Understanding the Market for Eco- Friendly Tires By: Kyle Costal, Pauline Gaynesbloom, Julia Mallinak, Nick Moyer, Kira Sizemore Getting the Green:

Presentation Overview Research Questions Key Findings Research Recommendations 2

Research Questions 1. Should Goodyear market a “soybean oil tire”? 2. Who should Goodyear market to? 3. Are consumers willing to pay more for it? 3

Key Findings: Eco-Friendly firms matter Being an Eco-Friendly Company matters more than producing eco-friendly products “Green” is not a Millennial issue It is a shared concern across all generations But… not everyone can afford to buy Some people will pay more But... there is a limit to what they will pay & why they will pay it 4

Methodology Secondary Research Primary Research Analysis Recommendations 5

Secondary Research 6

Process Explanation Sought to find: Overall perceptions of green products Differences between Millennials and older generations Examples from other industries of green efforts and results Used over 30 scholarly sources to ensure credibility 7

Secondary Research Findings General Skepticism towards “green”: “Greenwashing” problem in the 90’s Some people think “green” is a gimmick How to Establish Trust: Need evidence to back up claims 8

Secondary Research Findings (cont.) Education = Key to “Green” Success Authenticity and legitimacy help combat skepticism Education helps to improve image 9

Secondary Research Findings (cont.) General Price Sensitivity to “Green” Green products perceived to have lower quality Green products held to “traditional” quality standards Feel green is overpriced without additional benefits 10

Secondary Research Findings (cont.) The Millennial Generation Views similar to previous generations Support green, but don’t always act on it Millennials don’t have much expendable income yet 11

Secondary Research Findings (cont.) A Study on Revenue Opportunities Overall profits tied to announcement of green products, however... Not as much profit in product release Biggest opportunity to maximize profit in development and announcement stages 12

Primary Research 13

Process Explanation Primary Research Focus groups to gain initial insights for further research A survey to use insights from secondary research & focus groups to then test theories and find answers 14

Focus Group Inquiries: What influences Millennials in their tire-purchasing decisions? What are millennial perceptions of “green?” How might people react to “soybean oil tires?” 15

Focus Group Findings Males were the dominant influencers of purchase decision Females seemed uneducated on tires Terminology testing “Green” and “Soybean/Soybean Oil” had conflicting perceptions between groups “Environmentally-Friendly”/“Eco” had positive perceptions 16

Focus Group Findings (cont.) Mentioning “Soybean Oil Tires” caused confusion but also deeper questioning Some participants felt a company needed to be viewed as environmentally-friendly to sell an environmentally friendly product. 17

Survey Execution Developed questions within Survey Monkey Analyzed results in Survey Monkey and JMP Made some strategic decisions Avoid bias: Chose not to mention “Goodyear” specifically Eliminate Negative Connotations: Chose to use the concept of an “environmentally friendly tire” to represent the “soybean oil tire” 18

Survey Development 6 Main Q’s Heading In (1) How do tire names containing “green, eco-friendly, and soybean oil” rank when compared? i.e. What should Goodyear call this new tire? (2) Are males the only influencers in tire purchases? (3) Which tire features are most important to Millennials? 19

Survey Development (cont.) 6 Main Q’s Heading In (4) Are Millennials willing to pay a price premium for eco- friendly tires? If so, how much? (5) Are there significant differences between generations? (6) If a company is environmentally friendly, does that increase the likelihood that Millennials will purchase more traditional and environmentally friendly products from that company? (brand loyalty simply because of company stance?) 20

Survey Development (cont.) The Revision Process Consulted Marketing Professors Beta Test (64 respondents) Revised and Launched 21

Survey Findings 204 respondents 22

23 Possible Tire Names ● Most popular tire names: (1) Radial (control) (2) Eco-Friendly

24 Influencers ● Top influencers: (1) Professionals (2) Male family members

25 Important Tire Features ● Most Important: (1) Tread Life

26 Willing to Pay More for the Same Quality? ● Entire Population ● Price premium? Yes ≈ 60% No ≈ 40% ● Assumption: Same quality

27 ●Older generations generally more willing to pay a premium “60% Willing to Pay More” by Generation M = Millennials (Y) X = Generation X B = Boomer Generation

28 Surprise Finding: Significance by Gender Women Of the 60% of people willing to pay more, the majority were women Women are also more favorable to Eco-friendly products and Eco- friendly companies Possible target market?

29 Possible Price Premiums for 60% ● Common Price Premiums (1) Up to 10% (2) Up to 5% ● Average Price Premium ≈ 10%

30 Intention to Buy Eco vs. Traditional Products From Eco-Friendly Company Traditional Products Eco Products ● Likelihood of people purchasing traditional and eco-friendly products from eco-friendly companies. Idea of Brand Loyalty ● Scale -2: Strongly Disagree 0: Neutral 2: Strongly Agree

Answering the Original Research Questions 31

Answering the Original Research Questions 1. Should Goodyear market a “soybean oil tire”? a.No. Goodyear should not market any tire with the terminology “soybean oil” i.Unless the company wants to go through the hassle of having to educate consumers which could be extremely expensive. Even then, to tell consumers that soybean oil is being put into their tires could cause unnecessary confusion. 32

Alternatives to a “Soybean Oil Tire” 1.Market an “Eco-Friendly Tire” a.Avoids negative perceptions of products labeled “green” i.Too expensive ii.Low quality 2.Goodyear markets itself as an Eco-Friendly Company that produces great tires 33

Answering the Original Research Questions 2. Who should Goodyear market to? a. Depends. Remember this is not a Millennial issue. i. Charging a premium → target older generations with more income ii. Not charging a premium → target all generations 1. Either way, consider targeting females 34

Answering the Original Research Questions 3. Are consumers willing to pay more for it? Depends on... a. Who Goodyear wants to market to i. Older generations more willing to pay premiums b. What benefits are stressed in marketing communications i. In general, people are more willing to pay a premium if they feel that the performance of the tire has been enhanced, not just because the product is “green” 35

In Summary Pursue authentic Eco-Friendliness as a company Market the new tire as “Eco-Friendly” Market to older generations (possibly females) Charge a premium only if you can prove added performance benefits to consumers 36

Suggested Future Research ● Look deeper into the seemingly empathetic female market ● Figure out what communication mediums and messages can be used to persuade the female market and their male influencers 37

Questions? 38