CASE: GOODYEAR, THE

AQUATRED LAUNCH

GROUP 10
Sahil Jain
Mainak Pradhan
Rishi Kharbanda
Justin Fernandez
Ataul Karim

Gault. Chairman . increased priority on new product development. 4 C Analysis COMPANY  Goodyear – known as “Gorilla” for its dominance in the tyre industry.  Highest market share -15% (replacement) & 38% (OEM market) in 1991 (See Exhibit 1)  Made investment over $1.  Stanley G. Percent of Major Minor Private CONSUMERS consumers brands brands brands Price-constrained Segmented into four22% categories: 30% 35% 35% buyers Value-oriented 18 54 29 17 buyers Quality buyers 23 51 28 21 Commodity 37 18 37 45 buyers All buyers 100 33 33 34 .5bn to convert its factories to produce radials.  Had strong track record in launching innovative products.

Michelin. Minor brands and Private label companies are the competitors of Goodyear.  Michelin’s image was stronger among value-oriented and quality buyers than Goodyear (See Exhibit 7)  Goodyear replaced 38% of their tires with private label brands (See Exhibit 8)  Bridgestone and Michelin were planning to introduce new tires with 80000 mile warranties. CONTEXT  1970 -1980s: three important changes  Bias tires replaced by radial ones.COMPETITORS  Bridgestone. Firestone.  Uniroyal was introducing a new tire for light trucks.  Major impacts of these changes:  Sluggish demand due to increased average life of tires with less usage of cars.  Declined tire prices by 25% .  Foreign competition  Change in demand from consumers and car manufacturers.

• Mostly market share is dominated by Private Label. preferred for value and Whereas 44% of Michelin quality. . Case Facts Intent To Buy Switching among brands 30 24 22 Brand Goodyea Private 25 16 17 18 20 13 13 Replaced r Michelin Label 15 9 10 10 6 5 Goodyear 5 39 38 0 Michelin 3 44 36 Private label 5 8 70 Goodyear Michelin • Goodyear is popular among • Only 39% of Goodyear price sensitive customers customers bought whereas Michelin is Goodyear tire again. customers bought Michelin again.

Goodyear Distribution Channels .

One and two level consumer channels GY (MANUFACTUERE) Independent Independent Manufacturer dealers dealers owned outlets (Wholesalers) (Wholesalers) Car dealers. service stn. independent Own retail dealers outlets (Retailer) Consumers Consumers Consumers .

and positioning of a possible launch of Aquatred ?  Whether company’s distribution channels can be expanded ? . timing. Decision Problem Statement  To determine the viability.

Alternatives and their Evaluations  Launch Aquatred with existing distribution channels  Broaden its distribution to mass merchandiser Framework used : Evaluating channel alternatives using Economic. Control and Adaptive criteria. .

Disadvantages:  Complaints regarding minor billing problem. So. brand loyalty is high in this channel. Goodyear’s products generated 90% revenue. Yet.  Control and Adaptive criteria : Independent dealers might not be able to convey the USP of Aquatred . . competitions from other channels and manufacturer outlets (channel conflict).  50% stocked at least one other brand. Launch Aquatred with existing Advantages: distribution channels  2500 active independent dealers contributed to 50% of sales revenue.

Broaden its distribution to mass Advantages: merchandiser  One stop convenience outlets.  Sells tire at discounted price of 97% but there market share has declined from 28% to 12%  Loyalty to the manufacturer products were quite high as they sell only 34% of other brands. which might lead to Goodyear’s .  Control and Adaptive criteria : Concentrate mostly on sale of the product by volume. Disadvantages:  From Exhibit 4 It can be noted that the customers for Major Brands like Goodyear are mostly value oriented (54%) and quality buyers (51%) .

 Price for consumers might be structured in following way –  + 2 X better traction  + Safety (saving the cost of insurance premium)  + Stylish Exterior Total price with improved value should be communicated to customer. . Recommendation  It should be distributed using exclusive distribution channel design.  Pricing strategy: Price should be just high enough for customers to match with perceived high level of quality. It should provide limited distribution contract to the loyal outlets to protect dealer’s profit margins and sales volumes. This way Goodyear would have a full control over the distribution channel and can control prices.

use of black and white sidewall did not differentiate the product among consumers. Recommendation  5 out of 6 stores showed price sensitivity from 79. Hence. Aquatred can have above market price.85 to 88. similar price is advised for both products. Though it is evident.  Goodyear could use Winter Olympics to introduce the Aquatred. . This showed 10-15% improvement over average value 75.  Promotion program should be launched nationwide to have a stronger impact on the market.

Thank You .