- Five tire companies once dominated the US tire market but faced decline due to foreign competition and rising costs. Radial tires with increased mileage replaced bias tires in the 1970s and 1980s. - The document discusses the US tire market in the 1990s, noting increased average mileage per tire, lower prices due to overcapacity, and consumers' lack of brand loyalty. It profiles Goodyear as the only remaining US company and discusses its new Aquatred tire. - Goodyear launched the Aquatred, positioned as an innovative radial tire with best-in-class wet traction and a 60,000 mile warranty. It was priced competitively at $89.95-$93.95 and marketed toward safety

3. • Five major companies based out of Akron, Ohio Dominated the
market from 1900s to 1970s
• Bias & Bias-belted tires were phased out by radial tires
• They lasted under 20,000 miles, by the early 1980s radials lasted
over 40,000 miles leading to decrease in frequency of tire change.
• Foreign competition reduced market share per company
• Rising oil prices led to increase in production-cost
• A number of mergers/acquisitions modified the industry

4. • Average life of a new tire rose from 28,600 miles in 1980 to
37,300 miles in 1991
• Annual miles travelled per passenger rising slowly 9,100 miles in
1980 to 10,600 miles in 1990
• The median retail price dropped by1991,the average retail price
was $75.00
• Tire-producing capacity outstripped demand U.S. tire-making
capacity rose 12% between 1987 and 1990; capacity utilization fell
from 87% to 76% during the same period.
• Led to a number of mergers/acquisitions modified the industry

5. • Important attributes ( tread life ,traction)
• Infrequent purchase (every 2.5 years)
• Significant dollar purchase (around $ 75 per tire plus
installation costs)
• High perceived risk (safety and security on long journeys)
1. In 1992, 53% of consumers did not know what tire they planned to buy
next (against 36% in 1982)
2. 75% of all Goodyear tires are sold on promotion at an average discount
of 25%, and 40% of replacement tires are private labels.
5

6. Distribution
Channels
Small
independent
dealers
(40%)
Garages /
Service Stations
(6%)
Large Tire
Chains (23%)
Mass
Merchandisers
(12%)
Manufacturer
owned stores
(9%)
Warehouse
Clubs (6%)

7. Independent dealers dominated the market

8. • Value price and outlet
Trusting Patrons and
Bargain Hunters
• Loyal to outlet and brand
• Search for preferred brand at
the best price
• Buy the best within the budget
• Little loyalty to brand

9. Performance
vs
broad-line
Major brands,
Minor brands,
Private label
Replacement
&
OEM tire

10. Consumers in the Replacement Passenger Tire Market
Goodyear also regularly surveyed car owners concerning the criteria they used
to select a 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

12. • 1 of the 5 to dominate the industry, only remaining US company
• Quick to convert to radial production
• Profits hurt by international competition & oil prices
• Strong track record of innovation
• Diversified in 1980’s but earnings were sluggish
• Goodyear ranked third in worldwide sales of new tires
• 1991 Stanley G Gault Sold indirect investments Prioritized on new
development.

14. Distribution
Channels
4400 Small
independent
dealers (50%
sales revenue)
Franchised
Dealers and
Govt.
Agencies
(20%)
Just Tires
(under
testing
phase)
1047
Manufacturer
owned stores
(30% sales)

16. • Reestablish Goodyear’s industry leadership and
reputation for product innovation, especially vis a vis
Michelin.
• less number of competitors in the high wet-traction,
broad-line tires segment, being the first to enter the
market with such products
• Refocus the dealers on product and away from the daily
tactical problems of manufacturer-dealer relations
• Motivate Goodyear’s sales staff and dealers

17. BARRY ROBBINS
(VICE PRESIDENT, MARKETING,
NORTH-AMERICA, GOODYEAR)
STANLEY GAULT
(CHAIRMAN, GOODYEAR)

18. Long buying cycles of auto manufacturers
Goodyear has major share in
US Replacement Tire Market (15%)
Aquatred would come through the replacement market not as
Original Equipment

20. 1

21. 2

22. 3

23. 4

24. 5

25. 1

27. • The Aquatred was developed after comparing 10 different
designs on performance and consumer preference .
• Aquatreds traveling at 55 miles per hour stopped in two-car
lengths-less distance
• Aquatred came with a 60,000-mile warranty and positioned tire
at the top of the broad-line segment.
• Compared with buyers of the Invicta GS, Aquatred buyers were
more likely to replace competitors’ tires.
• Consumers searched more extensively for information prior to
purchase of Aquatreds.

28. Majority of drivers believed Aquatred has a good wet traction.

30. • Quality Radials &
durability
• Precision Handling
• Large Dealership
• Network
• Safety (lowest stopping
distance)
• Durability (60,000
miles > Industry average)
• Best Wet Traction
• Appearance: New,
Innovative, &
Contemporary Design

31. 2

33. Distribution
Channels
4400 Small
independent
dealers (50%
sales revenue)
Franchised
Dealers and
Govt.
Agencies
(20%)
Just Tires
(under
testing
phase)
1047
Manufacturer
owned stores
(30% sales)

34. 30%
50%
20%
0%
Sales
MANUFACTURER
OWNED
SMALL INDEPENDENT
STORES
FRANCHISE
DEALERS/GOVT.
JUST TIRES

35. Small and Large Independent dealers have the majority share in retail sales
replacement passenger tires.

36. Independent dealers have always had the majority share in wholesale
replacement tire market

37. • 50% of Goodyear’s independent dealers sold only Goodyear tires,
while the other 50% stocked at least one other brand.
• Among the latter, some merchandised other brands but Goodyear
tires still generated 90% of the revenues
• Three-fourths of all Goodyear tires sold in independent or company-
owned outlets were sold on promotion, at an average discount of
25%.

39. 3

40. Aquatred Invicta GS

41. Price, then brand Extensive Moderate
( s/to price)
Very low
Brand, then price Extensive High Very low
Brand, outlet
Outlet, brand
Brief
Brief
Very high
Mod. to low
Mod. to high
Very high
Price
Outlet
Extensive
Brief
Low
Low
Low
Very high

42. 18+23=41% of total customers (value-oriented +quality customers) prefer major brands over
Minor or private labels

44. 4

45. 4

46. 5

48. Proposed Aquatred Advertisement
TV AD focuses on advanced design and emphasizes on wet traction to appeal to the
quality ,safety and value-oriented customers

50. Consumers showed more interest in Aquatred
Invicta GSAquatred

51. Suggested retail price in Aquatred test market $90
Goodyear’s suggested retail prices for the Aquatred were $89.95 with a black sidewall,
and $93.95 with a white sidewall.

52. Suggested retail price in Aquatred test market $90