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Nexen Plans to Succeed with Focus on Improved Brand Image


Kyle Roberts is director of marketing for Nexen Tire America Inc., the Diamond Bar, Calif.-based country headquarters of South Korean tiremaker Nexen Tire Corp. A newcomer to the tire industry, the 38-year-old Roberts spent many years in key marketing posts in other B2B/B2C businesses like office furniture.


He is charged with boosting the company’s fortune in the U.S., where it posted sales of around $300 million last year. The goal this year, according to high-ranking executives with the parent firm, is 4.8 million tires, up from 2014 sales of 3.4 million tires.

Right now, according to those execs, Nexen’s top market is Europe, where it plans to sell around 9 million tires this year. That’s followed by the U.S. at 4.8 million planned for this year, and its home South Korea market at 4.3 million tires.

During a media visit to Nexen Tire Corp’s facilities in South Korea, Roberts sat with Tire Review editor Jim Smith to talk about Nexen’s marketing and sales plans going forward.


We were talking about some of the barriers that you face trying to build the brand in the U.S., like consumer awareness. But you were also concerned about how dealers saw Nexen in the market, even within the realm of their business opportunities.  


Kyle Roberts, director of marketing for Nexen Tire America Inc., at SEMA last year.

Roberts: “It’s no secret that our product is used as like an entry-level price-point tire right above the Chinese within the channel. And obviously that’s something that we want to change, but we know it’s going to require a lot of work to do that. Even if we elevate our brand within the channel, we still have to be able to address what the market’s willing to bear for our product. So, as we go out and educate our dealers and retailers on our product and our quality and our innovation and manufacturing capabilities and capacity and all that. And that’s great for them, and they can feel comfortable selling our product, but if they still can’t get the additional premium for the product at the consumer level, it’s not going to really do us any good. It’s sort of a chicken before the egg, though. We’ve got to take care of the dealer first and get them being loyal to our product and being able to sell our product features to the consumer. Then we’ll help reinforce that with some consumer marketing, starting in 2016, that’ll be a little bit more aggressive than the consumer marketing we’ve done in the past and this year.”

You talked a little bit yesterday about a marketing plan that you’ve got pretty much written and sitting on your desk. Talk about that, the genesis of that and where you hope that that may end up.


Roberts: “Well, it’s more about building our product at a core level with demographics that makes sense for us. Our leading message is warranty, and who does that make sense to? It makes sense to people that drive a lot of miles. It makes sense to people that are active, that may be driving to adventurous locations. That just speaks to us of young families, and of young, active individuals. We’re really trying to target where we think we can play best, and the benefit is that younger demographic also is more savvy on the Internet and doing research online and finding value. So when those consumers go online they see positive reviews for Nexen, they see a value price-point, and they can feel comfortable making a purchase, whereas an older generation may be a little bit more brand loyal to a big name, and they’re not savvy on doing research on the Internet. We’re having a very difficult time converting that customer to Nexen, so it’s wasted dollars for us to try and market to those people.


“To come full circle and answer your question about what does our plan revolves around, its about being 100% voice-of-customer, where we’re not competing with other tire manufacturers in a certain demographic, and it is focused on hobbies and action, those active lifestyles right now. We have a lot going on with that snowboarding, surfing, canoeing, kayaking, hiking and mountain biking type of segment, where families are loading up their cars and driving a couple hundred miles to the mountain or to the lake and having a weekend together. That’s really who we are targeting because on the weekdays they’re driving 30-40 miles round-trip to work, dropping the kids off, running errands, and then on the weekends they’re packing up the vehicle and going on day trips. That plays to our roadside assistance, our warranty programs, our road hazard. That caters to the young active families that are Internet savvy and are research savvy, and that’s really who we want to target.”


Nexen had a lot of emphasis of a few years ago on performance. It seems to be the road everyone travels at the beginning. Has that become a bit of a detriment to moving to a little bit of a broader message to the market?

Roberts: “Yeah, it has, and I feel like it’s a very crowded space. There are other people who do it better than we do. I didn’t want to compete in that. So when I came on board, one of the first things I did was ask what are we really good at. And we had a drift racing team, and we were trying to get involved with motorsports. We didn’t even have a competition tire. We were using a street tire for drifting. We weren’t performing well, and we weren’t putting in the budget that was required to have a positive brand image in that. We were selling some high wheel size and UHP products because we had a great price point with those products, but really we weren’t marketing this high performance brand, like a Pirelli or even a Continental or something like that. Then if you look at the way they advertise, there’s a dozen manufacturers that spend a lot of money advertising that high performance message. So, we can go and advertise the ‘don’t worry we’re the tire company that’s going to get you to the mountain’ or ‘we’re the tire company that’s going to get you safely to the soccer game, and if you’ve got a flat tire we’ll take care of it for you, you don’t need to get out of the car.’ That’s really where we’re going to go. It’s very difficult to make a tire company a lifestyle company, but we’re trying to create that with the younger generation.”


We’re starting to see a little bit more of that, the lifestyle marketing. Do you think that is where the future of all of this is going, where there’s going to be the subset of the broad, overarching Tier 1 mega companies, and then everybody else is looking for a slice of that lifestyle pie?

Roberts: “I really think so. I really do.”

How subdivided can the whole lifestyle play go, though? Is it like there’s this camping element or there’s this…

Roberts: “It’s not big enough. You still have to play in all categories. You have to look at your brand and your communication, your integrated marketing communication plan, and look at how to be the leader with this lifestyle brand. And then also play in the high performance and in the light truck segment without compromising your core message. Because if you just try and be one thing, I don’t think you’re going to find the volume that you need in order to be a successful manufacturer.


“So our challenge is to create a core of who we are, lead with that message, but then find ways to allow that message to correlate to a high performance crowd or a tuning crowd or a lifted-truck crowd and make it connect without jeopardizing who we are. For instance, we wouldn’t want to be the family wholesome brand and then go out there and go to an activation at a tradeshow and throw a lot of scantily clad models out there. It would be in conflict with what we’re trying to do. So we have to figure out a way to do that type of thing but in a way that matches with our core. I think if you try and segment too little of a piece of the pie, you’re going to fail.”


Do you view the argument by some of the Tier 3 and Tier 4 tire companies get lumped into those groups simply because of their lack of experience in the market, that it’s more about price, and that defines them in the market. Is part of the answer is to just change your pricing? Or do you have to earn that?

Roberts: “I think you have to earn it. You have to earn it. I think like any product segment, you’re going to have different tiers of product pricing. And, you know, right now with raw materials being super low, I think a lot of companies are doing cost-plus instead of maintaining a market price, and they’re doing cost-plus in order to gain marketshare. When you have larger Tier 1s that are doing a cost-plus, it forces Tier 2s and Tier 3s that don’t have the brand recognition to lower their price, as well. That’s unfortunate because we’re devaluing what a set of tires is worth in the marketplace.  And the only person that really wins is the consumer. It is great for them to be able to buy great tires at a lower price. But for the industry itself, it’s really causing a problem with profitability throughout the channel. So, I think it all starts with understanding what the market will bear for a set of products. The leaders in the marketplace need to set that price for what their product is worth, and then everyone else needs to fall in line with where their brand value is with the consumer.”


Part of that also requires having the right products and having adequate products. Where do you see Nexen in terms of reaching where you feel it should be from a product array standpoint, and what are some of the products that there has been to try to get to that?

Roberts: “We have a very full product line, somewhat too full in certain segments. We need to trim down. We do lack a mud tire line, and the investment is significant in order to get into that segment. It is something that we’re currently researching and looking at putting a business plan towards. But overall we think our product line is very strong. We just launched seven new patterns in 2013 and 2014, and it’s taking time for the market to get used to those new patterns and to try them and to develop them with their customers, but those seven new product lines have rounded out our product line very well.”


In terms of distribution, you mentioned yesterday that you’ve got a core of about 1,500 dealers, and these are guys who are basically 100-unit and above dealers. What is your goal in terms of a distribution number? Is there a bogey, or is it to build up incremental growth?

Roberts: “No, I don’t think there’s a target number. Obviously we have a sales growth number that we’re targeting, but we feel that there’s so much work that can be done with our current customer base, to grow their sales, that we really want to start there. So, when we have the dealer that doesn’t understand what Nexen is, and they’re purchasing 40 or 50 tires a year or using us as fill-in, then we can educate that customer and get them to start buying 200 or 300 units a year. We’re looking at 300%-400% growth with existing customer base possibilities just by reaching them and educating them on what we are, and giving them the tools to sell our product. I don’t think it’s more about the number of dealers. It’s more about our share of business with our current existing dealer base.”


What’s the message to the dealer? Where’s the play to get to that level?

Roberts: “We’re going out to the market with a three-tiered plan for the dealers, which is to educate them on who we really are, so they have the tools to sell the Nexen product. That’s the OE growth story and how we’re putting 2 million tires a year on the road in the U.S. right now, and that number is growing every month. And that’s going to build more replacement business, so they should feel comfortable stocking those products so that they can fill the replacement demand. That’s also increasing our brand awareness. So, the more OE products we sell, the more brand awareness we will have with the consumer. Then it’s talking about our manufacturing capabilities and our uninterrupted supply and capacity. It’s helping dealers know that if they partner with Nexen and take Nexen as one of their core brands that they’ll never be out of product, that they’ll always have supply. Understanding that our quality is top notch and top tier, and that’s some of the purpose of the manufacturing facility videos that we have that we show them. It’s about educating them on who we really are, so they don’t think we’re just a nice value brand that’s a step above the Chinese.


“The second step is incentivizing them to sell our product. We just launched the Next Level dealer program this year, and that was aimed at putting the power in the hands of the retailer to earn additional dollars on Nexen products.

“Then the third piece is to drive consumer brand awareness and pull business through the channel. That’s the piece that we’re focusing on in the second half of 2015 and more so in 2016. When they’re comfortable selling the product and they see they’re going to benefit by gaining loyalty rewards for selling the product, there’s less barrier to that consumer buying because the dealer can do a great job selling with confidence. That’s really how we’re targeting our existing customer base and then new prospect customers, as well.”


In terms of reaching out to the dealer market with some of that message, you mentioned trade advertising. What’s the plan as far as that’s concerned?

Roberts: “At the beginning of the year we did a little bit of ‘why Nexen,’ which is the OE and the manufacturing story, and that turned into ‘sign up for the Next Level program and here’s what you can earn.’ We will be doing some advertising later in the year with winners of the program and showcasing them and what they were able to win in the sweepstakes. We’ll be doing some product advertising, as well.


“And we did a couple of fun things this year that were just to build the Nexen brand within the industry. We did the NCAA tournament bracket pool in March, and we had several people sign up for that, and the great thing about that is they have to log in to the website in order to make their picks and follow their scores and see how they’re tracking. We developed over 700,000 impressions with that program. The goal was just to have the industry talking about Nexen for the month of March. We’ll be doing something similar to that with the NFL later in the year. We’ll be doing a contest for the industry where everyone can sign up and log in to the website and make picks. This will have Nexen on the top of their minds for the NFL football season.”


You mentioned earlier the seven new products over 2013 and 2014. Looking down the pike in terms of this year and going into next, what’s being worked on? What can we expect to see in terms of new products?

Roberts: “Our main focus right now is a competition tire that will come out in a few sizes, called the SUR4. We’re looking at additional sizes of our Aria AH7, which is our long-mileage touring tire. And we’re investigating the mud tire, which will be called the MTX.”

The new Nexen plant in Europe, is that going to be 100% dedicated to Europe, or is that going to be tapped for sourcing for other parts of the world?


Roberts: “From what my understanding is, it’s mostly for Europe. It’s nothing for the U.S. that I know of, but obviously it’ll open up capacity in our Korean plants for U.S.”

Is there a North American plant in the future?

Roberts: “A North America plant is next on the radar. However, the year that we would need that is still in question because of the additional capacity investments we made in the Korean factories and then with the European factory coming on board, that even frees up more capacity. We would nearly need to double our North American business from where it is today before we would look at putting a factory in North America. However, it is next in the pipeline. But the initial estimates are 2020.”


In five years’ time, where do you anticipate Nexen being?

Roberts: “I anticipate us being in the Tier 2 group somewhere as far as price level, and I’m seeing our volume double from where it is today, and our marketshare being closer to 4% instead of 2%.”

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