Strategic Marketing Analysis: Michelin Fleet Solutions Case Study

This case study analyzes Michelin Fleet Solutions' strategic shift from selling tires to selling kilometers. The assignment addresses key questions: Michelin's Fleet Solution offer, the drivers behind this move, customer adoption, and the difficulties encountered in deploying the solution. It explores internal and external factors influencing the company's decisions, including market conditions, competitive pressures, and internal organizational challenges. The analysis examines why customers choose MFS, the obstacles Michelin faced in implementing its solution, and ultimately, provides a recommendation on whether Michelin should pursue, repackage, or abandon its solution offer. The study highlights the complexities of transitioning from a product-focused to a service-oriented business model, emphasizing the importance of understanding customer needs, managing internal resources, and adapting to market dynamics. The assignment concludes with a recommendation, based on a consultation, for the future of Michelin's solution offer, considering factors like training programs, customer understanding of outsourcing benefits, and the need for improved communication and financial investment.

Running head: STRATEGIC MARKETING
Strategic marketing
Name of student
Name of University
Author note

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Michelin Fleet Solutions: From Selling Tires to Selling Kilometres
1- What exactly is Michelin’s Fleet Solution offer? Shortly present MFS.
Michelin Fleet Solution mainly is associated with the selling of kilometres rather than
selling tires. The company sells premium tires for the buses and trucks and thus the tire
market consists of two market segments including the Original equipment segment and the
Replacement market segment. The Original equipment tires are used in the new vehicles and
also have been used by the truck manufacturing companies such as the Mercedes, Renault,
Iveco, etc. Michelin Fleet Solutions offer represents promoting the business model by the
company all across Europe to ensure focus on delivering best quality customers’ services and
assist them to drive the cars, rather than just prioritising on the selling of tires (Mullins et al.
2013). This ensures transformation of service delivery from just offering tires to selling
kilometres by providing the people with assistance about the industry and its offerings along
with the tires that can be used by them in their cars for travelling conveniently
(Michelintruck.com 2019). The MFS offerings include huge sized European fleets with more
than 200 vehicles and at the same time, managed the tire assets for a period of three to five
years.
This has been a major and unique approach by MFS to make the customers
understand the need to contract considering only a part of the fleet with MFS. This has
allowed the company to manage the equipment and machineries and at the same time,
facilitate outsourcing of tire management solutions, control the costs incurred during the
operations and processes and ensure consistent innovation all throughout the business
functioning. This has not only strengthened the relationship between Michelin Fleet Solutions
and the customers, but also has helped in influencing the major transport companies as well
as the new growing companies to understand the values and benefits that could be derived

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from making purchases of the Michelin tires (Proctor 2014). Not only the MFS offer allowed
for expanding the customer base, but also has enabled differentiation of the offerings from
the competitors within the concerned industry too.
The extensive assistance provided by Michelin Fleet solutions has also enabled taking
a specific amount of money from the customers on a monthly basis considering the amount of
distance that they travelled in terms of kilometres. The costs are associated with the kind of
tires used in their vehicles, which have been transformed into variable costs. The revenue is
generally made through optimisation of tire management activities, which has also helped n
controlling the costs associated with the management of tires (West, Ford and Ibrahim 2015).
This is a unique way as most of the other companies have charged money for selling material
and based on time. The risks within the industry are predicted at the earlier stages, based on
which, the monthly fees are charged from the customers, due to which, the offerings have
been easily differentiable from the competitors, which represents Michelin Fleet Solutions
offer(Michelintruck.com 2019).
2- Why should Michelin move toward solutions? Investigate internal and external
drivers.
The potential and condition of the market targeted by MFS are the two major external
drivers for Michelin Fleet Solutions to offer solutions and better customers’ services.
Michelins should move towards the solutions for the purpose of attaining competitive edge
over its competitors and at the same time, make an entry into the services for becoming more
profitable and even facilitate the relationships with customers (Chernev 2018). This has
resulted in service excellence and the expenditures are accurate and are being paid on the
basis of miles covered, further should reduce the risks associated with the fluctuations in cost
associated with the purchase of tires, damage rates, etc.

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The internal drivers also include forming a dedicated sales team that can strengthen the
workforce and ensure geographical expansion with the help of adopting new approaches to
service related operations. The service provider networks are strengthened for delivering
effective services and at the same time, support the fleet management processes at Michelin
Fleet Solutions with ease and effectiveness (McDONALD 2016). The workforce efficiency is
one of the critical factors that contributes to the business functioning and thus the employees
of the organisation are also placed in the transportation companies, which has also
contributed to the management of information system implementation and ensured
improvement of management operations too (Michelintruck.com 2019).
Michelin should move towards the solution because for the past few years, the profit
level has dipped to a large extent, which also affected the organizational ability and potential
of the sales force to sell the new solution offer conveniently (Payne and Frow 2014). There
were issues related to the contracting phase as well, due to which, management of fleet under
contract also incurred lesser amount of revenue. There have been other factors such as the
high upfront cost, increased cost of switching and higher dependence, which also made it
difficult for the company to offer solution and enhance the level of value and benefits offered
to the clients. Considering the external forces or factors, the distributors must be provided
with new roles and responsibilities to be handled by acting as service providers
(O'shaughnessy 2014).
3- Why would customers go ahead with MFS?
The customers go ahead with the MFS because they are not interested in signing the
contract, because of the immature market conditions and increased costs of switching and
upfront costs. The sales force has also found it difficult to interact with the clients and make
them know about the benefits and values that can be obtained. The customers are willing to

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go with the MFS solution because the company has offered energy efficient tire fleet
solutions that are customised by Michelin Fleet Solutions (Michelintruck.com 2019). With
the tire fleet solutions integrated in their vehicles, the customers would be able to save a lot of
cost as well as fuel consumption, furthermore allow for maintaining minimum cost of
covering the miles and ensure reducing the energy consumption as well. This could lead to
running of fleets and vehicles perfectly and at the same time, the longevity of tires would
increase and there should be reduced chances of risks and failures related to accidents (Ben
Slimane and Chaney 2015). With the company, being focused on optimisation of tires as well
as the structure of costs associate with the business functions and processes, the financial
implications would be overcome and a good amount of cost could be saved as well during the
production of tire fleet solutions though without making any compromise to the quality of
products and services delivered. The implementation of an information system should further
boost the selling and delivery processes, furthermore create scopes and opportunities for
improving the organisational performance along with monitoring the regrooving process,
retreading of tires produced by Michelin Fleet Solutions too (Kowalkowski et al. 2015).
4- What causes the difficulties encountered by Michelin in deploying its solution offer?
The company changed its functioning from just selling tires to selling kilometres by
focusing more on the management of customers’ services. There were issues surrounding the
management of sales force, management of risks and development of channel relationships
and it has also been found that the research and development activities are not void of errors.
The company was unable to make the customers knowledgeable about the values and benefits
of the offerings, due to which, there was lack of value proposition and also the internal
incentives and benefits were not aligned properly. The key performance indicators or KPIs
were also not up to the mark, which further created complexities and affected the sales
revenue generated by the organisation (Eggert et al. 2014). The geographic expansion had

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been poor and ineffective, which created further difficulties and made the organisation, i.e.,
MFS to remain unprofitable. A negative image of the organisation was also perceived due to
the higher emissions of CO2 while the competition within the industry further made it
difficult for Michelin Fleet Solutions to generate the expected level of revenue. The tires of
Michelin are designed in such a manner that it can support both regrooving and retreading
purposes and also last longer than the average tire life cycle (Wei, Zhu and Lin 2013).
Though this concept is appealing and noteworthy, still the processes associated with the
manufacturing and production were much difficult to integrate, which also might consume lot
of effort and excessive money as well (Michelintruck.com 2019).
The sales force also was incapable of showing the customers about the value and
benefits to be offered with the help of this solution by MFS. Due to this, the clients were
unable to understand why they should pay some extra money for the tire management
solutions and thus the entire solution process seemed very complex. The major fleets under
the contract also raised a lot of concerns due to the lack of optimisation of costs (Sempels and
Hoffmann 2013). The clients though are aware of the products and the solutions, but still they
are not willing to some extra for the extra value or benefit that could be brought with the
solution offered by MFS. The presence of rivalries such as Bridgestone and Goodyear further
contributed to the immense competition within the industry and made it difficult for the
company to sustain in the competitive marketplace with ease and efficiency
(Michelintruck.com 2019).
5- Would you recommend pursuing / repackaging / abandoning Michelin’s solution
offer?
The recommendations should be made on the basis of consultations made with the
involvement of organisational memebrs and by acquiring the ideas and opinions of the

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employees before making any effective decision in business. From the consultancy work, it
has been found that the results are much below the expectations and the profit level is also
unsatisfactory (Yusuf 2015). I personally recommend pursuing the Michelin’s solution offer
because nowadays, the training programs arranged at the workplace of the company have
assisted in making the business much better. From various evidences, it is also found the
customers have managed to understand about the advantages of outsourcing the tire
management solutions, which has also influenced their buying behaviours largely. The
communication lacked in certain areas, which could also be overcome with the adoption of
this solution offer, thereby result in implementing effective information systems that should
create convenience for the employees of MFS to foster better teamwork, coordination at work
and improvement of communication process too (Eggert et al. 2014).
Though there has been decline in sales in the replacement market, the coordination at
work would be essential while pursuing the Michelin’s solution offer and this would be
beneficial for achieving the sales force objectives and increase the tire management related
sales comprehensively. This would also bring operational excellence and at the same time,
allow the transportation and tire company to outsource their tire management solutions,
furthermore capitalise on the service providers along with staying competitive within the
marketplace much more easily. As stated by ISC, it was more of a marketing related issue
rather than any other issue, which also could be resolved with the management of
promotional techniques to raise awareness among the clients and make them remain inclined
with the brand effectively (Kowalkowski 2016). There is need to make investments by the
shareholders or investors, which can also enhance the working capital and allow the company
to improve the financial condition. As Michelin confronted multiple issues and barriers, the
adoption of new Michelin solution offer should define a new value proposition and at the
same time, facilitate both internal and external communication required by the company to

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hold a good position within the competitive marketplace. This would also allow for putting
focus on the production of high quality products and even prioritise on the research and
development activities, which should enable innovation and consistency in delivering the
right services and solutions to the customers. This would redefine the entire value
proposition, according to me, thus create more scopes and opportunities for Michelin to
remain profitable and at the same time, ensure consistency in growth and development
though extension of product line that could deliver better lifespan of the fleets and vehicles
along with lesser energy consumption and higher security related aspects.

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