“goodyear: The Aquatred Launch”

Case Title:

Authors: John A. Quelch and Bruce Isaacson

Publication: McGraw-Hill

Key Issues:

• How can Goodyear be more competitive and maintain its leader position?

• How to launch Aquatred effectively?

Factors that should be taken into consideration:

• Intense competition

Although Goodyear was the leader in U.S. passenger tire market with 15% market share, the company still had to be very careful in all things done because the competition was so intense. There were so many players in the industry, both branded and private label. Although, each of them had less than 10% of market share, the second in rank, Michelin, was growing very fast in both replacement and OEM market. Also, the private label had become the biggest threat for all branded tires since many branded tire owners intended to replace their tires with private label.

• Changes in consumer preferences

From Goodyear’s research, 45% of tire buyers thought that price was the most important factor when shopping for tires, followed by 33% for the outlets and 22% for the brand. Also, Goodyear segmented consumers into four categories: price-constrained buyers (22%), commodity buyers (37%), value-oriented buyers (18%), and quality buyers (23%). Recently, more and more buyers became commodity buyers. When Goodyear launched a survey asked what brand of tires the owners intended to buy the next time, Goodyear had the highest percentage among price-constrained buyers (16%) and commodity buyers (10%), while 24% of value-oriented buyers and 22% of quality buyers intended to buy Michelin tires. This meant that Michelin’s consumers had high loyalty to the brand more than Goodyear’s.

• Goodyear distribution channels

There were three main distribution channels of Goodyear: 4,400 independent dealers accounted for 50% of sales revenues, 1,047 manufacturer-owned outlets generated 27% of sales, and the 600 franchised dealers accounted for another 8% of sales. Comparing to the industry’s statistics that had six main channels of retail sales: garages/service stations (6%), warehouse clubs (6%), mass merchandisers (12%), manufacturer-owned outlets (9%), small independent tire dealers (40%), and large independent tire chains (23%), Goodyear might have too few channels of distribution. The company could lose lots of tire customers who their preferred outlets had no Goodyear tires. Although Goodyear claimed not to want its tires sold in low-priced outlets, they sporadically obtained Goodyear tires. Therefore, Goodyear should answer itself first