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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
Created by Palak Goyal, IIT Kharagpur as part of an Internship done under the guidance of Prof. Sameer
Mathur, IIM LucknowIIMInternship.com
Disclaimer