Key Strategies for a Growing Segment

Q: How did your operations evolve in the north of the country after opening your distribution center in Monterrey?

A: We opened our first Hankook shop in Monterrey along with Grupo Raga and the goal is to open more by the end of this year in Chihuahua, Jalisco, Colima, San Luis Potosi, Yucatan, Queretaro and Mexico City. Although we already are the top brand in Chihuahua, we are just building our brand in Monterrey and San Luis Potosi. The north and south are two of our main priorities at the moment, considering that we now have an established presence in Jalisco, Guanajuato, Queretaro, Michoacan, Coahuila, Hidalgo, Puebla, Veracruz, the State of Mexico and Mexico City.
Q: How successful is your strategy to partner with supermarkets for aftermarket operations?

A: Our relationship with supermarkets has been critical in building our presence throughout the country. This is a much more price-driven market for commodity products but we have also positioned our tires, mainly the Laufenn brand. Our results have been positive and we expect our sales in supermarkets to grow approximately 15 percent by the end of 2018 compared to 2017. 

Q: What strategies have you implemented to grow your presence in a price-driven market like Mexico?

A: Clients sometimes think tires are all black and round. That is not the case and we have worked on five key elements to show the end consumer the advantages that Hankook can offer. First, we pay close attention to the clients’ needs to then offer product innovation based on those requirements. South Korean culture is founded on innovation and we are introducing products to the Mexican market that can offer an added value in terms of safety, comfort, sustainability and performance. We have also implemented warranties for our products as part of our differentiation strategy.
Our third strategy is related to cost reduction, both in manufacturing and distribution operations, which is why we now have a total of three distribution centers located in Monterrey, Queretaro and Puebla. The latter is focused on the original equipment segment but the other two support the development of our aftermarket distribution network, which is the fourth element in this growth strategy. For Hankook to be successful, we need distribution partners that believe in the brand and that know how to showcase its advantages when compared to commodity solutions. Finally, our people have been essential in building these relationships and incorporating new ideas into our organization. 
Q: How has the clients’ mindset changed in favor of quality rather than price?

A: Clients have become much more active when deciding what tire fits their vehicle best. Normally, they go for the same model the car had when they purchased it but our distributors have also been clever in showing clients the benefits they can get from Hankook. Overall, clients are more curious and more informed about what type of tire they should use according to the season and the speed range in which they drive. As a result, quality, safety and performance are trumping price as a priority in the consumer’s mind. The fact that companies are also working to reduce production costs and developing more affordable brands within their lineup has also been key for users to be more attracted to quality products. 
Q: How important is digitalization to Hankook’s strategy in the aftermarket?

A: Thanks to our growing presence in original equipment, our distribution network has steadily increased with our Hankook Masters stores. Our goal is to have 30 Hankook Masters stores by the end of the year. However, demand is greater and younger generations are now looking for us online. According to our latest statistics, Hankook is the best-selling tire brand online in Mexico, practically doubling the sales of our closest competitor. Today, between 30 and 32 percent of all tires sold digitally are Hankook, which equates to approximately 3 percent of our total sales. My personal goal is to grow our digital operations to 10-12 percent of our total sales by the end of 2019.