goodyear aquatread case

7/30/2019 Goodyear aquatread case

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Goodyear Aquatred

Group 11


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Agenda

Consumer Behaviour

Distribution Channels

Risks and Benefits of launching Aquatred Proposed Launch Strategy


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Consumer Behaviour

13 % of all buyers intent to buy Goodyear as well as Michelin

Preferred to Michelin by buyers in price constrained and commoditysections

But loses out to it in the value oriented and quality section (whichform 62 % of buyer base for major brands)

Need to improve the standings in the above two segments

Buyer dist.

major brands

19% 28% 33.8% 19.2%

All Buyers Price

Constrained

Value

Oriented

Quality

Buyers

Commodity

Buyers

Goodyear 13% 16% 17% 18% 10%

Michelin 13 9 24 22 6Other 19 18 20 25 16

Uncommited 55 57 39 35 68


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Consumer BehaviourSwicth Bridgestone Firestone Goodyear Michelin Minor Pvt. 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 2 4 10 7 32 42 100

Pvt. Label 2 5 8 5 7 70 100

Only 39% of Good Year products is replaced by Good Year whereas 44 % of

Michelin products are retained by their customers

This shows that their Brand loyalty is weak Approximately 12% of our customers are moving to other Brands which shows

that we are not fine tuned with our value buyers

Or it is because consumers are moving to a more price sensitive market


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Goodyear does not supply to channels thatcontribute to 24% of industry sales

Overreliance on manufacturer owned outlets

Price Index (%)

Growth % share

(81 -91) Industry (1991) Goodyear

Garage/ SreviceStations 110 -25 6 0

Warehouse Clubs 80 200 6 0

Mass Merchandisers 97 -25 12 0

Manufacurer OwnedOutlets 107 -18.18 9 27

Independent

Dealers 90-95 8.62 63 58

Others NA NA 4 15


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Goodyear has 1047 outlets compared to 125 by Michelin

An option can be to convert the owned stores to franchises or independent

dealers. ( Can be cost effective)

Goodyear has 4400 independent dealers but only 2500 active. (Just 57%)

Decrease in Independent dealers selling only Goodyear tires (70 % to 50%)

Higher margin for retailers than the private label tires (24-28% compared to 20%)

Efforts to be made to increase the activity. May be through incentivizing them.

(giving them an option to choose from a net cheaper product or an existing

package)

Type Number Contribution tosales

Per storecontribution

Owned 1047 27% .026%

Active Dealers &

Franchises

3100 58% .019%

Govt. Agencies 15%


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Mass Merchandisers ?

Pros: Would help it target the price sensitive buyer. (about 45% of buyers)

Can prove to be a good channel for the lower end products(introduced on behalf of private labels)

Increased demand can help mitigate the problem of lower capacityutilisation

Competitors like Michelin does it

Cons Can exacerbate the problems of the independent dealers (loss of

sales, lower prices) which might affect the brand loyalty of dealers

Brand Image

A possible option: Sell only the Lower end product through thechannel reserving high end products for its traditional supplychannels.


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Aquatred: To launch or not to Launch


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Product

Valueproposition:Wettraction (2nd on listof consumerpreferences)

Psychologicalassurance of safety

Visuallydifferentiatedproduct

Promotion

Launch &promotion duringWinter Olympics togain the position offirst mover

Training of salesstaff (33%customers told ofAquatreds wettraction, 16% abouthydroplaning)

60,000 mile

warranty

Place

Use of Goodyears

Just Tires

Independentdealers

ManufacturerOutlets

Pricing

8% of Aquatredcustomers are priceoriented

Given this segment,a price tag of $90

will not be an issue


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Risks / Challenges

Initial inventory

available only fordomestic cars

Molds to produce othersizes wont become

available immediately

Competitors launchingproduct with higher

tread life (80000 milescompared to 60000miles of Aquatred)

Launch of anothercompetitor product

within a year with thesimilar technology(antihydroplaning)

Suggestions

Launch tires for differentsizes/ imported cars later, butdont forego advertisement

opportunity of Olympics

Plan to raise 60000 milesguarantee to 80000

- R&D, get an 80,000 mile tireready to meet competitor

launch

Continuous R&D, be preparedwith a developed product tomeet competitors launch of

similar product


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Proposed Launch Strategy

Position in the higher margin replacementmarket

Value oriented and quality buyers

Quality and performance higher perceivedvalue + willingness to pay

Psychological need safety(Less breakingdistance)

Social need style

Economic benefit more value than competitors


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Proposed Launch Strategy

Price at a premium around USD 90,

communicates image of superior product

Promotional campaigns focus on value

driven consumers

Aggressively promote in high rainfall regions

Training programs for dealers and staff


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Thank You !

goodyear aquatread case

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