You are on page 1of 6

Goodyear: The Aquatred Launch Analysis Report

Submitted by Group 8:
Mayank Kumar (1302-084) Nikhil Garg (1302-090) Nikhil James (1302-091) Prashant Gupta (1302-105) Rahul Gupta (1302-113) Rahul Panthri (1302-114) Rajeev Tibarewal (1302-116) Ravi Kumar (1302-120)

charged with the responsibility of turning the company around. The other brands. Assess Goodyear’s position in the tire industry? Answer: Goodyear was among the five key players who dominated U. Newly appointed CEO Stanley Gault. Invicta. Aquatred. and the company's million-a-day debt service charges had placed Goodyear to the verge of bankruptcy. . Goodyear had made large investment (over $1. were Firestone. which had a considerable share in market. BF Goodrich and General Tire. Goodyear had several brands under its brand portfolio namely: Eagle. Arriva. 1047 manufacturer owned outlets and 600 franchise dealers. when company experienced its first financial loss in 58 years. Tempo and Corsa. The company also had a strong track record in launching innovative new product. 4400 Independent dealers.S tire market in 1970s. Six rubber plantations. 2000 Distribution outlets worldwide. Goodyear had an exceptionally well operating capacity that included 41 Plants in US and 43 Plants in 25 other Countries. recognized that Goodyear had to increase its selling prices wherever possible. Goodyear ruled the market until 1991. Uniroyal.5 billion) during the late 1970s to produce radials.Q1.

nail. How do consumers buy tires? How can the market be segmented? Answer: To analyze consumer-buying process.thickness of the rubber. at car registration inspection) occurred.Q2. Performance benefits are important in terms of lifetime for tire and reliability connected to Psychological safety. it is important to examine the situation in which a consumer makes the purchase. reliability. while dissonance seeking consumers explore product variety in terms of performance. resilience and durability and make a purchase in their favorite distribution channel. These consumers look at variety in durability. styles and brands . style and high touch service from sales representatives. Replacement tires market of 1991 shows that consumers across all segments are becoming more ti brand aware and price conscious. They could be drawn to low prices. The market can be segmented by dividing consumer into three categories: Quality Conscious: Factors driving purchasing decisions are performance attributes including long life time of the product . wide variety in sizes. and as a preventative measure before the crisis (including tear in the tread. the tire has become almost a commodity and consumers do not see it as a premium product. reliability. Price conscious: Perceive tires as a necessity. Consumer buys tires in cases of emergency when the tire is torn on the road. Price sensitivity is often low. In fact. Habitual buyers rely on the same brand and channel of purchasing. tread and superior high touch service at the point of sale. The behavior of consumers for tires in the replacement market are either habitual or dissonance seeking. Do not hesitate to change brands if it saves money. Value conscious: Factors driving purchasing decisions are getting extra value for money paid as compared to a competitive product.

. During 1970’s Goodyear opened 200 outlets per year and by 1983 the company owned 1300 outlets in United States.Assess the evolution of Goodyear’s distribution channels in the U. They primarily emphasized on franchising new outlets and also converted some company-owned outlets into franchised and independent dealerships.Q3. Its model was taken from Quick Lube stores that offered fast oil changes without an appointment.e.S. 1047 Manufacturer-owned outlets accounting for 27% of the sales and 600 Franchised Dealers who accounted for 8% of the sales. Working on a similar model Just Tires would sell and install tire providing guarantees on speed and quality of installation but would not provide any other product or service. Rest 15% of the sales was done through government agencies. replacement tire market? Answer: The company basically relied upon three types of outlet for its sales i. Good year was also planning to open a new Retail format Just Tires. Independent Dealers who were 4400 in number and accounted for 50% of the sales.

Good year’s reputation of being an innovator is not totally lost. There is large number of competition in the private label segment leading to increased price competition. It is seen the price of private label is 18% lower but with lower functional characteristics of lifetime. Hence Good year need Aquatred to improve its financial position and also its brand equity. Hence Aquatred should be introduced as soon as possible. Financially their net income is 1% lower than their net revenue.Q4. Half of the tires managed to get the same traction under wet conditions. This has resulted in a degradation of brand loyalty. The question is whether to add a sub brand to the existing good year brand. The focus should be on increasing their brand equity through increased customer perception of tires and by getting a higher margin. The product was thus priced at a premium of 10% above the rest due to its safety and appeal. Assess Aquatred’s strategic role in the marketing program? Answer: Aquatred tire is unique because of providing dry traction in snow ice and has improved safety component. They offer strongest competition for good year. In order to achieve the same Goodyear should break down price driven behavior and general perception of the customers. Michelin has started gaining due to a wide distribution channel and a combined sales force for premium and private label brands. The stopping of the cars became easier. They have neglected the innovation required to stay competitive in the market and hence has started diversifying into other segments. . In a stagnant tire replacement market this can help Goodyear to establish them as leader in innovation. Good year has been going through a crisis because of no clear strategy. The consumers have failed to identify anything distinct with good year and hence there is no differentiating factor.

Should Goodyear broadens its distribution to mass merchandisers? Should they be offered the Aquatred? Answer: a) We need to discuss on distribution structure of Goodyear in which 4400 independent dealers accounted for 50% of sales revenue where 27% of sales contributed to manufactured-owned outlets and 8% of sales for franchised dealers along with that 15% of sales were generated from government agencies. If Goodyear has to increase its market share then they have to sell it to garages/service stations. reliability and will give a convenient warranty which is up to 80000 miles. Moreover the company could offer more training program for independent dealer’s employees to strengthen their relationships and increase their sales. This new tires will offer better traction under the wet conditions. Goodyear’s marketing team also discovered that consumers were willing to pay more for a tire that looked like it provided wet traction. However. They also placed a very high importance on wet stopping ability.Q5. Goodyear should still maintain the current distribution channel and guarantee the interests of its 2500 independent dealers. warehouse clubs and mass merchandisers. will also provide more safety. As Goodyear plan to position their tire at the top of the broad line segment that is entry into the niche segment and to earn higher profit. b) Launching the Aquatred tire is a great opportunity for Goodyear and it will allow the company to sustain its innovation-oriented strategy. should have a good ride characteristic. a low noise level and should provide good mileage. While figuring out from the customer research it was mentioned that consumers wanted a tire that should be for all-season. For this they have to cut their prices but selling it to low-service outlets could erode the value of Goodyear brand.S. their idea of expanding distribution network using mass merchandizers should be dropped. But interestingly. it could also cannibalize the sales of existing outlets and might cause dealers to take on additional line of tires. . Goodyear should also focus on selling its Aquatred in specific targeted area such as heavy rainfall cities in U.