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

‡ 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 U. Tire Industry ‡ A dramatic shift in consumer preferences.for longer lasting radial tires.S. ‡ The globalisation of industry following the globalisation of automobile industry Foreign competition ‡ Excess manufacturing capacity.

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

415 All PriceValueQuality Commo Buyers Constrained Oriented Buyers Buyers Goodyear Michelin Other Uncommit ted 13 13 19 55 16 9 18 57 17 24 20 39 18 22 25 35 10 6 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 .

‡ Goodyear has higher intent to buy among quality and value buyers (18% & 17%). ‡ 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. beaten by Michelin (225 and 24%). Case: The Aquatread Launch 7 . but in both segments. ‡ Needs to reassess its quality leadership.

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

‡ Goodyear. looses out primarily to private label when OEM Goodyear tires are replaced.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.

53% of consumers did not know what tire they planned to buy next (against 36% in 1982) 2. In 1992.5 years) ‡ Significant dollar purchase (around $ 75 per tire plus installation costs) ‡ High perceived risk (safety and security on long journeys) 1. 75% of all Goodyear tires are sold on promotion at an average discount of 25%.How do consumers buy tires? ‡ Important attributes (such as tread life) ‡ Infrequent purchase (every 2. Case: The Aquatread Launch 10 . and 40% of replacement tires are private labels.

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

shopping behaviour.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. and brand vs outlet loyalty Case: The Aquatread Launch 12 .

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

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 .

franchised dealers) 15 (gov.t agencies) 15 ? Case: The Aquatread Launch .Goodyear¶s Distribution in Replacement Market Industry Goodyear Garages / service stations Warehouse clubs Mass merchandisers Manufacturer-owned outlets Independent tire dealers Others 6 6 12 9 63 4 0 0 0 27 58 (incl.

Strategic Role of Aquatred in Turning Around Goodyear ‡ Reestablish Goodyear¶s industry leadership and reputation for product innovation. ‡ 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 . especially vis a vis Michelin.

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 .

What should be Aquatred¶s positioning? ‡ ³Providing superior wet traction´. ‡ The Aquatred groove should be the visible point of differentiation. Case: The Aquatread Launch 18 .

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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