Selling in the Private Market
“We’ve been in business 21 years and never carried name brand tires.”
This is the eighth installment of Tire Review’s Dealer Diary, a year-long series showcasing a typical tire dealer, his business, how he runs it, the many issues he deals with, and his thoughts on the industry in general.
This year’s Dealer Diary series, written by Mana-ging Editor Craig Gifford, will feature two different tire dealers, alternating between one focused primarily on the retail side, and another that handles mainly commercial accounts.
We’d love to hear your comments on this series. Drop us a line using the reader feedback card in this issue, or send us an e-mail at [email protected].
Profiled in this installment is Jeff Hill, the retail sales manager of North Gateway Tire, located in Medina, Ohio.
Not carrying a name brand tire requires a lot from a dealer. The dealership’s name needs to be entrenched in the consumer’s mind. Sales people need to be able to get the rubber out the door. And you also need to provide excellent service to keep customers happy.
But let’s face it, any dealership needs to provide those things. Name recognition, good sales personnel and quality service are what keeps dealers in business, let alone profitable. However, to be a dealer that specializes in carrying private brand tires, one more thing is required.
Now some will argue that any independent tire dealer needs courage his entire livelihood is at stake every day, and with every tire he sells. But for a dealer to depend totally on a tire that really isn’t a household name takes a little more.
Playing the Name Game
Most customers recognize the Goodyear name, the Michelin name. Those are lines customers feel they can trust. That same name recognition isn’t there for something like Eldorado, Cordovan, National or Dynatrac. Customers just don’t know about all the features and benefits today’s private brand tires offer.
And that’s where the courage comes in. Dealers stake their reputations on tires that many customers haven’t ever heard of.
Now, it is true that many customers will take the advice of their dealer when it comes to what tire to buy. But can a dealer really compete better with a second or third tier tire line?
“Most assuredly,” said Jeff Hill of North Gateway Tire (NGT). ®We’ve been in business for 21 years and have never carried name-brand tires. And our tire sales continue to increase every year, along with total sales and profits.®
North Gateway carries private brands from Road King to Multi-Mile and everything in between. But with all the major tire lines out there, why feature those? Or, why not at least carry one major brand to help drawn in business, and then focus the customers on the private label?
What is it that a smaller brand can offer dealerships like North Gateway?
“I really wouldn’t call it a smaller brand,” Hill said. ®We carry the largest private brand in the world with the Multi-Mile line from TBC Corp.
“We carry those because we don’t like the major brands dictating to us how things have to be. And we have a protected area with the private brand.”
What it all boils down to is freedom and territory exclusivity. Many dealers like the ability to handle a tire line as they please, to offer their customers a solid alternative. They like being able to set their own profit margins and control everything about the brand. And they like doing that without having to compete with every other tire retailer in their market.
It really is that simple.
What Customers Really Want
But how are customers responding? After all, zero customer response translates into zero profits.
“The customers really like the product,” Hill said. ®The private brands give customers very good quality better than a lot of the major brands. And those customers feel they’re getting a quality product for less money.®
Yes, private brands do offer high quality at a cheaper price. In these days of manufacturing efficiency, most private brand lines are manufactured using the same technology and components even compounds ®” as major brands.
But the customer generally doesn’t know that at first. The dealer must be able to convey all the positives about the private label while working around lack of name recognition.
According to Hill, dealers are doing just that, taking advantage of the good things that private brands provide.
“Fifty two percent of people buy private brand tires,” he said. ®The tires are a high-quality product and they’re offered at a lower cost.
“But some of the customers are not familiar with private brands.”
That’s where dealer knowledge comes in. Any dealer worth his salt knows which direction to steer customers in. Over time, a trust is built between dealer and customer which allows dealers like Hill to aid in putting the right tire on the vehicle. Over half the time, the right tire the correct balance between performance and cost ®” is a private brand product.
Choosing the Right Lines
With that said, Hill looks for specific things when it comes to picking out brands.
“We look for lines that offer more value for the money,” he said. ®That’s what the customer wants.® Hill also cited quality and price as the two most important things when it comes to a brand.
But even for a dealer that carries major brands, having some private labels in the showroom can any dealer an added advantage over the competition. Territory-specific private brands can push a dealer over the edge in his marketplace by allowing him to attack certain niches and take advantage of competition shortfalls.
“We’re always trying to stay ahead of our competition,” said Hill. He feels NGT is ®more price-competitive,® but offers a better level of service and greater familiarity to his customers.
“I feel that as an independent dealer, we’re more service-orientated and more customer-focused than others.”
And being service orientated and customer focused means filling in where the competition has holes. That’s what North Gateway specializes in.
While NGT has selected lines on display in the showroom, Jeff Hill and company thrive on being able to find any tire that a customer could want.
“If it’s round and black and runs on- or off-road, we have it,” Hill said.