Goodyear Position in Tire Industry<br />The US tire industry was denominated by 5 companies in the early 1970’s where all the players are from US Goodyear, Firestone, Uniroyal, BF Goodrich, General Tire. Goodyear known as the ‘Gorilla’ of the world Tire industry and Ranked 3 rd in worldwide new tire sales.<br />Goodyear operated 41 Plants in US and 43 Plants in 25 other Countries, six rubber plantations, 2000 Distribution outlets worldwide, 4400 Independent dealers, 1047 manufacturer owned outlets and 600 franchise dealers. <br />The company also had a strong track record in launching innovative new product. Goodyear had made large investment (over $1.5 billion) during the late 1970s to produce radials. Goodyear had Eagle, Aquatred, Invicta, Arriva, Tiempo, Corsa in his brand portfolio.<br />Goodyear had produced two lines of private label tires: All American and The Concorde, which were replace by Goodyear branded tires in 1991. <br />
In 1991, the Goodyear Tire and Rubber Co. were in a severely damaged position. The company had experienced its first financial loss in 58 years, and the company‘s million-a-day debt service charges had placed Goodyear to the verge of bankruptcy. Newly appointed CEO Stanley Gault, charged with the responsibility of turning the company around, recognized that Goodyear also had to increase its selling prices wherever possible. Moving forward, Goodyear‘s strategy moving would be to find and seize the industry‘s fastest-growing, highest-margin markets.<br /> Table below shows how Goodyear starts losing its market share. <br />Brand image of major tire manufacturer, 1991<br />
Under Gault‘s direction, Goodyear began the process of transforming itself from a manufacturing-based company to a customer value-based company. <br /><ul><li>Feature of Aquatred</li></ul>Aquatred was designed to improve traction in wet conditions <br />Channeled water out from under tire, reduce hydroplaning<br />When 50% worn, the Aquatred maintain the same wet traction as new tire.<br /> 60,000 mile warranty<br />Car equipped with Aquatred travelling at 55 miles/hr stopped in as much as two car length less distance than similar car equipped with conventional tire. <br />Aquatred Strategic Role And The Marketing Program<br />
<ul><li>Strategic Role</li></ul>Promote aggressively during the winter Olympics and create difference awareness among the customers.<br />Use new, sleek appearance to attract customers. <br />Prevent Goodyear OEM tires to be replaced by other brands in the replacement market. <br />Promote high durability aspect. <br />Prevent value degradation.<br />Value based pricing.<br /><ul><li>Marketing Program</li></ul>Goodyear plan to position the tire at the top of the broad line segment with 60000 miles warranty.<br />The Aquatred was tested in a large metropolitan area and aggressively promote in high-precipitation areas. <br />Evaluation of channel for the launch of Aquatred - Keeping in mind the Positioning the product in the market.<br />At the time of Aquatred launch, the average price paid by consumers for the most popular-sized replacement tire was in the $50 range. Nevertheless, Goodyear‘s customer research indicated that consumers would be willing to pay much more for a tire possessing the Aquatred features. So, to the dismay of most industry observers, Goodyear introduced the Aquatred at a price of $95/ tire. <br />
<ul><li>Goodyear distribution structure</li></ul>Independent dealers 50% (4400 small independent dealers)<br />Manufacturer owned outlet 27% (1047 Outlets)<br />Franchised dealers 8%<br />Govt. agencies 15%<br /><ul><li> If Goodyear want to increase market share, they have to sell tires to garages/service stations, warehouse clubs or mass merchandisers.
To increase market share, Goodyear have to cut prices.</li></ul>Should Goodyear Broaden Distribution to Mass Merchandisers? Should They Be Offered Aquatred?<br />
In 1991, the Goodyear Tire and Rubber Co. was in a severely damaged position. The company had experienced its first financial loss in 58 years, and the company‘s million-a-day debt service charges had placed Goodyear to the verge of bankruptcy. <br />Selling tires to low- service outlets could erode the value of the Goodyear brand, cannibalize sales of existing outlets and might cause dealers to take on additional lines of tires.<br />NTDRA<br />Specialized training for new sales personnel. <br />Problem Goodyear has to face<br />
<ul><li> Consumer Research</li></ul> The research revealed some not-so-surprising information namely, that consumers wanted a tire that was all-season, had a good ride characteristic, a low noise level, and provided good mileage. Consumers also placed a very high importance on wet stopping ability. But, in addition, what Goodyear‘s marketing team also discovered was that consumers were also willing to pay more for a tire that looked like it provided wet traction.<br /><ul><li>Conclusion</li></ul> As Goodyear plan to position the tire at the top of the broad line segment (entry into niche segment), earn higher profit. Idea of expanding distribution network using mass merchandisers should be dropped.<br />