Whoever muttered those immortal words, ``Damn the torpedoes, full speed ahead,'' didn't have private brand tire marketers in mind, but the sentiment certainly applies.
Year after year, the top concerns impacting these companies' ability to do business in North America seem to jockey for turns in the top spot, but they never get very far from the limelight.
You probably know the drill: Shrinking margins along with a dwindling pricing gap among flag, associate and private labels; off-shore manufacturers pitting sometimes bargain-basement-priced tires against the homegrown variety. Oh, did we mention fill rates-good for some, lousy for others, depending on the day. Enter the Firestone recall into the equation, with chatter about consumers flocking to ``name-brand'' tires, and you might as well be writing a script for the TV show ``Fear Factor.''
Doesn't the premise of that so-called ``flight to quality'' rely on a denigration of private labels? And if so, has that fear translated into loss of sales for those marketers?
Well, yes and yes to those questions, but with a caveat: Initially, many tire buyers took a hard look at those higher-priced flags and bought them, according to some responses to an annual survey of private brand marketers conducted by Tire Business. But that flight apparently ended up being a ``puddle jumper.'' An economy that could be described as lukewarm, at best, has helped drive many price-conscious customers back into the arms of the flag's competitively priced private brand cousins.
Rest assured, there are still plenty of bullets for marketers to dodge.
According to Rubber Manufacturers Association statistics, manufacturers' passenger tire brands account for 57.9 percent of the marketplace, followed by 19.7 percent for associate brands and 22.4 percent for private labels. The light truck numbers reflect the same gaps: 59.3 percent for flag brands; 17 percent for associates and 23.7 percent for private brands.
But comments taken from surveys and interviews with private branders help illustrate that ``full speed ahead'' philosophy that has kept a number of private brand companies competitive.
Dan Wire, president and CEO of mega-marketer Treadways Corp., a subsidiary of Sumitomo Rubber Industries Ltd., said the company-which handles the Eldorado, Jetzon, Telstar, Laramie, Centennial and Doral private labels-is ``certainly not seeing any shift towards flag brands.'' In fact, ``it seems that dealers are moving customers towards quality private brands.'' And it's that ``dealer outlet loyalty,'' Mr. Wire continued, that ``continues to be more important to consumers than brand loyalty.''
``What slow economy?'' he wrote. ``Our business is up substantially in the first quarter.''
While he said he believes that several tire manufacturers overestimated the so-called flight to quality, the result has ``allowed off-shore brands to gain a greater foothold.''
The remainder of 2002 will be busy for Treadways: The company is looking to expand its brands, introduce some new product lines, and also have a business-to-business Web site functional by year-end, Mr. Wire noted. It will allow customers complete access to the firm's order management system.
Shifts in brand loyalty by consumers have, for the most part, depended on pricing, reported Paula Guerrero, assistant vice president of Coral Gables, Fla.-based Tirex Inc., which markets the Ziggurat brand.
While Tire Group International in Miami sees brand loyalty being constant, according to company COO Orlando Delgado, increased pricing competition has impacted the North American market and pricing disparity between name brands and private labels continues to shrink. The company markets the Astro and Cosmo brands.
Gripe as some might about those off-shore tire makers, Phil Marrett, senior vice president of sales and marketing for Heafner Tire Group Inc., had a bit of a different take on the issue. The Huntersville, N.C.-based firm ``is committed to sourcing the products our dealers need,'' he said. Consequently, ``off-shore sources are playing a larger role in our business as well due to poor supply from some of our suppliers.
``We see many of the foreign manufacturers as having a more competitive product from both a quality and price standpoint-more in tune with the exotic sizes, and more responsive to emerging trends in the performance and SUV markets, than many of the domestic manufacturers.''
Though some private branders have bought distribution-that is, retail chains-in an attempt to maintain or boost market share, Heafner learned the hard way a couple years ago that that approach doesn't necessarily work. ``We experimented with operating retail stores, but our customers helped set us straight,'' Mr. Marrett said, referring to Heafner's purchase and eventual sale of California's Winston Tire Co. chain.
Instead, ``we believe that the way to grow market share is with a total focus on providing our dealers with an unbeatable combination of product, service and value,'' he said. ``We're not using the private brand business to fund a retail expansion or acquire more retail competition for our dealers....''
Denis Monette, sales manager for Quebec's A. Picard and Sons Inc. and its President Tire Canada unit, has seen an increase in private label sales brought on by a cool economy, and he said he believes brand loyalty is increasing.
The company acquired distribution rights for the Vredestein brand for Canada, Mr. Monette reported, and this year has opened a new warehouse in Toronto as well as some new retail stores in Canada.
Stephanie Tires Corp. in Miami hasn't been impacted by the economy but has seen an increase in brand loyalty among consumers, said Isaac Dargoltz, president. However, the marketer of Sunstone and Aeolus tires has experienced a crimp in medium truck radial tire supply, he said, because there is ``not enough capacity.''
Contract manufacturer/private brander Galaxy Tire & Wheel Inc. in Malden, Mass., cited the economy as a concern. ``Sales are down,'' reported Leo Browne, vice president of operations, ``with tire dealers being cautious.'' The company's original equipment sales-it handles a variety of industrial, forestry, construction and off-road products-also are down, he said, due to ``lack of manufacturing.''
But Mr. Browne said loyalty to the firm's Galaxy and Constellation brands is increasing thanks to good pricing and service that ``gives dealers higher gross profit and less competition.'' Galaxy is working on a new program that will allow dealers to order online. Its Web site currently only takes dealer inquiries.
Scott Ward, president of Compton, Calif.-based Pro Competition Tire Co., a specialty sport-utility and off-road private label marketer, said brand loyalty has been increasing due to the Firestone-Ford Motor Co. recall controversy. The company launched a new tread pattern called the Xterrian for its Pro Comp brand and is ``always looking at new sizes.''
Happily, the firm hasn't experienced the competitive crunch of some other private branders, Mr. Ward noted, because ``we are a new company...at this point we are doubling every year.''
Growth is on the mind of Joe DiPrima, president of DiPrima Tire in Rossville, Ga. The marketer of the Teton and Watts brands also added a new line of solid tires called Freightmaster that has shipped in the last few months and will be expanded, he told Tire Business.
He admitted last year was poor-blame the economy-but 2002 has started out good and sales are ``coming back strong,'' boosted by a good passenger and light truck business. The company has enjoyed fill rates of about 90 percent.
DiPrima Tire has had a Web site for about three years, hasn't ``taken it to the next level yet, but we will eventually.'' Although customers cannot order via the Web site, it provides some 150 pages of product information and the ability for dealers to ask questions. ``We can't build a business on (the Web) yet,'' Mr. DiPrima said, ``but it's been a pretty good business for us, nonetheless.'' One secret is doing a good job following up on inquiries.
``The success rate on the Web site is really high-some things practically sell themselves-since customers usually see something that's hard to find elsewhere,'' he said.
The look of Ganin Tire Co. Inc. in Brooklyn, N.Y., has changed a bit over the past year or so. The company has a wholesale operation with two warehouses and runs seven retail locations in Brooklyn, Long Island and upstate New York. It also has a Bandag retread shop along with three commercial outlets in the Bronx that do business as Tire Supply Inc., according to Steve Ganin, vice president. Earlier this year the company's Reynolds Tire & Rubber division-longtime owner of the Brigadier brand-together with Continental Tire North America Inc., assigned the marketing of Brigadier to Independent Tire Sales Inc., based in Wheeling, W.Va.
Private branding may be a lot easier than the commercial business, which Mr. Ganin described as a ``very labor-intensive industry. You have to really sell your expertise more than ever-you can't sell by price alone.''
Just don't ask him about fill rates.
They're ``lousy...and I really don't know why,'' he complained. ``It's amazing we've done as much business as we have. The market is not that strong where they (manufacturers) should have this kind of fill-rate problem.''
What's he getting? ``Fifty percent would be great,'' he said, but that's generally wishful thinking. ``It depends on the lines.''
For Joe B. Thomas, COO of Spartan Tires & Private Brands Direct and its Reliable Tire Co. unit, business is either difficult or great-depending on the part of the country. ``It's tougher in the Northeast, status quo in the Midwest, and the rest of the country is growing by leaps and bounds,'' he told Tire Business. The firm's Dallas warehouse realized a 25-percent increase in business over the previous year, for example.
Why such a disparity in conditions? ``Some people are out there hustling,'' Mr. Thomas said. ``Others are sitting around wondering where the business went.''
It's not about brand-name issues, he continued, it's a matter of delivery, ``about being there for your dealers. Despite what some tire manufacturers think, the little guy needs someone to be there for him when he sells (a particular line). The business is there, but in a different format-you have to be prepared to do that.''
To improve its service to dealers, two years ago the company opened a warehouse in Blackwood, N.J., in a former department/grocery store. The building's low ceilings allow Spartan Tires to retrieve and ship tires quicker than in a normal high-ceiling warehouse, he said. The firm also has enlarged its Atlanta and Dallas warehouses by 20 percent ``just to handle all the sku's.'' But fill rates? ``They're terrible from everybody-and anyone who tells you they're any better is lying.''
He hasn't fretted about any flight to major brands because of the Firestone recall. ``I told my people: Let's not worry about the Ford Explorers on the road, but instead count the number-the 30 or 40 cars-between them and concentrate on those vehicles.''
However, Mr. Thomas said it's increasingly difficult to keep dealers supplied with the correct products when ``we're seeing sizes on exotic OE vehicles that have maybe only been around for a couple years and are continually changing. The manufacturers are building inventory for things they now can't sell and are attempting to push performance and build OE downstreams.''
Today, the concern is not so much about name brands, Mr. Thomas said, as it is about economics and marketing. ``The world did the tire dealer an injustice when they took away the personality of the tire'' and made it into an identity-less commodity product, he said, cautioning: ``You can't chase customers if you don't know who the customers are and what they want.
``The reason some companies are failing is they keep trying to reinvent the wheel''-and that goes for tire makers, as well, he said. ``Replicate the rapport you used to have with your customers,'' Mr. Thomas advised. ``So many are chasing something that doesn't exist. Today, there's no rapport like in days gone by.''
He offered a simple business philosophy for companies struggling to succeed and create an identity for themselves: ``Maybe folks need to take a look at when they were doing better and go back to...what worked for them."