Goodyear The Aquatred Launch Case Study Analysis

Summary of Case Analysis: Goodyear Tire and Rubber Company Essay

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Summary of Case Analysis: Goodyear Tire and Rubber Company

1. INTRODUCTION GOODYEAR TIRE AND RUBBER COMPANY

Goodyear Tire and Rubber Company, was founded in 1898 and was the world tire production leader until November 1990 when Groupe Michelin took over after merging with Uniroyal Goodrich Tire Company.

Goodyear¡¦s principal business is the development, manufacture, distribution, and sale of tires throughout the world. Its tires and tube sales represent 83 % of 1991 corporate sales of $10.9 billion with corporate wide earnings of $96.9 million. It has its owned Goodyear Auto Service Centers and franchised Goodyear Tire Dealers in supporting its distribution and sale of tires in US.

Goodyear controls 20 percent of…show more content…

SITUATION ANALYSIS

We need to consider a number of relevant information prior to making the decision. The information that needs to be considered is:

(a) What are Goodyear¡¦s situation, its strength, weaknesses, opportunities and threat?

Table 4 ¡VSWOT Analysis on Goodyear

Strength Weaknesses
„X 94 years of experience
„X 37% of US tire-making capacity
„X 60% in the Tire Replacement market (Top Ten in US)
„X 40% in the Original Equipment Manufacturer market
„X Market leader in North America
„X Broadest line of product
„X Broad market brand names with 11 brand names
„X Premium quality brands
„X A leading national advertiser
„X 8000 retails point of sale
„X 1000 company owned Goodyear Auto Service Centers
„X 2500 franchised Tire Dealers „X exclusive distribution policy
„X lack of customer service
Opportunities Threat
„X Additional 850 retails channels „X 2 million Goodyear brands were replace annually at Sears
„X growth of warehouse membership club stores and discount tire retails
„X customers loyalty to Sears

(b) What is the position of Goodyear in the Tire Industry?

There are 2 types of market in the tire industry, namely;

(i) Original Equipment Tire market;

Original equipment tires are sold by

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Goodyear Tires Case Study

Case Study: Goodyear: The Aquatred Launch

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 why it didn’t want its tires sold in low-priced outlets? Bad image? Then why Michelin, which had its tires sold in low-priced outlets, still got higher percentage from value-oriented buyers and quality buyers in the survey of ‘what brand of tires the owners intended to buy the next time’?

• New product launched: Aquatred

Aquatred was a new tire providing improved driving traction under wet conditions. The question was ‘was it the right product for the dealers and for the consumer, as the industry seemed to be turning toward long-life warranties and low-cost private label?’

It was also planned to launch during the Winter Olympics in January of 1992. However, the initial...

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