ORLANDO, Fla. (Feb. 26, 2004) — In its biggest product launch in a decade, Goodyear unveiled two tires under its new Assurance line, which the tire maker hopes will re-energize its turnaround and give dealers a needed competitive advantage in the broadmarket segment.
The Assurance line—introduced with much fanfare at the annual dealer conference Feb. 6 in Orlando—will include the ComforTred touring tire and the TripleTred all-season tire. More tires will be added to the line in the future, officials said, though they did not provide details. The Aquatred line, Goodyear's last major product introduction, will be phased out this year.
In the Goodyear lineup, Assurance is slotted for passenger cars as the Eagle brand is for performance, Fortera for sport-utility vehicles and Wrangler for light trucks. ComforTred, aimed at luxury vehicles, will be available in March in 20 sizes, and TripleTred, aimed at mid-level to luxury vehicles, will be available in April in 13 sizes with roughly 12 more coming later. Goodyear is in talks with auto makers about possible fitments for the ComforTred.
Goodyear officials told Tire Business that independent tire dealers and company-owned stores will have the first crack at selling Assurance, but they may not be alone for long. After the official launch, Goodyear will talk with all of its customers—including mass merchandisers—about the tires, though there is no timeline for those stores to come onboard.
While virtually all in-dependent dealers interviewed by Tire Business during the conference said they are very excited by the new product and want to sell it, some said they are tempering their enthusiasm with a “wait-and-see” attitude depending on how many factors—especially pricing and marketing—will play out.
“If they create the awareness to get (customers) in the store, we can sell it,” said Wendel Burt, co-owner of Burt Brothers' Tires in Bountiful, Utah.
To support the launch, Goodyear plans to spend more than $50 million on a national advertising campaign, including TV spots featuring the voice of actor Patrick Stewart from Star Trek. Other efforts include direct mail, print and radio ads. Assurance will be part of nearly all Goodyear advertising this year, and by the end of 2004, the company said it estimates 85 percent of Goodyear customers will have seen the commercial an average of 22 times.
“It's a significant investment for Goodyear,” said Andy Traicoff, general marketing manager for North American Tire. “(It's) more money than we've spent in a long time on advertising.”
Still, Goodyear said Assurance will not turn around its North American Tire unit on its own. One of its major turnaround goals is to increase North American market share 2 points by 2005—a goal that the company said last month is not currently on track.
“(Assurance) is an important means to that end,” Larry Mason, president of consumer tires, told Tire Business. “This single-handedly won't do that, but it's an important first step.”
The tires themselves took about 12 months to develop from concept to launch, officials said. The tires are meant to directly compete with Michelin products in the premium broadmarket segment, where Goodyear has lacked a product.
“Let's just put it bluntly, we needed something to compete with Michelin,” said Bob Fullerton, owner of Fullerton's Inc. in Roswell, Ga. “Their name is out there, their name has been touted so highly, but their price has not been there.”
Sheryl Henderson, marketing director at Michelin North America Inc., said the tire maker's premium mass market products have enjoyed good acceptance in the market.
“This is not surprising Goodyear would be looking at something similar,” she told Tire Business, adding Michelin is closely watching Assurance's progress.
Mr. Mason said the product gap materialized as Goodyear made progress in other segments while relying on Aquatred—a tire geared to wet performance—to cover the broadmarket base.
“We needed to come back to this large piece of the business to make sure we were competitive and growing,” he told Tire Business.
The TripleTred tire is designed to act like three tires in one to handle dry, wet and icy conditions. Three different tread zones have their own distinct designs and compounds: an ultra-high performance-inspired compound for dry handling, a new silica compound in the wet zone and a new compound that features volcanic sand and microscopic glass fibers for traction in the ice zone.
The tire will be pitted against the Michelin HydroEdge. Ms. Henderson said the HydroEdge, which carries an 85,000-mile limited treadwear warranty, had a sales goal of 250,000 units from its August launch to the end of the year. She said sales hit about 460,000 units in that period.
The ComforTred tire includes an absorbent layer of rubber between the belt and tread, designed to provide 20-percent more cushion against road vibration and impacts, Goodyear claimed. The tire will compete with the Michelin Symmetry, which also features an extra layer of padding and is original equipment on various vehicles.
Both Assurance tires include PermaBlack, a new compound additive that Goodyear said will keep the tire from turning brown with age. They also feature a Driver Assurance Package that includes an 80,000-mile limited treadwear warranty, a 30-day trial period, a roadside assistance program, nationwide warranty service, tire rotation reminder service and online product registration. The tires will be made in the recently upgraded Lawton, Okla., plant.
Suggested retail prices for the ComforTred will range from $83 to $137—about 20 percent higher than the typical Goodyear tire price, officials said. The price of a TripleTred will be about 5-8 percent higher. Mr. Traicoff said the prices are roughly 5 percent below the comparable Michelin tires.
These estimates sparked some disagreement among dealers. Some told Tire Business the prices were too close to Michelin, especially at the Assurance's launch.
“There's too much recognition in the Michelin brand,” said Eddie Hair of Eddie Hair Tire & Auto Center L.L.C. in Oak Ridge, Tenn. “There needs to be more disparity in the price, especially in introducing the line.”
Other dealers said Assurance will be fine as long as it stays below Michelin. Still others said price won't end up being a huge deal.
“The people have always paid the price for the Michelin,” said Kelly Monthei, general manager of Graham Tire in Worthington, Minn. Premium customers' concerns “are ride quality and the tire performing like we say it will. If we have that, price isn't an issue.”
Saul Ludwig, an analyst for McDonald Investments Inc. in Cleveland, said he learned the dealer cost for Assurance tires, size 225/60R16, would be $72 for ComforTred and $79.50 for TripleTred. Dealer cost for the same sized Aquatred is $71, he reported.
In addition, some dealers wonder whether the marketing plan will push Goodyear's products past Michelin in consumers' minds.
“Amazingly, they always spend money (on marketing). It's whether they stick with it instead of abandoning it like they have in the past,” said Ron Burt, co-owner at Burt Brothers. He cited Infinitred and Fortera as examples.
Mr. Mason said Goodyear plans to keep the marketing strong. In fact, Mr. Rich said the company is planning to give Fortera another push this year.
“We're covering all the marketing bases throughout the year,” Mr. Mason said of Assurance. “There's no launch 'em and leave 'em on Assurance, and that's our promise.”
Dale Pinkerton of Dale Pinkerton Inc. in Butler, Pa., said he is excited about the tire though he needs to see the exact pricing and how it will fit into his mix. “If the product's as good as they say it is,” he said, “I think it will do nothing but make money for the dealer and Goodyear.”