GUANACASTE, Costa Rica—Kumho Tire USA Inc. is heading into 2019 with a streamlined sales strategy that focuses on its independent tire dealer customers, a slimmer, less redundant product portfolio and a marketing plan centered on online, social media and analytics.
The U.S.-based subsidiary of South Korea's Kumho Tire Co. Inc. is looking to grow, reinvigorated by the stability that Qingdao Doublestar Group's July acquisition of a 45 percent stake in the company has provided along with the financial impact of its $607 million investment.
Kumho shared its plans with 30 key tire dealer and wholesaler customers during its 2019 dealer meeting, held Dec. 1-5 at the Four Seasons Resort at Peninsula Papagayo, Costa Rica.
Focusing on a theme of "Partnership Drive and Profitability," Shawn Denlein, Kumho's executive sales and marketing vice president, said Kumho has moved away from what he called a "transactional-based" price strategy featuring lots of deals to one that focuses on programs.
"We were being very aggressive with price and obviously that works short term," he said. "But long term the issue that you have is that you don't really have a lot of stability in the market. You'll have peaks and valleys in volume, and then your programs kind of get a little bit out of line, and your margins will eventually start to suffer."
The company has eliminated special pricing, he said.
Kumho also is looking at establishing a MAP (minimum advertised pricing) strategy internally to determine "where our product is positioned in the marketplace," said Denlein, who joined Kumho in April from Monro Inc. where he had been senior vice president of tire merchandising for just 13 months.
"What I would like to do eventually, is come out with a MAP pricing strategy. But before we do that we have to do a lot of due diligence behind the scenes to see truly where we fit."
He stressed, however, that MAP pricing would not be forced upon dealers. "We're studying it, and then we will come out and have conversations with everybody before we do any kind of implementation."
Stressing the importance transparency, Denlein said Kumho sees itself as a bottom second-tier tire manufacturer.
"We don't have aspirations to be a Tier-One player," he said. "We just want to be solidified in the tier that we believe we live in, which is the bottom of the second tier. So, we use words like 'high quality, reasonable price, best in class and just a smart choice for consumers.' That's really where we believe our positioning is in the marketplace."
To help improve dealer margins, Denlein said Kumho has simplified its buying programs, which he said had so many components even he had trouble understanding them. With one program, Kumho reduced the number of components to three or four from 10, he said.
The company is taking a similar approach with its product offerings, consolidating overlapping tire offerings. "Where we might have two treads, we are going to take it down into one tread," he said. "So, we are really trying to simplify the entire product portfolio."