Goodyear Tires Case Study

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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 h...

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...e company might have too many promotions. Finally, the consumers wouldn’t come to buy Goodyear tires at full price and it could affect company’s image, too.

• Goodyear needed loyalty program to establish and retain relationship with consumers as soon as possible before they switched to other branded tires, like Michelin, or private label tires that had lower price than Goodyear.

• The company should find a way to compromise with independent dealers about competition in the areas, while expand more distribution channels and find more new retail formats, like Just Tires.

• In order to launch Aquatred effectively, Goodyear needed cooperation from every departments, especially marketing department. Integrated marketing communication was very important to create awareness of the customers. It should focus on the word “innovation” and “safety under wet conditions”.
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