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GOODYEAR CASE-STUDY
Goodyear is launching a new high-traction tire series called Aquatred to establish itself as an innovative tire manufacturer. It is considering expanding distribution channels and the risks and benefits of launching Aquatred. Goodyear hypothesizes that launching Aquatred, with some changes, could help revitalize the company due to its brand strength, loyal customer base, and the product's advantages over competitors in the wet-traction segment. However, Aquatred is currently overpriced and expanding independent dealers or mass-merchandisers could help reach more customers. Launching during the upcoming Winter Olympics may boost sales through heavy promotion relating Aquatred to safety. Alternatives will depend on the launch's success or
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Introduction to the case study on Goodyear's product launch, Aquatred, highlighting its aim as a high-traction tire series.
Analysis of Goodyear's current situation, including industry challenges like low demand and high competition affecting the market.
Important questions related to the protagonists, current industry situation, competitors, and distribution channels relevant to the case study.
Key figures in Goodyear's launch strategy: Barry Robbins and Stanley Gault as main protagonists.
Details on Goodyear's main competitors and various distribution channels relevant for the new product.
Justifications for Goodyear's decision to launch Aquatred, leveraging its market strength and brand loyalty.
Analysis of brand switching risks to private labels and the characteristics of price-constrained and commodity buyers.
Shifts in consumer buying behavior, indicating a change in quality versus price-oriented buyer composition.
Market positioning of Aquatred with a 60,000-mile warranty and anticipated performance benefits over competitors.
Concerns regarding Aquatred's pricing compared to competitors, pointing towards overpriced positioning and potential price promotions.
Discussion on strategic distribution approaches for effective market reach, focusing on independent dealers and mass-merchandisers.
Timing the Aquatred launch around the Winter Olympics for maximum exposure and promotional efforts to enhance brand visibility.
Potential alternatives that Goodyear might consider depending on the success or failure of the product launch.
Conclusion of the presentation credits the author and the educational institutions involved in the case study.
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GOODYEAR CASE-STUDY
- 1.
- 2. WHAT IS THISCASE STUDY ABOUT?
- 3. THIS CASE-STUDY ISABOUT THE DILEMMAS OF MAJOR TIRE MANUFACTURER GOODYEAR’S NEW PRODUCT LAUNCH
- 4. WHAT IS THENEW PRODUCT ? AQUATRED (High-Traction tire series)
- 5. Situation Analysis Questions Hypothesis Proof and Action Alternatives WORK-FLOW FOROUR CASE STUDY ANALYSIS
- 6.
- 7. GOODYEAR IS ONEOF THE MAJOR TIRE MANUFACTURERS IN THE U.S. AND THE COMPANY NOW WANTS TO LAUNCH A NEW TIRE SERIES AIMED AT PROVIDING HIGH-TRACTION TIRES TO THE CONSUMERS AND ESTABLISH ITSELF AS AN INNOVATIVE TIRE MANUFACTURER.
- 8. SOME POINTS TOPONDER… • INDUSTRY GROWTH HASN’T BEEN TOO GOOD IN THE PAST FEW YEARS DUE TO LOW DEMAND. THE MAIN REASONS OF LOW DEMAND INCLUDE INCREASED OIL PRICES AND INCREASED AVERAGE LIFE OF NEW TIRES • A SHARP DECLINE OF TIRE PRICES – 25%, HAS BEEN OBSERVED IN THE PAST DECADE DUE TO INCREASED COMPETITION • LOW CAPACITY UTILIZATION AND HIGH TIRE-MAKING CAPACITY
- 9. • GOODYEAR’S CONTEMPLATIONOF UPCOMING LAUNCH OF AQUATRED TIRES. • RISK AND BENEFIT ANALYSIS OF EXPANDING COMPANY’S DISTRIBUTION CHANNEL
- 10.
- 11. • WHO ARETHE MAIN PROTAGONISTS? • WHAT IS THE CURRENT SITUATION IN TIRE INDUSTRY? • HOW IMPORTANT IS THE ROLE PLAYED BY VARIOUS DISTRIBUTION CHANNELS? • WHO ARE THE MAIN COMPETITORS ? • HOW IS THE NEW PRODUCT DIFFERENT FROM OTHER PRODUCTS OF THE COMPANY? • WILL THE LAUNCH OF THE NEW PRODUCT BE HELPFUL TO REVITALIZE GOODYEAR?
- 12. MAIN PROTAGONISTS ARE BARRYROBBINS (VICE PRESIDENT, MARKETING, NORTH-AMERICA, GOODYEAR) STANLEY GAULT (CHAIRMAN, GOODYEAR)
- 13.
- 14. WHAT ARE THEMAIN DISTRIBUTION CHANNELS? Wholesalers Oil Companies Large-retailers Manufacture-owned outlets Independent dealers Retailers Garages/ Service stations Warehouse clubs Mass-merchandisers Manufacturer-owned outlets Small Independent tire dealers Large independent tire chains
- 15.
- 16. GOODYEAR SHOULD TAKE ACHANCE WITH AQUATRED WITH SOME CHANGES IN ITS LAUNCH STRATEGY BECAUSE…
- 17.
- 18. GOODYEAR HAS ASTRONG TRACK RECORD IN DEVELOPING INNOVATIVE PRODUCTS LAUNCH OF GOODYEAR’S FIRST ALL SEASON TIRE, TIEMPO IN 1977 WAS SUCCESSFUL SUCCESSFUL LAUNCH OF EAGLE (HIGH-SPEED TRACTION) TIRES IN 1981
- 19. GOODYEAR HAS BEEN“THE GORILLA” (MAJOR PLAYER) IN TERMS OF MARKET SHARE OF REPLACEMENT TIRE MARKET AND AQUATRED WILL BE A PART OF THE REPLACEMENT SERIES
- 20. GOOD YEAR HASALAR LOYALCUTOMER BASE, SECOND ONLY TO MICHELIN
- 21. HERE IS THEPROOF… Major threat to this loyalty is brand switching to Private Labels but if we look at the numbers carefully, the stats aren’t as disturbing for Goodyear and Michelin as it is for other major players.
- 22. CAN SWITCHING TO PRIVATE LABELSBE CONTROLLED ? IT MIGHT NOT BE IMPOSSIBLE, BUT IT IS SURELY VERY DIFFICULT BECAUSE THE AVERAGE RETAIL PRICE OF A PRIVATE LABEL TIRE IS 18% LESS THAN THE BRANDED TIRES.
- 23. GOODYEAR HAS A STRONGERIMAGE ,COMAPRED TO MICHELIN, AMONG PRICE- CONSTRAINED BUYERS AND COMMODITY BUYERS
- 24. WHO ARE THESEPRICE-CONSTRAINED AND COMMODITY BUYERS? BOTH THESE BUYERS ARE PRICE CONSCIOUS AND PREFER LOWER PRICE BOTH THESE BUYERS SHOP AROUND MORE THAN QUALITY BUYERS AND VALUE ORIENTED BUYERS THEY POSSESS LOW BRAND LOYALTY
- 25. PROOF OF THEFACT THAT GOODYEAR HAS A STRONGER IMAGE AMONG COMMODITY BUYERS AND VALUE-ORIENTED BUYERS
- 26. CHANGES IN THEMINDSET OF CONSUMERS • IN THE PAST FEW YEARS, THERE HAS BEEN A 4% INCREASE IN THE NUMBER OF COMMODITY BUYERS AND ONLY A SLIGHT DECREASE IN THE PRICE- ORIENTED BUYERS (CONSIDERING THE INITIAL SHARE OF SUCH BUYERS-48%) • ON THE OTHER HAND, THERE HAS BEEN A 4% DECREASE IN THE QUALITY BUYERS
- 27.
- 28.
- 29. LESS NUMBER OF COMPETITORSIN THE HIGH WET- TRACTION, BROAD-LINE TIRES SEGMENT
- 30. WITH NEW PERFORMANCEAND DESIGN CHANGES BASED ON CONSUMER PREFERANCES, AQUATRED IS EXPECTED TO HAVE TANGIBLE AND PERCEPTIBLE ADVANTAGES OVER OTHER EXISTING MODELS.
- 31.
- 32. WILL THE PEOPLEBE READY TO PAY A HIGH AMMOUNT FOR A HIGH WET-TRACTION SERIES WHEN THEY HAVE THE OPTION OF BUYING TIRES WHICH PROMISE HIGHER DISTANCE WARRANTY AT A LOW PRICES?
- 33. YES, IF TEST-MARKET SURVEY ISTO BE BELIEVED
- 34. UNLIKE OTHER GOODYEAR PRODUCTS, THE CUSTOMERBASE OF AQUATRED TIRES IS DOMINATED BY QUALITY BUYERS AND VALUE- ORIENTED BUYERS
- 35. AQUATRED CUSTOMERS ARE MORE LIKELYTO REPLACE COMPETITOR’S TIRES
- 36. AQUATRED BUYERS SEARCHED MORE EXTENSIVELYFOR INFORMATION PRIOR TO PURCHASE AND ARE EXPECTED TO VALUE THE ADVANTAGES OF HIGH WET-TRACTION
- 37. IS THE COMPANY PRICINGTHE PRODUCT RIGHTLY?
- 38. RESULTS OF “MYSTERYSHOPPING” IN AQUATRED TEST MARKET Above shown are the prices quoted by six different outlets during a mystery shopping exercise in the test market. Goodyear’s suggested retail prices for the Aquatred were $89.95 with a black sidewall, and $93.95 with a white sidewall.
- 39. THE PRODUCT IS CERTAINLY OVERPRICEDAND HENCE, PRICE PROMOTIONS ON AQUATRED IS A GOOD OPTION
- 40. WHAT SHOULD BETHE IDEAL DISTRIBUTION CHANNEL? “THERE IS NOTHING CALLED IDEAL AND ONE HAS TO CONSTANTLY JUGGLE BETWEEN THE OPTIONS TO REACH AN OPTIMUM LEVEL OF SATISFACTION”
- 41. THE COMPANY CANEITHER… EXPANDING INDEPENDENT DEALERS (MAIN REVENUE GENERATOR) EXPANDING NEW FORMATS LIKE MASS-MERCHANDISER, WAREHOUSE CLUB & SERVICE STATIONS FOR MORE REACH AND VISIBILITY OF THE PRODUCT • FINANCIAL ASSISTANCE TO NEW ENTRANTS • TRAINING AND SUPPORT REQUIRED • LIMITED DISCOUNT NEEDS TO BE PROVIDED • LIMITED STOCK SHOULD BE PROVIDED (ELSE IT WILL START BOTHERING INDEPENDENT DEALERS)
- 42. WHAT SHOULD BETHE IDEAL TIMING FOR THE LAUNCH ?
- 43.
- 44. GOOD CHANCE TOREACH LARGE CUSTOMER BASE NEEDS TO SPEND HEAVILY ON ADVERTISEMENT AND PROMOTIONS (GOOD YEAR NEEDS TO RELATE ITSELF TO THE OLYMPICS THROUGH ITS ADVERTISEMENTS) HEAVY PROMOTIONS THROUGHOUT THE OLYMPICS EVENT CAN BE A BIG BOOSTER TO SALES
- 45. IT NEEDS TO PROMOTESAFETY AND COMFORT IT SHOULD MAKE PEOPLE UNDERSTAND THE VALUE OF HIGH WET-TRACTION
- 46.
- 47. ALTERNATIVES COULD BE THOUGHT OF DEPENDINGON THE FAILURE OR SUCCESS OF THE LAUNCH
- 48. IN CASEOF A FAILURE, THE COMPANY NEEDS TO THINK ABOUT ITS EXPANSION MEDIUM (BETTER USE OF WHOLESALE CHANNELS) THE COMPANY SHOULD LOOK TO FORRAY INTO OEM MARKETS TOO PRICING WILL ALSO A PLAY A MAJOR PART DEPENDING ON WHETHER OR NOT THE COMPETITORS COME UP WITH A SIMILAR PRODUCT AT A LOWER PRICE THE COMPANY WILL NEED TO RETHINK ABOUT THE VALUE THAT IS CONVEYED TO THE CUSTOMERS THROUGH ADVERSTISMENTS AND OTHER FORMS OF MARKETING
- 50. Created by AkashYadav, IIT Kharagpur, during an internship by Prof. Sameer Mathur, IIM Lucknow. www.IIMInternship.com