Growth of the company is tied to increasing market share and improving margins. The launch of Aquatred is the manifestation of a customer-focused value proposition and will provide better margins over taking the commodity approach to increasing sales. A two year payback is achieved with 0.24% market share gain, recapturing the initial $21MM investment.
Executives at Goodyear must decide whether to launch the new Aquatred line of tires, and if so, the best strategy with regards to distribution channels, pricing, and timing.
Goodyear needs to gain market share from competitors, particularly among the value and quality oriented consumers. In addition, Goodyear needs to improve margins due to an industry which is particularly mature and stagnant, causing net income to be less than 1% of total revenues.
In order for the Aquatred launch to be successful, Goodyear needs the support of its dealers.
Goodyear has been known as "The Gorilla" for its dominance of the world tire industry. However, there have been significant changes in the tire industry: emergence of the radial tire in the 70's, increased foreign competition, improvements in tire life, and changes in consumer demand due to the popularity of smaller cars.
• Target Market: U.S. Passenger Tire Market.
• Target Market Segments: 1: Replacement, 2: Broad-Line, 3: Major Brand (Exhibit 2).
• Market Positioning: The Aquatred will be positioned as a top of the broad-line, major brand, replacement tire that provides improved handling under wet driving conditions. .
5 C's (Customer, Company, Competition, Collaborators, Context).
Needs - Customers want safety, and tires that provide predictable handling stability under all conditions. .
Decision-Making Process - The five most important attributes considered when purchasing tires are tread life, wet traction, handling, snow traction, and dry traction.