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.

Pricing Strategy

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.

Thank you !

Created By:

Raghav Kumar

NSIT, Delhi