Goodyear is launching a new tire called Aquatred designed to provide improved traction in wet conditions. The vice president of marketing is analyzing key issues for the launch, including whether Aquatred meets consumer needs, the appropriate timing for launch, whether to expand distribution channels, and pricing and promotion strategies. Consumer surveys found wet traction is important to buyers and they may accept a higher price for Aquatred. However, competitors plan lower-priced, longer-warranty tires. A full-scale launch is estimated to cost $21 million and targeting the quality buyer segment through existing channels could attract nearly 3 million tire sales.
8. Known as
“The gorilla”
for its
dominance in
world tire
industry
43 plants in 25
other countries
41 plants in
United States
9. Known as
“The gorilla”
for its
dominance in
world tire
industry
43 plants in 25
other countries
6 rubber
plantations
41 plants in
United States
10. Known as
“The gorilla”
for its
dominance in
world tire
industry
More than
2,000
distribution
outlets
worldwide
43 plants in 25
other countries
6 rubber
plantations
41 plants in
United States
11. Known as
“The gorilla”
for its
dominance in
world tire
industryRanked 3rd in
worldwide
sales of new
tires in 1991
More than
2,000
distribution
outlets
worldwide
43 plants in 25
other countries
6 rubber
plantations
41 plants in
United States
18. •Is Aquatred the right product ? Is it what the
consumers need?
•What is the appropriate timing for the launch of
Aquatred so as to generate support from the
company’s traditional base of independent dealers ?
•Should we expand the company’s distribution
channels , and determine if they would sell
Aquatred ?
•What should be the Pricing and Promotional
policies for Aquatred ?
19. Is Aquatred the right product ? Is it what
the consumers need?
Why is that an issue ?
The industry in turning towards long-life
warranties and low-cost private labels .
Would Goodyear’s dealers be receptive
to a high-priced tire like Aquatred ?
Their competitors (Michelin and
BridgeStone) plan to launch new
tires with 80,000 miles warranties
in 1992 backed with heavy
advertising .
20. Lets Analyze the situation ......
152 million units of replacement tires were sold in
the year 1991
21. Goodyear surveyed car owners
Performance attributes
considered when purchasing
tires (in order of higher to
lower importance)
Wet Traction
Handling
Snow traction
Dry traction
Wet Traction is
second most
considered attribute
after tred life
22. Rating on tire’s traction on wet roads (Goodyear
consumer survey)
60% people found the wet traction excellent
for Aquatred but a similar response for
Invicta GS
23.
24.
25.
26. What is the appropriate timing for the launch of Aquatred so as
to generate support from the company’s traditional base of
independent dealers ?
Why is that an issue ?
•Goodyear could use the time of winter Olympics
January 1992 to introduce Aquatred .
•It might spark the sales of Aquatred but the initial
inventory of Aquatred was made to fit domestic cars
as opposed to smaller size of
imported cars.
•Mould to produce
other sizes would not
be ready until several
months after the
Olympics .
27. According to the Survey of Aquatred test Market
Goodyear could work on moulds and
reap the benefits of imported cars
that is 26 % of the consumer section .
28. Should we expand the company’s distribution channels,
and determine if they would sell Aquatred ?
Why is that an issue ?
Expanding distribution could boost sales , but selling tires in
lower service outlets could erode the value of the Goodyear
brand , cannibalize sales of existing outlets , and might cause
dealers to take on additional line of tires .
Wide range of tires are sold by Goodyear , dealers would need
advice regarding which customers would be likely to switch to
Aquatreds.
29. Goodyear’s Distribution Structure
Goodyear Outlets
Independent
Dealers
Strictly
wholesalers(No
retail operations)
Sold tires at retail
and resold tires
Sold tires at retail
only
Manufacturer-
owned outlets
Franchised
dealers
Government
agencies
4400 6001047
50%
revenue
27%
revenue
8% 15%
10%
40%
50%
Car dealers
Service stations
Small independent dealers
Other secondary outlets
2500 are
active
30. What should be the Pricing and
Promotional policies for Aquatred ?
Goodyear hoped to price Aquatred at a 10% premium over Invicta GS,
but successful launches were attributed to low retail prices ( Tiempo
1977)
Independent Dealers in test markets ask for
price promotions on Aquatred and it was
unclear that for how long could they
keep Aquatred out of channels
that were prone to discounting
and promotions .
Why is that an issue ?
31. ¾ th of all Goodyear tires sold in
independent or company-owned
outlets were sold on promotion , at
an average discount of 25%.
Core events – 6 in a year
They are 3 week periods spread
throughout the year during which
Goodyear dealers could buy
merchandise at a discount .
Situation Analysis......
36. Percentage of consumers No. Of tires
42% 2
40% 4
16% 1
2% 3
152 million replacement tires are sold in 1991 .
Total number of consumers : X
0.42*X*2+0.40*X*4+0.16*X*1+0.02*3*X=152 million
X=57.14 million consumers
37. Major
consumer
Segment
Percentage of
consumers
Consumers in
each segment
(million)
% Consumers
that prefer
major brands
in the given
segment
Consumers
that prefer
major brands
in the given
segment(milli
on)
%Consumers
preferring
Goodyear
over 4 other
major brands
Consumers of
Goodyear in
each Segment
(million)
Price 22% 12.57 30% 3.77 16% 0.60
Value 18% 10.28 54% 5.55 17% 0.94
Quality 23% 13.14 51% 6.70 18% 1.20
Commodity 37% 21.14 18% 3.80 10% 0.38
Total 100% 57.13 3.12
Total consumers -57.13 million
Goodyear Company records
3.12 million consumers for
Goodyear
38. 25% consumers on Goodyears want Aquatred .
Potential consumers of Aquatred – 0.78 million
consumers
91% bought four tires =2.83 million tires
Total Aquatreds demand-2.90 million tires
(considering 9% to buy one tire)
90$ per tire retail price as suggested
by the company . ¾ of the
dealers buy the tire at 25%
discount ( $67.5 ) from
Goodyear manufacturers .
40. Conclusions
The full scale Launch of Aquatred is estimated to cost
Goodyear $21 million .
Aquatred is to be launched with 60,000 miles warranty
with 90$ per tire , at the top of the broad-Line Segment .
41. Conclusions
Most of the Consumers are in the Quality buyers section
and are Brand oriented , thus retailing channels used
should be Manufactured-owned outlets and Independent
dealers . The existing dealers have conveyed the
necessary information to only 44% buyers. Training them
and establishing a stronger market with existing
distribution channel would be better .
42. Conclusions
The consumers do require wet-traction as an attribute in
their tires and thus Aquatred will attract consumers , but
most quality buyers and not many price-constraint
customers .
43. Conclusions
Aquatred can launch during Olympics but will not be able
to cater to imported cars . They must advertise to be at par
with the competitors . Highlighting the qualities while the
competitors play in low-price and tred-life strategies
