1. 1 Ganesh Iyer Goodyear (Key Issues) Week 6 Fall 2007

2. 2 Ganesh Iyer Consumer Behavior Emergency versus Planned purchases l Emergency Purchase l Minimal shopping l Grudge purchase l One/two tires l Replace with tires similar to type on car l Planned Purchase l Greater information search l 2/4 tires l Dealer Information and service important l OEM tires play less of a role l WHAT ARE THE IMPLICATIONS FOR GOODYEAR’S CHANNEL STRATEGY?

3. 3 Ganesh Iyer Implications for Goodyear’s Channel Strategy Emergency: l Wide distribution and high inventory. l Constant reminder advertising and sales promotion. l Expansion of distribution system to mass merchandisers would addresses this segment. Planned: l Innovative and differentiated products. l Dealer informational service important. l Selective distribution more suitable for this segment l Acqatread may address this segment.

4. 4 Ganesh Iyer Goodyear’s distribution Garages60 W. Clubs60 Mass. Merch.120 Mfg. Owned927 Independent6358 Other415 What does Goodyear gain from its Independent dealer channel? What is the role of company owned outlets?

5. 5 Ganesh Iyer Goodyear Distribution l Role of Independent Dealer »Service provision is important. »Reduces inter-brand competition. l 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.

6. 6 Ganesh Iyer Goodyear’s distribution l Goodyear penetration 4400 outlets vs. Michelin 7000 outlets. What are the pros and cons of Goodyear's selective distribution. GoodyearMichelin No. of Outlets44007000 Competition among dealers Dealer interest in other brands Manufacturer Influence over Retail

7. 7 Ganesh Iyer Should Goodyear broaden distribution to warehouse clubs and mass merchandisers? Pros l “Be within an arm’s length of desire” to cater to unplanned purchase segment. l Michelin and others already everywhere. l 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 l Increased retail price competition l Independent dealers might respond »By offering less informational service. »By supporting private labels.

8. 8 Ganesh Iyer Should Mass merchandisers and warehouse clubs be offered Acquatread? l Importance of retail selling effort and information provision »Can TV advertising do the job of communicating the unique benefits of Acquatread? l Aquatread has a role in opening up shelf space at mass merchandisers vs. Michelin

9. 9 Ganesh Iyer What happened? l Pre-launch publicity 150,000 sold before launch l 1992…1 mn. sold, 20% over forecast l Half of all buyers replaced non-Goodyear tires. l Goodyear broadened distribution to Sears then Wal-mart and K- Mart…added a total of 1500 outlets. l Wall street reaction was guarded…waiting for reaction from dealers l 1994..Sam’s Club starts testing Goodyear…Goodyear claims that it was not supplying directly. l Goodyear announces plan to stock at “Just Tires.” l Strong “brand pull” mitigates backlash from independent dealers.