goodyear : aquatred

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  1. 1. Goodyear ! The Aquatred Launch
  2. 2. Goodyear: The Aquatred Launch In 1992, Barry Robbins, Goodyears vice president of marketing for North American Tires, was contemplating the upcoming launch of the Aquatred, a new tire providing improved driving traction under wet conditions. OVERVIEW
  3. 3. Goodyear: The Aquatred Launch Case Decision Questions Was Aquatred the right product to generate support from Goodyears independent dealers? Was it the right time to launch Aquatred? How should Aquatred be priced and distributed?
  4. 4. Goodyear: The Aquatred Launch Analysis of the US Tire Industry
  5. 5. Goodyear: The Aquatred Launch Analysis of the US Tire Industry From early 1900s through the early 1970s, the US tire industry was dominated by 5 companies- Goodyear, Firestone, Uniroyal, BF Goodrich and General Tire.! The US Tire market saw consistent revenue & prot growth, and a complete absence of foreign competition.
  6. 6. Goodyear: The Aquatred Launch Analysis of the US Tire Industry In 1970s and 1980s, the US tire industry saw 3 major changes:1) Radial Tires Between 1975 and 1991, radials share of unit sales in the U.S. passenger tire market increased from 32% to over 95%2) Foreign Competition Imported passenger tires represented 8% of unit sales in the U.S. passenger tire market in 1972, 12% in 1982, and 22% in 1990.3) Nature of Demand Due to radials longer life, and high oil prices leading to less driving, consumers replaced tires less frequently.
  7. 7. Analysis of the US Tire Industry Demand for passenger tires grew sluggishly during the 1980s. While the average life of a new tire rose from 28,600 miles in 1980 to 37,300 miles in 1990, annual miles traveled per passenger car in the US grew only slowly, rising from 9,100 miles in 1980 to 10,600 miles in 1990.
  8. 8. Goodyear: The Aquatred Launch Company Background
  9. 9. Goodyear: The Aquatred Launch Company Background In 1991, Goodyear operated 41 plants in the United States, 43 plants in 25 other countries, six rubber plantations, and more than 2,000 distribution outlets worldwide
  10. 10. Goodyear: The Aquatred Launch Company Background Goodyear ranked third in worldwide sales of new tires
  11. 11. Goodyear: The Aquatred Launch Company Background
  12. 12. Goodyear: The Aquatred Launch Market Analysis for Passenger Tires
  13. 13. Goodyear: The Aquatred Launch Market Analysis for Passenger Tires The market for passenger tires could be segmented three ways
  14. 14. Goodyear: The Aquatred Launch Market Analysis for Passenger Tires 1) Based on the distinction between performance and broad-line tires Performance tires were wider than broad-line tires, were more expensive, and provided better traction. Although performance tires could be replaced with broad-line tires, consumers rarely made this substitution because of the resulting decrease in handling and performance.
  15. 15. Goodyear: The Aquatred Launch Market Analysis for Passenger Tires 2) Based on Replacement and OEM tires
  16. 16. Goodyear: The Aquatred Launch Market Analysis for Passenger Tires 3) Based on Brand Classications-Major Brands! ! -Minor Brands! -Private Labels Major brands accounted for 36% of unit sales in the replacement passenger tire market.! Minor brands represented 24% of unit sales! Sales of private label tires constituted the remaining 40% of the market.
  17. 17. Goodyear: The Aquatred Launch Market Analysis for Passenger Tires The average retail selling price of a private label tire was 18% lower than the price of a comparable branded tire
  18. 18. Goodyear: The Aquatred Launch Consumer Analysis for Replacement Passenger Tires Market
  19. 19. Goodyear: The Aquatred Launch Consumer Analysis for Replacement Passenger Tires Market The average time between purchases of tires was 2.5 years 42% of consumer purchases involved two tires, 40% involved four tires, 16% involved one tire, and only 2% involved three tires.
  20. 20. Goodyear: The Aquatred Launch Consumer Analysis for Replacement Passenger Tires Market Goodyear regularly surveyed car owners concerning the criteria they used to select a tire retailer !1.Price 2. Oers fast service 3.Can trust personnel 4. Store is attractive 5. Oers mileage warranty 6. Brand selection7. Maintains convenient hours
  21. 21. Goodyear: The Aquatred Launch Consumer Analysis for Replacement Passenger Tires Market 1985 1992 Price Oriented 48% 45% Brand Oriented 26% 22% Outlet Oriented 26% 33%
  22. 22. Goodyear: The Aquatred Launch Consumer Analysis for Replacement Passenger Tires Market Major Consumer Segments for Replacement Passenger Tires
  23. 23. Goodyear: The Aquatred Launch ! Wholesale and Retail Channels for Replacement Tires
  24. 24. Goodyear: The Aquatred Launch Wholesale Distribution Channels The U.S. replacement passenger tire market depended on the four wholesale channels listed below
  25. 25. Goodyear: The Aquatred Launch Dealers who were strictly wholesalers, with no retail operations, accounted for 10% of Goodyears factory sales to independent dealers and resold their tires to car dealers, service stations, small independent dealers, and other secondary outlets. Another 40% went to dealers who both sold tires at retail and resold tires to other dealers or to secondary outlets. The remaining 50% went to dealers who bought tires to resell in their own retail outlets and did not resell to other outlets.Wholesale Distribution Channels
  26. 26. Goodyear: The Aquatred Launch Retail Distribution Channels Six major retail channels competed for market share in the U.S. replacement passenger tire market
  27. 27. 3) Mass Merchandisers:Mass merchandisers were retail chains that sold tires, performed auto services, and carried other types of merchandise. 2) Warehouse Clubs: They operated large stores carrying categories as diverse as food, clothing, electronics, tires, and hardware. Although warehouse clubs were a relatively new retail format, they were growing quickly due to their low prices.1) Garages/Service Stations: These were typically small, neighbourhood outlets oering gasoline, tires, and auto services.
  28. 28. 4) Manufacturer-Owned Outlets: These outlets, owned and operated by the tire manufacturers, typically sold only one brand of tires and oered a range of auto services.5) Small Independent Tire Dealers: Small independent tire dealers operated one or two outlets, where they sold and installed tires and also oered auto services. 6) Large Independent Tire Chains: Also known as multibrand discounters, large independent tire chains typically had 30-100 outlets concentrated within a geographic region.
  29. 29. Goodyear: The Aquatred Launch Retail Distribution Channels Share of Retail Sales of Replacement Passenger Tires by Channel
  30. 30. Goodyears Distribution Structure Goodyear did not sell tires in garages/service stations, warehouse clubs, or mass merchandisers; instead, the company relied on three types of outlets Number % of sales revenue Independent Dealers 4400 50% Manufacturer Owned 1047 27% Franchised Dealers 600 8%
  31. 31. Goodyear: The Aquatred Launch Goodyears Distribution Structure The average selling price of all tires sold by Goodyears independent dealers was $75 per tire. Retail margins for independent dealers averaged 28% on Goodyear tires, 25% for dealers carrying other major brands, and 20% for private label tires. Average wholesale margins were 18% for private label tires and 14% for Goodyear tires.
  32. 32. Goodyear: The Aquatred Launch Competitor Analysis
  33. 33. Goodyear: The Aquatred Launch Competitor Analysis Michelins image was stronger among value-oriented and quality buyers, while Goodyear had a stronger image among price-constrained buyers and commodity buyers
  34. 34. Goodyear: The Aquatred Launch Competitor Analysis Michelin owners were the most loyal, followed by Goodyear owners, but signicant proportions of consumers who owned major brands replaced their tires with private label brands.
  35. 35. Goodyear: The Aquatred Launch AQUATRED Analysis
  36. 36. Goodyear: The Aquatred Launch Key Features Appearance wise appealing. Caught a customers eye as soon as they entered the showroom When 50% worn, the Aquatred maintained the same wet traction as a new all-season tire Cars equipped with Aquatreds traveling at 55 miles per hour stopped in as much as two-car- lengths-less distance than similar cars equipped with conventional all-season radials!
  37. 37. Goodyear: The Aquatred Launch Drawbacks Goodyear planned to launch Aquatred with 60K mile warranty, while competitors like Bridgestone and Michelin planned to launch new tires with 80K miles warranty. Apprehensive dealers, as industry moving towards low price and long life tires instead of high priced premium products like Aquatred. Dicult to capitalize on Olympic marketing, due to lack of required inventory.
  38. 38. Goodyear: The Aquatred Launch Case Decision QuestionsRevisited
  39. 39. Goodyear: The Aquatred Launch Case Decision QuestionsRevisited Was Aquatred the right product to generate support from Goodyears independent dealers? How should Aquatred be priced and distributed? Was it the right time to launch Aquatred?
  40. 40. Goodyear: The Aquatred Launch 1) Was it the right time to launch Aquatred?
  41. 41. Goodyear: The Aquatred Launch Current Situation of Goodyear In 1991, Goodyear earned less than 1% income on revenue of $10.91 billion Private label tires constituted 80% of the sales of Goodyears wholly owned Kelly-Springeld subsidiary; the remaining 20% were sold under the Kelly brand. Brand loyalty is degrading, and private labels are cannibalising into brand markets. The company is facing a management crisis and innovati