Summary Goodyear is the third largest tire manufacturing company in the world.

It has 15% market share in the US but the second in rank Michelin is also slowly gaining in on the market share. Another threat to Goodyears market share was the slowly increasing share of private labels. In order to avoid losing their market share they needed to transform themselves from a manufacturing based company to a company to a customer value based company. Consumers of replacement tires: Consumers are people who own cars, it is part of the vehicle maintenance to replace tires, and to most consumers it is considered as a grudge purchase. The day they know that they need to change tires is the day that they are going it to buy it. Usually consumers buy tires in pairs, 42% of them purchases involved 2 tires and 40% involved 4 tires. There are 3 types of consumers, quality-conscious buyers (18%), value-conscious buyers (23%) and price-focused buyers (59%). Despite their different views on the product, all of them accord a great importance on prices, it is a price driven market, and customers are getting used to buy their tires on promotion. Retail channels and distribution network of Goodyear tires: These include, large chains that do not do further retail operations, large chains that go on to re-sell to retailers and finally small independent dealers. Competitors: Major competitors to Goodyear are Bridgestone, Firestone, Michelin and private labels, but the main competitor is Michelin. Even though, they dont have the same image among customers: Goodyear attracts more price-focused customers, while Michelin has a stronger image among quality and value conscious customers. Besides, this latter has a more intensive distribution and coverage, indeed, unlike Goodyears products; we can find Michelins tires in warehouse clubs and mass merchandisers. The Aquatred Tire: The Aquatred is the new innovative tire developed by Goodyear for passenger cars, specially designed for driving in rainy weather. It is meant to satisfy different targeted segments in a matured market with a strong distribution strategy, especially among small independent dealers. Even though, its distribution structure had several problems which they need to work on. Goodyear needs to take a call on the fact if they want to launch Aquatred as a premium product and what such a decision can do to the company and its market share. This is a major concern due to the price sensitive nature of the market. The main question that lies behind launching Aquatred is that will Goodyear be a able to expand their channels and achieve transformation to a customer value based company without compromising on the existing channels of Goodyear.

How do consumers purchase tires? Consumers purchase behaviour can be described as: They consider important attributes such as thread life. They normally purchase tires only once in two and half years, this is considered to be infrequent. They spend a significant amount on tires, approximately seventy five dollars per tire plus their installation costs. They also consider the risk factor that is the safety and security especially on long journeys.

What is the strategic role of Aquatred? Is it a right tire at the right time? The major strategic role of launching Aquatred was to set-up a new image for the company, i.e., from manufacturing-based to customer-value based. Apart from building brand equity and establishing itself as an innovation leader, the company was relying upon Aquatred for improving its financial position. Goodyear wanted to revolutionize the current scenario by breaking the price driven behaviour of customers & changing their perception about tires and its characteristics. So, as a product from Goodyears side, its the right time to launch it. Challenges for Aquatred 80% of the tire market, Original Equipment Manufacture & Replacement, is at maturity stage with slow growth rate and tough competition. The distribution structure of Goodyear is feeling the heat from low price outlets over distribution of tires. The earlier competitive advantage of Goodyear has been of producing tires at large scale, but due to management crisis in the past, the company is moving with no clear strategy. Too many private labels from Goodyear reflected price driven focus, it was to be shifted towards customer value driven.

Competitive Review Michelin It was positioned as a tire meant for quality and value conscious customers. Both Michelin and Bridgestone were about to launch tires with improved warranty of 80,000 miles. Michelin was also available at discounted shops like warehouse clubs & mass merchandisers.

Goodyear advantages Goodyear had a strong track record of launching new & exciting products in the past. Goodyears market share (15%) was almost double to that of Michelin (8.5%).

How should Aquatred be priced, distributed and advertised? The main objective of Goodyear is now to handle the following: 1. Select a target market 2. Segmentation 3. Product position Segmentation: 1. Quality 2. Value- Oriented buyers 3. Price Conscious Consumers- Constrained buyers Target Market: 1. The target audience (Quality Conscious) seek additional value provided with the tire through reliability, durability or handling. 2. With the introduction of a new premium tire, Goodyear would need to introduce program to increase perceived value of tires in the market. Product Positioning: It should include the following traits: Characteristics as design, name and brand, warranty and level of customer service Premium brand: Aquatred should be positioned in the Higher Margin Replacement markets to the Quality Conscious consumers focused on quality and performance Focus on the psychological benefit that is safety and present it as the USP 1. Point of Parity Quality radials Precision handling Large dealership network 2. Point of Difference Safety (lowest stopping distance) Durability (60,000 miles>> Industry average) Best Wet Traction Appearance: New, innovative & contemporary design 3. Frame of reference Simplification of the message to consumers Avoid poisoning mistakes

Avoid positioning too many features Avoid targeting too broad of an audience Symbiosis Institute of Telecom Management

Pricing strategy Analysis of company goals, fixed and variable costs, customer buying behaviour, competitive differentiation and product value context. Deploying high pricing Goodyear will communicate image of a superior product. Perceived Value Pricing should focus on safety image, high traction performance, warranty and other service deliverables through channel, savings on insurance, brand reputation and trustworthiness. Promotion Program The launch should be nationwide to give a strong brand impact at a large. Promote aggressively during the Olympics and create difference awareness among the customers. Aggressively promote in high-precipitation areas. Communication program for the launch should include the following: Advertise the tire as a prestigious and stylish item with safety as the key message Training the dealers to brief them about Benefits against competitor brand Explaining technical characteristics of the product Sales incentive plans Test and drive demonstrations in all major dealerships across country. Customer Relationship Management To increase brand loyalty To increase direct communication To create a database for trends and consumer preferences Distribution: Aquatred should be distributed using exclusive distribution channel design. To design the channel network, Goodyear should understand the need of the Quality Conscious consumer segment is and where they purchase their tires from. Based on the analysis, this segment is interested in performance and quality; thus the channel must understand technical characteristics of tires and be able to provide presales and post-sales support. Small independent dealers and manufacturer outlets are most consistent with the high value premium image that Aquatred is going to portray. Channels should contribute to the value chain of the product through the following characteristics: Price Image Post sales - warranty, check-up, tire rotations

Presale- convincing target consumers of purchasing Financing-Payments Manufacturer needs to provide: Promotion Information