Goodyear’s PartneringLessons

Prepared by: Ayush Trivedi (PGP31017)Under the expert guidance of: Prof. Sameer Mathur

• American Multinational tire company established in the year 1898

• Manufactures products in 50 facilities in 22 countries

• Known for product Innovation

About the Company

Famous MarketingCampaigns by the

Company

“IF IT”S NOT GOOD YEAR, GOOD LUCK” campaign by the company to increase its appeal among consumers and to enhance its brand association to safety”

IF IT’S NOT GOOD YEAR, GOOD LUCK

“Goodyear “be the first” campaign to associate itself with victory and associate its brand to victory”

“BE THE FIRST”

“GOODYEAR’S FAMOUS BLIMP ADVERTISING”

Goodyear’s made to feel campaign video ad

Goodyear’s Made to feel good video Ad

The Happy years: 1970s & 1980sGoodyear managed the top tire reseller network in the 1970s & 1980s and earned dealer loyalty through

• Competitive prices• On time delivery• Visible Marketing efforts• Good quality products

Sales slumped 14%

During 1990s & 2000s

Revenue loss of $550 Million

Stagnation in No. of distributors for the past 6 years

“All this when category sales grew and a major competitor was forced to recall 6.5 million tires”

REASON: CHANNEL CONFLICT

What is Channel Conflict?Channel conflict is a situation in which channel partners have to compete against one another or the vendor's internal sales department. Channel conflict can cost a company and its partners money as partners try to undercut one another. It can also lower morale within the channel and cause some partners to consider other vendors

Types of Channel Conflicts• Among channel partners at different levels• Producers may annoy wholesalers or retailers when they try to

bypass these intermediariesVertical

• Results from disagreements among partners at the same level• Causes tension between different intermediaries that handle

similar productsHorizontal

• When manufacturer establishes two or more channels• For example- sale of same goods through retailers and through

e-commerce channels

Multi-channel

Cause of Channel conflict

Goal Incompatibility

Ambiguous Roles

Task Interdependence

Communication problem

Personality Difference

Expectation differences

Reasons for Channel Conflicts

How to solve Channel Conflicts• Consultation with Channel Partners• Consultation with Employees• Exchange of Employees• Diplomacy, Mediation and

Arbitration• Coherent Goals• Co-potation• Clearly formulated contracts• Legal Recourse

Channel Conflict at Goodyear•Company started offering products to discount retailers at bulk discounts•Broke the promise of not selling through discount retailers•At times, smaller individual dealers had to pay as much as customers could pay at discount retailers

“Smaller retailers started stocking other brands which impacted the sales of Goodyear”

Goodyear’s Missteps•Pressure on dealers to buy more tires than need•Uneven pricing with prices changing every month•Poor quality products

“All this led to stagnation in the dealership strength of Goodyear which stayed at 5,300 for 6 consecutive years”

Corrective Actions taken• Company launched its new tire range Assurance

through its authorized retailers only• The company started collaborating with dealers for

in-store promotion• Company started compensating manufacturers for

specialized marketing undertaken• Care was taken to ensure minimum price

fluctuations

Summary

1970s-1980sGoodyear’s Happy

years

What is Channel conflict and its types?

1990s-2000sDecline in profit and

stagnation in dealership count

How to solve the problem of Channel

conflict?

Reason Channel Conflict

How Goodyear solved the problem

1

4

2

5

3

6

Created by Ayush Trivedi during Brand Management course of Second Year of PGP taken

by Prof. Sameer Mathur, IIM Lucknow

(See www.IIMInternship.com) Prof. Sameer Mathur, IIM Lucknow

DISCLAIMER