CLEVELAND?The growing high-performance (HP) and ultra-high-performance (UHP) tire segments provide a great profit opportunity for tire dealerships, yet many tire dealers need to learn how to sell them successfully to consumers.
That was the consensus among tire maker executives who participated in the High-Performance and Light Truck Tire Panel during the ITEC show, Sept. 19.
?Tire retailers, today, if they're not in the HP and UHP business, they are missing the boat big time,? warned Tex Melotti, general manager of performance tires for Goodyear. ?And it won't be long before they are out of business as that dynamic continues down that road.?
In addition to Mr. Melotti, the panel comprised: Tom Gravalos, vice president of marketing, motorsports and OE sales, Pirelli Tire North America Inc.; Oscar Pereda, brand marketing, Michelin North America Inc.; Chris Jenkins, national program manager, Continental Tire the Americas L.L.C.; Mark Johnson, product education manager, Bridgestone Americas; Scott Jamieson, director of product management for Cooper Tire & Rubber Co.; and Mark Richter, senior manager of dealer marketing, Falken Tire Corp.
Bob Toth, director of products and innovation for Goodyear, moderated the panel discussion.
These panelists agreed that high-performance tires provide profit potential for tire dealers who market themselves as HP tire experts in their markets.
?You need to understand the vehicles. You need to understand the market,? Mr. Gravalos said. ?You need to develop strong relationships with the local distributors because the reality is you can't possibly stock all the sizes and types there are in the marketplace. So you'd better have a good distributor near you that can take care of your needs.?
He encouraged dealers to connect with local automotive enthusiasts, including car clubs.
?These are the opinion leaders in your community. They're the people who drive the car that is performance oriented. They're the people who other people will ask questions about. So get to know them and engage them in your business,? he said.
Mr. Jenkins also stressed the benefits of getting involved with local motorsports events and car clubs. He described grassroots marketing as ?getting consumers and influencers in your local market or local area to hear so much about what your business is doing or offering that they become your biggest cheerleaders and largest vocal supporters.?
?By showing local support and being at these events on a consistent basis, you now become the local perceived expert in this market,? he said. People visiting such events want to learn as much as they can yet they will perceive the high-performance tire dealer as having the most knowledge on the subject, he noted.
?The more they seek your expert advice the better chance you have to making that sale,? Mr. Jenkins said.
He also encouraged dealers to get involved in local charities and civic groups, as well as provide discounts to employees of fire departments, police departments, the post office, etc. to create a local customer base.
?Grassroots marketing is a must to continue any type of growth and to continue the buzz about your business. And this will bring strong and lasting relationships within your community,? Mr. Jenkins said.
Some of the panelists claimed the tire industry has done a lackluster job of marketing HP tires to the aftermarket consumer.
?The crossover you have to make in your marketing message is you have to get away from the gray and black marketing message?the fast race track racing, urbanesque stigma that UHP tires have because of the marketing message that has been given to that niche historically?and remove that into a real life environment: that it's a suburban experience, that it's a family safety experience and that a UHP tire can give that comfort and ride handling, that safety experience while not having to achieve harsh ride control and race track performance,? Mr. Jamieson said.
Mr. Gravalos encouraged dealers to market the advanced technology of the HP tire.
?In the industry, those of us who interact with consumers have to do a better job of helping consumers understand just how technologically wonderful the tire is.... The tire is the single most complex component on the automobile that you cannot disassemble,...yet they're round and black. They all look the same. They are boring. We don't do a good job of communicating value to the consumer.... We do that through training, some more training and some more training.?
Mr. Gravalos stressed the importance of training for high-performance tire sales.
?The reason we continuously see dealers fail in the high-performance business is because the people that are selling the tires, the folks behind the counter, are afraid to get involved in it because they really don't know enough about it. So you, as an owner of a business, have to be willing to invest time, and I know time is money, in getting your people trained.?
He also suggested that dealership employees responsible for selling high-performance tires get involved in the racing market. ?So when your customers come in with performance cars, your associate is excited about it, likes cars, is really ready, willing and able to represent the product. And it's about selling the consumer the right tire for the right vehicle. Don't let them take the path of least resistance,? he added.
?...So knowledge, knowledge and knowledge is really the key. And the knowledge of the product, the knowledge of what's appropriate for the vehicle and the knowledge of what is the distributor near you that can offer you the tires you need to take care of the customer,? he concluded.
Mr. Jamieson noted that a consumer who is interested in purchasing a UHP tire is going to be more in tune with his vehicle and he's going to be more educated in his desire for the performance he would like to achieve with his purchase. He probably has a fundamental, at the very least, understanding of the features and benefits on each of the tire options, be it the OE tire or an aftermarket option that he's researched online.
?Generally, 70 to 75 percent of consumers do their research online and are engaged for at least one week before they come into your stores to talk about tires,? Mr. Jamieson said.
?For the UHP consumer, that is certainly going to be higher than 70 to 75 percent. Probably nearly 100 percent of them are doing online research, whether it be articles in magazines or reviews.... So they come in with a specific idea in mind of what they need. They represent a smaller segment of all your consumers, a different segment. We break down the segmentation of consumers as: just the basics, security seekers, proud owners and hands-on enthusiasts.
?Proud owners and enthusiasts are represented in the UHP market share and need to be greeted and talked to and engaged with in a different manner,? he said.
?The UHP consumer is looking for validation of his research or validation of what he thinks will be best for his vehicle. You can certainly take him in another direction to a product you're carrying as long as you are able to make the comparatives against what he came in looking for. If he came in looking for an OE tire, you have to be able to make that call against what the aftermarket fitment does or doesn't give in comparison to the original fitment...,? Mr. Jamieson said.
Mr. Gravalos noted that the tire buying market has become gender neutral, as both men and women are making the purchase decisions.
?And what that is requiring us to do, as we should have done a long time ago, is really to start talking to consumers in consumer-friendly language.... We have to speak a language that they understand. We have to put information out there in a way that makes sense. And for those of you that represent the retail chains of distribution, you've go to have outlets that are attractive, that are places women would be comfortable going into and shopping. And if you haven't done that, shame on you, and don't be surprised if your business evaporates one day.?
Despite its minute share of the tire market, the run-flat tire will continue to gain sales in the coming years, according to the panelists, although most of that growth will be on the OE end.
?By 2015 the run-flat will be 1.4 percent of the industry, about 3.5 million tires,? said Goodyear's Mr. Melotti. ?The fact that it is such a small piece of the market, there is a lot of hesitation on the part of the manufacturers relative to the investment it takes to build it.?
?I see no decline, in fact an increase, in the number of vehicles that the car makers will put run-flats on,? said Mr. Gravalos, adding ?It's a segment where the tire technology really adds value to the car. And whether or not the consumer has figured that out yet is a different question...?
?They're not going away. They're here to stay. The car makers like it because it gives them all sorts of flexibility in car design. It gives them a great safety benefit to the consumer,? he said.