Goodyear: The Aquatred Launch

Harvard Case Study

Goodyear(1991)

Called “The Gorilla”

Ranked 3rd in worldwide sales of new tires

Operated 41 plants in the US, 43 abroad

2000 distribution outlets worldwide

Revenues of $10.91 billion

105,000 employees

Leader in the US market

By Performance

• Broad line tires• Performance

tires (Very Expensive)

By Time of Buying

• Replacement (Bigger Market)

• OEM

By Labels

• Major Brand(36%)

• Minor Brand(24%)

• Private Labels(40%)

Categories of tyres

Private label tires constituted 80% of the sales of Goodyear’s wholly

owned Kelly-Springfield subsidiary

Remaining under Kelly Brand

Average retail price of private label tire was 18% lower

Consumer Behavior

Tire Criteria

• 1. Price• 2. Offers fast service• 3. Can trust personnel• 4. Store is attractive• 5. Offers mileage warranty• 6. Brand selection• 7. Maintains convenient hours

Tire attributes• Tread life• Wet traction• Handling• Snow traction• Dry traction.

Customer Segments

Price-constrained buyers(22%)• Bought the best brand they could afford within budget

Value-oriented buyers(18%)• Searched for their preferred brand at the best price

Quality Buyers(23%)• Loyal, Upscale buyers

Commodity buyers(37%)• Valued price and outlet

Goodyear’s Distribution Structure

Independent Dealers Own stores Franchised Dealers+ Govt. Agencies

50%

27%

23%

Just Tires – New Retail Format under Test

Sales & Promotions

3/4th of all Goodyear tires sold in independent or company-owned outlets on promotions

Average discount of 25%

Offered via various offers (such as free tires on buying some or special discount, etc)

Goodyear’s Independent Dealers

4,400 independent dealers

Goodyear services to its dealers were not free

Goodyear supported its independent dealers by offering various services in training, advertising &

research

Goodyear’s Target

Major Brandds51%

Minor Brand28%

Private Label21%

Percent of Sales Represented by Quality Buyers

Intent to Buy for Major Consumer Segments

TARGE

T

Consumer Loyalty

TARGE

T

Switching Among Tire Brands, 1991

Goodyear’s Aquatred Launch Strategy

60,000-mile warranty

Wet Traction

Aimed to shed its “grudgy” perception among consumers

Its unique look

To increase customer loyalty

Initially for Replacement tire market

Challenges Goodyear Faced

Was Aquatred the right product?

Should it expand its Distribution Networks?

When to launch?

Aquatred Test Market

More popular among Quality buyers

More moved from other brands to Aquatred

91% bought 4-tires

Aquatred seems becoming brand itself

Product

Test market proved it to be a right product

60,000-mile warranty BUT competitors offered upto 80,000-mile

Priced 10% premium than its best broad line tire Invicta GS

Aquatred Distribution Strategy

Target distribution through other channels to increase its reach

Proper distribution should be assured to new dealers

Share of Retail Sales of Replacement Passenger Tires by Channel (U.S. market only)

Product Launch Time & Promotion

Winter Olympics in January of 1992

Can capitalize on high brand awareness

Initially only for Domestic Cars

Areas for Improvement

Dealers, retailers need to be trained in better way with more uniformity

No promotion should be offered like previous times

Utilize core events for marketing

Should promote and market aggressively in wet regions

Thank You!

Disclaimer

• Created by Anurag Jain, MNNIT Allahabad, during an internship by Prof. Sameer Mathur, IIM Lucknow.• www.IIMInternship.com