Seamless development: Kings Road Tyres on brand strategy

You might have expected Kings Road Tyres’ 40th year to have been marked by transition following the Group’s management buyout by Adrian Bader (managing director), Mark Cooper (commercial director) and Simon Lister (financial director). However, with the directors’ vast experience within the company, and the strong emphasis within its wholesale businesses on long-standing partnerships with both tyre brand suppliers and customers, the company told Tyrepress.com that the achievement of the last 12 months has been that “to the outside world, the business hasn’t changed with the ownership”; though strategic and business developments have continued under the new ownership team, some of what has happened was detailed in pre-existing plans and the focus has been on “making it seamless”.

On the wholesale side of the Group, the company has overhauled much of its internet content, including a new main site with more powerful e-Commerce capabilities, which it is demonstrating to customers at Brityrex as this issue goes to press, and brand-specific sites for Matador and Aeolus, for which KRT is the exclusive non-consumer tyre (ie. truck and bus, and OTR in the case of Aeolus) supplier in the UK. It is also developing a new budget brand, Antyre. Tyrepress.com visited the company’s West London head office in Hayes to talk over the company’s current wholesale strategy, which in many ways is still developing from a decision made in the last five-to-ten years.

KRT stocks around a quarter of a million consumer tyres and remains very active in the passenger car to light commercial segments, but Adrian Bader told T&A that the company made “a conscious decision about making investments in non-consumer products”; a decision that has allowed KRT to record in 2011 its “best” year, according to Bader. At the point this decision was taken, consumer tyres made up “roughly 50 per cent” of the company’s business – a proportion that has now been reduced considerably. KRT “saw an opportunity to tie in with suppliers”, Bader says, since “keeping stock of a full range is advantageous to the manufacturer”, while allowing the wholesaler to stake out a place aside from larger consumer players like Stapleton’s and Micheldever.

As an example of its pre-eminence in UK commercial and OTR tyre distribution, KRT says it had in stock 118 sizes and patterns of Bridgestone and Firestone branded TBRs in 2011. KRT lays claim to being the UK’s foremost trade supplier in agricultural tyres, holding an inventory of £5 million, with all the components. “Truck and agricultural are the two biggest components of our business,” Bader says.

In the agricultural segment, KRT distributes Michelin, Firestone, Trelleborg and Goodyear brands, in addition to Jetire and its private brand range of Kingstone brand tubes, as well as being the exclusive UK wholesaler of Michelin’s Taurus and, since 2011, Kleber brands. These latter deals illustrate the way the company tries to work with a manufacturer “to support what they are trying to do”, says Bader – in this case, Michelin. Bader says the company’s strategy is to help with the company’s non-premium brands, which also “ties in beautifully” with its own stock of Michelin and other premium brands.

Truck tyre principles

The company’s policy on its other most prominent area of expertise, truck tyres applies “exactly the same principles” as agricultural, Adrian Bader says: “the same loyalty to brands and everything else… We have a brand to fit each segment; we’ve been loyal to those brands and we’ve marketed them and increased the sales of those brands.” This marketing of truck tyre brands has been given prominence in the latest wave of new websites, with UK exclusive brands, Matador – a Continental Group brand – and Chinese manufactured Aeolus getting dedicated websites developed by KRT.

Aeolustyres.co.uk includes size, application and technical details for the comprehensive ranges of Aeolus TBR and OTR products. Aeolus began production in 1965, developing into a worldwide brand with a growing presence in the UK. Tim Bader said KRT was “confident it will help build the brand identity further with dealers,” illustrating the principles of working with suppliers.

With Aeolus, Adrian Bader stresses the quality of the manufacturer’s ambition and relationship, alongside its “support for European territories” with Europe-specific products. The manufacturer, Bader continues, is working with KRT to develop its own “long-term commerce”, while its ambition to manufacture 15 million truck tyres necessitates selling into “every European market”. Bader speaks in glowing terms of the potential of Aeolus, comparing the manufacturer’s attitude to its relationship with KRT favourably to other, less established Chinese brands.

Matador in “unique place”

The other manufacturer to receive KRT’s web-based marketing investment is Matador. KRT was made its exclusive UK TBR distributor six months ago, and the wholesaler is seeking to boost sales of the brand over the next 12 months with the new, dedicated website. Matadortyres.co.uk went live in April, covering the full portfolio of Matador TBR.  Sales promotions and incentives will also back-up the sales drive. Now part of Continental AG, KRT says Matador’s longevity and reputation for quality are key factors. All Matador products are manufactured in Europe, with a brand base in Puchov, Slovakia.

“When Matador first came into western sales, we were a Matador distributor,” Bader explains, “so we knew of the product. We believed it filled a gap in the market and it tied us in with one of our biggest suppliers. [When Continental offered KRT Matador again] it was a full range in long haul, short haul, construction, winter, 17.5”, 19.5”, 22.5” – it fitted the bill. It was a ready-made brand with European manufacturing… For those that don’t want to buy Chinese, but are still looking for a budget tyre, it hits that mark… It almost sits in a unique place. Keeping it where it is keeps it out of the range of mid-range and fends off the cheap Chinese products.”

Bader also explained what KRT can offer Conti by doing the job of raising Matador’s profile: “As soon as a manufacturer raises the profile of a product, it wants to raise the price, and suddenly there are three brands in that sector. There aren’t enough independents these days to find sufficient business to keep three brands going on their own – you’ve got to position them slightly differently. Semperit and Uniroyal is a direct clash, if you like, but they’re sold in a different way, which keeps them apart. But if they were both sold by Continental, it would be… tricky.”

“Mid-range” growth?

Aeolus aside, one thing the brands KRT is focusing marketing investment on have in common is their potential definition as “mid-range brands” (used in a broad sense to include Matador), particularly at the lower price end of this segment. When T&A asked Bader to share his segmentation model, he said: “I actually think it’s about five ranges; you’ve got super-budget, budget, a host of mid-range brands, the brands that sit just under premium like Pirelli and the premiums… I don’t think it’s clearly cut into three segments any more.”

While Bader says KRT is “trying to cover every segment”, the wholesaler has long had a strong interest in mid-range brands, and has a lengthy history with the Continental Group’s Uniroyal brand in particular. But with the widely acknowledged travails of mid-range brands in the economically difficult recent times beg the question why KRT is investing in marketing this price segment with brands such as Matador, Kleber and Uniroyal, for which KRT operates a separate distribution franchise in the UK.
Bader replies that with mileage down, and not much that can be done about the rising price of fuel, the number two cost to hauliers – tyres – comes into focus. “The reaction has been, ‘we need to wipe x-amount off our tyre bill’. The easiest way to do that is to change from Brand A to Brand B, but I think they’ve gone from Brand A to Brand C, missing out B.  The quickest way to [save £100,000] is to take a £300 tyre and buy a £200 tyre. And that’s what people have done.

“Needs must, but I think when they’ve experienced mileages of 50,000km and they’ve paid £200 for it and they can’t have it regrooved, and they can’t have it retreaded, and they’ve got to pay for the disposal of the casing, I think some people have said that that was a false economy.”

And tyre choice can also feed back into the biggest cost. “Yes, and it does,” continues Bader, “because there is no budget tyre that is going to save you fuel over a premium tyre… But what we are now beginning to see is that people still can’t afford to go back to premium, but are moving back towards mid-range brands. Let’s be honest; most mid-range brands are last year’s premium brand – the tread design anyway. If the tyre was the best in its class three years ago, but you’ve had to come up with a new product because of E-marking or Labelling – you’ve had to call it a Four instead of a Three – it doesn’t make the Three a bad tyre all of a sudden. It was a really good product, but we’ll have to sell it now [in the mid-range].” And this, as we have seen, gives wholesalers such as KRT can work with manufacturers to achieve better price segmentation and results.

Related news:

• KRT to show exclusive brands, launch new agri range at Brityrex
• KRT’s exclusive brands bring something different to OTR market
• Aeolus adds retreadable patterns to truck tyre range
• Kings Road Tyres – the UK’S Leading Truck Tyre wholesaler?
• Barry Hill celebrates 40 years at Kings Road Tyres