumption, improved safety and


57

ride quality and several other benefits. However, the initial
cost of a radial tyre is approx. 25% higher though on a cost
per kilometer (CPK) basis, radial tyre gives higher benefits.

The process of radialization in India has gained momentum
in recent years, particularly in the passenger car segment, as
given below:

Radialization Level/ Segment 1995 2004

Passenger Car 28% 85%

Light Commercial Vehicle (LCV) 9% 11%

Truck and Bus 1% 2%
Though radial tyres offer multiple benefits, low level of
radialization in the truck and bus segment is mainly due to
higher initial cost (with limited .demand pull.), low level of fitment
by OEs on commercial vehicles and poor road conditions.

With an improvement in road infrastructure, radialization in the
commercial vehicle (CV) segment needs an added thrust by
way of i) increase in fitment by the OEs (as in the case of
passenger car tyres), ii) increased demand for fitment of
commercial vehicle radials in the replacement markets.
Both these demand drivers can be accelerated by making
commercial vehicle radials cheaper and affordable.

Submission - Two critical raw-materials required in the
manufacture of radial tyres (Steel Tyre Cord and Polyester Tyre
Cord) are not manufactured domestically (or domestic
manufacturing is not of the required grade, i.e. for steel truck radials).
Reduction in customs duty on these two essential rawmaterials


58

from 20% to 10% will encourage wider application
and reduced cost.

2) Embossing of Maximum Price (MRP) on Truck/Bus Tyres

. In February, 1988, as per a directive of the Ministry of Industry,
Embossing of MRP on truck and bus tyres was started. This
was based on the recommendations of the Committee on Tyre
Industry (1984, known as Satyapal Committee).

. In the last over 15 years, the economic scenario has undergone
a sea change with liberalization, removal of controls and free
global trade in most items. Tyre Industry is also delicensed.

. Major raw-materials of tyre industry (Natural Rubber and
petroleum based materials) undergo wide fluctuations in prices.
In such a dynamic scenario, it is a not practical to emboss the
price on tyres due to market dynamics.

Submission - Tyre industry feels that there is no need to
continue with embossing MRP on truck/ bus tyres.

3) Taxation Related

Incidence of excise duty on tyres continues to be high @
24%, the same as on luxury products like air-conditioners etc.
In addition there are several local taxes and levies imposed on
tyres. Ultimate burden of high taxes falls on the consumer;

Apart from high Excise Duty, various embedded taxes (viz.
Sales Tax, Octroi, Cess etc.) take the total tax incidence on
tyres to an even higher level.



59

Truck and Bus tyres are used in vehicles for transportation of
common man and goods.

Submission - There is a need to reduce excise duty on tyres
from 24% to 16% in the next Union Budget.

4) Used Tyres

Developed and industrialized countries are facing a
monumental problem in disposal of used tyres. Hence,
developing and high tyre consumption countries like India are
being looked upon as a dumping ground for used tyres.

Several countries have banned or imposed severe restriction on
import of used tyres. In India, Government introduced .floor
price. (for assessment of Customs Duty) in 1997. Till recently,
floor price mechanism was effective in restricting imports.
However, of late, the volume of used tyre imports (in
circumvention) of the floor price has increased significantly.

Submission

a) India too should introduce a complete BAN on
import of Used Tyres.

b) Used Tyres should NOT be included in the list of any Regional Trade Agreements
(RTAs) for import into India at concessional rate of duty, as has been included in the
.request list. of Singapore under the India-Singapore Agreement.

5) Bangkok Agreement/RTA.s - Inclusion of Raw-Materials of
Tyre Industry

Under the Bangkok Agreement, tyres can be imported at 5%


60

concession in import duty (i.e. 15% customs duty vs. 20% normal
duty rate). South Korea and China are signatories of the
Bangkok Agreement. Tyre imports from these two countries at
concessional rate of customs duty are a matter a serious
concern for Indian tyre industry.

Preferential tariff treatment has resulted in import of large
volume of passenger car radial tyres into India from South
Korea and truck/bus tyres from China.

However, since major raw-materials of tyres are not included in
the Bangkok Agreement (eligible for concessional rate of
customs tariff from signatory countries) tyre industry is at a
disadvantage and is faced with inverted duty structure.

Submission - Raw Materials of Tyres should also be included the
list of items eligible for concessional rate of Customs duty
under Bangkok Agreement or any other RTA.

6) Automotive Industry Standards (AIS)

All large tyre companies had voluntarily taken BIS (Bureau of
Indian Standards) certification.

In addition, Government has proposed Automotive Industry
Standards (AIS) which are essentially .safety standards. and
applicable to tyre industry also.

Submission - Tyre Industry is of the view that there should be a
unified .national standard. which can be achieved with a
merger of AIS standards with BIS.

7) Government support for promoting Made in India Brand for Tyres


61


. Indian tyre industry is facing intense competition from China and
other South East Asian countries in tyre exports to other
countries.

. Though the quality of Indian tyres is better and has wider
acceptance, due to cheaper pricing, higher volumes and aided
by Government support and subsidies, Chinese tyres are cutting
into the share of Indian tyre exports.

. There is a need to promote India Brand for tyres as one which
spells quality and higher standards.

Submission - If the suggestion finds favour with the Department,
Tyre Industry can work out a proposal for Government support
in this direction.

8) Non-Tariff Barriers (NTBs) on Indian Tyres

. Several countries have imposed Non-tariff barriers, by way of
standards, specifications and quality markings, which Indian
tyres have to comply with when exported to those countries.
These stipulations are by way of Non-tariff barriers and are
coming in the way of improved export performance.

. Since the conditions imposed are in a WTO compatible manner,
there is a need to initiate simplification and curb duplication at
Government-to-Government level.

Submission - Tyres which have Bureau of Indian Standards (BIS)
markings should not require mandatory certification of importing
country. BIS should enter into reciprocal arrangement with its
counterpart organizations in other countries to this effect.


62



SUMMING UP . RECOMMENDATIONS FOR CONSIDERATION BY THE
GOVERNMENT

. Accelerate radialization in Commercial Vehicle (CV) segment
facilitated by reduction in customs duty on Steel Tyre Cord and
Polyester Tyre Cord to 10%, from existing level of 20%.

. The current practice of embossing of MRP on Truck and Bus
tyres should be allowed to be done away with.

. Reduce excise duty on tyres from existing 24% to 16% in the
next Union Budget.

. Impose a complete ban on import of Used Tyres. Raw Materials
of Tyres should also be eligible for concessional customs duty
under Bangkok Agreement or preferential customs duty under
Regional Trade Agreements;

. Automotive Industry Standards (AIS) should be merged with BIS

. Ensure that Non-Tariff Barriers (NTBs) on Indian tyres are
removed and reciprocal agreements for acceptance of national
standards are entered into.




63


TWO BIGGEST TYRE THIEVES

Viviers lashes out at inadequate management practices declaring: "The two biggest
'tyre thieves' in any truck operation are the uncommitted owners and the drivers.

"I know for a fact that there are big transport companies out there whose top
management have no real grasp of the actual kilometres travelled by their truck fleets
or what the real operating costs are. Any trucker who does not know what his fleet
mileage will not know what his tyre CPK is."

He contends that because of this lack of management focus, when tyre costs start
spiralling, someone else always gets to blame. Even more disconcerting is that he
reckons many managers will never reveal the true tyre costs to the owner for fear of
losing their jobs together with the annual bonus and company 4x4.

"Even we have been approached by one of the guys at a top transport company asking
if we would 'manipulate' the data on a tyre analysis report so he would look good
when reporting to the board of directors."

There is another reason why top management needs to be involved. "Financial
managers must ensure they collect all their respective credits for casings and
insurance claims from the suppliers. Many a time these are settled by means of a
jacket or a golf shirt and do not reach the place where they can affect the CPK. Every
cent a trucker gets back has a direct influence on the bottom line. Insurance and other
claims must be deducted from total CPK and must not be paid into an account where
they are hidden."


64


Talking of financial indicators, the diesel account can also be used as a yardstick on
tyre costs. It is seldom that one account will go up and the other comes down. If this
starts happening, fleet owners should realise there is a problem and fix it immediately.

On tyre maintenance, Viviers says many truck companies feel if they appoint
someone to act as a wheel fitter, that's the end of the problem: "I've seen it happen that
in no time at all, the 'tyre fitter' is handling the tarpaulins, filling trucks with diesel
and so on. At the end of the day, he hasn't got time to look after the tyres. Even when
the tyre fitter does have time, he has to be properly managed."

BREAKDOWN MANAGEMENT IS EXPENSIVE

Add all this up and Viviers says it is obvious then why many truckers spend more on
tyre-related breakdowns than they spend on tyres. He claims 'breakdown management'
or 'on-road maintenance' is the most expensive form of tyre management.

"This is largely due to the fact that in the event of an on-road tyre failure, around 90%
of truckers never get their original casings back. The breakdown guys change the
wheel and ride off with the flat tyre and that is the last time you set eyes on it."

When you consider a good steel casing is worth up to R850, it is easy for things to get
expensive very quickly. Viviers says he is aware of one of the bigger transport
companies spending over R300 000 per month on tyre-related breakdowns while a
competitor just down the road spends around R35 000 with the same amount of
trucks.

Apart from insisting that original casings be returned, Viviers says it is also important
that only new tyres are fitted in the event of a breakdown and not stock retreads. As
soon as the vehicle is brought back to the depot, the new tyre can removed and put
into stock.

Broadening the discussion, Viviers goes on to say that many truckers tender for a job


65

without doing any homework on road and underfoot conditions along the designated
route.

"Many a trucker is losing money and some have even gone under because they failed
to take underfoot conditions into consideration. Truckers are also losing big money by
using the wrong wheel rims. The market is currently being flooded with cheap,
narrow 8" and 81/4" rims that cause severe problems when used with 315/12R tyres."


FEEL THE PAIN

The one way to stop this waste of capital is to get the attention of top management:
"You have to speak to the man who feels the pain in his pocket," says Viviers.

Fortunately or unfortunately, depending on how you view the situation, the last couple
of years of increasing competition, rising prices and tight margins has forced
management off the golf courses and back into the boardrooms to review and
implement cost-saving management strategies.

With the dealer price of new steel radial truck tyres starting off at R5 000 apiece,
coupled to annual price increases averaging 15% a year, it is little wonder that
management is starting to show increased interest in getting hold of real and
meaningful numbers.
"The days when transport and workshop managers made decisions on gut feeling and
hearsay are over. Today they have to get it right," Viviers says. "This means
implementing proper tyre maintenance right from the first day the tyre is fitted to a
truck. And a good place to start is with the tyre equipment. Gauges, for example, must
be correctly calibrated in order to establish accurate pressures."



66



TYRE TEST
In terms of tyre selection, Viviers also notes that it is extremely important for fleet
operators to conduct back-to-back tests on tyres to ensure they are not being left
behind by new technology introduced by one or other tyre manufacturer and that the
tyres they are currently using are the best available to do the job on hand.

"If the operator is not testing one set of tyres against another, on what does he base his
purchasing decision?" Viviers asks.

Even with thorough testing, he reiterates that there is no such thing as the best tyre in
the land: "There are so many variables to take into account with each specific
operation. Tyre selection and for that matter, tyre costs, differ from one operation to
the next. Individual operators can only aim to achieve the best CPK for their own
operations and forget about the rest.

"As it goes the competition among the leading tyre suppliers is so strong there are
actually only very small differences between one tyre and another. It is also important
during these tests that the operator compares apples with apples."

Although the old adage 'penny wise pound foolish' is the graveyard for many a
trucker, the opposite is also true. "Some operators buy the most expensive premium


67

tyres and throw them into the fleet believing their tyre problems are over. This is a
stupid argument and an expensive exercise. The trick is in the maintenance. Look
after the tyre and you will save more than the money spent pro-rata on the original
price."

He also contends that there is no way the drivers can be left out of the tyre
maintenance picture.
"Many suppliers of new tyres are more than willing to train drivers in all aspects of
tyre care. This training is free of charge, comes in all languages and is as far as a
telephone call away.
BEST PRACTICE
According to Viviers, the best way to achieve the lowest CPK is to always run new
tyres on the front and grow your casing population. This should be done by fitting sets
of four or eight drive pattern tyres at a time. You may pay 10% more up front but in
the longer term, you will have 25% more rubber on the road.

Viviers says the first re-caps should also comprise of a drive pattern tread and should
also be fitted in complete sets: "The fewer different types of tread patterns and sizes
used, the lower your stock levels will be and the lower the CPK.

"Also, when it comes to retreads, it makes more sense to pay professional suppliers
top rates rather than look for the cheapest option. Professional tyre retreading
companies should get your original casings back within a week, some guys take up to
three weeks. You don't need a degree to work out how much less stock you need to
carry."

In the general discussion, he also brought up some interesting points in terms of
hidden costs. "What many operators fail to take into account is that their CPK will
increase in the hot summer months due to the extra heat that promotes tyre wear.
Allowances must be made for this."

He is also a firm believer in scrap tyre analysis, the importance of which cannot be


68

over-emphasised. "It is imperative that every tyre undergoes a post-mortem or scrap
analysis to identify, highlight and rectify problem areas."

Summing up, he says there is no quick fix but he firmly believes that the only person
who can control CPK is the one who feels the pain in his pocket - the manager or
owner.

"No transport company can be too small or too big that the man who signs the
cheques cannot be directly involved or not have the time to take care of the tyre costs.
If the owner or financial director is not directly involved, then somebody has got his
or her priorities wrong. Each and every successful tyre operation I know has the
involvement of top management."

And here are his last words of wisdom. Operators must be very careful when choosing
a tyre management service provider. "The Chinese have a saying about not trusting
anyone who does not have anything to lose. I will never understand how a trucker can
entrust his tyre account to a person who in the worst case scenario will only lose his
job while the trucker can actually go bankrupt."

According to Auto Truck & Tyre director JanBen Viviers, the five main tyre
mileage thieves are:
reveals that on average, 48% of tyres are set at the wrong pressure.










69



SOME KEY POINTS WHICH IS REQUIRED IN MARKETING
In this section I have described the facts and theories which were seen by me in field.
I have started this section with the explanation of market. It includes the explanation
of 4 Ps and concept of marketing. The next is description of marketing mix.
Marketing mix (Product, price, place and promotion) is essential in all aspects of any
business. Then I have described target market followed by supply chain management.
The emphasis which I laid on supply chain management is just because of the fact that
constant distribution is the core competency of Parag. I had described Cash
Conversion cycle because the company does not believe in credit sales. Each
transporter has to collect money from distributors/retailers daily. So directly they
reduce the length of ccc. It is followed by employee motivation and last but not the
least the sales promotion is described.
Marketing
Marketing is an ongoing process of planning and executing the marketing mix
(Product, Price, Place, and Promotion) for products, services or ideas to create
exchange between individuals and organizations.
Marketing tends to be seen as a creative industry, which includes advertising,
distribution and selling. It is also concerned with anticipating the customers' future
needs and wants, which are often discovered through market research. Essentially,
marketing is the process of creating or directing an organization to be successful in
selling a product or service that people not only desire, but are willing to buy.
Therefore good marketing must be able to create a "proposition" or set of benefits for
the end customer that delivers value through products or services.
Its specialist areas include:
Advertising and branding
Communications
Database marketing
Direct Marketing


70

Event organization
Global marketing
International marketing
Internet marketing
Market research
Public Relations
Retailing
Search Engine Marketing
Marketing Strategy
Marketing Plan
Strategic Management
A market-focused, or customer-focused, organization first determines what its
potential customers desire, and then builds the product or service. Marketing theory
and practice is justified in the belief that customers use a product or service because
they have a need, or because it provides a perceived benefit.
Two major factors of marketing are the recruitment of new customers (acquisition)
and the retention and expansion of relationships with existing customers (base
management). Once a marketer has converted the prospective buyer, base
management marketing takes over. The process for base management shifts the
marketer to building a relationship, nurturing the links, enhancing the benefits that
sold the buyer in the first place, and improving the product/service continuously to
protect the business from competitive encroachments.
For a marketing plan to be successful, the mix of the four "Ps" must reflect the wants
and desires of the consumers or Shoppers in the target market. Trying to convince a
market segment to buy something they don't want is extremely expensive and seldom
successful. Marketers depend on insights from marketing research, both formal and
informal, to determine what consumers want and what they are willing to pay for.
Marketers hope that this process will give them a sustainable competitive advantage.
Marketing management is the practical application of this process. The offer is also an
important addition to the 4P's theory.


71

Within most organizations, the activities encompassed by the marketing function are
led by a Vice President or Director of Marketing. A growing number of organizations,
especially large US companies, have a Chief Marketing Officer position, reporting to
the Chief Executive Officer.
The American Marketing Association (AMA) states, "Marketing is an organizational
function and a set of processes for creating, communicating and delivering value to
customers and for managing customer relationships in ways that benefit the
organization and its stakeholders.
Marketing methods are informed by many of the social sciences, particularly
psychology, sociology, and economics. Anthropology is also a small, but growing
influence. Market research underpins these activities. Through advertising, it is also
related to many of the
creative arts. Marketing is a wide and heavily interconnected subject with extensive
publications. It is also an area of activity infamous for re-inventing itself and its
vocabulary according to the times and the culture.
Concept of Marketing
Marketing is an instructive business domain that serves to inform and educate target
markets about the value and competitive advantage of a company and its products.
Value (marketing) is worth derived by the customer from owning and using the
product. Competitive Advantage is a depiction that the company or its products are
each doing something better than their competition in a way that could benefit the
customer.
Marketing is focused on the task of conveying pertinent company and product related
information to specific customers, and there are a multitude of decisions (strategies)
to be made within the marketing domain regarding what information to deliver, how
much information to deliver, to whom to deliver, how to deliver, when to deliver, and
where to deliver. Once the decisions are made, there are numerous ways (tactics) and
processes that could be employed in support of the selected strategies.


72

The goal of marketing is to build and maintain a preference for a company and its
products within the target markets. The goal of any business is to build mutually
profitable and sustainable relationships with its customers. While all business
domains are responsible for accomplishing this goal, the marketing domain bears a
significant share of the responsibility.
Within the larger scope of its definition, marketing is performed through the actions of
three coordinated disciplines named: Product Marketing, Corporate Marketing, and
Marketing Communications.
Two levels of marketing
Strategic marketing attempts to determine how an organization competes against its
competitors in a market place. In particular, it aims at generating a competitive
advantage relative to its competitors.
Operational marketing executes marketing functions to attract and keep customers
and to maximize the value derived for them, as well as to satisfy the customer with
prompt services and meeting the customer expectations. Operational Marketing
includes the determination of the porter's five forces model
Four Ps
In the early 1960s, Professor Neil Borden at Harvard Business School identified a
number of company performance actions that can influence the consumer decision to
purchase goods or services. Borden suggested that all those actions of the company
represented a Marketing Mix. Professor E. Jerome McCarthy, also at the Harvard
Business School in the early 1960s, suggested that the Marketing Mix contained 4
elements: product, price, place and promotion.
In popular usage, "marketing" is the promotion of products, especially advertising and
branding. However, in professional usage the term has a wider meaning which
recognizes that marketing is customer-centered. Products are often developed to meet
the desires of groups of customers or even, in some cases, for specific customers. E.
Jerome McCarthy divided marketing into four general sets of activities. His typology


73

has become so universally recognized that his four activity sets, the Four Ps, have
passed into the language.
The four Ps are:
Product: The product aspects of marketing deal with the specifications of the
actual goods or services, and how it relates to the end-user's needs and wants. The
scope of a product generally includes supporting elements such as warranties,
guarantees, and support.
Pricing: This refers to the process of setting a price for a product, including
discounts. The price need not be monetary - it can simply be what is exchanged for
the product or services, e.g. time, energy, psychology or attention.
Promotion: This includes advertising, sales promotion, publicity, and personal
selling, branding and refers to the various methods of promoting the product, brand,
or company.
Placement (or distribution): refers to how the product gets to the customer; for
example, point of sale placement or retailing. This fourth P has also sometimes been
called Place, referring to the channel by which a product or services is sold (e.g.
online vs. retail), which geographic region or industry, to which segment (young
adults, families, business people), etc.
These four elements are often referred to as the marketing mix, which a marketer can
use to craft a marketing plan. The four Ps model is most useful when marketing low
value consumer products. Industrial products, services, high value consumer products
require adjustments to this model. Services marketing must account for the unique
nature of services. Industrial or B2B marketing must account for the long term
contractual agreements that are typical in supply chain transactions. Relationship
marketing attempts to do this by looking at marketing from a long term relationship
perspective rather than individual transactions.
As a counter to this, Morgan, in Riding the Waves of Change (Jossey-Bass, 1988),
suggests that one of the greatest limitations of the 4 Ps approach "is that it
unconsciously emphasizes the insideout view (looking from the company outwards),
whereas the essence of marketing should be the outsidein approach". Nevertheless,


74

the 4 Ps offer a memorable and workable guide to the major categories of marketing
activity, as well as a framework within which these can be used.
Seven Ps
As well as the standard four P's (Product, Pricing, Promotion and Place), services
marketing calls upon an extra three, totaling seven and known together as the
extended marketing mix. These are:
People: Any person coming into contact with customers can have an impact on
overall satisfaction. Whether as part of a supporting service to a product or
involved in a total service, people are particularly important because, in the
customer's eyes, they are generally inseparable from the total service. As a result
of this, they must be appropriately trained, well motivated and the right type of
person. Fellow customers are also sometimes referred to under 'people', as they
too can affect the customer's service experience, (e.g., at a sporting event).
Process: This is the process involved in providing a service and the behaviour of
people, which can be crucial to customer satisfaction.
Physical evidence: Unlike a product, a service cannot be experienced before it is
delivered, which makes it intangible. This, therefore, means that potential
customers could perceive greater risk when deciding whether to use a service. To
reduce the feeling of risk, thus improving the chance for success, it is often vital to
offer potential customers the chance to see what a service would be like. This is
done by providing physical evidence, such as case studies, testimonials or
demonstrations.
Four New Ps
Personalization: It is here referred customization of products and services
through the use of the Internet. Early examples include Dell on-line and
Amazon.com, but this concept is further extended with emerging social media and
advanced algorithms. Emerging technologies will continue to push this idea
forward.


75

Participation: This is to allow customer to participate in what the brand should
stand for; what should be the product directions and even which ads to run. This
concept is laying the foundation for disruptive change through democratization of
information.
Peer-to-Peer: This refers to customer networks and communities where advocacy
happens. The historical problem with marketing is that it is interruptive in
nature, trying to impose a brand on the customer. This is most apparent in TV
advertising. These passive customer
bases will ultimately be replaced by the active customer communities. Brand
engagement happens within those conversations. P2P is now being referred as
Social Computing and is likely to be the most disruptive force in the future of
marketing.
Predictive modeling: This refers to algorithms that are being successfully applied
in marketing problems (both a regression as well as a classification problem).
Product
There are several general categories of new products. Some are new to the market (ex.
DVD players into the home movie market), some are new to the company (ex. Game
consoles for Sony), and some are completely novel and create totally new markets
(ex. the airline industry). When viewed against a different criterion, some new
product concepts are merely minor modifications of existing products while some are
completely innovative to the company.
Changes to Augmented Product
Core product revision
Line extensions
New product lines
Repositioning
Completely new
These different characterizations are displayed in the following diagram.


76

Ideas for new products can be obtained from basic research using a SWOT
analysis (OPPORTUNITY ANALYSIS), Market and consumer trends, company's
R&D department, competitors, focus groups, employees, salespeople, corporate
spies, trade shows, or Ethnographic o devoting resources to them.

The screeners must ask at least three questions:
Will the customer in the target market benefit from the product?
Produce and place advertisements and other promotions
Fill the distribution pipeline with product
Critical path analysis is most useful at this stage
These steps may be iterated as needed. Some steps may be eliminated. To reduce the
time that the NPD process takes, many companies are completing several steps at the
same time (referred to as concurrent engineering or time to market). Most industry
leaders see new product development as a proactive process where resources are
allocated to identify market changes and seize upon new product opportunities before
they occur (in contrast to a reactive strategy in which nothing is done until problems
occur or the competitor introduces an innovation). Many industry leaders see new
product development as an ongoing process (referred to as continuous development)
in which the entire organization is always looking for opportunities.
For the more innovative products indicated on the diagram above, great amounts of
uncertainty and change may exist, which makes it difficult or impossible to plan the
complete project before starting it. In this case, a more flexible approach may be
advisable.
Because the NPD process typically requires both engineering and marketing
expertise, cross-functional teams are a common way of organizing projects. The team
is responsible for all aspects of the project, from initial idea generation to final
commercialization, and they usually report to senior management (often to a vice
president or Program Manager). In those industries where products are technically
complex, development research is typically expensive, and product life cycles are


77

relatively short, strategic alliances among several organizations helps to spread the
costs, provide access to a wider skill set, and speeds the overall process.
Also, notice that because engineering and marketing expertise are usually both critical
to the process, choosing an appropriate blend of the two is important. Observe (for
example, by looking at the See also or References sections below) that this article is
slanted more toward the marketing side. For more of an engineering slant, see the
Ulrich and Eppinger reference below.
People respond to new products in different ways. The adoption of a new technology
can be analyzed using a variety of diffusion theories such as the Diffusion of
innovations theory. It include economical support of social sector.
Scope
Breadth -- number of product lines in a range.
Depth -- number of product items in a product line.
Steps in product design
Design and development of product ideas.
Selection of and sifting through product ideas.
Design and testing of product concept.
Analysis of instead of product concept.
Design and testing of emotional product.
Packaging
Packaging is the science, art and technology of enclosing or protecting products for
distribution, storage, sale, and use. Packaging also refers to the process of design,
evaluation, and production of packages. Package labelling (BrE) or labeling (AmE)
is any written, electronic, or graphic communications on the packaging or on a
separate but associated label.


78

Packaging can be described as a coordinated system of preparing goods for transport,
warehousing, logistics, sale, and end use. Packaging contains, protects. preserves,
transports, informs, and sells. . It is fully integrated into government, business,
institutional, industry, and personal use.

Requirements of good packaging
Functional - effectively contain and protect the contents
Provide convenience during distribution, sale, opening, use, reuse, etc.
Be environmentally responsible
Be cost effective
Appropriately designed for target market
Eye-catching (particularly for retail/consumer sales)
Communicate attributes and recommended use of the product and package
Compliant with retailers' requirements
Promotes image of enterprise
Distinguishable from competitors' products
Meet legal requirements for product and packaging
Point of difference in service and supply of product.
For a perfect product, perfect colour.
Forms of packaging
Specialty packaging emphasizes the elegant character of the product
Packaging for double-use
Combination packaging two or more products packaged in the same container
Kaleidoscopic packaging packaging changes continually to reflect a series or
particular theme
Packaging for immediate consumption to be thrown away after use
Packaging for resale packed, into appropriate quantities, for the retailer or
wholesaler


79

Trademarks
A trademark or trade mark (represented by the symbol or ) or mark is a
distinctive sign or indicator of some kind which is used by an individual, business
organization or other legal entity to identify uniquely the source of its products and/or
services to consumers, and to distinguish its products or services from those of other
entities.
A trademark is a type of intellectual property, and typically a name, word, phrase,
logo, symbol, design, image, or a combination of these elements. There is also a range
of non-conventional trademarks comprising marks which do not fall into these
standard categories.
The owner of a registered trademark may commence legal proceedings for trademark
infringement to prevent unauthorized use of that trademark. However, registration is
not required. The owner of a common law trademark may also file suit, but an
unregistered mark may be protectable only within the geographical area within which
it has been used or in geographical areas into which it may be reasonably expected to
expand.
The term trademark is also used informally to refer to any distinguishing attribute by
which an individual is readily identified, such as the well known characteristics of
celebrities.
Significance of a trademark
Distinguishes one company's goods from those of another
Serves as advertisement for quality
Protects both consumers and manufacturers
Used in displays and advertising campaigns
Used to market new products


80

Brands
A brand is a name, term, design, symbol, or other feature that distinguishes products
and services from competitive offerings. A brand represents the consumers'
experience with an organization, product, or service.
A brand has also been defined as an identifiable entity that makes a specific promise
of value.
Co-branding involves marketing activity involving two or more products.
Pricing
Pricing refers to the amount of money exchanged for a product. This value is
determined by utility to the consumer in terms of money and/or sacrifice that the
consumer is prepared to give for it.
Objectives
Increase sales volume
Increase revenue
Achieve or increase profits
Increase or maintain market share
Eliminate competition
Achieve advantages of mass production
Factors influencing price-determination
Production and distribution costs
Substitute goods available
Normal trade practices
Fixed prices
Reaction of distributors
Reaction of consumers


81

Nature of demand:
Elastic
Inelastic
Form of market:
Perfect competition
Monopolistic competition
Monopoly
Oligopoly
Steps to determine price
Determine market share to be captured
Set up price strategy
Estimate demand
Evaluate competitors' reactions
Channels
Manufacturer to consumer (most direct)
Manufacturer to wholesaler to retailer to consumer (traditional)
Manufacturer to agent to retailer to consumer (current)
Manufacturer to agent to wholesaler to retailer to consumer
Manufacturer to agent to customer ( ex : AMWAY )
Reasons for direct selling methods
Manufacturer wants to demonstrate goods.
Wholesalers, retailers and agents not actively selling.
Manufacturer unable to convince wholesalers or retailers to stock product.
High profit margin added to goods by wholesalers and retailers.
Middlemen unable to transport.


82

Reasons for indirect selling methods
Manufacturer does not have the financial resources to distribute goods.
Distribution channels already established.
Manufacturer has no knowledge of efficient distribution.
Manufacturer wishes to use capital for further production.
Too many consumers in a large area; difficult to reach.
Manufacturer does not have a wide assortment of goods to enable efficient
marketing.
direct on-selling advantages
Wholesalers
Reasons for using wholesalers
Bear risk of selling goods to retailer or consumer
Storage space
Decrease transport costs
Grant credit to retailers
Able to sell for the manufacturers
Give advice to manufacturers
Break down products into smaller quantities
Reasons for bypassing wholesalers
Limited storage facilities
Retailers' preferences
Wholesaler cannot promote products successfully
Development of wholesalers' own brands
Desire for closer market contact
Position of power
Cost of wholesalers' services
Price stabilization


83

Need for rapid distribution
Make more money
Ways of bypassing wholesalers
Sales offices or branches
Mail orders
Direct sales to retailers
Travelling agents
Direct Orders
Agents
Commission agents work for anyone who needs their services. They do not acquire
ownership of goods but receive del credere commission.
Selling agents act on an extended contractual basis, selling all of the products of the
manufacturer. They have full authority regarding price and terms of sale.
Buying agents buy goods on behalf of producers and retailers. They have an expert
knowledge of the purchasing function.
Brokers specialize in the sale of one specific product. They receive a brokerage.
Factory representatives represent more than one manufacturer. They operate within
a specific area and sell related lines of goods but have limited authority regarding
price and sales terms.
Marketing communications
Marketing communications breaks down the strategies involved with marketing messages
into categories based on the goals of each message. There are distinct stages in converting
strangers to customers that govern the communication medium that should be used.
Advertising
Paid form of public presentation and expressive promotion of ideas
Aimed at masses


84

Manufacturer may determine what goes into advertisement
Pervasive and impersonal medium
Functions and advantages of successful advertising
Task of the salesman made easier
Forces manufacturer to live up to conveyed image
Protects and warns customers against false claims and inferior products
Enables manufacturer to mass-produce product
Uninterrupted production a possibility
Increases goodwill
Raises standards of living (or perceptions thereof)
Prices decrease with increased popularity
Educates manufacturer and wholesaler about competitors' offerings as well as
shortcomings in their own.
Objectives
Maintain demand for well-known goods
Introduce new and unknown goods
Increase demand for well-known goods/products/services
Requirements of a good advertisement
Attract attention (awareness)
Stimulate interest
Create a desire
Bring about action
Eight steps in an advertising campaign
Market research
Setting out aims
Budgeting


85

Choice of media (TV, newspaper, radio)
Choice of actors (New Trend)
Design and wording
Coordination
Test results
Personal sales
Oral presentation given by a salesman who approaches individuals or a group of
potential customers:
Live, interactive relationship
Personal interest
Attention and response
Interesting presentation
Sales promotion
Short-term incentives to encourage buying of products:
Instant appeal
Anxiety to sell
Marketing Public Relations (MPR)
Stimulation of demand through press release giving a favourable report to a
product
Higher degree of credibility
Effectively news
Boosts enterprise's image
Customer focus
Many companies today have a customer focus (or customer orientation). This implies
that the company focuses its activities and products on consumer demands. Generally


86

there are three ways of doing this: the customer-driven approach, the sense of
identifying market changes and the product innovation approach.
In the consumer-driven approach, consumer wants are the drivers of all strategic
marketing decisions. No strategy is pursued until it passes the test of consumer
research. Every aspect of a market offering, including the nature of the product itself,
is driven by the needs of potential consumers. The starting point is always the
consumer. The rationale for this approach is that there is no point spending R&D
funds developing products that people will not buy. History attests to many products
that were commercial failures in spite of being technological breakthroughs.
A formal approach to this customer-focused marketing is known as SIVA (Solution,
Information, Value, Access). This system is basically the four Ps renamed and
reworded to provide a customer focus.
The SIVA Model provides a demand/customer centric version alternative to the well-
known 4Ps supply side model (product, price, place, promotion) of marketing
management.
Product -> Solution
Promotion -> Information
Price -> Value
Place ->Access
The four elements of the SIVA model are:
1. Solution: How appropriate is the solution to the customer's problem/need?
2. Information: Does the customer know about the solution? If so, how and from
whom do they know enough to let them make a buying decision?
3. Value: Does the customer know the value of the transaction, what it will cost,
what are the benefits, what might they have to sacrifice, what will be their reward?
4. Access: Where can the customer find the solution? How easily/locally/remotely
can they buy it and take delivery?


87

This model was proposed by Chekitan Dev and Don Schultz in the Marketing
Management Journal of the American Marketing Association, and presented by them
in Market Leader - the journal of the Marketing Society in the UK.
The model focuses heavily on the customer and how they view the transaction.
Product focus
In a product innovation approach, the company pursues product innovation and then
tries to develop a market for the product. Product innovation drives the process and
marketing research is conducted primarily to ensure that a profitable market
segment(s) exists for the innovation. The rationale is that customers may not know
what options will be available to them in the future so we should not expect them to
tell us what they will buy in the future. However, marketers can aggressively over-
pursue product innovation and try to overcapitalize on a niche. When pursuing a
product innovation approach, marketers must ensure that they have a varied and
multi-tiered approach to product innovation. It is claimed that if Thomas Edison
depended on marketing research he would have produced larger candles rather than
inventing light bulbs. Many firms, such as research and development focused
companies, successfully focus on product innovation (Such as Nintendo who
constantly change the way Video games are played). Many purists doubt whether this
is really a form of marketing orientation at all, because of the ex post status of
consumer research. Some even question whether it is marketing.
An emerging area of study and practice concerns internal marketing, or how
employees are trained and managed to deliver the brand in a way that positively
impacts the acquisition and retention of customers (employer branding).
Diffusion of innovations research explores how and why people adopt new
products, services and ideas.
A relatively new form of marketing uses the Internet and is called internet
marketing or more generally e-marketing, affiliate marketing, desktop advertising
or online marketing. It typically tries to perfect the segmentation strategy used in
traditional marketing. It targets its audience more precisely, and is sometimes
called personalized marketing or one-to-one marketing.


88

With consumers' eroding attention span and willingness to give time to advertising
messages, marketers are turning to forms of Permission marketing such as
Branded content, custom media and Reality marketing.
The use of herd behavior in marketing.
In an article entitled "Swarming the shelves: How shops can exploit people's herd
mentality to increase sales", The Economist recently reported a recent conference in
Rome on the subject of the simulation of adaptive human behavior. Mechanisms to
increase impulse buying and get people "to buy more by playing on the herd instinct"
were shared. The basic idea is that people will buy more of products that are seen to
be popular, and several feedback mechanisms to get product popularity information to
consumers are mentioned, including smart-cart technology and the use of Radio
Frequency Identification Tag technology. A "swarm-moves" model was introduced by
a Princeton researcher, which is appealing to supermarkets because it can "increase
sales without the need to give people discounts." Large retailers Wal-Mart in the
United States and Tesco in Britain plan to test the technology in spring 2007.
Other recent studies on the "power of social influence" include an "artificial music
market in which some 14,000 people downloaded previously unknown songs"
(Columbia University, New York); a Japanese chain of convenience stores which
orders its products based on "sales data from department stores and research
companies;" a Massachusetts company exploiting knowledge of social networking to
improve sales; and online retailers who are increasingly informing consumers about
"which products are popular with like-minded consumers" (e.g., Amazon, eBay).


Marketing Mix

What is the marketing mix?
The marketing mix is probably the most famous marketing term. Its elements are the
basic, tactical components of a marketing plan. Also known as the Four P's, the
marketing mix elements are price, place, product, and promotion. Read on for more
details on the marketing mix.


89

The concept is simple. Think about another common mix - a cake mix. All cakes
contain eggs, milk, flour, and sugar. However, you can alter the final cake by altering
the amounts of mix elements contained in it. So for a sweet cake add more sugar!

It is the same with the marketing mix. The offer you make to you customer can be
altered by varying the mix elements. So for a high profile brand, increase the focus on
promotion and desensitize the weight given to price. Another way to think about the
marketing mix is to use the image of an artist's palette. The marketer mixes the prime
colours (mix elements) in different quantities to deliver a particular final colour.
Every hand painted picture is original in some way, as is every marketing mix.

Some commentators will increase the marketing mix to the Five P's, to include
people. Others will increase the mix to Seven P's, to include physical evidence (such
as uniforms, facilities, or livery) and process (i.e. the whole customer experience e.g.
a visit the Disney World). The term was coined by Neil H. Borden in his article The
Concept of the Marketing Mix in 1965.
Price
There are many ways to price a product. Let's have a look at some of them and try to
understand the best policy/strategy in various situations.
Place
Another element of Neil H.Borden's Marketing Mix is Place. Place is also known as
channel, distribution, or intermediary. It is the mechanism through which goods


90

and/or services are moved from the manufacturer/ service provider to the user or
consumer.
Product
For many a product is simply the tangible, phsysical entity that they may be buying
or selling. You buy a new car and that's the product - simple! Or maybe not. When
you buy a car, is the product more complex than you first thought? The Three Levels
of a Product . . . The Product Life Cycle (PLC) is based upon the biological life
cycle. For example, a seed is planted (introduction); it begins to sprout (growth); it
shoots out leaves and puts down roots as it becomes an adult (maturity); after a long
period as an adult the plant begins to shrink and die out (decline). The Customer Life
Cycle (CLC) has obvious similarities with the Product Life Cycle (PLC). However,
CLC focuses upon the creation of and delivery of lifetime value to the customer i.e.
looks at the products or services that customers NEED throughout their lives.
Promotion
Another one of the 4P's is promotion. This includes all of the tools available to the
marketer for 'marketing communication'. As with Neil H.Borden's marketing mix,
marketing communications has its own 'promotions mix.' Think of it like a cake mix,
the basic ingredients are always the same. However if you vary the amounts of one of
the ingredients, the final outcome is different.

Physical Evidence is the material part of a service. Strictly speaking there are no
physical attributes to a service, so a consumer tends to rely on material cues. There
are many examples of physical evidence, including some of the following:

People are the most important element of any service or experience. Services tend to
be produced and consumed at the same moment, and aspects of the customer
experience are altered to meet the 'individual needs' of the person consuming it.

Process is another element of the extended marketing mix, or 7P's.There are a number
of perceptions of the concept of process within the business and marketing literature.


91

Some see processes as a means to achieve an outcome, for example - to achieve a
30% market share a company implements a marketing planning process.
Marketing decisions generally fall into the following four controllable categories:
Product
Price
Place (distribution)
Promotion
The term "marketing mix" became popularized after Neil H. Borden published his
1964 article, The Concept of the Marketing Mix. Borden began using the term in his
teaching in the late 1940's after James Culliton had described the marketing manager
as a "mixer of ingredients". The ingredients in Borden's marketing mix included
product planning, pricing, branding, distribution channels, personal selling,
advertising, promotions, packaging, display, servicing, physical handling, and fact
finding and analysis. E. Jerome McCarthy later grouped these ingredients into the four
categories that today are known as the 4 P's of marketing, depicted below:

The Marketing Mix
These four P's are the parameters that the marketing manager can control, subject to
the internal and external constraints of the marketing environment. The goal is to
make decisions that center the four P's on the customers in the target market in order
to create perceived value and generate a positive response.
Product Decisions
The term "product" refers to tangible, physical products as well as services. Here are
some examples of the product decisions to be made:
Brand name
Functionality


92

Styling
Quality
Safety
Packaging
Repairs and Support
Warranty
Accessories and services
Price Decisions
Some examples of pricing decisions to be made include:
Pricing strategy (skim, penetration, etc.)
Suggested retail price
Volume discounts and wholesale pricing
Cash and early payment discounts
Seasonal pricing
Bundling
Price flexibility

Distribution (Place) Decisions
Distribution is about getting the products to the customer. Some examples of
distribution decisions include:
Distribution channels
Market coverage (inclusive, selective, or exclusive distribution)
Specific channel members
Inventory management
Warehousing
Distribution centers
Order processing


93

Transportation
Reverse logistics
Promotion Decisions
In the context of the marketing mix, promotion represents the various aspects of
marketing communication, that is, the communication of information about the
product with the goal of generating a positive customer response. Marketing
communication decisions include:
Promotional strategy (push, pull, etc.)
Advertising
Personal selling & sales force
Sales promotions
Public relations & publicity
Marketing communications budget
Limitations of the Marketing Mix Framework
The marketing mix framework was particularly useful in the early days of the
marketing concept when physical products represented a larger portion of the
economy. Today, with marketing more integrated into organizations and with a wider
variety of products and markets, some authors have attempted to extend its usefulness
by proposing a fifth P, such as packaging, people, process, etc. Today however, the
marketing mix most commonly remains based on the 4 P's. Despite its limitations and
perhaps because of its simplicity, the use of this framework remains strong and many
marketing textbooks have been organized around it.
The marketing mix is generally accepted as the use and specification of the four Ps
describing the strategic position of a product in the marketplace. One version of the
origins of the marketing mix starts in 1948 when James Culliton said that a marketing
decision should be a result of something similar to a recipe. This version continued in
1953 when Neil Borden, in his American Marketing Association presidential address,
took the recipe idea one step further and coined the term 'Marketing-Mix'. A


94

prominent marketer, E. Jerome McCarthy, proposed a 4 P classification in 1960,
which would see wide popularity. The four Ps concepts is explained in most
marketing textbooks and classes.
Although some marketers have added other Ps, such as personnel and packaging, the
fundamental dogma of marketing typically identifies the four Ps of the marketing mix
as referring to:
Product - An object or a service that is mass produced or manufactured on a large
scale with a specific volume of units. A typical example of a mass produced
service is the hotel industry. A less obvious but ubiquitous mass produced service
is a computer operating system. Typical examples of a mass produced objects are
the motor car and the disposable razor.
Price The price is the amount a customer pays for the product. It is determined
by a number of factors including market share, competition, material costs,
product identity and the customer's perceived value of the product. The business
may increase or decrease the price of product if other stores have the same
product.
Place Place represents the location where a product can be purchased. It is often
referred to as the distribution channel. It can include any physical store as well as
virtual stores on the Internet.
Promotion Promotion represents all of the communications that a marketer may
use in the marketplace. Promotion has four distinct elements - advertising, public
relations, word of mouth and point of sale. A certain amount of crossover occurs
when promotion uses the four principle elements together, which is common in
film promotion. Advertising covers any communication that is paid for, from
television and cinema commercials, radio and Internet adverts through print media
and billboards. One of the most notable means of promotion today is the
Promotional Product, as in useful items distributed to targeted audiences with no
obligation attached. This category has grown each year for the past decade while
most other forms have suffered. It is the only form of advertising that targets all
five senses and has the recipient thanking the giver. Public relations are where the
communication is not directly paid for and includes press releases, sponsorship
deals, exhibitions, conferences, seminars or trade fairs and events. Word of mouth


95

is any apparently informal communication about the product by ordinary
individuals, satisfied customers or people specifically engaged to create word of
mouth momentum. Sales staff often plays an important role in word of mouth and
Public Relations (see Product above).
Broadly defined, optimizing the marketing mix is the primary responsibility of
marketing. By offering the product with the right combination of the four Ps
marketers can improve their results and marketing effectiveness. Making small
changes in the marketing mix is typically considered to be a tactical change. Making
large changes in any of the four Ps can be considered strategic. For example, a large
change in the price, say from $129.00 to $39.00 would be considered a strategic
change in the position of the product. However a change of $131 to $130.99 would be
considered a tactical change, potentially related to a promotional offer. The
Marketing Strategy is decisions that determine how to achieve marketings goal
(build and maintain a preference for a company and its products) in a particular target
market, through the selection and application of marketing mixes. The Marketing
Mix, originally known as The Four Ps, is a combination of product, price, place
[distribution], and promotion activities that are applied to a particular target market.
The general idea is to combine (mix) the variables to generate an optimal, positive,
and desired response in the target market. Diverse and numerous combinations of
marketing methods, modes, and techniques can be selected and applied to create a
marketing mix.
Criticisms
Peter Doyle claims that the marketing mix approach leads to unprofitable decisions
because it is not grounded in financial objectives such as increasing shareholder
value. According to Doyle it has never been clear what criteria to use in determining
an optimum marketing mix. Objectives such as providing solutions for customers at
low cost have not generated adequate profit margins. Doyle claims that developing
marketing based objectives while ignoring profitability has resulted in the dot-com
crash and the Japanese economic collapse. He also claims that pursuing a ROI
approach while ignoring marketing objectives is just as problematic. He argues that a


96

net present value approach maximizing shareholder value provides a "rational
framework" for managing the marketing mix.
Some people claim the four Ps are too strongly oriented towards consumer markets
and do not offer an appropriate model for industrial product marketing. Others claim
it has too strong of a product market perspective and is not appropriate for the
marketing of services.
An expanded system based on Seven Ps stresses the importance of Place, Product,
Price, Promotion, People, Process, and Physical evidence.
Using the 4Ps Marketing Mix Model
The marketing mix model can be used to help you decide how to take a new offer to
market. It can also be used to test your existing marketing strategy. Whether you are
considering a new or existing offer, follow the steps below help you define and
improve your marketing mix.
1. Start by identifying the product or service that you want to analyze.
2. Now go through and answers the 4Ps questions as defined in detail above.
3. Try asking why and what if questions too, to challenge your offer. For
example, ask why your target audience needs a particular feature. What if you
drop your price by 5%? What if you offer more colors? Why sell through
wholesalers rather than direct channels? What if you improve PR rather than rely
on TV advertising?
4. Once you have a well-defined marketing mix, try testing the overall offer from
the customers perspective, by asking customer focused questions:
a. Does it meet their needs? (product)
b. Will they find it where they shop? (place)
c. Will they consider its priced favorably? (price)
d. And will the marketing communications reach them? (promotion)


97

5. Keep on asking questions and making changes to your mix until you are satisfied
that you have optimized your marketing mix, given the information and facts and
figures you have available.
6. Review you marketing mix regularly, as some elements will need to change as the
product or service, and its market, grow, mature and adapt in an ever-changing
competitive environment.
Key points:
The marketing mix helps you define the marketing elements for successfully
positioning your market offer.
One of the best known models is the Four Ps, which helps you define your marketing
options in terms of product, place, price and promotion. Use the model when you are
planning a new venture, or evaluating an existing offer, to optimize the impact with
your target market.
Market segment
A market segment is a subgroup of people or organizations sharing one or more
characteristics that cause them to have similar product needs. A true market segment
meets all of the following criteria: it is distinct from other segments (heterogeneity across
segments), it is homogeneous within the segment (exhibits common attributes); it
responds similarly to a market stimulus, and it can be reached by a market intervention.
Market segment is the processing of marketing of characterizing a market into distinct
subsets (segments) that behave in similar ways or have similar needs. The segmentation
process in
itself consists of segment identification, segment characterization, segment evaluation
and target segment selection. If each segment is fairly homogeneous in its needs and
attitudes, it is likely to respond similarly to a given marketing strategy. That is, they are
likely to have similar feelings and ideas about a marketing mix comprising a given
product or service, sold at a given price, and distributed and promoted in a certain way.


98

Broadly, markets can be divided according to a number of general criteria, such as by
industry or public versus private sector. Generally segmentation is conducted using
demographic, geographic, attitudinal or behavioral data. Small segments are often termed
niche markets or specialty markets. However, all segments fall into either consumer or
industrial markets. Although industrial market segmentation is quite different from
consumer market segmentation, both have similar objectives.
The process of segmentation is distinct from targeting (choosing which segments to
address) and positioning (designing an appropriate marketing mix for each segment). The
overall intent is to identify groups of similar customers and potential customers; to
prioritize the groups to address; to understand their behaviour; and to respond with
appropriate marketing strategies that satisfy the different preferences of each chosen
segment. Revenues are thus improved.
Improved segmentation can lead to significantly improved marketing effectiveness.
Distinct segments can have different industry structures and thus have higher or lower
attractiveness (Porter). With the right segmentation, the right lists can be purchased,
advertising results can be improved and customer satisfaction can be increased
Successful segmentation requires the following.
homogeneity within the segment
heterogeneity between segments
segments are measurable and identifiable
segments are accessible and actionable
segment is large enough to be profitable

These criteria can be summarized by the word DAMAS:
D Differential: it must respond differently to a different marketing mix
A Actionable: you must have a product for this segment to be accured
M Measurable: size and purchasing power can be measured
A Accessible: it must be possible to reach it efficiently


99

S Substantial: the segment has to be large and profitable enough
Variables Used for Segmentation
Geographic variables
Region of the world or country, East, West, South, North, Central, coastal, hilly,
etc.
Country size/country size: Metropolitan Cities, small cities, towns.
Density of Area Urban, Semi-urban, Rural.
Climate Hot, Cold, Humid, Rainy.
Demographic variables
age
gender Male and Female
family size
family life cycle
Education Primary, High School, Secondary, College, Universities.
income
occupation
socioeconomic status
religion
nationality/race (ethnic marketing)
language
Psychographic variables
personality
life style
value
attitude
Behavioral variables
benefit sought
product usage rate
brand loyalty
product end use


100

readiness-to-buy stage
decision making unit
profitability
income status
When numerous variables are combined to give an in-depth understanding of a
segment, this is referred to as depth segmentation. When enough information is
combined to create a clear picture of a typical member of a segment, this is referred to
as a buyer profile. When the profile is limited to demographic variables it is called a
demographic profile (typically shortened to "a demographic"). A statistical technique
commonly used in determining a profile is cluster analysis. Other techniques used to
identify segments are algorithms such as CHAID and regression-based CHAID and
discriminant analysis
The purpose for segmenting a market is to allow your marketing/sales program to
focus on the subset of prospects that are "most likely" to purchase your offering. If
done properly this will help to insure the highest return for your marketing/sales
expenditures. Depending on whether you are selling your offering to individual
consumers or a business, there are definite differences in what you will consider when
defining market segments.
Category of Need
The first thing you can establish is a category of need that your offering satisfies. The
following classifications may help.

For businesses:
Strategic - your offering is in some way important to the enterprise mission,
objectives and operational oversight. For example, a service that helped evaluate
capital investment opportunities would fall into this domain of influence. The
purchase decision for this category of offering will be made by the prospect's top
level executive management.
Operations - your offering affects the general operating policies and procedures.
Examples might be, an employee insurance plan or a corporate wide


101

communications system. This purchase decision will be made by the prospect's
top level operations management.
Functional - your offering deals with a specific function within the enterprise such
as data processing, accounting, human resources, plant maintenance, engineering
design, manufacturing, inventory control, etc. This is the most likely domain for a
product or service, but you must recognize that the other domains may also get
involved if the purchase of the product or service becomes a high profile decision.
This purchase decision will be made by the prospect's functional management.
For the individual consumer:
Social Esteem or Pleasure - your offering satisfies a purely emotional need in the
consumer. Examples are a mink coat or a diamond ring. There are some products
that are on the boundary between this category and the Functional category such
as a Rolex watch (a Timex would satisfy the functional requirement and probably
keep time just as well).
Functional - your offering meets a functional requirement of the consumer such as
a broom, breakfast cereal or lawnmower.
Segmentation of Needs

Then you should establish what the need is and who is most likely to experience that
need. Your segmentation will be determined by a match between the benefits offered
by your offering and the need of the prospect. Some "need" categories for
segmentation include: Reduction in expenses. Prospects might be businesses that are
downsizing (right sizing), businesses that have products in the mature stage of their
life cycle or individuals with credit rating problems.

Improved cash flow

Prospects might be businesses that have traditionally low profit margins, businesses
that have traditionally high inventory costs or individuals that live in expensive urban
areas.


102


Improved productivity

Prospects might be businesses that have traditionally low profit margins, businesses
that have recently experienced depressed earnings or individuals with large families.

Improved manufacturing quality

Prospects might be businesses with complex, multi-discipline manufacturing
processes. Improved service delivery Prospects might be service businesses in highly
competitive markets, product businesses requiring considerable post-sale support or
individuals in remote or rural areas.
Improved employee working conditions/benefits

Prospects might be businesses where potential employees are in short z
Prospects might be new entrants to a competitive market.
Need for education

Prospects might be businesses or individuals looking for books on business planning,
or seminars on Total Quality Management.

Involvement with social trends

Prospects might be businesses concerned with environmental protection, employee
security, etc. or individuals who believe in say 'no' to drugs, anti-crime, etc.

Specific - relating to product/service characteristics

Prospects might be businesses or individuals interested in safety, security, economy,
comfort, speed, quality, durability, etc.
Factors that segment prospects



103

Having determined the more general segmentation characteristics you can proceed to
a more detailed analysis of the market. There are literally thousands of ways to
segment a market, but the following are some of the more typical segmentation
categories.

Purchase decision influencers

Once you have isolated a specific segment of the market on which to focus, then you
can consider more subtle influences on the purchase decision. Some of these are:
Preference for channel of distribution
Many prospects prefer to buy through a specific distributor or wholesaler. For
individuals this may be due to subtle, as well as, economic reasons. For example, an
individual prospect may immediately think of Wal-Mart or Home Depot when
considering an offering like yours. A business often has a preference so they can have
a single communication point for all purchases. This also often results in lower
purchase prices.
Seller Characteristics that can influence purchase decision:
Another form of influence is how the prospect perceives your offering and/or
enterprise. If you can determine the characteristics your prospects most value in an
enterprise they purchase from, you can identify those your organization possesses and
promote them to the prospect.

Unique employee skills, knowledge

Extensive experience with a specific market segment or field of scientific inquiry can
be a powerful promotional tool. For example if an enterprise could sat, "Our scientists
knows more about corn silk genetic structures than anyone in the world" they would
have a strong sales statement.

Special relationships with distribution channels
Product or service accessibility is a critical factor in sales success. If an enterprise
could say, "Due to a unique relationship, the XYZ video stores give us more shelf
space than any competitor" prospects will likely respond positively.


104


Customer service capabilities

Prospects like to know that they can depend on post sale support from the product or
service provider. A statement like, "We have more service outlets in New Hampshire
than any competitor" will help secure sales.

Unique product forms

Credible uniqueness such as, "Our product is the only one that offers dynamic digi-
whirling" is appealing to the market.

Manufacturing expertise

The market is always interested in purchasing from the "best". If an enterprise can
confidently state, "We are the only enterprise that can manufacture molecular
engineered widgets", they have created an image of being the "best".

Longevity

Reliability is important. A statement like, "We have been in business for 50 years, so
you can count on us to be there when you need us" is usually a strong selling point.

Purchase Decision Makers

Finally, a point to consider is, given the characteristics of your offering, what type of
decision maker will most likely be interested in purchasing from you. It may be
beneficial to rank your prospects based on the following classifications. While you
may not be able to make this classification of the prospect prior to the first contact, if
your sales personnel are sensitive to these characteristics it can strongly influence
your sales strategy.



105

Ultra Conservative - don't rock the boat, whatever they purchase must be
consistent with their current way of doing things.
They are most likely interested in products/services that are improvements to
existing offerings rather than something new.
Once established as a customer they are seldom inclined to review alternatives.
Very negative to technically complex offerings or offerings requiring extensive
user education.
Cost effective offerings are only of interest if they don't disturb the status quo.
They are likely to react positively to any volume purchasing opportunities.
Conservatives - are willing to change, but only in small increments and only in a
very cost effective manner.
Will consider new products/services but only if related concept has been proven to
be effective. More likely to purchase improvements to existing offerings.
Will probably want to review competitive offerings, but will gravitate to best
known offering with lowest risk decision.
Negative to neutral when considering technically complex offerings or offerings
requiring extensive user education.
Strongly influenced by cost effective offerings and/or 'best price' opportunities
Liberals - regularly looking for new solutions, willing to make change (even major
change) if the benefit can be shown.
Will usually consider new products/services even if the related concept has not yet
been proven to be effective, but only if the potential benefits can be specified and
understood.
Wants offerings that make effective use of technology, but is not interested in
offerings just because they use a certain technology.
Will always want to review competitive offerings, but will usually choose the one
offering the greatest benefit, even if there is some risk involved.
Neutral to positive when considering technically complex offerings or offerings
requiring extensive user education.


106

Usually concerned with keeping employees informed and educated, so will often
consider educational offerings.
Strongly influenced by offerings that most closely deliver the 'end results' desired,
even if they are not the most cost effective.
Often are on social trend bandwagons so react positively to offerings that address
these needs.
Technical Liberals - enamored with the benefits provided by high tech solutions
and any purchase decision will be biased by the technical content of the offering.
Usually consider new products/services even if the related concept has not yet been
proven to be effective.
Often consider just because they use a certain technology.
Will always want to review competitive offerings, but will usually choose the one
offering the most hi-tech features, even if there is some risk involved.
Consider themselves technically competent and will expect leading edge use of
technology.
Positive to fanatic when considering technically complex offerings even when
requiring extensive user education.
Conversion costs usually not a major concern if technical benefits are there.
Not particularly concerned with keeping employees informed and educated, so
educational offerings are not of great interest.
Strongly influenced by offerings those most closely deliver the 'end results'
desired, even if they are not the most cost effective.
Self Helpers - consistently defines/designs solutions to their problems, likes to
acquire tools that help in the innovation process.
Will usually consider new products/services, but the related concept must have
been proven to be effective.
Often consider just because they use a certain technology that is relevant to the
development program they have underway.
Will always want to review competitive offerings, but will usually choose the one
offering the most effective 'do it yourself' features.


107

Usually consider themselves technically competent and will expect very effective
use of proven technology.
Not especially inclined toward technically complex offerings, would rather have
user friendly, but thought provoking, offerings.
Conversion costs usually not a major concern if offering promises potential for
innovation.
Usually concerned with keeping employees informed and educated, so educational
offerings are of interest.

Developing a Target Market Strategy

Developing a target market strategy has three phases:
Analyzing consumer demand
Targeting the market(s)
Undifferentiated
Concentrated
Multi segmented
Developing the marketing strategy
Selecting Target Markets (Analyzing Demand)

Demand patterns: Do all potential customers have similar needs/desires or are there
clusters? Types of demand patterns are:
Homogeneous Demand-uniform, everyone demands the product for the same
reason(s). Very rare in the US, staple foods...
Clustered Demand-consumer demand classified in 2 or more identifiable clusters.
IE Automobiles:
luxury
cheap
Sporty


108

Spacious
Diffused Demand-Product differentiation more costly and more difficult to
communicate IE Cosmetic market, need to offer hundreds of shades of lipstick.
Firms try to modify consumer demand to develop clusters of at least a moderate
size. Or uses one MM.
Targeting the Market
Undifferentiated Approach (Total Market Approach)

Single Marketing Mix for the entire market.
All consumers have similar needs for a specific kind of product. Homogeneous
market or demand is so diffused it is not worthwhile to differentiate, try to make
demand more homogeneous.
Single MM consists of:
1 Pricing strategy
1 Promotional program aimed at everybody
1 Type of product with little/no variation
1 Distribution system aimed at entire market
The elements of the marketing mix do not change for different consumers; all
elements are developed for all consumers.

Examples include Staple foods-sugar and salt and farm produce. Henry Ford, Model
T, all in black.

Market Segmentation Approach.

Individuals with diverse product needs have heterogeneous needs.
Market segmentation is the process of dividing a total market into market groups


109

consisting of people who have relatively similar product needs, there are clusters of
needs.
The purpose is to design a MM(s) that more precisely matches the needs of
individuals in a selected market segment(s).
A market segment consists of individuals, groups or organizations with one or more
characteristics that cause them to have relatively similar product needs.
There are two Market Segmentation Strategies
Concentration Strategy

A single market segment with one MM.
Market
|
|A Market Segment
|-------------------
One MM------------------>A Market Segment
|-------------------
|A Market Segment

PROS include:
It allows a firm to specialize
can focus all energies on satisfying one group's needs
A firm with limited resources can compete with larger organizations.
CONS include:
Puts all eggs in one basket.
Small shift in the population or consumer tastes can greatly effect the firm.
May have trouble expanding into new markets (especially up-market). Haggar
having problems finding someone to license their name for womens apparel, even
though women purchase 70% Haggar clothes for men.


110

Objective is not to maximize sales, it is efficiency, attracting a large portion of one
section while controlling costs.
Examples include:
ROLEX, Anyone wear one.
Who are their target market?? Over $100,000
Multi-segment strategy

2 or more segments are sought with a MM for each segment, different marketing plan
for each segment. This approach combines the best attributes of undifferentiated
marketing and concentrated marketing.

Market
MM--------------------->|A Market Segment
|_______________________
MM--------------------->|A Market Segment
|_______________________
MM--------------------->|A Market Segment
|_______________________
MM--------------------->|A Market Segment


Example: Marriott International:
1. Marriott Suites...Permanent vacationers
2. Fairfield Inn...Economy Lodging
3. Residence Inn...Extended Stay
4. Courtyard By Marriott...Business Travelers
PROS include:
Shift excess production capacity.
Can achieve same market coverage as with mass marketing.


111

Price differentials among different brands can be maintained Contact
Lens!!
Consumers in each segment may be willing to pay a premium for the
tailor-made product.
Less risk, not relying on one market.
CONS include:
Demands a greater number of production processes.
Costs and resources and increased marketing costs through selling through
different channels and promoting more brands, using different packaging
etc.
Must be careful to maintain the product distinctiveness in each consumer
group and guard its overall image (Contact lenses)

Criteria needed for segmentation

For segmentation to occur:
1. Segments must have enough profit potential to justify developing and maintaining
a MM.
2. Consumer must have heterogeneous (different) needs for the product.
3. Segmented consumer needs must be homogeneous (similar).
4. Company must be able to reach a segment with a MM, IE Review to reach
Delaware undergraduates.
How do marketers reach children?
Cartoons on Saturday
Nickelodian
Cereal boxes
Sports illustrated for kids
Look at how media has changed recently due to changing demographics etc. and
therefore the need of marketers to reach these groups.


112

Media must respond because they are essentially financed by the marketers or at least
heavily subsidized.
Variables that can be used to segment markets.

Need to determine the variables that distinguish marketing segments from other
segments.
Segmentation variables should be related to consumer needs for, and uses of, or
behavior toward the product. IE Stereo; age not religion.
Segmentation variable must be measurable. No best way to segment the markets.
Selecting inappropriate variable limits the chances of success.
Variables for segmenting Consumer Markets include:
Demographic - age, sex, fertility rates, migration patterns, and mortality rates,
ethnicity, income, education, occupation, family life cycle, family size, religion
and social class.
Geographic -Climate, terrain, natural resources, population density, subcultural
values, different population growths in different areas.
Metropolitan Statistical Area
Primary Statistical Metropolitan Area
Consolidated Metropolitan Statistical Area
Market density- of potential customers within a unit of land.
Psychographic - personality characteristics, motives and lifestyles
Behavioristic Variables - Regular users-potential users-non users
Single Variable vs. Multi-Variable Segmentation
Single variable--achieved by using only one variable to segment
Multi-variable-- more than one characteristic to divide market.
Robert W Thompson a Scottish Engineer invented the pneumatic tyre in 1845. In
1970 the first


113


solid rubber tyre appeared in England. Hon Dunlop, a Scottish veterinary surgeon
improved on

Thompson`s invention in 1988.

Till l960`s foreign companies dominated the tyre industry. During late 60`s and early
70`s

Indian Industrial Entrepreneurs entered the market with foreign collaborations. As
automobile sector began to take its roots in the country, the tyre industry witnessed
the entry of many players and with the waves of liberalization sweeping the land in
1922; the industry saw the same as a part of joint ventures.
GLOBAL MARKET MAJORS

Bridgestone
Michelin
Good Year
Continental
Sumitomo
Pirelli
Yokoha
Kumho
Cooper
Toyo
Oust
Hankook
MRF
Shanga
Chinghi


114

Gajab Tungsad

The tyre industry in India came into existence with an established trading
outfit by US based Fire Stone Tyre and Rubber C0. in 1922 followed by
Dunlop Rubber C0.of UK in 1926. Initially They were trading companies but
subsequently diversified into manufacturing sector with plants In West
Bengal by Dunlop and in Mumbai by Fire Stone in the year 1932.
This Rs.l9000 crore industry fully depends on agricultural and industrial performance
of the economy, the transportation needs and the production of vehicles in the
country. Indian tyre Industry is one of the largest in the world with more than 100
million motor vehicles on the Indian roads.
SALIENT FEATURES OF INDIAN TYRE INDUSTRY
o Adaptability and absorption
o Innovativeness
o Exports
o Technology progression
o Wide product range for diverse usage

INDIAN MARKET MAJORS
o MRF
o Ceat
o Good Year
o J K Tyres
o Modi
o Bridgestone


115

o
The Indian Tyre Industry produced 736 lakh units of tyres (11 lakh tonnes) garnering
Rs. 19,000 crores in FY 07-08. MRF Ltd. was the market leader (22% market share)
followed closely by Apollo Tyres Ltd. (21%). The other major players were JK Tyre
& Industries Ltd (18%) and Ceat Ltd.(13%).

MARKET OF TYRE CAN BE CLASSIFIED IN THREE
CATEGORIES
1. Original Equipment Manufacturer (OEM)
2. Replacement Market
3. Export Market Globally, the OEM segment constitutes only 30 per cent of the
tyre market, exports l0 percent And the balance from the replacement market. In
india the major demand comes from the Replacement Market accounting for
around 48.70 percent. It is followed by 42.80 % from the Original Equipment
Manufacturers (OEIVI) and 8.50 per cent from the exports. Retreading is looming
over the tyre industry as a colossal threat. Simply put, rethreading is replacing the
womout tread of the old tyre with a new one. The popularity of rethreading
stems from the fact that it costs only 20 per cent of a new tyre but increases its life
by 70 per cent to 80 per cent. Most of the transporters in lndia retread their tyres
twice during its lifetime, while a few fleet owners even retread thrice. Though
retreading has penetrated 25 percent of the tyre market, it has not made much of a
dent in the rapidly growing two-wheeler and passenger car segments.


116

The Tyres produced in India are
Cross Ply
Radial
Cross ply tyres have been used in India for several years. The cross ply trestle pooly
cords run across each other or diagonally to the outer surface ofthe tyre. Rayon and
Nylon cords are used as the reinforcing meditun. These tyres can rethread twice
during their lifetime and hence preferred by the Indian transporters who normally
overload their trucks. ln India 90-95% tyre is sold of this typ. Radial tyre have their
cord running radially from bead at 90* angles to their rim or along the outer surface of
the tyre. The reinforcing mediums used in these tyres are polyester, nylon, fiberglass
and steel. Hence it provides for a longer life time and lower fuel consumption, with
better consumption, better control over vehicle and road holding.
Radial tyre usage has shown has shown significant increase in usage every year. In
India almost all automobile segments have shifted to radial tyres and the usage of
cross ply is restricted to trucks and buses only.
The Indian tyre industry is mainly dominated by the organized sector and consists of
four major players who together account for almost 85% of the industry`s turn over-
MRF Ltd., Apollo Tyres Ltd., JK Tyre &lndustries Ltd. and Ceat Ltd Unlike the
international tyre industry where passenger car radials dominate the market, in the
Indian tyre industry commercial vehicle tyres take the lead and account for
approximately 70% of the industry`s turnover. As a result, the growth of the entyre
industry depends upon primary factors like agricultural growth, industrial production,
growth in vehicle demand and secondary factors like infrastructure development,
prevailing interest rates and financing options.
The tyre industry is highly raw material intensive and a major constuner of rubber.
With raw material costs accounting for 70% of the cost of production, any change in
the price of rubber or the crude basket has a direct impact on the cost of production.
The comparatively stable raw material prices in the first half of FY 2007-08, coupled
with price rises undertaken by the industry in FY 2006-07, resulted in all major
players reporting improved operating profit margins. This was after a four consecutive
years of raw material cost push, both for natural rubber and crude oil linked raw
material basket. The second half of FY 2007-08, saw an upward trend for all major


117

raw material prices and the same is anticipated in the year ahead. As a result margins
are once again under pressure, even while the demand-supply situation continues to
be in favor of the industry.
The industry, already bogged by over capacity, is facing a severe threat of dumping of
cheap tyres by South Korea. Under the Bangkok agreement, signed between India and
South Korea in 1976, import of tyres from the latter into India would attract a
concessional duty of` 33 percent as against the normal tariff of 40 per cent. Two years
ago, the industry estimated the growth in the passenger car radial demand at 20 per
cent per annum. However, the auto recession has hit Them badly. But South Korea
made a killing by dumping cheap car radial tyres and walked away with ll per cent of
the tyre market. Another threat to the industry is the price of its raw materials, most of
which are petroleum by-products. Carbon, synthetic rubber and nylon tyre cord are
offshoots of petrochemicals. Thus, the future of the industry will swing with the
supply of crude oil.
The biggest threat, however, is yet to fully materialize. It will be from global majors
like Bridgestone and Michelin, which control 36 per cent of the global tyre market.
These players have set up their bases southeast Asia and the slum of the market in this
region, coupled with the vast growth potential Indian market beckoning them
towards India Bridgestone has tied up with ACC for 100% radial tyre unit and
Michelin is also marketing its Product through retail outlet the industry is driven more
by volume than by margins and each of Big five in the global tyre industry
Continental, Michelin, Goodyear , Pirelli generate an annual Tyre production
equivalent to total demand of Indian market. These mncs have big pocket And can
easily with held losses for 2-3 years. Their financial also permit them to invest in
R&D Which is beyond the reach of average Indian tyre manufacturer

POLICIES OF MRF
Quality Policies of MRF
This policy is to maintain market leadership through continuous quality improvement
to achieve this goal. All the MRF plant and corporate office give particular attention
to the following:


118

Product/process improvement by field/plant performance monitoring and prompt
service to the costumers. Up gradation of machinery to meet the increased need of
costumers. Continuous training of all the employee in order to acquire necessary skill
& knowledge.
At the plant level the respective general manager assigned the responsibility of
carrying quality system by collaborating with corporate function.
SAFETY POLICY OF MRF
MRF has well defined safety and health policy which are as follows:
It is the policy of the company that SAFETY and HEALTH of employee should be
the first Priority. It is the responsibility of everyone in the organization regardless of
his position he occupies to ensure that everyone in the factory reaches home to the
beloved one without any injury today and every day.
We shall observe this policy not only in letter but also in spirit and offer ACCIDENT
FREE SAFE PRODUCTION for the benefit of one and all.
ENVIROMENTAL POLICY OF MRF
This policy of MRF is to ensure that products are manufactured in environment
friendly and safe Manner .to achieve this goal all the MRF plant and corporate office
pay particular attention to the following:
Minimize the impact of manufacturing activity on the environment- air, water,
soil.
Comply with all applicable regulatory requirements.
Develop environment performance evaluation procedure for continuous
monitoring.
Optimize the consumption of resource ( water, energy, raw-materials ) by
minimizing Wastages, recovery, recycling wherever possible.
Up gradation of machinery and pollution control equipment.
Train all employee to perform their activities an environmentally responsible
and safe manner.
TRAINNIG POLICY OF MRF
This policy is to provide and develop knowledge, skills, and behavior of employee to


119

continuous improve performance .
To achieve this goal following are paid attention:
Identify and document the training need of employee through competence
evaluation each year.
Design and publish training calendar and schedule.
Providing training regularly based on identical needs training schedule.
Monitoring and evaluating the training process and outcome to access and to
decide the next training schedule.

























120





CHAPTER-2




AN OVERVIEW OF MRF


















121

CHAPTER-2
AN OVERVIEW OF MRF

MADRAS RUBBER FACTORY is major tyre manufacturing company located in
Chennai, southern part of India. It is successful and India's biggesttyre manufacturing
company and one of the best competitor in production of tyres worldwide. The MRF
products are renowned for its quality andinnovation. It exports its products to more
than 65 countries in America, Europe, Japan, Middle East, Japan and Pacific.

An enterprise that started as a toy balloon maker in 1946 in South India quickly grew
to become one of India's biggest and respected companies. Renowned for product
superiority and innovation, MRF continues to be the leading tyre-maker in India.
MRF Ltd. is the first Indian company to export tyres to the US, the very birthplace of
tyre technology. It is the first company in India to manufacture and market Nylon
tyres passenger tyres commercially. In 2004, the company's turnover crossed INR 30
billion mark. The company was given the title of most ethical company by 'Business
World' magazine after a survey conducted in 1999.



122



Founder K. M. Mammen Mappillai
Country India
Year of Establishment 1946 as a toy factory
Industry Tyre Manufacturing
Listings & its codes NSE: MRF; BSE: 500290
Registered Office 124, Greams Road
Chennai - 600 006
India
Tel.: +(91)-(44)-28292777
Fax: +(91)-(44)-28291844/ 0562
Website www.mrftyres.com
Related Website www.mrf-exports.com (MRF Exports)

MRF Tyres , the largest tyre manufacturer by revenue, has outperformed its peer
group in the quarter ended March 11 by recording double-digit growth in the topline
and a lower-than-expected decline in the bottomline. However, despite the betterthan-
expected financial numbers, the stock of the company has underperformed the
BSEbenchmark Sensex in the past one month. This is due to the relentless increase
in rubber prices, which is a major input cost for the tyre companies.
Even though tyre companies have revised product prices twice in the past six months,
the net impact on the operating margin is not huge due to the high differential
between the product and the raw material costs. So, tyre companies may continue to


123

face pressure on the operating margin in the coming quarters with the expected
increase in rubber prices.
MRF sales grew by 34% over the quarter ended March 11, with improved demand in
the passenger cars and commercial vehicles, which contributed less than half to the
volume beside improvement in replacement demand. This segment grew by 18% for
the similar period on year on year basis. But profitability was dented by almost two
folds increase in the raw material cost, which accounts for threefourths of the total
operational cost. Operating profit grew by 10% to Rs 234 crore, which is higher than
the previous quarter. Although raw material cost is up 51%, moderation in other
operational costs has resulted in growth in the operating profits.
With an increase in outlay in interest and depreciation costs, MRF net profit has
declined by 6% in the same period. Rubber prices shot up by 40% to Rs 56/kg, which
has resulted in contraction of operating by 200 basis points.
According to the Rubber Board of India, natural rubber production is expected to be 9
lakh tonnes compared to consumption of 9.7 lakh tonnes in the year ended FY11,
which can augment the pressure on rubber prices in the coming quarters. Further, with
a rise in inflation cost, the cost of owing a vehicle may increase, which
can dent automobile demand in the coming quarters.
Being a segment leader, with high market share in commercial vehicle , the company
can sustain the growth momentum in the coming quarters. So, an investor can take a
wait and watch approach for MRF as well as other companies in this industry and
keep a tab on rubber prices to take the exposure in the tyre stock in the near term.
MRF Ltd. is the first Indian company to export tyres to the US, the very birthplace of
tyre technology. It is the first company in India to manufacture and market Nylon
tyres passenger tyres commercially. In 2004, the company's turnover crossed INR 30
billion mark. The company was given the title of most ethical company by 'Business
World' magazine after a survey conducted in 1999.
Production at tyre major MRFs three manufacturing plants in the south has been hit
after employees struck work from October 10, demanding end to contract labour,
among other things.
Union sources said MRF employees at Arakkonam resorted to to a sit-in after the
management reportedly employed contract labourers for manufacture of tyres, which
was hitherto the preserve of permanent workers. They said the employees have been


124

protesting since October 3, but stayed away from work only from October 10 after the
management allegedly went back on its promises.
Besides the plant at Arakkonam, production was also hit at Puducherry and
Thiruvottiyur. The Arakkonam plant produces about 45,000 truck tyres and 25,000
tubes while Pudicherry and Thiruvottiyur manufacture 13,500 and 6,500 truck tyres
on a daily basis.
The Chennai-based company's said its net profits grew to Rs 144.56 crore from Rs
31.95 crore in the year-ago period, a growth of 352.4 per cent.Total income for the
quarter stood at Rs 3,008.27 crore against Rs 2,573.06 crore, it said in a filing to the
BSE.For the nine-month period ended June 30, net profits rose 81.9 per cent to Rs
407.59 crore from Rs 223.98 crore in the same period last year.Total income grew to
Rs 8,876.56 crore from Rs 7,123.38 crore during the nine-month period.The company
said its board of directors have approved an interim dividend of Rs 3 per equity
share.Shares of the company closed at Rs 10,151 apiece, up 2.05 per cent over the
previous close on the BSE.



125



Top international car brands such as Audi and BMW would now sport super premium
car tyres from MRF Limited. The tyre manufacturing company which has been
involved in manufacture of vehicle tyres since 1962 now exports to more than 65


126

countries across the globe, making it India's largest tyre manufacturing company
today.
MRF Tyres will be manufacturing a new range of high end tyres especially for luxury
vehicles from Audi and BMW. MRF Tyres have a market capitalization of over
Rs10,000 crores today and can be utilized for more than 35 models of Indian and
foreign cars in the country.
Mr. Koshy K Varghese, Executive Vice President who is in charge of Marketing
operations at MRF Tyres said that these new tyres are manufactured with advanced
polymer compound with a stable ring construction which will ensure greater stability
and ensure safety while tackling high speed driving. MRF Tyres is also got some
expansion plans in the offing. The company will be investing an amount of Rs 800
crores in a new plant in Tamil Nadu while the company is planning to acquire rubber
companies or rubber plantations to counterbalance the high cost of raw material being
imported for their use.


HISTORICAL BACKGROUND


In 1946, K.M. Mammen Mappillai started this company as a small toy balloon
manufacturing unit in a shed. In 1949, the business started producing a variety of
products like balloons, toys to industrial gloves and contraceptives. MRF was also
established as first office at Thambu Chetty Street, Chennai, India. In 1952,
manufacturing of tread-rubber started in that unit by installation of first machine and a
rubber mill at that factory.
In 1961, MRF established with Mansfield tire & Rubber Company of USA and started
manufacture of tyres with a huge success gained in tread-rubber. In 1964, the export
business of tyres made in progress. At Beirut (Lebanon) an overseas office was
established for the development export market. MRF muscleman is popularly known
now but this year was his birth. In 1967, MRF has become the first Indian company to
export tyres to USA. In the next 3 years MRF inaugurates Kottayam unit, a factory in
Goa and Arakkonam plant.


127

This was first company to produce Nylon tyres and gained huge commercial success.
And later MRF Superlug-78 was introduced for heavy duty trucks, this largest selling
truck tyre in the country.
In 1980, MRF technically collaborated with B.F Goodrich Company of USA which
was involved in development with NASA space-shuttle.
In the year 1984, the turnover of company crossed 2 billion INR and the first India
tyres produced by MRF for the fitment of MARUTI SUZUKI 800, which is first
India's small car. Nylogrip tyres were launched for two wheelers in next year.
In 1986, National Institution of Quality Assurance recognised MRF against 20 tyre
manufacturing companies worldwide. B.F. Goodrich Tyre Company has instituted 6
quality improvement awards to MRF.
Due to the company's effectiveness in the market again the turnover has reached to 3
billion INR. Premium Nylon tyre was also launched in the year 1987.
In 1989, once again MRF was awardedthe Visvesvaraya award for the bestbusiness
company in South India. It is recognised for its quality and excellence in the market.
Hasbro International (USA) and MRF collaborated with each other and Funskool
India has launched in the year 1989.
From 1993 to 1995, the turnover of company reached 10 billion INR to 15 billion
INR. And MRF tyres were chosenfor fitment on Daewoo Cielo. Mr and Mrs
Mammen Mapillai received gold medal for being first 2 employees of the company, in
the golden jubilee year The first ever F3 car and Super Lug tyres for trucks,ZVTS
tyres for passenger cars, Nylogrip Zapper for two-wheelers were launched. The rally
team of MRF wins APRC rally for first time in the 2001, second time in the year 2003
and third time win in the year 2005.
MRF's turnover crossed 30 billion INR in the year 2004 and 50 billion INR in the
year 2006. In the year 2007, MRF won JD Power Award. A new type of tyres Super
Lug 505 for the trucks was launched. Super Lug FS tyres were also launched because


128

the customers had claimed to be provided them saving fuel. ZLSK tyres were
launched. JD Power award was again won by MRF in the year 2008.
Just one year before attainment of independence by our country in 1946 a young
entrepreneur
Mr. K.M Mammen Mappillai opened a small toy balloon manufacturing unit shed at
Thruvottiyur, Madras. Over the year it started manufacturing variety of products
.MRF was incorporated towards the year 1960 and was converted into public limited
company in 1960.
Additional shares were offered to pulic in order to raise fund for manufacturing
automotive tyres and tubes in collaboration with U.S based Mansfield tyre & rubber
co. since then it has emerged as largest tyre manufacture in india. And 13
th
largest in
the world. With a turnover of Rs 5000 crores and also built a capacity of 6 million
tyres from 6 manufacturing unit in india. With a profit margin of approx 13% in the
tyre manufacturing sector. MRF hold more than 20% of market share. The company
creater to all vehicular segment from commercial vehicle and passenger car to 2-3
wheelers and tractors and has a strong presence in both radial and cross ply segments.
It hosts 68 sales center and 2500 distributor and export to over 75 countries a standing
testimony of MRFs outstanding leadership.
1946

A young entrepreneur, K. M. Mammen Mappillai, opened a small toy balloon
manufacturing unit in a shed at Tiruvottiyur, Madras (now Chennai).

1949

Although the factory was just a small shed without any machines, a variety of
products, ranging from balloons and latex-cast squeaking toys to industrial gloves and
contraceptives, were produced. During this time, MRF established its first office at
334, Thambu Chetty Street, Madras (now Chennai), Tamil Nadu, India.

1952



129

MRF ventured into the manufacture of tread rubber. And with that, the first machine,
a rubber mill, was installed at the factory. This step into tread-rubber manufacture,
was later to catapult MRF into a league that few had imagined possible.

1955

MRF soon became the only Indian-owned unit to manufacture the superior extruded,
non-blooming and cushion-backed tread-rubber, enabling it to compete with the
MNC's operating in India at that time.

1956

The quality of the product manufactured was of such a high standard that by the close
of 1956, MRF had become the market leader with a 50% share of the tread-rubber
market in India. So effective was MRF's hold on the market, that the large
multinationals had no other option but to withdraw from the tread rubber business in
India.

1960

The Company was incorporated as a private limited company on 5 November. The
Company Manufacture automobile, aircraft, cycle tyres and tubes in collaboration
with the Mansfield Tire & Rubber Co., Mansfield, Ohio, U.S.A. The tyres are sold
under the trade name Mansfield Tyres (MRF). The Company also produces other
industrial products made of rubber like conveyor belt, hoses etc. It took over the entire
business of the Madras Rubber Factory as a going concern as from 16 November, for
a consideration of Rs 25 lakhs.

1961

The Madras Rubber Factory Private Limited was converted into a public company on
1 April, and additional capital was issued in order to start the manufacture of
automobile tyres and tubes in collaboration with the Mansfield Tire & Rubber Co.,


130

Mansfield, Ohio, U.S.A. The Company was given permission to export tyres having
Mansfield trade mark to all world markets except U.S.A. and Canada. : 2,49,650
shares allotted without payment in cash. 350 shares subscribed for by the signatories
to the Memorandum of Association. 2,50,000 shares reserved and allotted directors,
etc. 5,00,000 shares issued to public in April 1961. The balance 2,50,000 shares
allotted to collaborators as payment for machinery.

1962

The main plant for production of tyres and tubes were commissioned on 4 December.

1963

Nylon Hot-Stretch Unit of the latest design was commissioned in November.

6,25,000 Right Equity shares offered at par in the proportion 1:2.

1964

With the commissioning of the main plant in 1964, MRF also made progress in the
export of tyres. An overseas office at Beirut

(Lebanon) was established to develop the export market, and it was amongst India's
very first efforts. This year also marked the birth of the now famous MRF
Muscleman.

1967

MRF became the first Indian company to export tyres to USA - the very birthplace of
tyre technology.

1970



131

In March, 5,62,500 bonus equity shares issued in the proportion 3:10.

1973

MRF scored a major breakthrough by being among the very first in India to
manufacture and market Nylon tyres.

1975

During September, 12,18,714 bonus shares issued in proportion 1:2. (Only 12,18,689
shares were taken up).

1978

The Company finalised a technical know-how collaboration with B.F. Goodrich Co.,
U.S.A., which became fully operative in early 1980-81.

This agreement was revalidated for further five years.

1979

The Masfield Tire & Rubber Co., U.S.A. offered for sale out of its holding 3,74,250
No. of Equity shares of Rs 10 each of the Company at

a premium of Rs 4 each as follows: 3,63,786 shares as rights to the existing
shareholders in the proportion 1:8 and 10,464 shares to the employees of the
Company.

1980

The Company crossed several milestones in its history. It went into technical
collaboration with BF Goodrich Tire Co., USA in the year.



132

The name of the Company, Madras Rubber Factory Ltd. was changed to MRF Ltd in
the year.

1981

Mansfield Tire & Rubber Co. of U.S.A., offered for the their balance shareholding of
3,55,537 No. of Equity shares of Rs 10 each in the

Company at a premium of Rs 4 per share as follows: 3,29,587 shares to the existing
resident Indian shareholders and non-resident Indian shareholders (on non-repatriation
basis) in proportion 1:10 and 25,950 shares to the Indian employees, business
associates and dealers of the Company.

2,00,000 No. of Equity shares allotted in Feb. 1982 to IFCI at a premium of Rs 5 per
shares on conversion of loans.

1983

The Company finalised a technical collaboration agreement with M/s. Marangoni
TRS SPA, Italy for the supply of know-how for the

manufacture pre-cured tread rubber for retreading industry.

1984

Sales crossed INR two billion. MRF tyres were the first tyres selected for fitment onto
the Maruti Suzuki 800 - India's first

small, modern car.

1985

A letter of intent was obtained for the manufacture of conveyor beltings and hoses in


133

collaboration with Industiral Pirelli SPA,

Italy. Plans were also on hand to go in for a joint venture with the aero tyre division of
B.F. Goodrich & Co., for retreading and subsequently for manufacturing aircraft
tyres.

1986

The Company issued 15% non-convertible debentures of Rs 100 each (II Series) for
Rs 8 croes as rights to the existing shareholders to raise finances for modernisation of
the Company. Under Cumulative interest payment scheme, these debentures are
redeemable in 3 annual

instalments of Rs 35 each commencing on 8 May, 1993 at a premium of 5% in the
first instalment. Under the non-cumulative interest payment scheme, the debentures
are redeemable in five equal annual instalments of Rs 20 each comencing from 8 May
1991 at a premium of 5% which will be paid on 8 May, 1993.

1987

(18 months), The Company obtained MRTP clearance and a letter of intent for the
manufacture of pre-cured tread rubber up to 6,000

tonnes per annum by using indigenous technology developed by the Company. MRTP
clearance was also obtained for setting up a new plant at Tada in Andhra Pradesh for
manufacrure of 1.5 million number of tyres and tubes per annum.

The Company entered into a collaboration agreement with Vapocure of Austraia to
manufacture polyurethane paint formulations that can be

rapidly cured at room temperature and would also help in the manufacture of
shatterproof glass. The plant with an installed capacity of 10,000 tonnes per annum
was being set up at Gummidipoondi in Tamil Nadu.


134


`Funskool (India), Ltd. and `Crystal Investment and Finance Co. Ltd.' became
subsidiaries of the Company. Funskool (India), Ltd.

was promoted in collaboration with Hasbro International, U.S.A., the World's largest
toy makers.

1988

The MRF Pace Foundation was set up, with international pace bowler, Dennis Lillee
as its Director. Not long thereafter, pace bowlers

trained at the Foundation were selected for the Indian Cricket Team.

1989

The Company was identified as `Star Exporter', a status that enables the company to
get priority treatment in several areas concerned

with customs, RBI, etc.

Aero tyre division of B.F. Goodrich Co., USA was taken over by Michelin Cie of
France.

Government approved the technical collaboration with Uniroyal Goodrich Tire Co.,
U.S.A., a subsidiary of Michelin Cie., France,

for imparting latest technology for bias ply/radial aircraft tyres for a period of 5 years.

1990

The Aruna Leathers & Exports Ltd. was amalgamated with the



135

Company. As per the scheme one equity share of Rs 10 each of MRF Ltd. was
allotted for every 10,000 shares of Rs 10 each fully paid-up held in ALEL.
Accordingly, 25 equity shares were allotted to the erstwhile sharehodleres of ALEL.

The Company introduced `Vapocure' colours in the market.

(6 months), the Company privately placed 15,00,000 - 14% non-convertible
debentures of Rs 100 each (III Series). The debentures

are redeemable - at a premium of 5% in three annual instalments of Rs 35 each
commencing from 31 July, 1997.

The Company privately placed with SBI Mutual Fund 10,00,000 - 14% debentures
(IVth Series) which are redeemable at a premium of 5% on

26 June, 1998.

During the year 5,00,000 - 14% debentures were also privately placed with
Infrastructure Leasing & Financial Services, Ltd. These

debentures are redeemable in three annual instalments at a premium of 5%
commencing from 23 July, 1997.

1991

The Company promoted a new Company viz. MRF International, Ltd., in view of the
tremendous growth potential in the export market.

3,85,000 No. of equity shares issued to (prem. Rs 242 per share) to the foreign
collaborators M/s. Asia Trading Services, Hongkong.

1992



136

The Company has formed a new Company, viz., MRF INTERNATIONAL LIMITED
and the Company has received the certificate of commencement of

business.

1993

K. M. Mammen Mappillai was awarded the Padmashri Award of National
Recognition for his contribution to industry - the only industrialist

from South India to be accorded this honour. MRF also became the first tyre company
in India to cross the INR 10 billion mark. In addition, the company was voted by the
Far Eastern Economic Review, as one of the ten leading Corporate Groups in India
and a Leader in Asia, and by readers of the A & M magazine, as one of India's most
admired Marketing Companies.

1995

The Company has received the Top Export Award for the year from All India Rubber
Industries Association.

1996

The Company has received an award from CAPEXIL - Certificate of Merit based on
the export performance for the year.

The Far Eastern Economic Review Award was presented to MRF for the fourth year
in succession in recognition of excellence.

1997

MRF Ltd has been assigned a credit rating of `PR1+' (superior) for its proposed Rs
100 crore commercial paper (CP) programme by Credit


137


Analysis and Research Ltd (CARE).

MRF is setting up a new plant in Pondicherry for the production of radial tyres.

The company set up the Arakonam plant in Chennai to produce bicycle tyres and
tubes.

MRF began manufacturing tyres and tubes in technical collaboration with Mansfield
Tire and Rubber Company, USA.

MRF has launched Nylogrip Zapper, a high performance tyre for new generation
bikes.

The company tied up with Uniroyal Goodrich Tire Co. of USA, a subsidiary of the
French Tyre giant Michelin, which held 9.8 percent

stake in the company.

1998

MRF Tyres has signed an OEM (original equipment manufacturer) alliance with Siel
Honda Motors and Hindustan Motors.

MRF has launched a market sampling operation for the MRF Zigma.

1999

MRF Ltd has decided to set up more such clinics in Northern and Western cities.

The Company has entered into agreements with the Depositories viz., National
Securities Depository Ltd. [NSDL] & Central Depository



138

Services (India) Ltd.

AIRIA Highest Export Award was given in recognition of our outstanding export
performance in respect of Auto Tyres & Tubes during

the year.

2000

The Company has set up shop in Dubai to target markets in the UAE as part of its
export thrust.

MRF has launched a steel-belted premium radial tyre variant called `MRF ZVTS'.

2002

MRF was ranked highest in customer satisfaction along with multinational
Bridgestone

in a study conducted by JD Power Asia pacific.

MRF Tyres Ltd sees slump in commercial vehicle tyre market and passenger car
growth has also declined.

High court dismisses the writ petition filed by MRF Employees Union challenging the
order

of dismissal of a worker, who was the secretary of the union.

Advertising Standard Council of India Quashed the objection raised by MRF by
upholding J K Industries claim of being India's Number one tyre maker in the four
wheeler segment.



139

MRF Ltd has obtained the 'Outstanding Corporate Sports Initiative' award from the
Federation of Indian Chamber of Commerce and Industry.

2003

MRF and Bridgestone are ranked highest in a tie for the second year in a row in
customer satisfaction with original tries according to JD Power Asia Pacific.

Shri K.M. Mammen Mappillai, Chairman and Managing Director expired on March
2nd.

Mr.C.D Khanna has ceased to be the Director of the company. And Mr. K S
Narayanan has resigned from the board of MRF.

Mr.N Kumar and Mr Ranjit Issac Jesudasen have been appointed as the directors of
the company.

Mr K S Narayanan ceased to be director of the Company with effect from April 17,
2003, consequent to his resignation from the Board of

Directors.

Mrf Ltd. has informed the Exchange that at its meeting held on December 19, 2003
the BOD have re-designated Jt. Managing Director

Mr. Arun Mammen as Managing Director of the Company w.e.f April 1, 2004.

MRF and Bridgestone are ranked highest in a tie for the second year in a row
in customer satisfaction with original tries according to JD Power Asia Pacific.
Shri K.M. Mammen Mappillai, Chairman and Managing Director expire on 2
March.
Mr. C.D.Khanna has ceased to be the Director of the company. And Mr.
K.S.Narayanan has resigned from the board of MRF.


140

Mr. N.Kumar and Mr. Ranjit Issac Jesudasen have been appointed as the
directors of the company.
Mr. K.S.Narayanan ceased to be director of the Company with effect from 17
April 2003, consequent to his resignation from the Board of
Directors.
MRF Ltd. has informed the Exchange that at its meeting held on 19 December
2003 the BOD have re-designated Jt. Managing Director
Mr. Arun Mammen as Managing Director of the Company w.e.f 1 April 200


2004

MRF Ltd. has informed that Mr Ravi Mannath has been appointed as Additional
Company Secretary of the Company w.e.f. January 5, 2004.

MRF received the highest rankings in the study in four of the five factors determining
overall satisfaction with tyres appearance,

durability, traction and handling.

MRF Tyres is the biggest consumer of natural rubber in India during 2002-03

Ties up with Maruti Udyog to boost motorsports in India

2007

MRF Ltd launches premium truck tyre Super Lug 50-FS.

2011



141

MRF Ltd inaugurated its 7th manufacturing facility at Ankanpally near Hyderabad,
exclusively for radial tyres.
2011

MRF Ltd crosses gross revenue mark of 10,000 crores
Present

It is also involved in a range of other activities via subsidiaries. Funskool India, a
Joint venture between Hasbro and MRF, is a major toy manufacturing company in the
country. MF Pretreads offers world class precured tyre retreading service, and MRF
Muscleflex is involved in making conveyor belts. It is presently under the leadership
of Vinoo Mammen, son of the late K.M. Mammen Mappillai.

Other Activities

MRF has been involved in the development of cricket through its sponsorship of
many cricketers and MRF Pace Foundation. At one point of time, MRF was the bat
sponsor of world-class batsmen including Brian Lara, Sachin Tendulkar, and
Australian captain Steve Waugh.

After Waugh's and Lara's retirement from international cricket, on 4th September
2009, MRF's contract with Sachin Tendulkar too expired. Sachin now uses Adidas
bats, and MRF are currently sponsoring Gautam Gambhir and Rohit Sharma two
other members of the Indian cricket team.







142

MISSION & VISION
MISSION
Be a Customer Obsessed Company - Customer First 24x7
No.1 Tyre Brand in India
Most profitable Tyre Company in India
Motivated and Committed team for excellence in performance
Be a Green Company
Deliver Enhanced Value to all stakeholders
Enhance global presence through Acquisition / JV / Strategic Partnerships
Our company mission is clear - to support the development of your most important
asset, your staff! From this you will experience:

Improved efficiency
Reduced costs
Professional people
We understand that waste management customer services dont usually conform to
standard hours, early starts / late finishing, in some cases 24 / 7. We will work without
disruption and maximum commitment to achieve our mission.

All AJF Waste Management staff will demonstrate professionalism whatever the
situation.

We have the experience and commitment if you have the desire. Let us
help YOU unlockYOUR companys true potential.

Our pledge to you is: Dont waste our time and we wont waste yours

Speak to us today about how we can help.

MRF mission statement is as follows: we will meet the global standard of tyre


143

industry
That delight costumer through costumer service focused, empowered employee,
innovative Service & cost efficiency.
VISSION
To be amongst the most admired companies in India, committed to excellence.
MRF TYRE LTD. Has a vision. a vision to be significant player in the global tyre
industry.
And a brand choice providing customer delight and enhanced stakeholder value and in
order
To make empower vision, they have strived to meet the need of costumer through:
To be most admired tyres brand globally
Error free service
Innovative product and service
Cost efficiency
Loved by more costumer
Targeted by top talent
Benchmarked by most business


Values
Costumer: We will be responsive to the need of our costumers
Learning: we will continuously improve our service innovatively &
expeditiously
People: we will trust & respect our employee.9
Community & partner: we will be transparent & sensitive in dealing with
our stake.



144

AIMS
To provide knowledge and understanding of the operations of an MRF
To provide knowledge of the safety requirements required when working in an
MRF

Who We are

A leader in the category MRF
holds the No.1 position for
the last 21 years.

Established as toy-balloon
manufacturing company in
1946 by KM Mammen
Mappillai, MRF quickly
emerged as the leading maker
of tread rubber. Since then,
the company hasn't looked
back.

The fact that it is the first tyre
company in India to reach a
turnover of 5000 Crores is
testament to its dominance of
the industry.

MRF is also the first
company to export tyres to
the US; its global presence is
now spread across 65
countries around the world.



The company's penchant for
quality has earned it the
distinguished Q1 certification
from Ford - an achievement
that qualifies MRF to supply
tyres to any of the Ford
plants worldwide. This has
also translated in the
company winning the
prestigious JD Power award
five times.

The company's love for
sports, especially Cricket, is
well known. The MRF Pace
Foundation is synonymous
with training and teaching the
world's best fast bowlers.

MRF's involvement in motor
sports in India is no less
fervent. Its rallying team has
won the prestigious FIA Asia
Pacific Rally Championships
twice. Even in international
championships MRF karting
tyres, homologated by FIA, is
the preferred choice.



145

OBJECTIVES OF THE COMPANY

1. To provide an understanding of the employers and employees responsibilities
within the Health and Safety at Work Act
2. To raise awareness of actions which may constitute a breach of the Health and
Safety at Work Act
3. To explain basic personal health and safety requirements when working in an
MRF e.g. PPE
4. To provide an understanding of how MRFs operate (using video footage)
5. To raise awareness of the type of accidents that can occur when working in an
MRF
6. To help candidates identify areas of high risk within MRF operations
7. To provide an awareness of specific health and safety procedures that may
operate within an MRF. The subjects would be explained:
1. Lock-off procedures
2. Entry into confined spaces
3. Traffic / Pedestrian interaction
4. Plant cleaning and maintenance protocol
LEARNING OUTCOMES
On successful completion of the course, participants will be able to;
Understand the basic function of an MRF
Understand the complex mechanical operations of an MRF
Understand how their individual actions contribute towards the safe operations
of an MRF
Identify the typical safety routines required when completing plant cleaning
and maintenance operations
Recognise the actions required when dealing with unplanned incidents
Recognise opportunities to reduce the risks and contribute towards safe MRF
operations
Support good health and safety practice within MRF operations


146






CHAPTER-3

PRODUCTS OF MRF














147


CHAPTER-3
PRODUCTS OF MRF
MRF is the leading manufacturer of tyres in 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 take on any road.
MRF has diverse business interests which also include Pretreads, Paint and Coats and
Toys.
MRF Conveyor Belting
MRF 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 in processes beginning with Mixing, Calendaring and the like, to
manufacturing of the Finished Products, all of which is In-House, MUSCLEFLEX-
Conveyor Belting has gained rapid acceptance in markets worldwide.
Cover Grades
A comprehensive range of Cover Grades covering a wide variety of applications is
manufactured. These Cover grades conform to the most Stringent International
Standards, across the range.
Quality Assurance
MRF Conveyor Belting Division is ISO 9001 certified. Belting is manufactured under
a detailed Quality Assurance Plan involving meticulous raw material testing, in-
process controls and stringent finished product testing.


148

Customers
MRF's comprehensive range is used for several applications including Mining,
Quarries, Ports, Thermal Power Plants, Cement Plants, Steel Plants, Fertilizer Plants,
Paper Manufacturing, Fertilizer Industry etc. Exports currently cover 15 countries
across the world and growing Rapidly.


Pretreads





149

MRF PRETREADS 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.
In the MRF PRETREADS system, the tread rubber is precured from MRF's factory in
a carefully controlled environment, thereby ensuring world-class quality. Today, MRF
PRETREADS has emerged as the Mileage leader in precured retreading and also has
the specialized expertise required for retreading Radial Tyres of Truck, Bus, LCV and
Passenger vehicle.
The MRF PRETREADS Advantage.
Greater tyre Mileage
Better Road Grip
Well researched Tread Patterns through years of innovation and Testing
Proven Rubber Technology
Range of patterns to suit various applications
Low Operating Costs:
MRF PRETREADS gives you 70-80% of original tyre mileage and costs
about 25-30% of a new truck tyre.
MRF is the leading manufacturer of tyres in 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 take on any road.
MRF has diverse business interests which also include Pretreads, Paint and Coats and
Toys.

Automotive tyres
Light Truck Tyres



150

Super Miller 99


Features
Unique rib tread pattern
Premium skid depth
Premium tread compound
Benefits
Good road grip
Wet rolling resistance
High mileage


151


Steel Muscle S1T4

Features
Unique cavity contour
Special tread pattern
Structural integrity
Improved tread compound



Benefits
Better Road holding and Improved Wear pattern


152

Reduces Uneven tread wear
Enhanced Retreadability
Better original mileage


Steel Muscle S1R4


Features
Flat tread contour
Longitudinal tread grooves
Edge treatment on the land area
Wear resistant tread compound
Structural integrity


153

Benefits
Optimum foot print to give Even tread wear
All wheel fitment
Reduce Erosion and compression wear
Good mileage
For better retreading

The Lug Plus

Features
Straighter lugs
Rounded shoulders
Strong casing


154


Benefits
Lesser stone trappin
Prevents lug breaks



Musclerok X
Features
Non-directional Tread Design
Heavy Butressed Lugs
Heat Resistant Undertread
Rugged Nylon Construction


155

Better Anti-oxident, Anti-ozonent sidewall compound


Benefits
Excellent pulling power in forward and reverse direction
Cooler running helps prevent tread separation
Strong and bruise resistant
Longivity of the tyre
Capable of carrying heavy loads


M-77



156

Features
Rib-lug tread pattern
Open and aggressive tread design
Premium tread compound
Strong casing
Benefits
All-wheel fitment
Excellent traction
Enhanced mileage, cut resistance
Tough casing to last many retreads


Passenger car tyres- bias ply and radial



157


ZLO
Features
Muscle polymer blend
Stable Spiral Ring
Unique Groove plus
Sporty sidewall design
Benefits
Stability in wet and dry conditions
Precise and responsive handling
Wide footprint
Stylish Looks




158


VTM

Features
Large tread blocks
See through circumferential grooves and wide lateral grooves
Benefits
Superior tyre life and durability
Excellent traction and grip in dry and wet conditions




159


ZCT

Features
Classic rib pattern
Zig zag tread design with siping
Benefits
Optimised for life and load carrying capability with uniform wear
Good lateral grip and traction for cornering and braking






160




SLM
Features
4 rib design
Unique tread compound

Benefits
Enhanced mileage and traction
Better road grip






161





NDMS

Features
Non-directional trend pattern
Strong casing
Benefits
Good traction on soft and sandy terrain
All wheel fitment




162

Super Trekker

Features
Non-directional treads pattern with rib-lug combination
Benefits
All wheel fitment with enhanced traction and excellent performance





163

Safari

Features
Unique tread pattern
Benefits
Excellent traction and mileage

Two/Three wheeler tyres


164


Zapper FV
Features
Rib Type
Extended shoulder
Reflective sides
Benefits
Better steering
Good for cornering aesthetics
Safety





165


Zapper FM

Features
Front Fitment
Directional Pattern
Good Grip
Benefits
Good Stability
Better Maneuverability
Better Traction




166


Zapper FS
Features
Front Fitment
Directional
Extended shoulders
Round profile
'Sticky' compound
Unique tread pattern
Benefits
Better stability
Sharp cornering capability
Good maneuverability


167

Good traction
Wet traction

Rib-Rib Plus

Features
Front fitment
Rib Tread pattern
Front Wheel Design

Benefits
Fast cornering ability
Low rolling resistance


168

Good wet traction







Meteor

Features
Rear Fitment
Aggessive block design
Directional block pattern

Benefits


169

Excellent on /off road application
Better stability
Good grip





Zapper Vyde
Features
Rear Fitment
High Performance Compound
Aggressive Block Design
Benefits
Excellent Traction


170

Better Stability
Better Wet Traction








Zapper C


Features
High performance compound
Rounded and extended shoulder profile
More cut-edges


171

Multiple cross over groove
Benefits
Excellent traction
Better cornering
Superior wet braking
Better grip



Moto-D



Features
Directional
Aggressive block design


172

Aggressive looks
Benefits
Better stability
Good traction on highway and off the road condition
Good wet traction








Nylogrip - ST Plus





173

Features
Both wheel fitment
Block design
Benefits
Optimum performance with aggressive l








Nylogrip - Plus



174

Features
Rear fitment
Siped block design
Tread with centre groove
Flat centre design
Rounded shoulder
Benefits
Excellent road grip
Water channeling
High milage and good ride comfort
Excellent cornering characteristics



Agricultural Tractor and Tilling tyre




175


Fork Lift Industrial - Solid
Features
Solid resilient tyre
Aggressive lug pattern
Triple compound construction
Optimum ride comfort
Benefits
Maintenance free
Optimum grip
Optimum life - comfort & balance





176


Power Tiller (Shakti)

Features
Unique thread design
Deeper tread with heavy padding
Benefits
Self cleaning ability of the tyre in farm operations
Longer tyre Life






177


Tractor Rear - Shakti Plus

Features
Unique lug design
Broader lugs
Strong casing
Benefits
Better Penetration into the soil
Self cleaning property of the tyre
More area ploughed per hour
Longer tyre life
Better retreadability


178



Tractor Rear - Shakti Life

Features
Unique lug design
Broader lugs
Strong casing

Benefits
Better Penetration into the soil
Self cleaning property of the tyre
More area ploughed per hour
Longer tyre life


179

Better retreadability


Tractor Rear - Shakti Super


Features
Unique lug design
Broader lugs
Strong casing
More road contact area
Benefits
Better Penetration into the soil
Self cleaning property of the tyre
More area ploughed per hour


180

Longer tyre life
Better retreadability


OTR



Sandgrip - Multi - Terrain and Special
Applications
Features
Double chevron block design
Wide tread width & large ground contact area
Flexible sidewall & wider cross section
Weather resistant tread & sidewall compound


181

Benefits
Excellent traction on surface and tracks
Yield reduced ground contact pressure
High floatation on yielding soil and aids traction with minimum soil disturbance
Withstands extreme climatic conditions from desert to snow


Musclerok - Smooth
Features
Tough Cut Resistant tread compound
Heavy sidewall construction
Rugged nylon casing
Benefits


182

Improved tread life and traction
Resistance to cuts, chips and abrasions
Prevents tread separation
Improved tread life and traction
Protection from sidewall damage
Strength and bruise resistant



Musclerok - Roadtrac

Features
Block type tread pattern
Tough compound


183

Rugged sidewall construction
Rugged nylon casing
Benefits
Excellent traction
Increases resistance to snagging and tearing
Protection from sidewall damage
Strength and bruise resistant



Musclerok - Industria

Features
Advanced directional industrial tread design


184

Tough Cut Resistant tread compound
Heavy sidewall construction
Rugged nylon casing
Benefits
Excellent ground holding, Wider contact area
Improved tread life and traction
Resistance to cuts, chips and abrasions
Prevents tread separation
Protection from sidewall damage
Strength and bruise resistant


185


Musclerok - Graders
Features
Extra rubber in tread center
Deep directional tread lug design
Tough OTR tread compound
Rugged nylon constuction
Benefits
Long wear and smooth ride over hard surfaces
Self-cleaning and high traction in a variety of job conditions
Resistance to cuts, chips, snags and abrasions
High Strength and bruise resistance


186




Musclerok Loaders
Features
Double chevron non-directional tread design
Tread reinforcing bar
Heavy buttressed lugs
Tough cut-resistant tread compound
Heat resistant undertread
Heavy sidewall construction
Rugged nylon construction
Benefits
Excellent pulling power in forward and reverse
To strengthen and stablise tread
Improved tread life and traction


187

Resistance to cuts, chips and abrasions
Cooler running and prevents tread separation
Protection from sidewall damage
Strength and bruise resistant

Musclerok - Earthmovers

Features
Double chevron non-directional tread design
Tread reinforcing bar
Heavy buttressed lugs
Tough cut-resistant tread compound
Heat resistant undertread
Heavy sidewall construction
Rugged nylon construction
Benefits


188

Excellent pulling power in forward and reverse
To strengthen and stablize tread
Improved tread life and traction
Resistance to cuts, chips and abrasions
Cooler running and prevents tread separation
Protection from sidewall damage
Strength and bruise resistant
LCV-BIAS



Superlug 505

Features
Unique, High Mileage tread compound


189

Special design with scoops at shoulder
Extra strong casing
Benefits
Ultimate, High Mileage tyre for LCVs
More circulation of air and faster heat dissipation
Better safety and more retreads








Supermiler 95

Features
Deep skid depth


190

Strong casing
Benefits
Good mileage
Good retreadability




SUPER MILLER 99

Features
Premium tread compound
Benefits
Good road grip
High mileage




191

Superlug
Features
Unique tread compound
More lugs
Special design with scoops on shoulder
Extra strong casing
Benefits
Cooler running
Good mileage
Better road grip
Better safety and more retreads
LCV- RADIAL




192


Steel Master

Features
Exclusive highway application
Rib design for excellent resistance to uneven wear
Benefits
Good maneuverability
Better mileage
Good cornering control




TUBES & FLAPS



193




Fork Lift - Poly Pouch

Fork Lift - Fitted Tube

Tractor Front - Fitted Tube


194




Tractor Rear - Loose Tube

Tractor Rear - Fitted Tube





195









CHAPTER-4

TARGET CUSTOMERS OF MRF











196

CHAPTER-4

TARGET CUSTOMERS OF MRF
Huge Rural Population

Approximately 70% of Indias population lives in the rural areas. Many companies
look Indian Rural area as the potential market for their products. Most of the products
are designed keeping in mind the requirements of the rural market. Either the
companies design new variety of products for targeting the huge customer base or
customize the existing product in order to suit the rural market.

Increasing Purchasing Power

The standard of living of the rural customers has increased a lot with the increase in
their purchasing power. Also, the rural customers demand the goods and commodities
which suit their standard of living. The companies look forward for these
opportunities and with the advantage of the increasing buying power of the rural
customer they design their product.

Also other factors like Effective communication channels and IT penetration in the
market which has also reached the rural market plays a major role for the targeting of
rural market as a completely different entity. Also the Impact of globalization has
turned the focus of the market players towards the rural market.


Characteristics of Rural Market

Low per capita income
Choosing price over quality and is influenced by mouth communication
Rural consumer is one who has limited education background


197

Exposed to limited product and brand

In the business of making quality mattresses, pillows and cushions.
Its a part of the large business conglomerate(MRF Ltd.) with state-of -the- art
manufacturing and R & D facilities located in South India. The Latex Foam Rubber
division started in 1958, and today MM Rubber has Pan India presence with 350
dealers, 12 marketing offices and 5 decades of experience . MM Foam is the
undisputed brand leader in latex foam segment..
A turn around driven by booming demand and cos established goodwill in the
market is expected in the next few years. Operating profit margins are showing a
quantum jump during the last 2 Qs..Net profit for the half year ended Q2 of FY10 is
almost equal to the total profit for the last full year FY09.


Scrip Code : 509196 Company : M.M.RUBBER COMPANY LTD.

Type
Un-
Audited
Un-
Audited
Un-
Audited
Un-
Audited
Un-
Audited
Un-
Audited
Period Ending
30-Sep-
09
30-Jun-
09
31-Mar-
09
31-Dec-
08
30-Sep-
08
31-Mar-
09
No. of Months 3 3 3 3 3 12
Description Amount(Rs. million)
Net Sales /
Interest Earned /
Operating Income
38.78 32.42 32.46 33.30 36.03 133.67

Other Income 0.01 0.42 0.53 -0.02 0.07 0.59

Total Income 38.79 32.84 32.99 33.28 36.10 134.26

Expenditure -34.76 -28.86 -32.06 -29.80 -35.03 -124.64

Interest -0.14 -0.11 -0.14 -0.46 -0.15 -0.91

Profit Before 3.89 3.87 0.79 3.02 0.92 8.71



198

Depreciation and
Tax
Depreciation -0.30 -0.30 -0.25 -0.30 -0.25 -1.10

Profit before Tax 3.59 3.58 0.54 2.72 0.66 7.60

Net Profit 3.59 3.58 0.54 2.72 0.66 7.60

Equity Capital 9.96 9.96 9.96 9.96 9.96 9.96

Operating Profit
Margin
10.39 12.28 2.87 10.45 2.97 7.20

Net Profit Margin 9.26 11.04 1.66 8.17 1.83 5.69

Cash EPS - - - - -



Co. is expected to report an EPS of Rs. 4 ( FV = Rs. 2 ) for FY10.Share of
this company is available at P/E of just about 3 and is going very cheap indeed..Buy at
CMP is recommended for long term hold .With low equity of less than Rs. 1 crore (
4.9 million shares of FV Rs. 2 ) upside potential is huge..
This report has been prepared solely for information purposes and the information
contained herein may not be deemed to be an investment advice. Such information is
impersonal and not tailored to the investment needs of any specific person. The
information contained herein is not a complete analysis of every material fact
representing any company, industry or security. The views expressed may change.
While the information contained herein has been obtained from sources believed to be
reliable, no responsibility (or liability) is accepted for the accuracy of its contents.
Investors are advised to satisfy themselves before making any investments and should
consult with and rely upon their own advisors whether and how to use such
information in making any investment decision. Neither the author nor his firm
accepts any liability arising out of use of the above information.






199











CHAPTER-5

SUPPLY CHAIN MANAGEMENT IN MRF














CHAPTER-5


200


SUPPLY CHAIN MANAGEMENT IN
Logistics

Refuse is no longer something to bury in the ground and forget about, its a resource,
a source of income.

Collection services are changing rapidly in the
face of ever increasing challenges to divert
materials away from landfill.

The logistics of collecting multiple materials, cost
effectively, with consideration for current
legislation and regulation, is an ever increasing
challenge for todays waste managers..

Our company has experience in the design and implementation of schemes for both
rural and metropolitan application.

We are able to offer advice, help & direction with:

Andy Firman has been responsible for round design and routing which include
setting reasonable levels of work for refuse collectors.
Chief Officer Waste Management
Planning a new scheme or changing direction within an existing method
Identify the materials to be collected
Consider the characteristics of materials to be collected
Design collection methods and vehicles
Resource utilization
Identification and engagement of key stakeholders
Identify final sorting processes for onward trade
Support training for key stakeholders


201


SAP India today announced that MRF Limited, has selected SAP for Automotive
solutions to support efforts to drive operational excellence across its global
organization. Following a detailed evaluation process, MRF opted to replace existing
applications from Oracle in favour of SAP's leading SAP ERP and SAP CRM
solutions, based on the SAP Net Weaver platform.

With global operations manufacturing and distributing tyres to more than 75
countries, MRF was faced with the need to improve visibility throughout its entire
value chain from raw materials to finished-goods partners in order to better plan for
and adapt to fluctuations in global supply and demand. With SAP the company will
be able to seamlessly integrate data between logistics and finance, eliminating
redundant work and saving time and operational costs. With this, all major tyre
companies in India run SAP solutions. MRF has selected Siemens Information
Systems (SIS) as the partner for implementation, HP Integrity servers and IBM DB2
as the database, on which this SAP deployment will happen.
Todays global tyre manufacturers are faced with volatile pricing of raw materials
such as rubber, and need to be able to plan for fluctuations in customer demand,
changes in materials prices, availability of materials while working to meet strict
timelines for shipments. In addition, as competition increases in an expanding global
marketplace, it is necessary for manufacturers to monitor and respond to competitor
behaviour specific to pricing, promotions and discounts.
At MRF, we selected SAP after a detailed evaluation process, said Prince Azariah,
chief information officer, MRF Ltd. SAP came out on top in terms of product
superiority, post sales support, record customer satisfaction and were confident that
taking advantage of SAPs enterprise SOA product roadmap would be a strategic
decision supporting our plans for continued growth.
MRF will implement SAP solutions at its six global manufacturing plants and 100
sales offices including the company headquarters in Chennai. The implementation is
currently underway with a go-live expected in the fourth quarter of 2007. MRF will
also establish an automotive user group within the company in its efforts to better user
reception and ensure better ROI.


202

SAP is proud to be chosen as the catalyst for MRFs transformation journey, said
Guenter Lasser, director, Automotive Business Unit, SAP. With SAP for Automotive
solutions and SAP NetWeaver as the platform for collaboration, SAP will provide
MRF the best-suited solutions to enable innovation, deliver better value at lower costs
with a broad range of best practices in the industry.
With this deal, MRF joins a growing number of Indian enterprises who have replaced
their existing solutions with SAP. In 2006, over 20 Indian enterprises moved on to
SAP solutions from various other solutions. Enterprises including Havells, Umrin
Products, Camlin, Shriram Pistons & Rings among others, decided to migrate to SAP
solutions from their existing software solutions.

Market Leadership

MRF operates 6 giant tyre plants across the Indian peninsula at Tiruvottiyur
and Arakonam in Tamil Nadu, Kottayam in Kerala, Ponda in Goa, Medak in
AP and Pondicherry. All of the factories have achieved ISO 9000 certification.
MRF manufactures a vast range of tyres in which includes heavy duty
truck/bus tyres, light commercial vehicle tyres, passenger car tyres, off-the-road
or lndustrial tyres, two-wheeler tyres and farm service tyres. Presently, MRF is
OE supplier to major global and domestic automobile companies - Ashok
Leyland, Eicher, Fiat, Force Motors, Ford, General Motors, Honda, Hyundai, John
Deere, Komatsu, Mahindra & Mahindra, Man, Maruti Suzuki, Mitsubishi, Tata
Motors, Scania and Volvo.
In 1967, MRF began export of tyres to US - the birth place of tyre technology.
Currently, MRF Tyres are exported to over 60 countries, including the US,
South America, Africa, Middle East, Australia, and other Asian countries. With
its focus on exports, the company plans to increase market share and start
operations in several additional countries. The companys exports have grown
from Rs 83.3 mn in 1983-84 to Rs 4,923.4 mn for the year ending Sep 2007. As per
the audited and reported results for the year ended Sep 30, 2007, the total income
stood at Rs 44,307.2 mn, profit before tax was Rs 2,609.6 mn while the net profit
after tax stood at Rs 1,717.8 mn.



203

More than tyres

MRFs foray into areas unrelated to tyres, have also maintained a strong
foothold in the market. FunSkool, a collaboration with Hasbro, is today Indias
largest toy company in the organized toy industry in India. In paints and
speciality coatings, MRFs Vapocure is among the leaders and Muscleflex, MRFs
brand of conveyor belting is a preferred brand in heavy-duty industrial belting.
MRF is among the few tyre manufacturers to also manufacture pre-cured tread
rubber. The company operates a widespread network of pretreads franchisees
in all important towns across the sub-continent.

Company Financials Rs mn Ratios %

Total Income 37,512.7 ROCE 9.2
Net Profit 435.0 NPM 1.2
Net Worth 8,234.2 RONW 5.3
EBITDA 2,583.3 EBITDA Margin 6.9

Motor Sport & cricket

In the early eighties, when India was still an isolated economy, MRF
pioneered the concept of motorsport as a testing opportunity and currently
has a strong presence across the Asia-Pacific region. MRFs Karting tyres which
are homologated by FIA-CIK for International competition, have become
exceedingly popular abroad especially in Malaysia. In 1987, MRF made a
unique corporate commitment to the development of pace bowlers for
Indian cricket, with the establishment of the MRF Pace Foundation. The
foundation has since contributed several pace bowlers to the Indian Cricket
Team as well as those nominated by other countries, such as New Zealand,
Australia, England, South Africa, Bangladesh.

Research & development



204

The MRF R&D team has made strides in developing Radial-tyre technology
for Indian roads, based on its cross-ply techno competence. MRF has laid
great emphasis on strong R&D and continuous product upgradation, which
has led to the successful development of the unique tyre technology for
cross-ply tyres. Additionally, MRF has developed its very own radial tyre
technology to suit the tough service conditions on Indian roads - for both,
the passenger and commercial segments. This has led to the launch of
several innovative products.



Market penetration

With over 83 sales offices across the sub-continent and an extensive
dealer network, MRF has augmented the industrys largest tyre distribution
network, with a widespread network of MRF T&S Centres, which offer
all-round technical tyre service. Having successfully contained any threat
from Multi-national tyre companies, and confident of its market dominance,
MRF is currently embarked on a steady, ongoing expansion programme
including the implementation of Greenfield projects. Currently, a project is
coming up in the southern town of Trichy and it is also scouting for new
locations to further its expansion plans.













205


















CHAPTER-6

PRICING STRATEGY OF MRF











206

CHAPTER-6

PRICING STRATEGY OF MRF

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.

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.

MRF: Price leaders

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
hasfollowed the
pricing cues
set by these leaders.

Using Price-Quality inference to its advantage:

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


207


Low Total Cost of ownership:

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

MRF- using the Markup pricing method:

The tyre industry being a very raw material intensive industry, the input costs mainly
decidesthe price of tyres. In fact, 90% of a tyres cost comprises of its raw material
costs. Markuppricing is the common pricing method followed across the tyre industry.
This involvesadding a standard markup to the tyres production cost.

Dealer discounts and allowances:

While MRF (in keeping with its Pull strategy of concentrating on end consumers),
does notindulge the dealer with too many discounts and allowances, Bridgestone has
mastered the artof 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.





208








CHAPTER-7
ADVERTISEMENT & SALES PROMOTIONOF MRF



















209

CHAPTER-7
ADVERTISEMENT & SALES PROMOTIONOF MRF

PRODUCT PROMOTION:

Marketing communications help a firm to inform, persuade and remind customers
about itsproducts, directly or indirectly.
India has traditionally followed a subdued promotion strategy to let its tyres
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
(consumers exposure to the brand name). Today, MRF command top-of-mind recall
excellent brand recognition in all categories of vehicles in the tyre market.

The Marketing Communication mix:

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

MRF: Gods of Advertising

MRF uses advertising as the primary medium to reach out to its customers. The
companyinvests heavily on print, TV and outdoor media, to drive its brand into the
minds of thecustomer. MRF is credit with devising some of the most creative ads ever
made for anIndian tyre company. It allots a huge budget outlay for advertisements and
otherpromotional activities. Its mascot, the MRF muscleman along with its slogan
Tyres withmuscle was once one of the most recognizable advertising campaign in
Indianadvertising history. It was specially devised at Lintas by its CEO, Alyque
Padamseehimself. Allyque and his team painstakingly surveyed scores of truck
drivers at road sidedhabas to understand their needs and wants.MRF takes care to


210

promote its tyres as tough, reliable and high endurance. This isbecause its main share
of customers comes from the Light and Heavy CommercialVehicles segment. Truck
and bus owners in this segment consider strength and enduranceas the No.1 factor
desirable in a tyre. For the passenger and two-wheeler segment, MRFpromotes itself
as a high quality and high performance tyre manufacturer.

Driving Sales Promotions through its dealers:

Sales promotions are used more by Bridgestone than MRF. Bridgestone
regularlyintroduces 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
customersinclude:
a)Free Provogue T-shirts worth Rs. 1,200/- for every car tyre purchaseb)
b)Free tyre and battery check-ups every 4-6 months exclusively.
c)50% discount on alignment and balancing exclusively.
d)Free F1 racing trip tickets through lucky draw

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 perfect lyaligned wheel fitting.

MRF: spin doctors of publicity campaigns:

Over the years, MRF has perfected the art of publicizingits brand through highly
visible events and celebrityendorsements. MRF has consciously aligned itself with
anumber of sporting events in India. Its most memorableassociation with sports and
celebrity endorsements wasthe MRF label that adorned Sachin Tendulkars bat
formany years. MRF is also well known for founding theMRF Pace Foundation,
which is today one of thepremier training institute forIndias budding pacebowlers.


211


Though cricket, givenits cult like status, gave MRF a lot of publicity, it was
itssponsorship of auto-racing projected its slogan, Tyres withMuscle and outlined
the quality of its tyres and allied products .




Riding the wave of Word-of-Mouth marketing:

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


Bridgestone: Banking on Below-The-Line (BTL) promotional activities



212

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:

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

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.
Thistype of communication is conventional and impersonal in nature. MRF invests
heavily onprint, 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
promotionalactivities. 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.

Developing Effective communications
Identifying the target audience:


213

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:
a. Original Equipment Manufacturers (OEMs)
b. The Replacement Market (replacement of old, worn out or defective tyres)
c.
Exports


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

Determining the Communication Objectives:

There are four possible communication objectives for a company:

a. Category Need: Establishing a product or service as belonging to a particular
category of products. Especially used for new-to-the-world products.

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

c. Brand Attitude: Evaluating a brand with respect to its perceived ability to meet a
relevant need


214


d. Brand Purchase Intention: Self-instructions to purchase a brand or to take
purchase related action.

1) MRF-creating 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 hasnt
heard of the MRF brand. MRF achieved this remarkable feat by adopting a multi-
pronged marketing strategy that involved endorsements bysports celebrities like
Sachin Tendulkar, Brian Lara and Steve Waugh, promotingpopular 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) Shaping Purchase Intention through Sellout schemes

Sell out schemes refer to the promotional offers and discounts that companies offer to
positively impact the buyers 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.
c) 50% discount on alignment and balancing exclusively for Bridgestone customers.
d) Free F1 racing trip tickets through lucky draw.





215





CHAPTER-8



MARKETING STRATEGY OF MRF





















216



CHAPTER-8

MARKETING STRATEGY OF MRF

Although MRF, Indias largest tyre manufacturer, entered the business much earlier
than most of its competitors, it chose not to invest any money in building plants or
acquiring companies abroad. Instead, it has focussed on building its brand in
international markets. But not anymore. Blame it on the rising raw material cost or
the inverted duty structure, MRF is now exploring opportunities for acquiring
companies (as well as rubber plantations) outside the country, all to protect
shrinking margins and remain profitable.

While the company is yet to announce full results for the year ended September 30,
2011, Arun Mammen, the Managing Director of MRF took a lot of pride in
announcing (at a press meet in Chennai recently) that the companys turnover has
crossed Rs.100 billion mark in FY2010-2011 (the first Indian tyre manufacturer to
do so in any financial year) at a growth rate of about 30 % over the previous year on
the back of buoyant demand. Though the topline has not posed a serious problem for
MRF (the topline of the company has doubled from Rs.50 billion in 2007) so far, the
bottomline has taken a dip due to high raw material costs. MRF reported a net profit
of Rs.2.2 billion for the nine month ending June 30, 2011 against a net profit of Rs.
2.7 billion during the corresponding period last year, a decline of 19.08%. And not
just MRF; in fact, the tyre manufacturing industry, as a whole, has been operating at
a margin of 1-1.5% for the last one year or so.

The reason is simple. The rubber prices have gone up from Rs.140 a kg to Rs.235 in
the domestic market over the last one year. Although prices have plateaued now,
they are still high for an industry that is marred with an inverted duty structure a
scenario where it costs more to import rubber (20% import duty) than importing a
brand new tyre by paying just 7% import duty.


217


Further, the removal of anti-dumping duty by the government on truck and bus
radials (TBRs) imported from China and Thailand from August 2011 onwards has
only made the situation worse for tyre manufacturers, including MRF, in India. The
move is expected to make imported tyres not only cheaper by almost 15-20%, but
will also limit the pricing power of domestic players in replacement TBR market
thereby further impacting their margins.

Notwithstanding the concerns of relatively lower distribution reach and
inconsistency in quality of the imported tyres, the attractive price point is expected
to pose a serious threat to domestic tyre manufacturers particularly in the
replacement segment where MRF happens to be one of the dominant players,
placing large Chinese tyre manufacturers like Giti Tire Company Ltd. and, Weifang
City Gunaite Rubber Co. Ltd. in direct competition with it. It was said that the
imports of rubber is being discouraged because of the larger interest of the domestic
rubber growing community. But one cannot understand that if this was the intention
why there has been a rise in the imports of finished tyres from other countries, how
is it going to help the domestic industry? questions Rajiv Budhiraja, Director
General, Automotive Tyre Manufacturers Association.

In such a scenario the only option left with MRF (and others too!) is to go for
overseas buyouts, both in terms of plant and plantations, and particularly in
countries like Thailand, Cambodia and Vietnam where the raw material is available
in abundance. This will not only offset the rising raw material cost (in turn easing
off the pressure from their bottomline), but will also bring Indian tyre manufacturers
back on a level playing field.

Shortage of rubber in the country has also challenged the company to consider
options outside. In fact, the production of natural rubber fell behind consumption by
more than 85,000 tonnes in FY2010-11. While the production of natural rubber
stood at 8,61,950 tonnes in FY2010-11, its consumption stood at 9,47,715 tonnes (as
per Rubber Board data). Even during the first five months of current financial year,
the production has been 3,11,200 tonnes against a consumption 4,00,995 tonnes.


218

Thus, MRFs decision to buy a rubber plantation abroad is justified as it will help
the company to get a better hold on its raw material supply chain in the long-run.

Further, for the uninitiated, MRFs arch rival Apollo Tyres is also eying Europe to
augment its international presence after its acquisition of Dunlops operations in
Africa in 2006 failed to deliver the desired results. Primarily, the small size of the
African market (around 35 million units) has forced Apollo to move its focus
towards the European market. In fact, Vredestein, a Netherlands based tyre
manufacturer bagged by Apollo in 2009, is expected to spruce up the overall
revenues from exports for Apollo Tyres to over 70% from the current level of 40%.
This makes it all the more important for MRF to go for a kill in the international
market as exports still account for only 10% of its total sales.










219


Marketing Management is a compound word which means to manage the entire
system of marketing.The process of ascertaining consumers needs ,converting those
needs into product or services & moving the product or services to the end users to
satisfy needs of specific consumer segment with a emphasis on profitability ensuring
the optimum use of available resources in the
organization.Todays market is customer oriented oriented. All the marketingactivities
are carried out considering the customer in the mind. In order to achieve
the marketing objective, it is very necessary to have a clear picture of customers
buying behaviour. All commodity markets are heterogeneous, some commodity are
never in conformity with each other as far as
their nature, habits , test, interest, income & mode of purchasing .So allcustomers
cannot be satisfied with the same product. In order to facilitate the marketing of the
product , the marketing manager divides a market intohomogeneous sub-
sets of customer having common characteristics to serve that sub-set concentrated.

MARKET INFORMATION

Although the tyre industry faces huge competition, price & cost pressures and high
entry barriers, the changing dynamics, with the growing economy and the escalating
auto industry, provide a fillip to the industry. The zooming auto industry, with sales


220

growing at a CAGR of 15.8% during the 2002-06 period, has driven the growth in the
tyre industry, keeping both the OEM and replacement demand buoyant. The demand
and growth for the industry depends on primary factors like overall GDP growth,
agricultural &industrial production and growth in vehicle-
demand and on secondaryfactors like infrastructure development and prevailing
interest rates. The total number of vehicles on the road is constantly swelling, on the
back of an increase in road transportation, which would gain more momentum
once projects like the Golden Quadrilateral and NSEW Corridor project getimplement
ed.The Indian tyre industry, comprising of 40 companies (47 factories) inthe
organised and un-organised sectors, can be divided into two tiers; Tier-I players (top 5
tyre companies) account for over 80% of industry turnover containing a well
diversified product mix and presence in all three
major segments, i.e. replacement market, original equipment manufacturers(OEMs)
and exports. Tier-IT companies are small in size, concentratingchiefly on production
of small tyres (for two! three-wheelers, etc.), tubes andflaps and the replacement
market. The industry has a negligible.
Market share in the commercial vehicles lyre category and is around20% in the two
wheeler lyre category.The Indian lyre industry has witnessed a CAGR of 7.7% over
the lastdecade. Though the replacement market has driven the industry growth for
along time, the OEM market has seen a robust growth over the last threeyears. The
truck and bus market is the largest segment of the
industry,accounting for approximately 70%of the industry turnover, in terms of value.
Tyre production, intonnage terms, grew at a healthy rate of 8.7% in 2008-
09 againstthat of 2007-08. The medium and heavy commercial vehicle (MHCV)
lyresegment registered a growth of 7.7% while the light commercial vehicle(LCV)
and passenger car lyre segments registered a phenomenal growth of 14.8% and
14.7%, respectively.A few years back the auto industry was sluggish and so also was
thelyre industry, but there has been a dramatic shift since the last 2-3 years.
asthe vehicle production has considerably gone up. Economic expansion,investments
and road development have all contributed to this increase indemand for vehicles.
This, in turn, has helped the growth in the lyre
industry.However, although the lyre industry grew in terms of sales volumes, profitabi
lity has been adversely affected due to a substantial increase in rawmaterials costs,


221

which accounted for 62% of the operating income in 2001-02, soared to over 70% in
2008-09 Hence, the growth in sales volumes hasnot really added to the bottom line.





























222


CHAPTER-9

SCOPE OF RADIAL TYRES IN INDIA


RADIAL TYRE:- Radial tires differ from traditional diagonal bias-ply tires in their
construction, which minimizes tread wear and improves flexibility of the sidewall for
better handling.
While tires may look simple they are actually made up of a series of layers of
different materials. If we peeled back the tread in bias-ply tire one would see a nylon
weave (these are the plies) beneath, running in a diagonal pattern meeting in the
centerline of the face of the tire. The weave runs at an angle down the sidewalls to the
bead the part of the tire that fits on the wheel's rim. Nylon ply is stronger than
polyester but compresses and sets when under load especially when left for periods of
time, resulting in "flat areas" on the tire. Due to the direction the ply runs on these
tires, the sidewalls don't bulge even if the tire is low. This design allows tread to wrap
down over the sidewall because there is no transition point from the circumferential
face to the sidewall.
A radial tire is constructed differently. Rather than diagonal nylon plies that meet in
the centerline it's made with polyester cords that run perpendicular from bead to bead,
up over the face of the tire and down each sidewall. In other words it's "wrapped" at a
right-angle to the direction of the tread. On the face of the tire over this polyester
wrap, is a belt that runs below the tread. The belt is nearly the width of the tire and
runs the circumference. This gives the tire a "squared" look. Though belts used to be
made of rubber-coated fibers nearly all belts today are made from steel fibers. Hence
the steel-belted radial. This belt helps stabilize the tread, reducing wear. Because of
the construction of a radial tire, the sidewall will always have a bulge at the point of
contact. Because of this bulge, when radial tires were still fairly new to the market
many people assumed they were under inflated.



223

Radial Tyre Construction

The plies of reinforcing tyre cord extend from bead to bead at a 90 degree angle to the
centreline of the tyre. Directly on top of the radial plies and under the tread is a full
length belt made up of several plies of cord or steel. This belt runs circumferentially
around the carcass. The cords are placed in the belt at a low angle of 15 to 25 degrees.
CONSTRUCTION
- Sophisticated
FOOTPRINT
- Square shape


224

- Even pressure distribution
- Less soil penetration
PERFORMANCE
- Superior traction
- Good stability
- Puncture resistant
- Low rolling resistance
- High mileage
- Good comfort
- Durable
- Even wear
SCOPE:-

Demand for tyres is derived from demand for automobiles. Therefore it is a derived
demand product and its fortunes are very closely linked to those of the auto segment.
Within the tyre industry the trucks and buses (T&B) segment accounts for more than
70% of sales. Though scooters and motorcycle tyre demand also plays a vital role, in
value terms, CVs gain significance. Tyre varieties can be divided into two categories
cross ply and radial. The domestic industry is dominated by cross-ply tyres, due to the
poor conditions of roads in the country and overloading of CVs. This is also the
reason why penetration of radial tyres in the CV segment is negligible and finds
presence only in the passenger car segment. On the other hand, radial tyres dominate
western markets. Radial tyres can be differentiated on the type of belt used fiberglass,
steel and nylon. Worldwide, steel belted radials are more popular due to their
performance advantage.
There are three major consumer segments for tyres namely replacement segment,
Original Equipment Manufacturers (OEMs) and exports. Though fortunes of the
sector are closely tied with the automobile industry, replacement demand continues to
remain the key growth driver. Replacement demand accounts for as high as 57% of
industry volumes. However, the contribution from OEM and replacement segments
varies across sub-segments in the auto sector. For instance, for the passenger car
segment, demand is balanced from replacement and OEM categories i.e.


225

50:50.Another key transition that is taking place in the industry is the entry
of multinationals like Good Year, Bridgestone and Michelin in the domestic
market.MNC tyre makers have cornered a higher market share in India in the last
three years due to their international relationships apart from superior technology.
Since Honda, Hyundai and Toyota have an international sourcing agreement with
Bridgestone, it is also the preferred supplier in India. Goodyear is believed to be the
preferred supplier for Ford India. An extensive distribution network and strong brand
recall are factors critical to tyre sales. Brand building is given a lot of importance by
manufacturers, who allot 2-3% of sales to advertising. With the introduction of radial
tyres, even technology has assumed significance. All foreign cars introduced in the
country are on radial tyres. Raw materials constitute 60%-70% of production cost of
tyres. Natural rubber and Nylon cord fabrics are the most critical raw materials as it
accounts for 50%of total raw material cost. Since most of the raw materials are crude
derivatives, a rise in prices has a negative impact on margins.
The export market holds tremendous potential for domestic manufacturers. Tyre
exports have grown at an annual compounded rate of 27% over the past 10years.
Indian tyres are exported to 56 countries, which are primarily developing countries.
















226






Chapter10




Exports of Tyres from India



















227




Chapter10
Exports of Tyres from India

Industry Turnover - Rs. 13,500 crores per annum;
Total number of tyre companies (large and medium) - 40
having 47 tyre factories location all across India.
Tyre Exports from India to the tune of Rs. 1400 crores
annually to over 65 countries worldwide, including several
developed countries. The target for 2004-05 is Rs. 1450 Crores.
Top 7 large tyre companies in India account for over 85% of
total tyre production;
(*) Unless otherwise stated, in this presentation Indian Tyre Industry refers to large
tyre companies, 7 in number, which constitute 85% of total tyre production in India.
In addition, a large number of small tyre companies also manufacture automotive
tyres (mainly two-wheeler tyres).
Indian tyre industry is manufacturing all categories of tyres (except some
specialized categories like Snow Tyres for which currently there is no requirement
and Aero Tyres). Indian tyre industry has the capability to produce all categories of
tyres.
Domestic demand for tyres to the extent of 98%, including demand for tyres for all
new vehicles being introduced in the country, is being met domestically.
Production of major categories of tyres in India is given below:
Category Production ( Lakh Nos. ) (2003-04)
TOTAL 546.90 % Share in Turnover
- Truck and Bus 108.21 60%
- Passenger Car/Jeep/MUVs 113.99 11%
- Light Commercial Vehicles 32.71 8%
- Two Wheelers 261.30 11%
- Tractor (Front & Rear) 15.63 6%



228




INDIAN TYRE INDUSTRY
Indian tyres have good acceptance in global markets;
Compounded Average Growth Rate (CAGR) of tyre exports in the last one decade
has been 8%;
Exports to over 65 countries worldwide;
17% export to highly quality conscious US market. other
major export markets are - (countries in) Latin America;UAE,
Bangladesh, Iran, Philippines, Vietnam, etc.
Over 20% of truck and bus tyres (bias) produced domestically are exported.
Emphasis now is on export of radial tyres, including Passenger Car radial tyres.
All large tyre companies are exporting as a long term commitment;
Tyre companies have built a vast and vibrant marketing network through dealers
and depots as a result of which all categories of tyres are readily available even in
remotest partsof the country, including villages;
The total number of tyre dealers, geographically spread all over the country is over
5,000 - serviced through over 500 depots of tyre companies. A vast majority of
dealers handle multi-brands of tyres. Tyre companies also have exclusive retail
distribution outlets;
Indian tyres are meant, and expected to perform, under different and extreme road
conditions, from unmetalled village roads to newly constructed national highways,
from extreme cold to hot and wet conditions prevailing in different geographical parts
of the country;
INDIAN TYRE INDUSTRY
2) Embossing of Maximum Price (MRP) on Truck/Bus Tyres. In February, 1988, as
per a directive of the Ministry of Industry, Embossing of MRP on truck and bus tyres
was started. This was based on the recommendations of the Committee on Tyre
Industry (1984, known as Satyapal Committee). . In the last over 15 years, the
economic scenario has undergone a sea change with liberalization, removal of
controls and free global trade in most items. Tyre Industry is also delicensed.


229

. Major raw-materials of tyre industry (Natural Rubber and petroleum based
materials) undergo wide fluctuations in prices.
In such a dynamic scenario, it is a not practical to emboss the price on tyres due to
market dynamics. Submission - Tyre industry feels that there is no need to
continue with embossing MRP on truck/ bus tyres.
India's Trye exports grew 30% in the first half (H1) of the fiscal 2011-12, desipte the
global economic slowdown, according to the data from Automotive Tyre
Manufacturers Association (ATMA).
Around 3.7 million tyres where exported during April-September period against 2.9
million tyres in the same period of the last financial year.
The total production of tyres in India in all automobile segments touched 63 million
pieces in H1 2011-12 fiscal, grew by 10% against 57 million in the same period last
year.
The two wheeler tyres recorded the highest growth in exports of 125%. A total of 41,
808 tyres were exported in the H1 of current fiscal against 18,600 in the same period
last year.
According to ATMA data, the passenger car exports increased 40% to 731,676 as
against 521,490 tyres in April-September period of the last financial year, while the
production increased from 12 million in the H1 in fiscal 2010-11 to 13.2 million in the
current fiscal. Around 109,878 Off-the-road (OTR) tyres were exported during the
period and the production increased by 8%.
The average monthly exports increased to 631,032 tyres as against 486,608 tyres in
the same period last year. Demand for the tyres from the re-placement sector is high
compared to the original equipment sector.










230












CHAPTER-11

FAILURE OF RADIAL TYRE
















231

CHAPTER-11

FAILURE OF RADIAL TYRE

When a radial tire suddenly loses its tread, the driver often loses control of the
vehicle. A blowout of the tire, or rapid pressure decrease in the remaining core, is
often associated with a loss of tire tread and drastically increases a vehicles chance to
roll over. When the rear tire of a vehicle suffers a blowout, controlling the vehicle
becomes very difficult, especially at highway speeds. This loss of control results in
the rear of the vehicle swinging around to become perpendicular to the direction of
travel (yawing). If the yawing is not immediately reversed in direction, then the
sideways motion often leads to the bead of the tire separating from the rim, allowing
the rim to dig into the pavement or surface of the road. As the rim digs into the
pavement it propels the vehicle into a roll. Rollovers may also occur if the vehicle
comes into contact with grass, dirt or other drastic surface changes while in sideways
motion. Grass or dirt will actually trip the vehicle and launch it into a rollover.
Tripping of the vehicle occurs when there is a sufficient amount of sideways
movement while the vehicle moves into a grass or dirt median from normal pavement.
Tire manufacturers have known that a leading cause of tread separation is due to the
design and placement of the belts and overlying tread. Tread and belt separations can
also occur from poor adhesion of the tire components. Poor adhesion results from the
use of old and expired adhesives, improper temperatures and unclean manufacturing
facilities used in the manufacturing process. Poor adhesion may also be the result of
contaminants introduced during manufacturing such as rust, moisture, oxidation,
grease, sawdust, gum wrappers and even cigarette butts.
Of all the known problems resulting in tire tread and belt separation, the leading cause
of belt separation is failure of the metal tire components to stick to the rubber. The
method most often used to bond these elements involves plating the metal with brass
and then applying a rubber compound containing sulfur. If the sulfur and other
compounds are not to the correct mixture, then incomplete adhesion occurs. If the
brass plating is allowed to oxidize, poor adhesion will likely occur. If there is a shiny
brass look to the belts, then most likely there was a deficiency in the tread bonding
process, which could also be compounded by other defects.


232


A vehicle's tires play a crucial role in a car's safety. As the only parts of the car that
physically touch the ground, they are one of the key factors affecting a vehicle's
handling and braking, and overall highway safety. What steps can you take to ensure
that your tires stay in optimal condition? Performing regular checks is quick and easy,
and a worthwhile investment of time in your and your family's safety.



Tire Construction Diagram:
Some tire manufacturers choose to cut costs and do not include the nylon overlay
component as shown in the illustration above. Firestone ATX tires are one example of
tires that do not include this important stabilization feature.

he National Highway Traffic Safety Administration tasked their Office of Defects
Investigation, or ODI for short, with expanding their investigation of defective tires.
The focus of the ODI's research was on those non-recalled tires that are similar to the


233

recalled Firestone tires (i.e., Wilderness AT tires of the size P235/75R15 and
P255/70R16 manufactured by Firestone for supply to Ford Motor Company as
original equipment), as well as replacement tires manufactured to the same
specifications ("focus tires").
Most of the focus tires were manufactured at Firestone's Wilson, North Carolina and
Joliette, Quebec plants, beginning in 1994. In late 1998, Firestone began producing
P255/70R16 Wilderness AT tires at Decatur, and in mid-1999, it began producing
P235/75R15 Wilderness AT tires at a new plant in Aiken, South Carolina. Also,
approximately 100,000 P235/75R15 Wilderness AT tires were produced at Firestone's
Oklahoma City, Oklahoma plant. The focus tires were predominantly used as original
equipment on Ford Explorer SUVs and, to a lesser extent, on Ford Ranger compact
pickup trucks, and as replacement tires for use on these and other SUVs and pickups.
The belt-leaving-belt tread separations that have occurred, and are continuing to
occur, in the recalled and focus tires begin as belt edge separation at the edge of the
second, or top, belt. This is the area of highest strain in a steel belted radial tire and it
is also a region with relatively poor cord-to-rubber adhesion because bare steel is
exposed at the cut ends of the cords. Once belt-edge separations have initiated, they
can grow circumferentially and laterally along the edge of the second belt and develop
into cracks between the belts. If they grow large enough, they can result in
catastrophic tread detachment, particularly at high speeds when the centrifugal forces
acting on the tire are at their greatest.
Non-destructive analysis tests were performed on numerous randomly collected focus
tires and peer tires from the southern states, where most of the tire failures have
occurred. The non-destructive analysis tests use shearography, which can detect
separations inside a tire. Shearography analysis tests demonstrated that the patterns
and levels of cracks and separations between the belts were far more severe in the
focus tires than in the peer tires. Many of the focus tires that were examined were in
the later stages of failure progression prior to complete separation of the upper belt.
A critical design feature used by tire manufacturers to suppress the initiation and
growth of belt-edge cracks is the "belt wedge," a strip of rubber located between the
two belts near the belt edges on each side of the tire. The belt wedge thickness, or
gauge, in the Firestone ATX tires and the Wilderness AT tires produced prior to May
1998 is generally narrower than the wedge gauge in peer tires, and the wedge gauge in


234

cured tires was often less than Firestone's target for this dimension. The Firestone
tires with this narrow wedge did not adequately resist the initiation and propagation of
belt-edge cracks between the steel belts. During March and April of 1998, Firestone
changed the material composition and increased the gauge of the wedge in its
Wilderness AT tires (and some other tire models).
Another important feature of radial tires related to the prevention of belt-leaving-belt
separations is the gauge of the rubber between the two steel belts, or "inter-belt
gauge." The inter-belt gauge initially specified by Firestone for the focus tires is
generally narrower than the inter-belt gauges in peer tires and is narrower than
Firestone's original specification for the ATX tires in the early 1990s. Moreover, the
actual measured gauge under the tread grooves in several of the focus tires measured
by ODI was far less than Firestone's minimum design specification. Since an
inadequate inter-belt gauge reduces the tire's resistance to crack growth and its belt
adhesion capabilities, this narrow inter-belt gauge may be partially responsible for the
relatively low peel adhesion properties of the focus tires compared to peer tires. In
August 1999, after becoming concerned about the adequacy of the inter-belt gauge in
the cured Wilderness AT tires, especially in the regions directly under the tread
grooves, Firestone changed the inter-belt gauge specification back to the original
dimension.
Another relevant feature is the design of the shoulder pocket of the focus tires. The
shoulder pocket design caused higher stresses at the belt edge and lead to a narrowing,
or "pinching," of the wedge gauge at the pocket. The focus tires exhibit a series of
weak spots around the tire's circumference, leading to the initiation and growth of
cracks earlier than in competitor tires and in other Firestone tires produced for light
trucks and SUVs. In addition, many of the focus tires exhibited shoulder pocket
cracking similar to that which Firestone identified as a significant contributor to the
risk of tread detachment in the recalled ATX tires.
Because the tread separations at issue in this investigation occur only after several
years of exposure, almost all of the tire failures on which the Office of Defects
Investigation analysis of field experience was based involved tires manufactured
before May 1998, when Firestone increased the dimensions and improved the material
of the belt wedge. In theory, these modifications to the wedge would tend to inhibit
the initiation and propagation of the belt-edge cracks that lead to tread separations. If


235

these modifications actually improved the resistance of the focus tires to belt-edge
separations, the historical failure trends described above may not predict the future
performance of the newer tires.
On the basis of the information developed during the ODI investigation, NHTSA
made an initial decision that a safety-related defect exists in Firestone Wilderness AT
P235/75R15 and P255/70R16 tires manufactured to the Ford specifications prior to
May 1998 that are installed on SUVs. These tires were manufactured primarily at
Wilson and Joliette and, to a lesser extent, at Oklahoma City. The initial decision does
not apply to the P255/70R16 tires produced at Decatur or any of the Wilderness AT
tires produced at Aiken, since these tires were all manufactured after May 1998.


Firestone Tire Tread Defects:
Hundreds of motor vehicle accidents resulting in death or serious injury, were caused
by tire tread or belt "separation" from defective Firestone tires.

Visually inspect your tires on a regular basis. If you note any of the following early
warning signs, have a professional inspection performed, check and correct items that
may be causing the condition, or replace your tires.

Cracking or cuts in the sidewalls.
Uneven tread wear. This can be caused by improper inflation, misaligned wheels,
damaged tires, or by problems with suspension parts.
Excessively worn tread. Most modern tires have tread-wear indicator bars running
across the tread, which signal the minimum allowable tread depth of 1/16-inch. When
the tread wears down to these bars, it's time for new tires. Inexpensive tread-wear
gauges are available at auto-parts and tire stores.


236

Alternatively, you can use a Lincoln-head penny as a tread-wear indicator. Insert the
penny into a tire groove with Lincoln's head toward the tire. If you can see the top of
Abe's head, the tread is too worn.
Bulges or blisters. If you see a bulge or blister on the sidewall, replace the tire at once.
These signal potential weak spots that could lead to tire failure.
Excessive vibration. Tire vibration may be a sign a wheel is misaligned, unbalanced,
or bent. It could also signify internal tire damage. Don't ignore vibration: Have the
vehicle serviced at once.
























237








CHAPTER-12

FINDING & SUGGESTIONS
























238


CHAPTER-12

FINDING & SUGGESTIONS

FINDINGS
From the information provided by the officials of the marketing department I found
that there were mostly industrial buyers and 70% of them were business
organizations.
On the basis of the collected data I found that customers purchase products of
MRF mainly because of the nearness of the products and quality.
It was found that the information given on inquiry for the order status to the
customer was satisfactory.
Overall quality of the products in comparison to its price is quite satisfactory.
Identification of the opportunities for foreign companies in terms of exports,
technology transfers, strategic alliances, financial collaborations in the Indian
vehicle sector.
The component-wise share of production is assessed.
Assessment of the implications of vehicle emissions.
Demand forecasts till 2011.
Major changes occurring in the Indian market
A study of the market access strategies for companies
An insight into the profiles of big players of the Indian automotive sector.

SUGGESTIONS

There is need to assess the existing selling techniques and make necessary changes.
The marketing department should do proper advertisement of the products. In
addition to the current mode of advertisement they may use hording, or they can
provide proper information about the product and its use with the help of CDs to
the buyers.
Proper attention should be given to the costumers grievance.


239

Department should conduct market survey at regular intervals to know about the
current market condition.
MRF should improve after sale service to its customers.
Instead of focusing upper class customers MRF should focus on consuming
class.
It should increase its show rooms in rural areas also.
Products knowledge and demo services can be improved.
Initial Services to new customers must be provided to make the new customers
familiar with the product.
STREANGTH

1.Established brand names (key in the replacement market)
2.Extensive distribution networks
3.Good R&D initiatives by top players

WEAKNESS

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








240

OPPORTUNITIES

Growing Economy- Growing Automobile Industry Increasing OEMdemand-
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 Indianec
onomy and the automobile sector! tyre industry are poised for animpressive 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, LCV 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 fromChina
now constitute around 5% of market share.With crude prices scaling upwards, added
pressure on raw material prices isexpected Ban on Overloading, leading to lesser wear
and tear of tyre sand subsequent slowdown in demand. However, this would only be a
short-term negative Cyclical nature of automobile industry













241

CONCLUSION

A large organizational structure it involves numerous official formalities and
policies which result in slow decision making in a department.
All the four Ps of marketing mix is not given equal attention.
Complex pre-sale and post sale activities makes the whole procedure sluggish
and which hinders potential customers and new customers as well.
Approximately 87% customers are satisfied with the MRF Tyres .
Rate of MRF Tyres are not high against with the other Company tyres.
After sale service (Claim) of MRF Tyres is very good.
Approx 82% customer said that they MRF Tyres very easily whenever they
require them from the nearest dealer.
Around 75% customer said that they purchase MRF Tyres from the
Exclusive dealer of MRF Tyres Ltd.




















242

BIBLIOGRAPHY

Books:
The management Bible, Canada, John Wil ey & Sons, Inc. . , sons. . , 2005.
Pageno referred from 109 to 124.
Kotl er, Phil ip - Marketing Management: Anal ysis, Planning,
Impl ementations and Control , Pearson Education, New Del hi. 2003,
11th edition5. Page no 98 to 112.
Beri - Marketing Research(Tata McGraw-Hil l), 1993, 2nd edi tion.
Page no referred from 101 to 115.
Kotl er, Phil p, Marketing management, , USA, Pearson Custom
Publishing, 10
t h
, mil lennium .
Page no referred from 147 to 160.

Magazines:
Marketing Aptit ude & Knowl edge, Delhi, Ki ranPrakashan, 2009.
Page no referred from 6 to 18.

INTERNET:

http://en.wikipedia.org/wiki/Madras_Rubber_Factory#References

http://dl.acm.org/citation.cfm?id=1815371

http://www.moneycontrol.com/company-facts/mrf/history/MRF

http://economictimes.indiatimes.com/mrf-ltd/infocompanyhistory/companyid-
11381.cms

http://www.mrftyres.com/Aboutus/History1946.aspx



243

http://en.wikipedia.org/wiki/Madras_Rubber_Factory

http://www.mbaskool.com/brandguide/automobiles/1823-mrf-madras-rubber-
factory.html

http://in.answers.yahoo.com/question/index?qid=20091221182228AAmR6ZF

http://www.niir.org/profiles/profile/1498/radial-tyres-tire-for-cars-trucks.html

http://www.tyres4u.com.au/tyretips_page-TyreTipsIndustrial_show.aspx

http://www.rubberoptions.com/pdf/009.pdf

http://www.tiredefects.com/tire-failure-and-tire-blowouts.cfm

http://en.wikipedia.org/wiki/Tire

http://www.freepatentsonline.com/EP0967093.html

http://www.sce.carleton.ca/faculty/tanev/TTMG_5004/Articles/Sull_No_exit_failure_
of-bottom_up_strategic_processes_2005.pdf

http://www.scribd.com/doc/25371310/Bridgestone-and-MRF-tyre-industry

http://consumerreports.org/cro/2012/03/early-warning-signs-of-tire-failure/index.htm







244

WORDS OF THANKS

I take the opportunity to pay hearty regards to Dr. D. K .GARG(Chairman), Mr. M. K.
VERMA (Dean) and placement head Mr.T.K.GUHA for lending me their kind
support for completion of my project.
I thank all those who directly or indirectly supported me morally, Financially and
through providing knowledge by which I could complete my Research.
Last but not the least I am thankful to the management of Bokaro Steel Limited and
especially to my guide Mr. N.T.B susikaran whose co-Operation and guidance was a
milestone in completion of my project.