LOVELY PROFESSIONAL UNIVERSITY

Department Of Management

Report On Summer Training

“CHANNEL ENHANCEMENT”

SUBMITTED TO LOVELY PROFESSIONAL UNIVERSITY

In partial fulfillment of the

Requirements for the award of degree of

MBA International business

Under the guidance of: Submitted By:

REGIONAL MANAGER ASHISH PUNDIR

FEROZ KHAN 11106037

RQ1107A01

SUMMER INTERNSHIP REPORT

ON

CHANNEL ENHANCEMENT

For CEAT LTD.

Submitted toRegional Office, Ludhiana

Date:14th June 2012

Submitted By

Ashish pundir

Section RQ1107

Roll no. A01

MBA (I.B)

Declaration by The Organization

This is to certify that this project entitled “CHANNEL ENHANCEMENT” for CEAT LTD. ” submitted to CEAT Regional Office Ludhiana, done by Ashish Pundir is original work . This

work has been carried out as summer internship under my guidance from

1 june 2012” to “ 15th July 2012”

Place: Ludhiana

Date : 15th July 2012

Mr. Feroz Khan

Regional Manager

Ceat Ltd.

Ludhiana

Acknowledgement

The present work is an effort to throw some light on “Channel enhancement for Ceat Tyres”.

The work would not have been possible to come to the present shape without the able guidance,

supervision and help to me by number of people.

With deep sense of gratitude I acknowledged the encouragement and guidance received by my organizational guide Mr. Feroz Khan and other staff members.

I convey my he artful affection to all those people who helped and supported me during

the course, for completion of my Project Report.

Executive Summary

The objective of this project is to implement strategies to strengthen and expand the 2/3 wheeler distribution network, increase the Channel enhancement for CEAT LTD. in Rajpura.

The first part of report includes the overview of CEAT Ltd. and SWOT analysis, PORTER’s model so that we can find out the present market and knowledge of company and the tyre industry.

Table Of Contents

Title Page No.

Chapter One

1.1 CEAT’s Brief Profile……………………………………………………………6

1.2 SWOT ANALYSIS…………………………………………………………….. 10

1.3 PORTER’S MODEL……………………………………………………………12

Chapter Two: Expansion and Strengthening Of 2/3 Wheeler Dealer Channel

2.1 Objective…………………………………………………………………………13

2.2 Methodology used……………………………………………………………….14

2.3 Findings………………………………………………………………………….15

2.4 Data collection & analysis…………………………………………………………..16

Chapter Three

3.1 Observations/Conclusions………………………………………………………26

3.2 Suggestions and Alternatives…………………………………………………...27

3.3 Bibliography………………………………………………………………………31

Annexure……………………………………………………………….20

INTRODUCTION

Ceat Ltd, a part of the RPG Goenka group, is the second largest tyre manufacturer in the country

after MRF. Ceat manufactures truck & bus, passenger car, scooter and LCV tyres. The company

is a dominant player in the truck & bus and passenger car tyre segments with a market share of

14% and 17% respectively. In FY2000, Ceat did well to posting a 21%yoy sales growth in the

replacement market for truck & bus tyres. It is presently focusing on catering to the fast growing

passenger car and two-wheeler industry. Towards this, it is commissioning a new radial tyre

factory in June 2000.

Industry basics

Tyre industry is capital intensive and as capacities come in spurts, it leads to constant demand-supply imbalances and consequent cyclicality in prices. Variable cost is also very high, with raw materials forming nearly 70% of the costs. Profit margins are therefore thin. Production process is technology intensive and globally huge sums are invested in R&D. Tyre demand is a derived demand, dependent on the auto industry, both for OEM and replacement market. The major segments are Truck & Bus (T&B) tyres and car tyres. Value share of T&B segment is about 73%. This segment is highly competitive and margins are typically lower than in the car tyres segment

Replacement market forms the largest segment (about 58%), followed by OEM (about 22%).

Export accounts for about 15%. With global demand slowing down, there is a consolidation of

capacities through mergers etc. The domestic tyre industry broadly mirrors the market

characteristics of the global industry. However, due to rough road conditions, the more rugged,

suitable and cheaper cross ply tyres are in vogue. Consumption of natural rubber is, therefore,

proportionately higher. The government has decided to impose 10% safeguard duty on carbon

black and hiking benchmark prices of natural rubber (25-30% of sales) in February 1999. Its

impact was felt only to an extent as prices of these commodities are ruling at historical lows in

the global market.

Ceat is part of the RPG group, which is diversified, with presence in major sectors like power,

fertilizers, pharmaceuticals, tyres, computer, telecom, financial services etc. The group stumbled

trying to grow via diverse platforms and has many companies that have turned sick. But lately

the strategy seems to be one of restructuring and consolidation. The group is divided into 4 broad

areas - rubber & allied products, power, electronics & telecom and chemicals. Ceat’s investments

in its subsidiaries have also come down this fiscal which is a sign of prudence on the

management. BUSINESS DESCRIPTION

Ceat is a manufacturing company, which produces rubber, tire, nylon fabric products, nylon tire

yarn, glass fiber, automotive flaps, filament mats and other rubber products for the automotive

markets in India. The company has a well established research and development center that

evaluates the application and development of new raw materials, compounds and tire sizes. It

produces tires for two and three wheeled vehicles, passenger cars, LCVs, trucks and buses. Ceat

exports to almost 50 countries, with the US being the largest destination

The company also provides investment financial services through Meteoric Industrial Finance

and Atlantic Holdings. Automotive tire sales account for around 90% of revenues, automotive

tubes account for about 8% and the remaining revenues come from other non-core operations.

The company is pursuing a strategic initiative of intensifying outsourcing to expand its product

range and increase production volumes. Ceat has an

agreement with Pirelli of Italy for outsourcing radial tires which are being marketed under the

CEAT Spider Radials brand name.

CEAT INDIA

Ceat Limited is a manufacturer of tires in India. Automotive tires comprise the largest part of the

Company's revenue, however it also produces tire flaps, rubber tubing and nylon thread. The

Company also offers financial services through Ceat Financial Services Limited, including hire

purchase, office equipment finance, container and equipment/infrastructure leasing and money

market operations.

History

CEAT stands for Cavi Electrici Affini Torino (Electrical Cables and Allied Products of

Turin).CEAT International was first established in 1924 at Turino in Italy and manufactured

cables for telephones and railwayIn 1958, CEAT came to India, and CEAT Tyres of India Ltd

was established in collaboration with the TATA Group.In 1982, the RPG Group took over CEAT

Tyres of India, and in 1990, renamed the company CEAT Ltd.

LITERATURE REVIEW

Ceat Ltd, a part of the RPG Goenka group, is the second largest tyre manufacturer in the country

after MRF. Ceat manufactures truck & bus, passenger car, scooter and LCV tyres. The company

is a dominant player in the truck & bus and passenger car tyre segments with a market share of

14% and 17% respectively. In FY2000, Ceat did well to posting a 21%yoy sales growth in the

replacement market for truck & bus tyres. It is presently focusing oncatering to the fast growing

passenger car and two- wheeler industry. Towards this, it is commissioning a new radial tyre

factory in June 2000.

EXPORTS COUNTRIES

CEAT has three manufacturing plants - Mumbai (Bhandup), Nasik & Sri Lanka. The company currently exports tyres to nearly 110 countries across USA, Europe, Africa & other parts of Asia.

It exports to over 110 countries across the world. In April 2007, the de-merger of its investment business to a separate investment and finance company was approved. CEAT is the only tyre company to be awarded the ISO/TS 16949:2002 certification.

Cricket rating

CEAT has also introduced the CCR Best Bowler, CCR Best Batsman, CCR Best Cricketer and CCR Best Cricket Team as well as CEAT Under 19 & T20 ratings. CEAT Cricket Ratings (CCR) was formed in 1995. It was the first International Cricket Rating System to reward and recognize the performances on annual basis.

VISION & MISSION

“CEAT will each time every time provide Total Customer Satisfaction through products and services of highest quality and reliability.

CEAT will nurture an exciting and challenging working environment embedded with fairness and free, frank exchange of views.”

SWOT ANALYSIS

Strengths

Good Brand Equity. Reach of the product is good.

Products have required accreditations. 4.50.10 is in good demand Brand Perception similar to M.R.F. Claim approval or rejection at authorized distributors have reduced the problems of

customers to a great extent. New Distributor policy has increased the reach of the product. Lug-xl pro and Mile-xl pro have considerably increased the market share for CEAT and

have a good feedback. Ayushman (Tractor tyre) is in good demand. OE fitment has increased from before. Now Ceat is coming as OE in Mahindra, Hero

Honda, Suzuki and LML two wheelers. Heavy range of products.

Weaknesses

Not very popular in the international market

Delivery-staff need training.

Customer service staff needs training.

Resale value is less w.r.t. MRF

Dealership issues are increasing.

Joint leak is a major issue in truck segment.

18.4/15.30 (Combine Tyre) is not in demand in replacement market.

Increasing level of dissatisfaction amongst all employees and dealers.

Opportunities

Reduction of Chinese tyre from the market will give way for expansion of market share.

Could extend to overseas.

Could seek better supplier deals.

An applied research centre to create opportunities for developing techniques to

Provide value-added services.

New motorcycle patterns are required.

Brand Pull can be increased if quality and Brand equity are leveraged accurately.

OE fitment needs to be increased.

Lug-XL in 900.20 segment.Can leverage the support of RPG group industries for cross selling and branding

Threats

Vulnerable to reactive attack by major competitors.

Lack of infrastructure in rural areas could constrain investment.

High volume/low cost market is intensely competitive.

18.4/15.30 (combine tyre) market is dominated by MRF and GOODYEAR.

Point of sale material provided by other companies such as JK etc are dominating the market with

dealer satisfaction.

Credit period is less w.r.t. to BIRLA.

Companies with poor product quality and no brand image are penetrating the market with schemes

and incentives for dealers.(Ralco providing calenders and printed stationery in the name of the dealer.)

Industry Analysis - Porter's Model Competitor analysis

RESEARCH METHODOLOGY

I n t e r F i r m R i v a l r y : L o wT h e t y r e i n d u s t r y i n I n d i a

i s f a i r l y c o n c e n t r a t e d , w i t h t h e t o p e i g h t c o m p a n i e s a c c o u n ti n g

f o r m o r e t h a n 8 0 % o f t h e t o t a l p r o d u c ti o n o f t y r e s

PROBLEM DEFINITION:

Management Decision Problem:

Company want to increase its sales in the channel enhancement segment for that want to know potentiality of market and which strategies make them to sustain and expand in market ?

Management Research Problem

Measure the region market for Channel enhancement , which market factor effect on sales? And for that which marketing mix helps to improve sales in region? And how to manage channel?

Problem Definition:

In the market, the marketing research problem is to measure the current market and factor of market for marketing strategy.

Which factor will influence for sales?

Which Marketing strategy for sales in market?

Research Objective:

The objectives of present study are listed below:

(A) Primary Objectives:

To determine mind share and heart share. To compare the performance of the major market players with respect to their 4P’s. To determine position strategy.

RESEARCH METHODOLOGYResearch Methodology is the systematic design, collection, analysis and reporting of data and findings, relevant to appraisal specific personnel situation facing the company. Research Methodology describes the research procedure. This research procedure covers the following points

RESEARCH DESIGN

A research design is an overall framework of project that indicates what information to be collected from which sources and by which procedures.

Research design is the plan, structure, and strategy of investigation conceived so as to obtain answers to research questions and to control variance.

In this project I used Porter Five forces model for industry analysis and SWOT analysis to make Marketing strategy which fulfill research objective.

METHODOLOGY USED

For Expansion:

1. Meeting Tyre Dealers personally through cold calling in Rajpura and sirhind.

2. Generating new Leads by identifying and focusing on tyre dealers which have a similar distribution network.

For Strengthening:

Meeting and surveying all existing dealers in Rajpura and sirhind. To identify ongoing dealer issues and act accordingly.

Data collection Method:

I used primary data for my research work.

I used sample size of 35 for my research work

Findings:

Dealer is the key decision maker for the customer while deciding the brand. A high level of trading in the market has affected the roots of the market and has changed

the mindset of the dealers completely. CEAT has a good Brand Equity in the market.

Decreasing levels of satisfaction of the dealers because of trading, lower profit margins, lower claim approvals etc.

Rajpura:

There are 7 tyre dealers in this region. In this district the overall liking for CEAT is less and is on a decreasing trend.

Number of potential dealers in this market are two namely:

New Krishna Tyres Raj Tyre Service

Data collection & analysis

REPORT

From analysis of data collected from the market survey and finding, analyzing market through dealer’s views there are more result found.

Most preferred brand is MRF and profitable to the dealers also MRF is able to sell out there schemes effectively. There sells effectively reached because of strong mind share with customer.

Objectives

To compare the performance of the major market players with respect to their 4P’s. To determine position strategy

Data collection and Analysis:1) Most preferred brand in market : MRF

33%

22%5%10%

4%

14%12%

MRFApolloMichelionJKGoodyearCEATBridgestone

MRF preference is 33%, Apollo 22%, Ceat 14%, Bridgestone 12%, JK 10%, Michelion 5%, Goodyear 4%.

2) Most selling tyre in market

Car

Motorcycle

Scooter

Bus

Trucks

Tractors

0 5 10 15 20 25 30 35

Motorcycle 30, Car 22, Scooter 18, Truck 14, Bus11, Tractor 2.

Monthly purchase of nylon and redial tyres

Nylon 70%

Redial 30%

Demand of tyre in the market

Nylon 32%

Radial 16%

Position of claims

67% people says yes that company claims in tyre in time and 23% says no,

Company unable to provide claim on time.

3) Most profitable brand: MRF

76%

9%

6%6%

3%

Chart TitleMRFApolloCEATJKBridgestoneBirlaGoodyearMichelin

Reason of enhancement in sales is quality, brand name and service.

4) In market, How to promote CEAT tyres

58%

9%

24%

9%

promote ceat tyres

Print MediaElectronic mediaService CampConsumer meets other

Print media 58%

Service camp 24%

Electronic media 9%

Consumer meets 9%

5) Life of tyres according to dealers

20%

15%

13%14%

13%

13%12%

tyre life rating

MRFApolloCEATJKBridgestoneBirlaMichelin

6) Fuel Consumption

19%

16%

14%15%

12%

13%12%

Fuel consumption rating

MRFApolloCEATJKBridgestoneBirlaMichelin

7) Price factor

16%

14%

14%13%13%

14%

16%

price rating

MRFApolloCEATJKBridgestoneBirlaMichelin

8) Claim settlement

20%

14%

13%13%14%

13%

13%

claim settlement rating

MRFApolloCEATJKBridgestoneBirlaMichelin

9) Brand value

22%

17%

16%

2%

15%

15%

15%

brand Value rating

MRFApolloCEATJKBridgestoneBirlaMichelin

10) Casing value

casing value rating

MRFApolloCEATJKBridgestoneBirlaMichelin

11) Services

20%

15%

14%13%

13%

13%

12%

service rating

MRFApolloCEATJKBridgestoneBirlaMichelin

OBSERVATIONS

1. Industry in Punjab is not growing as per the company’s expected growth for sales.

2. over production adding to stress.

3. New dealers bring the ongoing rates lower in the market.

4. Strong distribution channel and accurate production and policies of M.R.F. w.r.t. CEAT.

5. Big dealers are becoming bigger and small dealers are reducing their collaboration with CEAT.

6. Brand awareness is not increasing since major part of the product is sold through wholesale.

7. Trading is not contributing to increase in product information, brand awareness, change in product quality, change in branding.

8. Company is not taking care of dealer issues and doesn’t have any clear cut policies against trading.

9. Increasing dissatisfaction amongst all channel partners including dealers and employees.

10. Brand pull is less.

11. Dealers are not informed about the new and improved quality of CEAT tyres.

12. Motorcycle tyres now come with fitted tube, strapes, unconditional warranty which has been done to remain ahead of the competition.

SUGGESTIONS

1. Product information should be provided accurately to every channel partner whether or not dealing with company directly.

2. Opening of new dealers should be planned according to location and counter fitment considerations.

3. All channel partners should grow with the company.4. Employee satisfaction levels should be taken care off as it directly affects the business.5. More branding should be done to increase brand pull.6. Visibility of CEAT should be increased by increasing the number of boards, hordings etc.7. Dealership issues should be resolved at the earliest as an unsatisfied dealer promotes

negative publicity for the company which is very difficult to remove.8. The USP of CEAT tyre i.e. its softness should be highlighted as a benefit.9. Involvement of customers should be increased by various techniques of e and m -

marketing.10. New patterns for in place of M-86 tyre is required.11. Employee and channel partner satisfaction levels should be increased.12. Point of Sale Materials such as key rings, pens, pen stands etc play a major role to

increase dealer satisfaction and should be provided.13. Dress code for employees. It creates an impact and identity.14. Schemes and targets should be well matched with available stock.15. Finding market niches and serving them accordingly: Price,  service,  convenience  and

technology are some of the niches in Indian market.16. Employee recognition is required.

Questionnaire

Name:

Mob No:

Firm Name:

Address

1. Are you a dealer ?a. Yes b. No

2. You are the dealer of which company?a. MRF ……………b. APOLLO ………….c. MICHELION ……………d. JK …………..e. GOOD YEAR ………………f. DUNLOP …………….g. CEAT ……………h. BRIDGESTONE …………

3. Which type of tyres you are selling?a. Car …………..b. Motorcycle …………..c. Scooter …………..d. Buses …………..e. Trucks …………..f. Tractor ……………

4. Please indicate the monthly purchase of cross-ply and Radial : Cross- Ply/Nylon__________ Radial _______

5. In which truck tyre more demand in market?a. Nylon ……….. b. Radial c. Both

6. Company provides you claim on time?a. Yes ………. B. No ………..

7. Motorcycle & scooter costumers are using which type of tyre?

a. Tube tyre b. Tubeless tyre c. Both

8. Which Brand is more profitable?

a. MRF b. Apollo c. CEAT d. JK e. Bridgestone f. Birla g. Goodyear h. Michelin

9. Why do you sell this brand?

a. Quality b. Price c. Brand Name d. Other reason

10. Which companies sell out scheme is effectively reached to customers?

a. MRF b. Apollo c. CEAT d. JK e. Bridgestone f. Birla g. Michelin

11. How to promote the CEAT Car radial tyre in the market?

a. Print media b. Electronic media c. Service Camp d. Consumer meets e.

Other

12. You are interested of take dealership of CEAT tyre?a. Yes b. No

13. Rate the following brands on the following features from 1 to 5 (5 being the highest):

Michelin MRF JK Ceat Birla Apollo Bridgestone

Tyre Life

Diesel Consumption

Price

Brand Value

Casing Value

Service

Claim

BIBLIOGRAPHY

1. www.visualsoftindia.com/journal.html [viewed 07/06/2012]

2. http://www.ceat.in/newsite/home.asp [viewed 06/09/2012]

3. http://www.ceat.in/newsite/aboutus/ceat-company-overview.asp [viewed 06/09/2012]

4. http://www.ceat.in/newsite/aboutus/ceat-vision-values.asp [viewed 06/09/2012]

5. http://www.ceat.in/newsite/aboutus/ceat-cricket-ratings.asp [viewed 06/09/2012]

6. http://www.ceat.in/newsite/aboutus/ceat-corporate-history.asp [viewed 06/10/2012]

7. http://www.rpggroup.com/#A [viewed 06/10/2012]

8. Bajpai Naval (2011), Business Research Methods, New Delhi: Pearson Publishers Ltd.,

pp. 1-139

9. Kotler, P. , Keller K.L, Koshy A., Jha M. (2007), Marketing Management, 12th Ed. New

Delhi: Pearson Publishers Ltd., pp. 48,86-90,487-494

10.