GOOD YEAR: THE AQUATRED

LAUNCH
GROUP 2

HARMEET SI NGH BHARMI PGP291 54
RUSHI KESH THAKKAR PGP29350
APOORV MALHOTRA PGP29283
KAUSTUBH NANDESHWAR - PGP291 03
DI VYANSHU KUMAR PGP29266
NARENDRA VERMA PGP29025
RUCHI WAGHMARE PGP291 59

Background
41 plants in the USA and 43 plants in 25 other
countries.
Ranked no 3 in worldwide tire sales
Income less than 1% of $10.91 Billion in revenues in
1991
Track record of launching innovative products
INDUSTRY OVERVIEW IN 1970-1990
Emergence of Radial Tires, requiring major
investments
Foreign Competition : Michelin of France

IMPACTS
Demand Saturations
Price reduction
Production capacity more than demands
No innovations and efforts from companies


AQUATRED
FEATURES
Improves traction in wet conditions
Reduced hydro plating using channeling of water under tires
A 50% worn out Aquatred, maintains the same wet tractions as
a new one
Positioning in the top of broad line segments
Comes with a 60000 mile warranty
Cost of launch estimated to be $21 million
PROBLEMS
Aquatred can only be launched in the replacement
market
Selling through lower service channels could
increase the sales, but erode value of brand
Pricing of Aquatred was at a premium of over 10%
over the most expensive broad line tire- Invicta GS
Two other companies, Michelin and Bridgestone
were planning to launch new tires in 1992
With 80000 mile warranties
Huge advertisement budgets

SWOT Analysis
Strengths
Dedicated independent dealers
Strong track record in launching new
products
Largest market share in replacement
market
Brand image in price oriented buyer
Innovation and Patents
Opportunities
Absence of high durability tires
First mover advantage with
Aquatred
Weakness
Quality and value oriented buyers
Low profit and high indebtedness
Limited Marketing channel
Knowledge level of distributors
Threats
Foreign competition entering into
durability segment
Brand Value Erosion (Lower
Channels)
Bait and Switch Tactic by
unauthorized dealers
Legal Provisions for independent
dealers


SWOT
Segmentation
Market
Segments
Performance
based
Performance Broad line
Usage
Replacement OEM
Brand
Major Brand Minor Brand Private Label
Goodyear Existing Distribution Channels
Out of 6 distribution channels
used in the tire industry Goodyear
used only 3 distribution channels

Small independent dealers
Manufactured owned outlets
Large tire chains

50%
30%
20%
Goodyears distribution channels
Small
independent
dealers
Manufacturer
owned outlets
Large tire
chains
Consumer Breakdown
TYPE Breakup Aspects
Quality conscious 18% Product features matters the most
Value conscious 23% Product features and performance
matters the most
Price focussed 59% Price conscious buyers, Prefers
promotional offers and not concerned
about quality
Where does Aquatred
lie?
Can we cater to the price focused
consumer as well A private label
version?
Distribution Model- Channel conflict

The tire manufacturer is not only our supplier but also our
competitor through manufacturer owned outlets
To me its an indictment of the industry that cannot support
ourselves on tire sales. We have to have that service to survive
The march merchandiser are eating up the distribution of our
product, it could drive me out of the tire business
There is a lot of big whole sellers who will sell to anybody
Current Scenario
50% of the tires are sold through
independent dealers who also do regular
maintenance

Only 20% of revenues came from tire
related work

Independent dealers do most of the
sales work
Best strategy would be to enhance Goodyears relationship with small
independent dealers as they have a trust value with the customer who treats
tires as a commodity



Target channel types
Margins
Retail
Goodyear
28%
Private
Label 20%
Wholesale
Goodyear
14%
Private
Label 18%
Average margins should be around 30-32% in retail channel in order to
position Aquatred for the 41%(Value + Quality) customers
Purchase Pattern







Purchase Pattern Percentage
2 tire 42%
4 tire 40%
Single tire 16%
3 tire 2%
Given the distinct characteristic and design of Aquatred tires customer
would like to change 4 tires altogether. Goodyear could leverage this
purchase pattern
Recommendations
Possible Options
Launch Aquatred in the same channel. Expand the
current channel of Small Independent Dealers

Launch Aquatred by expanding the current
distribution channels. Include mass merchandisers,
large retail chains etc.

Reasons to maintain the same channel
Independent Dealers account for 50% of the Goodyear
sales
50% stockists exclusively stock Goodyear tyres
Majority of the others derive 90% revenues from GY tyres
Independent Dealers and Manufacturer Outlets occupy a
50% market share
Maintaining Vendor Relations and avoiding channel
conflicts
Costs incurred due to expansion will be saved
This will save time to launch before Continentals
hydroplaning tyres

Implementation Plan
Product: Features mentioned before
Price:
Charging a premium
Targeting the quality- and value - conscious buyers
Promotions:
Providing professional assistance to dealers
Promoting the product in dealer councils
Providing attractive schemes to penetrate the market
Place:
Reach out to all the current 4400 Small Independent Dealers
Targeting areas with heavy rains. Ex: Louisiana, Florida, New York
etc.


Path Ahead
Launch a Private Label tyre with similar features
Rationale:
60% of the buyers are price conscious
Mass merchandisers and large tire chains are steadily gaining
market share
Private labels have a higher margin in wholesale channels
Switching propensity to private labels highest (38% from
Goodyear)