AKRON-Private brand tire marketers are continuing to feel the pinch from price-competitive associate brands, but many still believe they have an ``ace in the hole'': market exclusivity. ``It seems manufacturers have increased their activity dramatically'' in associate brand sales, acknowledged Artie Shields of Regul Tire & Rubber Co., a private brand marketer based in Lincolnton, N.C.
The tire makers that offer their own lines of value-priced tires often are the same firms who produce tires for private brand marketers. ``The people who manufacture the products dictate our pricing and programs. It's difficult to compete when the manufacturer names the price,'' Mr. Shields said.
Another concern of private branders is that manufacturers are saturating the market. ``They keep adding more lines,'' said Robert Burns of Dean Tire & Rubber Co., Louisville, Ky., and president of the Private Brand Group of the National Tire Dealers & Retreaders Association.
Continued encroachment by associate brands was the hot topic of discussion at this spring's meeting of the Private Brand Group, according to several participants-just as it was in 1994.
Cooper Tire & Rubber Co. created the Starfire associate brand last year to position between its Cooper flag brand and Mastercraft associate brand.
And other manufacturers con tinually update their existing brands with new sizes and lines.
Bridgestone/Firestone Inc.'s Dayton Tire division, for example, is introducing eight new lines under the Dayton and Road King associate brands this year and several more are planned for next year, according to John Vincent, national sales manager for the division.
``We have to constantly generate new product ideas to constantly differentiate between private brands and associate,'' he said.
Manufacturers traditionally position their associate brands between the higher-cost flag brands and the value-priced private brands. But the price differential is eroding in some areas, according to private branders.
``If (associate brands) get too close to private brand prices, we lose,'' Mr. Shields said.
``(Associate brand marketers) have to get business from somewhere, but they take it from private branders,'' Mr. Burns added.
But spokesmen for several tire makers claim that increased sales of their associate brand lines hasn't been infringing on their private brand production capacity. Rather, they said, both associate and private brand businesses are thriving.
``We believe the market is big enough; there are enough channels to support both (private and associate brands),'' said Don Salyers, vice president of sales and marketing for Kelly-Springfield Tire Co.
``We don't position our house brand against private brands,'' a Cooper spokesman said. ``We present our program to the dealers. We're not selling against anyone; we just sell our program.''
The ratio of sales between private brands and company brands ``has been 50-50, for as far back as 30 years,'' the Cooper spokesman added. ``We don't push for one or push for the other.''
Many private branders believe the associate brand business is increasingly infringing on their markets with comparable dealer support programs, competitive prices and combined shipments with flag brand orders. Still, exclusive territories is ``one of the most important things private brands have to offer,'' Mr. Burns said.
That feature has continued to attract dealers competing with mass merchandisers and discounters on price.
``If no one has Regul in town, then (our dealer) won't get compared with competitors,'' Mr. Shields said.
``House brands have not practiced exclusivity in the market as private brands have,'' he added. ``Private brands have hung on to it-it's a key thing. We can't lose that. If we do, we're in trouble.''
Though they many not formally offer exclusive territories, most of the large associate brand marketers are working on improving customer relations and providing dealer support programs to make their associate brands more attractive.
Kelly recently combined its Kelly brand and associate brand sales forces to enable closer customer contacts, eliminate duplication of efforts and cut costs.
But while the sales staffing has changed, Kelly intends to maintain its strategy of developing separate networks of dealers and wholesalers for its Kelly, Lee, Star, Monarch, Hallmark and Republic brands.
Kelly promotes its associate brands by highlighting the products' performance and the support services the company offers dealers, including a telemarketing group to respond to dealer requests, a nationwide tire warranty and inventory availability, according to Mr. Salyers.
The company doesn't offer exclusive markets but will assign ``areas of responsibility'' to selected dealers and distributors of Lee and Star brands, Mr. Salyers said.
He noted that both Kelly's associate and private brand businesses have grown at about the same rate the past five years.
Instead of competing with private brands in the retail market, the Cooper spokesman said the company highlights its dealer programs: advertising support, good credit terms, ability to order tires in small quantities, a wide array of tires ranging from premium to value-priced, personal sales representatives and ``one of the finer adjustment programs in the industry.''
The tire maker has separate sales units to handle its Cooper and Mastercraft lines. Each brand has an exclusive dealer network, but each network can also carry the Starfire line, he said.
Dayton Tire likewise maintains one sales force to market Dayton tires to retailers and Road King tires to wholesalers. Associate brands have been ``a significant source of growth'' since the Dayton Tire unit was formed in 1991, according to Mr. Vincent, who noted the company has increased its production schedule to seven days a week to meet growing demand.
While Dayton controls its own shipping program, it shares warehouse facilities with its parent company. Thus, a retailer ordering from a regional warehouse can have flag and associate brands shipped together.
Mr. Vincent said Dayton provides ``an overall better value'' than private brands, offering dealers a credit card program, field sales and marketing support, and point-of-purchase materials.
Its Dayton line also provides a higher profit margin for dealers, who can position Dayton above their private brand offerings, Mr. Vincent said.
Under its new ``Alliance'' program, introduced earlier this year, Michelin Americas Small Tires is making an effort to simplify dealings with its dealers, and help dealers concentrate on selling more Michelin, BFGoodrich, Kleber and Riken brands.
The company has one sales force to handle all flag and associate brands and a separate one to support its private brand business. ``Where feasible, all of our product lines can be shipped on the same truck,'' a spokesman said.
MAST does offer exclusive territories to its Cavalier, Kleber and Riken dealers. The company said it highlights the features and benefits of each brand as they are designed to meet the requirements of a particular market segment.