DALLAS-The tire industry has changed more in the last decade than during the previous 50 years combined, observed marketing consultant and National Tire Dealers & Retreaders Association past president Joe DePaolis.
``No wonder so many (independent tire dealers) are confused, frustrated and, yes, even disillusioned,'' said Mr. DePaolis, conducting a marketing seminar during the NTDRA's recent convention in Dallas.
Some of these confused dealers are taking over very successful businesses from family members, he explained. Some are former employees of another independent dealership and others were employees of a major tire supplier. ``Somehow, what seemed to work in those scenarios just isn't producing the same profitable operations we once enjoyed,'' said Mr. DePaolis, a 35-year veteran of the tire industry and the former president and CEO of Johnny Antonelli Tire Co. Inc., Rochester, N.Y.
``Some of us are threatened by the advent of the mass merchandisers, membership and discount clubs,'' he continued. ``We feel as though we can't compete.
``Yet many of us haven't the slightest idea of who their customers are and who our customers are and how to go about capitalizing on our strengths and their weaknesses.''
He then laid out a step-by-step ``mini-marketing program'' by which tire dealers may accomplish this important task.
Following are some of the highlights of Mr. DePaolis' 90-minute presentation.
Step 1: Define your store's marketing area. Your marketing area, he explained to dealers, will be where you obtain approximately 80 percent of your customers. It will vary according to whether you are in urban, suburban, rural or very rural surroundings.
In an urban area, your marketing area is likely to be within a three-mile radius of your store's location. For suburban communities, it is likely to be within a three- to five-mile radius; and in rural areas it may extend beyond a five-mile radius.
``These are guidelines only,'' he cautioned dealers. ``Use good common sense (taking into consideration) such topography as rivers, interstate highways and shopping malls etc.
To define your marking area, obtain a map that includes all streets and, hopefully, all the zip codes within the vicinity of your store. Mark your store's exact location using a colored marker or highlighter and plot out your store's marketing boundaries.
Next, draw four lines, each starting at your store, extending in four directions-north, east, south and west. Each line should extend to the outer boundary of your marketing area (three miles, five miles etc.)
Then draw a circle around the area representing your primary market. The result should look like four spokes of a wheel with your dealership's location at the center.
Next, sketch out more precise marketing area boundaries by examining zip codeareas and ``natural'' boundaries such as rivers, highways, lakes etc. Don't include zip codes that fall only slightly within the circle you have drawn, Mr. DePaolis advised.
Finally, mark in three to four of your largest competitors.
Step two: Establishing key demographic information.
``It is extremely helpful to know the potential for your marketing area in order to have a better understanding of what is out there,'' he told dealers.
This is a good point to discuss the difference between marketing and sales, he said. ``Many of us have been taught to `make the sale,' the rest will come. If you simply want to sell, then this is sage advice. However, if you want to manage your business, control your assets and increase your bottom line-then you must do some marketing.
``For (our purposes), it will suffice to know that selling is concentrating on the product we are attempting to sell. Whereas marketing is concentrating on the customer.
``Demographics is the body of information that takes us, as tire dealers, out of the selling mode and puts us into the managing mode, where we can better control our own destiny, growth, profits and assets.''
Among other things, demographics tell the dealer:
the number of motor vehicles registered in the company's marketing area;
the types and ages of vehicles registered;
who lives within that marketing area (not only who, but their ages, incomes, educations, numbers of vehicles per household, buying habits and much more).
``Can you imagine,'' Mr. DePaolis asked dealers, ``how your business would grow-both in revenues and profits-if you only knew the potential in your marketing area? Who your customers are? What they're driving? What's important to them? What inventory to carry and services to offer in order to draw them away from all those competitors that are frightening you now?''
Where can this information be obtained? To begin, he advised, contact your:
1) suppliers or vendors-many of whom can furnish much of this information and often on a ``no-charge'' basis;
2) Chamber of Commerce and regional development commission;
3) public utilities;
4) city planning commission;
5) Department of Motor Vehicles for the state, county etc.;
6) local newspaper circulation department;
7) radio and television stations;
8) public library; and
9) other county offices such as highway departments, tax divisions, and registration bureaus.
``Once you have this information, the next step is to determine how much business is going to your competition,'' Mr. DePaolis said.
Step three: Assessing your competition.
``You may be thinking: `Why do I care about my competition? I can't do much about them anyway,' '' he told dealers.
``In order to determine your own potential, you have to have a rough idea of what the competition is doing.
Also, this allows you to examine their strengths and weaknesses. In the process, you may discover a market niche that isn't being served, or you may save a lot of expense by discovering the market is saturated with a product or service you were thinking of adding.
``More often than not,'' Mr. DePaolis said, ``you will find the competition is not formidable and that you and your team can run with the best of them.''
``By shopping the competition-both by personal visits and telephone-you can gain some valuable ideas on what to do and what not to do in your business operations.
``Regardless of the reasons, you aren't likely to meet and beat the competition unless you know something about them,'' he advised dealers.
Mr. DePaolis gave seminar attendees a sample form listing various competitors by type (price club, mass merchandiser, tire dealership, company store, etc.) and having blank spaces in which they can write in such information as the location, number of service bays, brands carried, services offered and other remarks specific to each.
After completing this form, a dealer would have a good overview of his or her marketing area and a better conception of where and how their own business fits into the picture.
Editor's note: In the next installment, Mr. DePaolis explains how the dealer can set unit and dollar sales objectives for his or her tire and service operations.