Falken Tire Corp. has experienced a 16.5% annual growth rate in North America during the last decade, according to its CEO and president, Richard Smallwood. He made these favorable remarks at Falken’s dealer trip in Kona, Hawaii, in June.
But this wasn’t the main point that Smallwood and other Falken executives wanted to share with Falken’s largest dealer customers. In a broad-ranging Q&A session, the straight-forward-speaking Smallwood told dealers that Falken aspires to be at the same level as Toyo Tire U.S.A. Corp. and Yokohama Tire Corp., “but we’re not there yet.” He believes the company is currently competing with Hankook Tire America Corp., Kumho Tire U.S.A. Inc. and Cooper Tire & Rubber Co.
He said the company wants to “brand up,” but must do the right things to do this. “You just can’t raise prices and say you’ve moved up!” Smallwood joked with dealers.
Falken’s vice president of sales, Bruce Ware, put it this way: “If we’re not a brand that creates value to our customers, we have no value.”
The company continues to expand its product offerings, work on its promotional efforts and increase distribution. Falken has 8,500 points of sale in the country, which Smallwood believes positions the brand well for the future.
The company also has begun placing its brand strategically at the original equipment level. In early June, it was announced in Europe that the Falken brand was going to be OE on the VW UP!, a city car designed for Europe. Smallwood said more OE fitments are in the works. He wants the Falken brand to be placed on high-volume vehicles with strong consumer preference images.
“We don’t want to be at OE just to be at OE. It’s about supporting the brand.”
He explained the balancing act the company has been doing this year due to the unfavorable currency exchange rate between the yen and the dollar, since his company doesn’t manufacture in the United States.
Falken raised prices substantially earlier this year, which Smallwood said led to customer complaints. In a rare move for the industry, Falken sent out a letter of apology to its customers. The company has since revised its pricing, but must continue to watch its profitability closely.
As for an Ohtsu passenger tire line that was planned for this year, Smallwood said the company has delayed the launch.
“The exchange rate just would have killed us. So the launch is on hold for the present time, even though we have molds in a plant for UHP passenger, and two light truck tire lines.”
In response to a dealer’s question about offering consumer incentives — not to bring customers into the store, but to help the close — Smallwood said he didn’t foresee any “whoopee-wowsers” at the present time.
Andrew Hoit, vice president of marketing, said that the company prioritized its resources on the company’s new Falken Fanatic Associate Dealer program above consumer incentives.
“We’re one of the last RMA (Rubber Manufacturers Association) member companies to put an associate dealer program together,” explained Ware. “We’ve got a number of people in our company with retail experience, and we studied other programs and then developed our program.”
Falken took the program to four of its largest customers to make sure it brought value to them. “They were impressed,” said Ware, who likes an associate dealer program because he feels that it makes it much easier to reward people who are supporting Falken the most.
(Details of the Falken associate dealer program appeared in Modern Tire Dealer’s in-depth coverage of manufacturer dealer programs in the May issue.)
Hoit said Falken is spending more money on branding and marketing impressions in 2012. Falken will spend about 40% to 45% of its budget on print advertising, 30% to 35% of its budget on television advertising, and the remainder in social media. Hoit said the company is invested heavily in social media. He told dealers that in one month, the company can reach five million potential consumer customers by posting two items per day on its Facebook page.
In the fourth quarter of 2012, the company is updating its ZE 912 line due to mileage concerns. The new product will be called the ZE 912 Plus. This will then be phased out and replaced with a completely new line in the first quarter of 2014. ■
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