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🛞 The $42K Tire

This tire set sold for $42,000…

The tire set was made for a Bugatti Veyron and built by Michelin - the largest tire company in the world.

Although Michelin is globally recognized as the top producer of tires today…

135 years ago they were nothing but a small-town shop in France.

At the time, cars were new and most citizens used free public transportation…

Yet with 1 strategic marketing strategy, Michelin managed to boost car sales by over 37% in the 1920s.

How did they do it? I’ll give you a hint…

It wasn’t ads…

It wasn’t by giving away free tires…

It was with a star - the Michelin Star

Here’s what we got for ya:

  • ⭐️ The Michelin Star

  • 💰 1 Strategy, 1000 Businesses

  • 🗺 We Sell Trips, Not Tires

Read time: 4 min 37 sec

⭐️ The Michelin Star

In 1889, two brothers Andres and Edouard Michelin opened their first tire store in Clermont-Ferrand, France,

The Michelin brothers

The tires were well made and of the best quality. But they had a big problem…

There were less than 300 cars in France.

At the time, the automobile industry had little luck selling cars as most couldn’t afford them.

And if cars weren’t selling, neither were tires.

With a great product but no market, the two Michelin brothers needed a way to convince people to buy cars.

And that’s when they came up with the Michelin Guide - the #1 guide for Frenchmen with a car.

From the Michelin Guide Website

Not only was it a guide for changing tires and maps, but it also had a list of the top restaurants, hotels, and gas stations in France.

The idea was simple…

Give out free brochures → Convince buyers to visit the restaurants/ hotels → Offer them tires to get there

The guide was a big hit.

Within the next 9 years, car sales soared in France as the Michelin Guide became a regular on the bestseller list.

The 2 brothers made Michelin Guides for other countries, and depending on the sales, they expanded across Europe.

Today, Michelin is worth $25.65B.

Let’s talk about what the hospitality industry has to do with cars, and how you can apply the same thinking in your business.

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💰 1 Strategy, 1000 Businesses

In any market, all buyers can be grouped into what’s called the buyer’s pyramid:

Most companies market to the top 3% ready to buy today. But in 1900 France, that was a very small number of people.

So the Michelin brothers had 3 options:

  1. Move somewhere with a bigger market for tires like the US or Germany

  2. Educate people about tires and why they should buy them (Still a small market)

  3. Choose a different market

They chose #3.

At the time, the hospitality industry was one of the fastest-growing markets in France.

And most importantly…

If they could pay hundreds for a nice dinner or hotel, they could afford a car and expensive tires.

By targeting the hospitality industry with the Michelin Guide, Michelin could market to the other 97% percent in both industries.

Michelin went from sub 400 to thousands of potential customers without changing a single aspect of their business.

We see this strategy everywhere today. Like alcohol brands marketing to sports fans…

Or Nike marketing to gamers on Fortnite and EA Sports (video games)

But by the late 1900s, most families had a car.

And as the market grew, so did the competition….

It became common practice to buy tires where you bought your car. And 9 times out of 10, they were less expensive than Michelin tires.

So Michelin had to yet again shift their marketing strategy…

🗺 We Sell Trips, Not Tires

Today, Michelin does not sell tires…

They sell problem-free road trips to the upper middle class.

Since the first Michelin Star, the system has evolved to a 3-star ranking:

“Worth a special journey”... “Worth a detour”...

Today, they have planned tourist routes on their website that take you to 3-star spots.

I’m willing to bet that most people interested in a 3-star Michelin Guide trip have enough money for expensive car rentals...

AKA Michelin’s target market.

So when you open the trip, you get a discount on Michelin car rentals and coupons for some of the listed spots.

The takeaway: Don’t sell the product, sell the irresistible benefit.

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