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Goodyears Assignment MM
Goodyears Assignment MM
Goodyear:
Launch of
Aquatred
A short study
Group 8
Group 8
Industry model
Tire manufacturers sold replacement tires to wholesalers. Wholesalers resold to dealers
and retailers, who then sold the tires to consumers. The wholesale distribution channel
is catered by four distribution channels Oil companies, large retailers, manufacturer
owned outlet and independent dealers. The six major retail channels in U.S.
replacement passenger tire market are Garage/service stations, warehouse club, mass
merchandisers, manufactured-owned outlets, small independent tire dealers, large
independent tire chains and other category of full-service auto supply stores.
Goodyears sales revenue is generated 57% by independent dealer, 27% by
manufactured-owned outlet and 8% by franchise dealers. The remaining 15% of sales
were primarily to government agencies. Goodyear placed increasing emphasis on
franchising new outlets and also converted some company-owned outlets into
franchised and independent dealerships. It also encouraged the fresh ideas like Just
Tires.
Promotion
Around three fourths of all Goodyear tires were sold at a discount of 25%. The
discounts were offered as a part of several promotional events spread throughout the
year. Radio, Television and print media were used to announce the special prices.
These kinds of discount offerings have made the customer price conscious.
Dealership
Goodyear operated through sales organizations to service the company-owned outlets
and independent dealers. It supported the dealers with a variety of services like auto
service, training, advertising, etc. Goodyear provided these services at a cost. The cost
was built upon the Goodyears prices but merchandising allowance (1.5%) and
wholesale allowance were available for the dealers.
Competition
On surveying it was found that Goodyear and Michelin were at par. Goodyear was
considered by the price-constrained buyers contrary to Michelin preferred by valueoriented and quality buyers.
The Aquatred Launch
Long buying cycles of Auto manufacturers makes Aquatred launch a bitter. Two
concerns that were felt: 1. Is this a right product? Aquatred is a boutique tire. 2.
Distribution channel. Should it be expanded? There were other issues regarding
launching the product during winter Olympics in Jan 1992. Pricing and promotional
policies had to be finalized. Did Aquatred revitalize Goodyear?