good year the aquatred launch
TRANSCRIPT
The Aquatred Launch
Case Study..
What isGOODYEAR
?
The Goodyear Tire & Rubber Company is a global manufacturing company founded in 1898 by Frank Seiberling and based in Akron, Ohio. It manufactures tires for automobiles, commercial trucks , light trucks, SUVs, race cars, airplanes, farm equipment and heavy earth-mover machinery. Since the early days of the tire industry, The Goodyear Rubber and Tire Company had been known as “The Gorilla” for its dominance of the world tire industry.
The Tire Industry in the..
United States
Goodyear
Firestone
Uniroyal
BF Goodrich
General Tire
5 Leading brands !!
In the 1970s and 1980s,the US Tire industry experienced
Important changes
1.Emergence of ‘radial’ tires to replace older ‘bias’ tires.
Radial lasted 40,000 miles in comparison to 20,000 miles of bias.
Radial share unit sales in US passenger tire market increased from 32% to over 95%.
2.Increased foreign competition
Imported passenger tires represented 8% in 1972, 12%
in 1982 and 22% in 1990 in the US passenger tire market.
3.Nature of demands from consumers and car makers
In 1970, the rise in price of oil, caused consumers to drive less.
Seven gallons or oil and derivatives required for making tire led to increased cost of manufacturing
What was the
IMPACT ?
1.Demand for passenger tires grew sluggishly.
2. New tire prices in the U.S. market declined.
3. Tire producing capacity outstripped demand.
4. A large number of mergers and acquisitions between various brands
What was the scenario of market for
passenger tires?
The Market was segmented in ways:3
1. Segmentation based on distinction between performance and broad-line tires.
2. It was based on replacement and OEM tires.
3. It was also based on brand classification, which included major and minor brands and private labels.
What is Consumer behaviour
towards tires?
According to consumers-“Tires are ‘grudge
purchases’- an expensive necessity to keep the
vehicle in driving condition.”
Survey results by customers highlighted the following things while
purchase:1.Price2.Offers fast service3.Can trust personnel4.Store is attractive5.Offers mileage warranty6.Brand selection7.Maintains convenient hours
Consumer SegmentsPrice constrained buyers
Buy best brand they could afford
Value oriented buyersPreferred brand at best
priceQuality buyers
Loyal to outlet and brandCommodity buyers
Value price and outlet
What are retail distribution channels?
6 major retail channels competed in US for market share-
1.Garages/service stations2.Warehouse clubs3.Mass merchandisers4.Manufacturer-owned outlets5.Small independent tire dealers6.Large independent tire dealers
Goodyear did not sell tires in garages/service stations,
warehouse clubs or mass merchandisers; instead, the
company relied on three types of outlets. Goodyear’s 4,400 independent dealers accounted for 50% sales of revenues, while the 1,047
manufacturer-owned outlets generated 27% of sales, and the 600 franchised dealers
accounted for another 8% of sales.
It was estimated that the 3/4th of all Goodyear tire sold in independent or company
owned outlets were sold on promotion, at and average
discount of 25%.
Independent dealers in tire industries
Independent dealers also set their own inventory policies. For many years Goodyear hadprotected its dealers by not selling Goodyear-branded tires in other outlets; in exchange, Goodyeardealers did not carry other brands. In 1989, 70% of Goodyear’s independent dealers carried onlyGoodyear tires, while 30% stocked other brands. Typically, the other brands were not aggressivelymerchandised but used only as lower-priced alternatives to Goodyear. By 1991, estimates suggested that50% of Goodyear’s independent dealers sold only Goodyear tires, while the other 50% stocked at least oneother brand. Among the latter, some aggressively merchandised other brands but Goodyear tires stillgenerated 90% of the revenues for most independent dealers
Way of working-
Auto ServicesAuto services included jobs such as oil changes,tune-ups, and front-end alignments, as well as repairs to parts such as brakes or transmissions
Monthly auto service sales for independent tire dealers averaged
$38,100 per outlet
CompetitionIn 1991, Goodyear and Michelin were virtually even, but Michelin’s image was strongeramong value-oriented and quality buyers, while Goodyear had a stronger image among price-constrained buyers and commodity buyers. The percentage of consumers who did not know what brandof tire they planned to buy next rose to 53% in 1992 from 36% in 1982.
The Aquatred:The Aquatred was developed after comparing 10 different designs on performance andconsumer preference. The deep groove down the center of the tire was dubbed the “Aquachannel.”
Goodyear planned to sell the Aquatred with a 60,000-mile warranty and to position the tire at thetop of the broad-line segment
Managers at Goodyear still had two concerns about the launch. First, did Goodyear have theright product for the dealers and for the consumer? In addition, Goodyear had to finalize pricing and promotional policies for the Aquatred.Goodyear hoped to price the Aquatred at a 10% premium over the Invicta GS
Aayush NayakUIT-RGPV, Bhopal, during
an internship by
Created By-
Prof. Sameer Mathur, IIM Lucknow.
www.IIMInternship.com