Cooper Tire & Rubber Co. is betting a new offering of high-performance tires will help gain higher recognition for the Cooper brand.
The tire maker hopes to augment its knowledge of speed-rated tire construction by shifting its Cooper-Avon Tyres Ltd. unit's technology from the United Kingdom to the U.S. and-more importantly-by sharing in Pirelli S.p.A.'s technology.
Cooper plans to use that knowledge to launch improved high-performance tires under the Cooper brand ``in the near future,'' according to D. Richard Stephens, who became Cooper's Tire Group president in December.
``We have been investing in the Cooper brand through increased advertising,'' Mr. Stephens said.
``Obviously, moving into more performance lines will continue to increase the brand awareness and the brand equity of the Cooper brand.''
A 25-year Cooper veteran, Mr. Stephens had been president of the company's International Tire Division for a year. Before that, he served as vice president of technical and commercial tire operations and held various technical and product/compound development positions, giving him the background to oversee Cooper's expansion in the high-performance tire arena.
The Findlay-based manufacturer already produces ultra-high-performance tires, but it hopes to increase its penetration-and its reputation-in the market during the next few years. ``To be able to do that, we need to have products that will perform in the areas of wet traction and wet handling better than the products that we have today,'' Mr. Stephens said.
Cooper got a bit of a black eye when it introduced inferior high-performance products in the early 1990s-tires that didn't have the wet traction equal to a Goodyear, Michelin or Pirelli tire, he said. Consumers view Cooper as a value-line brand that is a good performing product they can get for a reasonable price, and it will deliver more than what it should for the price, Mr. Stephens said. ``As a result of that, we haven't gotten our share of H-rated, V-rated and Z-rated tire sales. That's one of the reasons we went with Pirelli.''
Although Cooper prides itself on its ability to be ``a fast follower,'' developing the technology in-house would take time, he said. And time is something Cooper does not have if it wants to compete with the likes of Group Michelin or Goodyear, analysts contend.
``The train for speed-rated tires has left the station,'' said Saul Ludwig of McDonald Investments Inc. ``I would say right now, they (Cooper) are in the caboose.''
Building on Avon
Cooper is not completely lacking technology in the high-performance area. Cooper-Avon, its European tire operation, is positioned as a Tier 1 brand and sells comparable to Pirelli on the continent but still ranks behind leader Michelin. Despite its good reputation in Europe, Cooper-Avon has only a 1.5 to 2 percent market share in the segment, Mr. Stephens said, but the operation is slowly gaining ground.
Certainly a big boost to the Avon brand has been its association with Formula 3000 series racing since 1982, as well as other European-based racing circuits.
``Most anybody who's racing in Formula One has raced in Formula 3000 and has raced on (Avon) tires,'' Mr. Stephens said. ``Avon has a very good reputation in some of these race series.''
The brand has some presence in the U.S., since Cooper sells a small number of Avon ZZ1 tires here. But for the most part, ``the Avon name in the U.S. has no pizazz, no recognition,'' Mr. Stephens said.
Increasing brand recognition for the European name would be especially difficult given that consumers in the U.S. associate ``Avon'' with cosmetics, he said.
The Avon name won't get huge play in North America, but its technology will. Cooper recently introduced a product in Europe, the Avon ZZ3 performance tire line featuring 18-inch sizes.
``It is a major improvement over the ZZ1 when it comes to wet handling, wet traction, overall handling performance,'' Mr. Stephens said. ``That is technology that we developed in-house, and based on our testing of that product vs. competitors' products in Europe, we think we now have a product that is very, very competitive.''
The tire maker will transfer the technology behind Avon ZZ3 to the U.S. for use in the new Cooper high-performance offerings, Mr. Stephens said. But he admits that technology still is not up to the level of Pirelli, Michelin or Goodyear.
The Pirelli alliance
Cooper's alliance with Pirelli was a way to quickly get the performance tires and a heightened image through association with the Pirelli name, he said. Otherwise, the company would have to expend much money and time to market the Cooper brand or bring the Avon name over and exploit its European racing heritage.
Cooper's agreement with Pirelli gives it a more complete product line and has helped it gain some recognition for its namesake brand, according to Mr. Stephens. But Cooper wants to take the relationship a step further.
``One of the things that we're hoping to do with Pirelli is to have them share some of that technology with us, and we would share some of the technology that they need in being more efficient or maybe in making a better value-line product or becoming more profitable,'' he said.
Under the 3-year-old alliance between Cooper and Pirelli, Cooper oversees sales and distribution of Pirelli brand tires in the U.S.
That agreement has been working fine, Mr. Stephens said, but the two still are discussing how they could do joint technology development and how they can work together outside North America. Pirelli's technology ``is something that we would like to transfer to Cooper whether we use it for the Avon brand or the Cooper brand,'' he said without elaborating.
The next level
If Cooper is successful in increasing its premium sales, the manufacturer is hoping brand awareness will go up and help it claim a better share of tire sales in the U.S. While Cooper gained replacement sales through the first Firestone tire recall, it was prevented from participating in the second, Ford Motor Co.-ordered campaign because it wasn't on the car maker's approved list, Mr. Stephens said.
Cooper has invested in its brand nationally since 1994-95 and that helped increase sales annually until last year, Mr. Stephens said.
But Goodyear and Michelin have invested in their brand name for 50-plus years, spending ``oodles and oodles of dollars'' advertising their name, he said.
``Obviously, they've been able to elevate their name to be a more recognizable brand than most everyone else in the U.S.,'' he said.
The Cooper tire president argues against claims of ``flight to quality'' by Goodyear and Michelin.
``It's not a flight to quality, because the quality of the product that we manufacture-compared with the quality of Michelin, Goodyear, Conti General, Pirelli-our product will compete with any of them in any arena you want to test them in.
``That's not the issue,'' he stressed. ``The issue is it's a flight to brand and what brands in this country have high recognition.''
Whether or not Cooper's strategy will help it gain brand value remains to be seen, analysts said.
But the Bridgestone/Firestone recalls have increased consumer inclination ``to pay up for the higher brand,'' said Efraim Levy of Standard & Poor's Corp. ``It all really depends on the success of the new tires that they (Cooper) bring to market.''