COMPETITION
With regards to securing sales for the aquatred tires in the passenger car replacement market, Goodyear faced a few competitors in the same market. Their competitors could essentially fit into two distinct categories: Primary (manufacturer-level) and Secondary (retail-level) Competitors.

Primary Competitors
Goodyear’s primary competitors are other tire manufacturing companies, both foreign and domestic, such as Michelin, Firestone, Bridgestone, etc. (Also, “private label” tire manufacturers fit in this category?) The industry had, in the last year, experienced many acquisitions or takeovers of smaller tire companies by dominant firms with a bigger market share. The disappearance of the smaller players was indicative of a mature market, thick with price competition, yielding economic conditions that have almost completely annihilated profit margins for all players. At the same time, consumers were becoming savvy about the need for reliability and longevity in their replacement tires, which made it critical for surviving companies to adhere to the new demands.

Of all the competing tire companies, Michelin and Bridgestone, in particular, posed the biggest competition to not only Goodyear as a company, but the aquatred as a superior tire. The major key points are that:

i. Michelin and Bridgestone were planning to introduce a new tire in the next two years with an improved warranty of 80,000 miles. This was as a result of increasing demand for longer-wearing tires by the typical consumer. In contrast, Aquatred only had a 60,000 mile warranty and this point of product differentiation was bound to have an impact consumers. ii. Michelin had a much stronger brand loyalty in the market that Goodyear did. This was as a result of Michelin successfully positioning its products amongst quality and value conscious buyers. iii. Michelin had recently achieved a much larger share gain (from 75% - 80%) in both the OEM and Replacement markets. This guaranteed stiff competition especially in the replacement market that Goodyear was targeting with the Aquatred. iv. The existence of all-weather tires in the market by other competing companies also posed a potential problem to the sales of the Aquatred. While only the most quality (value-oriented consumers as well as quality oriented consumers could be sold on the Aquatred? I’m thinking: value = quality/price, price-constrained = price disproportionately more important than quality, quality-oriented = quality disproportionately more important than price, therefore value-oriented are not necessarily price-constrained; a value oriented consumer might purchase a super high priced item if the ratio of price to quality results in best “value per dollar” option) – not price - conscious consumers would be interested in the Aquatred, the majority of consumers were both quality and price conscious. Thus, as long as they got the benefit of an all weather tire at a lower price and higher mileage, they were less likely to pay a higher premium for tires of a lower mileage whose only main advantage was that they handled better in wet weather.