Goodyear Is Gunning Its Marketing EngineZachary Schiller
Demanding bosses have a penchant for asking: What have you done for me lately? But Stanley C. Gault wants to know what Goodyear Tire & Rubber Co. has done for the customer lately. As Gault sees it, "we're not serving the market with what the customer wanted but what the manufacturing plants wanted to build." The former chairman of Rubbermaid Inc., regarded as a marketing guru, intends to remake Goodyear as a marketer, right down to ensuring that the lettering on racing tires doesn't smudge before the race has even started. Gault's goal: to recapture the market share lost by the flagship Goodyear brand.
On Mar. 3, Goodyear took its biggest step yet to regain lost ground, jolting its dealers by announcing that it would sell seven Goodyear-brand tire lines through Sears, Roebuck & Co. But that's only a part of the company's new marketing push. Some of Gault's moves are right out of the textbook: roll out new products, boost ad spending, widen channels of distribution. But the new team Gault named last October to oversee the company's North American tire unit is doing more. Instead of dictating a single selling approach from Akron, it's taking the business one market at a time.
That's quite a departure from Goodyear orthodoxy, but drastic measures were probably in order. Goodyear has seen the share of the U.S. replacement car-tire market held by its name brand fall from roughly 15% to 12% since 1987.
PRICEY IMAGE. A big reason for the drop is that Goodyear simply wasn't putting its tires where shoppers would buy them. Increasingly, consumers are buying their tires at multibrand discount outlets as well as warehouse clubs (table). Alone among U.S. tiremakers, Goodyear has sold its brand almost exclusively through its own stores and independent dealers loyal to Goodyear. Those stores have a pricey image, says Gault, and potential customers who do come in encounter a selection that hasn't changed much lately.
Hooking up with Sears puts more Goodyear-brand tires where customers roll by. Sears sells 9.5 million tires a year, more than any other retailer. Goodyear hopes to sell up to 2.5 million tires a year at Sears, which could erase half of the market-share loss.
Of course, that assumes that Goodyear won't lose any sales by its longtime dealers, some of whom are feeling slighted. "You feel like after 35 years of marriage your wife is stepping out on you," fumes Marlo D. Reimer, president of Superior Tire Inc., a 10-store chain in Las Vegas. Others are more measured. "I'm just going to wait and see what Sears does," says Norman K. Trepke, president of Tire Town Inc., which has four stores in Longmont, Colo.
That points up the two-pronged hazard of the move to Sears: Dealers are restive, while the company's brand-name tires still aren't available in the fast-growing discount outlets. To fend off the low-priced competition, Goodyear has been testing its no-frills, quick-serve Just Tires stores. The tests have gone well enough in Memphis for the company to decide to open stores in Chicago and, probably, Boston. In another test, it has begun selling tires to a multibrand operator in Buffalo. Sales are up, although existing dealers are squawking that their margins have eroded.
SLICK AD. Another key element in Gault's strategy is launching new products. The headliner among Goodyear's new offerings is the Aquatred, introduced last fall as just the thing for rain-slick roads. Winter Olympics fans will recall the Aquatred ad--it featured computer-generated graphics of a tire turning from water to rubber. But even exciting consumer interest has its drawbacks: The company has to turn away business, since not all sizes are available yet.
Still, Gault believes it pays to advertise. So while he's slashing costs elsewhere, Goodyear will boost brand advertising by a third, to $50 million, and increase the amount of money available for dealer ads. It's even repainting its famous blimps and will link them more directly to sales efforts, including the Sears tie. And Goodyear is moving to answer some dealer complaints. Dealers who have been clamoring for a low-priced Goodyear-branded tire are finally getting their wish. And they'll have more pricing flexibility with the middle-market S4S model.
Goodyear is still drumming up private-label business for its thriving Kelly-Springfield Tire Co. unit. Wal-Mart is a new customer. But John F. Fiedler, the former Kelly chief elevated by Gault to head the North American tire unit, notes that Goodyear has to sell more of its name-brand tires if it is to fund its research and development and advertising. "Who do you want to be," he asks, "the largest unknown company in the U.S.?"
Gault insists that the whole Goodyear family will prosper from the new marketing approach. Some dealers disagree. Yet whether they'll start selling rival brands remains to be seen. For its part, Goodyear is trying to keep them in the fold. For now, Sears won't get the Aquatred, nor will Goodyear ship its name-brand tires to Sears' discount stores. That may not assuage some, but Gault has his customers to consider.