Goodyear: the Aquatred Launch

Powerful Essays
Topics: Tire
Harvard Business School

9-500-039
Rev. November 9, 1999

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Goodyear: The Aquatred Launch (Condensed)

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In January 1992, Barry Robbins, Goodyear’s vice president of marketing for North American
Tires, was contemplating the upcoming launch of the Aquatred, a new tire providing improved driving traction under wet conditions. The Aquatred would be positioned in the U.S. market as a replacement tire for passenger cars. Over recent years, the replacement tire market had matured and new channels had gained share, so Robbins needed to make sure Goodyear had the right product and the right timing to generate support from the company’s traditional base of independent dealers.
Despite a long and close relationship with those independent dealers, Goodyear was also weighing the risks and benefits of expanding the company’s distribution channels. If new outlets were added,
Robbins would also have to assess whether the new channel would sell the Aquatred.

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Background

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In 1991, Goodyear operated 41 plants in the United States, 43 plants in 25 other countries, six rubber plantations, and more than 2,000 distribution outlets worldwide. In fiscal year 1991, Goodyear earned net income of less than one percent on total revenues of $10.91 billion; the company had approximately 105,000 employees. Goodyear ranked third in worldwide sales of new tires behind
Michelin and Bridgestone, respectively.

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Low growth, declining prices and over-capacity in an environment of corporate consolidation characterized the U.S. tire industry. Exhibit 1 lists the brand shares of U.S. retail sales for the largest tire manufacturers from 1975 to 1990. During this period, Michelin achieved large share gains in both the replacement and original equipment manufacturer (OEM) markets. Unlike other U.S. tire manufacturers, Goodyear had made large investments (over $1.5 billion) during the late 1970s to produce radials. The company also had a strong track

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