Product Selling vs. Experience Selling

PARADIGM SHIFT IN SELLING PRODUCTS
(A case study of Good Year- Innovation in selling process)
Vendors sell their products by competing largely on

the basis of price, durability, and brand awareness.
The dealer and distributor structure is well known. The
industry practice is to sell the product to
original equipment manufacturers (OEMs) and
hope that owners will use the same type of tires when
they are ready to replace them. The business model
has remained the same in the industry for decades.
This is a traditional business model that is firm-

centric and product focused. Should this
industry remain this way, or can it become a “high-
tech–high-touch business”?
Consider an alternative in which the manufacturers do

not sell tires but charge for services. They
contract with fleet owners to charge per mile of
usage.
The pricing contract will be based on the type of

use, influenced by general factors such as:
Type of loads (for example, heavy loads In

India the average truck will be of 10 wheels
carrying a load upto 15-18 MT, while in US mostly
they are trailers which have a carry load of 25-35
MT in closed containers with a wheel base of 18
wheels per truck)
Typical route structures (for example, through

cities or across long distances, Hills and valleys,
rough and smooth roads), average distance
travelled per day
Individual characteristics of fleet

owners(fleet size of 20 in India, while in
Europe and US it is on an average 50-100
trucks), such as the training of drivers of 75
to 150 drivers) and therefore the quality of
driving
Periodical maintenance of vehicles, correct

tire pressure, Breaking systems (anti-skid breaks)
and wheel balancing at fixed period when due
Quality of servicing, such as tire rotation.
The tire as a product still exists and is at the core of

the business. However, the revenue is based on
tire usage, not on a one-time tire sale. The
retail business shifts from a transaction base
(selling a tire) to an ongoing relationship (continuous
and ongoing measurements of usage and ability to
provide feedback on better usage specific to a user)
with the consumer.
The revenue model now depends on accurate

measurements of tire usage on a periodic basis and
on parameters of wear and tear that are
transparent to the fleet owner and the company,
resulting in the ability of the tire company to offer
specific advice
This model has other advantages.

a) The firm gets detailed data on how individual
drivers actually drive their vehicles—
b) The size and weight of their loads,
c) the speeds at which they drive, and
d) the patterns of braking they follow
e) Host of other characteristics like fuel
consumption per Km., average maintenance
cost, accidents, breakdowns enroute - that
can help in the product development process.
Revised selling model eco-system

Skill Development Centres
The company need not focus solely on tire usage. It can
focus skills. Say, for instance, a particular driver has
driven only 20,000 miles on a set of tires, but the tires
show rough usage.
Sensors
Sensors to gauge the average speed, number of times of breaks

applied, load of trailer, stoppage frequency enroute.
Data Centres
Now assume that we have installed sensors that Measure

tire performance in real time and relay the on
driver safety as well. It can help a specific driver
improve her data to a central data center.
Alert Systems
The company can, in real time, alert drivers to be
careful, slow down when the roads are under
maintenance, steep curves or check the tire pressure,
or in some cases go to the next service station and change
the tire.
Service Centres to replace tires at regular geographical

distances
Is this a commodity business with few opportunities for

differentiation, or is this a highly differentiated,
service-oriented business that co-creates a
unique driving experience for a specific driver
and improves her skills as well? Will this radically
change the meaning of value in this business?
Will this approach change the nature of relationships

between the firm and its consumers?
Well, Goodyear already has a mileage-based service for its
fleet customers. Bridgestone is piloting an early version
of this model in Europe where the physical
measurements are still taken manu- ally and sent via the
Internet to the data center. Moving from this phase to
remote measurement via well-placed sensors is just a
step away.
Note the three distinct transformations taking

place:
1. Thefirm is moving from selling a product to

selling a service. The product is an integral part
of the service. But the value is based on
service.
2. The firm is moving from a transactional
relationship with a customer to a service
relationship with a customer.
Core Proposition
When strategy focuses on better fleet management—including
lower costs, improved safety and skills of drivers, and improved
understanding of truck dynamics—
the core value proposition shifts from the physical product (tire)
to services and solutions (better overall costs) to superior
experiences (for individual drivers).
3. When the manufacturer is selling a tire (just the
physical product) to the fleet owners, this type of
business would be described as a business-to-
business (B2B) organization. However, when that
company is providing feedback that improves
individual driver safety and skills, it looks more like a
business-to-consumer (B2C) organization
Questions:
1. The new infrastructure requirements may be

identified compared to traditional model of selling
(Replacing Dealer’s network)
2. What are the advantages a manufacturer will

derive under this new model and old model of
selling?

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PARADIGM SHIFT IN SELLING PRODUCTS

(A case study of Good Year- Innovation in selling process)

Vendors sell their products by competing largely on

This is a traditional business model that is firm-

Consider an alternative in which the manufacturers do

The pricing contract will be based on the type of

Type of loads (for example, heavy loads In

Typical route structures (for example, through

Individual characteristics of fleet

Periodical maintenance of vehicles, correct

Quality of servicing, such as tire rotation.

The tire as a product still exists and is at the core of

The revenue model now depends on accurate

This model has other advantages.

Revised selling model eco-system

Sensors to gauge the average speed, number of times of breaks

Now assume that we have installed sensors that Measure

Service Centres to replace tires at regular geographical

Is this a commodity business with few opportunities for

Will this approach change the nature of relationships

Note the three distinct transformations taking

1. Theﬁrm is moving from selling a product to

1. The new infrastructure requirements may be

2. What are the advantages a manufacturer will

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