GOODYEAR : The Aquatred Launch

Industry Type - Manufacturing (Tire & rubber company )

Founded - August 29, 1898 Akron, Ohio, U.S.
Founder - Frank Seiberling
HQ - Akron, Ohio , U.S.

Industry situation -
• Five major companies based out of Akron, Ohio Dominated the market from 1900s to 1970s
• Bias & Bias-belted tires were phased out by radial tires
• They lasted under 20,000 miles, by the early 1980s radials lasted over 40,000 miles leading to
decrease in frequency of tire change.
• Foreign competition reduced market share per company
• Rising oil prices led to increase in production-cost
• A number of mergers/acquisitions modified the industry

Impact -

• Average life of a new tire rose from 28,600 miles in 1980 to 37,300 miles in 1991

• Annual miles travelled per passenger rising slowly 9,100 miles in 1980 to 10,600 miles in 1990

• The median retail price dropped by1991,the average retail price was $75.00
• Tire-producing capacity outstripped demand U.S. tire-making capacity rose 12% between 1987
and 1990; capacity utilization fell from 87% to 76% during the same period.
• Led to a number of mergers/acquisitions modified the industry

Goodyears Situation-

• 1 of the 5 to dominate the industry, only remaining US company

• Quick to convert to radial production
• Profits hurt by international competition & oil prices
• Strong track record of innovation
• Diversified in 1980’s but earnings were sluggish
• Goodyear ranked third in worldwide sales of new tires
• 1991 Stanley G Gault Sold indirect investments Prioritized on new development.

Strategic role of aqua rated in turning around Goodyear -

• Reestablish Goodyear’s industry leadership and reputation for product innovation, especially vis a
vis Michelin.
• less number of competitors in the high wet-traction, broad-line tires segment, being the first to
enter the market with such products
• Refocus the dealers on product and away from the daily tactical problems of manufacturer-dealer
relations

• Motivate Goodyear’s sales staff and dealers

Why Launch Aquatred in Market -

• Long buying cycles of auto manufacturers

• Goodyear has major share in US Replacement Tire Market (15%)
• Aquatred would come through the replacement market not as Original Equipment

About Launch Issues of Aquatred -

• Product Appeal
• Channel
• Target matket
• Timing
• Price & promotion

And result says Aquatred is Good product in the basis of performance & Value oriented customers.

Aquatred Features -

• The Aquatred was developed after comparing 10 different designs on performance and consumer
preference .
• Aquatreds traveling at 55 miles per hour stopped in two-car lengths-less distance
• Aquatred came with a 60,000-mile warranty and positioned tire at the top of the broad-line
segment.
• Compared with buyers of the Invicta GS, Aquatred buyers were more likely to replace
competitors’ tires.
• Consumers searched more extensively for information prior to purchase of Aquatreds.

Issues in Distribution channel -

• 50% of Goodyear’s independent dealers sold only Goodyear tires, while the other 50% stocked at
least one other brand.
• Among the latter, some merchandised other brands but Goodyear tires still generated 90% of the
revenues
• Three-fourths of all Goodyear tires sold in independent or company- owned outlets were sold on
promotion, at an average discount of 25%.