good year
TRANSCRIPT
CASE STUDY GOODYEAR : The Aquatred Launch
EKTA KOTAK - 98
MIHEER MOGHE - 95
AMRUTA VADHAVKAR - 97
SURBHI GANDHI - 85
MANAS SHAH - 91
PARAS MEHTA - 80
SHRIKUNJ SONI - 83
RANJANA HOUSNUR - 89
ASIF MAHMOOD - 99
RAJA FERNANDO - 84
INTRODUCTION• HISTORY
• TAKE OVER
• INTEREST PAYMENTS
• 1991 Stanley G Gault
• INNOVATIVE
ASSESS GOODYEAR’S POSITION IN TIRE INDUSTRY?
• POSITION IN WORLDWIDE SALES
• OPERATED 84 PLANTS- 41 PLANTS IN U.S,43 PLANTS IN 25 OTHER COUNTRIES, SIX RUBBER PLANTATION, AND MORE THAN 2OOO DISTRIBUTION OUTLETS.
• INVESTMENTS – $1.5 BN
• 105000 EMPLOYEES
• NATURAL GAS & OIL TRANSMISSIONS
• STRONG IMAGE IN PRICE FOCUSED CUSTOMERS
• BRAND LOYAL CUSTOMERS
1975 1980 1985 1990 1991
Replacement Market( includes larger brands only)
Good year 14% 14% 15.5% 15% 15%
Michelin 2.5 7.0 8.0 8.5 8.5
Firestone 10.5 10.0 9.5 8.0 7.5
Sears 10.0 10.0 9.0 6.5 5.5
General 2.0 3.0 2.5 4.0 4.5
Bridgestone 0 2.0 2.0 3.0 3.5
Copper 1.0 1.5 2.5 3.0 3.0
Kelly 3.0 4.0 3.0 3.0 2.5
Uniroyal 3.5 3.5 3.0 3.0 2.5
Dunlop 2.5 2.5 2.5 2.5 2.0
Pirellis 0 0 1.0 2.0 2.0
others 42.5 34.0 35.0 35.5 37.5
Brands replaced Bridgestone firestone Good year Michelin minor Brands
Private label
total
Bridgestone 29 4% 8% 8% 7% 43% 100
Firestone 2 27 11 6 7 45 100
Goodyear 2 5 39 5 9 38 100
Michelin 3 3 7 44 6 36 100
Minor brands 2 4 10 7 32 42 100
Private labels 2 5 8 5 7 70 100
HOW DO CONSUMERS BUY TIRES?• GRUDGE PURCHASE
• AVG. TIME BETWEEN PURCHASE IS 2.5 YRS.
• PURCHASE OF TIRES BY CONSUMERS
• GREATER IMPORTANCE TO PRICE
Sales
1 TIRE
2 TIRE
3 TIRE
4 TIRE
TYPES OF CONSUMER
QUALITY CONCIOUS-18 %• Quality & Performance AttributesTREAD LIFEWET TRACTIONHANDLINGSNOW TRACTIONDRY TRACTION•Michelin image was stronger
VALUE CONSCIOUS-23%• Quality & Performance AttributesTREAD LIFEWET TRACTIONHANDLINGSNOW TRACTIONDRY TRACTION•Michelin image was stronger
PRICE FOCUSSED-59%• Treated tire as a commodity purchase •3 /4 of goodyear tires are sold on promotion•Goodyear image was stronger
Brand image of major tire manufacturer, 1991
All buyers Value conscious Quality conscious
Price focused buyers
Good year 15% 17% 15% 14%
Michelin 15 25 26 7
Others 19 19 24 17
Uncommitted 51 39 35 62
Individual customers
Account for 65% of revenue
$8.6BN IN US SALES
Distinction between Performance and broad
line ties
Market segmentation
Replacement and OEM Brand Classification Replacement and OEM Brand Classification
Performance Broad line
Wider
Better Traction
More Expensive
accounts for 25%of sales
Lesser Wide
Lesser Traction
Inexpensive
Distinction between Performance and broad
line ties
Car Manufacturers
Accounts for 35% of revenue
Replacement OEM Major Brands Minor BrandsPrivate label
Brands
Major tire manufacturers
Accounts for 36% of sales
High brand loyalty among the customers
Small manufacturer
Accounts for 24%of unit sales
High price niche segment brands
Very small manufacturers
Accounts for 40% of market
One distributor /territory
1991:80% of sales
Lower price and lower life
Warranty given by retailers
Share of retail sales of replacement tires by channel ( U.S market only)Channel share of retail sales
1976 1981 1986 1991
GARAGES/ SERVICE STATION
18% 11% 8% 6%
SMALL INDEPENDENT TIRE DEALERS
36 47 46 40
MANUFACTURER-OWNED OUTLETS
11 10 11 9
WAREHOUSE CLUBS 0 0 2 6
MASS MERCHANDISER
28 24 16 12
LARGE TIRE CHAINS 4 2 12 23
OTHERS 3 6 5 4
TOTAL 100% 100% 100% 100%
OEM Market 1975 1980 1985 1990 1991
Good year 35% 28% 32% 36% 38%
Michelin 2 5 11 16 16
Firestone 24 22 22 17 17
General 11 11 13 12 11
Uniroyal 20 24 22 17 13
Dunlop 0 10 0 1 3
Bridgestone 0 0 0 1 2
Growth strategy • In this case study Goodyear is using 2 growth strategies
• 1) market penetration strategy
• Goodyear is striving to increase the sale of the current products in the current markets through following ways
• Increase sales to the current customers
• Pull customers from the competitors’ products
• Convert non-users into users
2) Product development strategy: Goodyear is able to increase sales by product improvement and by
introducing New products. For example- Aquatred tires which has better wet traction and performance as compared to its competitors
ASSSES THE EVOLUTION OF GOOD YEAR’S DISTRIBUTION CHANNELS IN REPLACEMENT
MARKET
• 4,400 SMALL INDEPENDENT DEALERS (50% OF SALES
• REVENUE)
• 1047 MANUFACTURER OWNED OUTLETS (30% OF SALES)
• FRANCHISED DEALERS AND GOVT. AGENCIES
• JUST TIRES
• BY 1983, COMPANY OWNED 1300 OUTLETS
• EMPHASIS ON FRANCHISING NEW OUTLETS
• CONVERTING OWN OUTLETS INTO FRANCHISED AND INDEPENDENT DEALERSHIP
• RETAIL MARGINS-28% AND WHOLESALE MARGIN- 14%
• GOODYEAR’S SERVICE TO INDEPENDENT DEALERS
GOODYEAR’S DISTRIBUTION CHANNEL IN REPLACEMENT
MARKET SERVICES GIVE MORE REVENUE THAN SELLING TIRES. COMPLAINTS OF DEALER IN 1989, 70% OF GOODYEAR’S INDEPENDENT DEALERS CARRIED
ONLY GOOD YEAR TIRES. GENRATED 90% OF REVENUES FOR MOST INDEPENDENT DEALERS NTDRA TO PASS A BILL OF RIGHTS IN 1992 LOW PRICE OULETS WERE NOT ALLOWED TOSELL GOODYEAR
TIRES, BUT STILL THEY CONTINUED SELLING AT LOWER PRICESGOODYEAR SUED TWO AUTOMOTIVE CHAINS FOR ADVERTISING THEIR BRANDS.
Aquatred Launch
• Better wet traction, better tread life, good friction.• Managers concern at Goodyear• Expanding distribution channel• Launch related issues
SOLUTION
• Launch the new Aquatred tire, but keep distribution the same.
Pros : Less complex, support of independent dealers, No risk of eroding Goodyear brand name.
Cons : Miss opportunity to boost sales, No answer for OEM replacements by other brands.
• Push Aquatred tire aggressively in market, expand distribution, set uniform pricing structure, inform buyers,
Thank you