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March 05, 2013 01:00 AM

Hankook America launches initiatives to continue sales growth

Bruce Davis
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    CANCUN, Mexico—Hankook Tire America Corp. has achieved 13-percent average annual sales growth for seven years, and it wants to build on that pace.

    That's the message Hankook executives related at an annual meeting with dealers and distributors in Cancun Feb. 18-20. The subsidiary of South Korea's Hankook Tire Co. Ltd. plans to launch several initiatives this year, including:

    c Introducing products in targeted segments, such as summer UHP, winter passenger and wide-base truck/bus tires;

    c Broadening the firm's efforts to build brand image through advertising, promotions, sponsorships and social media;

    c Pursuing a few select new original equipment fitments on both the consumer and commercial sides;

    c Making undisclosed changes to the "One" dealer marketing program launched in 2012; and

    c Increasing the size of the commercial division field sales force to help dealers develop local and regional sales strategies.

    Hankook registered 20-percent sales growth in the U.S. last year to $1.2 billion, and company officials expect sales to rise to $1.4 billion this year. They base that forecast in part on the increased availability of product because of capacity expansions at plants in Indonesia and Hungary, as well as the end of the elevated U.S. tariffs on Chinese consumer tires.

    Still on the horizon is the possibility of a U.S. plant. Hyun Bum Cho, president and chief marketing officer for the parent company, said the chances of that are better than 80 percent. Site selection is still under way, Cho said, but neither he nor other Hankook executives disclosed more details.

    Shawn Denlein, senior vice president, marketing and sales, said Hankook's strategies are aimed at promoting "sustainable" growth for the company and its partner dealers/distributors.

    Among the characteristics Denlein emphasized are the breadth of the firm's product line and the quality of individual tires, which is underscored by several recommendations from Consumer Reports magazine and other consumer test¬ing bodies.

    Denlein pointed to the debut last year of the entry-level, Chinese-sourced King¬star brand that Hankook added to its offering. This, along with the Aurora brand, gives dealers a true, good-better-best product selection, he said, and allows Hankook to broaden its sales potential with its dealers.

    Hankook stocks the brands in its four U.S. warehouses, so dealers don't have to worry about placing overly large orders to secure the alternative brands, according to Calvin Pak, vice president of marketing.

    More tires available

    Helping fuel Hankook's growth in North America last year was improved product availability, Denlein said, aided by the commissioning during the year of Hankook's newest plant, in Bekasi, Indonesia.

    As a result, he said, fill rates essentially doubled last year by year-end to about 80 percent.

    The tire maker is offering these new tires for 2013:

    c Ventus S1 Noble 2 UHP all-season, which was introduced at the 2012 SEMA Show in Las Vegas, which went on sale March 1 in 40 sizes in rim diameters of 16 to 20 inches.

    c Winter i*cept iZ in 24 sizes, ranging from 14 to 18 inches in rim diameters; and

    c Winter i*pike RS, a studdable winter tire featuring a V-shaped tread pattern, available in 37 sizes ranging from 13 to 18 inches in rim diameter. This tire features a 16-row stud arrangement.

    Denlein said Hankook will reveal its revamped "One" dealer marketing program in the next several weeks, emphasizing changes to make it more transparent and there¬fore accessible.

    Dealers during the meeting said figuring out the program's various incentive levels was too time-consuming and complicated. Hankook announced the program at the 2012 event and rolled it out before mid-2012.

    Hankook's efforts to build the brand image are paying off, Pak said, as consumer brand awareness has doubled in the past few years, according to Hankook's research. Among activities to help build brand image are the firm's original equipment presence on a growing number of performance and luxury cars, its new relationship with Sears Automotive and its expanding circle of sports sponsorship deals, Denlein said.

    The company will continue to explore the boundaries of social media, where the return on investment is potentially higher.

    On the commercial side, Brian Sheehey, director, commercial tire, noted that Hankook's global expansion program of the past few years is allowing the group to design more specific products for individual markets.

    "We want your customers to see Hankook as the quality alternative to the major (tire makers' brands)," Sheehey said. The executive said Hankook wants to work with dealers to devise strategies that will help capture more business with local and regional fleets.

    To this end, Hankook plans to increase the size of its field sales force by 50 percent, he said, to help dealers organize "sales blitzes" locally.

    Hankook is not going after more fleet account business, he said, but wants to help dealers target specific competitors' products in their respective markets.

    Sheehey said most of Hankook's products for sale in North America are either SmartWay-verified or designed to be so, referring to the Environmental Protection Agency's program to identify products and processes that help trucking fleets reduce their fuel consumption.

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