It was a warm and sunny day in Austin, Texas, when my life changed forever. With my face pressed firmly against the tall safety fence leading up to turn one at Circuit of The Americas, I saw a race car do something that defied my understanding of physics up until that point in my life.
The number 16 Ferrari cut through the damp autumn air at 205 mph up the famous turn one hill before making a sharp left-hand turn at 62 mph. Growing up, I was always a fan of stock car racing, but that all changed in 2019 when I witnessed firsthand “The Greatest Racing Spectacle on The Planet” at the U.S. Grand Prix in Austin, Texas.
Since then, I’ve been obsessed with understanding the technical details of a series widely considered to be “The Pinnacle of Motor Racing.” And naturally, as a second-generation tire guy myself, I absolutely love that tires play such a pivotal role in Formula One racing. This year, the U.S. Grand Prix takes place from Oct. 21-23, and to get in the spirit of race day, I spoke with Mario Isola, Pirelli’s head of F1 and car racing, about Pirelli’s tire technology for this year’s F1 races. Take a look at that video interview above.
While F1 racing is a global affair, America’s infatuation with motor racing dates back to May 1911 when the first cars careened across the hallowed bricks of the Indianapolis 500 and later in 1948, when the first stock cars raced on the beaches in Daytona. Speed and power are part of our DNA here in America, which I believe is why Formula 1 racing – along with its Netflix presence – has grown in popularity in the US.
The Italian Job
As it turns out, this culture and deep passion for speed and horsepower is not uniquely American. “That’s part of our culture. We have the motor valley in Emilia Romagna, where we have famous brands like Ferrari, Lamborghini, Maserati and Pagani,” says Isola. “I believe that’s part of our DNA. We have a lot of brands in Italy and passion around these brands.”
And when it comes to ultra-high performance (UHP) road car tires and bleeding-edge tire technology, where better to look than the race track? As much as passion and emotion accompany motorsports, it turns out there’s also sound logic in this theory of looking to track tire technology. The experts call it strategic learning, which is really just another way of saying that many of the most successful people and companies look first to the experts. In other words, who’s doing it best and what can I learn from them in order to produce the best results in the shortest amount of time? And when it comes to UHP tires, the experts can often be found trackside alongside the likes of Ferrari, Mercedes and McLaren.
“Pirelli is the leader in the prestige car sector, with a market share of around 50%,” says Ian Coke, chief technical officer for Pirelli North America, who has been with Pirelli in various technical roles for the past 37 years. “More than half of the most desirable cars in the world leave their factories on Pirelli tires.”
In fact, Pirelli’s focus on building high-performance road car tires dates back to 1986 when Pirelli began creating the P-Zero tire concept alongside the legendary Ferrari F40, the final production car to be personally approved by Enzo Ferrari. “Today, P-Zero is synonymous with sporting performance, characterized by advanced technology derived from Pirelli’s long experience in motorsport,” says Coke. And that’s as true with its P-Zero Corsa UHP tire line, developed in conjunction with the likes of Porsche and BMW, as it is with the Cinturato all-season performance tire line.
From Track to Street to Your Showroom
So what can we learn from Pirelli’s on-track experience and how can we leverage this Italian high-performance tire expertise in order to improve our own business? To really understand this, we must first recognize that not all consumers are created equally.
Today, roughly 64% of consumers in the U.S. live paycheck to paycheck, and according to a University of Michigan survey, more Americans report reduced living standards due to rising inflation than at any other time in the survey’s history, except the two worst recessions of the past half-century.
Here’s what else we know: since 2011, household income growth for the top 20% of highest earners has outpaced all other income groups, and even further, income for the highest-earning households now accounts for more total aggregate income in America than the entire middle class.
So what does all of this mean? Simply put: Not all tire consumers are created equally. This has even spawned a new acronym for this type of higher-income consumer more likely to purchase high-performance (HP) and UHP tires: HENRY. Short for “High Earners, Not Rich Yet,” HENRY consumers earn between $100,000 and $250,000 per year and represent a significantly larger group than the traditional luxury consumer with more than 36 million HENRY consumers in America today. Not only that, but these consumers represent more than 40% of all consumer spending in the U.S.
In other words, leading tire retailers already understand the value of targeting this type of higher-income consumer.
Shifting Consumer Demands
So what can leading independent tire retailers learn from all of this consumer segmentation? And more importantly, how can we attract higher-income consumers more likely to purchase HP and UHP tires from us?
According to Customer Communications Group, high-income consumer demands differ from lower-income consumers in a few key ways. When making purchase decisions, these HENRY consumers look for C.T.S.: Convenience, Trust and Status.
Convenience: With more choices than ever before, consumers demand convenient experiences. For leading tire retailers, that means being where your consumers are when they enter the buying cycle. When we consider that 40% of consumers utilize a search engine when researching purchases and Google maintains an 87% share of all U.S. searches, it makes good sense to be where your customers are. That means actively engaging with consumers on your (free) Google Business page where you can create posts, offers and events as well as respond to reviews and even send and receive direct messages from consumers. This brings us to…
Trust: All of these choices are unequivocally a good thing for consumers, right? As it turns out, more is not necessarily better when it comes to choice. That could explain why 79% of consumers trust online reviews as much as personal recommendations. That’s what the experts call “The Paradox of Choice,” wherein having more options to choose from creates stress and can make the decision-making process even more difficult. That’s just part of why it’s so critical that leading independent tire retailers keep an eagle eye on customer reviews, especially on Google. And finally…
Status: Because a high-income HENRY consumer driving a Mercedes S class or a Tesla Model 3 or even the most popular car in America, the 2022 Honda Accord on 235/40R19 in. 96V speed-rated tires, want to feel special. According to the marketing website The Drum, high-income consumers are likely to seek personalized and authentic items. Today’s luxury purchases are purposeful and well-researched.
The Paradox of Choice
Never before have we had so many choices. And that’s true for both consumers and leading tire retailers, alike. But, of course, we also understand that more choice is not always better. That’s why it’s so critical for today’s tire dealers to align themselves with the right brands and suppliers.
When it comes to the UHP tire segment and higher-income HENRY consumers, we can learn a lot from motorsports.
You can see the Pirelli brand from winner’s circle podium to your retail showroom. In the words of Pirelli’s Coke, “Power is the inner force that drives us to go further, but control is the element required to reach every destination.”
Because simply put: Power is nothing without control.