Goodyear’s partnership with RMT robotics gives them a competitive edge over their rivals. Reducing their labor costs and keeping inventory levels low and customer responses high. This allows precise and faster production processes.
“We will remain a customer-centric company. We will strive to earn our customers’ business every day with the industry’s best products packed with innovation.” (Kramer, 2010)
Being a customer-centric company, allows them to satisfy their customers needs and cater to their demands faster, thus gaining a large consumer base.
With drag racing and drifting surfacing as a popular sport, Goodyear has worked to ensure the safety of the racers by offering semi-slick and fully slick tires specially created for such purposes.
Manufacturing companies today are always looking for a cutthroat advantage that would put them ahead of their rivals in an industry. Lean manufacturing could be the best solution. “Lean manufacturing is thought of to be the consideration of the total cost of resources to achieve a specific objective and to eliminate waste” (MXI, 2010)
It is an operational strategy in which all elements that do not create value to the company are eliminated in the supply chain, and this results in the decreasing of costs and a more efficient supply chain.
Question 2: Alternative competitive strategies for Bridgestone to pursue in European market
It may be difficult for Bridgestone to compete with Continental in Germany, Pirelli in Italy, or Michelin in France because a lot of times consumer would prefer products of a local producer and support the national production due to the emotional patriotic appeal. Especially when the local brands are major European producers Citizens are proud when their local producer is known internationally. Germans mostly choose tyres by Continental and French people are likely to stay with Michelin whereas in Italy Pirelli has only 23 percent of market share and the leader is Michelin with 31 percent. Therefore we believe most of the marketing efforts should be placed in all European markets except of German and French markets.
Bridgestone along with Michelin and Goodyear had the status of tyres suppliers to the Formula One World Championship for many years. Formula One represents the highest class of single-seater-auto-racing certified by the (FIA).
Formula One is not just a platform for the racers to compete, but an entertainment business and a massive television event, with an accounted collective global audience of 600 million people per race (2008) (Paddock Talk, 2009). Today Formula One has 20 races per season with 8 of them that take place in Europe. We believe one of the alternative competitive strategies that Bridgestone could pursue is to use participation in Formula One as its competitive advantage not just within the events hosted by F1, but also outside of those. It should use Paddock Clubs (a VIP hospitality facility) and overall F1 experience more aggressively to build closer relations with key customers in each country.
What Bridgestone suffers mostly from is its low brand awareness in most of the European countries. In the United Kingdom only 10 percent of the people asked remembered Bridgestone Brand. We think Bridgestone will gain form marketing its brand not just as a great tyres maker, but as the sole manufacturer for Formula 1 bolids. There is historical data shows that "in 1996 when the company became a partner of F1, Bridgestone's brand recognition in Europe's five largest countries was 13%, but by 2003 it had risen to 34%" (Bridgestone Motorsport, 2010).
Since 2008 Bridgestone has become a sole supplier of tyres to the FIA Formula One World Champion. This allowed the company to increase its global brand awareness "as the BRIDGESTONE logo appeared on television broadcasts beamed live around the world" (Bridgestone Motorsport, 2010). We think the company should aggressively promote itself as a sole manufacturer for Formula One drivers due to its highest quality and safety.
Another strategy is to focus on the market of retreated tyres. Today global environmetal concerns are rising: students are learning about the ways to save the energy and the corporations are working towards findîng alternative energy sources. Eventhough recycling costs more than dumping, consumer nowadays is very much concerned about how socially responsible the company is and how ethical is it in its business conduct. "Only 15 percent of the European Union's scrap tyres are retreated and reused" (Hollensen, 2011), which makes it a great market to be pursued.
We believe the company does now show enough concern about the environmental aspect of the production and penetrating market of retreated tyres can help to change company's image in the eyes of the comsumer making it more environmetally concerned. The company should closely cooperate with the European Commission and make consumers aware of the goals of this collaboration.
Website, packaging, stands in the dealerships and stores should have a statement that includes the reasons for reused tyres stated by European Commission:
Bridgestone and European Commission are working closely together to reduce waste problems and provide drivers with the environmentally friendly tyres, as well as to reduce consumption of natural resources such as rubber, minerals, metal wire and oil and to make the life of the future generations safer.
Bridgestone as a sole provider of tyres for Formula One is associated as being part of the high CO2 emission that F1 cars produce. Bridgestone is not going ot be the only one to focus on the environmental aspect.
According to the Formula One Teams Association (FOTA), the goal is to drop the F1 bolids by 15 per cent by 2012. FOTA "represents the world’s first full sports CO2 reduction initiative involving external auditors within the sporting industry". High enthusiasm associated these days with getting behind environmental friendly issues have driven FOTA towards finding better solutions without jeopardizing the sport atmosphere and we believe Bridgestone should not stay behind but also be among the first ones in this business to work closely and develop new ways of making their products environmentally friendly.
Question 3 – Criteria to be used when choosing a market.
There are certain criteria that a company has to look at in order to evaluate the attractiveness of a certain market. A company must therefore screen a market using a checklist of criteria they have set out for themselves to assess the opportunities of the market and the possible threats.
There is a list of criteria in which we have identified for Bridgestone that are important when pursuing the right market. Those include the geographical position of the country in question, the growth rate of the regions which Bridgestone would attempt to penetrate, the amount of international experience Bridgestone is already exposed to, and finally, the resources and core competences in which Bridgestone are capable of offering.
Bridgestone is an already established international company with global brand recognition and awareness, and a worldwide market share of 20% that reflects the vast consumer base they already have. In an attempt to measure their degree of internationalization using the diagram below (Hollensen, 2011). Bridgestone lies in “the international among others” with a high degree of internationalization of the firm and the market. It therefore has the possibility to bridge over to other “nets” or regions as it already acquired high international knowledge in various sales and marketing segments.
Expansion and growth in Europe however is seen to be lowest, where market share is only 10%. (Hollensen, 2011) There is therefore, obvious potential for expansion and growth in european countries, especially those which are easier to tackle such as Spain, Italy and the UK, as opposed to France and Germany, the homes of Michelin and Continental respectively.
Bridgestone should therefore begin by looking at the geographical position of the country in which they wish to develop and expand in. This includes the location primarily, and hence the cultural aspects of the region, including the language which aids in communication and therefore transport and delivery. Population and market size gives a clear indication of the potential success of the business. For example, consider a country like Andorra, a small, Catalan speaking country in southwest Europe, known as a destination for summer and winter resorts. With a population of no more than 84,000, no airport, unpaved roads, and buses as main transportation vehicles. It would be quite unwise to develop the brand in Andorra, the high cost of production, delivery and transportation would not benefit the company.
Another criteria that must be looked at is the growth rate of the potential market. A growing market is a vital factor for Bridgestone to achieve its goals in the European market. The European market for tires has however been stable over the years, this could assume that competitors are pushing for the same niches. For Bridgestone to penetrate such a market, they must differentiate their product and enter with an innovative, patented technology.
With Bridgestone being part of the “international among others” they have therefore already acquired enough international experience to position themselves there. Their goals and aims were set to always become the number one tire manufacturers in the world as stated by their mission statement.
“To establish the status of being the undisputed world no.1 tire and rubber company, both in name and in reality” (Bridgestone, 2010)
They are commited to adapting to cultures and values around the globe, while offering them superior quality and services.
Apart from Bridgestone’s international exposure and experience. A criteria which ranks highly in many aspects, is resources and core competences. As Bridgestone already operate internationally, it is clear that they do have sufficient resources to cater to the globe. It is key however to allocate these resources efficiently when further expansion takes place. Assuming that a surge of demand for the product happens, quick response to customers is required.
Looking further into core competences, which are the skills and knowledge the firm possesses, that allows them to market their products and services in different regions. Bridgestone have fundamental management policies in which the firm abides by, these aim for a global corporation and are based on a clear long term strategy.
Question 4: Proposal for Bridgestone's distribution and communication strategies
We are going to look at the European market excluding Germany and France in order to identify which distribution channels the company should use and how should it communicate with the consumer.
Distribution channels suppose to serve as a link between the producers and the end user. Bridgestone can either set up their products at the most expected places such as car shops and other particular outlets, or the company can arrange their distribution approach totally different form competition and possibly turn it into a competitive advantage, but this path would be hard to walk.
Bridgestone could either take an easier approach and standardize the promotion mix and the channel design worldwide, or to adapt it to the environment of each country. In this case, they would have to look at the shopping habits and outlet preferences for each country targeted.
Every winter the car driver should change the tyres from summer to winter. Most of the people take it to garages or dealerships to get the job done. Also the consumer often chooses to leave the summer tyres in the storage rather than carry it somewhere else and bring back for the change when the time comes. As a part of the distribution strategy the brand should offer the following deal for the consumer: free tyres change or storage if Bridgestone winter/summer tyres are purchased. Tyres change can cost from 80 to 280CHF depending on where it is done (Audi dealership charges 240CHF). Tyres themselves cost a lot more though (around 300 for 18' - to be verified). We believe by offering such deal Bridgestone will be able to steal the consumers from its competitors and because the quality of Bridgestone tyres is very high, most likely those consumer will stay happy with their choice therefore will allow the company to retain acquired consumer base.
Going forward with such deal, the company should choose selective market coverage as their strategy since such deal cannot be used in small garages that do not keep the tyres in storage. In Europe Bridgestone should choose "a number of intermediaries for each area to be penetrated" (Hollensen, 2011). The company should evaluate which current distribution channels bring most profit and pursue more channels of that type with the promotional deal.
It is quite hard to manage and control foreign distribution channels. To motivate the staff of a dealership or a retail store to sell the product, Bridgestone should offer the awards to the sales men who are able to promote and sell Bridgestone products to the consumers. If it is a dealership of a certain vehicle brand, most likely their goal is to sell the product disregarding if it is the tyres of Michelin or Bridgestone. Bridgestone can for instance pay in benefits 10% of the total value of the Bridgestone products sold to the sales person responsible for the trade. Some dealerships may be accused of agreeing to conditions that may create unfair competition, thus this option has to be carefully looked into and considered in each market to see how possible it would be to implement.
As a part of the communication strategy, the company should focus on the presentation of their brand stand in the dealerships, repair shops and other car products outlets. By presentation we mean the looks of the stand as well as the availability of information on the product.
Overall consumers usually make a comparison of the several brands offering similar products and base their decision on the information learned. Therefore we believe it is very important that the consumer has significant amount of information that is easy to find about the products and the brand overall. The company should use communication channels to inform the client about the benefits of Bridgestone products along with the consequences purchasing their product. As we mentioned in question 2, if the company goes forward with the retreated tyres, the reasoning behind it should be communicated to the consumer. Apart from the official Bridgestone website and other web resources, such information could be distributed through the packaging, fliers and stands. The company should also strengthen its PR campaign and look for the channels that target similar consumer.
Bridgestone's Facebook page gives an opportunity to win the tickets to Super Bowl, which is "the championship game of the National Football League (NFL), the premier association of professional American Football" (Wikipedia, 2010). If we look at the Facebook page of Michelin, it has 9,990 likes (friends). There are 94,954 people who like (are friends with) the Bridgestone's Facebook page. The promotional technique works, but not as widely as it could. By statistics there are "More than 500 million active users" on Facebook as of this month (Facebook, 2010). Since Bridgestone is working closely with the Formula One, the company could also create a lottery where the Bridgestone consumer could win the tickets to one of the Formula One European Grand Prix. Such offer should be widely communicated to the public and the winner should be interviewed at the race where the short video interview should be published on the company's website as well as the Facebook page, since it will add value to the offer and make it more tangible.
Whether the company will pursue with the suggested tactics, it should carefully examine the market, its distribution channels, behaviors of the clients and possible opportunities that each market might offer.
Bibliography
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