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Venkata Narayana Ega

1. How do consumers buy tires? How can the market be segmented?


Answer:
The buying behavior may depend on the customer. It varies from customer to
customer. Customers buy tires based on important attributes like tread life and traction. Tread
life is important when considering the life of the tires. On average customers usually buy tires
every 2.5 years which is infrequent. Consumers buy these tires based on the dollar amount that
they are spending which is usually $75 without installation costs per each tire and consumers
also look for safety and security on long journeys.

The market can be segmented into four main categories.

• Price-constrained buyers:
These customers usually buy the best tire within the budget and these customers
are less loyal to the brand.
• Quality buyers:
These customers are loyal to brand and outlet.
• Value-oriented buyers:
These customers search for the preferred brand at the best price.
• Commodity buyers:
These Customers are bargain hunters and we see outlet trusting patrons in these
customers. These customers value the price of the tire.

2. Should Goodyear broaden its distribution to mass merchandisers? Should they be


offered Aquatred?
Answer:

I think Goodyear should not broaden its distribution to mass merchandisers. As retail
sales from mass merchandisers were earning a lower profit margin as shown in Exhibit 5. And
independent dealers are serving as a revenue earner for Goodyear. Exhibit 4 shows that
customers for major brands like Goodyear are mostly value-oriented and quality buyers. So, we
don’t want to have the price constraint as a purchase decision. Because it may dilute the
Goodyears brand image. And upsetting the large network of 4400 independent dealers is a huge
risk as they are accounting 50% of retail sales.

I don’t think they should offer Aquatred. All the sales of Aquatred are expected to come
through the replacement market. Exhibit 5 shows that the sales from mass merchandisers are
12% and the independent dealers are accounting for 63% of sales. Also, as per Exhibit 10
consolidates the point of selling through its existing network of independent retailers. These
reasons should lead Goodyear to stay away from offering to the mass merchandiser.