Transcript
Goodyear: The Aquatred Launch
HARVARD BUSINESS SCHOOL CASE STUDY
What is Aquatred ?It is a new tire providing improved driving traction under wet conditions
Major Tire Industries in U.S
Three major changes in US Tire Industry
Emergence of RADIAL tires to replace older “bias” and “bias-belted” tires.
Between 1971-91 radial’s share of unit sales increased from 32% to 95%.
Increased in foreign competition
Change in nature of demand from consumers and car makers.
FOUR major impacts of these changes
Demand for the passenger tires grew
sluggishly
New tires in the U.S market declined
Tires producing capacity outstripped demand
Tire making capacity rose 12% and capacity utilization fell from 87% to 76%
Industry difficult economic conditions, coupled with the tire manufacturer slow response resulted in a number of mergers and acquisitions
In, 1991 company operated 41 plants in U.S, 43 plants in other 25 countries and 6 rubber plantations
Known as “THE GORILLA” in world tire industry
Goodyear ranked third in worldwide sales of new tires
In 1977, company introduced the TIEMPO, first all season radial
their unit sales grew from 2% to 71%
In 1981, company successfully launched the EAGLE
Market for Passenger Tires could be segmented in three ways
Distinction between Performance and Broad-line tires
Performance Tires Broad-line Tires
Market can be also segmented on Replacement and OEM tires
Replacement tires sold directly to the individual consumers
OEM tires were sold to the car manufacturers
In 1986, Sir James Goldsmith attempt to takeover Goodyear greatly increased their debt. Their earnings were sluggish despite spending $1 million per day on investments.
Third segmentation was along brand classification
It includes major brands, minor brands and private labels
Most consumers viewed tires as a “grudge purchase”
An expensive necessity to keep vehicle in driving condition
Five important tire attributes1)Tread life2)Wet traction3)Handling4)Snow traction 5)Dry traction
Criteria for selecting Tire Retailer1)Price2)Offers fast service3)Can trust personnel4)Store is attractive5)Offers mileage
warranty6)Brand selection7)Maintains convenient
hours
CONSUMER SEGMENTS
Price constrained buyer
Value oriented buyer
Quality buyers
Commodity buyers
Wholesale distribution channels
Retail distribution channels
Goodyear Distribution Structure
4,400 independent dealers accounted for 50% of sales revenue, 1,047 manufactured owned outlets generated 27% and the 600 franchised dealers for 8% and remaining 15% were to government agencies
Just Tires was a new retail format under test by Goodyear
Goodyear supported core events with radio, television and print advertising, announcing special prices on specific tire lines.
Independent Dealers
Independent dealers were organized into 28 districts, each with a district manager and an average of three area saled managers
Most dealer complaints involved relatively minor billing problems and competition from the other channels or the location
Independent dealers typically offered more choice than the single-brand selection offered at most company owned stores and required less capital and attention from the manufacturer
Goodyear had protected its dealers by not selling their branded tires to the other outlets; in exchange dealers carry did not carry other brands
Auto Service
It includes jobs such as oil changes, tune ups and front end allignments, as well as repair to the parts such as brakes
COMPETITION
Goodyear regularly surveyed car owners to monitor their image of the major tire brands
Loyalty of the brand among consumers replacing passenger tires
The Aquatred
Survey from the test market compared purchase behavior of The Aquatred buyers with purchase behaviorfor buyers of Invicta GS
The launch of the AQUATRED
PROBLEMS
Did company have the right product for the dealers and the consumers ?
Should the company Expand their distribution channels ?
What should be the appropriate timing to launch the product in the market ?
Company has the right product for the dealers and the consumers
1) It has 60,000 mile warranty2) Tests shown that in wet conditions, car equipped with aquatred
travelling at 55 miles stopped in as much as two car lengths distance than car equipped with conventional all season tires.
3) When 50% worn, the Aquatred maintained the same wet traction as new tires.
4) Aquatred tires were more likely to replace competitor’s tires.5) Test markets results shows that Quality buyers were more inclined to
Aquatred (61%) who represents 51% of the sales of the major brands which includes Goodyear.
Company should expand their distribution channels because
1) The company’s three types of outlets produced 85% of their sales revenues with 50% from independent dealers, 27% from manufactured owned outlets and 8% from the franchised dealers.
2) From 1970-1983 company increased their manufacture owned outlets and converted some company owned outlets into franchised and independent dealers.
3) The company has protected their dealers by not selling their branded tires in the other outlets; in exchange dealers does not carry other brands thus, in 1989 70% of their independent dealers carried only Goodyear’s tires.
4) It also can prevent OEM tires from being replaced by other brands in the replacement market as OEM tires were making $695 millions by selling 16.3 units in 1991.
Company should launch the Aquatred in January itself beacuse
1) It was the time during winter olympics.2) 74% of the users of the Aquatred make the vehicle domestic.3) 33% of the Aquatred buyers got this information by
advertisment in newspaper, thus this is the appropriate time to market the Aquatred as their will be many readers during the time of the olympics to know about the events and other stuff regarding the winter olympics.
4) Other companies were also launching their tires same year so if we were launched after that we lose advantage of the marketing boom during the olympics.
THANK YOU
Jaannasheen SinghIIT(BHU) VARANASI
13155043Intern under
Prof. Sameer Mathur
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