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(MBASkills.IN) Good Year
Goodyear, established in 1898, faced significant channel conflict leading to a decline in profits and dealership stagnation from the 1990s to 2000s. The conflict arose from discount retailing practices that undermined dealer sales, prompting corrective measures such as product exclusivity and collaboration with dealers for promotions. Key issues included poor quality products and pricing inconsistencies, but Goodyear's restructuring efforts helped to stabilize its dealer network and improve brand reputation.
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(MBASkills.IN) Good Year
- 1. Goodyear’s Partnering Lessons Prepared by:Ayush Trivedi (PGP31017) Under the expert guidance of: Prof. Sameer Mathur
- 2. • American Multinationaltire company established in the year 1898 • Manufactures products in 50 facilities in 22 countries • Known for product Innovation
- 4. “IF IT”S NOTGOOD YEAR, GOOD LUCK” campaign by the company to increase its appeal among consumers and to enhance its brand association to safety”
- 5. “Goodyear “be thefirst” campaign to associate itself with victory and associate its brand to victory”
- 6. GOODYEAR’S FAMOUS BLIMPADVERTISING
- 7. Goodyear’s made tofeel campaign video ad Goodyear’s Made to feel good video Ad
- 8. The Happy years:1970s & 1980s Goodyear managed the top tire reseller network in the 1970s & 1980s and earned dealer loyalty through • Competitive prices • On time delivery • Visible Marketing efforts • Good quality products
- 10. Sales slumped 14% During1990s & 2000s Revenue loss of $550 Million Stagnation in No. of distributors for the past 6 years “All this when category sales grew and a major competitor was forced to recall 6.5 million tires”
- 12. REASON: CHANNEL CONFLICT Whatis Channel Conflict? Channel conflict is a situation in which channel partners have to compete against one another or the vendor's internal sales department. Channel conflict can cost a company and its partners money as partners try to undercut one another. It can also lower morale within the channel and cause some partners to consider other vendors
- 13. Types of ChannelConflicts • Among channel partners at different levels • Producers may annoy wholesalers or retailers when they try to bypass these intermediaries Vertical • Results from disagreements among partners at the same level • Causes tension between different intermediaries that handle similar products Horizontal • When manufacturer establishes two or more channels • For example- sale of same goods through retailers and through e-commerce channels Multi-channel
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- 15. How to solveChannel Conflicts • Consultation with Channel Partners • Consultation with Employees • Exchange of Employees • Diplomacy, Mediation and Arbitration • Coherent Goals • Co-potation • Clearly formulated contracts • Legal Recourse
- 16. Channel Conflict atGoodyear •Company started offering products to discount retailers at bulk discounts •Broke the promise of not selling through discount retailers •At times, smaller individual dealers had to pay as much as customers could pay at discount retailers “Smaller retailers started stocking other brands which impacted the sales of Goodyear”
- 17. Goodyear’s Missteps •Pressure ondealers to buy more tires than need •Uneven pricing with prices changing every month •Poor quality products “All this led to stagnation in the dealership strength of Goodyear which stayed at 5,300 for 6 consecutive years”
- 19. Corrective Actions taken •Company launched its new tire range Assurance through its authorized retailers only • The company started collaborating with dealers for in-store promotion • Company started compensating manufacturers for specialized marketing undertaken • Care was taken to ensure minimum price fluctuations
- 20. Summary 1970s-1980s Goodyear’s Happy years What isChannel conflict and its types? 1990s-2000s Decline in profit and stagnation in dealership count How to solve the problem of Channel conflict? Reason Channel Conflict How Goodyear solved the problem 1 4 2 5 3 6
- 21. Created by AyushTrivedi during Brand Management course of Second Year of PGP taken by Prof. Sameer Mathur, IIM Lucknow (See www.IIMInternship.com) Prof. Sameer Mathur, IIM Lucknow DISCLAIMER