Download - Goodyear : The Aquatred Launch
Tire industry and Goodyear Background
US tire industry was denominated by five companies in early 1970's . Goodyear known as 'Gorilla' of world tire industry and ranked 3rd in worldwide new tire sales.
Goodyear operated 41 plants in US and 43 plants in 25 other countries, 6 rubber plantations and more than 2000 distribution outlets worldwide, 4400 Independent dealers, 1047 manufacturer owned outlets and 600 franchise dealers.
Strong track record of innovation but profit hurt by international competition and oil prices.
In 1991, Goodyear were in severely damaged position. The company had experience its first financial loss and the Goodyear was on the verge of bankruptcy.
CEO Stanley Gault sold indirect investments and set priority on new development.
Brand image of major Tire Manufacturer
All Buyers
Value Conscious Buyers
Quality Conscious Buyers
Price ConstraineBuyers
Commodity Buyers
Goodyear 13% 17% 18% 16% 10%
Michelin 13 24 22 9 6
Other 19 20 25 18 16
Uncommitted
55 39 35 57 68
Aquatred Edge over other tires
Something that could be noticed from distance
Developed after comparing different designs on performance and consumer preference.
Unique aqua Channel design channel waters from under the tire and provides better traction in wet conditions.
Cars equipped with Aquatred , travelling at 55 miles per hr in wet conditions, can stop as much as two length less distance.
60,000 mile warrenty
Case Decision Situation
Managers at Goodyear have following concern
- Dealer's perspective
- Would dealers be receptive to a high priced tire when
industry is moving towards low cost long life tyres?
- Customers Perspective
- want long life warranties at low price
- Identifying the right target segment and brand positioning - Type of market segment to be targeted
- Type of Customers
- Selecting the Right Marketing channel - If distribution to be expanded
- What specific channels or retailers should be added
Current Market stats:
Goodyear is able to attract 17% Value oriented buyers and 18% Quality Buyers.
Michelin Value Oriented Buyers is 24 % and Quality buyers 22%.
Performance based tires provide Goodyear with a higher % profit margin then standard radials.
Consumer Prefereces and Behaviour
23% of current buyers are quality buyers.
18% of buyers are value oriented buyers.
% of consumers
Major Brands
Minor Brands
Private Brands
Price oriented
22% 30% 35% 35%
Value oriented
18 54 29 17
Quality buyer 23 51 28 21
Commodity 37 18 37 45
All tier buyer 100 33 33 34
Channel Structure and Trends
Small and Independent Distributors share 63% of total Retail sales
Manufacturer owned outlet shares 9% of retail.
Proposed Strategy
Identify area in US with heavy rainfall.
Mapping them with no of car in respective area
Target Value oriented and Quality Buyers
Create Customer Awareness about Aquatred through Advertising.
Distribution System
Current Distribution system meet the demand of targeting value oriented as well as quality Buyers.
Hence, no expansion in current distribution system is Required
Pros of current distribution system
Less Complex
No conflict created among different distributors by introduction of new distributors
No sales cannibalization of existing outlet
No risk of dilution of Good year brand value.
Avoidance of conflict between Manufacturer owned outlets and Independent distributors
By adding a knowledge centre functionality in Manufacturer owned outlets.
- This would create value for the customers.
- Distributors would perceive this as added incentive to promotion
Uniform Pricing.
Building Relation with existing Dealers
Create a forum for dealers through which they will communicate with Good year effectively and give their feedback and opinion.
Dealer Family outing
Best dealer award
Discounts for meeting targets early.
Goodyear should enter the market with a Market skimming objective to establish market leadership through a superior product with initial premium pricing that can be later reduced.
The price should be high enough for customers to match it with perceived high level of quality.
The pricing method - perceived value pricing should focus on safety image, high traction performance, warranty and other service deliverable through channels.