Case Analysis: Goodyear-The Aquatred Launch

Group 10
Ataul Karim (P16005), Justin Fernandez (P16018), Sahil Jain (P16022), Rishi Kharbanda (P16028), Mainak Pradhan (P16042)

Background
Consumer: Goodyear segmented tire buyers into four categories price-constrained buyers,
value-oriented buyers, quality buyers, commodity buyers. In 1992, 45% of tire buyers were price
oriented, 22% were brand oriented and 33% believed the outlet was not important.
Company: Goodyear operated 41 plants in the US, 43 plants in 25 other countries, 6 rubber
plantations and more than 2000 distribution outlets worldwide. It ranked 3 rd in worldwide sales
of new tires. It also had a strong track record in launching innovative products.
Competitors: Michelin, Firestone, Uniroyal, BF Goodrich, Bridgestone, Uniroyal and General
Tire. Michelin is the major competitor for Goodyear among value-oriented and quality buyers.
Context: In the 1970s and 1980s, the US tire industry experienced three important changes- the
emergence of the radial tire to replace the older bias and bias-belted tire constructions,
increase foreign competition and change in the nature of demand from consumers and car makers
were observed. In 1989, Goodyear started the NEWEX project, to develop a new and exciting
replacement market tire. The Aquatred was developed after comparing 10 different designs on
performance and consumer preference.
Decision Problem Statement
Is Aquatred the right product for the dealers and for the consumers? If yes, whether distribution
should be expanded and if so, what specific channels or retailers should be added? Is it the right
time to launch the Aquatred?
Alternatives and their Evaluations
1. Goodyear to broaden its distribution to mass merchandiser and offer Aquatred
Mass merchandiser focuses more Intensive distribution which comes with its own
advantages and disadvantages
Advantages:
Intensive distribution through mass merchandiser can be done through small
and large independent tire chains which would provide increased coverage
and increased sales.
Disadvantages:
a) This strategy would help in the short run but it can hurt long term performance
by eroding brand equity.
b) Mass merchandiser focuses on volume which encouraging price wars which
further erodes profitability
c) Mass merchandiser sales are driven by promotional discounts while Aquarted
product is priced at 10% premium over the standard product.

2. Goodyear to broaden its Distribution Channels focusing on Exclusive Dealership

with the Aquatred
To focus more on Selective distribution and reducing on the Intensive distribution
Advantages
a) Selective distribution will help in gaining adequate market coverage with
more control and less cost than intensive distribution.
b) Aquarted pricing and selective distribution will ensure that the product is of
high quality and will attract the quality customers also.
c) It will also ensure that the territory conflict is minimum among the
distributors.
Disadvantages
a) Most customers of Goodyear are price-sensitive and hence market share in
that segment may come down.

Recommendation and Outcomes

Aquarted product is a patented technology and its launch will ensure that Goodyear is innovation
driven company. To move from the promotional discounts, company should focus on the
advertisement and try to attract the customers through the quality features of the product. The
launch of Aquarted during winter Olympics is a right decision as the product is in initial phase
and hence extensive marketing is needed. Price of the product should be kept slightly high (810%) so that the price-oriented customers as well as quality oriented customers could be
targeted. For distribution purpose, selective distribution model should be adopted to gain the
market coverage with more control.
So our outcome is that Goodyear should launch the Aquarted product keeping in mind the
following recommendations:
Premium pricing
Launch during winter Olympics
Selective distribution channels
Invest more in advertisement than promotions