Brands of confusion
Private brand tire: marketed and owned by a company or organization other than the one that manufactures it.
Associate brand tire: marketed by the manufacturer under a brand name other than the manufacturer’s chief label or labels.
Low-cost imported tire: manufactured overseas and marketed as a direct competitor to private and associate brand tires.
Private brand tires often are confused with associate brands and low-cost imports, and sometimes even major brands. The results from our 2008 Private Brand Tire Study make that quite clear.
Certainly that is understandable to some extent. They often compete against each other within the same tier based on price and/or exclusivity.
But when asked, “When you think of a private brand, what is the first brand name that comes to mind?” more than 70% of the dealers named a non-private brand. Out of the top 10 brands mentioned, only three were private brands! And the confusion exists regardless of the size of the dealership.
That either means dealers are not as brand conscious as manufacturers and marketers would like to think, or dealers are more concerned with the name on the outside of the building. Or both.
Suffering from erosion
To be fair to both the companies marketing private brands and the dealers selling them, private brand confusion also was apparent in our 1986 and 1996 private brand studies -- just not to this extent. Also, manufacturers of associate brands and importers have eroded some of the main advantages of private brand marketers, low price and exclusive territories, for example.
Many tire manufacturers on whom private branders had depended for product have exited the business, forcing them to look overseas for manufacturing capacity. The largest domestic private brand marketer is Cooper Tire & Rubber Co.
In 2007, private brands accounted for 14.8% of the replacement consumer tire market share in the United States, or more than 35 million tires. That was down from 17% in 2007 and 26.4% in 1998.
Survey results: brands
When they were asked to name a private brand, only 23% of the respondents named an actual private brand. Here’s a breakdown of what they did name:
Associate brand: 31%
Private brand: 23%
Imported brand: 19%
Major brand: 17%
Among the top five brands that dealers listed when asked to name a private brand, only two, Multi-Mile and Hercules, were private brands. “Cooper” was mentioned by the most dealers, 11.7%, followed by Mastercraft, a Cooper associate brand (9.1%). Another associate brand, Dayton, was third at 6.7%, followed by Hercules (5.7%) and Multi-Mile (5.2%).
The top 10 brands listed accounted for 52.2% of the top-of-mind responses.
Mastercraft was named most often by dealers as the one private brand tire line they would sell if they could only sell one (13.3%). Once again, only three of the top 10 responses to this question were private brands. Overall, 15 private brands were mentioned in answer to the question.
When asked, “Based on quality and reputation, what are the top three private brands that you perceive to be the best?” four brands stood out, thanks to a tie. All responses for first, second and third place were taken into account to determine the ranking.
Hercules/Dayton (tie): 5%
When factoring out associate, imported and major brands, the private brands perceived as the best by tire dealers are as follows:
Close to 70% of the respondents said their retail customers perceive the quality of major brands to be better than the quality of private brands.
Survey results: sales
Keeping in mind their brand confusion, 95.7% of the respondents to our survey said they carry private brands.
When they were asked, “What percent of your tire unit sales comes from private brands?” the average was 40%.
When asked if they were planning to add a private brand tire line in the next 12 months, 21% said yes. (Of the 4.3% of dealers who said they do not carry private brands, 4% said they plan on adding a line in the next 12 months.)
Over the same time frame, 15% said they were planning to drop a private brand line.
Price is the top reason a dealer handles private brand tires, according to our survey, and has been for years.
Dealers are split when it comes to selling major and private brand tires. More than 43% said private brands are easier to sell than major brands.
An additional 10% said there is no difference.
Profitability is the bottom line
Nearly 50% of the respondents to our survey said they enjoyed an increase in their private brand business over the last two years. The average increase over that period was 13%.
In contrast, 17% suffered an average decrease of 12%. Some 30% said their private brand business stayed the same.
Does it really matter whether private brands are confused with associate brands or low-cost imports? Not to the dealer. Price points, high margins, exclusivity -- whoever offers private brand-like benefits to the dealer is the dealer’s friend.
Buy a Becker! You can’t literally. But you can technically
Ever hear of the “Becker” tire brand? There isn’t one.
Becker Tire & Treading Inc. sells Bridgestone, Firestone, Toyo, Kumho and Yokohama passenger, light truck and truck tires. The 53-year-old company based in Great Bend, Kan., started selling Yokohama, its newest brand, in 2005.
It also sells Michelin and BFGoodrich agricultural tires, and is a Bandag retreader.
Major brands aside, the profit margin on its TBC Corp. private brands is consistently better, according to Gary Albright, president and COO.
Becker Tire retails and wholesales Multi-Mile passenger, LT and truck tires; Power King truck and skid steer tires; and Harvest King ag tires. In 2009, Becker Tire will celebrate 40 years as a TBC distributor.
“It’s probably a little more difficult to sell because of the (lack of) name recognition,” says Albright. “A lot of people buy Becker Tire — whatever we promote, basically. In other words, people buy from people.”
Becker Tire runs eight combination retail/commercial outlets. Its wholesale division services close to 1,000 customers in Kansas, Oklahoma, Texas, Colorado, Nebraska and Missouri. It is coming off a record year, and Albright predicts 2008 will be even better.
According to Modern Tire Dealer’s 2008 Facts Issue, TBC is the top domestic private brand marketer with a 7% consumer tire market share among four brands. Hercules Tire & Rubber Co. is second with a market share of 2.5%, followed by Treadways Corp. (2%) and Del-Nat Tire Corp. (1.5%).
Both TBC and Treadways are owned by Sumitomo Corp. of America.