In launching its first line of luxury tyres, MRF is banking on the familiarity that it has built with consumers and on its partnership with cricket to extend its equity to a new brand.
T E Narasimhan reports.
For as long as one can remember, MRF has been associated with cricketers and cricket bats and the muscle man holding up a tyre in its logo. Now, as it launches its first line of luxury tyres called Perfinza, the company is banking on the familiarity that it has built with consumers over the years and on its partnership with cricket to extend its equity to a new brand among a new category of consumers.
However, given that the luxury car market in India is barely 1.5 per cent of the branded passenger car segment, the biggest challenge will be to find enough elbow room to steer the brand around.
MRF believes that there is a market for luxury tyres, especially as penetration of cars in the country goes up.
In fact, this has led to increased investment by all tyre companies. During 2014-17, the tyre industry invested over ₹11,500 crore in green and brownfield expansions.
MRF chairman and managing director K M Mammen says, "With competition becoming more intense, MRF will focus on constantly improving product superiority, widening its distribution network and ensuring brand dominance across all segments."
Hence, the leap into the luxury category.
As a first step, MRF is working to create a luxury profile for the new brand, creating an identity that is distinct from the mass appeal that it has built for the rest of its portfolio.
It has appointed South African cricketer A B de Villiers, who has been its brand ambassador in the past too, as global brand ambassador for Perfinza.
De Villiers, the company says, has global appeal. Besides he embodies what the brand wants to say about itself; that it is a global product, at home in India.
AB de Villiers, known for his skills with the bat and athleticism on the field, is a key member of the Royal Challengers Bangalore team in the Indian Premier League (IPL).
Perfinza, the company says, is the first tyre made by an Indian company to be approved by a leading global luxury car manufacturer, Mercedes Benz has given its seal of approval for the tyre for its E-class vehicles.
MRF will rely heavily on experiential branding for the new product, Koshy K Varghese, executive vice president, marketing, MRF said.
"We are the only Indian company to manufacture luxury and premium tyres, till now this market has been dominated by multinationals," said Varghese.
He makes the case that as the only Indian brand on the block, the company is careful to get the image right. Even when it comes to sales points, the company said that the brand would be available in select stores and pushed aggressively through e-commerce.
The company is also taking a keen interest in customer engagement at the dealer level. It says that it is helping train the customer relationship and sales manpower at close to 275 outlets that will sell these products.
MRF, which started its journey making rubber balloons way back in 1946, is the largest tyre company in the country today with a turnover of over ₹15,000 crore, which is 30 per cent of the total tyre industry's turnover of around ₹50,000 crore.
The company claims it is number one in all the segments. It manufactures tyres for two-wheelers, cars, trucks, heavy vehicles, aircrafts, helicopters, Formula One cars, and others.
To stay ahead, the company said that it has been steadily putting its resources into research and development. The R&D spend has gone up by 250 per cent to ₹200 crore and; while the spending on branding and advertising in percentage terms remains the same at around 1.5 per cent, in absolute terms it has increased.
Last year, the company reported ₹15,000 crore as revenues, and it has set itself a target to increase the number to ₹22,000 crore by 2021, says Arun Mammen, vice chairman and managing director, MRF.
Varghese believes that the journey henceforth will draw hugely upon the brand equity that MRF has built over the years.
The brand has been extremely visible on account of its associations with sports, with cricket-endorsers and by being a part of marquee sporting events in the country. Even product experience has been a factor in building people's loyalty, not only advertisements said Varghese.
Marketing experts said that MRF has been wise in its choice of cricket and in the way it associates with cricketers.
MRF promotes its tyres as tough, reliable and high endurance by being a part of different sports and tournaments, rallies and by branding products like cricket bats used by some of the greatest batsmen said experts. The brand was endorsed by Sachin Tendulkar earlier, now Shikhar Dhawan, Virat Kohli and AB de Villiers are also among its brand ambassadors.
MRF is also involved with racing, karting, rallying and various other motorsport events.
By bringing its past associations to bear upon its latest brand extension, the company is hoping to build recall for a new name. And that is critical, say experts, because the biggest set of customers for the new brand is in the replacement market.
The replacement market accounts for nearly 70 per cent of MRF's sales. Varghese agrees and adds that the customer is going to come to them once in four-and-a-half to five years and the way to build the brand is to ensure that the experience and the image are a tight fit.