Presented by Group 8
Goodyear: Launch of Aquatred A short study
Members: Aayush Shah, Roushan, Saurabh, Vinoth, Manu Prasad
Group 8
Report on launch of Goodyear’s tire Overview Barry Robbins, Goodyear’s vice president of marketing in No rth American Tires is dwelling on the upcoming launch of the new improved tire Aquatred which provide the improved driving traction under wet conditions .The Aquatred is planned to position as a replacement tire for passenger cars in US market. Known for its dominance in the world tire industry, the Goodyear tire has strong track record in launching innovative products. Background of Tire Industry
Till the early 1970s, the US tire industry was dominated by five companies including Goodyear. But the U.S. tire market has come across major changes in 1970s to 1990s. The first was emergence of the radial tire to replace older “bias” and “bias -belted” constructions. The radial tire offers superior trend-wear, handling and gas mileage but a stiffer ride. The second major change was increased foreign competition and the third was in nature of demand from consumers and car maker. These changes brought four major impacts to tire industry. First, the demand for passenger tires grew sluggishly , second was declined new tire prices in U.S. market and third tire-producing capacity outstripped demand .The fourth impact caused by difficult economic condition and slow response of tire manufacturers’ resulted in a number of mergers and acquisitions. Segmentation
The market for passenger tires could be segmented in three ways. First category based on the distinction between more expensive, broader performance tires and broad-line tire. Market could also be segmented based on replacement and OEM tires. A third segment comprises major brands, minor brands and private label. Sales of private label tires constituted 40% of the market. In previous Goodyear had produced two lines of private label tires: the All American and the Concorde. These tires were replaced with comparable Goodyear-branded tires. Most of the consumer in the replacement passenger tire market view tires as expensive necessities to keep a vehicle in driving condition. The performance attributes looked by consumer at the time of purchase are price, fast service, trusted personnel, attractive store, mileage warranty, brand selection and convenient hours. The four consumer segments based on their shopping behavior are price-constrained buyer, value-oriented buyer, quality buyers and commodity buyers. Almost half of the buyers buy best affordable brand within their budget.
Group 8
Industry model
Tire manufacturers sold replacement tires to wholesalers. Wholesalers resold to dealers and retailers, who then sold the tires to consumers. The wholesale distribution channel is catered by four distribution channels Oil companies, large retailers, manufacturer owned outlet and independent dealers. The six major retail channels in U.S. replacement passenger tire market are Garage/service stations, warehouse club, mass merchandisers, manufactured-owned outlets, small independent tire dealers, large independent tire chains and other category of full-service auto supply stores. Goodyear’s sales revenue is generated 57% by independent dealer, 27% by manufactured-owned outlet and 8% by franchise dealers. The remaining 15% of sales were primarily to government agencies. Goodyear placed increasing emphasis on franchising new outlets and also converted some company-owned outlets into franchised and independent dealerships. It also encouraged the fresh ideas like “Just Tires”. Promotion
Around three fourths of all Goodyear tires were sold at a discount of 25%. The discounts were offered as a part of several promotional events spread throughout the year. Radio, Television and print media were used to announce the special prices. These kinds of discount offerings have made the customer price conscious. Dealership
Goodyear operated through sales organizations to service the company-owned outlets and independent dealers. It supported the dealers with a variety of services like auto service, training, advertising, etc. Goodyear provided these services at a cost. The cost was built upon the Goodyear’s prices but merchandising allowance (1.5%) and wholesale allowance were available for the dealers. Competition
On surveying it was found that Goodyear and Michelin were at par. Goodyear was considered by the price-constrained buyers contrary to Michelin preferred by valueoriented and quality buyers. The Aquatred Launch
Long buying cycles of Auto manufacturers makes Aquatred launch a bitter. Two concerns that were felt: 1. Is this a right product? Aquatred is a boutique tire. 2. Distribution channel. Should it be expanded? There were other issues regarding launching the product during winter Olympics in Jan 1992. Pricing and promotional policies had to be finalized. Did Aquatred revitalize Goodyear?
