Alpha Tyre Case
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Alpha Tyre Company
Case is intended to be a part of instruction material developed for teaching at a Marketing class in Business Schools. Alpha is not a real company – any resemblance to a real corporation is co-incidental. Case facts are for discussion only and are not intended to be a demonstrator of correct or incorrect handling of management situation.
Alpha Tyre Company (ALPHA) is engaged in the manufacture and sale of car tyres. Most of ALPHAs business is conducted primarily through the OE (Original Equipment) route, selling to automobile manufacturers such as Maruti, Hyundai, Tata, Honda, Toyota and Hindustan Motors. The company has a strong presence in the OE market and it wants to protect its dominance in this space. However, ALPHA is lagging behind in the replacement market with minimal brand recall in the market place.
In the overall tyre market, ALPHA has a small share since it specializes in car tyres only. The big Indian players in the market like MRF, CEAT and JK wield a wide range of tyres – for two-wheelers, three-wheelers, cars, utility vehicles, and commercial vehicles i.e. trucks and buses.
The companys new CEO, who has recently been brought in from a Consumer Durables company, fears that a low brand recall in the replacement market would adversely affect their OE market share and therefore wants to develop a growth strategy to expand the companys replacement market share.
The Marketing department at ALPHA did not have a consistent and researched understanding of what drove tyre sales and how customers went about buying car tyres. Past research findings by ALPHA on consumer preferences have been sketchy and market information has been collected on ad-hoc basis. There is no evidence of any extensive study conducted on consumers and most of the theories going around in the company are based on hunches and gut-feel. Various strategies were used in the past to reach the customer target groups. The tyre-dealers were targeted through a rigourous sales process along with target-based schemes. Mechanics and Car Service Stations were reached through direct schemes. Mass Media and PR were used to communicate with end users.
The Sales department has a different approach on what needs to be done in the replacement market – they believe that pushing the product with better dealer margins is the way to go and that the Marketing department is wasting time with Positioning and Brand Building.
The quality of tyres is judged, among other factors, on the wear rate of the tyre, which was measured with a calibration device after certain specified usage intervals. ALPHA has a modern tyre testing lab and most of their tyres compare well vis-à-vis their competition in lab tests and road tests conducted by the company.
To formulate a marketing strategy, Alpha