Strategic marketing of TRENCO

Résumé du document

TRENCO is situated in a particular context. Main actor during almost 50 years in Egypt, the company was able to handle private and public markets. Being the principal interlocutor with the Egyptian Armed Force and the general public sector, TRENCO profited from a great portfolio of clients. Furthermore, private car assemblers and automotive services played as a security of sales, at least until the introduction of PIRELLI in 1999 as the first competitor with a good awareness.

But TRENCO passed through difficulties. In 2010, the company went to bankruptcy (TRENCO accumulated losses exceeded 11 times its paid-in capital). Regarding to the new competitors that entered into the market (mostly Chinese companies) TRENCO hasn't been able to handle the competition. Of course, the price war was a main factor but the brand positioning of TRENCO was not optimal. The culture of TRENCO was quite idyllic: “Exceed customers' expectations - Deliver value - the best service and the most reliable tires - Being a Responsible Corporate…” We can see here a first problem of positioning which we will analyze after.

Competition
As we said before, the first competitor that changed the market in Egypt was PIRELLI which bought out shares of Alexandria Tires Company (ATC Inc.) the second Egyptian tire manufacturer, and brought Italian standard qualities to ATC Inc. TRENCO has been impacted from this alliance and started to lose market shares.

When imported brand, mostly from Asia, came to Egypt (as KUMHO, TIREX, PIRELLI-Asia, MICHELIN-Asia, and BRIDGESTONE) TRENCO faced a strong competition that leads the company to a very difficult situation.

Extraits

[...] The different Marketing Mix Strategies for TRENCO. This includes the Product, Price, Marketing Communications, and Distribution Strategies. In this section we will offer one possible evolution of TRENCO's marketing mix and we will try to analyze the strengths and weaknesses that the company should have taken care of. Product TRENCO's products consist of both replacement and original equipment tires for cars, trucks etc. But there are too many products, or at least not enough differentiated. The result is confusion in the consumer mind. [...]

[...] Of course, the price war was a main factor but the brand positioning of TRENCO was not optimal. The culture of TRENCO was quite idyllic: “Exceed customers' expectations - Deliver value - the best service and the most reliable tires - Being a Responsible Corporate We can see here a first problem of positioning which we will analyze after. Competition As we said before, the first competitor that changed the market in Egypt was PIRELLI which bought out shares of Alexandria Tires Company (ATC Inc.) the second Egyptian tire manufacturer, and brought Italian standard qualities to ATC Inc. [...]

[...] But, when exporting became the first goal of the company, the volume of sales decreased dramatically certainly because of this lack in leveraging the brand awareness on the domestic market: Situation analysis So, we have here a company, for a long time a privileged actor in Egypt thanks to public contracts, but which didn't invest in a strategy of differentiation when competitors arrived on the market. The conclusion is a logic process from a non-identification of changes in the market to the collapse. If TRENCO should have use KPIs (Key performance indicators) they probably had identify their loss in market shares, furthermore wen Asian competition entered on the market. TRENCO was not well prepared to face an international competition. Portfolio analysis If we look at the portfolio analysis, TRENCO was quite well organized. The product, tires, was in the maturity phase of the product lifecycle. [...]

[...] So TRENCO developed licenses. Exclusive distribution agreement or partnership with a car assembler might have been a good solution to place products in a high value. Conclusion global tires and rubber market rebounded from market decline in 2009 to post a strong market growth of in 2010 generating total revenues of $ 124.7 billion”[1] TRENCO which was an Egyptian (government related) company has been bought out by the French Michelin because of its uncertain financial issues. The company went down because of a lack of innovation, with products but mostly because of their marketing strategy unchanged since 1956. [...]

[...] - The advertising was, to my mind, the key of the first TRENCO's weakness. Leads were numerous, for example: o Egyptian made products o Knowledge and field of expertise for African roads specificities o Partnership with the ministries, proof of quality TRENCO is manufacturing tires, so speaking of SBUs we can only identify one business unit even if the company developed several models. The question is how TRENCO considered its only source of revenue when the market situation changed? Using a GE's Matrix we can try to understand what the company was passing through: TRENCO was in good health before the arrival of PIRELLI. [...]