Goodyear

The Aquatred Launch

Background

•Ranked 3rd world wide in sales after Michelin and Bridgestone.•41 plants in the US & 43 overseas.•Also known as “The Gorilla”•2000 Distribution Worldwide.•Major portion of Passenger tier revenue (65%) comes from Replacement tiers.

The Market for Passenger Tiers

Performance tiers

(High Profit)

Broad-LineTiers(Low

Profit)LowPrice

HighPrice

Lower Traction

Higher Traction

The Market for Passenger Tiers

Major BrandsUnit Sales -

36% Most

RecognisedGoodyear,

Bridgestone, Firestone,

Michelin, etc.

Minor BrandsUnit sales –

24%Less

RecognisedDunlop,

Uniroyal, Cooper, etc.

Private Label

Unit Sale – 40%

Recognised with

different retailer names.

Brand Share of Unit Sales

1975 1980 1985 1990 19910

10

20

30

40

50

60

70

80

GoodyearMichelinFirestoneOthers

Others include more than 15 Companies

Consumer Segments

Price-constrained buyers

Value-oriented buyers

Quality buyers

Commodity buyers

For Replacement Passenger tiers

Price-constrainedValue-oriented buyersQualityCommodity buyers

Consumer Segments

Distribution Channels

Garage/Service Station

Warehouse Clubs

Mass MerchandisersManufacturer-owned Outlets

Small independent Tier Dealers

Large independent Tier Dealers

Goodyear Distribution4400 small independen

t Dealers(50% Sales)

Just Tires(Testing Phase)

Franchised Dealers

(20%)

1047 Manufacture

r Owned Stores

(30% Sales)

ScenarioIs Aquatred the right product to launch at the present time? Discuss the launching Strategy.

Goodyear’s StrategyAquatred

Wet Traction

Appearance

60000 miles warranty

Product

10% premium pricing over Invicta GS

Pricing

Small Independent Dealers

Manufacturer owned outlets

Distribution

Goodyear and Independent Dealers

198970% Goodyear

199150% Goodyear

Independent Dealers grow sales, expand brand availability

& increase market share.

Strength• First Mover Advantage.• Selective Distribution Strategy

matches with PLC stage.• New technology breakthrough.• In 1991, 50% of independent dealers

sold only Goodyear tires.

Weakness

• 75% sales are promotion driven.• Low availability in many

outlets forced consumers to buy other brands.• Product is high priced but

market is driven low priced.

Consumer Behaviour

PriceBrand.

Outlet

05

101520253035404550

1985

1992

19851992

Consumer BehaviourTread Life

Wet Traction

Handling

Snow Traction

Dry Traction

Consumer Behaviour

Price

Offers Fast Service

Can trust personnel

Store is attractive

Offers mileage warranty

Brand Selection

Maintains Convenient hours

CompetitionGoodyear

Michelin

Other

Uncommited 0

50

100

All Buyers

Price Con-strained BuyersValue-oriented buyers

Quality buyers

Commod-ity buyers

Launch of Aquatred

• A high profile nation wide launch of Aquatred.• Budget of $21• Launch during winter Olympics in January 1992.

Launching Strategy

• Promotion among travel agencies and car rental services.

• Promotional specialised training for sales personnel of independent dealers.

• Aggressive promotion amongst consumers in winter Olympics.

• Aggressive promotion in high-rainfall regions.

• Promote as a high performance tire in wet condition.

• Price the tire at par with the safety feature.

References

• The Harvard Business School case Goodyear: the Aquatred Launch. • https://www.google.co.in/search?q=aquatred+tires&biw=1242&bih=606&source=lnms&tbm=isch&sa=X&ei=SwKUVanYDMzbuQSLv7HgCA&sqi=2&ved=0CAYQ_AUoAQ#tbm=isch&q=aquatred+tire+png

Disclaimer

Created by Aakash Tripathi, IIT(BHU), during an internship by Prof. Sameer Mathur, IIM Lucknow.