SUMMER INTERNSHIP PROJECT REPORT

ON

REASEARCH ON L.C.V. REPLACEMENT TYRE MARKET

IN

J.K. TYRE & IND. LTD.

Submitted in partial fulfillment of requirement of Bachelor of Business Administration (B.B.A) General

BBA Vth Semester (Morning) (A)

BATCH 2012-2015

Submitted to:

Submitted by:Ms. Tanvi Gupta

Himanshu

Assistant Professor

00514101712

JAGANNATH INTERNATIONAL MANAGEMENT SCHOOL KALKAJI

ACKNOWLEDGMENTA Project work is never the work of an individual. It is more a combination of ideas, suggestion, contribution and work involving many folks. One of the most important parts of writing of a project is to thank those who have contributed to it.

I would like to extend my heartfelt gratitude to Mr. Sandeep Kumar (Dy. Manager- Trade Marketing) for providing his invaluable support and guidance required for the completion of this project.

I would also like to place on record my acknowledgement to the entire staff of the JK Tyre & Ind. Ltd., New Delhi for their considerable support, their precious time and suggestion for the successful completion of the project.

I am also grateful to the dealers, the distributors and the people who have given their precious time to answer the questionnaire, thereby, giving insights to make the project more successful.

Like no player can strike a goal without guidance from his coach, neither can a student reach a destination without light being provided by his teacher. Lastly I would like to thank faculty in-charge, Assistant Prof. Tanvi Gupta for her co-operation and support that she has given me at every stage during my summer internship.

I would like to sincerely thank all of you for the wonderful support and guidance.

CERTIFICATE OF COMPLETION

This is to certify that this project RESEARCH ON L.C.V. REPLACEMENT TYRE MARKET IN J.K. TYRE & IND. LTD. under my guideline..

Ms. Tanvi GuptaTABLE OF CONTENTS

TOPICS PAGE NO.

1. Introduction 52. Company Profile 133. Research Methodology 244. Analysis & Interpretation 295. S.W.O.T 436. Conclusion & Recommendations 467. Bibliography

578. QUESTIONNAIRE

58 INTRODUCTIONThis project has been made to study the market share of JK Tyre in the Lower Commercial Vehicle (LCV) segment. It also involved the study of LCV Tyre market to analyze JKs performance vis--vis the competition.

My attempt is aimed to analyze the LCV replacement tyre market of JK Tyres and to study & analyze the LCV sector.

In this report, I have carried out a brief analysis of tyre industry in L.C.V. segment, discussing the current market trends and business profile. I have also highlighted the opportunities and potential of this particular sector along with the future growth perspectives.

The industry is definitely set to grow, but the huge competition, huge buyer power, pricing inflexibility and cost pressures prove as detriments. Tyre companies are operating at very thin margins and their return ratios are also not attractive. One can look at tyre stocks but only from a trading perspective.

Both, OEM and Replacement demand would drive growth, with exports also adding-in. The growing economy and the infrastructure sectors provide the much-needed impetus. However, tyre companies face immense competition, together with price and cost pressureBy adopting various calculation and analysis and then making interpretation with the solution of specific problem I put my efforts on giving appropriate suggestions to the company.INDIAN TYRE INDUSTRYBackground

The origin of the Indian Tyre Industry dates back to 1926 when Dunlop Rubber Limited set up the first tyre company in West Bengal. MRF followed suit in 1946. Since then, the Indian tyre industry has grown rapidly.

Transportation industry and tyre industry go hand in hand as the two are interdependent. Transportation industry has experienced 10% growth rate year after year with an absolute level of 870 billion ton freight. With an extensive road network of 3.2 million km, road accounts for over 85% of all freight movement in India.

Market Characteristics:

Demand

The demand for tyres can be classified in terms of:

Type: Bus and Truck; Scooter; Motorcycle; Passenger Car; Tractor

Market: OEM; Replacement; Export

Environment Analysis - Porter's Model

Entry Barriers: HighThe entry barriers are high for the tyre industry. It is a highly capital intensive industry

Bargaining Power of the Buyers: HighThe 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: HighThe 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: LowThe 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 IncreasingDuring 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.

Tyres by Type

The Indian tyre industry produces the complete range of tyres required by the Indian automotive industry, except for aero tyres and some specialised tyres. Domestic manufacturers produce tyres for trucks, buses, passenger cars, jeeps, light trucks, tractors (front, rear and trailer), animal drawn vehicles, scooters, motorcycles, mopeds, bicycles and off-the-road vehicles and special defence vehicles.

The scenario in India stands in sharp contrast to that in the world tyre market, where car tyres (including light trucks) have the major share (88%) by volume followed by truck tyres (12%). In India, however, passenger car tyres have a mere 17% share of the overall tyre market (as of FY2003).

Compiled by INGRESTruck and Bus Tyres

The truck and bus tyre segment accounted for 19% of tyres produced in India in FY2003. Every truck/bus manufactured generates a demand for seven tyres (six regular and one spare) as against three in the case of two-wheelers and five for passenger cars. In addition, the price of a truck tyre is significantly higher than that of a passenger car tyre (roughly 10 times) or a motorcycle tyre. Thus the demand multiple emanating from the commercial vehicle segment is highest in value terms.

Given the regular use and heavy wear and tear of truck and bus tyres, the demand from the replacement market in this segment worked out to 68% of the total demand for truck and bus tyres in FY2003; the OEM demand accounted for around 9% the same year. With the Indian manufacturers of cross-ply tyres focusing on the export market, this segment accounts for around 22% of the demand for truck and bus tyres.

Passenger Car Tyres

The passenger car tyre segment accounted for 17% of all tyres produced in India in FY2003. With passenger car production witnessing a growth of 12% in FY2003 over the previous year, OEM demand accounted for about 33% of the total sales that year. The replacement market accounted for around 63% of the total sales of passenger car tyres in FY2003. Exports accounted for 4% of the total passenger car tyre demand in FY2003. With the stock of cars increasing, replacement demand is likely to continue.

Motorcycle Tyres

Motorcycles accounted for 76% of two-wheelers sold in the domestic market in FY2003. Motorcycle tyres constitute the largest segment of the domestic tyre industry (29% of total tyre demand in FY2003). The replacement market accounted for around 49.8% of the total motorcycle tyres sold in FY 2003, while OEM demand accounted for around 50%.

Scooter Tyres

Scooters were the dominant segment in the Indian two-wheeler industry till FY1998, accounting for around 42% of domestic two-wheeler sales. However, the introduction of new motorcycle models has seen the share of scooters declining to 19% of domestic two-wheeler sales in FY2003. The OEM segment accounted for around 34% of the total sales in the scooter tyre segment in FY2003, with the rest being accounted for by the replacement market.

Tyre Demand by Markets

Vehicle Manufacturers 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 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.

Exports

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.

INTRODUCTION TO THE COMPANY

JK Organization owes its name to Respected Late Lala Juggilal Singhania, a dynamic personality with a broad vision. Inspired by the cause of the Swadeshi movement of Mahatma Gandhi, and driven by the zeal to set up an Indian enterprise, Lala Kamalpat Singhania founded J.K. Organization in the 19th century ushering in a new industrial era in India.

The process of industrialization and diversification was worthily and successfully carried on by Lala Kamalpat three illustrious sons, Sir Padampat, Lala Kailashpat and Lala Lakshmipat Singhania, aided in no small measure by the late Lala Gopal Krishna son of Sir Padampat.

JK Tyre, a Division of JK Industries is the flagship company under the umbrella of JK Organization. JK Industries (JKI) is under the able leadership of Shri. Hari Shankar Singhania, is one of the leading automotive tyre manufacturers in India.

The advent of JK Organization on the industrial landscape of India almost synchronizes with the beginning of an era of industrial awareness - an endeavor for self reliance and the setting up of a dynamic Indian industry. This was way back in the middle of the 19th century. And the rest that followed is history.

JK Organization has been a forerunner in the economic and social advancement of India. It always aimed at creating job opportunities for a multitude of countrymen and to provide high quality products. It has striven to make India self reliant by pioneering the production of a number of industrial and consumer products, by adopting the latest technology as well as developing its own know-how. It has also undertaken industrial ventures in several other countries.

JK Organization is an association of industrial and commercial companies and charitable trusts. Its member companies, employing nearly 50,000 persons are engaged in the manufacture of a variety of products and in diverse fields of commerce.

Trusts are devoted to promoting industrial, technical and medical research, education, religious values and providing better living and recreational facilities. With the spirit of social consciousness uppermost in mind, J.K. Organization is committed to the cause of human advancement.

Ever since its inception it has been JK Tyre's belief in the value of technological superiority that has made it grow by leaps and bounds. This division produces and sells tyres and tubes under the brand name "JK Tyre" for Truck, Buses, Passenger Cars, Jeeps, Light Commercial Vehicles, Multi Utility Vehicles and Tractors.

JK Tyre was founded in 1977. It built its first plant at Jaykaygram near Udaipur in Rajasthan. This was set up in technical collaboration with General Tire International Co, USA. Since then, the wheels of JK Tyre have moved only forward. It now has four plants at Kankroli (near Udaipur), Banmore (near Gwalior) and two at Mysore. To create its mark on the global highways, the company forged a technical partnership with Continental AG of Germany, the fourth largest tyre maker in the world. To keep pace with the market demand as well as technological leadership in Indian market JK Tyre took over ailing Vikrant Tyres in 1997 and turned it around in ten months. The takeover brought the company to the forefront of the bus and truck segment, giving it the largest presence with a 25.3% share.

J.K. Industries and Vikrant Tyres Limited are the only tyre companies in India to have received all three ISO 9001, QS 9000 and ISO 14001 certificates. This indeed is a true reflection of their commitment to stringent quality.

Also, JK Tyre is the largest exported tyre brand from India. It was awarded the CAPEXIL's Highest Export Award for 1997-97 by FIEO. It enjoys preferred premium brand status in Truck Bias market in USA and across many markets in Africa, Middle East and South East Asia.

JK Tyre has consciously followed a policy of continuously modernizing and expanding its tyre manufacturing facilities to retain its edge in the market place.

Our customer base covers virtually the entire Original Equipment Manufacturers (OEMs) in India together with Replacement Market for four wheeler vehicles, Defence and State Transport Units. Besides India, we have a worldwide customer base in over 45 countries across all 6 continents.PRODUCTS & SERVICES

JK Tyre has been at the forefront of the radial revolution in India. It is the first tyre manufacturer in the country to introduce Radial Tyres. This has resulted in development of many innovative products from the most modern, technologically advanced production facilities, some of which are as follows:

First manufacturer to launch "T" rated tyres in 1994-Ultima.

First manufacturer to launch "H" rated tyres in 1996-97-Ultima 210 H.

First manufacturer to launch Dual Contact High Traction Steel radials- Aquasonic.

First manufacturer to introduce India's first range of eco-friendly coloured tyres.

JK Tyre is the preferred OEM supplier to Indias leading automobile manufacturers like Maruti Udyog Ltd., Telco, Mahindra & Mahindra, Hindustan Motors, Ashok Leyland, Swaraj Mazda, Eicher, Escorts, Bajaj Tempo, L & T, John Deere and New Holland, thus showcasing the high levels of quality associated with its products and services.

JK Tyre has taken the lead in redefining tyre retailing in India. It has set up more than 100 exclusive One Stop Tyre Sales and Service Center - J K Steel Wheels.

It is also credited with the launch of Indias first and unique Dial-a-Tyre service wherein the customers can get tyres delivered and fitted at their doorsteps.

J JKs offering under passenger car segment (radial tyre) consists of ULTIMA, ULTIMA XPS, ULTIMA-XS, ULTIMA-XP, ULTIMA ROYALE, ULTIMA 210S, TORNADO, BRUTE, BRUTE 4X4, RALLY.

Car Bias consists of CAPTAIN, JET DRIVE, JET DRIVE XS, and JET DRIVE DX.

JK Tyres are also available for the entire range (various models and variants) of automobile manufactured by the followning manufacturers namely: Maruti, Daewoo, Fiat, Premier Padmini, Ford, Hindustan Motors, Mitsubishi, Honda Motors, Opel, Hyundai Motors, Skoda Auto, Toyota Motors, Mahindra & Mahindra and Tata Motors in India under passenger car segment.

COMPETITORS

Apollo

Apollo is the 18th largest manufacturer of tyres in the world. The company, was incorporated in 1972, manufacturer automotive tyres, tubes and flaps. The unconditional warranty policy, which covers everything from small cuts to blowouts, is the best among all tyre manufacturers and makes Apollos a good-value-for-money buy. It has plants in Limda (Gujarat), Ranjangaon (Maharashtra), Perambra (Kerala) and Kalamassery (Kerala). Apollo Tyres has a history of lockouts, due to labour unrest. Since 1996, the company has had 5 lockouts at various plants in the country.

BridgestoneBridgestone Tyre (India) is the subsidiary of Bridgestone Corporation, Japan. Its offerings include brands like S248 (for 80 aspect ratio) and S322 (for 70 and 65 aspect ratios). The Bridgestone B350s using DONUT technology are higher performance tyres, though not high speed ones, and are best for extensive driving over variable road conditions without compromising on speed. The warranty covers five years against only manufacturing defects - and Bridgestone is quite strict about enforcing it. It has a plant in Dhar (Madhya Pradesh).

CeatCeat Limited is the flagship company of the R.P Goenka (RPG) group. The company manufactures automotive tyres, tubes and flaps. The company is the 20th largest manufacturer of tyres in the world. The company has a technical tie-up with Yokohama Rubber Company, Japan for manufacturing car radial.It has plants in Mumbai and Nasik (Maharashtra).

GoodyearGoodyear India Limited (GIL) is a 74 per cent subsidiary of $ 13.5 billion Goodyear Rubber and Tire Company, US. The company manufactures automotive tyres, tubes, flaps, transmission belts and industrial V belts. The GPS2 is known to be one of the better tyres in its class as it is particularly quiet and offers a soft ride. However, it is sensitive to mechanical irregularities, which can cause them to wear out fast. These tyres are again only available in the 'S' speed rating.

The GT770+ is a 'T' speed-rated tyre and is longer lasting than the GPS2. Goodyear also boasts of a large range of tubeless tyres and in fact has been at the forefront of promoting the tubeless concept in India. It has a plant in Ballabgarh (Haryana).

MRFThe Company is one of the leading players in various tyre categories including truck and bus, light truck, passenger car, jeep, tractor front, ADV and scooter tyres. The company has a highest share in the replacement segment, due to the perceived brand image and quality of tyres manufactured by the company. The range essentially consists of the Zigma CC, ZVT and ZVTS in nylon casing with an 'S' speed rating. The problem though is the nylon casing which over time tends to lose its shape leading to a wobble that in turn sometimes result in belt distortion. It has plants in Ponda (Goa), Kottayam (Kerala), Arkonam (Tamil Nadu), Chennai (Tamil Nadu), Medak (Andhra Pradesh) & Pondicherry.

MichelinMichelin has surveyed the Indian markets and road conditions well to come up with tyres meant for India. The Certis, which is the premier range, covers vehicles from the Hyundai Santro to Toyota Qualis. The pattern is a unique asymmetric design, which is basically meant to counter the forced camber angle between the road and the vehicle. And it comes with a very safe 'H' rating. Michelin plans to launch truck and bus radial tyres in India.

LIGHT COMMERCIAL VEHICLES IN THE CURRENT SCENARIOA sound transportation system plays a pivotal role in the countrys rapid economic and industrial development. The well developed India automotive industry, with deep forward and backward linkages, ably fulfils this catalytic role by producing a wide variety of vehicle passenger cars, light- medium commercial vehicles, multi utility vehicles such as jeep, scooter, motor cycles, mopeds, three wheelers, tractors etc.

Light Commercial Vehicles are defined as being constructed primarily for the carriage of goods and weighing less than 3.5 tonnes gross vehicle mass. They include utilities, panel vans, cab chassis and cargo vans etc. Light Commercial Vehicles are primarily constructed for the carriage of goods; many are used for the carriage of passengers.

LCV moves a variety of cargo that includes raw materials, industrial products, consumer durables, drugs and pharmaceuticals, agriculture products and recently having moved on to more sophisticated items like refrigerated cargo, time sensitive and high value cargo, heavy commercial vehicles taking over the movement of cargo from these hubs and onto the doorsteps of consumers. LCV is basically used for intra city transportation where there is restriction in moving goods beyond certain payloads, as medium and heavy vehicles are not allowed to move within city so demand for light commercial vehicle is increasing at phenomenal rate. There are several companies manufacturing LC, they are:

1. TATA MOTORS

2. EICHER MOTORS

3. SWARAJ MAZDA

4. HINDUSTAN MOTORS

5. MAHINDRA AND MAHINDRA

6. ASHOK LEYLAND

Research Methodology

Research Objective

To study the market share of JK Tyre. To study the consumer behaviour of a buyer of tyre.

To determine the main reasons behind the choice of particular brand by consumer.

To study the weight age given to each attributes while making the purchase decision.

To find out the areas of improvement in a tyre from JK Industries Ltd.

RESEARCH METHODOLOGY Collection of data through a structured questionnaire from LCV owners.

LIMITATIONS OF THE SURVEYAs in market research there are certain limitations that had governed, this study also has.

A few of these limitations are as followning:

This study is restricted to parts of Delhi and NCR.

The sample frame or size for evaluating stand wise may not completely reflect the market.

The respondents may due to one or other reasons conceal the true facts, thus giving erroneous figures.

Some respondent reply half heartedly.REPLACEMENT MARKET TO SEE SUSTAINABLE GROWTH

The Replacement Market is one of the more sought-after markets by Tyre players, since the margins are better, compared to those of OEMs (who are relatively few in number and have a huge bargaining power). Replacement demand, which comes from existing automobiles, has been increasing for sometime now and is expected to do the same, going forward. Replacement of tyres varies across categories, due to different life-spans of tyres.

The typical life of truck tyres is 40,000-45,000 kms or, on a general basis, around 12 to 18 months. The replacement cycle is relatively longer for two-wheelers and cars, ranging anywhere between 24 to 48 months. However, the demand for radial tyres in cars has further augmented the replacement cycle. Here, it becomes important to talk about Re-treading, which is a phenomenon of repairing the outer surface of the tyre in order to increase its life. The cost of re-treading a tyre is around 20-25% of the cost of a new tyre. A re-treaded tyre lasts for around 60% of the life of a new tyre. Though the quality of tyre deteriorates on retreading, since it is highly economical, it is highly resorted to, especially in the passenger car segment. In the LCV/ HCV (truck) segment, re-treading depends on the type of operator. For instance, for a single truck operator that operates over shorter distances, mainly on inter-city and intra-state routes, re-treading is high. However, the organised or large-fleet operators prefer to replace the tyres after an average usage of 40,000-45,000 kms. These operators do not risk using old or re-treaded tyres on long-distance trips because breakdowns costs are immense.

Outlook

On the positive side, it is estimated that there would be a volume growth of 12-14% in 2008-09. The performance of the tyre industry is linked to the automobile and infrastructure sectors, the growth of which is dependent on the performance of the economy. The current estimated economic growth is over 8%. The continuous thrust being placed by the Government on the development of infrastructure, particularly roads, agriculture and manufacturing sectors, would lead to an impressive acceleration in the automobile/ tyre sector, generating more demand for tyres. However, tyre companies face immense competition together with price and cost pressuresANALYSIS AND INTERPRETATION ON CONSUMERS SURVEY

L.C.V OWNERSHIP TREND:

SAMPLE SIZE: 150

SAMPLE SIZE: 35

SAMPLE SIZE: 40

SAMPLE SIZE: 45

SAMPLE SIZE: 35

The responses to the above questions showed that:

Majority percentage of owner owns 1 to 2 L.C.Vs with 35.7% of market share.

L.C.V owner owning 3 to 4 constitutes 30.7% of L.C.V market share comes second.

L.C.V owner owning 5 to 7 constitutes 17.8% of L.C.V market share is third.

L.C.V owner owning 8 to 10 constitutes 5% of L.C.V market share is fourth.

L.C.V owner owning 11 to 15 constitutes 4.3% of L.C.V market share is fifth.

L.C.V owner owning 16 to 20 constitutes 3.6% of L.C.V market share is sixth.

L.C.V owner owning 20 above constitutes 2.9% of L.C.V market share is the least.

On the basis of numbers of L.C.V. owned, L.C.V owners can be classified in to three categories:

1. Lower Level Transporter (1 to 2)

2. Middle Level Transporter (3 to 4 & 5 to 7)

3. Higher Level Transporter (8 to 10, 11 to 15, 16 to 20 & 20 above)

35.7% of owners have 1 to 2 L.C.Vs, they constitute the largest numbers of fleet owner. As they are lower level transporters so their contribution in purchasing power is not that phenomenal. Respondents of this segment are not consistent toward a particular brand.

Middle Level Transporter constitutes 48.5% of L.C.V fleet owner, this is the major percentage of L.C.V owned and they have significant purchasing power. These transporters can be influenced to purchase particular brand of tyres, if proper description of product, promotion and special offers are made via dealers.

Higher Level Transporter constitutes 15.8%. If we compare it with middle level transporter it will be a meagre percentage, but considering their purchasing power they are making substantial contribution in purchasing tyres.

As owners own large number of L.C.Vs and their business involve more intra and inner city transportation, so replacement of tyres are more frequent. In this case individuals can be influenced via Area Sales Manager with special offers and discounts.

Stands to concentrate are Kamla Market & Okhla Industrial Area as majority of owners in these stands own a lot of L.C.Vs and are easier to influence to buy a particular brand. L.C.V. OWNERSHIP IN DELHI:

SAMPLE SIZE: 650

MODELS OF LIGHT COMMERCIAL VEHICLE OWNED:

Response to the above question was as following:

In the Delhi region it was found that the Tata model 407 has a major presence in the L.C.V segments in all stands. Tata 709 is at second position in Delhi region. In case of Eicher it was observed that all the Eicher models are equally popular.

In Naraina, it was seen that Tata model 407 and 709 are more popular. Eicher models 10.75 and 10.90/ 10.95 are also popular.

In Okhla, Tata model 407 has major market share in LCV followed by Tata 709 and Tata 410. Eicher models 10.50, 10.75 and 10.90/10.95 are popular too.

In Paharganj, it was seen that Tata model 407 is the most popular model followed by Tata 709 and Tata 410. Eicher models 10.50 & 10.75 are popular too.

In Kamla Market, Tata 407 is more popular followed by Tata 709 and Eicher models 10.59 and 10.75.

WHERE YOUR L.C.V. OPERATES:

Intra City: Most of the L.C.V. owners operate in Delhi and N.C.R.

Outer City: The stands operate in Rajasthan, Haryana, Punjab, U.P, West Bengal, Uttaranchal, Maharashtra, Bihar, Himachal Pradesh, and Gujarat.

How many kilometer you cover per day (Average):

The response to this question shows that the LCVs usually run about 1- 150 Kms. daily on an average in and around Delhi.

What kind of payload you load in your L.C.V and weight of payload:

The type of goods carried by these LCVs can be anything from household furniture, to office furniture, to factory raw material, to food grains, construction material, garments, electronic appliances, perishable goods, cement, general merchandise items.

Response to weight load, L.C.V owners is varying area wise is as follows:

In Naraina, payload is between 3 to 5 tonnes. They mostly carry general goods, cargo furniture, electronic equipments etc.

In Paharganj, payload is between 1 to 2 tonnes. They mostly carry motor parts, leather, garments and export items.

In Okhla, payload is around 3 tonnes. They mostly carry general goods, industrial goods (steel, electrical equipments, machines parts etc.) In Kamla Market, payload for Tata 407 is around 3 tonnes and for Eicher is 5 to 6 tonnes. They mostly deal in carrying inter city loadings.Fitment Survey Analysis

What is fitment survey?

A fitment survey is used to find out the market existence of all the tyre manufacturers in a particular region. A collective analysis of this survey would help to ascertain the actual percentage of market share of all the players in the region.

A fitment survey is done by surveying all the tyres fitted on to the front as well as on the rear wheels of a vehicle.

Stands covered in Delhi:

1) Naraina2) Okhla3) Kamla Market4) Paharganj5) Udyog Vihar6) Mini Truck Union

Others include Dunlop Tyres, Malhotra Tyres, Bridgestone, retreaded tyres etc. Apollo is the leader with 34% in Delhi region. During the survey it was found that Apollo enjoys a strong brand image in the market. Features that the respondents categorized in the favour of Apollo are:

1. Better Mileage2. Easy Claim3. Less bead failure4. Better cut growth resistance5. Reduced Thermal failure (heat developed during over load application)6. Easy to retread7. More rubber at wearing zone MRF is the runner up with 28%. Features that the respondents rated in the favour of Apollo are :1. Better loading capacity

2. Better Mileage

3. Warranty

4. No beading problem

5. Better cut growth resistance

6. High road contact area, enhancing road grip

7. Better casing and easy retredability JK Tyres is third with 16%. Features that the respondents rated in the favour of JK Tyres are:1. Better Mileage2. Less bead failure3. Better cut growth resistance4. Reduced Thermal Failure ( heat developed during over load application) CEAT is fourth with 16%, features that the respondents rated in the favor of CEAT are:

1. Warranty2. Easy Claim3. Uniform wearing4. Better casing and easy retreadability5. Better advertisement and sales promotion at various stands. Others are at fifth position with 5%. Birla is at sixth with 3% market share.FACTORS INFLUENCING PURCHASING DECISION:

Mileage of tyres is rated as the most important factor for consumers.

Loading capacity of the tyres was rated as the second most important factor.

The consumers rated tyres price as the third most important factor.

Dealer influence of the tyres was rated as the fifth most important factor.

Availability of the tyres was rated as the sixth most important factor.

After how many months/ years you replace your tyres (Average).

Response to this question was varying area wise as

In Naraina 1 year

In Paharganj 1 to 1.5 years

In Okhla 0.5 year

In Kamla Nagar 1 year Udyog Vihar 1.5 years Mini Truck Union 1 yearS.W.O.T.STRENGTHS:

Established brand names (key in replacement market).

Extensive distribution networks- For example, Apollo Tyres has 118 district offices, 12 distribution centers and 4,250 dealers.

Good R&D initiatives by the top players.

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

Growing Economy Growing Automobile Industry Increasing OEM demand Subsequent rise in replacement demand.

With continued emphasis being placed by the Central Government on development of infrastructure, particularly roads, agricultural and manufacturing sectors, the Indian economy and the automobile sector/ tyre industry are poised for an impressive growth. Creation of road infrastructure has given, and would increasingly give, a tremendous fillip to road transportation, in the coming years. The Tyre industry would play an important role in this changing road transportation dynamics.

Access to global sources for raw materials at competitive prices, due to economies of scale.

Steady increase in radial Tyres for MHCV, LCV.

THREATS:

Continuous increase in prices of natural rubber, which accounts for nearly one third of total raw material costs.

Cheaper imports of Tyres, especially from China, selling at very low prices, have been posing a challenge. The landed price is approximately 25% lower than that of the corresponding Indian Truck/ LCV tyres. Imports from China now constitute around 5% of market share.

CONCLSUION & RECOMMENDATIONS

PROBLEM ANALYSIS

The structured questionnaires for the LCV users include problems that the end users are facing with the quality, service or any other problem with the J.K. Brand. It is from this form of primary data that a few common problems were projected which are acting as hindrances in JKs path of being the number one tyre manufacture in the LCV segment.

A general analysis of these problems from the mouth of the end users pointed mainly towards improvement in the quality of the tyre.

Some of the common problems from the light commercial vehicle owners end were:

QUALITY RELATED

Tyre spreading

Tyre wearing away/ low tyre durability

Tyre taking air/ tyre swelling

The rubber of the crown being weaker as compared to the other brands

Tyre getting heated

The rubber of the tyre GOTI (as commonly known by the LCV drivers) becoming uneven

More mileage and trouble free service required.

CLAIM SERVICE

A lot of customers have reported that the claim availing process of JK Tyre is not only complicated but also a very lengthy process. First, the consumer has to go to the dealer to report their complaint which involves a lot of dealers hesitation to pass the claim then even if the dealer forwards it to the company, again the company experts check the tyre. If the tyre expert of the company once gets satisfied he passes the claim for a replacement of tyre. The whole process involves a lot of time and running around. The consumers would prefer the company being a bit more consumer friendly thus following a shorter channel for this process.

PROMOTIONS

While I was in the market carrying out my survey at various LCV stands I was informed by many vehicle owners that there was the lack of promotion of JK Tyre in the LCV segment, While MRF and Ceat is actively involved in promotion at various stand, they visits stands and give gifts to LCV using their brand tyres. With strong competition emerging from not only the bigger players, like MRF, Apollo and Ceat but also from the local brands; the need of the hour demands for an aggressive promotion for the brand at the level of the end users and the dealers.

The main purchasing force of the tyres in this segment in the dealers persuasion to purchase a particular brand of tyre and the second force may be the brand name, the goodwill that exists for a brand in a particular area or stand. Hence, word of mouth promotion of a brand among the light commercial vehicle owners and drivers plays an important role in building an image in the mind of potential customer. There is lack of consumer contact Loyalty Point scheme. An initiative started by JK tyres to increase its market share.

AVAILABILITY

In cement siding, Gurgaon, Paharganj, Okhla, area there is availability problem so consumers are buying other brands. Dealer in these stands are more aggressively promoting other brands compared with JK tyres.

MORE MILEAGE AND TROUBLE FREE SERVICE REQUIRED.

The consumers are looking for tyres with better mileage and trouble free services.

RECOMMENDATIONS:

PROMOTIONS:There is an urgent of aggressive promotion for the range of JK Tyre in the LCV segment at the consumers as well as at the dealers end.

Setting Promotional camp at various LCV stands in Delhi region making them aware with product range and their quality. Public relations and word of mouth marketing play a growing role within marketing mix to build and maintain brand.

Most of the problems that were projected, as per the primary data collected from the end users, revealed issues relating to the quality of the tyres. The end users when asked about the problems that they are facing with JK Tyres, as their instant reply would be , tyre is not durable, tyre takes air, tyre spreads after using for a short span of time, time rubber is weak, rubber of the tyre becomes uneven, etc. Not only the tyre expert but also the sales officer understands that most of the times it is not the fault of the tyre but a genuine fault with the machine, the vehicle. This is what the company people understand not the end user. They simply recognize this as a flaw with the JK brand of tyres. Well this is not the right most of the times, but this cannot be conveyed to the consumers by just saying it to them. They wont buy your talk; you got to prove it to them.

These camps can be used to educate the end users regarding such issues relating to the vehicle. They should be educated that if the tyre is wearing away from one side it is owing to bad alignment of the vehicle and not a flaw with the tyre. They should be informed about tyre rotation. Why is it necessary for long lasting of the tyre and other such issues and ways in which they can not only increase the life of the tyre but also the vehicles life. These camps could provide free alignment free servicing and other such customer care services. This will help JK Tyre in enhancing the brand equity and sales of JK brands.

LCV Training manual should be carried by sales force to Dealer and shown to consumer so that they can show JK tyres attributes compared with competitors.

Celebrity Endorsements.

Celebrity endorsement helps a brand to further strengthen its image among consumers. Cricket is a very popular game in India and Ceat & MRF are more involved in sponsoring cricket.

In 1995, the Professional Management Group (PMG) and Ceat decided to transform cricket into an experience, bigger and more exciting than anything players and fans had ever witnessed. They decided to reward the performance of players at the international level. Thus was born the first International Rating System- CEAT Cricket Rating System (CCR) - a system to reward outstanding performance across every sphere of cricket- batting, bowing, fielding and even wicket keeping.

MRF is currently promoting its brand aggressively by advertising during the IPL with its blimps which has attracted a lot of media attention.

JK has revolutionized motor sports in India and has produced racers like Narain Karthikeyan and Karun Chandhok, who now represents India in international competitions. Besides Motor Sports JK Industries need to get involve with Cricket activity also endorse few cricket personalities. As the LCV owners least follow motor sport and follow more cricket, so it will be better way to further strengthen JK brand among them.

SPECIAL SCHEME

JK has started consumer Loyalty point Scheme and Warranty scheme, it started way back on December, 2005. But all the LCV owners in Delhi region are not aware with the scheme so via dealers and sales & marketing department more stress is needed to be given to make customer aware of schemes launched by JK tyres to further increase its customer base.

Effective merchandising accelerates the buying process as it serves as an on the spot reminder to the consumer to buy, so JK tyres should concentrate more on Dealers for promotion of JK Tyres.

Taping Fleet owners like Coca-Cola Company, Pepsi, Bisleri, Mother Dairy and Logistic companies like DHL, Blue Dart, FedEx, Gati, Blazeflash etc. to buy JK Tyres.

ATTENTION TOWARDS THE DEALERS

All this while we understood the dealers role in selling a tyre and the importance of a dealers push. Therefore, the dealers should be kept at all times happy if the company wants to survive in that area. The dealers problem should be handled most instantly. They should be kept attracted towards some incentives or the other in the form of monetary or otherwise. The company should lend a listening ear towards their accounting related problems and instant steps should be taken to rectify such problems. Dealers profitability and margins, this is where everything boils down to, should always be kept in mind at tall times with respect to all brands of JK or else there are many other competitors in the market in this industry. Losing one dealer means losing manifold customers.

MEETINGS

The company should organize meetings and get together for the dealers and the end consumers to understand the market scenario, problems and issues relating to the brand and the market strategies (for the dealers).

PRICING

As per the primary data, questionnaires from the end consumers, I fell that the pricing strategy of JK Tyres is perfectly fine, it need no major change. MRF tyre in the LCV segment are the highest priced tyres as compared to its major competitors, still it sells. Here, we see that MRF is playing the game on the pricing strategy keeping Indian consumers way of thinking in mind backed with its brand equity.

This price war may be won by a promotional strategy wherein through adequate promotional activities and camps the consumer is educated about JK Tyres product superioty in terms of design and technological advancement as compared to MRF along with the advantage that JK Tyre offers to its customers as compared to MRF like for example JK Tyres having a better cut resistance in its tyres. Furthermore, the consumers and the dealers should be educated about the cost per kilometer benefit from JK Tyre as compared to MRFs wrong perception of being the number one. The consumer should be made to realize that Is the price he is paying for a tyre is it feasible in ratio to the number of kilometers it runs. All this has to go in the minds of the consumers or at least an attempt could be made in this aspect and it can be done with the most adequate sensitive promotional strategy.

MARKET AWARENESS

It is always advisable to be more alert once a company becomes a market leader, because it is always the leader who is being attacked by the competitors to take away their territory because a market leader has a tendency to get complacent once it reaches the status of being a market leader, they are satisfied capturing the majority of the market share and do not really make an effort to keep increasing the market share, they start developing a tendency to be more defensive and retain their market share than to become more offensive and capture the competitors market share.

They need to motivate the front line sales person to be able to get important information about the market, because they are the people who are in direct touch with the market and dealers, they should be advised to give a weekly report to the regional office as to the latest updates on the market development taking place in the market and also the emerging needs of the consumers. This would help the company to be in touch with the latest happenings in the market and also will be able to take necessary actions at the appropriate time.

BIBLIOGRAPHY

REFERENCES

1. "BSE Plus". Bseindia.com. Retrieved 3 October 2013.2. Mahapatro, B. B. (1993). Industrial Wage Regulation in Orissa. Mittal Publications. p.108. ISBN978-81-7099-474-9. 3. JK Tyre (1 April 2011), JK Tyre Heritage, retrieved 9 March 2013 4. JK Tyre (1 April 2011), JK Tyre International Sales Footprint, retrieved 9 March 2013 5. Reuters (1 April 2011), Profile of JK Tyre & Industries Ltd (JKIN.BO), retrieved 9 March 2013 6. Company History - JK Tyre & Industries Ltd.7. JK Tyre Motorsports - Total Control Zone Overview. 8. Event Calendar - The federation of Motorsports Club of India9. JK Tyre (3 October 2013), JK Tyre Accolades Footprint, retrieved 9 March 2013QUESTIONNAIREName:

Address:

Contact Information:

Email Address:

How many L.C.V you own?

1-3

4-7

8-11

12-15

More Than 15 Name of the manufacturer of the vehicle:

Tata Motors

Eicher Motors

Swaraj Mazda

Hindustan Motors

Ashok Leyland

Mahindra & Mahindra

Where your L.C.V. operates?

North India

South India

East India

West India

How many kilometres you cover per day?

1-50

51-100

101-150

151-200

More Than 200

What kind of payload you load in your L.C.V.?

Stone/Marble/Bricks/Coal

Cement/Iron rods/Iron scraps/Engineering goods

Courier Services

Perishable goods

Others

What is the payload in your L.C.V.?

1-2 tonnes

3-5 tonnes 5-7 tonnes

More than 10 tonnes Which company tyre do you prefer?

J.K. Tyre

Apollo

Goodyear

Ceat

Michelin

Bridgestone

MRF

Which tyre has the best performance?

J.K. Tyre

Apollo

Goodyear

Ceat

Michelin

Bridgestone

MRF

When do you have to change your tyres?

After 20,000 kms

After 30,000 kms

After 40,000 kms

More than 40,000 kms

What are your comments on J.K. Tyres?( Strengths and Weakness)

Which brand can handle the highest load carrying capability?

How do you purchase the tyres?

Cash

Credit

From which dealer do you buy the tyres?

Which factor affects your purchasing decision?

Greater Mileage

Load Capacity

Warranty

Price/Schemes

After Sale Services/Claims

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