goodyear aquatred launch

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  • THE AQUATRED LAUNCH

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  • The Goodyear Rubber and Tire Company41 plants in U.S. 43 plants Overseas2,000 distribution word wide.Also known as The Gorilla.Around 1,05,000 employeesRanked Third in worldwide sales of new tires.Innovative in terms of technology ($1.5 b.)Marketing (Eagle Tires, Tiempo)

  • Performance Vs. Broad-line Tires

    Replacement Vs. OEM

    The Market For Passenger Tire

    More expensive Better traction.Less expensive Poor handling25% of Goodyears unit Sales 30% of Dollar salesHigher percentages of profits.Less percentage of profits.

    Sold to Individual Consumers .Sold to Car manufacturers.65% of Revenue 35% of RevenueCut-through CompetitionLarge ScopeMarket Leader (Rank 1; Mkt Share 38%)

  • Brand ClassificationThe Market For Passenger Tire

    Major BrandsMinor BrandsPrivate Label36% of unit sales.24% of unit sales.40% of unit sales.Highest recognition among consumers.Minor but well-recognized among consumers.Larger manufacturer used excess capacity to service private labels.Goodyear, Firestone, Michelin, Bridgestone, Pirelli and Goodrich.Dunlop, General, Kelly , Uniroyal, Cooper, Yokohama and Toyo.They carried names to particular retailers.

    *

  • Channels

    Independent DealersStrictly whole-sellersRetail DealersRetail Owners10 %40 %50 %Car dealers, service stations, small independent dealersOther dealers, secondary outletsOwn retail outlets

    WholesaleDistribution Channels (percent of U.S. passenger tire replacement sales in units)Type of Outlet 1976198119861991Oil companies 9532Large retailers 24201619Manufacturer-owned outlets 11101312Independent dealers 56656867

    Large Retailers include mass merchandisers & Ware house clubs They bought tires directly from mfrs to resell in their stores.Independent dealers have gradual increase in share*

  • Channels

    Retail Distribution passenger tiresGarage / service stationWarehouse clubsMass MerchandisersManufacturer-owned outletsSmall independent tire dealersLarge independent tire chainsSet-upSmall OutletsLarge StoresLarge Retail space / chainLarge OutletsOne or two outletsConcentrated within geographic regionsOutletsNeighborhood outletsless than 100 outletsSome hundredsless than 100 outletsVarious30-100 outlets Product / service offeredTires, gasoline, auto services Food ,clothing electronics ,tires ,hardwareOnly installation of tiresCarried various types of merchandise. Performed auto servicesTiresTiresTiresTires soldPrivate lab. / BrandedBrandedVarious Branded / own brandOne brandStart with a brand and add on later / private labelsPrivate labels / BrandedPlayersManySams, Pace, Price club, Costco Kmart / Sears /Wal-MartManufacturers : Goodyear / Michelin / FirestoneManyTire America, National Tire Warehouse,and Discount Tire.StrategyLow volume / Stiff competition from high volume playersDeal based/ Low pricesHigh Volume/ Low pricesHigh Volume/ Low pricesLow volume/ Stiff competition from high volume players High Volume/ Low prices

    6 retail channels 1. Garage : on decline due to low cost high volume outlets.2. Warehouse clubs - self service except installation. low prices , deal based with vendors3. Mass merchandisers - had hundreds of outlets - performed auto services, and carried other types of merchandise maintained very wide brand selection and its own brand also.4. Manufacturer-owned outlets: owned and operated by tire manufacturers, own tire sales - & range of auto services.5. Small independent tire dealers: One or two outlets, where they sold and installed tires - offered auto services. - started as single-brand outlets - over time added additional brands. 6. Large independent tire chains: multi-brand discounters, large independent tire chains gained share, often by acquiring smaller independent dealers.7. Other: Half the sales in the other category were accounted for by full-service autosupply stores such as Western Auto, Auto Palace, or Pep Boys. These stores sold tires atlow prices as traffic builders and were resented by independent dealers as a consistentsource of low-priced competition*

  • Goodyears Distribution Structure4 channels of distribution : Independent dealers : Accounted for 50% of sales revenues through 4,400 outlets (2500 active selling full line of Goodyear tires) Manufacturer-owned outlets : Generated 27% of sales through 1,047 outletsFranchised dealers : 600 in total accounted for another 8% of salesGovernment agencies : 15% of sales

    Goodyear did not sell tires in garages/service stations, warehouse clubs, or mass merchandisers. However another private label of Goodyear Kelly Springfield was sold by mass merchandisers

    Just tires a proposed new retail format of Goodyear planned to offer tires & fast oil change without appointment and guaranteed speed & quality of installation

    Starting 1970s, Goodyear opened 200 outlets to 1,300 in 83

    Process : Owners were franchised by Goodyear for three years before they became independent / various business & functional training *

  • Manufacturer-owned outlets : Greater control for opening / closing an outletHigh associated demands for capital and management attentionSome competition perceived by Independent dealerConverted some outlets into franchised dealerships.

    Independent DealerRequired owner to invest $100,000 and generate revenues of $1,000,000 pa.Sold an average of 15.5 tires/day, including both Goodyear and other brands of tiresMost Goodyear dealers had majority of their sales from Goodyear tires - average selling price of $75 per tire. Margins : 28% averaged for independent dealers on Goodyear tires25% for dealers carrying other major brands20% for private label tiresAverage wholesale margins were 18% for private label tires and 14% for Goodyear tires

    Goodyears Distribution Structure

    Some inept dealers would act as wholesaler and sell direct to mass merchandise which eats up distributionGY tried to stop diversion by legal restriction by 1 dictating the retail sell price and 2. dictating whom to b resold.*

  • Sales OperationCompany Owned Outlet42 Districts (1 DM)20 to 23 Stores each (1SM)

    Independent Dealers28 Districts (1DM)Avg. 3 SMServices Expertise & TrainingGY Business Mgt. SystemNational & Regional Adv.Research on Market TrendCertified Auto Service

  • Independent DealersAuto ServicesServices sales $38,100 per month per outlet26% (1980) to 48% (1991)20% tries related workMargins 50% Services Labor20% to 25% Parts installedRevenues70% services Labor30% parts

  • Independent DealersServices provided were not free.Paid upon receipt, ordered in full trailer loads or purchased under occasional promotional programs.AllowanceWholesale AllowanceMerchandising Allowance 1.5%Advertising Accruals 4%

  • Goodyear & Independent Dealers198970% only GY & 30% other brand also199150% 50%Aggressively merchandised other brands but GY generated 90% of the revenues. Independent dealers network better optionGrow sales, expand brand availability & increase market share

  • Consumer Behavior

    Chart1

    4845

    2622

    2633

    1985

    1992

    Sheet1

    Orintation19851992

    Price4845

    Brand2622

    Outlet2633

    To resize chart data range, drag lower right corner of range.

    Sheet2

  • Consumer BehaviorTire AttributesTread LifeWet TractionHandlingSnow TractionDry Traction

    Tire CriteriaPrice Offers Fast ServiceCan Trust PersonnelStore is AttractiveOffers Mileage WarrantyBrand SelectionMaintains Convenient Hours

  • Consumer Segments

    Type of BuyersLoyalty to OutletLoyalty to BrandShop AroundOtherPrice ConstrainedLESSLESSMOREBest in their BudgetValue OrientedLESSMAJOR BRANDSEXTENSIVELYSearch for best pricesQuality- PrestigeMOREMORELESSBest Tires. 65% Major BrandQuality - CCMORELESSLESS38% Major BrandsCommodity- Bargain HunterLESSLESSEXTENSIVELYYOUNG,PRICECommodity- Trusting PatronsMORELESSLESSLower Price

    *

  • CompetitionIntent to buy Major Brand Segments? 36% (1982) TO 53% (1992)

  • Switching Among Brand9%-11% of sales on adv. & promotion60% on promotion60% share of voice in TV & Magazines

  • Promotions1. Estimated 75% of all Goodyear tires sold in independent or company-owned outlets were sold on promotion, at an average discount of 25%. Offered to the consumer by schemes like one free tire with the purchase of three tires, one tire for half price with purchase of another tire at full price, or 25% off the price of selected tires.2. Promotions organized around core eventssix 3-week periods spread throughout the year to buy merchandise at a discount. This was supported by radio, television, and print advertising announcing special prices on specific tire lines. 3. Spring dating, organized every spring , provided extended financing on tire orders to Goodyear dealers

    *

  • Aquatred DifferentDesignPerformance & Consumer PreferenceAquachannelHydroplanning & Wet Traction60,000 mile warrantyTop in Broad Line

  • Test Market - ResultAquatred buyer were likely to replace competitors tires.Less Cannibalizing (GY 38-51) (M17-15)Information Search is extensiveBraking the orientation (Brand 56-47)Uplifting Brand EquityTarget SegmentsValue Oriented & Quality Buyer

  • Test Market - ResultDetailing by Salesperson

    Absences of Integrated communication at Touch Point

    DetailsAquatredInvicta GS60 K mile Warranty41%10%Great Wet Traction33%38%Dont tell any thing13%42%Wont Hydroplane16%9%Other29%18%

  • The Launch of Aquatred A high profile nationwide launch of Aquatred was planned to have a strong impact on the market as it was a product which wou