Goodyear (Key Issues) Week 6 Fall 2007
Consumer BehaviorEmergency versus Planned purchases • Emergency Purchase • Minimal shopping • Grudge purchase • One/two tires • Replace with tires similar to type on car • Planned Purchase • Greater information search • 2/4 tires • Dealer Information and service important • OEM tires play less of a role • WHAT ARE THE IMPLICATIONS FOR GOODYEAR’S CHANNEL STRATEGY?
Implications for Goodyear’s Channel Strategy Emergency: • Wide distribution and high inventory. • Constant reminder advertising and sales promotion. • Expansion of distribution system to mass merchandisers would addresses this segment. Planned: • Innovative and differentiated products. • Dealer informational service important. • Selective distribution more suitable for this segment • Acqatread may address this segment.
Goodyear’s distribution • What does Goodyear gain from its Independent dealer channel? • What is the role of company owned outlets?
Goodyear Distribution • Role of Independent Dealer • Service provision is important. • Reduces inter-brand competition. • Why use a mix of company-owned and independent dealers? • Coverage • Discipline your independent retailer, service provision, maintain retail prices • Like resale price maintenance but no legal problems.
Goodyear’s distribution • Goodyear penetration 4400 outlets vs. Michelin 7000 outlets. What are the pros and cons of Goodyear's selective distribution.
Should Goodyear broaden distribution to warehouse clubs and mass merchandisers? Pros • “Be within an arm’s length of desire” to cater to unplanned purchase segment. • Michelin and others already everywhere. • Market is maturing and becoming more commoditized. • Independent dealers are becoming less Goodyear loyal and using Goodyear name to bait-and-switch to private labels • Going to mass merchandisers might counter-balance this Cons • Increased retail price competition • Independent dealers might respond • By offering less informational service. • By supporting private labels.
Should Mass merchandisers and warehouse clubs be offered Acquatread? • Importance of retail selling effort and information provision • Can TV advertising do the job of communicating the unique benefits of Acquatread? • Aquatread has a role in opening up shelf space at mass merchandisers vs. Michelin
What happened? • Pre-launch publicity 150,000 sold before launch • 1992…1 mn. sold, 20% over forecast • Half of all buyers replaced non-Goodyear tires. • Goodyear broadened distribution to Sears then Wal-mart and K-Mart…added a total of 1500 outlets. • Wall street reaction was guarded…waiting for reaction from dealers • 1994..Sam’s Club starts testing Goodyear…Goodyear claims that it was not supplying directly. • Goodyear announces plan to stock at “Just Tires.” • Strong “brand pull” mitigates backlash from independent dealers.