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CHANNEL

PROMOTION
Of
Good Year Tyres

INTRODUCTION

The tyre industry is largely dominated by the organized sector, the unorganized
sector is predominant with respect to bicycle tyres. The sector is raw-material
intensive, with raw material accounting for 70% of the total costs of production.

The major factors affecting the demand for tyres include the level of industrial
activity, availability and cost of credit, transportation volumes and network of roads,
execution of vehicle loading rules, radicalization, retreading and exports.

The Indian Tyre industry is expected to show a healthy growth rate of 9-10% over
the next five years, according to a study by Credit Analysis and Research Limited.

The company was named after American Charles Goodyear, inventor


of vulcanized rubber.

Goodyear has now produced tires in India for more than 45 years, with two big
manufacturing plants, one near Delhi and other in Aurangabad, Maharashtra.

Goodyear India Ltd. can proudly point out that it was they who launched the very first
Indian-made tubeless radial back in 2002.

Currently, radials account for 90% of passenger car tire market, 11% of the light
truck tire market, and only a very small 2% to 5% of the (heavy) truck tire market.

Marketing of GY as a brand

Tires are difficult to market, this is


because, there is no favorite brand of tire.

Some one would want to buy Toyota, but


never would bother to ask which tires are
fitted onto it.

When tires are worn out generally they


are replaced by the same brand that
came along with it or the brand that is
available with the nearest retailer.

There is generally no brand preference in


the replacement market.

Hence a strong Distribution network is


important.

But if we consider OTR tires market


segment, generally security is the main
issue. Hence a known brand is trusted.

Here GY is market leader. E.g. Airplanes,


Mining, construction equipments.

Factors affecting sales of tires

Less Number of customers

High Geographic Dispersion of customer

Low Frequency of purchase

Tendency to postpone purchase

Level of Familiarity/ Product knowledge is low

Degree of Brand loyalty not high

Purchase on Impulse is not applicable

Level of involvement is high

Not purchased as a basket of goods

Speed of decision making process is low

Presence of expert influencer

Elements of Crisis Purchase exist

Not a perishable item

No time band associated with the purchase

Segments According to vehicle


categories
Tyre Industry

Commerci
al Vehicles

Others
Passenger
Vehicles

MHCV

HCV

LCV

Farm
Vehicles
Scoot
ers

Cars
Motor
Cycles

OTR

Industrial
Vehicles

Segments that GY is in
Tyre
Industry

Commercial
Vehicles

MHCV

HCV

Others
Passenger
Vehicles
LCV

Farm
Vehicles
Cars

Scooters
Motor
Cycles

OTR

Industrial
Vehicles

Further Segmentation
OTR are capable off driving on and off paved or gavel
surface. E.g. Airplanes, Mining and Agro vehicles etc.
On road includes all vehicles you see on road including
Trucks, Cars, Bikes etc.
OET as explained in the diagram are wider ,expensive &
provided better traction .
Replacement Tires: These are those tires that customers of
vehicle companies, replace their tire with, when the OE tires
are worn out.
Goodyear is a market leader in OE including Tractor and
Mining tires and second to leader in replacement tire
market.

Why Channels are a Necessity?


Intermediaries Reduce the Number of Channel Transactions
It is about giving consumer choice, making it convenient for
them to interact with the company in all stages of a consumer
journey!

Channel Distribution

We focus here on the replacement market*

Continued

Till date there are 1500+ contact point of GY in India.

There are 3 level of intermediaries that GY are into.

Which practice they follow depends on the type of market, e.g.: In an off
season you can push through distributer but not via dealer

All dealers dealing with the Company will have to maintain Security Deposit
with the Company.

The minimum amount of SDS is Rs.1.00 Lac (one lac) for all dealers
dealing in Truck/Non Truck/all other categories.

The minimum amount of SDS is 0.50 Lac (fifty thousand) for dealers not
dealing in Truck/Specialty

But an interest of around 8-10 % is payable through credit note

PLANNING OF GOOD YEAR


NEWEST VENTURE

Why Channel Promotion?


According to them Channel Promotions is done for:Brand Push
During off season the demand of the product is low hence promotion activities become a necessity.
To

maintain the brand image


So that it doesnt come to giving discounts because this diminishes brand
value.

Helps

in providing customer control by REACHING OUT


So that the company is there to engage the customer while he is going through the purchase process.

Increment

in the perceived value for the customer


To make the perceived value for the benefit on the product look higher than what they are actually
worthy for.

To

attract efficient and effective intermediaries


This is so that the one singular right message from the company reaches the right consumer through
intermediaries whom they must necessarily find trustworthy.

To

receive effective feedback


So that the company could know the pattern and know whether the marketing efforts of the company
is effective or not.

Understanding Biggest need of Channel


Promotion at GY
Channel Cooperation & Conflict
What is Channel Conflict?
When each member of the channel is an
independent business, retailers might
not behave according to the manufacturer
desires
Channel Conflict Types

GY faces Vertical Conflict and its conflicts with its independent dealers have
decimated the firms replacement tyres sales.

2) Why vertical conflicts at GY?


Most of the sales are through
independent dealers
Conflict between various channels
due to differences in the independent
goal of each channel
Goal:
Small independent dealers : Obtain
higher margin & attract loyal customers.
Manufacturer owned : To make public
aware & educate about Goodyears
product line
Large chains : To push the largest
volume of product at smaller margins.
3) How did they find a solution?
What they did was that they shared their incremental profits with channel member
to reward them for better service thus promoting them to perform better and work
towards a common objective. This was done through Double Marginalization.

Channel Marketing Strategy

Understanding the difference between Strategies


and Marketing Tactics

The below mentioned have been used in the


past but may or may not be applied or used
throughout the year.

Goodyear Channel marketing strategies


includes:
1) Loyalty Programs
These include special cards: gold, silver and
platinum cards in which points are
added on
the units of
purchase by the retailer or
distributer.

Platinum Members:
A platinum club which consists of its top dealers.
They are invited to all tyre promotions, dinners
and other events that happen in the region. Their
feedbacks are considered important for
companies marketing strategy.

If a VP visits that region he also visits the Dealers shop. Apart from this they
are invited to the annual conclave for sharing the corporate vision and the
plan for the next year with them. These annual conclaves are held in foreign
countries where the dealers are given fully paid trips

Gold Members:
The Rhino Gold club of dealers is a toned down version of the platinum
club. It is for the dealers who show promise but yet are not big enough to be
accommodated in the Platinum club. They also have CRMs installed in
their systems like the platinum members.

2) Turnover Incentives (TOD)


If the sales turnover target is achieved for every
quarter, then incentives are provided to the
dealers. These targets are different for each
level of intermediaries, depending on the
size of the intermediaries. Sometimes
to attract new dealers discounts are also
offered as special incentives.

3) Referral Program
This is similar to all the other
referral programs where an
intermediary refers another and
if arrangements work out, then
some rewards are granted to the
referring party.
4) Chairmans Club
Here they have something
called the Chairmans Club, where
distinguished intermediaries are
invited a party is thrown every
3 months and are addressed by the
leadership on concerning issues.
This is considered prestigious to be
a member of this club

Seasonal Tactics Used


for Stock Build up
Good year chooses to be more of a tactic driven company:
Tyres are usually purchased in pairs by customers
The tactics could be seasonal. E.g. For tractor
industry Kharif and Ravi seasons are good. Rest of
the months need a push. Distributer are targets then.

Results of Channel Promotion

Build mind share and encourage


distributor loyalty to the brand.

Improved gross margins by


promoting the products the company
wants to move in

To Educate your dealers and channel


sales partners on the features and
benefits of your products.

Differentiate the company from its


competition and improve distribution
channel engagement

Build stronger long-term relationships


with all of sales channels.

Innovations in Channel
Promotions
1)

Dealer Education Program

Goodyear Farm and Commercial teams made several visits to dealers and customers
across the country. The management team during its visit, affirmed Goodyear's intent of
getting as close as possible to the customers through regular and frequent customer
meets

The associate dealers were positive about the impact of various initiatives being taken by
Goodyear to take the business to new heights.

1)

The Highway Helper Initiative

Goodyear recently announced the launch of an exceptional new phone application for
Indian customers - Goodyear 'Highway Helper'. It allows fast access to important phone
numbers (emergency, police, tow trucks, taxis, dealers, etc.) and also provides tire
dealer information, car maintenance, vital information on troubleshooting guides, safe
driving tips and even offers interactive mini games.

Goodyear India launched this initiative in collaboration with RACE - India's leading onroad repair service provider.

This helped in significantly gaining dealers confidence as it is likely to increase sales in


US. Similar app coming soon in India.

When asked who handles innovations in channel promotions.


Leadership does, they say. Here is an example how this go bad
when very less Market Research is done.

This is a campaign by Star Bucks, which motivated people to talk


about Race discrimination while having coffee, which was largely
mocked.

Competitor Analysis

Proper HR training is provided to the channel


members by companies like Ceat, MRF which helps
in bringing a
1) Common message from the company to the
consumers
2) Gives the intermediary a feeling of belongingness
towards the parent company, though GY has a
training program in place.

Special discounts on the products are offered from


time to time, which GY usually avoids due the fear of
diminishing its brand name

Better Loyalty schemes and discounts offered and


available with the competitors like MRF and Ceat,
thus ensuring a robust distributive network.

They posses attractive and better schemes to new


dealers offering them various incentives.

How did Channel Promotions


affect sales?

After a series of new promotional


activities after 2010, there has
been a difference in the amount
of sale, but the cost was greater
as anticipated. As directed by the
Manager of the firm, the company
is not ready to invest more
because the difference the not
much. Goodyear is overall a 22
billion $ company and the portion
from India is merely 6 million.
Thus the top leaders are less
motivated for investing in India.

SWOT Analysis
Strengths
1) It is a 200 year old company, with 5 yrs in India
and has a strong brand name.
2) Adaptations to change in market scenario is
strong.
3) Healthier steps are been strongly initiated and
outcomes are awaited.
4) Channel Conflict resolution strategies are
innovative and have shown results.
5) Leader in tractor and mining segment, thus
vowing distributers are easy n replacement
market

Weaknesses
1) Penetration level is less.
2) Intense competition for channels in the tyre
industry makes market share constant
3) Reputation not good as compared to
competitors related to friendliness to
intermediaries.
4) Prizing strategy gives dealers a lesser margin.
5) Innovations in channel marketing.

Opportunity
1) Most of the segments in India are untouched,
that could be ventured into. E.g.: Two wheeler
and LCV segment.
2) Innovative and catchy advertising campaigns.
3) Access to highest level of technology
developed in US. The company thus has first
chance to bring new products in India which
impresses intermediaries.
4) Improvement in road infrastructure under the
new schemes by Gadkari would help reach
smaller town and would require a deeper
distribution network.

Threats
1) Price frequently changes, thus difficult to
woe distributers and dealers.
2) Competitors have innovative, friendly and
a larger distribution network as compared.
3) Cyclical nature of the automobile
industries.
4) Lack of infrastructure in rural areas.
5) Sales depends a lot on car and tractor
sales in an area.

Recommendations

Motivations and Incentives, if on monetary basis give better results as


proven by Ceat Pvt Ltd.

More distributer market research is required so that more products could


be pushed into the market which is a necessity

They should have a proper HR system in place for the dealers and
distributers so that , they could have a feeling of belongingness

Steps should be taken like more training programs and special incentives
so that a singular message reaches the customers from different
intermediaries.

There is continuous innovations in technology but those are not marketed


well in India. Thus programs should be conducted to make the
intermediaries aware about the new products that comes in.

Goodyear is a very big company and hence more investment could be


asked for from the main leadership and similar models for marketing any
new products should be molded the Indian way.

More associations with other firms could be made, to penetrate deeper into
the market and increase market share.

Just a FUN FACT

THANK YOU
BY :
SALONI RAMSISARIA (15DM131)
SANKALP JAIN (15DM133)
SATYA NARAYAN MISHRA (15DM135)
SHUBHAM KOGTA (15DM146)
SHUBHAM SAXENA (15DM147)

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