goodyear tire and rubber company

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GOODYEAR TIRE AND RUBBER COMPANYPresented by Andrea Aguila and Stefanie Aguila Background Current Situation Market AnalysisSWOT Analysis Main Questions Recommendations Case update The Company was founded in 1898 by Frank A. Seiberling in Akron, OH.Goodyear specializes in the design, manufacture and distribution of tires for automotive and industrial applications.Operate 60 plants in 26 countries for distribution to 185 countries around the globe.Revenues are generated through five operating units based on geographic regions North America, Latin America, European Union, Asia Pacific, and Eastern Europe (which includes the Middle East and Africa).

Historical Background

Sears management had approached Goodyear about selling the companys popular Eagle brand tire in 1989 - Declined.Goodyears top management believed that such action undermine the tire sales ->$38 million loss in 1990 and change Goodyear top management in 1991.In 1992 The Goodyear Tire and Rubber Company decided to reconsider about Sears offer.

Current SituationGoodyear is considering selling their tires via Sears retail channels. This move would be strategically advantageous because consumers are demanding low price tires and Goodyear is focused on high priced tires. By using Sears as a retail channel, they can provide a private label, low cost tire to consumers via a retailer which customers already have loyalty.

As stated above, consumers are losing loyalty to tire brands but they do have increased loyalty to retailers (such as Sears). Therefore, this move would provide Goodyear with a broader spectrum of customers.

Market AnalysisThe bulk of the business comes from repeat customers, around 70% being the repeat orders. Business comes from large customers, but small customers are from where the maximum leads are generated. Once a new customer is acquired, he tends to buy again from Dealer, irrespective of the size. Retailer gives importance to those brands from which they is getting more profit.

The company has good opportunities open in front of the associate dealers if we start focusing on them.Goodyear has different pricing strategies for different dealers.Customers don't have much knowledge about Goodyear tires. Customers easily get influenced.


VISIONBecome a market-focused tire company providing superior products and services to end-users and to our channel partners, leading to superior returns for our shareholders.

MISION To develop products with superior quality and value that best fills the needs of consumers.

OBJECTIVES 1. To maintain 38% market share in Original Equipment Passenger Car Tires; 2. To be market leader in tires industries; 3. To continue making profit; 4. To continue growth in worldwide.SWOT AnalysisInternal FactorsStrengthWeaknesses High market share in US.The brand name is one of the best known in the world.Market share leader in North and Latin America.Loss market share by 3.2%Change of management.

SWOT AnalysisExternal FactorsOpportunitiesThreats Well known brand name abroad to gain market share.Better distribution channels.Work with personal dealers to aid in selling and marketing the 12 other tire brands.High competition both in price and quality.

PROBLEMSDecline in market share of replacement tires

2 million Goodyear tires were replaced by competition at Sears.

Which is the best solution to solve these problems?

Alternative 1Adding retail outlets is likely to increase Goodyear sales of replacement tires.

Adding traditional multibrand independent dealers would increase Goodyear sales since they capture 44% of the U.S. market share.Chain and department stores only capture 14% of the U.S. market share.

ADVANTAGESDISADVANTAGESPotential for increase in market shareBoost in brand loyalty & awarenessIncrease in points of purchaseDisputes within existing relationshipsNo guarantee of sales in Sears

Alternative 2May decide to do:

Market Penetration

Market Development

Product DevelopmentAdvantages & DisadvantagesMarket PenetrationLess cost in Advertising & Promotion because Goodyear only need to refresh their existing buyers

Experience & happy dealers Red Ocean

Lose market share in warehouseclub and mass merchandiseMarket DevelopmentBlue ocean

Can cater a new marketProduct and market cannibalization

Unhappy existing dealerProduct DevelopmentProduce cheaper tire

Increase sales

Cater price sensitive buyerJeopardizeGoodyear brand

Bad perception & reputationMarket PenetrationThis can be done by upgrading current retail points of sales by applying a same strategy or concept used in membership clubs and mass merchandiser.

they might upgrade their current dealers to be equipped with latest technology and extend the dealers services to be more holistic services like membership club does.

Alternative 3Option 1: Accept Sears proposal by changing its distribution policy

Option 2: Reject Sears proposal and maintain as beforeWe have decided to accept the proposal, for the following reasons:

Increasing the distribution channel

Sears would be able to recapture the market of replacement tires for Goodyear, and regaining the 2-million tires market at Sears.

We deem it best to just sell one product, which is the Eagle to Sears. This is to ensure that there is no product cannibalization between Sears and the franchise dealers.Best AlternativeRecommendations Goodyear tyres should provide more offers or discount to the existing clients. To try to increase the profitability of retailers by keeping good profit margin.To focus on giving knowledge to the salesperson more than the end user. To start focusing on the ADs as well to capture the market.To start a membership type of a system for the retailer/dealers.To have similar pricing policy for the entire dealer so that there is no problem for dealers/retailer to deal with the customers.

Case Update



Website of SearsGoodyear Tires


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