In the business world, identity is everything.
A company's name can hold a lot of meaning in the minds of consumers, telling them the types of products it sells and the degree of customer service they can expect. The same holds true for tire dealers.
“To me (brand) is number one,” said Barry Steinberg, owner of Direct Tire in Watertown, Mass. “We've built our brand for 38 years. We advertise as Direct Tire & Auto Service. That's all we are. We rarely if ever advertise a tire brand other than running specials.”
But for many dealers, running a business and working to build the brand can be difficult and time-consuming . Sometimes it makes sense to form a relationship with an established brand, by way of joining a marketing group or franchise program.
Two-thirds of dealers responding to Tire Business' recent survey of independent business owners indicated they already belong to some sort of marketing/buying collective, and another 20 percent said they consider that joining one would be helpful. Roughly 85 percent of those who already belong said this has helped them improve their bottom line.
Just 14 percent of the survey respondents indicated they weren't considering this option.
John Kreidel, CEO of Northwest Tire Factory L.L.C., a Portland, Ore.-based company offering an associate program for dealers in the western half of the U.S., told Tire Business there are many reasons why tire dealers choose to align themselves with larger marketing groups.
“I don't think it's being forced on them. I think they're searching for solutions to help them compete,” he said. “A lot of times being a member of a marketing group can help them do the things they can't do very easily on their own. By leveraging group member power they're able to focus on taking care of their customers and let some of the other larger scale things be handled by their marketing group.
“I'm not so sure it's being driven by loss of market share or increased competition,” he continued. “I think dealers or any business you've got to become smarter and better and competition helps breed that, so a lot of guys are looking into marketing groups.”
Identity crisis
Under the Tire Factory program, dealers are required to co-brand their existing business name with the Tire Factory name by tacking “Tire Factory” onto the end of it. So far the company has 180 member stores flying the group's flag, and another 30 affiliates that have not yet converted officially. The program has members in 14 western states.
Most of the program members began as independent dealerships, Mr. Kreidel said. For many of these dealers, one of the biggest obstacles to overcome is altering the name they use in the marketplace.
“It's always one of the big issues that members digest when they look at our program, but in general it's about brand awareness with the consumer,” Mr. Kreidel said. “The members by zone all chip into a build-a-brand bucket. They get to decide what they spend that money on with some guidelines from Tire Factory, but that's one of the biggest things they're looking for. With our annual advertising budget, people do recognize the Tire Factory name and the Tire Factory brand.”
American Tire Distributors Holdings Inc. (ATD) offers a similar solution for dealers with its Tire Pros franchise program, which also requires its dealers to co-brand with the Tire Pros name. Ron Sinclair, senior vice president of marketing for ATD, said it's about establishing a “mutual commitment” and creating a “level of linkage” between the two entities.
“I think dealers still have a real desire to maintain their independence,” he said. “A lot of dealers we work with—a lot of Tire Pros dealers—have been established in their markets for decades. They've built their businesses and they've built an identity in their markets, and I think the vast majority want to retain that independence.
“What they're looking for I think is the benefits associated with a program like Tire Pros,” he continued. “They're looking for access to tools to better market their businesses to give their customers access to promotions and warranty programs that can be national in scope. At the end of the day, it's giving that dealer an ability to compete with those national players that are out there.”
Messrs. Kreidel and Sinclair said using a co-branding strategy allows dealers to maintain their local identity while also allowing for a unified marketing strategy. Dealers are encouraged to leverage the marketing assistance that comes with being part of the program with their own local presence.
“(Local ownership) is one of the big benefits as we go up against some of the giants in the industry,” Mr. Kreidel said. “We love the fact that we have a local owner at the sharp end of the stick in the local market, and we don't ever want to lose that…. One of our 10 principles of business and values is to maintain that local market presence because it gives us a big advantage against a big chain.”
Northglenn, Colo.-based Jim Paris Tire Factory, formerly known as Jim Paris Tire & Auto, converted to the Tire Factory program in February. Before joining the program, owner Jamie Paris said he had been considering getting out of the tire business altogether, but now he's considering opening more locations.
“It's one of those things where I was at a crossroads where I was going to either have to get out or change it up,” he said. “The benefits of having more stores in this program are way better because your volume bonuses are all tied into one corporation, not where I have to do 800 units at each store. It's if I do 800 units total I'm getting that deal on those tires, which is a huge benefit.
“I'm looking at those top tier volume bonuses and I'm thinking, ‘If I get more stores those are very attainable.'”
Tire Factory handles the company's advertising, which Mr. Paris said has saved him about 15 hours a month. In addition, local distribution, bulk pricing on tires and Tire Factory's volume bonus program have proved to be very beneficial.
Mr. Paris said despite some initial confusion among customers who were concerned there was a change in ownership, joining the program has been a very positive experience. He said he believes if other dealers could get past the name change they would see the benefits, too.
“I've talked to owners here,” Mr. Paris said. “I don't know why there's such a hang-up on it, but there is. The benefits you get for having to incorporate a name and doing a little bit of upgrades to your waiting room way outweigh the cost of that.”
Joe Rice, owner of Monongalia, Pa.-based Big G Tire Pros said joining the Tire Pros program three years ago was a “shot in the arm” for his business.
“The problem is with an individual small dealer like me is you feel like you're in a bubble and you miss out on a lot of things that are happening in the industry,” he said. “It just changes so fast anymore. I saw Tire Pros with all the different programs that they offer, and they were able to pull me out of that bubble and make me part of a whole system.”
Since then, his tire sales and service business have increased as a result of improved marketing and access to training programs. He also was able to open a second location in Bridgeville, Pa.
Benefits
Among other benefits, dealers who choose to join programs like Tire Factory and Tire Pros receive professional marketing support, allowing them to compete with larger retailers.
“Joining Tire Pros is not about getting a lower price,” Mr. Sinclair said. “Tire Pros—the heart and soul of the program—is about bringing to bear a level of marketing support and consultation.”
Mr. Sinclair said the program employs people who are experts in building marketing plans.
“These marketing managers are not necessarily long-time tire folks,” he said. “These are folks that understand building marketing plans, understand buying media, understand how to evaluate this radio station versus that radio station, etc., etc., and all the things we believe require a level of specialization to do really well.
“And then on the retail side there's also retail support—individuals that have worked in a retail tire store. They are tire experts and they are retail experts, being able to bring to bear ideas on how to improve efficiency of the operation…. That level of support is really a key in joining the program.”
Most dealers who join programs such as Tire Pros and Tire Factory have similar benefits in mind—improved buying power, access to national warranty programs and sales volume bonuses to name a few—but many find there are other advantages that come with being part of larger network of business owners, Mr. Kreidel said.
“Almost without exception, dealers will look at the program, they'll look at the advertising, they'll look at the things we're doing on the Web,” Mr. Kreidel said. “That's all good, the pricing's good, but generally after they join they find half the benefit comes from learning from other dealers that are successful.”
Tire Factory offers its members access to its Complete Winning Strategy (CWS) program, a Web-based Twenty group that allows non-competing groups of dealers to discuss business strategies. The company also offers traditional face-to-face Twenty group meetings.
“Once guys decide to join the fold and become part of the family, we just don't have that many leave,” Mr. Kreidel said. “The camaraderie, the spirit of learning from one another, the joint buying and the joint advertising is really kind of cool.”
Mr. Sinclair echoed that point.
“Once they get on board, one of the benefits the dealers really play back to us on a daily basis is being able to generate and gain ideas from other Tire Pros dealers,” Mr. Sinclair said. “…(T)hese guys build relationships and trust and they share ideas, and they can say things to each other that for us, as a supplier, can be difficult: ‘You shouldn't be doing this. This isn't helping your business.'”