Magazine for the professional tire industry
Issue link: https://mtd.epubxp.com/i/762675
MTD December 2016 Consumer tire focus Bridgestone targets OE, larger sizes, and the 'Boss' By Greg Smith N ew tire lines, increased market- ing efforts and sales support for dealers, plus a "doubling down" on its consumer focus were the major high- lights from the Bridgestone Consumer Tire Business Meeting held last month in Los Angeles. Roughly 200 dealers were in aendance. Bridgestone used a "Tonight Show " format to send out its message to dealers, with John Baraa, president of U.S. and Canadian consumer replacement tire sales for the Consumer Tire Sales Division of Bridgestone Americas Tire Operations LLC (BATO) acting as the emcee. Baraa told dealers about key develop- ments that have been happening with the company. He said the company has increased its U.S. and Canadian OE sales by 45% since 2011. "We will be OE on one in four vehicles in North America by 2020." (Asked by Modern Tire Dealer for clarification on this point aerward, Baraa confirmed that the company wants a 25% unit market share.) MTD estimates the Bridgestone and Firestone brands combined had a 17.3% OE market share in 2015. e intent behind this move, according to Baraa, is to help the company capture additional higher end, higher value tire sales. He also told dealers that since 2011, the number of light vehicles on the road has increased by 15.4 million vehicles. Gordon Knapp, CEO and president of Bridgestone Americas Inc. since September, spoke to dealers about a number of industry issues he believes will be affecting the market. He said the industry has gone through five to six years of low prices for commodities and raw materials, which has led to overall price erosion. He thinks this trend may be behind the industry, as materials "may have boomed in the first quarter of 2016." He pointed to natural rubber moving upward from $.40 to $.50 per pound in January to current prices of $.68 to $.70 per pound. Knapp also spoke of competitors who "have raced to zero" when it comes to pricing. He does not believe the industry is helped when that happens. Knapp used the analogy of the current price of athletic shoes compared to tires as a prime example of the industry not being able to differentiate and capture higher prices for its products. He also pointed out that in the next three to four years, there would be a significant increase in capacity in the U.S. and Mexico, "and this will also lead to pricing pressure in 2019-2020." As for Bridgestone, Knapp said that even though he is new in his position, dealers should not "expect any knee-jerk changes in our direction." He wants to "double-down" on the company's emphasis on "the Boss," who he calls the ultimate consumer. e company is targeting the high-rim diameter portion of the market (18 inches and above) as well as the run-flat seg- ment, according to Knapp. He pointed to his company's $300 million expansion at its Joliee, Quebec, plant over the next three years to double its high-rim diameter production. (See MTD online article dated Feb. 26, 2016, about the expansion). Knapp believes the demand for these tires will grow by 40% over the next four years. To back up this comment, Knapp said that in August, 62% of all new vehicle sales were SUVs, light trucks, and CUVs. Bridgestone's own consumer research shows that 80% of all consumers now go online to research tires before they buy. A key factor, however, is that 50% of the consumers decide where to get their tires mounted before they even choose a brand. Knapp told dealers that Bridgestone's approach to online sales is to have high visibility, but "we want you to participate in it." He then spoke about the company's online platform designed to drive traffic to tire dealerships. Bridgestone will continue its marketing and promotions with the NHL, NFL, and the PGA in 2017, citing its successes with those programs in 2016. Philip Dobbs, chief marketing officer for BATO, showed gains that the Bridgestone and Firestone brands have made since 2012. Dobbs said the company's research showed an 8% increase in unaided awareness for the Bridgestone brand to roughly Focus on industry BATO executive John Baratta, left, plays host to new Bridgestone Americas Inc. CEO and President Gordon Knapp. Pricing is an issue, says Knapp. 60