Kumho Tire USA has weathered the storm of 2010 – a year riddled with the financial makeover of parent company Kumho Asiana Group, a sluggish economy and continued repercussions of the Chinese tire tariff – and is looking toward a bright future.
Somewhat appropriately, the tiremaker used the sunny backdrop of Los Cabos, Mexico, when delivering the positive message at its 2011 dealer meeting, which took place in early January.
“Even with all the challenges thrown at Kumho in 2010, and one of the worst economic downturns in recent history, Kumho has managed to keep the ship aright and forge a strong path toward the future,” said J.B. Kim, Kumho Tire USA president and CEO.
He explained that Kumho reacted to the challenging environment by changing the value proposition of its brand, realigning its sales force, restructuring its distribution network and changing its marketing focus. “2011 will be full of changes for the U.S. market, but Kumho will be positioned to serve dealers’ needs both with new products and support,” Kim said.
Also on hand for the meeting was parent company Kumho Tire Co. president and CEO J.H. Kim, who followed up on the remarks and promises he made to dealers at last year’s event.
“Last year at this time, I told you that Kumho Tire will continue to be a supplier of tires to the U.S. marketplace, and I asked all of you to continue to believe in us as a valuable supplier,” said J.H. Kim. “I am proud to say my prediction has come true as a result of the wonderful support all of you have given to Kumho Tire USA in the past year.”
In 2010, Kumho forged a new agreement with its labor unions in South Korea in order to improve production efficiencies. “This will allow us to provide better product to you at a more competitive price,” J.H. Kim said. “As more than 60% of our production capacity comes from Korea, this was a major step in defining our future.”
He added the tiremaker also reorganized its management structure to speed decision-making and improve response time. “Even though you may not have seen the complete effects of this yet, you will feel the results in 2011,” J.H. Kim noted.
One major focus of 2010 was adapting to the U.S. tariff on Chinese-made tires. “Beginning in 2009 and into 2010, we were forced to realign the production mix of every factory we have,” J.H. Kim told dealers, noting that meant shipping tires to the U.S. from its plants in South Korea and Vietnam instead of China. “This alignment made it possible to modify which products were made in which factories so we can continue to bring Kumho products into the U.S. You have made it clear to us that you’d like more, and we will do our best to address your desires. You will see improvements in 2011.”
National vice president of sales Armand Allaire explained to dealers the company’s supply chain management and logistics improvements, as well as its new client-centric focus. In 2010, Kumho Tire USA consolidated from five distribution centers to three. The remaining warehouses in Rancho Cucamonga, Calif., Chicago and Atlanta have a combined square footage of nearly 1.6 million square feet.
“The consolidation allows what comes in to be more effectively packaged up and shipped to you. Our fill rates have improved because of this,” Allaire told dealers.
Kumho has changed to a client-centric focus, meaning that the tiremaker “cannot be all things to all people, therefore we must focus on servicing our key clients,” he noted. “We will focus on key retail and wholesale clients and align our products and services to our mutual interests.”
Rather than regional vice presidents and sales managers that manage business by geographic areas, Kumho has shifted to divisional vice presidents and key client managers, who will concentrate on groups of clients. The tiremaker also boosted its call center, which now provides improved response time on sales issues.
The result of the shifted focus will be an improvement in the quality of products, procedures and relationships, Allaire added.
Boosting Brand Awareness
Vice president of marketing Rick Brennan presented tire industry and consumer trends that all point to a positive 2011, specifically a continued growth in business, a slow decline in unemployment and a steady growth in home sales and new construction. The end result will be increased consumer confidence. And to tap into that confidence, Kumho will continue to adapt its marketing strategy for better top-of-mind brand awareness, he said.
“We have to find a way to capture people in a moment of passion,” Brennan said. “If we can catch them at a football or basketball game when they are at the height of euphoria and truly interact with them, not just have our name on a sign then when it comes time to buy tires, they will associate the Kumho name with that positive connection. If we interact with a consumer when he’s having a positive time, he will remember us.”
Along those lines, Kumho will continue its sports marketing program, in which Brennan estimated Kumho staff personally interacted with one million fans in 2010, when it sponsored the Los Angeles Lakers and Miami Heat NBA teams, soccer’s Manchester United, and five NCAA football teams: the University of Southern California, Ohio State University, the University of Texas, the University of Florida and the University of Tennessee.
The tiremaker will shift away from general motorsports and instead place a focus on grassroots motorsports, car clubs and enthusiast groups.
Kumho also will boost its Internet and social media presence, in addition to increasing advertising in trade publications and creating all-new point-of-sale materials, TV commercials, Internet ads, product videos and consumer promotions in 2011, according to Kumho Tire USA marketing manager David Koh. Kumho plans to partner with dealers for co-branding efforts in the trade ads and in stadium signage, he added.
In his presentation, Brennan also focused on what dealers need to be prepared for in order to succeed in the coming years. After the meeting, he boiled it down to one key focus: be more aware of what is going on in your market and concentrate on what you need.
“With the expansion of SKUs, dealers can’t stock everything,” he said. “And if they wait to call their local wholesaler until a customer is in their door, it may be too late.”
He noted that recent trends show the immediate purchase is declining. Instead, consumers are spending time doing research on their own, then base the final decision of where to buy a given product solely on price and availability. Smartphone apps that are able to read barcodes and provide price comparisons for nearby businesses may not have reached the tire industry yet, but they are on the way, Brennan said.
“The key to keeping a consumer from walking out is to have the product available and to capture and close the sale right then and there,” he said. “Dealers have to make decisions that are going to get increasingly complex. Knowing the market, working with suppliers and having the tires on-site is the biggest thing.”
Part of the client-centric focus mentioned earlier addresses this need, Brennan noted. “There’s a lot more than tires to be sold by manufacturers in the future. You also have to sell the capability to help dealers run their businesses. We’re working diligently to be able to be one of the best at doing this.”
New for 2011 is the Ecsta 4X, an asymmetrical all-season UHP tire designed to improve grip, cornering and braking both in wet and dry conditions, as well as in light snow, according to Kumho. The tire, which replaces the Ecsta ASX, will be available in July in 48 sizes ranging from 15- to 20-inch rim diameters.
The Ecsta 4X is among Kumho’s tires that qualify for the tiremaker’s new 25% UHP Road Hazard Warranty, in which a consumer’s tire will be replaced if it has been damaged within the first 25% of treadwear, according to the company. Other tires included in the warranty, which became effective Jan. 1, are the Ecsta LX Premium (KU27), Ecsta ASX (KU21), Ecsta SPT (KU31) and Ecsta LE Sport (KU39).
Also in 2011, Kumho will produce additional sizes of the Ecowing KH30, which was introduced last year. Three SmartWay-certified tires the KLD01e drive, KLS02e steer and KLT02e trailer will replace original designs, which did not have the “e” and a fuel-saving image branded onto the tires’ sidewalls.