Discount Tire Company Marketing Practices

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Abstract

The purpose of this paper is to explain and evaluate the marketing activities of Discount Tire Company. The name Discount Tire Company and the abbreviation DTC may be used interchangeably within this paper. It is my intent to expound upon the marketing activities that have made this company so successful. I contend that, in a down economy, these marketing activities have allowed the company to remain ahead of its competition.  

Discount Tire Company was founded in Ann Arbor, Michigan in 1960 by Bruce T. Halle. Mr. Halle had already owned several other businesses before starting this one. His store, which was located in an old gas station, did not have the space for inventory, nor did it have much equipment to speak of. He stocked a set of new tires and a set of used tires, and since he did not have an air compressor, he would inflate the tires at a station across the street. He was a one man show with little to no overhead. Fast forward fifty plus years; the company now has over eight hundred locations, and is the largest independent tire and wheel retailer in the world. Throughout the years, Mr. Halle always said that the best advertising available was word of mouth. It is the cheapest and most effective way to influence your customers. The philosophy is "they are in the people business, and selling tires is a byproduct". Essentially, if you treat customers with respect, and do what is right, people will share their experience with others. This is not to say that he never advertised in any other medium. He ran advertisements in the local newspapers, and up until recently, still ran weekly ads in the sports section of the newspaper. Why in the sports section, you ask. For many years the primary purchaser of tires was men, and it was widely thought that men read the sports section of the paper. This type of thinking has since gone away. Armed with the knowledge that in today’s environment, women make up a much larger percentage of customers, and with newspaper readership on a huge decline, the newspaper ads have become obsolete. DTC is also in the Guinness Book of World Records for having the longest running commercial on television. The commercial, which came out in 1975, shows an old lady throwing a tire through the window of the store. The tag line was, “If ever you’re dissatisfied with one of our tires, feel free to bring it back”. Now, the commercial itself is a little kooky, but the message was a powerful statement, at the time. It didn’t say, if there is something wrong with the product to bring it back, but rather if you are unhappy with it, for any reason, to bring it back. In the automotive industry, where somebody is always out to get you, this was a big deal. That ad still runs today, but the difference is that DTC has been able to get tire manufacturers to pay for part of the ad by stating at the end of the commercial that you can buy their tires at DTC. This has been a big shift in the advertising philosophy of DTC over the years. It’s really smart, if you think about it, getting tire manufacturers to share the expense of the advertising budget simply by putting their name in the advertisement. This has been used in television commercials, as mentioned above, in newspaper ads, in radio ads, and other forms of print ads. This type of support from vendors results in a massive reduction of the annual advertising budget. As with any company, however, you must try to focus your attention on the most productive forms of advertising. So, you try to calculate the ROI (return on investment) of various types of advertising efforts. This can be very difficult to quantify, and sometimes very costly to compile the data needed to make the correct strategic decision. Over the years, DTC has tried many different types of advertisements. There have been direct mailers, email blasts, and automated surveys triggered from the point of sales system. In 2003, DTC decided to get...
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