Case: Goodyear - The Aquatred Launch

Dr. Prafulla AGNIHOTRI Professor – Marketing Group, IIM Calcutta
Case: The Aquatread Launch 1

Main Issues Involved
• • • • Goodyear’s position in the industry How do consumers buy tires? How can the market be segmented? Goodyear’s distribution channels in the US replacement tire market • Aquatred’s strategic role and the marketing programme • Should Goodyear broaden its distribution to mass merchandisers? Should they be offered the Aquatred?
Case: The Aquatread Launch 2

Tire Industry • A dramatic shift in consumer preferences.for longer lasting radial tires. • Growth in sale of private label tires • Improved quality of private labels 40% of unit sales of replacement tires in 1991 Case: The Aquatread Launch 3 Increase from 32% to +95% from 1975 to 1991 . • The globalisation of industry following the globalisation of automobile industry Foreign competition • Excess manufacturing capacity.The U.S.

principal competitor in the branded market (29% OEM.What was Goodyear’s Position in the US Tire Market in 1990s? • The company was burdened with debt and deteriorating net income (Table C).5% Replacement market). 15. • Michelin . Case: The Aquatread Launch 4 . • Ranked third in worldwide sales of new tires (Table B.403). • Ranked first in the US OEM market (38%) and also in the replacement market (15%). p.

415 All PriceValueQuality Commo Buyers Constrained Oriented Buyers Buyers Goodyear Michelin 13 13 16 9 17 24 18 22 10 6 Other Uncommit ted 19 55 18 57 20 39 25 35 16 68 5 Case: The Aquatread Launch .Intent to Buy for Major Consumer Segments Figures in % Exhibit 7 p.

What do these figures tell you? Case: The Aquatread Launch 6 .

Case: The Aquatread Launch 7 . • Goodyear has higher intent to buy among quality and value buyers (18% & 17%). • Needs to reassess its quality leadership. beaten by Michelin (225 and 24%). • The difference between Goodyear’s intent to buy (13%) and market share (15%) =Actual purchase (2%).Goodyear’s consumer franchise appears weaker than its share leadership would suggest…… • The same % of consumers (13%) intent to buy Goodyear as they intent to buy Michelin. but in both segments.

What does it indicate? Significant absence of brand loyalty!!!! Case: The Aquatread Launch 8 ..• Difference between Goodyear’s share of OEM tires (38%) and replacement tires (15%)….

Brand Switching Exhibit 8 • 39% of Goodyear owners repeat buy Goodyear but 44% of Michelin owners repeat buy Michelin. Case: The Aquatread Launch 9 . like other brands. • Goodyear. looses out primarily to private label when OEM Goodyear tires are replaced.

5 years) • Significant dollar purchase (around $ 75 per tire plus installation costs) • High perceived risk (safety and security on long journeys) 1.How do consumers buy tires? • Important attributes (such as tread life) • Infrequent purchase (every 2. Case: The Aquatread Launch 10 . 75% of all Goodyear tires are sold on promotion at an average discount of 25%. In 1992. and 40% of replacement tires are private labels. 53% of consumers did not know what tire they planned to buy next (against 36% in 1982) 2.

What are the possible bases of segmentation? • OEM tires (35% of Goodyear $ sales) versus replacement tires (65%). • Major brand tires (36% of industry units). • Performance tires (30% $ sales) versus broad line tires (70%). This is nothing but product-classification scheme. minor brands tires(24%) and private label tires (40%). Case: The Aquatread Launch 11 .

shopping behaviour. and brand vs outlet loyalty Case: The Aquatread Launch 12 .Can we segment the market on some other bases? Such as • Price co nstrained buyers How will you describe • Value oriented buyers these bases of • Quality buyers – prestige segmentation? – conservative • Commodity buyers – bargain hunters – trusting patrons Relative importance of different benefits.

to low Low Low Mod. Commodity •B. then brand Shopping Loyalty to Process specific brand Extensive Moderate ( s/to price) High Loyalty to Specific Outlets Very low Value oriented Brand. Patrons Price Outlet Extensive Very low outlet Brief brand Brief Extensive Brief Very high Mod. to high Very high Low 13 Very high Case: The Aquatread Launch . Hunters •Trst.Consumer Segments in the Replacements Passenger Tire Industry Consumer Segment Price constrained Key Decision Criteria Price. then price Quality buyers •Prestige Brand. •Conservative Outlet.

Can there be any other basis of segmentation? • Emergency purchases • Planned purchases What are the implications of this simple two segment analysis? Case: The Aquatread Launch 14 .

t agencies) 15 ? Case: The Aquatread Launch . franchised dealers) 15 (gov.Goodyear’s Distribution in Replacement Market Industry Goodyear Garages / service stations Warehouse clubs Mass merchandisers 6 6 12 0 0 0 Manufacturer-owned outlets Independent tire dealers Others 9 63 4 27 58 (incl.

especially vis a vis Michelin. • Refocus the dealers on product and away from the daily tactical problems of manufacturer-dealer relations • Motivate Goodyear’s sales staff and dealers Case: The Aquatread Launch 16 .Strategic Role of Aquatred in Turning Around Goodyear • Reestablish Goodyear’s industry leadership and reputation for product innovation.

.The Aquatred is likely to appeal to…. • Quality and value buyers especially those who are brand sensitive and more likely to engage in pre-purchase information search. Case: The Aquatread Launch 17 .

Case: The Aquatread Launch 18 . • The Aquatred groove should be the visible point of differentiation.What should be Aquatred’s positioning? • “Providing superior wet traction”.

How should it be positioned? • As a performance tire or • At the top of the broad line segment? • What should be the price? Case: The Aquatread Launch 19 .

Should Goodyear broaden its distribution to mass merchandisers? Should they be offered the Aquatred? Case: The Aquatread Launch 20 .

Thank You Case: The Aquatread Launch 21 .

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