Goodyear:

The Aquatred Launch

Group D1
A Suman
Maithili Rege
Amita Kota
Prithvi Raj
Mahroof V
Varinder Singh
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Major Issues
Is Aquatred the right product for the customers?
Should the distribution channels of Goodyear be
expanded? If yes, which specific channels should
be added?
Is the timing of the launch of Aquatred apt?
Is Goodyear right in pricing Aquatred at a 10%
premium over Invicta GS?

Analysis of Issues
Issue 1: Is Aquatred the right product for the customers?
Answer: YES
5 important tire attributes as per the customers, in order
from higher to lesser importance:
o
o
o
o
o

Tread life
Wet traction
Handling
Snow Traction
Dry Traction

Aquatred offers superior wet traction as compared to the

current all season radial tyres (with tread life at par with
the other radial tyres) - valued highly by customers
Distinct and superior appreance
Positive test market results more likely to replace
competitors tires
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Analysis of Issues
Issue 2: Is the timing of the launch of Aquatred apt? Is Goodyear
right in pricing Aquatred at a 10% premium over Invicta GS?
Answer: YES
Continental Tire known to be working on a similar product
o

First movers advantage and hence could also charge a premium for Aquatred

Once the competitor launches a similar product, the prices

need to be revised based on the competitors pricing.
Issue 3: Should distribution channels of Goodyear be expanded?
Target Customers:
o

Value oriented buyers

Value brand Predisposed to major brands
Relatively less price sensitive
Quality Buyers - Prestige buyers
Want to own best tires on market, Aquatred marketed to be the best
Major brands accounted for 65% of the purchases so make a well informed
decision

Common characteristics: Low loyalty to any particular outlet,

value brand, well informed

Analysis of Issues
Distribution Channels:
Current Channels:
o Company owned stores (number: 1047, 27% of sales)
o Franchises (number: 600, 8% of sales)
o Independent dealers (number: 4400, 50% of sales)

Higher sales per store for company owned stores

o Partly due to reduction in % of exclusive independent dealers for Goodyear
(from 70% in 1989 to 50% in 1991)
o Company owned stores incur higher costs and given the current economic
condition of the company (i.e. high interest payments leading to lower net
income), it is advised to avoid further increase the company owned stores

Avoid mass mechandisers and warehouse clubs

o Erosion of the brand value of Goodyear
o Cannibalization of the sales of existing outlets
o Might lead to dealers taking additional lines of tires
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Analysis of Issues
Independent Dealers:
Increase the number of independent delears
o Customers value the provision of auto services
o Account for 67% of the replacement tire sales higher market penetration

Challenges:
o Inactivity of dealers
Only 2500 of 4400 independent dealers are active
Goodyear tire sales offer higher margin (28%), hence, this could act as
an incentive for dealers to stock Goodyear tires
o Significant variations in the pricing and the communication of attributes at
the different stores
Standardise communication that would be shared to the customers at
the outlets either through pamphlets, brohures, training etc.
Srandardisation required in the pricing of the product
o Loss of legitimate channel power due to roll out of Bill of Right in 1992 (by
NTDRA)
Use reward or referrent power to enfroce the changes
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Recommendations
Aquatred is a premium product, target customers are
value oriented buyers and quality buyers (prestige
buyers)
Product launch needs to be done at the earliest to gain
the first movers advantage
Engage in exclusive distribution
o Increase the number of independent dealers
o Decrease the inactive dealers
o Avoid mass mechandisers and warehouse clubs brand value erosion

Standardise communication that would be shared to

the customers at the outlets either through pamphlets,
brohures, training to employees etc.
Srandardisation required in the pricing of the product
7