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CASE STUDY-GOOD YEAR: THE AQUATRED LAUNCH

1. Assess Goodyears position in the tyre industry.


Ans: The US tyre industry was dominated by 5 companies in the 1970s : Goodyear, Firestone, BF
Goodrich, Uniroyal and General Tyre. Goodyear tyre was known as the Gorilla in the world tire
industry. Also ranked 3
rd
in worldwide sales of new tyres.
Goodyear operates 41 plants in the US, 43 plants in 25 other countries, six rubber
plantation, and more than 2000 distribution outlets worldwide. The company has also launches
innovative new products in the market. Goodyear had produced two lines of private label tires:
the ALL AMERICANS and the CONCORDE. Goodyears broad range of tyres consists of AQUATRED,
INVICTA GS, ARRIVA, INVICTA GL, TEMPO and CORSA GT.


2. How do customers buy tyres? How can the market be segmented?
Ans: Consumers purchase tires as grudge purchase that is rarely planned in advance. Over half of
consumers purchase replacement tires the same day they realize the need; and dont know which
brand they will purchase next. However they concentrate on certain attributes while making their
purchase (in order of importance from high to low)
a.) Price
b.) Offer Fast Service
c.) Can trust Personnel
d.) Store is attractive
e.) Offers mileage warranty
f.) Brand Selection
g.) Maintains convenient hours

MARKET SEGMENTATION


3.) Assess the Evolution of Goodyears distribution channel in the U.S. Replacement tyre market.
Ans: Goodyear relied on mainly three types of outlets. The major one was manufacturer owned
outlets. The company had owned 1,300 outlets in the U.S. However over time due to capital and
managerial reasons they placed increasing emphasis on franchising new outlets in the form of
dealerships. Also changed some existing company owned outlets to the same. Training was provided
in all aspects to these franchises.
So they ended up with these major distribution channels.
a.) INDEPENDENT DEALERS-Goodyear had about 4,400 independent but only 2,500 were active. .
They accounted for 50% of the sales of Goodyear.
b.) MANUFACTURER OWNED OUTLETS- Generated 27% of the sales.
c.) FRANCHISED DEALERS- Accounted to 8% of the sales.
The rest 15% sales were primarily to GOVERNMENT AGENCIES.
Goodyear claimed not to want its tyres sold in low-priced outlets such as warehouse clubs, mass
merchandise and Auto supply stores.
JUST TYRES was a new retail format under testing by them.
4.) Assess Aquatreds strategic role and the marketing program?
Ans: Considering the survey from the test markets the strategy is as follows:
Goodyear plans to position its product on top of the broad line segment (boutique tyre)
with 60000 miles warranty.
Goodyears target segment of customers are the affluent class and the areas that have high
precipitation.
They want to attract the customers on basis of the design and appearance that is
perceptibly different from the counterparts.
Emphasize the features of Wet traction.
PRICE
CONSTRAINED
BUYERS
Looking for the
best brand they
can afford
Shop around and
have little loyalty
VALUE ORIENTED
BUYER
Have a brand
preferance
They shop around
and have no outlet
loyalty
QUALITY BUYER
PRESTIGIOUS
BUYERS-Want to
own the best
COMFORTS
CONSERVATIVES-
Loyal to a specific
outlet
COMMODITY
BUYERS
BARGAIN
HUNTERS-Little
brand preferance
and low loyalty
TRUSTING
PATRONS-Buy low
price tyres from
prefered retailers.

The pricing would be premium about 10% above Invicta GS.
No discount on Aquatred
Channels must be restricted to independent dealers as it is mainly for the high end
customers

Marketing Program: Promoting its new product aggressively during the winter Olympics so
that it can reach to a large number of people. A lot of investment is needed for
advertisement as this is an elite segments and an awareness has to be created among the
people about the product. This product is expected to earn good profits hence a lot of
effort has to be put in its promotion.
5.) Should Goodyear broaden its distribution to mass merchandise? Should they be offered the
Aquatred?
Ans: If Goodyear wants to increase market share then it must broaden its distribution channels to
mass merchandise. However if they do this it could erode the value of the Goodyear brand as a
whole, also cannibalize sales of different outlets and might cause dealers to take on additional lines of
tyre.
As Goodyear plans to position itself in the niche market segment then distribution through mass
merchandise should be dropped.