goodyear - the aquatred launch

Download Goodyear - The Aquatred Launch

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  1. 1. ABOUT THE CASE
  2. 2. the players (1/2) BARRY ROBINS Vice President of Marketing STANLEY G. GAULT Chairman of Goodyear
  3. 3. GOODYEARs BACKGROUND (2/2) In 1991 41 Plants in USA, 43 Plants other nations 3rd Rank in Worldwide Sales Income < 1% of $10.91 Billion Revenue $1 Million per day on Interest Spending in 1991 History of Successful Product Innovation
  4. 4. AIM OF THIS CASE
  5. 5. OBJECTIVE 1 MAKING SURE GOODYEAR HAS THE RIGHT PRODUCT & TIMING TO GENERATE SUPPORT FROM THE COMPANYS TRADITIONAL BASE OF INDEPENDENT DEALERS Well talk about market segments & consumers and dealers preferences over tire attributes
  6. 6. OBJECTIVE 2 WEIGHING THE RISKS & BENEFITS OF EXPANDING DISTRIBUTION CHANNELS. ANALYZING WHETHER THE NEW CHANNELS WOULD SELL THE AQUATRED Well study the companys distribution structure & analyze the market research done on this
  7. 7. TIRE INDUSTRY IN USA
  8. 8. OVERVIEW from 1970 to 1990 3 Major Events CAUSE a. Radial tires introduced, required heavy investments b. Increase in foreign competition c. Change in Demand due to Increase in Oil Prices Impact EFFECT a. Slow Demand Growth b. Price reduction c. Production Capacity > Demand d. Mergers & Acquisitions
  9. 9. MARKET FOR PASSENGER TIRES
  10. 10. MARKET SEGMENTATION (1/3) Market divided on basis of :- a. PERFORMANCE vs BROAD-LINE TIRES b. REPLACEMENT vs OEM TIRES c. BRAND CLASSIFICATION i. Major Brand (36%) ii. Minor Brand (24%) iii. Private Label (40%)
  11. 11. TIRE ATTRIBUTES a. Tread Life b. Wet Traction c. Handling d. Snow Traction e. Dry Traction RETAILER CRITERIA a. Price b. Offers Fast Service c. Trustable Personnel d. Attractive Store e. Mileage Warranty f. Brand Selection g. Convenient Hours CONSUMER PREFERENCES (2/3)
  12. 12. CONSUMER SEGMENTATION (3/3) On the basis of preference of brand or outlet a. Price-Constrained Buyers 22% b. Value-Oriented Buyers 18% c. Quality Buyers 23% d. Commodity Buyers 37% In 1992 a. 45% Price Oriented b. 22% Brand Oriented c. 33% Outlet Oriented
  13. 13. MARKET FOR REPLACEMENT TIRES
  14. 14. Retail channel (1/3) DISTRIBUTION CHANNELS Garage/ Service Stations (6%) Warehouse Clubs (6%) Mass Merchandis ers (12%) Manufactur er owned Stores (9%) Small Independe nt Dealers (40%) Large Independe nt dealers (23%)
  15. 15. Goodyear's distribution structure (2/3) DISTRIBUTION CHANNELS 4400 INDEPENDENT DEALERS 50% 1047 MANUFACTURER OWNED 27% 600 FRANCHISED DEALERS 8% GOVERNMENT AGENCIES 15% Number of stores Sales Revenue
  16. 16. Goodyear S independent dealers (3/3) Dealers Organized into :- 28 Districts 1 District Manager 3 Area Sales Managers Goodyear Offered Services like :- Expertise & Training Certified Auto Service Goodyear Business Management System National & Regional Advertising Research on Market Trends
  17. 17. THE AQUATRED TIRE
  18. 18. AQUATRED features (1/2) INNOVATIVE Design Improved Traction in Wet Conditions SAFE Reduced Braking Time & Distance SUPERIOR Top of Broad Line Segment STRENGTH 60,000 Mile Warranty APPEARANCE New & Striking Design
  19. 19. AQUATREDs LAUNCH (2/2) Sale only through Replacement Market Priced at a premium of 10% over Invicta GS Launch Budget of $21 million Launch during Winter Olympics in January 1992
  20. 20. LAUNCH CONCERNS
  21. 21. PRODUCT (1/5) Is it the Right Product for the market ? Michelin & Bridgestone planned to launch new tires with 80,000 mile warranties and huge advertisement budgets What would the consumer prefer ?
  22. 22. Distribution channel (2/5) Should they expand distribution ? Would prevent being replaced by other brands If yes then through which channels ? Selling through lower service outlets could erode Brand Value
  23. 23. Timing (3/5) When should it be Launched ? Plan to launch during Winter Olympics Might spark Sales Initial Inventory unavailable for Imported cars
  24. 24. EDUCATING DEALERS (4/5) Which customer would be likely to switch to Aquatreds ? Dealers tried selling to affluent looking customers Should the new channels receive the Aquatred?
  25. 25. Pricing & Promotion (5/5) What should the price be ? Kept at a premium of 10% over Invicta GS Should they allow price promotions on Aquatred ? Problem of tires being diverted to Unauthorized dealers
  26. 26. SOME SUGGESTIONS
  27. 27. Suggestions (1/3) Sales force and dealers must be properly trained so that they convey the correct message to the customer EXHIBIT 10 Avoid discounts on Aquatred instead Decrease Prices Success of Tiempo due to low retail price In competition with high mile warranty tires Reduces Brand Image
  28. 28. SUGGESTIONS (2/3) Optimize promotion during Winter Olympics Launch the product before the competition does Increase awareness of a new product among customers by creating curiosity Change mindset by highlighting the importance & need of safe tires in all conditions Unavailability of product for imported cars would not be a big concern Only 26% buyers of Imported cars
  29. 29. SUGGESTIONS (3/3) Market Extensively & Aggressively in Rain- prone areas Expand Distribution Network into Garage/Service Stations Reduce effects of whole sellers Maximizes geographic reach Increases Sales & Market Share
  30. 30. DISCLAIMER Created by Bhavnoor Singh, IITR, during a marketing internship by Prof. Sameer Mathur, IIM Lucknow. (See www.IIMInternship.com )