irelli’s NAFTA unit, said the tiremaker can think big without accepting compromises or excuses.”/>
And it was the first (at least in anyone’s memory) Pirelli dealer meeting in quite some time. Not that the tiremaker had a lot of catching up to do, but it did have a lot to talk about, a new tire to showcase for some 150 U.S. and Canadian dealers, and a group of about 400 U.S. and international dealers and other guests to host at the big race.
Among the replacement market wholesalers and retailers at the Hyatt Regency San Antonio for the dealer “convention” were some familiar dealers (such as Charlie Creighton of Colony Tire, Edenton, N.C.); dealer groups like the Independent Tire Dealers Group, Tequesta, Fla.; car dealer tire supplier Dealer Tire, Cleveland; and The Tire Rack.
The tightly-packed weekend meeting was long on information, which executives hoped reflected a new, clearer approach to market for the brand. Some of the information was revisited the following day during a driving and classroom event around the recently launched Cinturato P7 All-Season Plus, and at the Grand Prix of the United States, won by Brit Lewis Hamilton, who celebrated in a custom-made, Pirelli-badged Stetson.
The heart of the weekend, though, was the dealer meeting, kicked off by Paolo Ferrari, nine months on the job as chairman and CEO of Pirelli’s NAFTA unit, who introduced the meeting theme: “Think Big. No Compromises.”
A Good Story
“We have a good story to tell,” Ferrari said. The bold theme was appropriate because now Pirelli has a firm plan and can think big while not accepting compromises – or excuses, he noted.
He shared Pirelli’s view of where the OE and replacement markets are headed – global and North America – and how it matches Pirelli’s “premium strategy focus” (UHP, run-flats, winter tires).
“We are pursuing that part of the market that is growing,” he said. “And that is the premium segment.”
Every tiremaker, Ferrari noted, defines premium differently, some by size, some by speed rating, some by intended fitments. “Premium to us is a moving target” that “constantly shifts” based on “continuous advances in technology and innovation,” as well as changes in OEM demand and consumer desire. “We have to think of it this way.”
To be in the premium segment and succeed, he said, “we need to be relevant to consumers and OEMs will be willing to pay a premium price.”
Proof of that moving target, Ferrari said, is that Pirelli is seeing more of a convergence between the European and North American markets – smaller vehicles and greater emphasis on fuel economy (hybrids, electric vehicles and low rolling resistance tires). That is not limited to smaller vehicles, he added, as super premium carmakers like Audi, Porsche, Bentley and Mercedes-Benz are asking for lower rolling resistance tires, and carmakers in general “are seeking 10%-15% year-over-year improvements in rolling resistance.”
Boosted significantly by the new $300 million Silao, Mexico, consumer tire plant that opened earlier this year, Ferrari said, Pirelli now has ready access to product, and is backing that with a cleaner, clearer product screen and significant investment in marketing and promotion. The added capacity, he noted, will be key moving forward as Pirelli has committed to 18 new products over the next five years (globally, not specifically for North America). By 2015, these new products will account for 57% of Pirelli’s global revenues.
Throwing the Levers
“We are concentrating all resources and aligning all internal levers and programs to a premium strategy – R&D and product development, local manufacturing, targeted premium consumer segments, and a focus on select dealer and retailer partners,” Ferrari said.
But even with that, he admitted, “we have an even more comprehensive portfolio of products, I think, than we are able to communicate sometimes.”
To better leverage the Pirelli brand (valued at $2.9 billion), the tiremaker is scaling up its sell-in and sell-out marketing, advertising and channel support efforts.
That starts at the beginning, according to Tom Gravalos, vice president of marketing and OE sales, with understanding how consumers buy tires and how they see tire brands. Gravalos reviewed extensive research Pirelli has done to not only position its brand, but to develop models of different “premium” tire buyers. Some, he said, are more engaged in the process than others; some proceed based on how they see brands, vehicles and retail outlets.
At the end, the effort to see how they want to research and buy tires, he said, helps Pirelli stay ahead of shifts in consumer desires and demands, and better target its marketing and promotion efforts to reach all identified premium buyers in different ways.
Marco Zambianchi, vice president of product and business planning, told dealers about the OE level shifts into and around the “premium market” and how these are impacting the replacement side. And he showed data indicating that even as the total replacement market has slid by 17.7 million tires between 2007 and 2011, (based on RMA shipment data), the “premium segment” has grown by 10.7 million units.
Zambianchi showed how the revised Pirelli product screen fits into the “premium segment.” Once regarded as disjointed by dealers, Pirelli’s new product screen is straight forward, focused on the UHP segment with the P Zero lineup, the SUV/CUV and pick-up market with the Scorpion line, and the HP all-season segment with the Cinturato line.
He gave way to senior vice president and head of sales Riccardo Cichi, who talked about “customer partnership programs.” Cichi pointed out that on the replacement side, Pirelli “is not overexposed and has dedicated focus on our selective business partners” – those being car dealers and retail and wholesale independent tire dealers. Car dealers, he noted, are growing as a share of the replacement market.
Cichi outlined sales support efforts through consumer rebates, as well as other special promotions, sales incentives, digital media and POS support, and a major consumer sweepstakes (with the winner getting an all-expenses paid trip to Sicily), which launched Oct. 1 and runs through March 31, 2013.
Dealer training aids have been enhanced, Cichi said, with a revised e-learning modular training and dealer certification program, and an expanded 12-city “drive and learn” tour in 2013.
Rafael Navarro, vice president of communications, media relations and motorsports, complimented Ferrari’s vow of more promotion, more marketing and more support with an outline of planned 2013 media, promotion and support activities. Pirelli will return to advertising in tire industry publications, increase its exposure in enthusiast and lifestyle publications, and increase its TV efforts.
TV advertising will not only support Formula 1 (which shifts to NBC SportsNet next season), but also the tiremaker’s World Challenge efforts. Pirelli also re-upped with famed car designer Chip Foose on a multi-year support deal on Foose’s “Overhaulin’” show on Discovery, plus spots on the car-oriented Velocity network. Pirelli also signed a new contract with rally driver and Internet sensation Ken Block.
On the motorsports side, Navarro reminded that the tiremaker is working to extend its F1 supply deal with the FIA past its 2013 expiration. Additionally, Pirelli has signed new multi-year contracts to support the Pirelli World Challenge, the Ferrari Challenge, the Pirelli Porsche Cayman Inter Series and the Porsche Pirelli GT3 Cup.
Navarro also outlined how Pirelli will become “the most relevant tire manufacturer online.” The effort, he said, is designed to “build consideration and preference for Pirelli” in order to “drive conversion with dealers.”
In addition to an all-new website, the online push will include traditional social media platforms, work with well-recognized bloggers, and all-new digital off-shoots.
“Why digital?” Navarro asked the attendees. “Research drives us there, and enthusiasts and image conscious drivers are both heavily invested online.” Pirelli, he said, has a defined vision of how all of the media elements – traditional and digital/social – will converge on the target consumer for the benefit of the tiremaker and its retail customers.
