Marketing Planning in Tire Industry - Assignment Example

Marketing Planning Table of Contents Global tyre market 3 UK Sourcing: The list of source countries 3 The tyre retail sector in UK 4 Tyre sales over the internet 4 Macro Environment Analysis 4 Micro Environment Analysis 6 SWOT Analysis 7 Key areas of competitive advantage 8 GAP Analysis 9 Strategic recommendations 9 Assumptions about the future of the market place 9 Reference List 10 Global tyre market The tyre industry is beyond doubt a globally spread industry with numerous companies, spanning throughout the world. More than 160 tyre manufacturers operate internationally and spend over £1 billion a year for research and development purpose. Figure 1: The global tyre market (Source: Tyre Industry Federation, 2011) UK Sourcing: The list of source countries More than 300 brands of tyres are sold in the United Kingdom. These tyres are sourced from a number of countries in the world, who are widely known for having internationally recognized tire manufacturers. Figure 2: Countries exporting tyres to the UK (Source: Tyre Industry Federation, 2011) The tyre retail sector in UK There are around 3,000 tyre outlets in the United Kingdom, which specialize in tyre retailing and associated services. In addition, there are approximately 20,000 garages and other service outlets, which involve in selling of new tyres as a segment of a broader service offering. The whole industry combined employs near about 16,000 people. The tyre retail sector is also engaged in the sales of replacement tyres. The value of sales amounts to about £3.2 billion a year. Tyre sales over the internet Even though automobile tyre industry is an exuberant sector, which has witnessed an unprecedented growth over the past few years, concentration of internet retailers, often termed as e-retailers, remains quite small (3%). However, in the recent past, concentration of the same seems to be growing at a rapid rate with many players entering the already competitive market. With the scenarios presented above, it is quite clear that the competition that Guildford Tyres Co. Ltd. deals with is immense. They are tyre retail and automotive service specialist, who have been in service since 1967. It is a family owned and administered business, which has become the leading autonomous tyre specialist in the county of Surrey within the United Kingdom (Guildford Tyre Company, 2012a). The products sold by the company ranges from car tyres, 4x4 tyres, van tyres, cycle tyres, motorcycle tyres, wheels, brakes, batteries to shock absorbers (Guildford Tyre Company, 2012b). The services offered by the company includes tyre fitting, mobile tyre fitting, wheel alignment and servicing, puncture repairs, tyre wholesale and other associated services (Guildford Tyre Company, 2012c). Macro Environment Analysis Political analysis The political landscape of the UK is established in the ethos democracy and steady framework of governance, which ensures a certain degree of uniformity in its policies. After the world wars, the UK established itself as a major global force, which was stimulated by a swift economic development. One of the major contributors of this development was the tyre industry and it continues to be the same in the contemporary society. UK’s strong trade relationship with countries, such as, China, Thailand, South Korea and others, have provided them with reliable suppliers, who have been offering superior quality tyres to tyre retailers based in UK over the past few decades. Economic Analysis The UK is an immensely developed economy and is also known to have a favourable climate for investment. The sovereign state is widely known for its excellent infrastructure that is appropriate for conducting business. As far as tyre retail industry is concerned, there is a huge concentration of SMEs, who have benefited significantly from the infrastructures. The highly competitive economy has resulted in inception of superior quality tyre retailers whose mission and vision is to offer quality products and services to their customers. Social Analysis People living in the UK have a higher standard of living when compared to residents of other developed economies. The underlying reason pertaining to this fact is the solid economic growth, which has significantly enhanced the social infrastructure of the sovereign state. The purchasing power of residents of the United Kingdom is much higher than those of other countries. They can afford to pay extra in order to avail a superior quality of product. As far as the tyre retail sector is concerned, this can work in favour of those companies, who aim towards a niche market with a heavy concentration of wealthy buyers. Apart from that, it needs to be kept in mind that majority of residents in the UK owns a car and tend to upgrade their tyres frequently. This provides tyre retailers with an opportunity to achieve a wider customer base, making themselves stand apart in such a competitive market. Technology analysis The governments of the respective countries of the UK have been able to achieve noteworthy progress in the field of research and development. A lot of efforts have been made in order to boost the level of competitiveness in the technology sector. This has given rise to many e-retailers, who conduct trade over the internet. Such has also been a recent trend in the tyre industry, where more and more retailers are choosing to trade over the web as this is a perfect mode of reaching a greater customer base (Market Line, 2012). Micro Environment Analysis Porter’s five forces analysis for Guildford Tyre Co. Ltd. Figure 3: Porter’s five forces model (Source: Arora, 2013) Intensity of existing rivalry Relatively high competitions: This means there are higher numbers of firms who are competing for the same customers as well as resources. Rapid growth rate: At a time when the industry is developing rapidly and generating significant revenues, competitors are more likely to compete in order to distinguish themselves in front of their customers (Bennison and Hines, 2003; Bennison and Jones, 2002). The single and the most significant way to achieve growth in a rapidly growing industry is to steal market share from the competitors, thereby designing and offering unique products and services. Threat of new subsidiaries A greater number of substitute companies, offering the same products and services, mean that customers can easily choose other services and products appropriate to their needs. Threats from companies, such as, Tyre shopper.com, National tyres and auto care, blackcircles.com and other companies, who are engaged in online retailing of tyres at a cheaper rate than the rate available in the market. By doing so, these companies have been able to grab a wider base of customers and thus, pose a significant threat to tyre retailers, such as, Guildford Tyre Co. Ltd (Kennedy and Coughlan, 2006; Burt and Sparks, 2003). Bargaining power of buyers When customers appreciate a specific product they more often than not end up paying a higher price for the product. This affects the Tyre industry assignment positively. The original equipment manufacturers are in a strong position as far as the bargaining power of buyers is concerned. Bargaining power of suppliers A relatively low level of suppliers means that there are a higher number of suppliers with limited bargaining. It is widely known that volume of tyres supplied is a crucial factor for suppliers. At a time when suppliers rely on high volumes, they possess significantly less buying power. This is precisely because a producer can choose to reduce the volumes and hence, lower profits generated by the suppliers (Berman and Evans, 2001). Threat of new entrants The threat of new entrants in the UK tyre retail sector is relatively high, precisely because of the enhancement in the technology sector. More and more tyre retailing companies are going online in order to be able to offer their products and services to a larger customer base. By offering products and services at a much lower rate, they are being able to beat the competition in the market. SWOT Analysis Strength Wide range of products, which are unique and are appropriate to the needs of customers. Variety of services, such as, tyre fitting, mobile tyre fitting, wheel alignment and servicing, puncture repairs, tyre wholesale and other associated services. Greater degree of physical presence. Highly accessible to consumers. Weakness Not so well-known compared to its competitors. Restricted market share because of a competitive sector. Unavailability of online retailing services. Opportunities To expand its operations over the internet in order to gain a larger customer base. Larger brand awareness because of being in the list of top SMEs in the UK. So, the company could leverage on that. Threats High concentration of competitors. Availability of similar products and services in the market at discount. Economic recession. Key areas of competitive advantage Significant presence in the region of operation. Large variant of products and services. The products and services offered by the company are highly unique and are designed in order to suit the needs of customers. Seasonal offers associated with products and services. GAP Analysis Although Guildford Tyres Co. Ltd has a significant local presence, the company has not been able to achieve the level of customer base as anticipated. This is precisely because the company does not have any interface over the internet, whereby they can sell their products and services to customers. By not doing so till date, the company has lost a significant proportion of customers, even though they offer their products and services at discounted rate. The reason behind this is the fact that consumers, after choosing their product, would have to come down to one of the service centres of the company in order to get the desired product installed. However, if the company expands over the internet, they can provide the same support to customers without causing much inconvenience to them and at the same time, can serve a wider customer base (Hunt, 2014). Strategic recommendations Apart from an online interface for selling their products and services, the company can also develop a smart phone application, which would keep their customers updated about every discount and offers available on their products. In addition, the application would also serve as an alert for their customers, reminding them of any services or monitoring to be done on any peripherals of the automobile. With the advent of technology, this strategy could prove to be an USP of the company, thereby fetching them a greater number of satisfied as well as potential customers (Appiah-Adu and Singh, 1998; Bates, 1995). Assumptions about the future of the market place It is assumed that the market for tyres will continue to grow at a rapid rate, like, that in the present scenario. The new entrants in the market will pose a big threat to existing players as the new entrants would be very aggressive in their marketing strategies, which will be aimed at making companies stand apart in the market. With enhancement of technology, availing products and services would become easier for consumers. Moreover, escalating competition will obviously bring down the price of products and services being offered as well as will enhance the quality of the same (Direct Marketing News, 2001). Reference List Appiah-Adu, K. and Singh, S., 1998. Customer orientation and performance: A study of SMEs. Management Decisions, 36(6), pp. 385-394. Arora, P., 2013. Porters 5 forces. [online] Available at: [Accessed 19 February 2014]. Bates, T., 1995. Analysis of survival rates among franchise and independent small business startups. Journal of Small Business Management, 33(2), pp. 26-36. Bennison, D. and Hines, T., 2003. Retailing for communities: issues of inclusion and exclusion. International Journal of Retail & Distribution Management, Vol. 31, No. 8, pp. 385-388. Bennison, D. and Jones, S., 2002. New strategies needed to reflect changing town centre activities. Urban Environment Today, 8, pp. 6-7. Berman, B. and Evans, J. R., 2001. Retail Management: A Strategic Approach. 8th edn. New Jersey: Prentice Hall. Burt, S. and Sparks, L., 2003. E-commerce and the retail process: A review. Journal of Retailing and Consumer Services, 10, pp. 275-286. Direct Marketing News, 2001. E-Retailing Benefits Both Consumers and Marketers. [online] Available at: [Accessed 19 February 2014]. Guildford Tyre Company, 2012a. Company Information. [online] Available at: [Accessed 19 February 2014]. Guildford Tyre Company, 2012b. Products. [online] Available at: [Accessed 19 February 2014]. Guildford Tyre Company, 2012c. Services. [online] Available at: [Accessed 19 February 2014]. Hunt, J., 2014. Advantages & Disadvantages of eCommerce Retailing. [online] Available at: [Accessed 19 February 2014]. Kennedy, A. and Coughlan, J., 2006. Online shopping portals: an option for traditional retailers? International Journal of Retail & Distribution Management, 34(7), pp. pp. 516-528. Market Line, 2012. PESTLE Analysis. Business Source Complete, pp. 13-31. Tyre Industry Federation, 2011. A guide to the UK tyre industry from manufacture to end of life reprocessing. [pdf] Tyre Industry Federation Available at: [Accessed 19 February 2014]. Read More