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Continental invited tire seller Chris Kunz to test its products Jeff Wilson for Bloomberg Businessweek
It’s just past 9 a.m. on a soon-to-be-scorching June Thursday on the southern edge of Texas hill country, and Chris Kunz is making a Ford Mustang squeal. Kunz, a 28-year-old assistant store manager for Discount Tire in Houston, is comparing a set of General Tire G-Max tires with four Goodyear Eagle GTs. It’s looking bad for the Goodyears, which is exactly what Continental, the company that owns the General brand, hoped. “God, these Goodyears are horrible,” says Kunz, who says they gave a rougher and noisier ride when he hit 60 mph on the twisty, 1.1-mile asphalt course. (Goodyear spokesman Jim Davis says, “The Eagle GT is an excellent product.”)
Kunz, who works for the second-largest independent U.S. tire retailer, is one of about 950 tire salesmen Continental brings to its Uvalde proving grounds for 10 hours each year, as the world’s fourth-largest tire maker tries to maximize its marketing budget by influencing some of the most influential men in the business. Tire stores are a bit of a holdout in the world of big-ticket retail, where Internet research is supplanting salesmanship. The word of the guy working the tire-store counter still matters in as many as 80 percent of retail tire purchases, tire sellers say. That’s not small change: Americans will spend $13 billion at tire retailers this year, up 6.6 percent from 2010, according to researcher IBISWorld.
The Uvalde events have helped Hanover (Germany)-based Continental’s U.S. business gain market share over the past five years, boost profits, and increase average selling price by 20 percent. “We’re a huge company that basically is lacking brand awareness in the U.S.,” says Travis Roffler, Continental’s marketing director for North America. “We have the technology and the capability. We just need the recognition of these products and to grow this brand to the point where people on both sides of the counter will give us a shot.”
Continental, which sponsors soccer and racing but doesn’t do tire advertising on TV networks, spends about $1 million annually mounting 4 weeks of daily Uvalde events. That’s about 15 percent of its marketing budget for its biggest dealers. Included are dinner and drinks at a ranch, transportation, and two nights of room, board, and open bar at the Quality Inn. That comes to about $1,000 per tire guy—a guy who typically makes about $40,000 a year. “This is a huge investment we do for our dealers to get them to experience the product,” Roffler says. “We track sales before and after, and we know it pays off.” Continental says its top dealers, the ones whose salesmen are invited to Uvalde, have increased unit sales by 30 percent each year since 2007. It attributes most of that increase to the Uvalde program.
Tire makers have hosted dealers at events for years. Michelin brings about 1,000 dealer reps to events at its test track in Laurens, S.C., as well as facilities in Vermont and Nevada. Goodyear Tire & Rubber hosts dealers at its San Angelo (Tex.) proving grounds and other locales. But such events are more crucial to Continental, which doesn’t own blimps or advertise on network TV, as a way to talk directly to the guys who tell many customers which tire to buy. “In the end, the counter person is the person who’s going to recommend the tire for the consumer, independent of all the advertising money you spend,” says Matthias Schoenberg, who until a July 1 promotion ran Continental’s tire unit for the Americas.
