Goodyear aquatred launch
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Goodyear aquatred launch

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  • Large Retailers include mass merchandisers & Ware house clubs They bought tires directly from mfrs to resell in their stores. Independent dealers – have gradual increase in share
  • 6 retail channels 1. Garage :– on decline due to low cost high volume outlets. 2. Warehouse clubs - self service except installation. low prices , deal based with vendors 3. Mass merchandisers - had hundreds of outlets - performed auto services, and carried other types of merchandise – maintained very wide brand selection and its own brand also. 4. Manufacturer-owned outlets: owned and operated by tire manufacturers, own tire sales - & range of auto services. 5. Small independent tire dealers: One or two outlets, where they sold and installed tires - offered auto services. - started as single-brand outlets - over time added additional brands. 6. Large independent tire chains: “multi-brand discounters,” large independent tire chains gained share, often by acquiring smaller independent dealers. 7. Other: Half the sales in the “other” category were accounted for by full-service auto supply stores such as Western Auto, Auto Palace, or Pep Boys. These stores sold tires at low prices as traffic builders and were resented by independent dealers as a consistent source of low-priced competition
  • Starting 1970s, Goodyear opened 200 outlets to 1,300 in 83 Process : Owners were franchised by Goodyear for three years before they became independent / various business & functional training
  • Some inept dealers would act as wholesaler and sell direct to mass merchandise which eats up distribution GY tried to stop diversion by legal restriction by 1 dictating the retail sell price and 2. dictating whom to b resold.

Goodyear aquatred launch Goodyear aquatred launch Presentation Transcript

  • THE AQUATRED LAUNCH Panacea Ankit – 092104 Bhavin – 0821 Jayesh – 092120 Biju – 0821 Nigam – 082142
  • The Goodyear Rubber and Tire Company
    • 41 plants in U.S. 43 plants Overseas
    • 2,000 distribution word wide.
    • Also known as “The Gorilla”.
    • Around 1,05,000 employees
    • Ranked Third in worldwide sales of new tires.
    • Innovative in terms of technology ($1.5 b.)
    • Marketing (Eagle Tires, Tiempo)
  • Performance Vs. Broad-line Tires Replacement Vs. OEM The Market For Passenger Tire More expensive Better traction. Less expensive Poor handling 25% of Goodyear’s unit Sales 30% of Dollar sales Higher percentages of profits. Less percentage of profits. Sold to Individual Consumers . Sold to Car manufacturers. 65% of Revenue 35% of Revenue Cut-through Competition Large Scope Market Leader (Rank 1; Mkt Share 38%)
  • Brand Classification The Market For Passenger Tire Major Brands Minor Brands Private Label 36% of unit sales. 24% of unit sales. 40% of unit sales. Highest recognition among consumers. Minor but well-recognized among consumers. Larger manufacturer used excess capacity to service private labels. Goodyear, Firestone, Michelin, Bridgestone, Pirelli and Goodrich. Dunlop, General, Kelly , Uniroyal, Cooper, Yokohama and Toyo. They carried names to particular retailers.
  • Channels Independent Dealers Strictly whole-sellers Retail Dealers Retail Owners 10 % 40 % 50 % Car dealers, service stations, small independent dealers Other dealers, secondary outlets Own retail outlets Wholesale Distribution Channels (percent of U.S. passenger tire replacement sales in units) Type of Outlet 1976 1981 1986 1991 Oil companies 9 5 3 2 Large retailers 24 20 16 19 Manufacturer-owned outlets 11 10 13 12 Independent dealers 56 65 68 67
  • Channels Retail Distribution – passenger tires Garage / service station Warehouse clubs Mass Merchandisers Manufacturer-owned outlets Small independent tire dealers Large independent tire chains Set-up Small Outlets Large Stores Large Retail space / chain Large Outlets One or two outlets Concentrated within geographic regions Outlets Neighborhood outlets less than 100 outlets Some hundreds less than 100 outlets Various 30-100 outlets Product / service offered Tires, gasoline, auto services Food ,clothing electronics ,tires ,hardware Only installation of tires Carried various types of merchandise. Performed auto services Tires Tires Tires Tires sold Private lab. / Branded Branded Various Branded / own brand One brand Start with a brand and add on later / private labels Private labels / Branded Players Many Sam’s, Pace, Price club, Costco Kmart / Sears /Wal-Mart Manufacturers : Goodyear / Michelin / Firestone Many Tire America, National Tire Warehouse, and Discount Tire. Strategy Low volume / Stiff competition from high volume players Deal based/ Low prices High Volume/ Low prices High Volume/ Low prices Low volume/ Stiff competition from high volume players High Volume/ Low prices
  • Goodyear’s Distribution Struct ure
    • 4 channels of distribution :
    • Independent dealers : Accounted for 50% of sales revenues through 4,400 outlets (2500 active selling full line of Goodyear tires)
    • Manufacturer-owned outlets : Generated 27% of sales through 1,047 outlets
    • Franchised dealers : 600 in total accounted for another 8% of sales
    • Government agencies : 15% of sales
    • Goodyear did not sell tires in garages/service stations, warehouse clubs, or mass merchandisers. However another private label of Goodyear “Kelly Springfield was sold by mass merchandisers”
    • “ Just tires” a proposed new retail format of Goodyear planned to offer tires & fast oil change without appointment and guaranteed speed & quality of installation
    • Manufacturer-owned outlets :
    • Greater control for opening / closing an outlet
    • High associated demands for capital and management attention
    • Some competition perceived by Independent dealer
    • Converted some outlets into franchised dealerships.
    • Independent Dealer
    • Required owner to invest $100,000 and generate revenues of $1,000,000 pa.
    • Sold an average of 15.5 tires/day, including both Goodyear and other brands of tires
    • Most Goodyear dealers had majority of their sales from Goodyear tires - average selling price of $75 per tire.
    • Margins :
      • 28% averaged for independent dealers on Goodyear tires
      • 25% for dealers carrying other major brands
      • 20% for private label tires
    • Average wholesale margins were 18% for private label tires and 14% for Goodyear tires
    Goodyear’s Distribution Struct ure
  • Sales Operation
    • Company Owned Outlet
    • 42 Districts (1 DM)
    • 20 to 23 Stores each (1SM)
    • Independent Dealers
    • 28 Districts (1DM)
    • Avg. 3 SM
    • Services
      • Expertise & Training
      • GY Business Mgt. System
      • National & Regional Adv.
      • Research on Market Trend
      • Certified Auto Service
  • Independent Dealers Auto Services
    • Services sales $38,100 per month per outlet
      • 26% (1980) to 48% (1991)
      • 20% tries related work
    • Margins
      • 50% Services Labor
      • 20% to 25% Parts installed
    • Revenues
      • 70% services Labor
      • 30% parts
  • Independent Dealers
    • Services provided were not free.
    • Paid upon receipt, ordered in full trailer loads or purchased under occasional promotional programs.
    • Allowance
      • Wholesale Allowance
      • Merchandising Allowance 1.5%
      • Advertising Accruals 4%
  • Goodyear & Independent Deal ers
    • 1989
      • 70% only GY & 30% other brand also
    • 1991
      • 50% – 50%
      • Aggressively merchandised other brands but GY generated 90% of the revenues.
    • Independent dealers network better option
      • Grow sales, expand brand availability & increase market share
  • Consumer Behavior
  • Consumer Behavior
    • Tire Attributes
    • Tread Life
    • Wet Traction
    • Handling
    • Snow Traction
    • Dry Traction
    • Tire Criteria
    • Price
    • Offers Fast Service
    • Can Trust Personnel
    • Store is Attractive
    • Offers Mileage Warranty
    • Brand Selection
    • Maintains Convenient Hours
  • Consumer Segments Type of Buyers Loyalty to Outlet Loyalty to Brand Shop Around Other Price Constrained LESS LESS MORE Best in their Budget Value Oriented LESS MAJOR BRANDS EXTENSIVELY Search for best prices Quality- Prestige MORE MORE LESS Best Tires. 65% Major Brand Quality - CC MORE LESS LESS 38% Major Brands Commodity- Bargain Hunter LESS LESS EXTENSIVELY YOUNG, PRICE Commodity- Trusting Patrons MORE LESS LESS Lower Price
  • Competition
    • Intent to buy Major Brand Segments
    • ? 36% (1982) TO 53% (1992)
  • Switching Among Brand
    • 9%-11% of sales on adv. & promotion
      • 60% on promotion
    • 60% share of voice in TV & Magazines
  • Promotions
    • 1. Estimated 75% of all Goodyear tires sold in independent or company-owned outlets were sold on promotion, at an average discount of 25%.
    • Offered to the consumer by schemes like one free tire with the purchase of three tires, one tire for half price with purchase of another tire at full price, or 25% off the price of selected tires.
    • 2. Promotions organized around “core events”—six 3-week periods spread throughout the year to buy merchandise at a discount. This was supported by radio, television, and print advertising announcing special prices on specific tire lines.
    • 3. “Spring dating,” organized every spring , provided extended financing on tire orders to Goodyear dealers
  •  
  • Aquatred
    • Different
    • Design
      • Performance & Consumer Preference
      • Aquachannel
      • Hydroplanning & Wet Traction
      • 60,000 mile warranty
      • Top in Broad Line
  • Test Market - Result
    • Aquatred buyer were likely to replace competitors tires.
    • Less Cannibalizing (GY 38-51) (M17-15)
    • Information Search is extensive
    • Braking the orientation (Brand 56-47)
      • Uplifting Brand Equity
    • Target Segments
      • Value Oriented & Quality Buyer
  • Test Market - Result
    • Detailing by Salesperson
    • Absences of Integrated communication at Touch Point
    Details Aquatred Invicta GS 60 K mile Warranty 41% 10% Great Wet Traction 33% 38% Don’t tell any thing 13% 42% Won’t Hydroplane 16% 9% Other 29% 18%
  • The Launch of Aquatred
    • A high profile nationwide launch of Aquatred was planned to have a strong impact on the market as it was a product which would revitalize the image of Goodyear in the market.
    • An budget of $21 million
    • Launch during the Winter Olympics in January 1992 was proposed to get an advantage of the mass promotion and mileage.
  • Launch Issues
    • Right Product or not
    • Timing
    • Distribution Channel
    • Initial Inventory
    • Communication at Touch Point
    • Pricing & Promotion
  • Team Recommendations
    • Go-to Market Strategy
    • Customers : Value-oriented & Quality buyers segment
    • Communication Plan :
      • Message : Highlight core value of safety , trust & reliability at all weather conditions.
      • Place : Upcoming Olympics events on Jan-1992 through a video ad with above message.
      • This needs to be backed up with :
            • Radio Ads
            • Teaser Ads to create inquisitiveness
            • & awareness
            • Billboards
            • Press releases
            • “ On Snow” Demo
  • Team Recommendations
    • Initial Inventory
      • Test Market Result have shown
      • 74% buyers of Domestic
      • 26% buyer of Imported
  • Team Recommendations
    • Channel Strategy
    • Use existing Independent Chain & manufacturing outlets
    • Geographic spread of all contact points for maximum reach
    • Design promotional incentive schemes for dealers .
    • Motivate / train / facilitate other Independent dealers to promote Goodyear products (total 1900 dealers)
    • Contact point integration to have same message (Training )at all touch-points.
  • DISCUSSIONS …
    • Regards,
    • Panacea