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New Faces, Fresh Strategy For Falken

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The sounds of tire studs clattering over the brick downtown streets is disarming to those less familiar with the crunching gravel-like noise.

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But that’s a familiar reminder of spring for the residents of Reykjavik, the capital city of Iceland and largest town on the 40,000-square-mile volcanic island of 325,670 people – the most sparsely populated country in Europe.

It may be small – about the size of the state of Kentucky, I’m told – but it is by far one of the most interesting and endearing places on the planet.

Located in southwestern Iceland, Reykjavik is home to two-thirds of the island’s population, and at 64°08′ North, it is the world’s northernmost capital of a sovereign state. Thanks to an extensive geothermal system and other efforts, 85% of the country’s energy comes from renewal sources. It also has one of the lowest crime rates anywhere; police don’t carry guns, and it is common to seem baby-laden prams parked outside shops while mom and dad shop.
The narrow downtown streets are one way because that’s all the space there is in the central city. Charming, understated and clean with door after door of small shops catering to both tourists and the locals. The grocer and hardware store are sided by a Christmas store and one selling Icelandic wool sweaters, hats and scarfs.

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Iceland was first settled in 870 A.D. by Norwegian explorer Ingólfur Arnarson, and Reykjavik was founded in 1786 as a trading town. Thanks to detailed recordkeeping, Icelanders can trace their country’s past almost to the day, unlike many countries.

Iceland has been home to numerous movie sets over the years, including recent hits “Thor: The Dark World,” “Star Trek Into Darkness,” “Journey to the Center of the Earth” and “Prometheus.” The capital city hosted the 1972 world chess championship between America’s Bobby Fischer and the Soviet Union’s Boris Spassky, and a 1986 summit meeting between Ronald Reagan and Soviet leader Mikhail Gorbachev.

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And let’s not forget, there was the whole volcanic ash thing in March 2010 when a volcano in Eyjafjallajökull in the south erupted for the first time since 1821, touching off nearly two months of flight cancellations across Europe.

Iceland is actually one giant volcano, geologically active and covered by sand and lava. Outside of the capitol city lie miles upon miles of moss-coated lava boulders, snow-capped mountains, black beaches of finely ground lava rock, glaciers and glacial rivers, geysers, amazing waterfalls and patches of tillable land reserved for grasses and feedstock for the island’s unique horses and grazing cattle and sheep.

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Warmed by the Gulf Stream, Iceland is actually quite temperate despite its name and latitude just below the Arctic Circle. By contrast, Greenland, its next-door neighbor, is completely covered by deep snow and ice.

The rich history of a country makes it a hot travel destination. Enough to attract Falken Tire Corp. for its annual dealer incentive trip, held this past April.

Down to Business

Even an incentive trip has some business to conduct, and Falken’s newly minted executive director of marketing Rick Brennan walked attendees through the tire company’s view of the current North American market and some upcoming product additions.

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Brennan told the 15 dealers on the trip that the new vehicle market has nearly reached pre-recession levels, but that fuel economy has become a more important target for both drivers and automakers. However, Americans still want the benefits of larger vehicles, thus the shift to gas-sipping SUVs and growth of CUVs, and the addition of new entries like an Acura based on the popular Honda Fit platform and engine.

Consumers, he noted, are experiencing “life in real time” thanks to new smartphone and tablet technologies, and this will lead to changes in their retail lives. The winners will be those tire companies and dealers that engage and leverage the advantages new technologies bring.

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On the products side, Brennan said the Falken Wildpeak H/T will be getting 18 new sizes this August, taking the line to 44 total sizes and 78.6% coverage of the light truck/SUV/CUV segments. The expansion includes 17-, 18- and 20-inch metric and P-metric tires, as well as three LT-metric sizes.
The Wildpeak M/T will officially launch next year, he said, but three sizes – 37×12.50R17, LT265/75R16 and 38×­13.50R17 – are expected to be available this year. In all, the line will carry 26 flotation and LT-metric sizes.

Falken’s Ziex STZ05 will get five new sizes by the close of October, he said: 255/55R18 XL, 235/60R18 XL, 285/50R20 XL, 245/50R20, 245/55R19 and 255/60R19.

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By November, the Falken Sincera SN211 will see four new sizes, Brennan noted, including 235/65R17 XL, 235/60-­ R18 XL, 235/70R16 and 225/65R17.
The Ohtsu FP7000 will add sizes in December, including three extra load sizes.

Business Changes

Just before the dealers departed for Iceland, Falken president Richard Smallwood announced the retirement of sales vice president Bruce Ware, who has served the tiremaker for 11 years. With that, Andrew Hoit moved over from head of marketing to become vice president of sales. Brennan, who came on board nearly two years ago as executive director of product strategy, took over for Hoit.

Hoit said the change has started a bit of a reorganization that will result in “expanding the size” of the sales staff. “We’re looking at ways to not only expand our effective coverage but also increase the penetration. Today we have around 15 people on the sales staff, and that will virtually double in size over the course of the next year or so.”

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Smallwood said that Hoit’s been charged with creating a “new” sales organization, and Smallwood said, “we’re allowing him the freedom to build the sales teams as he sees it necessary.”

Part of the change includes moving from three sales territories – East, West and retail – to four, and creating a separate group to handle Falken’s medium truck tire lines. Each will have its own division manager, and Smallwood indicated that territories could be further sliced as needed in the future.

The medium truck side will get a lot of attention, the executives said. “We’ve tried having our regular sales force sell truck, too, and that just hasn’t worked. And so, we’re going to have a dedicated truck tire sales force, and then we can do a better job of taking care of the customer.
“We haven’t been fully committed to the business, and we’ve got to make a decision: You’re either in or you’re out, but you can’t straddle the fence,” Small­- wood said.

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“We virtually disappeared from the truck tire market,” offered Brennan. “Now we’re coming back with a new brand (Falken) and new products, so we can push ourselves in through the small guys, the one-on-one owner operators, small fleets, P&D – those are the ones that we need to focus on now, and then when we get our distribution up, we can go to larger fleets.”

Falken feels more comfortable with its place in the consumer market. “In terms of light vehicle product, we’ve passed almost all of our competitors, in terms of shipments,” Smallwood said. “What we need to do better now is build the power of the brand. OE is going to be the biggest one. That’s why you see us having such an aggressive push at OE, like with Chry­sler, we have four different Volkswagen fitments coming out, and we’re finishing up a project with Porsche right now. Those are going to make a big difference for us and it’s going to bring more consumers to the dealer.”

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Brennan said dealers can expect to see a number of new tools to help dealers build their businesses. “We’ve got to go in and really know a lot more about the dealer, a lot more about what’s going around the dealer so that we can help him build his business.”

That will also require “developing an ability to see a bigger picture from five puzzle pieces and how those fit in with the dealer. And then show him how we fit and how we’ll bring more sales or more profit or reduce his workload,” he said.

Still, Falken knows it has some work to do. “We haven’t done a good job in developing a wide enough light truck product line. We have been historically weak there,” Smallwood admitted. “With our touring products, we haven’t had a broad enough range there. We’ve been very strong in high performance and ultra-high performance; we have the fourth highest market share brand in North America in UHP.”

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Distribution and market coverage are also on Smallwood’s radar. “We don’t need to create conflict with the dealer to grow,” he said. “We just have to start selling tires to markets where we just have no coverage whatsoever. It’s going to be the product, getting enough product out there and then getting better regional coverage.”

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