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September 26, 2013

NA Business Overview Vendavo Discovery Session Prep. September 26, 2013. Agenda. Strategic Roadmap North America Business Structure Consumer Overview Commercial Overview Pricing Process and Applications. 2. North America Strategy Roadmap. Where We Are.

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September 26, 2013

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  1. NA Business Overview Vendavo Discovery Session Prep September 26, 2013

  2. Agenda • Strategic Roadmap • North America Business Structure • Consumer Overview • Commercial Overview • Pricing Process and Applications 2

  3. North America Strategy Roadmap Where We Are • Executing Plan • Innovation Leader • Strong Earnings • NAT Adding Economic Value • Weak Volume • Pension Remains a Challenge • Industry Key Strategies • Key How To’s 7 MegaTrends • Market-Back Innovation Excellence • Target Profitable Market Segments • Operational Excellence • Enabling Investments • Top Talent / Top Teams • North America: Profitability • Asia: Winning in China • EMEA/LAT: Continued Success Our Destination (2013+) • Creating Sustainable Value • First with Customers • Innovation Leader • Leader in Targeted Segments • Competitively Advantaged • Profitable thru Economic Cycle • Cash Flow Positive • Investment Grade 3

  4. Region Structure North America Asia Pacific Latin America Europe, Middle East, Africa

  5. North America Product Business Units $9.7B NetSales 2012 Commercial 19% of Gross Sales Consumer 69% of Gross Sales Motorcycle 2% of Gross Sales (JV) Off The Road 5% of Gross Sales Race 1% of Gross Sales Aviation 4% of Gross Sales

  6. NA Company Owned Distribution Wholesale Distribution 52 COWD (US), 2 COWD (CAN) 1,000 G3X Customers 20,000 Associate Customers Consumer and Commercial Retail Stores 592 Goodyear Auto Service Centers Just Tires GBMS POS System Commercial Tire Centers Wingfoot Commercial Tire Systems 44 Wingfoot Truck Care Centers

  7. NA Consumer Sales

  8. NA Consumer Replacement Sales Channels Indirect Customers G3X Dealers (Deliver for Account of Goodyear) Associate Dealers

  9. NA Consumer Market Segments Category Tier

  10. NA Commercial Sales • Tread rubber, precure mold cure • cushion, Unicircle treads

  11. NA Commercial Replacement Sales Channels Indirect Customers G3X Dealers (Deliver for Account of Goodyear) Associate Dealers

  12. NA Commercial Sales and Marketing Category Management Channel Development Brand Marketing GOODYEAR DEALERS ETC… GOV’T NAT’L ACCTS DUNLOP KELLY OTHER Long Haul Regional Mixed Service Urban Retread Business Solutions Best Practices

  13. Pricing Roles and Responsibilities Tactical Bring home AOP/sales plan OWNER = CATEGORIES Implementation Execute, analyze, report OWNER = PRICING Strategic Sets course long term OWNER = BRAND Measurement: Brand equity, Brand market share/profit Process: Pricing vs competition at line level Measurement: Category market share and profitability Process: Pricing at SKU level vs. marketplace Measurement: Speed, efficiency, ROI, SOX/legal compliance Process: Pricing tools, analysis, and applications. CHANNEL TEAMS “Market-back Voice” All pricing actions are based on the price at retail and the competitive landscape in order to maximize the value of the G3 brands

  14. Pricing Process Flow Pricing Dept provides analysis, validates documentation, and routes request in Decision Tracker Sales enters pricing request in TPS TPS Tactical Pricing System Pricing Engine Reporting Field Price Books Decision Tracker Approvals Documentation Pricing for 3rd Party Billing Pricing Dept loads approved pricing in TPS GBMS Pricing for direct bill, customer, product info Legacy Billing System 3rd Party Deliveries Mainframe Customer/ Item Master File SAP EDW Delivery Receipts Sales info, order info, customer price books Tire-HQ 14

  15. Current Pricing-Related Applications Unique Price Analysis Tools by PBU • TPS Pricing Engine • 10 yrs old, aging platform • Specialized internal resources • Limited reporting capability • Custom integration w/SAP • Flexible to handle business complexity TRADE SPEND CPS COMP INFO VPM EDW CAT REPORT TPS SEE CIMS EBIT ANALYZER PRICE MART • Decision Tracker • Separate homegrown approval app • Some duplicate manual administration • Does not “talk” to TPS, risk for inconsistency 15

  16. Pricing Tool Box VPM Volume, Price, Mix by Business, Channel, Category Price Reports Goodyear Pricing data by customer. Generates trend lines by SKU. Customer Price Comparisons Flexible Data Extractor Primary competitive pricing data base. Many options for querying and summarizing data Price Mart Longitudinal pricing data by customer by SKU. Automates analysis of customer pricing trends over time. Retail Pricing Trends over time Create powerpoint of G3 and competitive product retail pricing by SKU by month. Brand Tool – Competitive line positioning G3 baseline product vs. Competitive, relative tire line positioning at retail OE RMI Models Models impact of raw material changes for individual OE customers based on contract pricing conditions. CPS Customer Profitability Summary Cash Based PorL by customer Trade Spend Report YTD Trade Spend report by customer

  17. Pricing Structure • Base Price Input includes: • G3 and competitive retail pricing, • Share of market, OE position • Maturity of size, is the market crowded? • Cost/margin • Portfolio alignment Base Price • Volume Allowance • On-Invoice discounts (marketing programs, competitive disc.) • Marketing Program Input: • Temporary price reductions for a month or quarter to address a competitive situation in a channel or channels • By line or SKU • Firm (waterfall) or Super Firm (no waterfall) • May also be sell-out based (below invoice rebate) Invoice Price • Competitive Discount Input: • Discount to address a specific customer’s competitive situation in their market • By line or SKU • Firm (waterfall) or Super Firm (no waterfall) • Type 1 rebates – customer-specific • Type 3 rebates Three biggest areas of ongoing pricing activity • Type 1 Input includes: • Specific customer objectives for mix, growth, expansion or redistribution • ROI on invested program $ • Customer segmentation • Annual review by customer for program performance and strategic fit Net Price

  18. Pricing Structure Base Price • Volume Allowance • On-Invoice discounts (marketing programs, competitive disc.) • Core Programs: • Value Added Rebates / SPIFF • Focus on sell-out • Drive mix • Maintain sell in price on premium products • Support new products • Customer engagement through promotional activities and training • Reduced discounting by GASC Invoice Price • Type 1 rebates – customer-specific • Type 3 rebates • Core programs • SPIFF / Value Add Rebates • Drive mix • Support new products Net Price

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