Goodyear Case

Goodyear: The Aquatred Launch

I. Introduction

In January 1992, Goodyear, who was once known as “The Gorilla” for its dominance in the tire market, faced one of the most serious situations. Goodyear had been in a negative financial standing with increased debt from takeover attempts since 1986. Starting from 1987, sales grew at a stagnant rate and Goodyear even experienced a net loss in 1990. Goodyear had to come up with a strategy to overcome this financial crisis with a new product in the market. The product that could possibly change the course of Goodyear’s history was Aquatred, and it was to be introduced at just the right time with the right price. However before considering on the timing and pricing, Goodyear must first ask itself if Aquatred was the right product to launch given its differentiated features from the existing products. If Aquatred was the right product, then Goodyear had to strengthen and develop its current marketing strategy to appeal to its new target segment as well as consider expanding its distribution channels. For a better understanding of this predicament, this case analysis will first perform market analysis examining both external and internal factors. Second, STP analysis will be done to explore the target consumer segment for Goodyear and more specifically for Aquatred. Third, 4P analysis will highlight the distinct features of Aquatred and consider its distribution channels, pricing, and promotion. Finally based on these different analyses, we will conclude whether Aquatred was the right product for Goodyear to launch.

II. Market Analysis

A. Environment (External Factor) During 1970s and 1980s, there were 3 significant changes that took place in the U.S. tire industry. First, the emerging radial tire market began to replace the older “bias” and “bias-belted” tire constructions as the share of radial tire unit sales grew from 32% in 1975 to over 95% in 1991. U.S. tire manufacturers, however, were hesitant on converting...