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GROUP 6
BACKGROUND (sharmista)
1900s U.S. tyre industry dominated by 5 companies. It was characterized by consistent growth in revenues & profits and absence of foreign competition.
BACKGROUND
Major impacts of these changes:
Sluggish demand due to increased average life of tyres with less usage of cars.
BACKGROUND
Goodyear known as Gorilla for its dominance in the tyre industry. Highest market share -15% (replacement) & 38% (OEM market) in 1991 Made investment over $1.5bn to convert its factories to
produce radials.
Had strong track record in launching innovative products. Stanley Gault, Chairman , increased priority on new product development.
BACKGROUND
GY Earned net income of less than 1% on total revenues. GY testing a new retail format just tyres
BACKGROUND
50% of GYs independent dealers sold only GY tyres and other 50% stocked at least one other brand. These dealers aggressively merchandised other brands but still GY generated 90% of its revenue. 1991 Dealers were not pleased with their reliance on auto service which earned 48% of their revenues.
BACKGROUND
Michelin owners were most loyal followed by GY. GYs competitors planning a wide range of campaigns for 1992. Aquatred new tyre, with improved driving traction under wet condition. Robbins concerned over the Aquatred launch program. Aquatred product to revitalize GY.
QUESTIONS
Aquatred, a the right product consumers? Whether distribution be expanded and if so which channels to be added?
PRICING
Price conscious consumers, making purchase only on sale. New tyre prices in U.S. passenger market had declined & averaged at $75.
CONT
Pricing also depends on the marketing channel to be used. Use of exclusive distribution for Aquatred to signify uniqueness and premium pricing.
CONT.
Perceived difference: survey also revealed that buyers were more likely to replace competitors tire with Aquatred.
CONT
Firms advertising decisions depend on how much motivation dealers need. Need to advertise more for Aquatred as:
Miles warranty was just 60,000 when competitors were
coming up with 80,000 miles warranty Priced higher when consumers where getting price
conscious.
Targeted at maturing replacement market.
CONT.
Increase advertising to induce sales and thus increase capacity utilization which is currently lower.
Consumers
Consumers
Consumers
OEM
Consumers
CONT.
Retail channels:
Independent dealers accounting for 50% of sales Manufacturer owned outlet 27% of sales Franchised dealers 8% of sales Government agencies 8% of sales
CONT
Use only for selected tyre lines which have entered the maturity or decline stage. With this it can gain adequate market coverage. Would avoid brand dilution. Avoid channel conflicts by reserving selling rights of certain goods only to individual dealers.
CONT
Protect its image by avoiding over exposure and availability in discount stores, as its positioned in the top broadline segment.
Suggestion
To periodically review channel design of Aquatred and modify it if not working as planned. Use of e-commerce marketing practices. Lowering price at later stages to drive competition out.