Hankook: Ready To Move On
These are exciting times for Hankook Tyre UK, as the company prepares to relocate its headquarters into a new warehouse and office complex, designed and built to the company’s own specifications. In terms of distance, the move is negligible – just half a mile or so down the road in Daventry, Northants – but in terms of what it means to the company, the significance is enormous.
Hankook Tyre UK has undergone a number of changes over recent years, one of the most high profile of which was the appointment of Richard Page as managing director, some two and a half years ago. His first job was to review exactly what Hankook was selling, and where, then to examine the Hankook product range and decide which tyres the UK company should offer. Explained Richard Page: “In effect, we were trying to tune the range to what we thought was wanted by the UK market.”
The next step was a benchmarking exercise, comparing Hankook’s prices with those of various competitors in a number of sizes, and then deciding where they wanted to position the Hankook brand in terms of price in the different market sectors.
Finally, UK sales manager Ian Mayoll examined the existing customer accounts and their buying terms, having decided that the company’s future lay in dealing with customers who were prepared to put some effort into making the brand a success. The word “partnership” is over-used nowadays, but it was this level of commitment that Hankook Tyre UK was looking for. The end result was a rationalisation in the number of customer accounts, but Hankook Tyre UK was confident that the remaining customers were of the right calibre to help the brand move forward.
Richard Page summed up the results of this exercise by saying: “What we did introduced stability and consistency to Hankook’s price structure. The prices we decided on were fair, and seen to be fair, and we identified terms and levels of support that reflected the commitment from those customers that helped promote the brand.”
Working together
Having got the product range and price structure right, Richard Page’s ambition was to develop the customer base further. This is more than just a numbers game, however, as the idea is for a nationwide network of stockists, all prepared to put some effort into selling the Hankook brand.
In order to develop this initiative, Paul Crowley joined Hankook Tyre UK last Autumn in the role of marketing manager. This was his first position in the tyre industry, although he is no stranger to the automotive market place, having held positions with Motaquip and Peugeot.
It is important to attract the right quality of retailer, said Paul Crowley, and he accepts that there has to be some kind of incentive – after all, Hankook is by no means the only tyre company wooing the independent dealer. So it was that a package of support measures was created, including interior and exterior signage and decoration, photographs (of cars, rather than merely tyres), point of sale material, and so on. At the time of writing, two tyre depots nearby have been decorated, as pilots for the scheme.
The idea is that the retailer can enhance the image of his depot to the level at which he feels comfortable. Hankook Tyre UK is willing to make this investment without seeking a commitment to volume. There is obviously a certain expectation that in return the dealer will promote the brand to the best of his ability.
Richard Page made the point that the refurbishment is carried out by a professional company and that the end result is a quality job. “After all, quality products deserve quality merchandising,” he argued. Paul Crowley agreed, adding: “Dealers that have been selling Hankook tyres have no qualms about the quality of the product – in the past, Hankook has not helped them to promote the product to the end user, but now this is changing.”
So the retailer gets a smartened-up depot and, while it is true that the Hankook name is in evidence (they are paying for it, after all) it is not in your face. Before any work is carried out, the design company involves the retailer in its plans and takes his wishes into account wherever possible. But what’s in it for Hankook? With the expressed desire to have a network of around 500 partner depots, we are talking a substantial investment and, with no solid commitment from the dealer, is it not a gamble?
The answer, from both Page and Crowley, is an emphatic “no”, as they believe that, if you support the dealer in his efforts to promote and sell the brand, then he will appreciate the back-up. It is back to the partnership idea, where both sides work together for their mutual benefit. And it looks set to intensify, as Paul Crowley said: “Next year we will be looking to work with dealers at an even closer level in order to help drive sales for him.”
Increased sales and new products
This, then, is a brief outline of how Hankook Tyre UK has redefined and developed its sales and marketing strategy. Has it worked? The answer is in the new premises currently being built on a five-acre site in the Heartlands Business Park, which, at 90,000 sq. ft. indoor warehouse capacity, is practically double Hankook Tyre UK’s existing storage capability.
With tyres being manufactured in Korea and China, Hankook Tyre UK has a lead time of around three months and the company tries to maintain at least six months’ supply of tyres either in stock or on the seas. Increased sales have led to increased stockholding requirements, hence the new warehouse. There is some forward planning involved too, as Hankook Tyre UK will initially occupy around two thirds of the new warehouse, with the remainder being available to cater for the company’s projected future growth.
Not that Hankook Tyre UK’s recent successes have been all plain sailing; another recent appointment was that of Barrie Horrocks, who came on board in order to develop the truck tyre business and to try to generate pull demand from the end user. While this has been very successful, and demand has increased substantially, there have been supply problems in certain sizes. However, the good news for Hankook Tyre UK, and its truck customers, is that there will soon be additional truck tyre manufacturing scheduled at one of Hankook’s Chinese factories, so hopefully, fill rates will get back to normal before long.
Like all major tyre manufacturers, Hankook keeps a close eye on the market and its R&D department is continually introducing new products to cater for changing trends. A good example of this is the RHO6 range of high performance 4×4 tyres. These are available in rim sizes of up to 24 inch and are aimed squarely at the SUV market, which, while not approaching the level in the USA, where SUVs account for around half of new vehicle sales, is definitely on the increase in the UK and elsewhere in Europe.
Products such as these, the K104 directional tyre, with aspect ratios down as low as 30 series, and further high performance products scheduled for introduction next year, show that Hankook can compete at the highest end of the market, believes Richard Page.
Another factor that adds to the company’s credibility among those in the market place is OE acceptance and, from March this year, Hankook was chosen by Ford to supply V and H-rated tyres for one of its higher-specification Mondeo models. The tyre in question is the asymmetric pattern K105 and this also neatly illustrates the earlier point of tailoring the product range to suit the market. Before the OE contract, the K105 was not offered in the UK, but now it has joined the Hankook Tyre UK portfolio.
The mood at Hankook Tyre UK can best be described as “buoyant”, with the staff keen to move into their new home. The new complex may be necessary as a result of increased success in the UK market, but neither Richard Page nor Paul Crowley regards it as a target reached; rather it is the first step on the road to greater involvement with its customers and the means to providing those customers with improved service and logistics.
Comments