This case study analyzes the Harvard Business Case "Goodyear: The launch of Aquatred".

1. Harvard Business Case Study

4.  Gorilla


5. 
$10.91 billion
$0.1 million.
 3rd
105,000

6. In June 1991, Stanley G
Gault took over as the
chairman with Barry Robbins
serving as Vice President of
marketing.

8. In the 1980s, radial tires were
quickly replacing the
conventional bias-belted tires.
Foreign competition increased.
Michelin of France used its
expertise in radial tires to gain
market share.

9. Rising oil prices decreased
demand.
Overcapacity was expected to
last through the mid 1990s.

10. Difficult economic conditions led to many
mergers and acquisitions
Only major US tire
manufacturer that
had not been acquired
was Goodyear

12. The market for passenger tires can be segmented
along brand classifications.
Average price of private label tire was 18%
lower than that of a branded tire.
36%
24%
40%
% of unit sales
Major brands
Minor brands
Private Labels

15. 50%
27%
8%
15%
% of sales revenue
independent dealers
maufacture owned
outlets
franchised dealers
government agencies

17. Goodyear plans to launch its latest technological
innovation,
 60,000 miles warranty
 Unique design channels
water out from under
the tire
 Superior wet traction
 Does not hydroplane
 Premium price product

18. Key issues

19. Is
Aquatred
the right product for
dealers and consumers ??
1.

20. For consumers:
A survey conducted by Goodyear among car owners
revealed the top two performance attributes
consumers consider for buying tires :
Aquatred :
Tread life – 60,000 miles (much above market
average)
Wet traction – same as a new all-season tire after
being 50% worn !

21. A comprehensive survey comparing purchase behavior
of Aquatred and Invicta GS buyers yielded the
following numbers :
The first segment did, on an average 50 % more product
research than the second and ended up buying Aquatreds.
Thus, Aquatred does indeed meet customer needs.
Checked newspaper ads 33% 23%
Telephoned outlets 21% 14%
Shopped other dealers 20% 12%
Total : 74% 49%

22. For dealers:
The following table showcases the major consumer segments for
Replacement Passenger Tires (Exhibit 4) :
Percentage sales of Major brands due to Price constrained and Commodity buyers
= (22%)(30%) + (37%)(18%) = 13.26 %
Percentage sales of Major brands due to Quality and Value oriented buyers
= (18%)(54%) + (23%)(51%) = 21.45%
Price-constrained
buyers
22% 30%
Value-oriented
buyers
18% 54%
Quality buyers 23% 51%
Commodity buyers 37% 18%

23. The table below enlists the purchase decision
segments of Aquatred buyers :
As is clearly evident, bulk of Aquatred buyers are the
Quality and Value oriented buyers, who form the
greater 21.45 % segment (as calculated previously).
Price-constrained Buyers 6%
Value-oriented Buyers 23%
Quality Buyers 61%
Commodity Buyers 10%

24. “In 1991, Goodyear and Michelin were virtually
even, but Michelin’s image was stronger
among value-oriented and quality buyers, while
Goodyear had a stronger image among price-
constrained buyers and commodity buyers.”
Thus the introduction of Aquatreds, increases
Goodyear’s market reach to include quality and
value buyers and can greatly boost the selling
potential of dealers.

25. Should
Distribution
be expanded ??
2.

26. Considering present situation of overcapacity,
expansion of distribution is futile and would only
increase competition between dealers.
Instead, a structural modification aimed at
maximizing sales can prove useful.

27. Goodyear’s 4400 independent dealers, who
contribute 50% toward its sale are its biggest
assets and proper measures must be taken to avoid
further straining of relationship with them.
50%
27%
8%
15%
% of sales revenue
independent dealers
maufacture owned
outlets
franchised dealers
government agencies

28. Business with wholesalers found supplying in low-priced
outlets must be reduced and replaced by alternate
distribution channels. This would provide following
benefits:
• Retail dealers would be encouraged as Goodyear
products won’t find their way into low priced
outlets.
• Aquatred will be available only at its designated
value in market thereby maintaining its premium
image.

29. Independent dealers 50/4400 = 0.0114 %
Manufacture owned outlets 27/1047= 0.0258%
Franchised dealers 8/600= 0.0133%
As shown above, the manufacturer owned outlets
are the most profitable in terms of sales volume.
But they are accompanied by additional costs of
capital and management.
Thus, efforts can be concentrated on improving
numbers of franchised dealers for replacing select
wholesalers.

30. What should be the
Pricing and
Promotional policies
??
3.

31. The core target market for the Aquatred brand
are the quality and value oriented consumers.
Thus, its brand image should be that of a
premium brand and should be viewed as the
highest value offering.

32. Pricings of 6 dealers were found as follows by a
mystery shopper:
Calculating the average price, we get
$85.32 for Aquatred with Black sidewall
$85.82 for Aquatred with White sidewall

33. Studies reveal that customers expect broad-line tires
from Goodyear brand to be priced within a $6 range
With Invictus GS priced at $80, dealer pricings
averaging at $85.32 and customer expectations in
mind, an appropriate pricing scheme would be :
$86.5 Aquatred with Black sidewall
$88.5 for Aquatred with White sidewall

34. Promotional policies
Facing difficult economic conditions, cutting
back on the advertising budget can be
detrimental to the brand.
The need of the hour is aggressive marketing
and advertising using radio, television and
print media to secure loyal customer base.
The commercial time opportunity at the
Olympics must be utilized to the fullest for
introducing the Aquatreds to the world

35. Requests for Aquatreds for imported cars must be seen
as an opportunity to market the comparable wet
traction of the Invictus GS
The comparable pricing and characteristics of
Invictus GS can rebuild its popularity and boost its
sales too

36. Conclusion
 Aquatred must be launched as a premium product for
catering to the quality and value conscious consumers.
 Such positioning will not only reduce cannibalization
but will also attract rival market share.
 Current distribution channels must be utilized to the
maximum and products must be aggressively
marketed and advertised.
 Dealers must be encouraged to maintain
recommended price to earn future promotional offers.

37. Credits
 http://freehdwalls.net/three-arrows-center-target-bullseye-hd-wallpaper/
 http://www.waynestiles.com/wp-content/uploads/2009/06/Complaining-Makes-us-Doubt-
Gods-Presence.jpg
 http://thumbs.dreamstime.com/z/approved-stamp-15889461.jpg
 http://www.goodyear.com.ve/img/1024x768_tcm1098-133566.jpg
 http://www.goodyear.com.mx/img/1280x1024_tcm1095-65331.jpg
 http://si.wsj.net/public/resources/images/BN-IB178_GOODYE_J_20150423141315.jpg
 http://e36261ef1f37a9aa564c-
183246622d51cc66cab6f7d435863a72.r86.cf5.rackcdn.com/wp-
 content/uploads/2015/04/goodyear_napanee_manufacturing_plant_e-582x330.jpg?b61106
 http://www.desktopwallpapers4.me/photography/tires-8787/
 http://cdn.wall-pix.net/albums/art-photography/00025154.jpg
 http://fc00.deviantart.net/fs44/i/2009/127/4/b/Chess_Pieces_07_by_WingsOfAHero.jpg

38. Disclaimer