case study of goodyear : the aquatred launch

1. Goodyear : The Aquatred
Launch

2. HISTORY
• TRADITIONALLY HUGE MARKET SHARE
• 41 PLANTS IN U.S AND 43 PLANTS OVERSEAS
• 2000 DISTRIBUTION WORLDWIDE
• AROUND 1,05,000 EMPLOYEES
• FOREIGN MARKET SHARE ROSE FROM 8 % IN 1972 TO 22% IN
1990

3. The market for Passenger
Tires
PERFORMANCE BROADLINE TIRES
Better traction Poor handling
30% of dollar sales
25% of Gooodyear’s unit sales
Higher percentage of profits
Less percentage of profits
More expensive Less expensive

4. The Market for Passenger Tires
65 % REVENUE
35% REVENUE
Replacement Vs OEM
SOLD TO INDIVIDUAL CUSTOMERS
SOLD TO CAR MANUFACTURERS

5. The Market for passenger tires
BRAND CLASSIFICATION
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
Large manufactures use
excess capacity to service
private labels
Goodyear , Firestone ,
Michelin , Bridgestone ,
Pirelli and goodrich
Dunlop , General , kelly ,
uniroyal , cooper
They carried names to
particular retailers

6. Goodyear’s Distribution
Structure
4 CHANNELS OF DISTRIBUTION
• INDEPENDENT DEALERS : ACCOUNTED FOR 50 % OF SALES REVENUES
THROUGH 4400 OUTLETS ( 2500 ACTIVE
• MANUFACTURER-OWNED OUTLETS : GENERATES 27 % OF SALES
THROUGH 1047 OUTLETS
• FRANCHISED DEALERS : 600 IN TOTAL ACCOUNTED FOR ANOTHER 8
% OF SALES
• GOVERNEMENT AGENCIES : 15 % OF SALES

7. SALES OPERATION
COMPANY OWNED OUTLET INDEPENDENT DEALERS
42 DISTRICTS ( 1 DM ) 28 DISTRICTS ( 1 DM )
20 TO 23 STORES EACH (1 SM ) AVG. 3 SM
• SERVICES
1. Expertise & Training
2. GY business mgt. System
3. National & regional advantage
4. Research on market trend
5. Certified Auto service

8. INDEPENDENT DEALERS AUTO
SERVICES
• SERVICES SALES $38,100 PER MONTH PER OUTLET
1. 26 % ( 1980 ) to 48 % ( 1991 )
2. 20 % tries related work
• MARGINS
1. 50 % service labor
2. 20 % to 25 % parts installed
• REVENUES
1. 70 % service labor
2. 30 % parts

9. Goodyear & independent Dealers
• 1989
 70 % only GY & 30 % other brand also
• 1991
 50 % - 50 %
 Aggresively merchandised other brands but GY generates 90 % of the
revenues
• INDEPENDENT DEALERS NETWORK BETTER OPTION
 Grow sales , expand brand availability & increase market share

10. CONSUMER SEGMENTS
TYPES OF BUYERS LOYALTY OF
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 BRANDS
QUALITY - CC MORE LESS LESS 38 % MAJOR
BRANDS
COMMODITY –
BARGAIN HUNTER
LESS LESS EXTENSIVELY YOUNG,
PRICE
COMMODITY –
TRUSTING
PATRONS
MORE LESS LESS LOWER PRICE

11. SWITCHING AMONG BRANDS
• 9%-11% OF SALES ON ADV. & PROMOTION
• 60 % SHARE OF VOICE IN TV & MAGAZINES
BRAND
REPLACED
BRIDGESTON
E
FIRESTONE GOODYEAR MICHELIN MINOR
BRANDS
PRIVATE
LABEL
BRIDGESTON
E
29 4 8 8 7 43
FIRESTONE 2 27 11 6 7 45
GOODYEAR 2 5 39 5 9 38
MICHELIN 3 3 7 44 6 36
MINOR
BRANDS
2 4 10 7 32 42
PRIVATE
LABEL
2 5 8 5 7 70

12. PROMOTIONS
1. ESTIMATED 75 % OF ALL GOODYEAR TIRES SOLD IN INDEPENDENT OR COMPANY – OWNER
OUTLETS WERE SOLD ON PROMOTION AT AN AVERAGE DISCOUNT OF 25 % .
2. PROMOTIONS ORGANIZED AROUND “ CORE ELEMENTS “– SIX 3 WEEK PERIODS SPREAD
THROUGHOUT THE YEAR TO BUY MERCHANDISE AT A DISCOUNT . THIS WASSUPPORTED 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 GOOD YEAR DEALERS.

13. SHOULD WE LAUNCH
AQUATRED ?

14. RESULTS OBSERVED
• AQUATRED BUYERS WERE LIKELY TO REPLACE COMPETITOR TIRES
• LESS CANNIBALIZING ( GOODYEAR 38-51 & MICHELIN 17-15)
• BREAKING THE ORIENTATION ( BRAND 56-47 )
1. Uplifting brand equity
• TARGET SEGMENTS
1. Value oriented& quality buyer

15. RESULTS OBSERVED
• FEATURES TOLD BY THE SALESPERSON
Details Aquarted Invicta GS
60 k mile warranty 41% 10%
Great wet traction 33 38
Didn’t mention them 13 42
Won’t hydroplane 16 9
Other 29 18

16. The launch of Aquatred
• A HIGH PROFILE LAUNCH OF AQUARTED WAS PLANNED AS IT
WAS ESSENTIAL FOR REVITALIZING THE NAME OF GOODYEAR
TYRES IN THE MARKET
• FULL SCALE BUDGET FOR LAUNCH : $21 MILLION
• GOOD YEAR MADE COMMITMENTS FOR COMMERCIAL TIME
DURING THE WINTER OLYMPICS IN JANUARY 1992 TO GET AN
ADVANTAGE OF MASS PROMOTION

17. Issues faced on
launching
• TIMING OF LAUNCH
• RIGHT PRODUCT OR NOT
• DISTRIBUTION CHANNEL
• PRICING AND PROMOTION
• INITIAL INVENTORY

18. Recommendations
GO- TO MARKET STRATEGY
• CUSTOMERS : VALUE ORIENTED AND QUALITY BUYER SEGMENT
• COMMUNICATION PLANS
a. Message : Highlight core values of safety , trust and reliability on all season
b. Place : Upcoming Olympics events on jan – 1992 through a video ad with above
message
In addition other strategies are required
1. Radio ads
2. Teaser ads
3. Billboards
4. Press releases
5. “On snow “Demo

19. Recommendations
• INITIAL INVENTORY
- TEST MARKET RESULTS SHOW
- 74 % BUYERS OF DOMESTIC
- 26 % BUYERS OF IMPORTED

20. Recommendations
CHANNEL STRATEGY
• USE EXISITING INDEPENDENT CHAIN & MANUFACTURING OUTLETS
• GEOGRAPHIC SPREAD OF ALL CONTACT POINTS FOR MAXIMM REACH
• DESIGN PROMOTIONAL INCENTIVE SCHEMES FOR DEALERS
• MOTIVATE OR TRAIN OTHER INDEPENDENT DEALERS TO PROMOTE GOODYEAR
PRODUCTS ( TOTAL 1900 DEALERS )
• CONTACT POINT INTEGRATION TO HAVE SAME MESSAGE AT ALL TOUCH- POINTS

22. CREATED BY ELDHOSE
ALIAS , MEC ERNAKULAM
,DURING AN INTERNSHIP
BY PROF . SAMEER MATHUR
, IIM LUCKNOW
www.IIMInternship.com