Case Study

CASE STUDY:

ZEN MICROGRIP TYRES

Zen Microgrip Tyres:

The automobile industry is growing at the rate of 25% and the economy is also moving along at 6.5 %, but Microgrip has not been able to show the same kind of results. This is a persisting problem with the company and what is required is a concrete solution to bail them out of the issue.

The company started in 1990, when it launched the state of the art radial tyres. These tyres were used all over the world and the company thought of taking the advantage of this better feature packed tyres in India. Zen Microgrip could not take the first mover advantage in this case as they lacked some basic promotional and product awareness skills. They did not promote the product that well, there were no informative campaigns to make the user aware of the benefits of the radial tyres over the conventional nylon tyres. The company did not pass on the information to the dealers and they were left alone to use their own push tactics, which finally did not work.

The Indian tyre market is divided into 3 segments. The potential customers include passenger vehicles, LCV (light commercial vehicles) and the two wheelers. The market for all these 3 type of buyers can be the replacement market, the OEM (original equipment manufacturer) and the export market.

Microgrip had done well in the export area but there were serious issues in the replacement and the OEM markets.

The basic problem in the LCV replacement market is that the customers are very price sensitive. The radial tyres are costing Rs. 4000 compared to the cost of conventional tyres that is Rs. 3000. Also the tractor trailer tyre came in same size and was interchangeable, many of the customers preferred to use them as they were cheaper and also provided tax benefits. The Indian customers are used to loading their vehicles, which adds on to the extra load per tyre. In reference to the LCV market, there were only a handful rivals to Zen. ITF enjoyed the leadership as they had brand loyal customers and they held regular customer meets to get the customer feebacks.

THE SOLUTION to compete in the LCV and the passenger car market is that ZEN has to firstly do a SWOT analysis and use their strengths to differentiate their product.

* They were the first to introduce the product in the market.

* They have a very good export platform

* Advantages of the radial tyres above the conventional tyres

* Growth in the economy and the automobile sector

Apart from these few strengths they have to attract the price sensitive customers and to do this they have to segregate their product in 2 levels. The up market or the premium range and a low market or the economic range. In this way they can attract the customers that are ready to pay a little extra or almost the same price as the conventional tyres and get the added benefits that is offered by radial tyres. Zen also has to convince the OEMs to supply radial tyres as factory fitted tyres. They have to explain them the safety parameters associated with radial tyres and how they are fuel efficient. Once the OEMs start using radial tyres the demand for them would eventually increase to two folds or more.

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