PARADISE ISLAND, Bahamas (January 28, 2000) — From a sales and marketing standpoint, 1999 proved "the best year ever" for Michelin Americas Small Tires, the passenger and light truck tire arm of Michelin North America Inc.
What´s more, 2000 promises to be even better, MAST officials told attendees at its annual customer meeting Jan. 10 in the Bahamas.
Pete Selleck, COO of MAST and executive vice president of Michelin North America, summed up the year saying: "Our supply chain is now healthy, we gained considerable market share and we exceeded our financial targets."
The year´s success also "tells another great story — a deeper story of behaving like partners, of trusting each other, of enlighted self-interest," Ken Kruithof, MAST vice president of sales for the eastern U.S., told dealers. "Our growth is the result of your growth."
While final totals for 1999 weren´t yet available, officials estimated that MAST´s sales rose about 11 percent overall. That would place the company´s share of the North American passenger and light truck market at about 22 percent, based on previously published figures.
MAST officials at the meeting used superlatives such as "tremendous" and "astonishingly successful" to describe a year in which the sales growth of nearly every one of the company´s brands substantially outpaced that of the industry at large.
The company said that, compared with average growth of 3.9 percent industrywide in shipments of passenger and light truck tires last year:
* Sales of Michelin-brand tires, in units, climbed 11 percent;
* BFGoodrich brand unit sales jumped 19 percent;
* Uniroyal sales advanced 9 percent; and
* Six of the company´s nine associate and private brands had increased sales, including five that leapt by more than 20 percent.
Meanwhile, MAST´s objectives in 2000 are no less ambitious. They call for achieving 10-percent growth in sales of the Michelin brand, 9 percent for BFG, and a whopping 17-percent increase in the case of Uniroyal and MAST´s associate and private brands.
"We expect to triple the rate of growth of the industry," Mr. Kruithof told dealers at the meeting.
MAST said it has budgeted a "double-digit" increase in its advertising and sales promotion expenditures to support this effort.
The company has achieved this growth with a direct customer base that is less than half the size it was in years past.
"Two years ago, we saw and accepted the fact that we couldn´t be everything for everybody," said Jean-Michel Guillon, MAST vice president of sales. "Since then, we´ve cut down our direct customer base by more than half."
As a result of that decision, officials said, MAST concentrated its marketing efforts on those distribution channels and individual accounts where its prospects for success were greatest — and the move paid off.
This strategy, in combination with an aggressive multi-brand sales program, has increased MAST´s share of the tire purchases made by those customers significantly, officials said.
Barry Downs, vice president of sales for the western U.S., told the audience that along with its strong dealer-customer base, MAST also now enjoys a 60- percent share of the wholesale club market, 30 percent of the mass merchandiser segment, 20 percent with the retail segment (which includes independent tire dealers) and 25 percent of the sales made to the wholesale distributor channel.
Unlike similar MAST gatherings in the recent past, company officials this year found little need to apologize to dealers for unacceptable fill rates and backorders.
"We made tremendous progress in 1999, achieving 89-percent fill rate for all our brands," said Mr. Guillon, whose comment was met with a round of applause from appreciative dealers.
"We can do better and achieve world-class (fill-rate) figures at about 95 percent, if we work with you on these challenging goals," he told dealers.
To accomplish that objective will require three major steps, all of which are based on trust and cooperation, Mr. Guillon told dealers.
The first step, he said, must be sharing information — specifically information relative to sales, inventory and forecasting.
The second step will require setting common goals in areas such as MAST´s share of account and volume, tire sales productivity by outlet, and inventory turns.
Mr. Guillon said the third necessary step will be integrating information systems. "Let´s build bridges electronically between our knowledge and yours. It´s going to cut costs like nothing else...," he told dealers.
The need for a greater partnership between MAST and its independent dealer customers was a common theme throughout the company´s four-hour presentation.
Mr. Selleck said that MAST, in an effort three years ago to help make the company´s corporate culture "truly customer-focused," initiated a survey process called Customer Value Analysis, which asks dealers and other customers to prioritize their needs and then rate the company´s performance in meeting those needs.
Results of the survey also are calculated to compare MAST´s performance with that of its competitors in areas such a product quality, price and service.
Mr. Selleck said the latest CVA survey shows MAST has achieved considerable progress in some areas since the process first was carried out in 1996.
However, he said MAST´s initial scores three years ago left a lot of room for improvement.
"In 1996, while we were strong in product quality, we were rated poorly in service quality and very poorly in price," he said. "At that time, we set some targets (as to) where we wanted to go in improving our scores in 1999. We (not only) wanted to maintain our product quality leadership, but reach parity with our competitors in service quality, and make significant improvement in the pricing areas.
"Here´s how we did," he told dealers, referring to the company´s 1999 results: "We virtually hit the target we set in service quality. We made tremendous progress in the pricing area. And we doubled our product quality leadership over our competition."
Mr. Selleck said the one performance area in which the company´s survey rating has decreased since 1996 was fill-rate. MAST´s rating in regard to fill-rate "hit rock bottom" in 1998, he said, apparently reflecting the period immediately following a strike at the company´s Fort Wayne, Ind., tire plant. And while the company´s rating showed some improvement in the 1999 survey, it still leaves room for improvement, he added.
One reason for the company´s low 1999 rating, Mr. Selleck said, may have been that the annual survey is conducted during the first quarter of the year. Thus this latest score was based on conditions that occured during the first three months of last year when tire supplies still were affected by the strike.
"As we launch the CVA survey this year, I´m anxiously awaiting your verdict on all these areas, especially the fill-rate area," Mr. Selleck told dealers.