“Consistent. Stable. Dependable.” Those three little words detail the outlook and plan for Kumho Tire USA Inc. in 2017, says Jim Mayfield, executive vice president of sales and marketing.
Mayfield and the Kumho team are spreading the brand’s gospel this week to representatives of 23 tire dealerships in the U.S., plus four more from Canada. They’re gathered for Kumho’s annual dealer meeting in Grand Cayman.
The biggest news is that Kumho is taking a break from its recent rapid-fire introductions of new products. After 11 new tire line introductions in the past two years, including four unveilings at the dealer meeting a year ago, Mayfield says the company does not plan to roll out any new tires in 2017.
“I think maybe it’s time to let you have some digestive time so you can get these products programmed to where you need them to be,” Mayfield says.
“But we’re not stopping the product development process.” New and replacement products are already in development for 2018.
“Our product replacement process will continue in a much more balanced and organized way. We don’t ever want to get back to a point of introducing 11 new product lines in less than two years. It’s too disruptive for us,” Mayfield says.
As for 2017, that “consistent, stable, dependable” motto means dealers will see no changes to their buying programs. The volume bonus and growth bonus plans are staying the same, and Kumho will continue to offer dealers marketing support funds that they can access in the same manner as 2016.
Payouts and benefits of the Premium Fuel associate dealer program aren’t changing either, but distributors will see one big enhancement in 2017. In the past some branded products didn’t help distributors build brackets in the program, but starting in 2017 “every product that says Kumho on the side – that you buy from us, Kumho USA – and that’s a key piece, everything will count toward building brackets toward the Fuel dealers. So your sales people don’t have to keep track of what counts and what doesn’t count,” Mayfield says.
Another improvement coming for the dealer program is a faster way to process benefit checks at the end of each quarter. The goal is to return checks to dealers within two weeks.
Senior Marketing Manager Brian Gallagher and his team are building new creative assets to enhance dealer training on the company’s products, and the sales team has grown to include four consumer divisions, a commercial division, led by new-to-Kumho Gary Sass, and a growing sales operations team that is working on analytics.
Mayfield says, “We have to grow. There’s no hiding that. We’ve been pretty stable; 2016 I think with most of our customers we’ve had nice sales growth, but we’ve got to continue that in 2017.
The company remains committed to offering value products that provide good margins for dealers. “I’m working with you to grow your business with us in a way that is good for you and good for us, and we’re going to be looking for new business as well.
“Kumho has to grow and we’re going to do it in a way that is manageable and not disruptive, but we are going to grow our business.”
Good indicators for the start of 2017
Steve Ewing says market indicators point to 2017 being a good year for tire sales. Ewing, the market intelligence and pricing manager for Kumho, says retail gas prices and vehicle miles traveled have both shown favor on the tire industry this year. The first week of December has been the first time in 2016 prices at the pump have been higher than they were a year ago, and those lower fuel prices have led “to a nice increase” in vehicle miles traveled. Year-to-date, it’s up 2.6% -- an increase of 53 billion miles driven.
“If an average tire is 60,000 miles, that should be an additional demand of around 900,000 units through August,” says Ewing. “That didn’t materialize in the market so the question is then what does that mean. It probably means were going to have some nice demand in the coming months as people realize the weather has turned into more winter season and I need to replace these tires that have worn out.”
He also points to a post-election rise in consumer confidence and the low unemployment rate as good indicators of what’s ahead for tire dealers.
Building the brand
The “consistent, stable, dependable” angle applies to Kumho marketing, too, says Gallagher. After joining the company in February, he says his team is working to apply a steady hand across all platforms through every month of the year.
The company’s biggest stake is in its National Basketball Association partnership, and that’s not changing in 2017. A big focus is in connecting Kumho to its new hometown of Atlanta, Ga. The company calls Georgia “the new heart of Kumho Tire,” with its headquarters in Atlanta and its first U.S. plant now operating in nearby Macon.
After sponsoring the Atlanta Hawks’ playoff bid last season, Kumho has signed on as the NBA team’s official tire. (The tire company also is the official tire of the Charlotte Hornets.) And that’s all on top of the brand’s continuing partnership with the NBA and the NBA’s D-League.
“We’re building our brand in our new home court; it gives us a lot of presence in the southern region. We want to start there and figure out how were going to build on that to get more exposure,” Gallagher says.
To fill in the gaps on the calendar in the NBA off-season, Kumho is sponsoring videos with select NFL players, including New York Giants running back Rashad Jennings.
Kumho wants to take that same personal approach from sports, and apply it to its product marketing as well, especially on social media. Gallagher says Kumho will be looking for its diehard fans and showcasing them in raw video-format messages.