Goodyear is launching a new high-traction tire series called Aquatred to establish itself as an innovative tire manufacturer. It is considering expanding distribution channels and the risks and benefits of launching Aquatred. Goodyear hypothesizes that launching Aquatred, with some changes, could help revitalize the company due to its brand strength, loyal customer base, and the product's advantages over competitors in the wet-traction segment. However, Aquatred is currently overpriced and expanding independent dealers or mass-merchandisers could help reach more customers. Launching during the upcoming Winter Olympics may boost sales through heavy promotion relating Aquatred to safety. Alternatives will depend on the launch's success or

1. CASE-
STUDY
LAUNCH OF
AQUATRED
TIRES BY
GOODYEAR

2. WHAT IS THIS CASE
STUDY ABOUT?

3. THIS CASE-STUDY IS ABOUT THE
DILEMMAS OF MAJOR TIRE
MANUFACTURER GOODYEAR’S NEW
PRODUCT LAUNCH

4. WHAT IS THE NEW PRODUCT ?
AQUATRED
(High-Traction
tire series)

5. Situation
Analysis
Questions
Hypothesis
Proof and
Action
Alternatives
WORK-FLOW FOR OUR CASE
STUDY ANALYSIS

6. SITUATION

7. GOODYEAR IS ONE OF THE MAJOR TIRE
MANUFACTURERS IN THE U.S. AND THE
COMPANY NOW WANTS TO LAUNCH A
NEW TIRE SERIES AIMED AT PROVIDING
HIGH-TRACTION TIRES TO THE
CONSUMERS AND ESTABLISH ITSELF AS
AN INNOVATIVE TIRE MANUFACTURER.

8. SOME POINTS TO PONDER…
• INDUSTRY GROWTH HASN’T BEEN TOO GOOD IN THE PAST FEW
YEARS DUE TO LOW DEMAND. THE MAIN REASONS OF LOW
DEMAND INCLUDE INCREASED OIL PRICES AND INCREASED
AVERAGE LIFE OF NEW TIRES
• A SHARP DECLINE OF TIRE PRICES – 25%, HAS BEEN OBSERVED IN
THE PAST DECADE DUE TO INCREASED COMPETITION
• LOW CAPACITY UTILIZATION AND HIGH TIRE-MAKING CAPACITY

9. • GOODYEAR’S CONTEMPLATION OF
UPCOMING LAUNCH OF AQUATRED TIRES.
• RISK AND BENEFIT ANALYSIS OF EXPANDING
COMPANY’S DISTRIBUTION CHANNEL

10. QUESTIONS

11. • WHO ARE THE MAIN PROTAGONISTS?
• WHAT IS THE CURRENT SITUATION IN TIRE INDUSTRY?
• HOW IMPORTANT IS THE ROLE PLAYED BY VARIOUS DISTRIBUTION
CHANNELS?
• WHO ARE THE MAIN COMPETITORS ?
• HOW IS THE NEW PRODUCT DIFFERENT FROM OTHER PRODUCTS
OF THE COMPANY?
• WILL THE LAUNCH OF THE NEW PRODUCT BE HELPFUL TO
REVITALIZE GOODYEAR?

12. MAIN PROTAGONISTS ARE
BARRY ROBBINS
(VICE PRESIDENT, MARKETING,
NORTH-AMERICA, GOODYEAR)
STANLEY GAULT
(CHAIRMAN, GOODYEAR)

13. MAIN
COMPETITORS
OF
GOODYEAR

14. WHAT ARE THE MAIN DISTRIBUTION CHANNELS?
Wholesalers
Oil Companies
Large-retailers
Manufacture-owned outlets
Independent dealers
Retailers
Garages/ Service stations
Warehouse clubs
Mass-merchandisers
Manufacturer-owned outlets
Small Independent tire dealers
Large independent tire chains

15. HYPOTHESI
S with
PROOFS
AND

16. GOODYEAR SHOULD TAKE
A CHANCE WITH
AQUATRED WITH SOME
CHANGES IN ITS LAUNCH
STRATEGY
BECAUSE…

17. BRAND-SPECIFIC
REASONS

18. GOODYEAR HAS A STRONG TRACK
RECORD IN DEVELOPING
INNOVATIVE PRODUCTS
LAUNCH OF GOODYEAR’S FIRST ALL SEASON TIRE, TIEMPO IN 1977 WAS
SUCCESSFUL
SUCCESSFUL LAUNCH OF EAGLE (HIGH-SPEED TRACTION) TIRES IN
1981

19. GOODYEAR HAS BEEN “THE GORILLA”
(MAJOR PLAYER) IN TERMS OF MARKET SHARE OF
REPLACEMENT TIRE MARKET AND
AQUATRED WILL BE A PART OF THE REPLACEMENT
SERIES

20. GOOD YEAR HAS ALAR
LOYALCUTOMER BASE,
SECOND ONLY TO
MICHELIN

21. HERE IS THE PROOF…
Major threat to this loyalty is brand switching to Private
Labels but if we look at the numbers carefully, the stats
aren’t as disturbing for Goodyear and Michelin as it is for
other major players.

22. CAN SWITCHING
TO PRIVATE
LABELS BE
CONTROLLED ?
IT MIGHT NOT BE IMPOSSIBLE, BUT IT
IS SURELY VERY DIFFICULT BECAUSE
THE AVERAGE RETAIL PRICE OF A
PRIVATE LABEL TIRE IS 18% LESS
THAN THE BRANDED TIRES.

23. GOODYEAR HAS A
STRONGER IMAGE
,COMAPRED TO MICHELIN,
AMONG PRICE-
CONSTRAINED BUYERS AND
COMMODITY BUYERS

24. WHO ARE THESE PRICE-CONSTRAINED
AND COMMODITY BUYERS?
 BOTH THESE BUYERS ARE
PRICE CONSCIOUS AND PREFER
LOWER PRICE
 BOTH THESE BUYERS SHOP
AROUND MORE THAN QUALITY
BUYERS AND VALUE ORIENTED
BUYERS
 THEY POSSESS LOW BRAND
LOYALTY

25. PROOF OF THE FACT THAT GOODYEAR HAS A
STRONGER IMAGE AMONG COMMODITY BUYERS AND
VALUE-ORIENTED BUYERS

26. CHANGES IN THE MINDSET
OF CONSUMERS
• IN THE PAST FEW YEARS, THERE HAS BEEN A 4%
INCREASE IN THE NUMBER OF COMMODITY BUYERS
AND ONLY A SLIGHT DECREASE IN THE PRICE-
ORIENTED BUYERS (CONSIDERING THE INITIAL
SHARE OF SUCH BUYERS-48%)
• ON THE OTHER HAND, THERE HAS BEEN A 4%
DECREASE IN THE QUALITY BUYERS

27. PRODUCT-
SPECIFIC REASONS

28. 60,000-MILES
WARRANTY

29. LESS NUMBER OF
COMPETITORS IN
THE HIGH WET-
TRACTION,
BROAD-LINE TIRES
SEGMENT

30. WITH NEW PERFORMANCE AND
DESIGN CHANGES BASED ON
CONSUMER PREFERANCES,
AQUATRED IS EXPECTED TO HAVE
TANGIBLE AND PERCEPTIBLE
ADVANTAGES OVER OTHER EXISTING
MODELS.

31. BUT…

32. WILL THE PEOPLE BE READY TO PAY A HIGH
AMMOUNT FOR A HIGH WET-TRACTION
SERIES WHEN THEY HAVE THE OPTION OF
BUYING TIRES WHICH PROMISE HIGHER
DISTANCE WARRANTY AT A LOW PRICES?

33. YES,
IF TEST-MARKET SURVEY
IS TO BE BELIEVED

34. UNLIKE OTHER
GOODYEAR
PRODUCTS, THE
CUSTOMER BASE OF
AQUATRED TIRES IS
DOMINATED BY
QUALITY BUYERS
AND VALUE-
ORIENTED BUYERS

35. AQUATRED
CUSTOMERS ARE
MORE LIKELY TO
REPLACE
COMPETITOR’S
TIRES

36. AQUATRED BUYERS
SEARCHED MORE
EXTENSIVELY FOR
INFORMATION PRIOR TO
PURCHASE AND ARE
EXPECTED TO VALUE
THE ADVANTAGES OF
HIGH WET-TRACTION

37. IS THE COMPANY
PRICING THE
PRODUCT
RIGHTLY?

38. RESULTS OF “MYSTERY SHOPPING” IN AQUATRED
TEST MARKET
Above shown are the prices quoted by six different outlets during a
mystery shopping exercise in the test market.
Goodyear’s suggested retail prices for the Aquatred were $89.95 with a
black sidewall, and $93.95 with a white sidewall.

39. THE PRODUCT IS
CERTAINLY
OVERPRICED AND
HENCE, PRICE
PROMOTIONS ON
AQUATRED IS A GOOD
OPTION

40. WHAT SHOULD BE THE IDEAL
DISTRIBUTION CHANNEL?
“THERE IS NOTHING CALLED IDEAL AND ONE HAS TO CONSTANTLY
JUGGLE BETWEEN THE OPTIONS TO REACH AN OPTIMUM LEVEL OF
SATISFACTION”

41. THE COMPANY CAN EITHER…
EXPANDING INDEPENDENT
DEALERS (MAIN REVENUE
GENERATOR)
EXPANDING NEW FORMATS
LIKE MASS-MERCHANDISER,
WAREHOUSE CLUB &
SERVICE STATIONS FOR
MORE REACH AND VISIBILITY
OF THE PRODUCT
• FINANCIAL ASSISTANCE TO
NEW ENTRANTS
• TRAINING AND SUPPORT
REQUIRED
• LIMITED DISCOUNT NEEDS TO
BE PROVIDED
• LIMITED STOCK SHOULD BE
PROVIDED (ELSE IT WILL
START BOTHERING
INDEPENDENT DEALERS)

42. WHAT SHOULD BE THE IDEAL TIMING
FOR THE LAUNCH ?

43. WHATCOULD
BE ABETTER
TIME THAN
WINTER
OLYMPICS?

44. GOOD CHANCE TO REACH
LARGE CUSTOMER BASE
NEEDS TO SPEND HEAVILY ON
ADVERTISEMENT AND
PROMOTIONS (GOOD YEAR
NEEDS TO RELATE ITSELF TO
THE OLYMPICS THROUGH ITS
ADVERTISEMENTS)
HEAVY PROMOTIONS
THROUGHOUT THE OLYMPICS
EVENT CAN BE A BIG BOOSTER
TO SALES

45. IT NEEDS TO
PROMOTE SAFETY
AND COMFORT
IT SHOULD MAKE
PEOPLE
UNDERSTAND THE
VALUE OF HIGH
WET-TRACTION

46. ALTERNATIVES

47. ALTERNATIVES
COULD BE
THOUGHT OF
DEPENDING ON
THE FAILURE
OR SUCCESS
OF THE
LAUNCH

48.  IN CASE OF A FAILURE, THE COMPANY NEEDS TO THINK
ABOUT ITS EXPANSION MEDIUM (BETTER USE OF
WHOLESALE CHANNELS)
 THE COMPANY SHOULD LOOK TO FORRAY INTO OEM
MARKETS TOO
 PRICING WILL ALSO A PLAY A MAJOR PART DEPENDING ON
WHETHER OR NOT THE COMPETITORS COME UP WITH A
SIMILAR PRODUCT AT A LOWER PRICE
 THE COMPANY WILL NEED TO RETHINK ABOUT THE VALUE
THAT IS CONVEYED TO THE CUSTOMERS THROUGH
ADVERSTISMENTS AND OTHER FORMS OF MARKETING

50. Created by Akash Yadav, IIT
Kharagpur, during an internship by
Prof. Sameer Mathur, IIM Lucknow.
www.IIMInternship.com