Hankook Tire Europe Headquarters laid the foundation to expand sales in Europe when the company’s European production base, its Hungary Plant, began operations. In line with this, the company’s Europe Headquarters set a strategic goal toward a company-wide mission in Europe - the establishment of Hankook Tire’s third home market - in four stages.
In 2008, the headquarters will continue to increase its brand value and services through faster distribution restructuring and high-value communication. Hankook Tire Europe Headquarters plans on achieving 4.5% market share in the European market in 2008 by carrying out aggressive marketing in all its business areas. To this end, it has defined five main areas to work on (infrastructure and work process, distribution, price competitiveness, products, and communication) and is pursuing various marketing activities to ensure its status as a premium brand.
With the commencement of operations at its Hungary Plant, Hankook Tire laid the groundwork for related works such as production, logistics, sales and marketing to be carried out consistently within the Regional Headquarters. After Korea and China, it is the third time Hankook Tire has accomplished this.
The Europe Headquarters is now on track to becoming a self-operating organization in control of its own home market, expanding human resources mainly with local employees for early stabilization of the Regional Headquarters, and further expanding its global capabilities through continuous training and skills programs. In addition, Hankook Tire Europe Headquarters is accelerating future-oriented channel downstream restructuring to alter its distribution structure, which is now focused on independent wholesale channels, into diverse retail channels.
As well, it is securing loyal retail channels through the Hankook Masters program and consistently exploring new retail channels such as car dealers and buying groups to establish a distribution network tailored to the specific characteristics of the European tire distribution network. Hankook Tire is also seeking ways to change itself from a regular supplier to a premium supplier as it enters a mature stage of supplying OE products to automakers in Europe, with its Hungary Plant serving as a driving force. With respect to prices, Hankook Tire Europe Headquarters is strengthening its information gathering channels on tire prices, conducting regular analysis of competing products, and establishing the lowest purchasing price system in Europe in order to secure competitiveness.
Also, in order to respond to the formation of a parallel market, it is setting up various price control programs, including a comparison of different tire prices in many different countries and upward equalization of regional prices. In terms of products, the headquarters is developing new products with innovative concepts to lead the market.
To improve the lack of product synergy between OE and RE products due to the existing way of supplying RE products first and OE products later, it is pursuing marketing synergy and efficiency in product operation by developing specialty products and plans on continuously promoting the excellence of its products through a variety of tests conducted by industry magazines and motor sports activities.
For the promotion of the Hankook brand, the company’s Europe Headquarters is enhancing brand value and strengthening sales capabilities by efficiently executing a marketing budget for Europe. By conducting high-value communication as a premium brand, the headquarters will gradually increase its above the line (ATL) ratio as brand recognition increases. Finally, to strengthen communication with target groups, the headquarters will select strategic events to promote its tire products, while continuing to concentrate on marketing activities.
With production, Hankook Tire Europe Headquarters selected seven important tasks in order to minimize trial and error at the Hungary Plant and is planning to improve the overall work process to enable its stable operation, even if it is only now in its early operational stage.
With the Hungary Plant, Hankook Tire secured production capability that can support a future increase in local sales with a marked reduction in delivery time, providing high customer satisfaction to local consumers and automakers. Moreover, Hankook Tire is aiming to establish a future-oriented distribution system for distributors and specialized sellers.
In the American replacement market, the risk of stagnant market growth is increasing due to an economic slump caused by high oil prices and America’s subprime mortgage crisis. Up until the first half of 2008, the demand for tires for commercial vehicles (including large-sized trucks/buses) is expected to be low because of a tough policy to control emission gas that was enacted in 2007. Thus, it is necessary to strengthen sales capabilities throughout the North American region, including Mexico, which was recently added as a region that falls under control of Hankook Tire America Headquarters.
In 2008, the company’s America Headquarters will conduct operational policies divided into two parts: distribution and communication. In an effort to improve its distribution network in the U.S. and expand consumer contact points, the headquarters will increase sales to retailers, while executing various marketing support activities to increase loyalty among sub dealers.
Like other Regional Headquarters, Hankook Tire America Headquarters will also maximize the synergy effect in sales of OE and RE tires, keeping open the possibility of getting directly involved with running retail stores if necessary. By strengthening business with large-scale distribution channels that have nationwide retail stores, the Hankook Tire America Headquarters will increase the sales ratio of the company’s products as it ensures they are sold at proper prices. This will expand sales and enhance Hankook Tire’s brand value.
When it comes to the commercial tire business, which has been gaining more importance recently, Hankook Tire America Headquarters is pursuing three tasks in order to enhance the value of its truck and bus radial (TBR) tires, a company-wide task: expansion of commercial dealers, development of fleet accounts and diversification of channels, thereby expanding consumer contact points.
While its distribution downstream has been in effect for several years, the importance of small quantity orders, frequent delivery requests and fill rates are also emphasized. As a result, the strengthening of logistics capabilities is of paramount importance. To this end, Hankook Tire America Headquarters has further strengthened its integrated logistics network throughout North America by running another warehouse in Chicago since March 2008.
For the past few years, Hankook Tire has radically increased its market share in America, though it has not been as successful at enhancing its brand value or recognition in relation to its market share growth. In order to make up for this, it needs to increase its brand image and brand equity by increasing communication at consumer contact points as it maximizes its marketing activities throughout the American market. Hankook Tire America Headquarters is establishing and carrying out operational policies uniquely designed for the American market based on global brand marketing strategies.
To accomplish this, it has come up with three policies to be implemented in 2008: allocating a sufficient budget to maximize efficiency of major media advertising campaigns, coming up with detailed media policies and ways to support events and below the line (BTL) advertising techniques. To enhance the company’s brand value, Hankook Tire America Headquarters will carry out major marketing activities for the expansion of brand awareness and expand its sales of strategic products.
Detailed activities include strategic TV advertisements after careful analysis of target consumer groups and return on investment analysis around major areas in the U.S. After achieving its first goal of expanding brand recognition, it will then establish a consistent brand image through various mediums (print media, online and mobile marketing) in order to transform brand recognition into brand loyalty.
Furthermore, as of 2008, Hankook Tire will take part in the American Le Mans Series (ALMS), a world-famous motor sports competition where the company will have a chance to directly display its technology to over five million TV viewers as well as major automakers like Ferrari, Porsche and Audi.
In the L.A.A.M. region (Latin America, Asia-Pacific, Africa and Middle East) full-fledged economic growth is occurring in quite a few markets, so the possibility of market expansion is growing. Although the world’s economy might contract in 2008, mainly around developed countries in the aftermath of America’s subprime mortgage crisis, experts are predicting that the L.A.A.M. region will be able to stave off global economic contraction as it strengthens its own economic capabilities.
Particularly in the Middle East and North Africa, where oil money from high oil prices and the growth of local markets have spurred the economy, an increasing number of local tire companies (or joint venture plants with global tire makers) are being established.
As global tire makers begin their full-scale entrance into BRICs markets, where economic growth rates are high, a fierce marketing war has begun for corporate survival and the expansion of market share among both local and global companies. In 2008, Hankook Tire L.A.A.M. Headquarters is reinforcing its sales capabilities in earnest throughout the region for the first time as a whole.
To carry this out, the headquarters will reinforce its marketing strength to focus on new markets, establish a marketing process that reinforces its sales capabilities, and expand its aggressive sales plan to cover the entire market. In terms of products, Hankook Tire L.A.A.M. headquarters intends to increase profitability by developing locally-customized and/or environmentally-friendly products and by strengthening its product planning process, resulting in an optimized product portfolio.
After analyzing product competition, it will then come up with appropriate price levels and carry out integrated marketing activities in cooperation with Hankook Tire’s Global Staff Offices and Overseas Sales Subsidiaries/Offices for the enhancement of its brand value. This will not only reinforce its marketing power but also establish product and price policies based on an in-house process that provides relevant market information. With distribution, Hankook Tire L.A.A.M. Headquarters is pursuing a reinforced distribution network to make the Hankook Tire brand a premium brand so that the company draws closer to end-consumers while expanding distribution points.
To this end, the headquarters is using the experience it accumulated with local branding from Model Shops and Store Branding Project in 2007 as it selects a consistent branding plan to apply to the entire L.A.A.M. region in 2008 and establish a larger distribution network that can be connected to sales.
As for communication, the L.A.A.M. Headquarters will carry out programs to communicate directly between people at sales points, which is why it is now conducting downstream communications and promotions. In an effort to systematically deliver consistent messages based on annual communications plans with customers, Hankook Tire L.A.A.M. Headquarters is drawing up detailed schedules and plans before putting them into practice.
People are relatively optimistic about the prospect for increased domestic consumption in China because of the 2008 Beijing Olympics, but there is also a strong possibility that the business environment will become tougher than the previous year because of the rising cost of raw materials, a reduced export VAT refund, increased personnel expenses because of a new labor law, and the revaluation of the Chinese yuan (CNY).
Reduced export merits, pressure over continuous cost increases and changes in the distribution field show how intense competition for market share will become among tire makers in China. Throughout 2008, Hankook Tire China Headquarters is enhancing its brand value for strengthened profitability in order to establish and maintain a second home market, a companywide mission, as it carries out diverse marketing activities. Although the company’s China Headquarters strengthened its in-house capabilities in an effort to improve the driving force for long-term growth in 2007, 10 years after entering China’s market, in 2008 it is concentrating on the improvement of profitability and sales expansion.
Hankook Tire China Headquarters plans on carrying out activities to increase its brand value in four areas: products, price, distribution and marketing infrastructure. With its products, it is designing strategies that focus on the improvement of its sales mix and stronger product competitiveness. With prices it is securing practical price superiority by establishing a strategic OE business system, maximizing the synergy with its RE products.
With global tire makers carrying out aggressive operations and local tire makers growing rapidly, competition in the Chinese market is fiercer than ever. Hankook Tire China Headquarters is working on distribution downstream in order to expand sales to premium consumers mainly living in large cities through the expansion of new, premium distribution systems like T’Station and reorganization of its existing distribution network.
It is also increasing the value of its commercial products to expand its TBR sales network and improving product and service capabilities. Finally, in terms of marketing infrastructure, Hankook Tire China Headquarters is improving the company’s capabilities by strengthening training programs and securing proper inventory lead time following the full-scale operation of its global production system and expansion of its various sales routes.
It is also improving its logistics infrastructure in order to adjust itself to a changed logistics environment. Based on such strategies, the company’s China Headquarters will ensure Hankook Tire’s position as a premium brand in China. It will also maintain its position as China’s number one tire seller (by sales amount among tire makers in China) with a balanced portfolio of product sales for both passenger cars and commercial vehicles.
Hankook Tire Korea Headquarters established its operational policies based on four company-wide strategic guidelines: securing competitiveness in production and product quality, strengthening customer-oriented sales and marketing capabilities, improving business quality toward automakers, and establishing a timely logistics/delivery system. As major tire companies maintain their high level of competitiveness and customer demand for high-quality products becomes higher than ever, Hankook Tire is making the qualitative management of its manufacturing process and product quality higher priorities.
Furthermore, its Korea Headquarters is making appropriate responses to this by carrying out changes inside the company such as restructuring and expansion of facilities, as well as continuously fulfilling higher demand for product quality from automakers. In order to respond to such changes in the business environment and secure manufacturing and product quality competitiveness fit for a global brand, Hankook Tire is establishing high value-added production systems for more consistent product quality on top of its flexible and resilient application of production capabilities.
It is also improving working conditions through continuous, innovative activities at plants. Moreover, Hankook Tire is raising the company’s EHS(environment, health, safety) levels up to the standard of the world’s leading companies. By increasing investment in environment-related facilities and by continuously introducing programs for the promotion of health, the company is turning all Hankook Tire workplaces into healthy, environmentallyfriendly spaces that are managed according to the company’s environmental management system.
In 2008, competition in the replacement market is expected to be much tougher because of continuous expansion of market share by other tire makers, a great many low-price products, reorganization of customer-oriented markets, and the expansion of distribution channels among tire makers. In response to this, Hankook Tire is strengthening its customer and market-oriented services as well as its sales capabilities by making fundamental changes within the company. In light of this, Hankook Tire Korea Headquarters is expanding its retail capabilities both qualitatively and quantitatively in an effort to make them superior to its competitors.
For example, the company is strengthening sales training for agencies and staff members from a customer’s point of view, increasing customer promotion, and running tire franchise stores like T’Station, Tire Town and TBX (Truck & Bus eXpress). To respond more carefully to the demands of customers, it is also strengthening activities to monitor product quality in the market as it strengthens customer satisfaction services using IT technologies.
The aftermath of the global liquidity crisis started with the subprime mortgage crisis in the U.S. and put a considerable burden on the Korean automobile market, which is closely tied to the American economy. Tire makers and automakers are experiencing considerable difficulties because of rising costs and decreasing sales. On the other hand, tire importers and some Korean tire makers are competing for business with automakers through very low prices, making competition even tougher for Hankook Tire.
In response to this, Hankook Tire is distancing itself from pricedriven competition, while further strengthening its superiority in product quality, product development and demand fulfillment to solidify cooperative relationships with automakers. It is also improving profitability and increasing sales through more aggressive marketing plans aimed at strategic automobile models and the improvement of a strategic sales mix.
With the construction of its plant in Europe, Hankook Tire secured another global production base and an increased number of sales channels. Its logistics situation had also changed, as the company needed to control inventory lead time more efficiently even as it dealt with high oil prices and high shipping costs that made on-time delivery of products more essential than ever.
In order to sell a wide range of products efficiently, Hankook Tire needs to reduce lead time, optimize inventory management and offer a flexible supply system. Hankook Tire is managing inventory lead time on a global scale, optimizing its inventory refill system, while acquiring flexibility in production and supply so that it can respond to quantitative changes on a global level. Additionally, it is providing quality products for customers quickly and precisely as it minimizes transportation time between production regions/plants and optimizes logistics cost.