Goodyear: The Aquatred Launch HARVARD BUSINESS SCHOOL CASE STUDY 2. What is Aquatred ? It is a new tire providing improved driving traction under wet conditions 3. Major Tire Industries in U.S 4. Three major changes in US Tire Industry 5. Emergence of RADIAL tires to replace older “bias” and “bias-belted” tires. Between 1971-91 radial’s share of unit sales increased from 32% to 95%. 6. Increased in foreign competition 7. Change in nature of demand from consumers and car makers. 8. FOUR major impacts of these changes 9. Demand for the passenger tires grew sluggishly 10. New tires in the U.S market declined 11. Tires producing capacity outstripped demand Tire making capacity rose 12% and capacity utilization fell from 87% to 76% 12. Industry difficult economic conditions, coupled with the tire manufacturer slow response resulted in a number of mergers and acquisitions 13. In, 1991 company operated 41 plants in U.S, 43 plants in other 25 countries and 6 rubber plantations Known as “THE GORILLA” in world tire industry 14. Goodyear ranked third in worldwide sales of new tires 15. In 1977, company introduced the TIEMPO, first all season radial their unit sales grew from 2% to 71% 16. In 1981, company successfully launched the EAGLE 17. Market for Passenger Tires could be segmented in three ways 18. Distinction between Performance and Broad-line tires Performance Tires Broad-line Tires 19. Market can be also segmented on Replacement and OEM tires Replacement tires sold directly to the individual consumers OEM tires were sold to the car manufacturers 20. In 1986, Sir James Goldsmith attempt to takeover Goodyear greatly increased their debt. Their earnings were sluggish despite spending $1 million per day on investments. 21. Third segmentation was along brand classification It includes major brands, minor brands and private labels 22. Most consumers viewed tires as a “grudge purchase” An expensive necessity to keep vehicle in driving condition 23. Five important tire attributes 1)Tread life 2)Wet traction 3)Handling 4)Snow traction 5)Dry traction 24. Criteria for selecting Tire Retailer 1)Price 2)Offers fast service 3)Can trust personnel 4)Store is attractive 5)Offers mileage warranty 6)Brand selection 7)Maintains convenient hours 25. CONSUMER SEGMENTS 26. Price constrained buyer 27. Value oriented buyer 28. Quality buyers 29. Commodity buyers 30. Wholesale distribution channels 31. Retail distribution channels 32. Goodyear Distribution Structure 4,400 independent dealers accounted for 50% of sales revenue, 1,047 manufactured owned outlets generated 27% and the 600 franchised dealers for 8% and remaining 15% were to government agencies 33. Just Tires was a new retail format under test by Goodyear 34. Goodyear supported core events with radio, television and print advertising, announcing special prices on specific tire lines. 35. Independent Dealers 36. Indepe

1. Goodyear:
The Aquatred Launch
HARVARD BUSINESS SCHOOL
CASE STUDY

2. What is Aquatred ?
It is a new tire providing improved
driving traction under wet
conditions

3. Major Tire Industries in U.S

9. Three major changes in
US Tire Industry

10. Emergence of
RADIAL tires to
replace older “bias”
and “bias-belted”
tires.
Between 1971-91 radial’s share of unit
sales increased from 32% to 95%.

11. Increased in foreign
competition

12. Change in nature of
demand from
consumers and car
makers.

13. FOUR major impacts
of these changes

14. Demand for the passenger tires
grew sluggishly

15. New tires in the U.S
market declined

16. Tires producing
capacity
outstripped demand
Tire making capacity rose 12% and
capacity utilization fell from 87% to 76%

17. Industry difficult economic conditions, coupled
with the tire manufacturer slow response
resulted in a number of mergers and acquisitions

18. In, 1991 company operated 41 plants in
U.S, 43 plants in other 25 countries and
6 rubber plantations
Known as “THE GORILLA” in
world tire industry

19. Goodyear ranked third in worldwide sales
of new tires

21. In 1977, company introduced the
TIEMPO, first all season radial
their unit sales grew from 2% to 71%

22. In 1981, company successfully
launched the EAGLE

23. Market for Passenger Tires
could be segmented in
three ways

24. Distinction between
Performance and Broad-line
tires
Performance Tires Broad-line Tires

26. Market can be also segmented on Replacement and
OEM tires
Replacement tires sold
directly to the individual
consumers
OEM tires were sold to the car
manufacturers

27. In 1986, Sir James Goldsmith attempt to takeover
Goodyear greatly increased their debt. Their earnings
were sluggish despite spending $1 million per day on
investments.

28. Third segmentation was along
brand classification
It includes major brands, minor brands and private labels

29. Most consumers viewed tires as a
“grudge purchase”
An expensive necessity to keep vehicle in driving
condition

30. Five important tire attributes
1)Tread life
2)Wet traction
3)Handling
4)Snow traction
5)Dry traction

31. Criteria for selecting Tire
Retailer
1)Price
2)Offers fast service
3)Can trust personnel
4)Store is attractive
5)Offers mileage
warranty
6)Brand selection
7)Maintains convenient
hours

32. CONSUMER SEGMENTS

34. Price constrained
buyer

35. Value oriented buyer

36. Quality buyers

37. Commodity buyers

38. Wholesale distribution
channels

39. Retail distribution
channels

41. Goodyear Distribution
Structure
4,400 independent dealers accounted for 50% of sales
revenue, 1,047 manufactured owned outlets generated 27%
and the 600 franchised dealers for 8% and remaining 15%
were to government agencies

42. Just Tires was a new retail format under test by
Goodyear

43. Goodyear supported core events with radio,
television and print advertising, announcing
special prices on specific tire lines.

44. Independent Dealers

45. Independent dealers were organized into
28 districts, each with a district manager
and an average of three area saled
managers
Most dealer complaints involved
relatively minor billing problems
and competition from the other
channels or the location

46. Independent dealers
typically offered more
choice than the single-
brand selection offered at
most company owned
stores and required less
capital and attention from
the manufacturer

47. Goodyear had protected its dealers by not selling their
branded tires to the other outlets; in exchange dealers
carry did not carry other brands

48. Auto Service
It includes jobs such as oil changes, tune ups and front
end allignments, as well as repair to the parts such as
brakes

49. COMPETITION

50. Goodyear regularly surveyed car owners to monitor
their image of the major tire brands

51. Loyalty of the brand among consumers replacing
passenger tires

52. The Aquatred

53. Survey from the test market compared purchase behavior of The
Aquatred buyers with purchase behaviorfor buyers of Invicta GS

54. The launch of the
AQUATRED

55. PROBLEMS
Did company have the right product for the
dealers and the consumers ?
Should the company Expand their distribution
channels ?
What should be the appropriate timing to launch
the product in the market ?

56. Company has the right product for the dealers
and the consumers
1) It has 60,000 mile warranty
2) Tests shown that in wet conditions, car equipped with aquatred
travelling at 55 miles stopped in as much as two car lengths distance
than car equipped with conventional all season tires.
3) When 50% worn, the Aquatred maintained the same wet traction as
new tires.
4) Aquatred tires were more likely to replace competitor’s tires.
5) Test markets results shows that Quality buyers were more inclined to
Aquatred (61%) who represents 51% of the sales of the major brands
which includes Goodyear.

57. Company should expand their
distribution channels because
1) The company’s three types of outlets produced 85% of their sales
revenues with 50% from independent dealers, 27% from
manufactured owned outlets and 8% from the franchised
dealers.
2) From 1970-1983 company increased their manufacture owned
outlets and converted some company owned outlets into
franchised and independent dealers.
3) The company has protected their dealers by not selling their
branded tires in the other outlets; in exchange dealers does not
carry other brands thus, in 1989 70% of their independent
dealers carried only Goodyear’s tires.
4) It also can prevent OEM tires from being replaced by other
brands in the replacement market as OEM tires were making
$695 millions by selling 16.3 units in 1991.

58. Company should launch the Aquatred in
January itself beacuse
1) It was the time during winter olympics.
2) 74% of the users of the Aquatred make the vehicle domestic.
3) 33% of the Aquatred buyers got this information by
advertisment in newspaper, thus this is the appropriate time to
market the Aquatred as their will be many readers during the
time of the olympics to know about the events and other stuff
regarding the winter olympics.
4) Other companies were also launching their tires same year so if
we were launched after that we lose advantage of the marketing
boom during the olympics.

59. THANK YOU
Jaannasheen Singh
IIT(BHU) VARANASI
13155043
Intern under
Prof. Sameer Mathur