Brand Overhaulin’

The biggest news from Cooper’s Reifen Essen stand was the US-based company’s decision to launch run-flat technology into the European market. At the same time Cooper’s large open-plan stand showed that the company is continuing to invest in raising its profile by modernising its brand image. Tyres & Accessories met with Cooper president, chairman and CEO, Tom Dattilo and found out more about how the brand re-launch is going and what the strategy behind the company’s run-flat launch is.

Cooper left it until barely a week prior to the Reifen Show before it announced that the company would launch its Zeon 2XS run-flat tyre in Essen. So when T&A arrived at the Cooper stand this figured in one of the first questions asked – why launch run-flats now? It appears that the time is ripe for such a release. As far as run-flats are concerned “there have been questions over demand for some time. But now that OE sizes have proliferated, we have decided to market our new offering,” Tom Dattilo explained, adding that the company had been working on the technology for some time before the news that it would soon sell the product became public.

Could it also be due to the fact that observers are expecting the run-flat market to grow exponentially across Europe? Recent Europool figures show that summer run-flat sales were up 88 per cent across western Europe between January and May 2006. During the same period winter run-flat sales rocketed 127 per cent. True, year-to-date volumes are still low (385,000 summer and 133,000 winter run-flats), but that’s the point. Incidently the fact that the market is currently dominated by OE run-flat suppliers with European production facilities means the quoted Europool figures are about as reliable as they come at the moment.

With volumes rising so quickly, now would indeed appear to be a good time for companies targeting the aftermarket – and perhaps not planning to produce large volumes just yet – to make their mark with run-flats. No surprise then that Marangoni Tyres also chose the Essen Show to debut its run-flat technology.
Cooper’s decision to make its run-flat unveiling an exclusively European debut was similarly interesting.

Dattilo believes that a decision on his part to launch this technology into the North American market now would be “premature.” “It might never be the right time,” he added. Instead the Cooper boss believes “it will take a [few] more years before run-flat market volumes are generally more significant.” So therefore this is a good time for those with clear following strategies to enter the market. And this is by no-means a derogatory statement. Cooper has clearly stated in the past that it has no intention of becoming an OE manufacturer, putting a rapid increase in market share out of the question.

Interestingly the new product line-up will be available in both winter and summer variations, something that indicates that the company’s intention is to sell these products well and truly into the European market, rather than carbon copy its plan for other world markets. With considerable demand for winter run-flats in Germany and growth expected in Scandinavia, these markets are tipped to be focal points for this part of the new product line. In 2005 652,000 winter run-flats were sold across Europe (compared with 480,000 summer run-flats), according to Europool a staggering 579,000 of these were sold in Germany.

When questioned along these lines, Dattilo was keen to point out that these products are not aimed at just the German market, but wherever these tyres are needed. As far as the UK’s developing winter tyre market is concerned, Dattilo believes consumers will decide about what the trade offers. “Intellectually all-season tyres probably make more sense [in the UK market],” he commented, adding: “We’ll sell the products that the consumers want to buy.”

Pimp my brand

Something else Cooper has been working hard at is developing its brand identity. While Cooper is a well-known name in Europe and particularly in the US, the last 12 months have seen Cooper make every effort to rejuvenate the brand and broaden its recognition internationally.

Interactive forms of marketing are becoming increasingly important as the company more and more targets younger drivers. As a result the company is increasingly looking to “non-traditional advertising” methods to achieve its objectives. And arguably all its different media approaches are aimed at different age groups. “Now we operate a more lifestyle orientated approach – showing the product in an environment that young people relate to in their own lives,” Dattilo commented. As part of this, this year saw Cooper redevelop its web-site, turning it into a flash animation-based online spectacle. According to the company, the web site has initially got a lot of responses and has grown to include an increasingly popular web locator.

In general Cooper’s re-branding exercise is said to be going well and succeeding in making the brand more “cool” and accessible to the younger market. Which brings us neatly to a lighter question. How did the company forge its relationship with hip-hop officiando and vehicle tuning personality Funkmaster flex? “He came to us,” said Dattilo, explaining that the rapper saw the brand as good fit for his image.
Cooper’s involvement with hip tuning programmes doesn’t end there, according to Dattilo, the manufacturer’s longstanding relationship with the well-known (and internationally syndicated) programme “Pimp My Ride” is set to continue raising its brand profile, whenever its tyres are featured. So what’s next a place on Snoop Dogg’s next album cover?

But doesn’t this systematic strategy of targeting younger consumers risk alienating the existing customer base? “Target audience only means who are we advertising to? We sell tyres to any age,” said Dattilo. Rather than alienating any group, the strategy is to cut through the media onslaught with advertising that stands out, he explained.

Another possible negative with this approach is that all the emphasis on the Cooper brand will have a detrimental effect on Avon. This question is particularly pertinent in light of the UK wing of the company’s recent name-change. This part of the business, which includes high performance and motorsport tyre manufacturing capacity at the company’s Melksham, UK, base, was previously known as Cooper-Avon Tyres Ltd. Then in November 2005 the company announced that it would be known as Cooper Tire & Rubber Co Ltd from then on. Tom Dattilo denies that this shows any kind of brand bias, describing it simply as a corporate formality. “We want to grow both brands,” said Dattilo referring to the European market. Although tyre rack distributes Avon in North America, worldwide, the manufacturer’s top brand remains as Cooper.

In addition to a new corporate identity and trendy multimedia advertising campaigns, Cooper has also invested heavily in motorsport involvement. On an international level this has meant supplying the control tyre to the maiden series of the A1 Grand Prix (A1GP). According to Cooper, the first year of A1GP has been well received in many markets. Furthermore company executives have already attended meetings regarding the planning of next year’s motorsports season.

Recent A1 television deals included license agreement renewals in the Netherlands with RTL7 and TV3 in New Zealand. In addition Sky Sports UK has agreed to allow a delayed race broadcast to be made available on terrestrial television. Furthermore the word is the series may even have some new locations.

Although it was perhaps not so initially successful in the US, the event as a whole got off to a good start at Brands Hatch in the UK, receiving widespread high-profile media coverage. In addition the series is said to have been particularly popular in Indonesia, South Africa and China. Good news for a company planning sell more tyres in these regions, especially in China.
Cooper took advantage of the synergy provided by A1GP’s visit to Shanghai, using the event as a platform for some announcements about its Chinese market plans. At a special “Pit Stop China” press conference, Cooper Tire announced that the Cooper brand would shortly be available for the Chinese market. “The Chinese market has to be served by domestic production,” Tom Dattilo told Tyres & Accessories.

Cooper plans to achieve this using capacity gained through its recent acquisition of Shandong Chengshan Tire Co., China’s third-largest tyre manufacturer. According to Dattilo, the Chengshan facility is expected to go into production in the winter of 2007.
The company’ joint venture with Kenda Rubber industrial Co is expected to start making tyres in the third or fourth quarter of this year with an annual capacity of between 10-12 million units radial passenger and truck tyres. According to Dattilo, Cooper’s off off-take arrangements with companies like Hangzhou Zhongce will remain unaffected by this and future capacity increases. “In fact we are looking forward to growth in these respects,” he explained: “We want to maintain and grow truck business, but also put a significant amount of capital into PCR production.”

The current ratio of truck to passenger car production is around 70:30. But, according to Dattilo, the long-term plan is for this to invert, becoming 65:35 (passenger to truck tyres) in 15 – 20 years time, depending on market growth. The ideal position is for the company’s production position to mirror market conditions.

T&A wondered what effect all this additional capacity might have on production in so-called high cost production countries like the UK and US. “Manufacturing any product in a high cost country results in feeling the pressure of having to be more productive. The world is a very competitive place,” Dattilo replied. So for the time being Cooper’s strategy continues to be that the company sources its “price fighter tyres out of China” while sourcing the more complex products from the ‘higher cost’ factories. So are UK workers’ jobs secure in the long-term? “I wouldn’t want anyone to think that their job is “safe,” including me,” Dattilo answered.