Case Study Apollo Tyres Limited Marketing Essay

Introduction:

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. The Indian tyre industry is highly raw material intensive and is a Rs 20000 Cr industry.

According to a study by Credit Analysis and Research Limited (CARE), the tyre industry is expected to show a healthy growth rate of 9-10 percent over the next five years.

Many innovations happening.

Four major companies alone hold 63% of the organized tyre market out of the 40 listed companies in the tyre sector.

Apollo tyres

MRF

JK tyres

Ceat

Tyre is in demand at 3 different stages. Original equipment market, replacement market and export market.

Apollo Tyres Limited:

It’s the fastest growing top tyre manufacturer, with annual turnover of Rs 5036.80 crores (2009-2010). It was founded in 1976. Its first plant was commissioned in Perambra in Kerala state. In 2006 the company acquired Dunlop Tyres International of South Africa. The company now has four manufacturing units in India. It has a network of over 4,000 dealerships in India, of which over 2,500 are exclusive outlets. “Apollo Tyres Ltd.” has been pioneer in the implementation of “Six Sigma” among all the tyre companies in India, and is in the list of top 15 tyre manufacturers of the world in terms of Revenues.

SWOT Analysis:

STRENGTH:

Established brand name

Extensive distribution network

Effective R& D initiatives

Backward integration to eradicate the dependency

Global presence

Leverage opportunities across globe

Quick response to changes

Strategic alliance with automobile giants (maruthi, ford etc)

WEAKNESS:

Profitability highly correlated with price of raw materials (rubber-70% of TC).

No control on price due to high competition

Highly capital intensive market

Lockouts and strike (especially Kerala plant)

No presence in 2&3 wheeler markets

OPPURTUNITIES:

Growing economy

Growing demand for automobiles

Rise in replacement demand

Access to global source of raw materials & global market

Economies of scale with wider markets through expansion

Rise is disposable hands of the middle class

The national thrust in road infrastructure facilitating a tremendous fillip to surface transportation in the coming years

THREAT:

Continuous increase in the price of raw material (rubber)

Cheaper tyre from China and other neighbouring countries.

Cyclical nature of automobile industry

Political instability in the foreign countries where Apollo have ventured into (Hungry)

Inflation in Zimbabwe, resulting in no net earnings from investment.

Strategies – The Road to success:

Ever since the inception of Apollo Tyres Ltd, the company has been effective in developing strategies which greatly helped in its growth. Expansion of business is given great focus and strategies are developed in accordance with the situation and the requirements. Apollo is noted for its ability to foresee the opportunities and act accordingly thereby converting the opportunity into their strength. Apollo has always been keen in maintaining a good and effective relationship with their suppliers and customers. Their entry strategies has been a huge success and has helped them establish a strong foothold in the foreign countries as well. In order to have a control on the supply of raw material Apollo tyres have also ventured into backward integration strategies in areas where they face problems with the supply of raw materials. Capacity expansion of plants is also undertaken thereby helping Apollo Tyres Ltd in attaining economies of scale leading to an impact on the pricing strategy.

The Key Strategies undertaken by Apollo Tyres over the years are been listed below.

Started operation in 1976 in Kerala, which is the biggest producer of rubber in the country ensuring raw material supply.

In 1988 they expanded into Gujarat by setting up a plant in Baroda worth 168.96 Cr

In 1989 entered into a strategic alliance with Maruthi for radial tyres. And premium tyres for some truck manufacturing companies.

In 1994 they Enhanced the supply chain management by creating 2500 dealers thereby establishing an effective distribution network.

In 1995 ventured into the automobile hub in the country Pune with a manufacturing unit.

In 1995 ,set up a 50:50 Joint Venture with continental tyres with a production capacity of 4.7 million and a capital outlay of 400 CR.

In 1998 Apollo Tyres announced a voluntary retirement scheme (VRS) for the workers at its Perambra unit in Kerala with a view to optimize manpower utilization and costs.

In 2003,established a 49:51 Joint Venture with Michelin Group to manufacture truck and bus radials for the Indian market.

In 2005 entered into a distribution tie up with Triveni Khushali Bazaar for retailing its farm tyres.

Expansion into the global market through investments and alliances in Western Europe, Eastern Europe, East Asia, Latin America, Africa.

Planning to enter into the Chinese market which is currently the world’s largest tyre producing and exporting market. If Apollo is successful in this venture it would be the first Indian tyre manufacturing company to establish a permanent production presence in China.

Apollo tyres aim to be a global tyre producer with footprints in all corners of the world.

Mission & Vision:

Mission –

“Apollo Tyres wants to focus on strengthening its presence in the commercial vehicles segment. It also expects to improve market share through strategic alliances”.

The Company has been performing exactly in accordance with its mission statement. It gives a clear picture of what the company focuses on. The mission statement acts as strength for Apollo.

The mission statement also emphasises what they aim at, like improving market share through strategic alliances. Analysing the functioning of Apollo Tyres Ltd makes it clear that their mission statement clearly depicts their path of growth. The growth of the company has been attained with the expansion which they attained through the strategic alliances which they formed with different manufactures in India as well as in the foreign countries. They are also among the top four players in the Indian tyre industry and are also among the top 15 tyre manufactures in the entire world market based on revenues.

Vision –

” A significant player in the global tyre industry and a brand of choice, providing customer delight and continuously enhancing stakeholder value “.

The vision statement shows what the company is planning to achieve in the future. It has a vision of placing itself as the brand which customers would love to use and also make them delighted and there by enhance the stakeholders value.  True to its vision, Apollo Tyres believes in making investments in people, productivity, process and of course the planet. Its community programmes are all targeted towards benefitting specific customer groups associated with the company’s business. A connection with better business practices also makes each of its community programmes sustainable over time. 

The attempt towards creating a “greener” world is ever-evolving in the processes it adopts in its manufacturing units, the raw materials used, who they are sourced from and the tyres that are eventually sent to customers. 

Building Brand Identity:

Apollo Tyre Ltd has always been focusing on building its brand identify. Their focus on building the companies brand identity is directly linked with their vision of creating a long lasting relationship with their customers, though providing values resulting in customer delight. Brand building is very important since most customers do not understand the specifics of the product.

Few factors influencing brand identity building of Apollo.

Product diversification is done on an extensive basis so as to suit the requirements & various climatic and natural conditions existing in the location (cross ply tyres to radial tyres).

2% to 3% of the companies total profit is spend on advertisement which helps them in improving their brand identity.

Providing high endurance tyres ( second to MRF ).

Building brand identity through reinventing, innovating and reinforcing its market leadership.

Cutting-edge technology and competitive products to worldwide markets on the back of its  brand values of quality, reliability, safety and trust.

Brand differentiation is crucially undertaken to build Apollo as a global brand.

Three pillars helping Apollo to create a brand identity are – international quality standards, last much longer & thus enhancing value for money and provides a smooth and quiet ride.

Focusing on Word of mouth publicity to build brand identity since in automobile and tyre industry 90% of the vehicle owners makes their choice based on this.

Investing in R&D to upgrade the technology as a result of which they have come up with different product bifurcation.

Establishing Co branding relationships with automobile manufactures like Maruthi.

Significance Of The Company LOGO:

The logo of Apollo tyres is very much significant to the company strategies. The logo depicts a red disc with an unending road which symbolizes the reliability and long life. It means the tyres ensure a longer period of life. The red colour represents the harshness of the road and means to convey that Apollo tyres are designed in a manner that they can be used in any circumstances thereby converting your ride in a smooth quiet and joyful one.

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The logo also has an advantage that it clearly engraves the name Apollo in it there by it makes it easier for the customers and public to identify and recall the brand spontaneously. It helps in invoking a clearer brand image of the company with the customers.

The logo shown above is developed with the concept of roads and tyres the O represents tyres and the straight line represents road. Thus it covers the direct aspect of their product and its usage. The symbol circle stands for energy, motion, life and space which is directly linked to the four wheels of a vehicle. The different colour used by apollo in its new logo gives it new identity to the brand. The logo is depicted across thousands of tyre stores, communication media and even on the tyres. Thus the effective logo also helps the company in building a brand identity in the minds of the customers.

No famous celebrities and events are undertaken to endorse the brand which we feel could be used to enhance the brand image like what MRF have done using Sachin to endorse the brand. The advertisements of Apollo tyres are not much acclaimed.

The state of competition and Apollo’s Value Proposition:

The Indian tyre industry is been dominated by few major players. Four top companies alone make up 63% of the total share. There exists stiff competition between these major players in the market. In their global business market they will have to face the international players as well. In the Indian markets due to the huge competition, cost pressure and price their exist high entry barriers for small scale organisations to come up cause a threat to the existing giants. But the emergence of lost cost Chinese tyres in the Indian markets will create a cause of concern for these big players. Many of these companies go for joint ventures as a strategy to avoid competing against each other in some or the other sections.

Apollo tyres is the largest manufacturer of Commercial vehicles tyres in India and is the second largest in the industry in terms of revenue. Its ranked 15th in the global tyre market as a result of the various acquisitions it has ventured into across the globe.

Value Proposition –

Conclusion:

Apollo Tyres Ltd should continue their effective formulation and implementation of strategies which will help them be among the top players in the tyre industry. Apollo is also focusing into product diversification strategies. New products like tubes, alloy wheels etc are been considered into the product lines of their business. Profitable growth, customer

Satisfaction & returns to shareholder is adapted as the key in becoming a true global brand. With their entry into the European markets and plans of entering into china Apollo tyres will become a complete Global player achieving their target of $2 Bn.