Research Paper on Mexican Market in Tyre Industry

Introduction

Competitive analysis is described as the process of identifying your market competitors and evaluating their approaches to determine their weaknesses and strengths relative to your products and the services (Fleisher & Bensoussan, 2003). Collection and analysis of the strategic information of rival firms is a significant tactic that helps you know what your business competitors are doing to outweigh you in the market. The analysis gives you the ability to discern industry or foreign market trends and adapt to the competitor strategies. Knowing their market strategies assist you in competing favourably or entirely out-compete them. The paper provides a detailed description of the competitive analysis of the Mexican market in the tire industry to help Madras Rubber Factory enter the Mexican tire market.

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Tire production is directly proportional to the rate of vehicle production. Vehicle production in Mexico is growing at a high rate (Berry, Grilli & Lopez-de-Silanes, 1992). From statistics, the production of vehicles in Mexico grew at a compound annual growth rate (CAGR) of close to 6.7% between the years 2011-2015 giving a total Unit of 3.48 million in 2015. With this motorization rate of both the passenger and commercial vehicles, there is significant demand for tires in Mexico. On account of the increasing sales of vehicles, expanding the size of the car fleet and the rise in vehicle production in Mexico the tire market of the country is expected to go up during the 2015 - 2020. The increase in motorization in Mexico with an increase in tire demand is the first significant factor to be considered by Madras Rubber Factory before entering the foreign market.

Passenger's car is the dominating vehicle fleet in Mexico with a market share of more than 70% of the entire vehicle fleet with busses making the highest number. The commercial vehicles production and sales take a market share of 30% with the light commercial taking a more significant percentage than the heavy commercial (Mortimore, 1995). The vast passenger's fleet size production therefore makes the passenger car tire production and sales to dominate the market of the whole country. In that case, Madras Rubber Factory management should consider majoring on the production of the passenger car tires to compete favourably in this market.

From the report given by Mexico Tyre Market Forecast and Opportunities, 2020, it was noted that tire replacement market dominated with a market share of 60% in 2014. It is projected that the share of tyre replacement segment would continue growing up to the forecast period of 2020. In 2015 the same organization did research and gave a report projecting tyre growth from 2016-2021 at a CAGR of 10% (Dealer, 2015). The increase in market share of the tire in the 2015 report was attributed to the anticipated improvement of the OEMs production capabilities, high urbanization and increased infrastructural development (Gereffi, 1999). The same study confirmed that commercial passenger vehicles would continue dominating the market.

Mexico hosts six big tyre companies operating the country's domestic tyre manufacturing plants. They include Pirelli, Copper Tyre and Rubber Co., JK Tyre and Industries limited, Bridgestone's Americans Inc. and Continental AG (Haber, 1995). Yokohama, Michelin and Hankook import tyres that they also sell in Mexico. The importation shows that the demand of tire outweighs the production rate. Therefore, Madras Rubber Factory from India can join the market, work smart and compete favourably with the already established tire companies in Mexico. The major OEMs in Mexico are General Motors, Toyota, Nisan, Chrysler, Mercedes Benz, Fiat, MAN, Scania, Volkswagen Volvo, and Isuzu among others (Mexico, 2013). With almost all the passenger car and the above Original Equipment Manufactures the tyre market of the country is projected to increase in many of the coming years.

The major competitors who have taken the largest tyre market share in Mexico and worldwide are, Bridgestone America Inc., Michelin and Continental. The three major companies should keenly be checked by any tire company who wish to get into the Mexican tyre market. Therefore, before Madras Rubber Factory enters or establishes its company in Mexico, the management should closely monitor the competitor's strategies (Aulakh, & Teegen, 2000). The strategies used by Michelin Company are banking on the product differentiation to outsmart the competitors. They have also continued to promote other products like X One also known as "Super single" Truck tire; produce more energy efficient tires that some customers admire mostly (Hansen, Bertrand, Marshek & Hudson, 1989).They have also launched an improved Ultraflex technology that they are going to use in producing a better Axiobib agricultural tire. The company management is also revamping the marketing and distribution departments to improve productivity and sales. The company produces more of the passenger car tires and light truck tires that are mostly bought. The company also built a firm in Guanajuato in Mexico in 2008 which made it improve the production rate and sales. They have also opted to build others to help them meet the demand and have a surplus (Antun, Granados & Guarneros, 2010). The management is looking onto proper ways of reaching the customers and distribution centers quickly. On this, they have opted to improve the Nexus program they launched way back. By use of this program, the distribution centers give a short-term sales forecasts thus more sales outcome.

In 2008 the company suspended the development of the original equipment for the Uniroyal brand due to the price increase of the raw materials. This forms one of the thoughtful strategies that the company used to manage the competition in the market thus remaining one of the well-performing tyre industries (Malhotra & Berger, 2016). To improve its sales and the relationship between the customers the company has opted to offer credit cards through CarCareOne. They did this to their customers in 70 locations, and it helped them a great deal in doubling the dealerships. In the program, the dealers chose 12 months, six months or 90 days with no interest paid on the purchases they made at Michelin. The strategy made some of the expensive products of Michelin affordable for those who could not afford to buy them at ones. Such a fair and a well-calculated deal that made the company win more customers hence improved share of the market of Mexico.

On marketing, the company management used online sales tutorials which provided "Talking points." The method is being used by the dealers of Michelin to sell its products to potential buyers efficiently. Michelin Company also uses different advertisement modes to make their products known to customers. The company director through its marketing manager said that they are going to pump more on media (Baltes, 2015). The injected money was to be used in the expanding radio, television, online and print media to increase the advertisement of their products. The company also plans to expand campaigns and decisions targeting the gearheads, programming and favorite magazines. The company has kept on encouraging its dealerships to partner with clubs such as four-wheel-drive clubs with the aim of promoting selected outstanding trails in the USA. The firm also has increased its market share with OEMs trough joining new segments such as backhoes, combines, floaters and sprayers. Lastly the firm imports some unique products in Europe like Michelin Multibib 65 series tire which are used at given conditions and not provided by competitors.

The strategies taken by Bridgestone American Inc. to improve its production rate include expanding and upgrading most of its production machines. The company does yearly upgrade of its machinery through replacement of the outdated technologies for faster and efficient manufacturing (Gann, 1996). It also has the plan to upgrade its satellite plants and build more for maximum production. The company also chipped began sponsoring various popular sports teams financially and materially. It has sponsored South American club football, national hockey team among others who have marketed the company worldwide and also made frequent purchases from their company. The company has always remained very keen on marketing docket (Afeyan, Malek, Bufton, Ficici & Austin, 2007).They elect very competent and strong team leaders who can unite the whole team and stay ambassador of the company at any every moment. The company has built a network of sale points all over the USA and other parts of the world to help in maintaining the market share and the lead. The management has also opted to employ more workers mostly in the newly established and upgraded facilities. The new team forms majorly the marketing and sales who holds a significant section of the company.

On marketing, Bridgestone Company has majored on advertisements of its products on major televisions, worldwide radios, and national print media and online platforms. It encourages its employees to promote the company and its products on social media. The company has also developed brochures and company magazines which are sold at low prices or at times given for free to help advertise its products (Afeyan, Malek, Ficici & Austin, 2007).It also broadcasts at the screens of the sponsored teams which reach most of the prospect customers. The company has also taken to giving after sales services and rewards to people who have done lump sum purchase of their products. The company have made partnerships with several organizations who purchase on credit from them and pay at later dates. The partnership is an extended chain mode of marketing where each partner markets the Bridgestone company to sister companies (Upreti, 2018). This leads to a long chain customer development and maintenance. The company also makes quality and unique tire products from large treads to well-fitting and fashionable tires. The final strategy is pumping of more money in the production of passenger car tires which are in high demand but also produces calculated heavy commercial tires too.

Conclusion

In conclusion, the competitive analysis of the market trend and the demand for tire in Mexico and the world can be used by the management of Madras Rubber Factory to survive in the tire market of Mexico. The analysis of competition strategies employed by the two leading tire companies in Mexico is also a significant factor to help the company understand the strengths and weaknesses of the tire companies in Mexico. Most of the tire producing companies in Mexico major on marketing strategies, partnerships, advertisements, technology and quality of products to outdo others. The general market trend of Mexican tire production is more of passenger car tire production. The weakness lies in the rate of production of the heavy commercial fleet and special tires used at specific conditions of the environment. Therefore, Madras Rubber Factory can establish a market for special tires and commercial car tires and take advantage of (NAFTA). The NAFTA which allows free trade in North America would help them explore and dominate the outside markets with the unique tire products.

References

Afeyan, N. B., Malek, K. M., Bufton, N. J., Ficici, S. G., & Austin, H. A. (2007). U.S. Patent No. 7,177,851. Washington, DC: U.S. Patent and Trademark Office.

Antun, J. P., Lozano, A., Alarcon, R., Granados, F., & Guarneros, L. (2010). The physical distribution of goods in a megalopolis: Strategies for policies on the location of logistics facilities within the Central Region of Mexico. Procedia-Social and Behavioral Sciences, 2(...