The document discusses Goodyear's launch of the Aquatred tire, which features an innovative tread design to improve wet traction. It analyzes several issues with the launch: 1) The Aquatred may not be the right product as it overlaps with Goodyear's existing Invicta GS tire; 2) Launching during the winter Olympics may cause supply issues due to initial production of smaller sizes; 3) Expanding distribution channels could erode the brand and cannibalize existing outlet sales. It determines the new channels should likely not sell the Aquatred due to questions around the product's differentiation and potential to burden inventory.
From April 2004 to the end of 2009 I was involved with a fun and interesting project, Sweetskinz graphic rubber applications. We did this presentation near the end of the company's search for an investor or partner that would rescue us. Sadly that never happened. The idea is still a good one. Someone, somewhere, sometime will revisit it and do it right. To them, best of luck!
Goodyear: The Aquatred Launch HARVARD BUSINESS SCHOOL CASE STUDY
2. What is Aquatred ? It is a new tire providing improved driving traction under wet conditions
3. Major Tire Industries in U.S
4. Three major changes in US Tire Industry
5. Emergence of RADIAL tires to replace older “bias” and “bias-belted” tires. Between 1971-91 radial’s share of unit sales increased from 32% to 95%.
6. Increased in foreign competition
7. Change in nature of demand from consumers and car makers.
8. FOUR major impacts of these changes
9. Demand for the passenger tires grew sluggishly
10. New tires in the U.S market declined
11. Tires producing capacity outstripped demand Tire making capacity rose 12% and capacity utilization fell from 87% to 76%
12. Industry difficult economic conditions, coupled with the tire manufacturer slow response resulted in a number of mergers and acquisitions
13. In, 1991 company operated 41 plants in U.S, 43 plants in other 25 countries and 6 rubber plantations Known as “THE GORILLA” in world tire industry
14. Goodyear ranked third in worldwide sales of new tires
15. In 1977, company introduced the TIEMPO, first all season radial their unit sales grew from 2% to 71%
16. In 1981, company successfully launched the EAGLE
17. Market for Passenger Tires could be segmented in three ways
18. Distinction between Performance and Broad-line tires Performance Tires Broad-line Tires
19. Market can be also segmented on Replacement and OEM tires Replacement tires sold directly to the individual consumers OEM tires were sold to the car manufacturers
20. In 1986, Sir James Goldsmith attempt to takeover Goodyear greatly increased their debt. Their earnings were sluggish despite spending $1 million per day on investments.
21. Third segmentation was along brand classification It includes major brands, minor brands and private labels
22. Most consumers viewed tires as a “grudge purchase” An expensive necessity to keep vehicle in driving condition
23. Five important tire attributes 1)Tread life 2)Wet traction 3)Handling 4)Snow traction 5)Dry traction
24. Criteria for selecting Tire Retailer 1)Price 2)Offers fast service 3)Can trust personnel 4)Store is attractive 5)Offers mileage warranty 6)Brand selection 7)Maintains convenient hours
25. CONSUMER SEGMENTS
26. Price constrained buyer
27. Value oriented buyer
28. Quality buyers
29. Commodity buyers
30. Wholesale distribution channels
31. Retail distribution channels
32. Goodyear Distribution Structure 4,400 independent dealers accounted for 50% of sales revenue, 1,047 manufactured owned outlets generated 27% and the 600 franchised dealers for 8% and remaining 15% were to government agencies
33. Just Tires was a new retail format under test by Goodyear
34. Goodyear supported core events with radio, television and print advertising, announcing special prices on specific tire lines.
35. Independent Dealers
36. Indepe
From April 2004 to the end of 2009 I was involved with a fun and interesting project, Sweetskinz graphic rubber applications. We did this presentation near the end of the company's search for an investor or partner that would rescue us. Sadly that never happened. The idea is still a good one. Someone, somewhere, sometime will revisit it and do it right. To them, best of luck!
Goodyear: The Aquatred Launch HARVARD BUSINESS SCHOOL CASE STUDY
2. What is Aquatred ? It is a new tire providing improved driving traction under wet conditions
3. Major Tire Industries in U.S
4. Three major changes in US Tire Industry
5. Emergence of RADIAL tires to replace older “bias” and “bias-belted” tires. Between 1971-91 radial’s share of unit sales increased from 32% to 95%.
6. Increased in foreign competition
7. Change in nature of demand from consumers and car makers.
8. FOUR major impacts of these changes
9. Demand for the passenger tires grew sluggishly
10. New tires in the U.S market declined
11. Tires producing capacity outstripped demand Tire making capacity rose 12% and capacity utilization fell from 87% to 76%
12. Industry difficult economic conditions, coupled with the tire manufacturer slow response resulted in a number of mergers and acquisitions
13. In, 1991 company operated 41 plants in U.S, 43 plants in other 25 countries and 6 rubber plantations Known as “THE GORILLA” in world tire industry
14. Goodyear ranked third in worldwide sales of new tires
15. In 1977, company introduced the TIEMPO, first all season radial their unit sales grew from 2% to 71%
16. In 1981, company successfully launched the EAGLE
17. Market for Passenger Tires could be segmented in three ways
18. Distinction between Performance and Broad-line tires Performance Tires Broad-line Tires
19. Market can be also segmented on Replacement and OEM tires Replacement tires sold directly to the individual consumers OEM tires were sold to the car manufacturers
20. In 1986, Sir James Goldsmith attempt to takeover Goodyear greatly increased their debt. Their earnings were sluggish despite spending $1 million per day on investments.
21. Third segmentation was along brand classification It includes major brands, minor brands and private labels
22. Most consumers viewed tires as a “grudge purchase” An expensive necessity to keep vehicle in driving condition
23. Five important tire attributes 1)Tread life 2)Wet traction 3)Handling 4)Snow traction 5)Dry traction
24. Criteria for selecting Tire Retailer 1)Price 2)Offers fast service 3)Can trust personnel 4)Store is attractive 5)Offers mileage warranty 6)Brand selection 7)Maintains convenient hours
25. CONSUMER SEGMENTS
26. Price constrained buyer
27. Value oriented buyer
28. Quality buyers
29. Commodity buyers
30. Wholesale distribution channels
31. Retail distribution channels
32. Goodyear Distribution Structure 4,400 independent dealers accounted for 50% of sales revenue, 1,047 manufactured owned outlets generated 27% and the 600 franchised dealers for 8% and remaining 15% were to government agencies
33. Just Tires was a new retail format under test by Goodyear
34. Goodyear supported core events with radio, television and print advertising, announcing special prices on specific tire lines.
35. Independent Dealers
36. Indepe
The report gives a quick overview of leading names in global tyre market - their size, history, country of origin, and they products and services they offer.
In cases where the companies are listed, their key financial numbers are also presented.
IBR is positive on tyre retail business - we find retail margins are good, and it is possible to offer various other auto products and services from the same outlets. Hence there is scope to value add, and increase margins even further
The final assignment 4 of an online marketing internship by Prof. Sameer Mathur of IIM Lucknow is an in-depth presentation report on a HBR Harvard Business Review Article Titled "Make the most of a polarizing brand" by Xueming Luo, Michael Wiles, and Sascha Raithel
Preserve the luxury or extend the brandSameer Mathur
Preserve the luxury or extend the brand is an article which makes to think gaspard (owner of wine company in france ) that to extend the brand name or just preserve it.
This presentation is about a case: What are brands good for? which highlights the concept of Disaggreated marketing and defines the modified role of brands!!
2. THE EVENT
Launch of Aquatred, a new
tire providing improved
driving traction under wet
conditions.
3. THE ISSUES
• Right Product
• Right timing
• Risks and Benefits of expanding the company’s distribution
channels
• Should new channel sell the Aquatred?
5. The Tire Industry in the United States
Big 5 of 1900-1970
• Goodyear
• Firestone
• Uniroyal
• BF Goodrich
• and General Tire
6. Three important changes of 1970-80s
• Emergence of the radial tire to replace the older “bias” and
“bias-belted” tire constructions
• Increased foreign competition
• Change in the nature of demand from consumers and car
makers
8. • Demand for passenger tires grew sluggishly during the 1980s
• New tire prices in the U.S. market declined
• Tyre producing capacity outstripped demand
• Number of mergers and acquisitions
9. The Company
• Operated 41 plants in the United States, 43 plants in 25 other
countries, six rubber plantations, and more than 2,000
distribution outlets worldwide
• Net income of less than one percent
• Ranked third in worldwide sales of new tires
10.
11.
12. The Market for Passenger Tires
• Performance and broad-line tires
• Replacement and OEM tires
• Major brands, minor brands, and private label
13. Consumers in the Replacement
Passenger Tire Market
Buying Decision Criteria Ranked:
• 1. Price
• 2. Offers fast service
• 3. Can trust personnel
• 4. Store is attractive
• 5. Offers mileage warranty
• 6. Brand selection
• 7. Maintains convenient hours
15. Wholesale and Retail Channels for
Replacement Tires
Wholesale Distribution Channels
16. Retail Distribution Channels
• Garages/service stations:
• Warehouse clubs:
• Mass merchandisers:
• Manufacturer-owned outlets:
• Small independent tire dealers:
• Others
17. Goodyear’s Distribution Structure
• 4,400 independent dealers accounted for 50% of sales revenues
• 1,047 manufacturer-owned outlets generated 27% of sales
• 600 franchised dealers accounted for another 8% of sales
18. Goodyear’s Promotion Strategy
• Three-fourths of all Goodyear tires sold in independent or company-
owned outlets were sold on promotion, at an average discount of
25%
• Spring dating
20. Design
• Developed after comparing 10 different designs on performance
and consumer preference.
• The deep groove down the center of the tire dubbed the “Aqua
channel.”
• Tread design channeled water out from under the tire, reducing
hydroplaning and improving traction in wet conditions.
• In wet conditions, cars equipped with Aquatred traveling at 55
miles per hour stopped in as much as two-car lengths- less
distance than similar cars equipped with conventional all-season
radials.
• When 50% worn, the Aquatred maintained the same wet traction
as a new all-season tire.
35. Right Product
Aquatred doesn’t fit as the correct product for the company reasons
being:
• Within the company, it has heavy overlap with Invicta GS, both are
all season and robust - hence cater to the same category. In fact -
in a survey it was found that Invicta GS has better satisfaction level
than Aquatred. So its less likely that customers would be shelling
out a premium of 10% for some ornamental change.
• Michelin and Bridgestone both planned to launch new tires with
80,000-mile warranties in 1992 backed by heavy advertising. Its
likely that Goodyear’s dealers will be receptive to a high-priced tire
when the industry seemed to be turning toward long-life
warranties and low-cost private labels.
36. Right Timing
The launch timing of winter Olympics didn’t really suit
Aquatred reasons being:
• It might spark sales of the Aquatred, but the initial inventory
of Aquatred had been made to fit domestic cars, as opposed
to the smaller sizes for imported cars. This can create supply
bottlenecks which could lead to customer uproar and negative
publicity.
• Molds to produce other sizes would not be available until
several months after the Olympics creating further uncertainty
about supply.
37. Risks and Benefits of expanding the
company’s distribution channels
• Selling tires in lower-service outlets could erode the value of
the Goodyear brand, cannibalize sales of existing outlets.
• Might cause dealers to take on additional lines of tires.
• Fear of losing brand exclusivity by selling in every other shop.
38. Should new channel sell the Aquatred?
The decision to add Aquatred to the new channels is highly
doubtful reasons being:
• When the product itself was not promising and differentiable,
it was likely to add confusion in the huge range for the
customer.
• It could burden up the inventory adding to unnecessary cost.
39. Disclaimer:
These slides were created by Deepak Madan, BITS Pilani, during
a Marketing internship by Prof. Sameer Mathur, IIM Lucknow
(See www.IIMInternship.com)