Market / Location of Potential Customers for Tire Shops

Last Updated on 06.08.2024 by hrushetskyy

Basically anyone who owns a vehicle is a prospective customer for a tire store. Any person who a drive has to periodically have mechanical service done or put tires on his car. But this is an enormously wide market for the typical small business owner to consider you need to define as closely as possible a profile of typical customers you’ll encounter in your tire store considering a number of variables.

Both consumer and commercial segment customers can be targeted by the tire store entrepreneur. As a general rule the customer base for heavy duty trucks and buses is limited well established in virtually all areas and strongly competitive.

It makes much more sense for the first time small business operators to focus on the consumer and the consumer vehicle commercial fleet market from both a marketing and inventory acquisition point of view. In other words you can realistically expect to attract the fleet owners at taxicab companies and flower delivery services as customers. Do not however expect to serve the local Bekins Company or Greyhound.

Your customer base is a function of what your potential customers are driving. If you’re locating in Beverly Hills or Palm Beach for example you are likely to have customers who are unusually well heeled and who drive Cadillac Mercedes or Jaguars. If locating in a middle class suburb of Kansas City or Omaha you’ll most likely have customers who drive Fords Chevys or moderately priced foreign cars. If you locate in a rural community where farming or ranching is a principal business you’ll likely have customers who drive pickups four wheelers or vans.

To a somewhat lesser extent your customer base is a function of where your customers are located in your community. Why is it less important? Because the field is open and you’re marketing efforts may allow you to draw customers from a wider than normal socioeconomic radius in your area. Your shop may be on the poor side of town but you may attract customers from wealthy neighborhoods, if you advertise properly offer the right incentives and provide the degree of service required.

Loyal Clientele

One aspect of this business is that tire customers who are properly handled tend to be loyal. You’re selling tires they’re buying service and this can hold true no matter where you are located. We have heard of tire customers driving 20 miles to deal with a particular shop. If you position yourself in the local market in the ways recommended in this report your chances of realizing increased customer flow will be increased.

TARGETING YOUR MARKETS

In targeting your markets your job is to play up the service and selection angles of your tire store as opposed to the chain and department stores (Sears etc.). Industry experts recommend using direct mail (see Advertising & Promotion) coupons and cross coupons the latter a joint venture between two or more differing specialty services working the same general market for example cross couponing with another noncompeting auto aftermarket retailer.

Attractive flyers sent through surrounding and other target neighborhoods also work well according to operators we interviewed many of whom said they’ve had good luck in targeting apartment dwellers homeowners lower middle (with quality retreads) and upper middle class consumers.

IDEAL LOCATIONS

Since tires are something everyone needs with smart marketing virtually any area of the country has the potential for service oriented tire stores. Among the best regions of the country is the Northeast with other viable regions including the Upper Midwest Mid Atlantic states Florida and the West.

If you can find a corner location you will benefit from the high visibility and ease of access that such a site gives you. Notice, that the big sign is visible from more than two directions and is on a controlled inter section.

High-Density Business District

On a local level the ideal location is a high-density business district either urban or suburban depending on region where patrons have established buying habits. This is a business dependent on volume so unless you have a heavy truck trade most rural areas won’t generate the needed income.

Your potential customers will be more inclined to use your services if you make yourself easy to reach. You might locate in residential business areas where customers can easily drop by. Locating near shopping centers and business areas will make it convenient for customers to get to work or do other errands. The main thing is that people are not likely to drive miles and miles to use your tire center.

In nearby suburbs the majority of single-family dwellings ideally should be occupied by homeowners as opposed to renters however, areas with high concentrations of middle to upper middle income apartment units are also desirable.

This and other information should be obtained in a thorough market survey before zeroing in on either a specific location or site.

HOW TO DO A MARKET SURVEY

A thorough market survey will help determine a reasonable sales forecast for your tire center. Here are the basic steps to assess your market and make a forecast:

1. Determine the market limits or trading area.

2. Study the population within this area to determine its potential spending characteristics.

3. Determine the area’s purchasing power.

4. Determine the present sales volume of the type of services you will be offering.

5. Estimate what proportion of the total sales volume you can reasonably obtain.

Step 5 is extremely important. Opening your new tire store within a given community doesn’t guarantee additional business volume, it may simply redistribute the business already there.

In conducting your market research you’ll be gathering two types of data. The first will be “primary” information that you will compile yourself or hire someone to gather. Most information however will be “secondary” or already compiled and organized for you. Reports and studies done by government agencies trade associations or other businesses within your industry are examples of the latter. Search for them and take advantage of them.

Primary Research

When conducting primary research there are basically two types of information that can be gathered: exploratory and specific. Exploratory information is geared toward defining a problem by questioning targeted consumers using fairly open ended and general questions that elicit lengthy answers.

Specific research concentrates on solving a problem that has already been defined. It usually involves more in-depth questioning than exploratory research. When conducting specific research the objective is to arrive at concrete courses of action that will resolve a problem defined by exploratory research.

While most companies will hire a marketing firm to acquire primary data for them this is not always the case. When conducting primary research using your own resources you must first decide how you will question your target group of individuals. There are basically three avenues you can take: direct mail telemarketing or personal interviews.

If you choose a direct mail questionnaire make sure your questions are short and to the point. Most people don’t really like to be bothered with direct mail questionnaires so if they are lengthy your chances of receiving a good response will drop.

The same is true with telemarketing. Most people are bombarded with phone solicitations these days and have become wary of unfamiliar voices over the phone. This combined with the fact that you are invading their free time at home makes you an unwelcome visitor over the phone. Many people however will provide you with a small amount of their time to answer a few questions. Don’t get too verbose though or people will hang up on you.

The best course of action to obtain primary data is to conduct person to person interviews. Once you’ve acquired an individual’s attention and they’ve agreed to perform an interview it is easy to sit down and ask questions that will take an hour or more to complete. The advantage of personal interviews over direct mail and telemarketing is that you’re not usually invading the individual’s personal territory or time. Interviews are usually conducted at a prearranged time that is convenient with the interviewee. Many interviewers offer an incentive to agree to an interview.

This might be a small payment such as $ 10 or a free gift. The important thing is that you are dealing with a willing candidate.

Secondary Research

As previously mentioned most secondary research information will have been gathered for you already by firms outside your company and will be fairly easy to obtain at a nominal cost or for nothing whatsoever. Secondary research is not as involved as primary research. It doesn’t require any interviews to determine problems and develop courses of action. It only requires knowledge of where to search for resources that have already gathered the information.

Census Tracts

Almost every county government publishes population density and distribution figures in easily available census tracts. These will show you the number of people living in specific areas such as precincts or water districts or even 10- block neighborhoods. Some counties publish reports that show the population 10 years ago 5 years ago and currently thus indicating population trends.

Declining static or small populations do not suggest new businesses for an area. Increasing and expanding populations desiring the services you propose to offer are ideal. To judge whether they are potential customers you must study the lifestyle of the community.

Maps

Maps of major trading areas in counties and states are available from chambers of commerce industrial development boards trade development commissions and city newspaper offices. These maps show where the major business of the subject area is conducted and reflect the population’s spending habits.

Look at road maps of any area for information on the ease of access to specific sites. Access is an important consideration in determining market area limits.

Media Sources

Ask the sales departments of your area’s newspapers and magazines for copies of the business profiles used in their sales efforts. They will help determine the financial situation of your potential clients. The advertising manager is another source of information on spending patterns in the community.

Also check with managers of local broadcasting stations. The research they routinely conduct can help you determine if there is a valid market for your services.

Study the Yellow Pages to see how many businesses of a similar type are already operating and where they are located. This information is also available from Dun & Bradstreet. Evaluate the number of tire operations against statistics on the population’s base that can support a tire store the reputation of existing operations your perception of their method of conducting business and how you can improve your chances of success by duplicating or modifying your own setup to accommodate your market.

Community Organizations

Major cities have chambers of commerce or business development departments which encourage new businesses in their communities. They will supply you (usually for free) with information on population trends community income characteristics payrolls industrial development and so on.

Industry

The tire business is served by a number of different trade associations. Among these the Tire Retread Information Bureau and the National Tire Dealers and Ret-readers Association conduct surveys of market trends retail facts and so forth that can be useful in helping you identify prior to your opening the customers you are most likely to encounter. This is important not only to your marketing efforts but also to your merchandising/inventory choices. You can readily understand why you need to be aware of what kinds of tires people are choosing in the wider market based on national advertising regional climate needs and the like.

Check out the kinds of automobile dealerships new and used in your area. What kinds of cars and in what volume are people buying? This information which will provide clues to the kinds of tires that will be needed by your customers may be available from the dealerships themselves or in some communities from the chamber of commerce.

You must identify the industry in the area. Payrolls create buying power for your potential customers unless payroll stability and growth are present investment in the area may be unwise. You want to locate in a community that has substantial diversified and permanent industry an upward trend in community payrolls and a minimum of seasonality.

LOCATION

The two major aspects in locating your business are:

1) Deciding on the particular community

2) Choosing a site within that community.

CHOOSING A COMMUNITY SELECTING A SITE

In choosing a community you will consider many factors. The important concerns are:

1) Is the population base large enough to support your tire center?

2) Does the community have a stable economic base that will promote a healthy environment for your business?

3) Are demographic characteristics compatible with the market you wish to serve? Weigh these considerations according to your business needs and goals.

Population Required

The United States Census of Business is a gigantic study that includes information on the numbers of firms in each line of business and the populations of the communities in which they are located. Your own state census of business can be helpful in this regard.

Studies show that a population base of at least 8 300 is needed to support a tire dealership. The fact that a small population base is required to support a tire store has to be weighed in light of the level of competition in the area.

Economic Base

A community’s economic base determines your opportunities. The wealth produced in or near the community greatly affects local employment income and population growth.

People move from one community to another for better employment opportunities and higher income prospects. The occupational makeup of a community depends upon the types of jobs its resources and location will support while its population density depends upon the number of such jobs available. The nature and number of jobs largely determines the size and distribution of incomes earned by the community’s residents.

To evaluate a community’s economic base find the following information:

1.   The percentage of people employed full-time and the trend in employment.

2.   The average family income.

3.   Per-capita total annual sales for your goods.

You can obtain this information by studying census data and other business statistics. You can also learn a great deal about your prospective community by looking and listening. Some danger signals include the following:

1.    The necessity for high school and college graduates to leave town to find suitable employment.

2.   The inability of other residents to find local jobs.

3.   Declining retail sales and industrial production.

4.   An apathetic attitude on the part of local business owner’s educational administrators and other residents.

Favorable signs are:

1.   The opening of chain- or department- store branches.

2.   Branch plants of large industrial firms locating in the community.

3.   A progressive chamber of commerce and other civic organizations.

4.   Good schools and public services.

5.   Well-maintained business and residential premises.

6.   Good transportation facilities to other parts of the country.

7.   Construction activity accompanied by a minimal number of vacant buildings and unoccupied houses for sale.

Demographic Characteristics

You must know the demographic profile of your potential customers in order to properly evaluate a community for location. Professional’s business executives and their families differ from blue-collar workers in their purchasing interests and needs, a suburban clientele usually will differ from one that comes from a densely populated urban center, families have different interests and needs than singles, etc.

Social class a function of income occupation education culture upbringing and other factors strongly influences customers’ tastes and spending habits. Residents of a particular community or neighborhood may be of different social classes but generally there is some class uniformity within communities.

To see if the community you are considering offers a population with the demographic traits necessary to support your business look at the following:

1) Purchasing power (degree of disposable income),

2) Residences (rented or owned houses condos or apartments),

3) Places and kinds of work, 4) means of transportation,

5) Age ranges,

6) Family status

7) Leisure activities.

Detailed demographic information should be available from established businesses within your industry or from a trade association. In this business the lower on the economic scale a customer is the more likely they are to shop price rather than service. Affluent buyers of tires shop they are more interested in service than price.

Once you’re established in a location you must remain aware of the community’s demographic characteristics. As communities and the people within them change business owners must either change their locations or redefine the markets they wish to serve. Failure to follow one of these courses can mean reduced revenue or even business collapse.

When you are satisfied that the community you plan to serve has the qualities to support your tire store you must choose the site at which you will locate.

SELECTING A SITE

For a tire center site location is probably the most important factor in determining success, and in some instances it is all-important. Studies have shown that poor location is among the chief causes of all retail-business failures. In retailing you must be willing to pay for a good location. The cost of the location often reflects the volume and/or quality of the business you will do.

Keep in mind however that in some lines of retail business site location is not a critical factor. For example if customers have a good reason to travel a longer distance to reach you they will do so even if you are located on the outskirts of town. This is true of tire dealerships. Customers who are properly handled tend to be loyal. You’re selling tires, they’re buying service. We have heard of tire customers driving 20 miles to deal with a particular shop. If you position yourself in the local market in the ways recommended in this report your chances of realizing increased customer flow will be increased.

Anticipated Sales Volume

The anticipated sales volume of your tire store also has a direct bearing on your selection of site. For many lines of business and this is one of them only one medium- or large-volume operation with a limited range of goods or services can successfully locate in a small shopping center or shopping district. You must consider the presence (or in the case of a new mall or shopping center the potential presence) of other businesses that will be in direct competition with you.

If the foot traffic is high and/or there is a broad range of services sold then there might be enough business to divide. Two department stores or two auto dealerships may be able to compete successfully side by side but usually not two grocery stores two videocassette-rental stores or two tire centers since they draw their customers mostly from the immediate area in which they are located.

Zoning Codes

In almost every city and town are areas as small as a few blocks or as large as many acres zoned for only commercial industrial or residential development. Within these broad classifications are further zoning restrictions. A commercial zone may permit one type of business to operate but not another. Survey your community for potential locations. It’s important to check the zoning codes of areas under consideration before spending a lot of time and money on a market survey or pursuing a specific site.

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