Goodyear Aquatred

Group 11

Agenda
Consumer Behaviour Distribution Channels Risks and Benefits of launching Aquatred Proposed Launch Strategy

Consumer Behaviour
Buyer dist. major brands 19% 28% 33.8% 19.2%

All Buyers
Goodyear Michelin Other Uncommited 13% 13 19 55

Price Constrained
16% 9 18 57

Value Oriented
17% 24 20 39

Quality Buyers
18% 22 25 35

Commodity Buyers
10% 6 16 68

13 % of all buyers intent to buy Goodyear as well as Michelin Preferred to Michelin by buyers in price constrained and commodity sections But loses out to it in the value oriented and quality section (which form 62 % of buyer base for major brands) Need to improve the standings in the above two segments

Consumer Behaviour
Swicth Bridgestone Bridgestone 29% Firestone Goodyear Michelin Minor Pvt. Label Total 4% 8% 8% 7% 43% 100%

Firestone
Goodyear Michelin Minor

2
2 3 2

27
5 3 4

11
39 7 10

6
5 44 7

7
9 6 32

45
38 36 42

100
100 100 100

Pvt. Label

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

Distribution Channels
Growth % share Price Index (%) (81 -91) Garage/ Srevice Stations Warehouse Clubs Mass Merchandisers Manufacurer Owned Outlets Independent Dealers Others 110 80 97 107 -25 200 -25 -18.18 Industry (1991) 6 6 12 9 Goodyear 0 0 0 27

90-95
NA

8.62
NA

63
4

58
15

Goodyear does not supply to channels that contribute to 24% of industry sales Overreliance on manufacturer owned outlets

Distribution Channels
Type Number Contribution to sales Per store contribution

Owned

1047

27%
58% 15%

.026%
.019%

Active Dealers & 3100 Franchises Govt. Agencies

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)

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 capacity utilisation 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 the channel reserving high end products for its traditional supply channels.

Aquatred: To launch or not to Launch

Product
Value proposition:Wet traction (2nd on list of consumer preferences) Psychological assurance of safety Visually differentiated product

Promotion
Launch & promotion during Winter Olympics to gain the position of first mover Training of sales staff (33% customers told of Aquatreds wet traction, 16% about hydroplaning) 60,000 mile warranty

Place
Use of Goodyears Just Tires Independent dealers Manufacturer Outlets

Pricing
8% of Aquatred customers are price oriented Given this segment, a price tag of $90 will not be an issue

Risks / Challenges
Initial inventory available only for domestic cars

Suggestions
Launch tires for different sizes/ imported cars later, but dont forego advertisement opportunity of Olympics

Molds to produce other sizes wont become available immediately

Competitors launching product with higher tread life (80000 miles compared to 60000 miles of Aquatred)
Launch of another competitor product within a year with the similar technology (antihydroplaning)

Plan to raise 60000 miles guarantee to 80000 - R&D, get an 80,000 mile tire ready to meet competitor launch

Continuous R&D, be prepared with a developed product to meet competitors launch of similar product

Proposed Launch Strategy

Position in the higher margin replacement market
Value oriented and quality buyers

Quality and performance higher perceived value + willingness to pay

Psychological need safety(Less breaking distance) Social need style Economic benefit more value than competitors

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

Thank You !