The document discusses Goodyear's plans to launch its new Aquatred tire. It proposes a $21 million budget to launch the tire during the Winter Olympics in January 1992. This would take advantage of the mass promotion and publicity of the Olympics. The launch plan focuses on value-oriented and quality customer segments. It recommends an integrated communication plan highlighting the tire's safety, trustworthiness and all-weather performance. Initial inventory should focus on domestic and imported mixes based on test market results. The plan also recommends using Goodyear's existing distribution channels and dealers while motivating other independent dealers to ensure consistent messaging across all touchpoints.

1. THE AQUATRED LAUNCH Panacea Ankit – 092104 Bhavin – 0821 Jayesh – 092120 Biju – 0821 Nigam – 082142

2. The Goodyear Rubber and Tire Company 41 plants in U.S. 43 plants Overseas 2,000 distribution word wide. Also known as “The Gorilla”. Around 1,05,000 employees Ranked Third in worldwide sales of new tires. Innovative in terms of technology ($1.5 b.) Marketing (Eagle Tires, Tiempo)

3. Performance Vs. Broad-line Tires Replacement Vs. OEM The Market For Passenger Tire More expensive Better traction. Less expensive Poor handling 25% of Goodyear’s unit Sales 30% of Dollar sales Higher percentages of profits. Less percentage of profits. Sold to Individual Consumers . Sold to Car manufacturers. 65% of Revenue 35% of Revenue Cut-through Competition Large Scope Market Leader (Rank 1; Mkt Share 38%)

4. Brand Classification The Market For Passenger Tire Major Brands Minor Brands Private Label 36% of unit sales. 24% of unit sales. 40% of unit sales. Highest recognition among consumers. Minor but well-recognized among consumers. Larger manufacturer used excess capacity to service private labels. Goodyear, Firestone, Michelin, Bridgestone, Pirelli and Goodrich. Dunlop, General, Kelly , Uniroyal, Cooper, Yokohama and Toyo. They carried names to particular retailers.

5. Channels Independent Dealers Strictly whole-sellers Retail Dealers Retail Owners 10 % 40 % 50 % Car dealers, service stations, small independent dealers Other dealers, secondary outlets Own retail outlets Wholesale Distribution Channels (percent of U.S. passenger tire replacement sales in units) Type of Outlet 1976 1981 1986 1991 Oil companies 9 5 3 2 Large retailers 24 20 16 19 Manufacturer-owned outlets 11 10 13 12 Independent dealers 56 65 68 67

6. Channels Retail Distribution – passenger tires Garage / service station Warehouse clubs Mass Merchandisers Manufacturer-owned outlets Small independent tire dealers Large independent tire chains Set-up Small Outlets Large Stores Large Retail space / chain Large Outlets One or two outlets Concentrated within geographic regions Outlets Neighborhood outlets less than 100 outlets Some hundreds less than 100 outlets Various 30-100 outlets Product / service offered Tires, gasoline, auto services Food ,clothing electronics ,tires ,hardware Only installation of tires Carried various types of merchandise. Performed auto services Tires Tires Tires Tires sold Private lab. / Branded Branded Various Branded / own brand One brand Start with a brand and add on later / private labels Private labels / Branded Players Many Sam’s, Pace, Price club, Costco Kmart / Sears /Wal-Mart Manufacturers : Goodyear / Michelin / Firestone Many Tire America, National Tire Warehouse, and Discount Tire. Strategy Low volume / Stiff competition from high volume players Deal based/ Low prices High Volume/ Low prices High Volume/ Low prices Low volume/ Stiff competition from high volume players High Volume/ Low prices

7. Goodyear’s Distribution Struct ure 4 channels of distribution : Independent dealers : Accounted for 50% of sales revenues through 4,400 outlets (2500 active selling full line of Goodyear tires) Manufacturer-owned outlets : Generated 27% of sales through 1,047 outlets Franchised dealers : 600 in total accounted for another 8% of sales Government agencies : 15% of sales Goodyear did not sell tires in garages/service stations, warehouse clubs, or mass merchandisers. However another private label of Goodyear “Kelly Springfield was sold by mass merchandisers” “ Just tires” a proposed new retail format of Goodyear planned to offer tires & fast oil change without appointment and guaranteed speed & quality of installation

8. Manufacturer-owned outlets : Greater control for opening / closing an outlet High associated demands for capital and management attention Some competition perceived by Independent dealer Converted some outlets into franchised dealerships. Independent Dealer Required owner to invest $100,000 and generate revenues of $1,000,000 pa. Sold an average of 15.5 tires/day, including both Goodyear and other brands of tires Most Goodyear dealers had majority of their sales from Goodyear tires - average selling price of $75 per tire. Margins : 28% averaged for independent dealers on Goodyear tires 25% for dealers carrying other major brands 20% for private label tires Average wholesale margins were 18% for private label tires and 14% for Goodyear tires Goodyear’s Distribution Struct ure

9. Sales Operation Company Owned Outlet 42 Districts (1 DM) 20 to 23 Stores each (1SM) Independent Dealers 28 Districts (1DM) Avg. 3 SM Services Expertise & Training GY Business Mgt. System National & Regional Adv. Research on Market Trend Certified Auto Service

10. Independent Dealers Auto Services Services sales $38,100 per month per outlet 26% (1980) to 48% (1991) 20% tries related work Margins 50% Services Labor 20% to 25% Parts installed Revenues 70% services Labor 30% parts

11. Independent Dealers Services provided were not free. Paid upon receipt, ordered in full trailer loads or purchased under occasional promotional programs. Allowance Wholesale Allowance Merchandising Allowance 1.5% Advertising Accruals 4%

12. Goodyear & Independent Deal ers 1989 70% only GY & 30% other brand also 1991 50% – 50% Aggressively merchandised other brands but GY generated 90% of the revenues. Independent dealers network better option Grow sales, expand brand availability & increase market share

13. Consumer Behavior

14. Consumer Behavior Tire Attributes Tread Life Wet Traction Handling Snow Traction Dry Traction Tire Criteria Price Offers Fast Service Can Trust Personnel Store is Attractive Offers Mileage Warranty Brand Selection Maintains Convenient Hours

15. Consumer Segments Type of Buyers Loyalty to Outlet Loyalty to Brand Shop Around Other Price Constrained LESS LESS MORE Best in their Budget Value Oriented LESS MAJOR BRANDS EXTENSIVELY Search for best prices Quality- Prestige MORE MORE LESS Best Tires. 65% Major Brand Quality - CC MORE LESS LESS 38% Major Brands Commodity- Bargain Hunter LESS LESS EXTENSIVELY YOUNG, PRICE Commodity- Trusting Patrons MORE LESS LESS Lower Price

16. Competition Intent to buy Major Brand Segments ? 36% (1982) TO 53% (1992)

17. Switching Among Brand 9%-11% of sales on adv. & promotion 60% on promotion 60% share of voice in TV & Magazines

18. Promotions 1. Estimated 75% of all Goodyear tires sold in independent or company-owned outlets were sold on promotion, at an average discount of 25%. Offered to the consumer by schemes like one free tire with the purchase of three tires, one tire for half price with purchase of another tire at full price, or 25% off the price of selected tires. 2. Promotions organized around “core events”—six 3-week periods spread throughout the year to buy merchandise at a discount. This was supported by radio, television, and print advertising announcing special prices on specific tire lines. 3. “Spring dating,” organized every spring , provided extended financing on tire orders to Goodyear dealers

20. Aquatred Different Design Performance & Consumer Preference Aquachannel Hydroplanning & Wet Traction 60,000 mile warranty Top in Broad Line

21. Test Market - Result Aquatred buyer were likely to replace competitors tires. Less Cannibalizing (GY 38-51) (M17-15) Information Search is extensive Braking the orientation (Brand 56-47) Uplifting Brand Equity Target Segments Value Oriented & Quality Buyer

22. Test Market - Result Detailing by Salesperson Absences of Integrated communication at Touch Point Details Aquatred Invicta GS 60 K mile Warranty 41% 10% Great Wet Traction 33% 38% Don’t tell any thing 13% 42% Won’t Hydroplane 16% 9% Other 29% 18%

23. The Launch of Aquatred A high profile nationwide launch of Aquatred was planned to have a strong impact on the market as it was a product which would revitalize the image of Goodyear in the market. An budget of $21 million Launch during the Winter Olympics in January 1992 was proposed to get an advantage of the mass promotion and mileage.

24. Launch Issues Right Product or not Timing Distribution Channel Initial Inventory Communication at Touch Point Pricing & Promotion

25. Team Recommendations Go-to Market Strategy Customers : Value-oriented & Quality buyers segment Communication Plan : Message : Highlight core value of safety , trust & reliability at all weather conditions. Place : Upcoming Olympics events on Jan-1992 through a video ad with above message. This needs to be backed up with : Radio Ads Teaser Ads to create inquisitiveness & awareness Billboards Press releases “ On Snow” Demo

26. Team Recommendations Initial Inventory Test Market Result have shown 74% buyers of Domestic 26% buyer of Imported

27. Team Recommendations Channel Strategy Use existing Independent Chain & manufacturing outlets Geographic spread of all contact points for maximum reach Design promotional incentive schemes for dealers . Motivate / train / facilitate other Independent dealers to promote Goodyear products (total 1900 dealers) Contact point integration to have same message (Training )at all touch-points.

28. DISCUSSIONS … Regards, Panacea