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IMC Plan for JK Tyre Industry

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Tyre Industry in India

Introduction:

Tyre (or tyre in British English) is a ring-shaped covering that fits around a wheel 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 is derived from the word "attire", referring to the dressing of the wheel.

The fundamental materials of modern tires are rubber and fabric along with other compound chemicals. Their constructive make-up consists of the tread and the body. The tread provides traction while the body ensures support. Before rubber was invented, the first versions of tires were simply bands of metal that fit around wooden wheels in order to prevent wear and tear. The most recent and popular type of tire is pneumatic, pertaining to a fitted rubber based ring that is used as an inflatable cushion and generally filled with compressed air. Pneumatic tires are used on many types of vehicles, such as bicycles, motorcycles, cars, trucks, earthmovers, and aircraft.

Technology generation in the Indian tyre industry has witnessed a fair amount of expertise and versatility to absorb, adapt and modify international technology to suit Indian conditions. This is reflected in the swift technology progression from cotton (reinforcement) carcass to high-performance radial tyres in a span of four decades. Globalization has led to the linking of the economies of all the nations and therefore major Indian players in the tyre industry are pursuing global strategies to enhance their competitiveness in world markets. The present section broadly undertakes an overview of the Indian tyre industry through an examination of its growth trends with respect to production, exports and acquisition of technological capabilities.

TYRE INDUSTRY SCENARIO

Indian Tyre Industry can be globally competitive on a level playing field Robust growth in the economic activity in various sectors of the economy as well as in the Surface Trans- port sector and renewed thrust in the infrastructural spends continued to be growth drivers for the Tyre Industry. The reduction in excise duty from 24% to 16% was a welcome move, The completion of Golden Quadri- lateral and North- South and East-West corridor projects will further boost the Automobile sector. This augurs well for the Indian tyre industry.

While the demand continues to be buoyant, rising input costs in general and petro-based raw materials in particular is a matter of concern. During the year, the Tyre Industry faced pressure on margins on account of imbalances in the cost increases and tyre prices.

There are significant deficiencies in the infrastructure and its cost thereof vis-a-vis the global one thus putting the Indian Industry in a disadvantageous position. While the reduction in the import tariffs is a step in right direction, it needs to be calibrated with the development of infrastructure in the country.

Key Features:

  • there are 40 listed companies in the tyre sector in India.
  • Major players are MRF, JK Tyres, and Apollo Tyres & CEAT, which account for 63 per cent of the organized tyre market. The other key players include Modi Rubber, Kesoram Industries and Goodyear India, with 11 per cent, 7 per cent and 6 per cent share respectively. Dunlop, Falcon, Tyre Corporation of India Limited (TCIL), TVS-Srichakra, Metro Tyres and Balkrishna Tyres are some of the other significant players in the industry.
  • While the tyre industry is largely dominated by the organized sector, the unorganized sector is predominant with respect to bicycle tyres.
  • The industry is a major consumer of the domestic rubber market. Natural rubber constitutes 80% while synthetic rubber constitutes only 20% of the material content in Indian tyres. Interestingly, world-wide, the proportion of natural to synthetic rubber in tyres is 30:70
  • The sector is raw-material intensive, with raw material accounting for 70% of the total costs of production
  • Total production s in tonnage: 11.35 lakh MT & total production of tyres in all categories: 811 lakh (2007-08)
  • Current level of radialization includes 95% for all passenger car tyres, 12% for light commercial vehicles and 3% for heavy vehicles (truck and bus)
  • Restrictions were placed on import of used /retreaded tyres since April 2006
  • Import of new tyres & tubes is freely allowed, except for radial tyres in the truck/bus segment which has been placed in the restricted list since November 2008
  • Total value of tyre exports form India is approximately Rs 3000 crore (2007-08)
  • 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, radialization, retreading and exports.

The tyre technology upgradation is an extremely difficult process, particularly in the Indian scenario, due to several factors. First, since tyre technology encompasses various disciplines such as polymer, chemical, steel etc. compromises have to be made in the upgradation of technology because of a) the conflict and complimentarity inherent in these disciplines, b) the usage pattern of the tyres and c) the cost factor. Further, a tyre's performance could be affected due to factors such as the weather, loading pattern etc. Despite these bottlenecks technology upgradation in Indian tyre industry during the last few decades has been significant. This has been possible to some extent due to government approvals of collaborations with MNCs in this sector. The emphasis given by Indian tyre companies to applied research, the setting up of well-equipped in house R&D centres by large tyre companies, manned by experts and experienced professionals have also helped in technology upgradation. Indian tyre technology has exhibited versatility in maintaining inflow of technology through foreign collaborations and tailoring the same to Indian needs.

Automation:

The production system in the Indian tyre industry has been traditionally very labour intensive. The automation of manufacturing processes has increased gradually, which has slashed the size of the workforce to a considerable degree and has effected a change in its composition. The degree of automation has been greater in the area of radial technology, while cross ply technology is still labour intensive. The firms have been resorting to automation in order to tackle problems related to labour unionization and indiscipline in the sector. The rationale provided by the firms for the increasing drive towards automation of the manufacturing facilities has been that high quality and uniformity of the final product usually cannot be guaranteed with a labour intensive process. (Iyer & Upadhyay 2008).

New Policy Initiatives

The tyre industry in India has had to grapple with raw material price volatility, rupee appreciation and cheap Chinese imports. In this connection, some of the recent initiatives by the government to facilitate the growth of the sector include:

No WTO bound rates for Tyres and Tubes No restrictions on the import of all raw materials required for tyre manufacture except carbon black, which has been placed in the restricted list Increasing thrust on development of road infrastructure

The Marketing Communications Mix

A company's total marketing communications mix, or promotion mix, consists of the specific blend of advertising, personal selling, sales promotion, and public relations tools that the company uses to pursue its advertising and marketing objectives. The five major types of promotion are:

  • Advertising: Any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor.
  • Personal selling: Personal presentation by the firm's sales force to make sales and build customer relationships.
  • Sales promotion: Short-term incentives to encourage the purchase or sale of a product or service.
  • Public relations: Building good relations with the company's publics by obtain- ing favourable publicity, building up a good “corporate image,” and handling or heading off unfavourable rumours, stories, and events.
  • Direct marketing: Direct communications with carefully targeted individualconsumers to obtain an immediate response—the use of mail, telephone, fax, e-mail, and other non-personal tools to communicate directly with specific consumers or to solicit a direct response.

Each type of promotion has its own tools. Advertising includes print, broadcast, outdoor, and other forms. Personal selling includes sales presentations, tradeshows, and incentive programs. Sales promotion includes point-of-purchase displays, premiums, discounts, coupons, specialty advertising, and demonstrations.

Direct marketing includes catalogues, telemarketing, fax transmissions, and the Internet. Thanks to technological breakthroughs, marketers can now communicate through traditional media (newspapers, radio, telephone, and television), as well as its newer forms (fax machines, cellular phones, pagers, and computers). These new technologies have encouraged more companies to move from mass communication to more targeted communication and one-on-one dialogue. At the same time, communication goes beyond these specific promotion tools. The product's design, its price, the shape and colour of its package, and the stores that sell it—all communicate something to buyers. Thus, although the promotion mix is the company's primary communication activity, the entire marketing mix promotion and product, price, and place must be coordinated for greatest.

Over the past years, tyre companies around the world perfected the art of mass marketing —selling highly standardized products to masses of customers. In the process, they developed effective mass-media advertising techniques to support their mass-marketing strategies. These companies routinely invested millions of dollars in the mass media, reaching tens of millions of customers with a single ad. However, as we move into the twenty-first century, marketing managers face some new marketing communications realities.

The ChangingCommunications Environment

There are two major factors are changing the face of today's marketing communications.

1. As mass markets have fragmented, marketers are shifting away from mass marketing and developing focused marketing programs, designed to build closer relationships with customers in more narrowly defined micromarkets.

2. Astimprovements in information technology are speed- ing the movement toward segmented marketing marketing. Today's information technology helps marketers to keep closer track of customer needs—more information about consumers at the individual and household levels is available than ever before. New technologies also provide new communications avenues for reaching smaller customer segments with more tailored messages.

The shift from mass marketing to segmented marketing has had a dramatic impact on marketing communications. Just as mass marketing gave rise to a new generation of mass-media communications, the shift toward one-on-one marketing is spawning a new generation of more specialized and highly targeted communications efforts.3 Given this new communications environment, marketers must rethink the roles of various media and promotion mix tools. Mass-media advertising has long dominated the promotion mixes of consumer product companies. However, although television, magazines, and other mass media remain very important, their dominance is now declining. Market fragmentation has resulted in media fragmentation into more focused media that better match today's targeting strategies. For example, in 1975, what were the three major US TV networks (ABC, CBS, and NBC) attracted 82 percent of the 24-hour viewing audience. By 1995, that number had dropped to only 35 percent, as cable television and satellite broad- casting systems offered advertisers dozens or even hundreds of alternative channels, which reachsmaller, specialized audiences. It's expected to dropeven further, down to 25 percent by the year 2005.

The few mass magazines of the mid-twentieth century have been replaced by thousands of special-interest magazines. HMF alone publishes these and more than 20 other magazines reaching 17 different markets and more than 47 million readers, not to mention a wide range of online, broadcast, outdoor, and other media. focused audiences. Beyond these channels, advertisers are making increased use of new, highly targeted media, ranging from video screens on supermarket shopping carts to CD-ROM catalogues and Web sites on the Internet.4 More generally, advertising appears to be giving way to other elements of the promotion mix. In the glory days of mass marketing, consumer product companies spent the lion's share of their promotion budgets on mass-media advertising.

Now a days, media advertising captures only about 26 percent of total promotion spending.5 The rest goes to various sales promotion activities, which can be focused more effectively on individual consumer and trade segments. Marketers are using a richer variety of focused communication tools in an effort to reach their diverse target markets. In all, companies are doing less broadcasting and more narrow casting.

The Need for Integrated Marketing Communications

The shift from mass marketing to targeted marketing, with its corresponding use of a richer mixture of communication channels and promotion tools, poses a problem for marketers. Consumers are being exposed to a greater variety of marketing communications from and about the company from an array of sources. However, customers don't distinguish between message sources the way marketers do. In the consumer's mind, advertising messages from different media—such as television, magazines, or online sources—blur into one. Messages delivered via different promotional approaches—such as advertising, personal selling, sales promotion, pub- lic relations, or direct marketing —all become part of a single message about the company. Conflicting messages from these different sources can result in confused company images and brand positions. All too often, companies fail to integrate their various communications channels. The result is a hodgepodge of communications to consumers. Mass advertisements say one thing, a price promotion sends a different signal, a product label creates still another message, company sales literature says something altogether different, and the company's Web site seems out of sync with everything else. The problem is that these communications often come from different company sources. The advertising department or advertising agency plans and implements advertising messages. Sales management develops personal selling communications.

Other functional specialists are responsible for public relations, sales promotion, direct marketing, online sites, and other forms of marketing communications. Such functional separation has recently become a major problem for many companies and their Internet communications activities, which are often split off into sepa- rate organizational units. “These new, forward-looking, high-tech functional groups, whether they exist as part of an established organization or as a separate new business operation, commonly are located in separate space, apart from the traditional operation,” observes one integrated marketing communications expert.“They generally are populated by young, enthusiastic, technologically proficient people with a burning desire to ‘change the world,'” he adds, but “the separation and the lack of cooperation and cohesion” can be a disintegrating force in marketing communications In the past, no one person was responsible for thinking through the communication roles of the various promotion tools and coordinating the promotion mix. Today, however, many companies are adopting the concept of integrated marketing communications (IMC).

The company carefully integrates and coordinates its many communications channels to deliver a clear, consistent, and compelling message about the organization and its products.6 As one marketing executive puts it, “IMC builds a strong brand identity in the marketplace by tying together and reinforcing all your images and messages. IMC means that all your corporate messages, positioning and images, and identity are coordinated across all [marketing communications] venues. It means that your PR materials say the same thing as your direct mail campaign, and your advertising has the same ‘look and feel' as your Web site.”7 The IMC solution calls for recognizing all contactints at which the customer may encounter the company, its products, and its brands. Each brand contact will deliver a message, whether good, bad, or indifferent. The company must strive to deliver a consistent and positive message at all contact points. To help implement IMC, some companies appoint a marketing communications director, or marcom manager, who has overall responsibility for the company's communications efforts. Compaq Canada, for example, has a vice-president of integrated marketing communications. IMC produces better communications consistency and greater sales impact. It places the responsibility in someone's hands—where none existed before—to unify the company's image as it is shaped by thousands of company activities. It leads to a total marketing communication strategy aimed at showing how the company and its products can help customers solve their problems.

J. K. Industries Ltd.

J.K. industries achieved yet another milestone and the turnover touched an all time high of Rs. 2,400 crores during the year. Operating Profit for the year was Rs. 132 crores and after providing for cost of borrowings, depreciation and taxation, Profit After Tax is Rs. 17 crores as against Rs. 12 crores in the previous year. There has been a sharp increase in input costs in view of increase in the prices of petro-based raw materials. Commensurate increase in the selling prices of tyres could not be made thereby affecting margins. It is a matter of concern that this overhang of increase in input costs continued throughout the year. The Company has been trying to meet this difficult situation by adopting various measures including aggressive cost cutting, business process improvements, product re-engineering as also enrichment of product and market mix. The Company has also renegotiated the rates of interest on existing term loans. As a result, interest cost in the current year is expected to witness a significant reduction. Completion of expansion resulting in increased capacities coupled with aforesaid steps, is expected to result in improvement in the margins in coming year.

APPROPRIATIONS

The amount available for appropriation, including surplus from previous years and debenture redemption reserve no longer required, is Rs. 57.81 crores. The Directors propose this to be appropriated as under:

Rs. Crores

Debenture Redemption Reserve

5.99

General Reserve

1 .75

Dividend

7.49

Corporate Dividend Tax

1.05

Surplus carried to Balance Sheet

41 .53

 

DIVIDEND

Company are pleased to recommend dividend of 20 % (Rs. 2 per Equity Share) on the Equity Share Capital of Rs. 37.46 crores. The dividend outgo will be Rs. 8.54 crores (inclusive of dividend tax of Rs. 1.05 crores) as against Rs. 8.47 crores (inclusive of dividend tax of Rs. 0.98 crores) in the previous year. The dividend in the hands of the shareholders is tax free.

SUSTAINED LEADERSHIP AND GROWTH

Quality Excellence

The Company continues to play a leading role in the Tyre Industry in India. During the year, production increased to 57.74 lac tyres compared to 55.62 lac tyres achieved last year. All the four Tyre Plants of the Company operated at optimum capacities producing world class quality tyres.

CUSTOMER FIRST

If is a matter of great pride that your Company has been ranked No.1 in the 'Tire Customer Satisfaction Index Study' conducted by J D Power Asia Pacific 2005 India. Company acknowledge the support of all its valued customers in attaining the leadership position in the Tyre Industry in India. JK Tyre continues to be India's only Tyre 'Superbrand'. It reinforces our belief of putting the "customer first" in all our endeavours.

TRUCK/BUS RADIAL TYRES

Production GraphDuring the year, your Company achieved yet another milestone and rolled out One Millionth All Steel Truck/Bus Radial Tyre. The Company has produced radial truck/bus tyres of the value of more than Rs.1,000 crores so for and has been exporting the same to several global markets. Your Company continues to produce more than 80% of India's All Steel Truck/Bus Radial Tyres.

The expansion of capacity of Truck/Bus Radials by 50% was completed and has now become operative. This would allow the Company to continue its leadership role in this vital growth area and meet India's growing demand for Radial Truck Tyres. Innovative Promotion and Concept Selling marketing strategy helped the Company to accelerate the use of Truck/Bus Radial Tyres in the country. With renewed thrust on the improvement and enlarging road network and highways, the pace of radialization shall pick up in the years ahead. Increasing number of buses are being fitted with radials and with the increased road movement as a result of better road quality and network, radials will find application on larger number of buses. Plans are well under way to further expand the capacities to meet the demand for accelerated radialization.

EXPANSION

In addition to expansion of the truck radial capacity as mentioned above, the passenger radial capacity expansion by 30% has nearly been completed. The benefits of both these enhanced capacities will be available in the coming year. To meet the surge in demand for the Company's tyres as also maintaining our leadership in the Tyre Industry, further capacity expansion is planned.

Exports GraphEXPORTS

Your Company continues to be the lead exporter of tyres from India. During the year, exports increased to Rs. 383 crores. The Company has developed an extensive global marketing net- work and its tyres are sold in 60 countries across 6 continents. 'JK Tyre' is a preferred brand in several leading global markets. This is yet another recognition of the Company's world class quality tyres.

HUMAN CAPITAL

The Company believes that human resources are key to the success of business. It has been taking several steps to enhance employee skills through training & development, empowerment and nurturing talent. In recent years, major initiatives on Competency based Leadership Development and Business Process Re-engineering were taken up which have yielded excellent results.

JK TYRE -MARKET LEADER

Production during the year touched a high of 57.74 lac tyres against 55.62 lac tyres last year. All the 4 Tyre Plants of the Company worked at the optimum capacities at high operational efficiency levels, producing world- class quality tyres.

During the year, the Company achieved yet another land mark of being ranked No.1 in the Tyre Customer Satisfaction Index Study conducted by J D Power Asia Pacific 2005 India -a distinct customer satisfaction endorsement of your Company's products. This has reinforced our market leadership. It is indeed a matter of great pride and satisfaction that JK Tyre has received the most coveted recognition of 'Superbrand' and now No.1 ranking in the Customer Satisfaction. This, more than amply demonstrates the Company's commitment to its customers and its leadership in the Indian Tyre market.

COMMERCIAL TYRE SEGEMENT

The segment constitutes Bus, Truck and LCV tyres. Their efforts have been to not only meet customer expectations but also to give the very best in quality and performance driven products.

During the year, Company made new offerings and introduced various tyres, the principal ones being Jet Xtra, Jet Rock and Jet Star for segment specific Bias Truck applications. Nine new tyres were introduced for LCVs for different usage and road conditions.

The Company continued to establish great focus on customers through customer contact programmes in LCV tyres and also by partnering the fleet program of Indian Oil Corporation. Training camps were organized to create awareness amongst tyre fitters by organizing "Master Tyre Fitter" Programmes - a first in the industry. AIDS awareness programme was launched amongst Truck Drivers to educate them for prevention and care of this deadly disease.

TRUCK RADIALS

Company's initiative of introducing all Steel Truck Radial tyres in India have started yielding results and the roll out of the millionth tyre at the most modern plant at Mysore in July '05 is a testimony to the far sighted vision of your company. Company is not only the No.1 truck radial manufacturer, but is a dominant leader in the market with more than 80% market share.

New products and sizes of tyres were introduced in the market which received excellent consumer acceptance. JK Tyre Truck/Bus Radial Tyres are gaining increased fitment by Original Equipment Manufacturers.

Customers education and participative involvement with end users has taken shape under the Unique Fleet Management Programme. Dedicated personnel have been attached to the fleets to enable them to fully realize the benefits of usage of radials. The Tyre Care Center Network along prominent highways continues to provide round the clock service to truck/bus operators. Your Company is able to see the rapidly growing pace of radialisation moving from current levels of approximately 2% to 5% in the immediate future to 10% in next 5 years. Expansion of capacity by 50% will help maintain company's leaderships in domestic market as also service its export to sophisticated markets across the globe.

CAR TYRES

During the year under review, your Company continued its thrust on partnering growth with OEM Customers. Various consumer oriented activities such, as 'Zip and Sip' offer, participation in 'Indian Oil Extra' Rewards programme and 'Monsoon Protection' offer were undertaken to strengthen bondage with customers. Product aesthetics, introduction of newer range, addressing product requirement across different types of cars continued to be important focus areas for radial car tyre segment. Various new sizes and patterns such as Vectra and Zephyr for car radials were introduced for the new models launched by the auto manufacturers. Through relentless efforts, the Company achieved Unique Distinction of being ranked No.1 in Customer Satisfaction by JD Power Asia Pacific, a world leader in assessing customer satisfaction in the automotive segment. Expansion in capacity by 30% shall enable the company to increase its participation in replacement as well as OE segments.

STEEL WHEELS

At the forefront of all car consumer-reach programs has been the 'Steel Wheels' retail network as an important Customer Interface touch point. This year, Steel Wheels played a significant role creating awareness on tubeless tyres usage. Over hundred outlets across the country cater thousands of customers with value added services including wheel alignment, wheel balancing and automated tyre changer apart from providing ready guide on tyre care in a pleasant ambience.

ORIGNAL EQUIPMENT MANUFACURERS(OEMS)

India is fast emerging as a global automotive hub. The Automotive industry is maturing and New Models being introduced at a rapid pace is a challenge for the tyre industry. It is our privilege to be a major business partner to highly prestigious OEM manufacturers with increased share of Business both in Commercial as well as Passenger categories.

It may be recalled that JK Tyre product development group was entrusted with the task of developing tyres for Maruti Udyog's New Generation Global Car. It is heartening that during the year, JK Tyre was listed as a single source vendor for Maruti "Swift" Car, Mahindra and Mahindra Ltd. selected your Company for supplying specially developed ELANZO tyres for their luxury Scorpio vehicle.

OFF THE ROAD TYRE(OTR)

Your Company has put renewed thrust on development of OTR Tyre business. Both production and sales increased by various folds in the last four years with JK Tyre OTRs attaining improved market share.

Continued thrust on development of new sizes of products has helped the company to emerge as the best in class in the domestic replacement market.

MOTOR SPORTS

JK Tyre has been successful in promoting motor sports in India during the last more than 10 years and has being pursuing the task of nurturing talented drivers to achieve greater heights for their recognition at various platforms in domestic racing championships as well as international arena Narain Karthikeyan -JK Tyre Prodigy became the first ever Indian Formula- 1 Racing Driver. Karun Chandhok and Armaan Ebrahim became A-l drivers with Armaan becoming a success in Formula BMW Asia. The Company organized 5th National Karting Championship and Racing Championship during the year. The Company also participated in Dubai Endurance Test and now re-entered National Rallying with great elan and success.

GLOBAL PRESENCE

Being the largest tyre exporter, your Company accounted for over 30% of total tyre export from India during the year, with export turnover of Rs. 383 crores. It was made possible mainly by the continued thrust on strengthening international network and building 'JK Tyre' brand in the overseas markets. Your Company continues to operate through an extensive distribution network spread across 60 countries' over 6 continents.

The company is enhancing outsourcing activities from China for international and for Chinese markets in its own brands. It is a matter of pride that 'JK Tyre' and Vikrant Tyre' brands are rated amongst premium brands in highly quality conscious global bias tyre markets.

TECHNOLOGY

Being a pioneer of Radial Technology in India, Company continues its zeal to maintain Technology Leadership. It has established many firsts in the areas of Technology in the past and has further accelerated this pace through extensive in-house Research and Development activity as well as through adoption of latest technology from its collaborator, Continental AG, Germany -the 4th largest Tyre Company in the world.

The fact that "SWIFT" -a new world class model of Suzuki has only JK Tyre as its 100% supplier, is yet another endorsement of Company's leadership in Technology. JK Tyre is the first Indian Company to commercialize 'V' rated (speed rating of 240 kms/hour) Passenger Radial tyres.

HASETRI (Hari Shankar Singhania Elastomer & Tyre Research Institute),. an independent institute dedicated to Elastomer and Tyre research, promoted by your company is driving company's Technological advancement. HASETRI is a Scientific and Industrial Research Organization (SIRO) and besides up- grading the facilities, infrastructure and manpower capabilities, is working jointly with Technology team of the Company to come out with new and advanced products. Towards this endeavour, HASETRI is not only benchmarking technological capabilities, but also collaborating with various National and International academic institutes. The Company has also established a Centre of Excellence for Tyre and Vehicle Mechanics in IIT, Chennai for latest computational system, which is the first such Centre in this field for tyre vehicle dynamics technology. This idea has been well appreciated by Automotive companies as it aims to develop superior products for Indian Automobiles.

With this strength and Technology Leadership initiatives, customers have well acclaimed performance of products both in Domestic and Export markets.

KNOWLEDGE INITIATIVE

Your Company has been and continues to be a Technology leader. With competitive scenario and fast changing needs, the wealth of information and knowledge has to be assimilated and converted into a powerful tool.

Keeping this in mind, your Company has taken steps to establish "Knowledge Management" as a key concept. With the vast advent of Information Technology and to put this to optimum use, your Company has put in place a system to capture, assimilate and store knowledge in most user-friendly manner to be able to use it most effectively for the advancement of technology and manufacturing capabilities.

HUMAN RESOURCE DEVELOPMENT

During the year, the Company laid focus on integrating various Business Processes into cohesive organization through HR driven activities by laying stress on adopting best practices and synerigising them with learning initiatives. The Company introduced competency based HR systems, process based organization, reinforced talent management & leadership development and encouraged young leaders forum.

Shri RP Singhania, Vice Chairman & Managing Director received "CEO with People Orientation" Award at the Asia Pacific Conference. Banmore Tyre Plant received National Level Quality Circle Award, and Vikrant Tyre Plant was chosen by CII for HR Mission study. In addition, the Company was conferred 'Amity HR Excellence Award' as also Shri G.P. Rao, Vice President (HR) was given the "HR Professional of the year award -2004" by GSBA -Top rankers.

FINANCIAL STATEMENT

 

During the year under review, operating profit of the company has been impacted due to spurt in petro- based raw material cost, which account for 60% of the raw material costs. Selling price could not be increased commensurate with the increase in cost of inputs resulting into lower profitability during the year. To meet this challenge, the company focused on operational excellence, cost reduction measures and better working capital management. .

INTERNAL CONTROL SYSTEM

The company has appropriate internal control, systems for business processes, with regard to efficiency of operations, financial reporting, compliance with applicable laws and regulations etc. Clearly defined roles and responsibilities down the line for all managerial positions have been institutionalized. All operating parameters are monitored and controlled. The company has an Internal Audit Department which prepares the audit programmes of all Units/Offices to cover significant areas to ensure conformance, with internal checks and controls. The Internal Audit Department carries out extensive audit throughout the year covering all areas of operations. The Internal Audit reports are reviewed by the Senior Management and placed before the Audit Committee of the Board of Directors alongwith the actions taken on regular basis.

CAUTIONARY STATEMENT

"Management Discussion and Analysis Report" contains forward-looking statements, which may be identified by the use of the words in that direction, or connoting the same. All statements that address expectations or projections about the future, including, but not limited to statements about the Company's strategy for growth, product development, market position, expenditure and financial results are forward looking statements. The Company's actual results, performance or achievements could thus differ materially from those projected in such forward-looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements on the basis of any subsequent development, information or events.

Evaluation and Control of JK Tyre Ltd:

The sales response to all television and print ads are the best indicators due to the very large amount of possible viewers for each, where as store displays and general public relation events are better suited for focus groups, mall intercepts and small random samplings.

In terms of focus groups and small random samples, the message evaluation techniques for the marketing suggested for the riders shoe will vary based on the two separate demographics being targeted by the product positions: those involved in athletic activity and those not involved in athletic activity. The higher response from one group to the other for a particular advertisement shouldn't be seen in a negative way. Instead, the two groups should be considered as separate entities with specific advertisements aimed at only one consumer base - though not mutually exclusive for all advertisements. For the athlete market, any focus group, mall intercept or random sample, should focus on recall tests and recognition tests with a focus product features; the non athlete demographic questioning should be mostly about brand and image.

COMMUNICATION TOOLS USING TYRE INDUSTRY:

The correct set of communication tools is vital to a successful marketing campaign. Target markets needs to be studied so that the most effective ways and times to communicate the Riders brand are maximized. The marketing strategy will include the following types of communication tools: television, magazine print advertisements, the internet and different events for effective public relations.

Television is the most reliable source of media for maximum reach to the consumer. It has a high intrusion value while also allowing creative's great opportunities for design. The reason this type of commercial was chosen was to remain as neutral and to attract the largest portion of our target market as possible.

Another type of media that would have a great impact in the campaign would be print advertisements in magazines. Print ads have proved to be more effective than television.

Public relations are also going to be an important component to the Riders marketing strategy. This event will be a good way to promote the shoe as well as supporting active lifestyles while building brand loyalty and trust.

IMPLEMENTATION PLAN:

There are many ways an implementation plan can mould and showcase a product. For our campaign we want our implementation plan to be efficient. It is very important that we know when are the right times to showcase our product and technology so that it'll have the most success.

For the next year the communications schedule will be filled with plenty of opportunities, activities and events that will help promote the riders.

The plan is mostly based on specific dates and events where we think advertisements will be successful.

The price and quality of the shoe with its technology makes for a good choice when doing diwali shopping. During diwali people are home and spend more time with family in common areas where there will usually be a TV. Diwali is a time where there is a lot of traveling. Due to this our print ads are going to be emphasized in in-flight magazines as are part of our strategy. The online top and side advertising banners will not only be in sport websites but on online shopping sites as well. Even though our system is pulsating, it is a goal emphasize this time of the year for the reasons given above.

The next important trend that follows the Christmas season is the New Year resolution trend. This is time of the year that people who fit within our target market tend to look for something to shake up their lifestyle for a healthier and better life. They are looking for smart decisions and riders will provide a smart shoe.

Another key time is the beginning of the summer. The weather gets more comfortable for running and using the outdoors, and is also the time when students get out of school and start generating capital.

The other seasonal trend that had an impact in how our implementation plan was shaped is the end of August and beginning of September. The back to school time means a chance to start all over again; a new level waits ahead with new challenges and new opportunities. By this time it should be emphasized and clear that our product is a top of the line purchase, our technological claims are valid and that if a customer wants the best and the latest, our product and technology is what should pop in their mind. Promotion at this time has two purposes: one, to be part of the back to school purchases and two, strengthen our message.

We decided to do promotion solely online for the build up period to one of the final four games, and mainly for the basketball version of the shoe. Part of the March Madness traditions are filling up the brackets with your picks for the different rounds. This is huge in India and it is all done online, all major networks and TV channels. We want our banners to be in every major site that will offer bracket fillings to their visitors. Our commercial will also be played in these websites their media sections before a video clip is played. There will be a lot of traffic consisting of fans looking for player profiles and highlights.

This strategy will let us gain maximum exposure to our target market while being able to educate the consumer about the special technology. The audience at the gymnasium and the viewers will be able to get another look at the technology in our shoe during the prime time event.

They have the opportunity to actually be able to learn and see the world's smartest shoe in person, not through a advertising medium. This event will also help build brand trust, loyalty and strength among the consumers.

The marketing will take place through media coverage and public relations creating a buzz about the shoe and again strengthening the brand name.

BUDGET:

 

Future prospects of the Indian Tyre industry

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 (CARE). While the truck and bus tyres are set to register a compounded annual growth rate (CAGR) of 8%, the light commercial vehicles (LCV) segment is expected to show a CAGR of about 14 %. However, we have to also take account of the effect of the global recession on the sector in making these assessments. The growth of the sector is closely linked to the expansion plans of the automobile companies, the government's thrust on development of road infrastructure and the sourcing of auto parts by the global Original Equipment Manufacturers (OEMs). Some significant hurdles towards attaining these projected growth rates could be raw material related price volatility, rupee appreciation and the looming threat of cheap Chinese imports. The Indian tyre companies need to make active efforts to explore newer markets as the existing markets for bus-truck tyres, which account for about 45 % of the total export volume, is nearing saturation. There is also an urgent need to increase the degree of radialization in order to safeguard their share in the export market. Global tyre manufacturers have been making constant efforts to innovate and offer a diverse range of products such as tyres with pressure warning systems, run flat tyres, eco-friendly tyres and energy efficient tyres. In this context, the Indian domestic companies have to pursue a growth strategy of continuous innovation and increasing emphasis on product differentiation.


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