goodyear aquatred launch

GoodyearAquatred Launch

Tire Industry In United States

Dominated by 5 major players

Mich

elin

Bridge

stone

Goodyear

Continental

Pirelli

Sumim

oto0

2

4

6

8

10

1210.4 9.8

8.5

3.9 3.7 3.5

Sales (in $)Goodye

ar

Mich

elin

Firesto

ne

Continental

General02468

1012141618

Brand shares of unit sales

197519851991

In 1970s and 1980s US Tire

Industry experienced 3

Important CHANGES

Nature of demands from consumers and

car makers

Increased foreign

competition

Emergence of Radial

Tires

Market share increased from 32% to 95%

Increased from 8% to

22% in 1990

Consumers replaced tires less frequently

1. 2.

3.

Major effects of this changesDemand for passenger tires

grew sluggishly

Tire prices in the market declined

Increased mergers and acquisitions

Tire producing capacity outstripped demand

Company’s Background

Ggo

Gorilla of tire

industry

Gorilla of tire industry

1987 1988 1989 1990 1991

Net Sales $9,905.2 $10,810.4 $10,869.3 $11,272.5 $10,906.8

Net income (loss) 770.9 350.1 206.8 (38.3) 96.6

Net income(loss) per share

12.73a 6.11 3.58 (0.66) 1.61

Tire industry had became stagnant during 1990s due

to long life and reduced demand

Sales and Income for Goodyear Subsidiaries

GOALTo create a

market driven

organization and serve

the customer.

Gorilla of tire

industry

Market Segmentation

Gorilla of tire

industry

Distinction

between performance and

broad line tires

Replacement and

OEM tires

Brand Classifica

tion

Consumer BehaviorPrice

Offers fast service

Can trust personnel

Store is attractive

Offer Mileage warranty

Brand Selection

Maintains convenient

priceThe 7 most

important criteria:

Gorilla of tire

industry

Price Constrained

Buyers

Value Oriented Buyers

Quality Buyers

Commodity buyers

Consumer Market Segmentation

Retail Distribution Channels

Maj

or R

etai

l Cha

nnel

s

Garages/ Service stations

Warehouse Clubs

Mass Merchandisers

Manufacture Owned Outlets

Small Independent Tire Dealers

Large Independent tire chains

Other

Goodyear’s Distribution StructureOutlets

Independent DealerManufacturer owned outletsFranchised DealersGovernment

Goodyear’s Independent Dealers

42 districts

22- 23 stores per district

1 district manager for each district and store manager for each store

Promotional OffersCore EventsSocial & Print Media

CompetitionIntent to buy (All

Buyers)GoodyearMichellinOtherUncommitted

Price Constrained Buyers

GoodyearMichellinOtherUncommitted

Value oriented buyers Goodyear

MichellinOtherUncommitted

Quality BuyersGoodyearMichellinOtherUncommitted

Commodity Buyers

GoodyearMichellinOtherUncommitted

Brand Loyalty among Consumers

Brand Replaced

Bridgestone

Firestone Goodyear Michelin MinorBrands

PrivateLabel

Total

Bridgestone

29 4 8 8 7 43 100

Firestone 2 27 11 6 7 45 100

Goodyear 2 5 39 5 8 38 100

Michelin 3 3 7 44 6 36 100

Minor Brands

2 4 10 7 32 42 100

Private Label

2 5 8 5 7 70 100

Aquatred

Launch

Two Major Conce

rns

Gorilla of tire

industry

Did Goodyear have the

Right product for the dealers and for the consumers

?

Product

Great Wet Traction

Sleek sidewall design

Longer life

60,000 miles

warranty

Careful tread

placement

Different

33%

41%

• $89.95 with a black sidewall• $93.95 with a

white sidewall• 10% premium

over the Invicta GS

Gorilla of tire

industry

Price Constrained Buyers

Value Oriented Quality Buyers Commodity Buyers

16 17 1810

6

23

61

106

13

64

17

Chart Title

Goodyear Aquatred Invicta GS

Target Segment

People

Gorilla of tire

industry

Promotional Strategies

• 33%

Newspaper Ads

• 21%

Telephone Outlets

• $31 billion

Full scale launch cost

• Winter Olympics

Perfect timing for launch

Gorilla of tire

industry

PLACE2nd major concern

Distribution Channels??

Gorilla of tire

industry18%

28%

11%

36%

4%3%

Share of Retail Sales in 1976

Garages

Warehouse clubs

Mass Merchanisers

Manfacture Owned Outlets

Small Independent Tire Dealers

Large Independent Tire Chains

Other

6% 6%12%

9%40%

23%4%

Share of Retail Sales in 1991

GaragesWarehouse clubsMass MerchanisersManfacture Owned OutletsSmall Independent Tire DealersLarge Independent Tire ChainsOther

Should expand by increasing independent

retailers

Expansion should be done in strategic

locations

Expansion should be to a certain extent, beyond

which will lead to decrease in prices and unfair trade practices

Expansion strategies

• Maintain brand strength and product quality as maximum of them purchased the product based on past experience

• Sales person, dealers should be trained to achieve uniformity in presentation process

• Promotional offers on price

Recommendations

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