Goodyear Tire Analysis

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Recommended: Online vs in store shopping

Problem Statement:

With the development of Aquatread (AT), a premium differentiated tire intended for the broadline, replacement market; Goodyear (GY) must reassess its competitive position and distribution systems in the North American tire market. The GY is currently a market leader in the replacement market with 15% market share (Sales of 22.8MM units). GY¡¯s marketing strategy, in particular, the launch of AT, must be examined in the context of evolving consumer buying patterns and distribution channels, as well as alignment with their business strategy of differentiating GY through their brand. The key marketing decisions to be made are should GY launch AT, should GY expanded its distribution and whether or not AT is to be included in this expansion.

The Market for Replacement Tires.

The US replacement tire industry (152MM units) had seen; stagnant growth (5 yr CAGR 1.1%), declining prices (25% over 10 years), foreign imports, excess capacity, brand consolidation and longer tire life. These factors have contributed to a shift in the market place towards a competitive, commodity- like market. The major brands account for 36% of the market with Private Label (PL) having the largest share (40%). The distribution channels in the market have moved towards independent dealers (67%) and large retail distribution (19%). Exhibit 1 details the market share and price levels within channels as well as the level of service consumers receive.

Consumers and Segmentation Analysis:

50% of consumer purchases are made the same day consumers are aware of the need to replace tires. Purchases are likely to be made at convenient locations with little research and only 1-2 tires replaced. For planned purchases, the primary performance...

... middle of paper ...

...ience in this channel through its Kelly brand and it is preferable to cannibalize sales to GY products. Threats to this wider distribution are GY¡¯s relationship with the independent retailers and potential erosion of its brand. However, there is no other major brand distributing solely in the independent channel so retailers have no choice and sales are being lost to PL mostly in this channel. In addition many independents are moving towards stocking other brands so GY needs to move into new channels. GY could also only offer a limited range in the mass merchandisers, unlike the retailers who have the full line plus the new AT. The media campaign and introduction of AT should provide sufficient boost to GY¡¯s brand equity. Longer term (after 1 year), GY could consider including AT in the mass merchandiser but GY¡¯s market position would need to be re-examined.

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