Goodyear: The Aquatred Launch

Group D1 A Suman

Maithili Rege

Amita Kota

Prithvi Raj

Mahroof V

Varinder Singh

1

• Is Aquatred the right product for the customers?

• Should the distribution channels of Goodyear be

expanded? If yes, which specific channels should

be added?

• Is the timing of the launch of Aquatred apt?

• Is Goodyear right in pricing Aquatred at a 10%

premium over Invicta GS?

Major Issues

2

Issue 1: Is Aquatred the right product for the customers?

Answer: YES

• 5 important tire attributes as per the customers, in order from higher to lesser importance: o Tread life

o Wet traction

o Handling

o Snow Traction

o Dry Traction

• Aquatred offers superior wet traction as compared to the current all season radial tyres (with tread life at par with the other radial tyres) - valued highly by customers

• Distinct and superior appreance

• Positive test market results – more likely to replace competitor’s tires

Analysis of Issues

3

Issue 2: Is the timing of the launch of Aquatred apt? Is Goodyear right in pricing Aquatred at a 10% premium over Invicta GS?

Answer: YES

• Continental Tire known to be working on a similar product o First movers advantage and hence could also charge a premium for Aquatred

• Once the competitor launches a similar product, the prices need to be revised based on the competitor’s pricing.

Issue 3: Should distribution channels of Goodyear be expanded?

• Target Customers: o Value oriented buyers

• Value brand – Predisposed to major brands

• Relatively less price sensitive

o Quality Buyers - Prestige buyers

• Want to own best tires on market, Aquatred marketed to be the best

• Major brands accounted for 65% of the purchases – so make a well informed decision

• Common characteristics: Low loyalty to any particular outlet, value brand, well informed

Analysis of Issues

4

Distribution Channels:

• Current Channels: o Company owned stores (number: 1047, 27% of sales)

o Franchises (number: 600, 8% of sales)

o Independent dealers (number: 4400, 50% of sales)

• Higher sales per store for company owned stores o Partly due to reduction in % of exclusive independent dealers for Goodyear

(from 70% in 1989 to 50% in 1991)

o Company owned stores incur higher costs and given the current economic

condition of the company (i.e. high interest payments leading to lower net

income), it is advised to avoid further increase the company owned stores

• Avoid mass mechandisers and warehouse clubs o Erosion of the brand value of Goodyear

o Cannibalization of the sales of existing outlets

o Might lead to dealers taking additional lines of tires

Analysis of Issues

5

Independent Dealers:

• Increase the number of independent delears o Customers value the provision of auto services

o Account for 67% of the replacement tire sales – higher market penetration

• Challenges: o Inactivity of dealers

• Only 2500 of 4400 independent dealers are active

• Goodyear tire sales offer higher margin (28%), hence, this could act as an incentive for dealers to stock Goodyear tires

o Significant variations in the pricing and the communication of attributes at the different stores

• Standardise communication that would be shared to the customers at the outlets either through pamphlets, brohures, training etc.

• Srandardisation required in the pricing of the product

o Loss of legitimate channel power due to roll out of Bill of Right in 1992 (by NTDRA)

• Use reward or referrent power to enfroce the changes

Analysis of Issues

6

• Aquatred is a premium product, target customers are

value oriented buyers and quality buyers (prestige

buyers)

• Product launch needs to be done at the earliest to gain

the first movers advantage

• Engage in exclusive distribution o Increase the number of independent dealers

o Decrease the inactive dealers

o Avoid mass mechandisers and warehouse clubs – brand value erosion

• Standardise communication that would be shared to

the customers at the outlets either through pamphlets,

brohures, training to employees etc.

• Srandardisation required in the pricing of the product

Recommendations

7