AKRON (June 5, 2000)—Private and associate brands have given dealers a smorgasbord of tires to offer consumers for nearly every size and application, from trendy performance tires to durable light truck tires.
But dealers still can experience holes in their product offerings when the manufacturers fail to supply enough of a private- or associate-brand lineup. One alternative is to seek a generic or "neutral" label to fill in the gaps.
Just take a walk through a shopping mall parking lot, noting how many vehicles sport so-called "no-name" tires, which often have nothing more than a size on the sidewall and no identifiable brand name or manufacturer.
Very loosely defined, generics are tires not connected to any brand name. Their purpose is to supplement existing branded lines or sizes to complete a line, said Phil Pacsi, director of consumer tires brand marketing at Bridgestone/Firestone Tire Sales Co.
These tires can wear obscure labels because they´re not promoted either by the tire makers or private branders. Often, they´re available in quantities too small to make up a percentage point in sales.
But these "fill-ins" are advantageous to dealers because they offer marketing flexibility and some exclusivity, said Dan King, director of marketing and corporate sales for Yokohama Tire Corp.
In a lineup that includes major and "sub-brands," neutral brands give consumers more choice in price points, Mr. King said. And generic tires can provide dealers with extended line or size coverage, Mr. Pacsi said.
He noted that dealers´ reputations will determine their success in selling generic products. Retailers successful at selling private and associate brands, he said, usually can convince a consumer who isn´t brand or technology conscious to buy a neutral label.
Pricing for neutral brands generally is comparable with associate brands, Mr. Pacsi said.
Generics, like private brands, also offer a dealer the benefit of being the only retailer in town who carries that tire, Mr. King said. Hence, consumers can´t come in with a price quote from another store on that product.
However, Mr. King admitted that because neutral labels are fillers, dealers can place them only into one category instead of having a passenger, performance and light truck tire for the same brand.
"(Neutrals are) generally not as popular as being able to pick from a full associate (brand) lineup," he said.
Yokohama offers its dealers one generic label—Allegiance IV—only for the 60,000-mile passenger category.
"Most of the time you´ll see neutral brands in the passenger lineup because the passenger market is so large, and the 60,000-mile passenger category is so large," Mr. King explained. "You tend to see a neutral there than in any other segment right now."
The Fullerton, Calif.-based company doesn´t promote its Allegiance IV brand and has scaled back production in the past five years to produce more associate tire lines. One such associate line, Prodigy, will be available to dealers this summer, Mr. King said.
Other tire makers, such as Goodyear and Cooper Tire & Rubber Co., also offer a few generic labels. Goodyear produces Concorde for the entry-level passenger segment, a spokesman said.
Cooper introduced the generic Durango (light truck) and Mentor (passenger) labels a couple years ago. Like Yokohama and BFS, Cooper´s generic label business is so small and limited it can´t be quantified, a spokeswoman said.
Michelin North America Inc. and Continental General Tire Inc. said they are both focused on their flag, associate and private brands, and therefore do not produce generic labels.
As for why some private brand marketers turn to "neutral" brands, the reasons include product availability and the desire to offer their dealer customers an opening price-point tire.
While TBC Corp. does not have a generic tire program, a spokesman said that in order for the company to provide its customers with products for every application, "we will offer a neutral product to distributors of our brands."
An example is the Memphis, Tenn.-based company´s Grand Spirit HR+4, an H-rated tire that comes in 17-inch sizes and is targeted to "a very unique niche market. We don´t make the tire in every brand, but we offer it to all our customers," the spokesman said.
Because tire mold costs can be prohibitive, some firms also turn to a neutral that crosses over several brand lines as one way to offer market coverage.
One private brand marketer told Tire Business the generic brand is a niche market product often pitched at a certain breed of customer—the bargain hunters. "But you´re not really supposed to sell it," he said. In the good-better-best scenario, a neutral is often used as a come-on to spur a customer to buy a tire that´s more profitable for a dealer.
Like most tire makers, Goodyear is constantly doing internal as well as in-field research into why consumers buy certain types of tires.
Up until four years ago John Montgomery, Goodyear´s former director of market planning and research, spent a lot of time trying to figuring out what makes tire buyers tick. He is currently the company´s director of global product planning.
"It goes back to the realization that there are different market segments out there.|.|.|and not everybody is a brand buyer, for various reasons," he said.
"Some might have constraints on their pocketbook, or maybe they´re going to trade their car in six months down the road.
"Or a person simply may not perceive that there are differences among brands. They´re convinced that a tire is a tire and, for financial or attitudinal reasons, don´t think it´s worth paying extra money for a flag brand."
A spokesman for one large private brander said neutral brands account for up to 20 percent of the company´s sales. However, true generics actually comprise a fairly small segment of the market, Mr. Montgomery said, while private labels are a sizable segment into which "many of these buyers fall and continue to feed that marketplace.
Obviously, a brand marketer would like everyone convinced that it´s worth paying more to get a brand name.
"But until that day happens," he said, "there will be a market for no-name or generic-type and private brands."
The market normally ebbs and flows with how much spare change a consumer has, he added, and how strong or weak the economy is. Brand names tend to do better in a good economy.
A lot of marketers will put their own private label name on a tire, coupled with a significant or attractive mileage warranty backed by the retailer, he said.
"Then you have a situation where maybe it´s a tire the consumer has never heard of, but they trust the retailer. So they go with that retailer´s recommendation, knowing if there is a problem, the retailer will back up the product."