GM | 21 Feb 2003
"The demand of tyres in a particular market is determined by the vehicular population in that market. However, the ownership patterns are now slowly changing, specially in the metros, affecting the marketing strategies of tyre majors"
In this section of brand speak, Neeraj Bhatia, General Manager- Marketing talks to exchange4media's Nikhil Gupta, about the brand- JK Tyres, their marketing strategy and unique trends in the Indian market. Starting his career with the Modi Group, Bhatia joined JK tyres as a marketing manager in year 1994, rose through the ranks to become General Manager- Marketing in year 2001 and he is now driving the brand towards new levels in the consumer mind space.
Q. How does JK Tyres differentiates itself as a brand?
We design our tyres especially for Indian conditions, Indian customer and Indian markets, unlike other tyres brands available in India, which are designed for some other markets. I think that is where we make the difference. That is the reason why in most of the product categories we are ahead of the competition.
Q. So, how are the Indian conditions different from the international conditions?
Indian conditions are different, the maximum and minimum temperatures are different. So, are the road conditions, Indian driving habits are different, Indian vehicle geometries have been different. So, these conditions are unique to India.
Q. If we look at the sales composition of the tyres, what is the percentage for Original Equipment Manufacturers (OEM) sales and retail sales?
It varies from segment to segment, if you look at truck tyres, the OEM markets are not even 10-15%. But if you look at car tyres then the OEM markets is upto 60%.
Q. In car tyres, are the sales composition same if we compare Indian markets with US and UK markets?
No, its not the same the retail markets are much bigger than the OEM markets, which is not the case in India.
Q. So, are the Indian markets moving in the same direction?
Yes, its changing but it will take at least 10 years for this figure to get reversed. From the current, 60: 40 of OEM vs retail sale, for passenger car tyres, to 40: 60 ratio.
Q. Which new trends in the market are affecting the tyre industry in India?
The demand of tyres in a particular markets is determined by the vehicular population in that market. Though the ownership patterns are now slowly changing. Specially in the metros, the dual and triple car ownerships are rising. This is affecting the overall mileage driven on a particular car. So, the experience of changing the tyre is very remote, as they might sell the car altogether in 4-5 years.
Q. So, what is your marketing strategy towards your OEM customers?
Our marketing strategy for the OEM customers is multifold. Firstly, there is a certain amount of technical capability, which needs to be proved. You have to tell them about product development, product servicing, and distribution network in the market. Secondly, your brand acceptance in the market is very important. And it has to be done very aggressively, because there are other competitors, there trying to achieve the same goal. And thirdly, the price is also a major consideration in OEM today.
Q. How important are quality certifications?
These certifications give you a better entry point to the OEM market, vis-Ã -vis your competitors, if they don't have it. As you know, all American companies want their vendors to have QS 9000. QS 9000 was instituted by the big four, General motors, Chrysler, Ford and American Motors. They got together to lay down the procedures, which should be accepted by the vendors, before they start supplying to them. And these are very stringent measures. Now we are going for the TS certification, which is one step further. We also received the CII- Exim Bank award for business excellence. So, these things help us a lot in dealing with OEMs
Q. Will the prices go down in the future?
Yes, they are likely to go down in the future, but by how much I do not know. They have gone down by 9-10% in the past 5 years, and they will continue to go down. Now it is upto the government on how they handle the duty structure because that's the only thing, which is waiting to be passed on.
Q. How was 2002 for the tyre industry? And how do you see 2003?
It was a mixed bag, and it had its ups and downs. Things were going very smooth till the August-September. I am just talking about the commercial tyres but they have shown vagaries in November and December. Railways have competed very effectively with roads. So, these have caused the situations of temporary slowdown. I am hopeful that January onwards things should improve.
Q. A lot of factors like automobile sector, state of economy, logistics industry, affect the demand of tyres. Are there any new factors?
Changes in the economy have direct fallouts on the commercial tyre segments, not in the passenger car segment. Yes, the government infrastructure initiative the Golden Quadrilateral should provide the tyre industry with some consistent demand, in the coming years.
Q. What is the future of branding for passenger car tyres in the country?
As the market has moved to become a buyers market, with about 4-5 brands competing for the same. In such a scenario brand differentiation has become the key. In the commercial tyre segment per se the product performance per se determines brand differentiation. In car tyres, like any other durable category, you need to have brand association with many aspects of consumer depending upon how you are targeting him. If you begin with consumer, the biggest concern is the safety on the road. But if you notice most of the tyre brands are talking about safety in one form or the other. We are talking about, 'Total Control.'
Q. Will newer tread designs of tyres becoming a new selling point for passenger car tyre segment?
Yes and no. In passenger car tyres, new patterns make a difference, so how the tread pattern looks makes a difference. These things add value for the trade, the end retailer, as all these innovations are sold at a premium. And for us it keeps the customer together, they keep coming back to us.