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THE AQUATRED LAUNCH

Panacea
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The Goodyear Rubber and Tire


Company

41 plants in U.S. 43 plants Overseas


2,000 distribution word wide.
Also known as The Gorilla.
Around 1,05,000 employees
Ranked Third in worldwide sales of new
tires.
Innovative in terms of technology ($1.5 b.)
Marketing (Eagle Tires, Tiempo)

The Market For Passenger


Tire

Performance Vs. Broad-line Tires

More expensive
Better traction.

Less expensive
Poor handling

25% of Goodyears unit Sales


30% of Dollar sales
Higher percentages of profits.

Less percentage of profits.

Replacement Vs. OEM


Sold to Individual Consumers . Sold to Car manufacturers.
65% of Revenue

35% of Revenue

Cut-through Competition
Large Scope

Market Leader (Rank 1; Mkt Share


38%)

The Market For Passenger


Tire
Brand Classification
Major Brands

Minor Brands

Private Label

36% of unit sales.

24% of unit sales.

40% of unit sales.

Highest recognition
among consumers.

Minor but wellrecognized among


consumers.

Larger manufacturer
used excess capacity
to service private
labels.

Goodyear, Firestone,
Dunlop, General,
Michelin, Bridgestone, Kelly , Uniroyal,
Pirelli and Goodrich.
Cooper, Yokohama
and Toyo.

They carried names


to particular retailers.

Channels
Wholesale
Distribution Channels (percent of U.S. passenger tire replacement
sales in units)
Type of Outlet
Oil companies
Large retailers
Manufacturer-owned outlets
Independent dealers

1976
9
24
11
56

1981
5
20
10
65

1986
3
16
13
68

1991
2
19
12
67

Independent Dealers
Strictly whole-sellers

Retail Dealers

Retail Owners

10 %

40 %

50 %

Car dealers, service


stations, small
independent dealers

Other dealers,
secondary outlets

Own retail outlets

Channels
Retail Distribution passenger tires
Garage /
service
station

Warehous
e clubs

Mass
Merchandi
sers

Manufactur
er-owned
outlets

Small
independe
nt tire
dealers

Large
independen
t tire
chains

Set-up

Small Outlets

Large Stores

Large Retail
space / chain

Large Outlets

One or two
outlets

Concentrated
within
geographic
regions

Outlets

Neighborhood
outlets

less than 100


outlets

Some
hundreds

less than 100


outlets

Various

30-100 outlets

Product
/
service
offered

Tires,
gasoline, auto
services

Food
,clothing
electronics
,tires
,hardware
Only
installation of
tires

Carried
various types
of
merchandise.
Performed
auto services

Tires

Tires

Tires

Private lab. /
Branded

Branded

Various
Branded / own
brand

One brand

Start with a
brand and add
on later /
private labels

Private labels /
Branded

Many

Sams, Pace,
Price club,
Costco

Kmart / Sears
/Wal-Mart

Manufacturers
: Goodyear /
Michelin /
Firestone

Many

Tire America,
National Tire
Warehouse,
and Discount

Tires
sold
Players

Goodyears Distribution
Structure
4 channels of distribution
:
Independent dealers : Accounted for 50% of sales revenues
through 4,400 outlets (2500 active selling full line of Goodyear
tires)
Manufacturer-owned outlets : Generated 27% of sales through
1,047 outlets
Franchised dealers : 600 in total accounted for another 8% of
sales
Government agencies : 15% of sales
Goodyear did not sell tires in garages/service stations, warehouse
clubs, or mass merchandisers. However another private label of
Goodyear Kelly Springfield was sold by mass merchandisers
Just tires a proposed new retail format of Goodyear planned to
offer tires & fast oil change without appointment and
guaranteed speed & quality of installation

Goodyears Distribution
Structure
Manufacturer-owned
outlets :
Greater control for opening / closing an outlet
High associated demands for capital and management attention
Some competition perceived by Independent dealer
Converted some outlets into franchised dealerships.
Independent Dealer
Required owner to invest $100,000 and generate revenues of
$1,000,000 pa.
Sold an average of 15.5 tires/day, including both Goodyear and
other brands of tires
Most Goodyear dealers had majority of their sales from Goodyear
tires - average selling price of $75 per tire.
Margins :
28% averaged for independent dealers on Goodyear tires
25% for dealers carrying other major brands
20% for private label tires

Average wholesale margins were 18% for private label tires and
14% for Goodyear tires

Sales Operation
Company Owned Outlet

42 Districts (1 DM)
20 to 23 Stores each
(1SM)

Independent Dealers
28 Districts (1DM)
Avg. 3 SM
Services

Expertise & Training


GY Business Mgt. System
National & Regional Adv.
Research on Market
Trend
Certified Auto Service

Independent Dealers
Auto Services
Services sales $38,100 per month per
outlet
26% (1980) to 48% (1991)
20% tries related work

Margins
50% Services Labor
20% to 25% Parts installed

Revenues
70% services Labor
30% parts

Independent Dealers
Services provided were not free.
Paid upon receipt, ordered in full
trailer loads or purchased under
occasional promotional programs.
Allowance
Wholesale Allowance
Merchandising Allowance 1.5%
Advertising Accruals 4%

Goodyear & Independent


Dealers
1989
70% only GY & 30% other brand also

1991
50% 50%
Aggressively merchandised other brands
but GY generated 90% of the revenues.

Independent dealers network better


option
Grow sales, expand brand availability &
increase market share

Consumer Behavior

Consumer Behavior
Tire Attributes
Tread Life
Wet Traction
Handling
Snow Traction
Dry Traction

Tire Criteria
Price
Offers Fast Service
Can Trust Personnel
Store is Attractive
Offers Mileage
Warranty
Brand Selection
Maintains Convenient
Hours

Consumer Segments
Type of
Buyers

Loyalty to
Outlet

Loyalty to
Brand

Shop
Around

Other

Price
LESS
Constrained

LESS

MORE

Best in their
Budget

Value
Oriented

LESS

MAJOR
BRANDS

EXTENSIVEL
Y

Search for
best prices

QualityPrestige

MORE

MORE

LESS

Best Tires.
65% Major
Brand

Quality - CC

MORE

LESS

LESS

38% Major
Brands

Commodity- LESS
Bargain
Hunter

LESS

EXTENSIVEL
Y

YOUNG,
PRICE

Commodity- MORE
Trusting
Patrons

LESS

LESS

Lower Price

Competition
Intent to buy Major Brand Segments

? 36% (1982) TO 53% (1992)

Switching Among Brand

9%-11% of sales on adv. & promotion

60% on promotion

60% share of voice in TV & Magazines

Promotions
1. Estimated 75% of all Goodyear tires sold in independent or
company-owned outlets were sold on promotion, at an
average discount of 25%.
Offered to the consumer by schemes like one free tire with
the purchase of three tires, one tire for half price with
purchase of another tire at full price, or 25% off the price
of selected tires.
2. Promotions organized around core eventssix 3-week
periods spread throughout the year to buy merchandise at
a discount. This was supported by radio, television, and
print advertising announcing special prices on specific tire
lines.
3. Spring dating, organized every spring , provided
extended financing on tire orders to Goodyear dealers

Aquatred
Different
Design
Performance & Consumer Preference
Aquachannel
Hydroplanning & Wet Traction
60,000 mile warranty
Top in Broad Line

Test Market - Result


Aquatred buyer were likely to replace
competitors tires.
Less Cannibalizing (GY 38-51) (M17-15)
Information Search is extensive
Braking the orientation (Brand 56-47)
Uplifting Brand Equity

Target Segments
Value Oriented & Quality Buyer

Test Market - Result


Detailing by Salesperson
Details

Aquatred

Invicta GS

60 K mile
Warranty

41%

10%

Great Wet
Traction

33%

38%

Dont tell any


thing

13%

42%

16%

9%

Wont
Hydroplane
Absences

of Integrated communication at
Touch
Other Point
29%
18%

The Launch of Aquatred


A high profile nationwide launch of Aquatred
was planned to have a strong impact on the
market as it was a product which would
revitalize the image of Goodyear in the market.

An budget of $21 million


Launch during the Winter Olympics in January
1992 was proposed to get an advantage of the
mass promotion and mileage.

Launch Issues

Right Product or not


Timing
Distribution Channel
Initial Inventory
Communication at Touch Point
Pricing & Promotion

Team Recommendations

Go-to Market Strategy


1. Customers
: Value-oriented & Quality buyers
segment
2. Communication Plan :
a) Message : Highlight core value of safety , trust &
reliability at all weather conditions.
b) Place : Upcoming Olympics events on Jan-1992
through a video ad with above message.
This needs to be backed up with :
Radio Ads
Teaser Ads to create inquisitiveness
& awareness
Billboards
Press releases
On Snow Demo

Team Recommendations
Initial Inventory
Test Market Result have shown
74% buyers of Domestic
26% buyer of Imported

Team Recommendations
Channel Strategy
1. Use existing Independent Chain & manufacturing
outlets
2. Geographic spread of all contact points for
maximum reach
3. Design promotional incentive schemes for dealers .
4. Motivate / train / facilitate other Independent
dealers to promote Goodyear products (total 1900
dealers)
5. Contact point integration to have same message
(Training )at all touch-points.

Regards,
Panacea

DISCUSSIONS

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