Good Year Case Study

CASE STUDY-GOOD YEAR: THE AQUATRED LAUNCH

1. Assess Goodyear’s position in the tyre industry. Ans: The US tyre industry was dominated by 5 companies in the 1970’s : Goodyear, Firestone, BF Goodrich, Uniroyal and General Tyre. Goodyear tyre was known as the “Gorilla” in the world tire industry. Also ranked 3rd in worldwide sales of new tyres. Goodyear operates 41 plants in the US, 43 plants in 25 other countries, six rubber plantation, and more than 2000 distribution outlets worldwide. The company has also launches innovative new products in the market. Goodyear had produced two lines of private label tires: the ALL AMERICANS and the CONCORDE. Goodyear’s broad range of tyres consists of AQUATRED, INVICTA GS, ARRIVA, INVICTA GL, TEMPO and CORSA GT.

2. How do customers buy tyres? How can the market be segmented? Ans: Consumers purchase tires as grudge purchase that is rarely planned in advance. Over half of consumers purchase replacement tires the same day they realize the need; and don’t know which brand they will purchase next. However they concentrate on certain attributes while making their purchase (in order of importance from high to low) a.) b.) c.) d.) e.) f.) g.)

Price Offer Fast Service Can trust Personnel Store is attractive Offers mileage warranty Brand Selection Maintains convenient hours MARKET SEGMENTATION

PRICE CONSTRAINED BUYERS • Looking for the best brand they can afford • Shop around and have little loyalty

VALUE ORIENTED BUYER

QUALITY BUYER

• Have a brand preferance • They shop around and have no outlet loyalty

• PRESTIGIOUS BUYERS-Want to own the best • COMFORTS CONSERVATIVESLoyal to a specific outlet

COMMODITY BUYERS • BARGAIN HUNTERS-Little brand preferance and low loyalty • TRUSTING PATRONS-Buy low price tyres from prefered retailers.

3.) Assess the Evolution of Goodyear’s distribution channel in the U.S. Replacement tyre market. Ans: Goodyear relied on mainly three types of outlets. The major one was manufacturer owned outlets. The company had owned 1,300 outlets in the U.S. However over time due to capital and managerial reasons they placed increasing emphasis on franchising new outlets in the form of dealerships. Also changed some existing company owned outlets to the same. Training was provided in all aspects to these franchises. So they ended up with these major distribution channels. a.) INDEPENDENT DEALERS-Goodyear had about 4,400 independent but only 2,500 were active. . They accounted for 50% of the sales of Goodyear. b.) MANUFACTURER OWNED OUTLETS- Generated 27% of the sales. c.) FRANCHISED DEALERS- Accounted to 8% of the sales. The rest 15% sales were primarily to GOVERNMENT AGENCIES. Goodyear claimed not to want its tyres sold in low-priced outlets such as warehouse clubs, mass merchandise and Auto supply stores. JUST TYRES was a new retail format under testing by them. 4.) Assess Aquatred’s strategic role and the marketing program? Ans: Considering the survey from the test markets the strategy is as follows:  Goodyear plans to position its product on top of the broad line segment (boutique tyre) with 60000 miles warranty.  Goodyear’s target segment of customers are the affluent class and the areas that have high precipitation.  They want to attract the customers on basis of the design and appearance that is perceptibly different from the counterparts.  Emphasize the features of Wet traction.

 The pricing would be premium about 10% above Invicta GS.  No discount on Aquatred  Channels must be restricted to independent dealers as it is mainly for the high end customers Marketing Program: Promoting its new product aggressively during the winter Olympics so that it can reach to a large number of people. A lot of investment is needed for advertisement as this is an elite segments and an awareness has to be created among the people about the product. This product is expected to earn good profits hence a lot of effort has to be put in its promotion. 5.) Should Goodyear broaden its distribution to mass merchandise? Should they be offered the Aquatred? Ans: If Goodyear wants to increase market share then it must broaden its distribution channels to mass merchandise. However if they do this it could erode the value of the Goodyear brand as a whole, also cannibalize sales of different outlets and might cause dealers to take on additional lines of tyre. As Goodyear plans to position itself in the niche market segment then distribution through mass merchandise should be dropped.