Goodyear Aquatred Analysis and Decision Sheet

Submitter by : Ashish Mittal (M-11-03)

S. No.

Areas of Concern

Known Informations
a. Goodyear planned to sell the Aquatred with a 60,000mile warranty and to position the tyre at the top of the broad-line segment. b. Michelin and Bridgestone both planned to launch new tires with 80,000-milewarranties in 1992 backed by heavy advertising.

4 P's

c. Goodyear hoped to price the Aquatred at a 10% premium over the Invicta GS, i.e., at $ 90 per tyre. d. Three-fourths of all Goodyear tyres sold in independent or company-owned outlets were sold on promotion, at an average discount of 25% in a number of ways, such as one free tyre with the purchase of three tires etc. e. Owing to limited initial inventory Goodyear is looking

Segmentation, Targeting & Positioning

Market was segmented on the basis of 1. Performance and broad line tires. 2. Replacement and OEM tires. 3. Major brands, minor brands and private labels. Consumer Segmentation : 1.Price-constrained buyers 2.Value-oriented buyers 3.Quality buyers 4.Commodity buyers

Competition

Bridgestone, Michelin and its subsidiaries were the leaders in the value-oriented customer segment.

Launch Timing

Goodyear had been planning to exploit opportunity of introducing new products during conduct of the Winter Olympics in January, 1992 and could introduce the Aquatred at that point. Launching during the Olympics might spark sales of the Aquatred.

Major Issues

Recommendations
a. Competitors planned to introduced new tyres which appeared to offer better value for money but if that was actually the case that remained to be seen.

b. Also, Goodyear had the first mover advantage in Whether Goodyear's dealers be receptive to a high- this case as they were the first to introduce this priced tire when the industry seemed to be turning segment product. toward long-life warranties and low-cost private labels c. Given the outstanding performance Aquatred offered on wet surfaces along with the extended lifetime irrespective of weather conditions against that offered by Invicta GS, the premium of $ 10 appeared a little underrated. Given the first mover advantage, Goodyear could certainly afford to charge a little more intially,say $ 100 per tyre.

As a major brand, Goodyear planned to compete with other major manufacturers' quality products through Aquatred which wasn't their forte as such. Since they had focussed on the price-constrained & the commodity buyers till this point, they had planned to target the remaining two segments now completing the circle. But not being well known for this category, would they be able to pull off well, was a major apprehension.

Aquatred was at least at par par with the best broad-line tyre Goodyear offered, i.e., Invicta GS, even if not superior in ordinary conditions. But in wet conditions the product offered unmatched performance. Given the fact, this offered the best opportunity to them to enter the niche value-oriented customers for whom the performance was everything and more importantly who would be willing to shell out more for better quality.

Launching Aquatred meant a head-on collision with Michelin & Bridgestone which wasn't exactly the case yet. Given their strong image in this segment, it looked a bit difficult for Goodyear to steal their loyal customer base with a new product which was yet to prove its worth.

Clearly, Aquatred was a product whose contemporary no other manufacturer had at that point of time. So even though succeeding in capturing the segment looked uncertain, there were very likely to succeed given the product had right attributes. This was the perfect opportunty to tap the untapped potential that existed out there.All that was required was right promotion & advertising straretegy for Aquatred to make the buyers aware of its introduction to the market.

But the initial inventory of Aquatreds had been made to fit domestic cars, as opposed to the smaller sizes for imported cars. Molds to produce other sizes would not be available until several months after the Olympics.

Goodyear would in no case do good by waiting to launch till the Olympics given that anyway they would be able to target only the domestic customers till a few months post Olympics. Therefore, they got to launch Aquatred as soon as possible since other manufactuers are still at least some months away to launch similar product. This would give them the first mover leverage in the least as well as ability to charge slight higher premium initially.