This is an Analysis Presentation report made on a Harvard Case Study

2. ABOUT
THE
CASE

3. the players (1/2)
• BARRY ROBINS
– Vice President of Marketing
• STANLEY G. GAULT
– Chairman of Goodyear

4. GOODYEAR’s BACKGROUND (2/2)
• In 1991 – 41 Plants in USA, 43 Plants
other nations
• 3rd Rank in Worldwide Sales
• Income < 1% of $10.91 Billion Revenue
• $1 Million per day on Interest Spending in
1991
• History of Successful Product Innovation

5. AIM
OF
THIS
CASE

6. OBJECTIVE 1
• MAKING SURE GOODYEAR HAS
THE RIGHT PRODUCT & TIMING
TO GENERATE SUPPORT FROM
THE COMPANY’S TRADITIONAL
BASE OF INDEPENDENT DEALERS
– We’ll talk about market segments & consumer’s
and dealer’s preferences over tire attributes

7. OBJECTIVE 2
• WEIGHING THE RISKS & BENEFITS
OF EXPANDING DISTRIBUTION
CHANNELS. ANALYZING
WHETHER THE NEW CHANNELS
WOULD SELL THE AQUATRED
– We’ll study the company’s distribution structure &
analyze the market research done on this

8. TIRE
INDUSTRY
IN USA

9. OVERVIEW from 1970 to 1990
• 3 Major Events – CAUSE
a. Radial tires introduced, required heavy
investments
b. Increase in foreign competition
c. Change in Demand due to Increase in Oil Prices
• Impact – EFFECT
a. Slow Demand Growth
b. Price reduction
c. Production Capacity >
Demand
d. Mergers & Acquisitions

10. MARKET FOR
PASSENGER
TIRES

11. MARKET SEGMENTATION (1/3)
• Market divided on basis of :-
a. PERFORMANCE vs BROAD-LINE TIRES
b. REPLACEMENT vs OEM TIRES
c. BRAND CLASSIFICATION
i. Major Brand (36%)
ii. Minor Brand (24%)
iii. Private Label (40%)

12. • TIRE ATTRIBUTES
a. Tread Life
b. Wet Traction
c. Handling
d. Snow Traction
e. Dry Traction
• RETAILER CRITERIA
a. Price
b. Offers Fast Service
c. Trustable Personnel
d. Attractive Store
e. Mileage Warranty
f. Brand Selection
g. Convenient Hours
CONSUMER PREFERENCES (2/3)

13. CONSUMER SEGMENTATION (3/3)
• On the basis of preference of brand or outlet
a. Price-Constrained Buyers – 22%
b. Value-Oriented Buyers – 18%
c. Quality Buyers – 23%
d. Commodity Buyers – 37%
• In 1992
a. 45% Price Oriented
b. 22% Brand Oriented
c. 33% Outlet Oriented

14. MARKET FOR
REPLACEMENT
TIRES

15. Retail channel (1/3)
DISTRIBUTION
CHANNELS
Garage/
Service
Stations
(6%)
Warehouse
Clubs (6%)
Mass
Merchandis
ers (12%)
Manufactur
er owned
Stores (9%)
Small
Independe
nt Dealers
(40%)
Large
Independe
nt dealers
(23%)

16. Goodyear's distribution
structure (2/3)
DISTRIBUTION
CHANNELS
4400
INDEPENDENT
DEALERS
50%
1047
MANUFACTURER
OWNED
27%
600
FRANCHISED
DEALERS
8%
GOVERNMENT
AGENCIES
15%
Number of stores Sales Revenue

17. Goodyear ‘S independent
dealers (3/3)
• Dealers Organized into :-
– 28 Districts
– 1 District Manager
– 3 Area Sales Managers
• Goodyear Offered Services like :-
– Expertise & Training
– Certified Auto Service
– Goodyear Business Management System
– National & Regional Advertising
– Research on Market Trends

18. THE
AQUATRED
TIRE

19. AQUATRED features (1/2)
• INNOVATIVE – Design Improved Traction in
Wet Conditions
• SAFE – Reduced Braking Time & Distance
• SUPERIOR – Top of Broad Line Segment
• STRENGTH – 60,000 Mile Warranty
• APPEARANCE – New & Striking Design

20. AQUATRED’s LAUNCH (2/2)
• Sale only through Replacement Market
• Priced at a premium of 10% over Invicta GS
• Launch Budget of $21 million
• Launch during Winter Olympics in January
1992

21. LAUNCH
CONCERNS

22. PRODUCT (1/5)
• Is it the Right Product for the market ?
– Michelin & Bridgestone planned to launch new
tires with 80,000 mile warranties and huge
advertisement budgets
• What would the consumer prefer ?

23. Distribution channel (2/5)
• Should they expand distribution ?
– Would prevent being replaced
by other brands
• If yes then through which channels ?
– Selling through lower service
outlets could erode Brand Value

24. Timing (3/5)
• When should it be Launched ?
– Plan to launch during Winter Olympics
– Might spark Sales
– Initial Inventory unavailable for Imported cars

25. EDUCATING DEALERS (4/5)
• Which customer would be likely to switch to
Aquatreds ?
– Dealers tried selling to
affluent looking customers
• Should the new channels
receive the Aquatred?

26. Pricing & Promotion (5/5)
• What should the price be ?
– Kept at a premium of 10% over Invicta GS
• Should they allow price promotions on
Aquatred ?
– Problem of tires being diverted to Unauthorized
dealers

27. SOME
SUGGESTIONS

28. Suggestions (1/3)
• Sales force and dealers must be properly
trained so that they convey the correct
message to the customer
– EXHIBIT 10
• Avoid discounts on Aquatred instead
Decrease Prices
– Success of Tiempo due to low retail price
– In competition with high mile warranty tires
– Reduces Brand Image

29. SUGGESTIONS (2/3)
• Optimize promotion during Winter Olympics
– Launch the product before the competition does
– Increase awareness of a new product among
customers by creating curiosity
– Change mindset by highlighting the importance &
need of safe tires in all conditions
• Unavailability of product for imported cars
would not be a big concern
– Only 26% buyers of Imported cars

30. SUGGESTIONS (3/3)
• Market Extensively & Aggressively in Rain-
prone areas
• Expand Distribution Network into
Garage/Service Stations
– Reduce effects of whole sellers
– Maximizes geographic reach
– Increases Sales & Market Share

32. DISCLAIMER
• Created by Bhavnoor Singh, IITR,
during a marketing internship by Prof.
Sameer Mathur, IIM Lucknow.
(See www.IIMInternship.com )