Goodyear was considering launching the Aquatred tire. Some key questions around the launch included whether it was the right product, the right timing, and whether distribution channels should be expanded. The Aquatred offered superior wet traction compared to competitors' tires and had a tread life of 60,000 miles, longer than industry average. However, pricing it at a 10% premium may limit some buyer groups. Launching during the winter Olympics could provide an early advantage through promotions tied to the games. Expanding independent dealers and wholesale channels may require additional support and incentives. Careful consideration of competitors' actions and market response would also be important.

1. Goodyear:
The Aquatred launch
Prateek Rout
NIT Rourkela
HARVARD BUSINESS SCHOOL CASE

2. The
STALWARTS

3. BARRY ROBBINS,
Goodyear’s vice president of
marketing for North American
Tires.
STANLEY G. GAULT, Chairman
of Goodyear.

4. PRESENT SITUATION

5. Some of the unanswered questions
regarding the launch of Aquatred
Tire:
- Is this the right product?
- Is it the right timing for the
launch?
- Should the distribution channels
be expanded?
- Will Aquatred be sold through the
new markets?

7. TIRE
INDUSTRY
AQUATRED
TIRE
AUTO
SERVIC
ES
CUSTOME
R
SEGMENT
S
INSIGHTS ON

8. TIRE INDUSTRY
•1900 – 1970’s
Five companies dominated the US
market

9. TIRE INDUSTRY
CHALLENGES (1/3)
Radial Tire construction > Bias & bias-belted tire constructio
Advantages:
• Superior tread-wear, handling and gas mileage.
• Radial tires lasted for 40,000 miles whereas bias-belted
tires lasted for 20,000 miles.

10. TIRE INDUSTRY
CHALLENGES (2/3)
Increased foreign competition
Import passenger tires unit sales BOOMED:
• 1972 – 8%
• 1982 – 12%
• 1990 – 22%

11. TIRE INDUSTRY
CHALLENGES (3/3)
Nature of demand from consumers and car makers
• Rise in the price of oil.
• Rise in cost of manufacturing tires.
• Shift of sales towards smaller cars
which place less wear on tires.

12. TIRE INDUSTRY
• Demand for passenger tires grew
sluggishly
• New tire prices in the U.S. market
declined.
• Tire-producing capacity outstripped
demand.
• Rise in the number of mergers and

13. COMPANY BACKGROUND
STATS (1991)
• 41 plants in United States.
• 43 plants in 25 other countries.
• 6 rubber plantations.
• 2000 distribution outlets worldwide.
• Total revenue - $10.91 billion.
• 105,000 employees.
• Ranked third in worldwide sales of new
tires.

14. COMPANY BACKGROUND
INNOVATIVE PRODUCTS
• 1977 – Introduced the TIEMPO, the first all-
season radical.
• 1981 – Launched the EAGLE, the first radial tire
offering high-speed traction for sports cars.

15. COMPANY BACKGROUND
In 1991 Goodyear was still spending $1
million per day on interest payments
and earnings were sluggish.

16. COMPANY BACKGROUND
STANLEY G. GAULT
• Chairman of Goodyear and retired
chairman of Rubbermaid.
• Installed his own management
team.
• Sold off assets.
• Increased priority on new product
development.

17. MARKET FOR PASSENGER
TIRES
SEGMENTATION BASED ON PERFORMANCE AND
BROAD-LINE TIRES
• Performance tires were wider than broad-
line tires, were more expensive, and
provided better traction.
• In the U.S. passenger tire market,
performance tires represented 25% of
Goodyear’s unit sales, 30% of dollar
sales, and an even higher percentage of
profits.

18. MARKET FOR PASSENGER
TIRES
SEGMENTATION BASED ON REPLACEMENT
AND OEM TIRES
• Replacement tires were sold to individual consumers, while
OEM tires to car manufacturers.
• In 1991, U.S. replacement tire sales - $8.6 billion.
• In the United States, Goodyear’s passenger tire division
derived 65% of its revenues from replacement tires and 35%
from OEM tires.

19. MARKET FOR PASSENGER
TIRES
SEGMENTATION BASED ON BRAND
CLASSIFICATION

20. CONSUMER BEHAVIOR
CONSUMER PURCHASES
• 2 tire purchases – 42%.
• 4 tire purchases – 40%.
• 1 tire purchase – 16%.
• 3 tire purchases – 2%.
• Purchases of sets of four tires
accounted for 60% of all units sold.

21. CONSUMER BEHAVIOR
TIRE ATTRIBUTES
• Tread life.
• Wet traction.
• Handling.
• Snow traction.
• Dry traction.
IMPORTANCE

22. CONSUMER BEHAVIOR
CONSUMER CRITERIAS
• Price.
• Offers fast service.
• Can trust personnel.
• Store is attractive.
• offers mileage warranty.
• Brand selection.
• Maintains convenient hours.
IMPORTANCE

23. CONSUMER SEGMENTS
 Price-constrained buyers
 Value-oriented buyers
 Quality buyers
 Commodity buyers

24. DISTRIBUTION CHANNELS

25. DISTRIBUTION CHANNELS
WHOLESALE DISTRIBUTION CHANNELS
LARGE RETAILERS
INDEPENDENT
DEALERS
Strictly wholesalers (10%)
Strictly Retailers (50%)
Wholesalers + Retailers (40%)

26. DISTRIBUTION CHANNELS
RETAIL DISTRIBUTION CHANNELS
GARAGES/SERVIC
E STATIONS
WAREHOUSE
CLUBS
MASS
MERCHANDISERS MANUFACTURER
-OWNED
OUTLETS
SMALL
INDEPENDENT
TIRE DEALERS
LARGE
INDEPENDENT
TIRE CHAINS
OTHER
(Ex- FULL
SERVICE
STORES)

27. GOODYEAR’S
DISTRIBUTION
STRUCTURE

28. GOODYEAR’S INDEPENDENT
DEALERS
Sales organization for independent
dealers was organized into 28 districts,
each with a district manager and three
sales managers
Area sales manager made sure:
• Dealer orders were placed properly.
• Information provided about market trends.
• Advices offered on operations.
• Complaints are handled.
•In 1989, 70% of Goodyears
independent dealers carried
only Goodyear tires, while 30%
stocked other brands.
• In 1991, the estimates were
50-50.
Allowances:
• Wholesale allowance.
• Merchandising
allowance (1.5%).
• Advertising accruals
(4%).

29. PROMOTIONS
“Spring
Dating”
Core
Events
Unique
product
offerings

30. AUTO SERVICES
 Services sales $38,000 per month per
outlet
 Margins – 50% service labor & 20 to 25%
parts installed.
 Revenues – 70% service labor & 30%
parts.

31. COMPETITION
VS
• Better brand image among a group of
buyers.
• Wise spending on advertising and
promotion.
• Loyal customers.

32. AQUATRED TIRE

33. POP
 Quality radials.
 Precision handling.
 Large dealership network.

34. POD
 Safety (lowest stopping distance)
 Durability (60,000 miles >> Industry
average)
 Best wet traction.
 Appearance: New innovative and
contemporary design.

35. BCG MATRIX

37. OBJECTIVE OF
CASE STUDY

38. Should we
launch
Aquatred?

39. LAUNCH ISSUES
Is this the right
PRODUCT?

40. TREAD LIFE OF
60,000 MILES
SURVEY REVEALS:
CONSUMERS WERE
MORE LIKELY TO
REPLACE COMPETITIOR
TIRES
ONLY PRODUCT
OFFERING WET
TRACTION

41. LAUNCH ISSUES
PRICING &
PROMOTION?

42. Average selling price of a
tire by Goodyear’s
independent dealer - $75
Conclusion–Reduce the
price of the tire to add
some specific buyer
groups.
“Aquatred” was priced at
10% premium over Invicta
Gs.
Good year’s suggested
price higher than that
suggested by independent
dealers.
50% of the sales revenue
from Independent dealers

43. LAUNCH ISSUES
PRICING &
PROMOTION?

44. Is the decision taken by Goodyear to
launch Aquatred during winter
Olympics is right?
Yes
 Goodyear’s ads should sell “SAFETY” and not
just the tires.
 Aquatred should be promoted in heavy rainfall
regions of the country.
 Should give “Early bird discounts” to attract
customers and give service incentives.

45. LAUNCH ISSUES
REFORMATION OF
MARKETING
CHANNELS?

47. How to Expand independent
dealers?
TRAINING AND SUPPORT ACTIVITIES
FINANCIAL ASSISTANCE FOR NEW
ENTRANTS
FRANCHISE-TO-INDEPENDENT CERTIFICATION
PROCESS

49. How to Expand Wholesale
channels?
Only limited
stock to be
supplied
Limited
discounts
No
Incentives
Only to few
wholesalers

50. LAUNCH ISSUES
TIMING OF
LAUNCH?

51.  Launched during the Olympics.
 Early bird Advantage.
 Heavy promotions with ads.
 Organize contests between the
games.
 Opportunity to connect with huge
consumer base.

53. Michelin and Bridgestone launch products
earlier than expected. Then:
• Reevaluate Prices.
• Incentives to dealers for targeted sales.
Sales are lower than anticipated. Then:
• Reevaluate the value conveyed.
• Make use of wholesale channel.
• Use in OEMs.

55. TIRE
INDUSTRY
AQUATRED
TIRE
AUTO
SERVIC
ES
CUSTOME
R
SEGMENT
S
INSIGHTS ON

56. AQUATRED TIRE

57. Should we
launch
Aquatred?

60. These slides were created by Prateek
Rout, as part of an internship done
under the guidance of Prof. Sameer
Mathur (www.IIMInternship.com)