February 04, 2014
Goodyear’s Kramer: Here come the 'millennials'!
Kramer told attendees that Goodyear corporate strategy is working, with the company on a path for a third year in a row of operating earnings being over $1 billion. “That’s the first time we’ve ever done that in the 115-year history of our company.”
Richard Kramer, chairman and CEO of the Goodyear Tire & Rubber Co., told attendees at the 2014 Goodyear Dealer Conference that auto sales are increasing and replacement tire business is coming. As it does, tire dealers need to understand the changing consumer that will bring that business, and that includes selling to "millennials."
The conference took place at the Gaylord Opryland Resort & Convention Center in Nashville, Tenn., Jan. 29-Feb. 1.
“In 2013 we saw positive signs the second half of the year into the fourth quarter. My view of the North American tire industry always has been in terms of it rebounding; it’s not a question of ‘if,’ it’s a question of ‘when.’”
Kramer said that “when” is starting now, as evidenced by increased auto sales three years in a row. Goodyear is seeing increased volume from OE fitments, which is a part of the company’s strategy.
“That means replacement business is coming. In the next three to five years you’re going to see more cars rolling into your shops with Goodyear tires on them needing to replace those Assurances, those Eagles and those Wranglers. That’s something to be excited about.”
Kramer said more evidence of a rebounding economy includes an increase in consumer confidence. Consumers are buying more products and the housing market is getting better.
He referenced Goodyear’s seven “megatrends” shaping the tire industry that he first introduced at the 2012 Dealer Conference. Kramer said the eighth megatrend is the changing consumer.
“Today the largest demographic in the United States is baby boomers, making up about a third of the adult population, born from after World War II to the mid-1960s. But with time the boomers are going to be replaced with a new demographic, the millennials. Born between 1980 and around 2000, the millennials are going to be the next generation and this group is going to have the biggest impact on U.S. business moving forward.”
Kramer said millennials:
- are racially diverse;
- have more women with economic clout;
- are technologically savvy;
- 64% have constant Internet access;
- 57% own a personal computer;
- spend eight hours daily connected to media;
- are comfortable making online purchases;
- 83% sleep with their phones;
- have the mindset that the consumer is in control;
- have increased expectations; and
- expect a brand experience.
“It’s not just about a new generation connecting with technology, it’s really about how they connect with the information that they’re getting from that technology. Equally important is how they’re going to use that information in shaping their shopping and buying behaviors. That’s what we need to think about.”
Kramer said millennials do their research through online reviews, service ratings, Twitter, Facebook, blogs and YouTube videos.
“These consumers are constantly connected with access to unlimited information. They trust bloggers and they follow their advice. All that makes a difference in how they think about their purchasing decisions.”
Kramer said that having consumers in control with higher expectations creates a new normal for the tire industry. To stand apart from the competition is going to require a different approach. With a baseline expectation of higher quality, consumers are going to expect more and find the value of a brand in more than just the product alone. A big part of the value is going to be in the experience that’s delivered with the product.
“How does this impact the tire industry? First, the trends are not going away and there will be no business in the world that will be immune. Second, the tire expert, the tire retailer matters more than ever. The consumer needs you and Goodyear needs you as consumer expectations change and they talk about the experience that they expect to have when they come in to your stores.
“Third, experience matters and it‘s up to us think about what’s important to the next generation of tire buyers by considering that total experience."