Goodyear : The Aquatred Launch

HISTORY• TRADITIONALLY HUGE MARKET SHARE • 41 PLANTS IN U.S AND 43 PLANTS OVERSEAS

• 2000 DISTRIBUTION WORLDWIDE • AROUND 1,05,000 EMPLOYEES• FOREIGN MARKET SHARE ROSE FROM 8 % IN

1972 TO 22% IN 1990

The market for Passenger Tires

PERFORMANCE BROADLINE TIRES

Better traction Poor handling

30% of dollar sales25% of Gooodyear’s unit salesHigher percentage of profits

Less percentage of profits

More expensive Less expensive

The Market for Passenger Tires

65 % REVENUE

35% REVENUE

Replacement Vs OEM

SOLD TO INDIVIDUAL CUSTOMERS

SOLD TO CAR MANUFACTURERS

The Market for passenger tires

BRAND CLASSIFICATION

Major Brands Minor brands Private label

36 % of unit sales 24 % of unit sales 40 % of unit sales

Highest recognition among consumers

Minor but well recognized among consumers

Large manufactures use excess capacity to service private labels

Goodyear , Firestone , Michelin , Bridgestone , Pirelli and goodrich

Dunlop , General , kelly , uniroyal , cooper

They carried names to particular retailers

Goodyear’s Distribution Structure 4 CHANNELS OF DISTRIBUTION

• INDEPENDENT DEALERS : ACCOUNTED FOR 50 % OF SALES REVENUES THROUGH 4400 OUTLETS ( 2500 ACTIVE

• MANUFACTURER-OWNED OUTLETS : GENERATES 27 % OF SALES THROUGH 1047 OUTLETS

• FRANCHISED DEALERS : 600 IN TOTAL ACCOUNTED FOR ANOTHER 8 % OF SALES

• GOVERNEMENT AGENCIES : 15 % OF SALES

SALES OPERATIONCOMPANY OWNED

OUTLET INDEPENDENT DEALERS

42 DISTRICTS ( 1 DM ) 28 DISTRICTS ( 1 DM )

20 TO 23 STORES EACH (1 SM ) AVG. 3 SM

• SERVICES 1. Expertise & Training 2. GY business mgt. System3. National & regional advantage 4. Research on market trend 5. Certified Auto service

INDEPENDENT DEALERS AUTO SERVICES • SERVICES SALES $38,100 PER MONTH PER OUTLET

1. 26 % ( 1980 ) to 48 % ( 1991 )

2. 20 % tries related work

• MARGINS

1. 50 % service labor

2. 20 % to 25 % parts installed

• REVENUES

1. 70 % service labor

2. 30 % parts

Goodyear & independent Dealers

• 1989 70 % only GY & 30 % other brand also

• 1991 50 % - 50 % Aggresively merchandised other brands but GY generates

90 % of the revenues

• INDEPENDENT DEALERS NETWORK BETTER OPTION

Grow sales , expand brand availability & increase market share

CONSUMER SEGMENTS TYPES OF BUYERS

LOYALTY OF OUTLET

LOYALTY TO BRAND

SHOP AROUND OTHER

PRICE CONSTRAINED

LESS LESS MORE BEST IN THEIR BUDGET

VALUE ORIENTED LESS MAJOR BRANDS EXTENSIVELY SEARCH FOR BEST PRICES

QUALITY - PRESTIGE

MORE MORE LESS BEST TIRES 65 % MAJOR BRANDS

QUALITY - CC MORE LESS LESS 38 % MAJOR BRANDS

COMMODITY – BARGAIN HUNTER

LESS LESS EXTENSIVELY YOUNG, PRICE

COMMODITY – TRUSTING PATRONS

MORE LESS LESS LOWER PRICE

SWITCHING AMONG BRANDS

• 9%-11% OF SALES ON ADV. & PROMOTION

• 60 % SHARE OF VOICE IN TV & MAGAZINES

BRAND REPLACED

BRIDGESTONE

FIRESTONE

GOODYEAR MICHELIN MINOR BRANDS

PRIVATE LABEL

BRIDGESTONE

29 4 8 8 7 43

FIRESTONE 2 27 11 6 7 45

GOODYEAR 2 5 39 5 9 38

MICHELIN 3 3 7 44 6 36

MINOR BRANDS

2 4 10 7 32 42

PRIVATE LABEL

2 5 8 5 7 70

PROMOTIONS1. ESTIMATED 75 % OF ALL GOODYEAR TIRES SOLD IN INDEPENDENT

OR COMPANY – OWNER OUTLETS WERE SOLD ON PROMOTION AT AN AVERAGE DISCOUNT OF 25 % .

2. PROMOTIONS ORGANIZED AROUND “ CORE ELEMENTS “ – SIX 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 GOOD YEAR DEALERS.

SHOULD WE LAUNCH AQUATRED ?

RESULTS OBSERVED

• AQUATRED BUYERS WERE LIKELY TO REPLACE COMPETITOR TIRES

• LESS CANNIBALIZING ( GOODYEAR 38-51 & MICHELIN 17-15)

• BREAKING THE ORIENTATION ( BRAND 56-47 )1. Uplifting brand equity

• TARGET SEGMENTS 1. Value oriented& quality buyer

RESULTS OBSERVED• FEATURES TOLD BY THE SALESPERSON

Details Aquarted Invicta GS

60 k mile warranty 41% 10%

Great wet traction 33 38

Didn’t mention them 13 42

Won’t hydroplane 16 9

Other 29 18

The launch of Aquatred• A HIGH PROFILE LAUNCH OF AQUARTED WAS

PLANNED AS IT WAS ESSENTIAL FOR REVITALIZING THE NAME OF GOODYEAR TYRES IN THE MARKET

• FULL SCALE BUDGET FOR LAUNCH : $21 MILLION

• GOOD YEAR MADE COMMITMENTS FOR COMMERCIAL TIME DURING THE WINTER OLYMPICS IN JANUARY 1992 TO GET AN ADVANTAGE OF MASS PROMOTION

Issues faced on launching• TIMING OF LAUNCH• RIGHT PRODUCT OR NOT • DISTRIBUTION CHANNEL• PRICING AND

PROMOTION • INITIAL INVENTORY

Recommendations GO- TO MARKET STRATEGY

• CUSTOMERS : VALUE ORIENTED AND QUALITY BUYER SEGMENT• COMMUNICATION PLANS

a. Message : Highlight core values of safety , trust and reliability on all season

b. Place : Upcoming Olympics events on jan – 1992 through a video ad with above message

In addition other strategies are required

1. Radio ads

2. Teaser ads

3. Billboards

4. Press releases

5. “On snow “Demo

Recommendations• INITIAL INVENTORY

- TEST MARKET RESULTS SHOW

- 74 % BUYERS OF DOMESTIC

- 26 % BUYERS OF IMPORTED

Recommendations CHANNEL STRATEGY

• USE EXISITING INDEPENDENT CHAIN & MANUFACTURING OUTLETS

• GEOGRAPHIC SPREAD OF ALL CONTACT POINTS FOR MAXIMM REACH

• DESIGN PROMOTIONAL INCENTIVE SCHEMES FOR DEALERS • MOTIVATE OR TRAIN OTHER INDEPENDENT DEALERS TO

PROMOTE GOODYEAR PRODUCTS ( TOTAL 1900 DEALERS )• CONTACT POINT INTEGRATION TO HAVE SAME MESSAGE AT ALL

TOUCH- POINTS

CREATED BY ELDHOSE ALIAS , MEC ERNAKULAM ,DURING AN INTERNSHIP BY PROF . SAMEER MATHUR , IIM LUCKNOW

www.IIMInternship.com