1 CAPITOL 1 Founded six years ago, TOFAN GROUP Corporation started its activity by selling tires spare parts

and accessories for all kinds of motor vehicles. Through its wide range of products TOFAN GROUP Corporation addresses to clients from transportation companies to motor shops, gas stations and vulcanization centers. In only three years (1993-1996) TOFAN GROUP Corporation managed not only to expand its distribution network on a national level, founding 40 county branches, but also to accomplish some important goals concerning tire field. Though, in June 1995 it was inaugurated TOFAN RECAP, a top technology unit for retreading commercial tires, having an annual production capacity of 70000 tires, using the latest specialized cold technology and also the well known warm technology. The whole production process is being actively overseen by a modern nondestructive ultrasounds control system. At the beginning of 1996, TOFAN GROUP Corporation purchased the majority share-stock of Danubiana Company; a new program for modernization of the technology and range of agriculture and truck tires was started, based on a better relationship with all customers. In 1997 new entrances in the TOFAN's family: "VICTORIA" - Floreti and "SILVANIA" - Zalu, in the privatization process by acquisition of the major share-stock. SILVANIA S.A., placed industrial area of Zalu - strongly developed in the last years, is one of the most important tire producers from Romania. Founded in the industrial boom period, SILVANIA S.A has been specialized in the manufacture of a wide range of tire flaps and of the according inner tubes. It is the only company in Romania that manufactures all steel tubeless tires. By this stage TOFAN GROUP Corporation became the most important Romanian tire producer, covering the largest range of tires: from passenger cars to trucks and tractors. $100 million modernization program was extended in order to reach new quality performance and new markets for tires. On a long term, of course, there are necessary other major investments concerning the new technology and modeling production depending on the market demand, taking into account the better competition from strong world producers which invests a lot in SE Europe. Having now more than 9000 permanent clients and production capacities that cover more than 85% of national market, TOFAN GROUP Corporation has developed a strong commercial network and also its own transport company TRANS.

2 Expanding its area of preoccupation TOFAN GROUP Corporation founded in 1994 an Romanian - American Company RDT SYSTEMS S.A., which has as activity purpose RDS services supply - traffic information transmission, dates transmission; radio paging on a national level, achievement and installation of the security complex systems, import-export and distribution of telecommunication equipment. In order to confirm the company's progress, in June 1997, financial group NOMURA joined TOFAN GROUP Corporation with an investment of $100 million; this was the biggest investment of foreign capital in Romanian private field.

3 CAPITOL 2 A. Domestic market In order to sell the tires, TOFAN GROUP Corporation had to choose distribution channels, to establish the prices, to sell, to finance transactions, to organize storing and dispatch of merchandises, to serve the clients. Concerning the market requirements, the consumers demand has been identified, potential buyers have been localized and then the company had to choose the most wanted tires and theirs distribution channels. The main products of TOFAN GROUP Corporation and required by the consumers are Victoria and Danubiana brand, made in Romania. The development of tires production inside TOFAN GROUP Corporation is influenced a lot by trucks and tractors industry from our country, because this industry consumes between 40% of trucks tire production, made by Danubiana and Victoria and 60% of tractors tire production. The improvement of car production-Dacia and Daewoo- had a major contribution for the development of tires production for "first equipment" and as a result the import is eliminated. In these conditions, TOFAN GROUP Corporation has in view the promotion of a strategy for the increase of market activity volume, the demand being net superior to tires offer. Concerning the distribution network, TOFAN GROUP Corporation chose the most efficient option. The sales are made directly to the final consumers, being founded, in time, 40 branches, distribution centers, with possibilities of adjustment taking into account the market structural changes and the economical conditions, in the same number of counties, from our country. The main internal consumers or dealers of tires with whom TOFAN GROUP Corporation has sales agreement contracts are: ROMAN S.A Brasov; TRACTORUL Brasov; CASTRUM Corporation S.A.; ROMEDIL '95 Construct S.A., etc. B. International market A feature of the export made by TOFAN GROUP Corporation is the fact that an important part is executed through some long-term cooperation contracts, signed for 5 years, with the possibility of unlimited extension. Some foreign companies are mentioned above:

4 - Galaxy Tire CO. INS.-SUA, with 8 million USD value - Titan Europe Ltd - England, with 16 million USD value - Nokian Tires Ltd - Finland, with 3 million USD value As a result of these export cooperation activities, a value of 39 million USD is achieved in every year. Another topic is direct export, which is made for many clients all over the world. In the top are mentioned the following countries: Germany, England, Italy, Egypt, France, and USA. A basic part of the supply system is the import activity. The import volume is nearly 36 million USD annual only for raw materials, volume which is going to grow annual with the value of investments made for technology program. In the end of 1997, TOFAN GROUP Corporation achieved over 1000 billions lei turnover, with 8 billions lei gross profit; being situated in the top ten companies from Romania. In 1998 it was achieved a turnover of 1600 billion lei, with a profit of 50 billions lei.

5 CAPITOL 3 The number of different brands in a very large range of type-dimensions and of construction, which is based on the knowledge and experience of TOFAN GROUP experts characterize tires production of the group factories. The technology of tire production is based on a specific conception of cars construction industry, whose content and way of achievement must be known by those people who deal with marketing activities and tire sales. Concerning the market dynamics TOFAN GROUP Corporation has a strategy based on the increase of market activity volume. Concerning the market structure TOFAN GROUP Corporation has a differentiated strategy. An important aspect of this activity is the diversification of production, having as a main purpose to accomplish the technical features and performances realized by very well known firms in this industrial area and also to increase the competitiveness of tires in order to satisfy internal and external demands. So, TOFAN GROUP Corporation produces and sales the entire range of tires for cars, trucks, buses, tractors and agricultural equipment; now, Danubiana and Victoria tires companies produce 178 typedimensions of tires in 369 constructive alternatives. In order to show differentiated strategy adopted by TOFAN GROUP Corporation, are presented above the large range of tires, classified according to the way of use: - First group - tires for cars (Danubiana and Victoria) - Second group - tires for trucks, trolleys, buses and technological equipment (Danubiana and Victoria) - Third group - tires for autotractors front wheel (Danubiana) - Fourth group - tires for autotractors back wheel (Danubiana). The differentiation of tires is made taking into account the area of use (tourism, agriculture, etc) and also the roads on which the vehicles using the tires are driven and activities performed by these vehicles. Distribution activities for tires are organized in branches, planned on area structures, which involves a number of branches in a territorial zone. This structure presents a lot of advantages: - Permanent contact with consumers - A large sale availability - Each distributor has a well-defined activity area - Reduced transport expenses

6 Sales are made: 1. directly, to the consumer 2. by middle-men, which take the tires as agents, wholesale dealers and retailers. 3. by middle-men on commission: dealers, business men, producers' agents Concerning the market changes TOFAN GROUP Corporation has an active strategy. TOFAN GROUP Corporation is eager to develop new products in order to satisfy as well as possible customer's needs. Concerning the strategy about the market exigencies TOFAN GROUP Corporation adopted high quality requirement. In time, it was necessary the standardization of tires. For that purpose appeared International Regulations, which contain the technical and functional features (for instance DOT - Transport Department USA; ISO - International Standardization Organization; the Regulation EEC 54 - ONU). TOFAN GROUP Corporation is registered to DOT and joined EEC - ONU Regulation. As a result, export demand is getting bigger and bigger - for instance since 1996 over 70% of tractor tires production are exported every month. The big investments in technology and quality control allowed TOFAN GROUP Corporation to assure two years warranty for all the cars and truck tires and three years for agriculture tires. The Military Authority recognized quality level of all factories production and TOFAN GROUP became the official supplier for all military units in Romania. Concerning the competition level the strategy adopted by TOFAN GROUP is an offensive one. TOFAN GROUP has a well-structured situation of sales evolution which offer the possibility to act quickly in order to identify the typodimensions and the reasons that leaded to deviations, the areas and branches left behind, the buyers who didn't take the quantities allocated, the typodimensions and profiles of tires with slow sale and remain in stock. The estimation of sale possibility on areas and territorial branches is a continuous problem because the areas potential is always in change and is connected to evolution of the users' buying power and the area of sale.

7 An indicator of TOFAN's position on Romanian market is the penetration degree, calculated as sales volume divided to total sales volume on that market (area, branch).

8 CAPITOL 4 ADVERTISING CAMPAIGN At the end of 1997, TOFAN GROUP launched a national advertising campaign for sailing AUTOMAXIMA 2000 tires with the new brand MONTANA - high quality speed tire - offered with lower prices, which increased the number of clients. The number of distributors increased to 1800 companies and the sales volume to nearly 60 milliard lei annual. TOFAN GROUP knows what clients buy and, as a result, to plan what typodimensions must be produced and where to be distributed to. Production, marketing, sales, statistics, expenses, modernization, changes are all submitted to one slogan: LET`S PUT ROMANIA ON WHEELS! A team from Market Department is in charge with the prestige and performances of TOFAN GROUP, the image and advertisement of the company. Using advertisement, TOFAN GROUP became a permanent presence in mass media, with commercials in the important newspapers, on TV and radio. In order to inform the consumers, there have been distributed catalogues with informations and dates about TOFAN GROUP and its distributors network. Direct advertisement, with materials sent by mail, and also posters and exterior panels have an important utility. The presence of TOFAN GROUP at a most important fairs and exhibitions, organized in Bucharest or in the country (TIB '96, '97, '98, INDAGRA '97, '98), but also abroad were actions with obvious results in sales promotion. After AUTOMAXIMA 2000, in 1998 a new specialized program was launched AGROMAXIMA - dedicated to end-users from villages or agricultural companies. Implementation of new technologies made possible: - the expanding of cars tire range to higher speed tires, 4x4 tires (MONTANA GLADIATOR); - the modernization of truck tires range in "all steel" series; - new tubeless tires on 70'' range for agricultural use; - new low series of tires for truck and bus; This program is very helpful for small agricultural producers from Romania. TOFAN GROUP sponsored a lot of activities in different areas (for instance TOFAN Theatre and Film Foundation with successful shows all over the world, the reward of the most important artistical personalities.

9 Recently, TOFAN GROUP has changed its activity through North-East Press Group, which owns radio and TV stations, newspapers and magazines.

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Marketing strategy at TOFAN GRUP S.A. CUPRINS CAPITOL 1 CAPITOL 2 CAPITOL 3 CAPITOL 4