GOODYEAR TIREAND

RUBBER COMPANY

Presented by Andrea Aguila and Stefanie Aguila

INDEX

● Historical Background

● Current Situation

● Market Analysis

● SWOT 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 company’s popular Eagle

brand tire in 1989 - Declined.

➔ Goodyear’s 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 Situation

Goodyear 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 Analysis

❏ The 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.

COMPETITORS

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.

MISIONTo develop products with superior quality and value that best fills the needs of

consumers.

OBJECTIVES1. 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 Analysis

Internal Factors

Strength Weaknesses

★ 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 Analysis

External Factors

Opportunities Threats

★ 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.

PROBLEMS

❖ Decline 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 1

Adding 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.

ADVANTAGES DISADVANTAGES

● Potential for increase in market share

● Boost in brand loyalty & awareness

● Increase in points of purchase

● Disputes within existing relationships

● No guarantee of sales in Sears

Alternative 2

May decide to do:

★ Market Penetration

★ Market Development

★ Product Development

Advantages & Disadvantages

Market Penetration

❖ Less cost in Advertising &

Promotion because Goodyear

only need to refresh their existing

buyers

❖ Experience & happy

dealers

❖ Red Ocean

❖ Lose market share in warehouse

club and mass merchandise

Market Development

❖ Blue ocean

❖ Can cater a new market

❖ Product and market

cannibalization

❖ Unhappy existing dealer

Product Development

❖ Produce cheaper tire

❖ Increase sales

❖ Cater price sensitive buyer

❖ Jeopardize Goodyear brand

❖ Bad perception & reputation

Market Penetration

➔ This can be done by upgrading current retail points of sales by applyinga same strategy or concept used in membership clubs and massmerchandiser.

➔ they might upgrade their current dealers to be equipped with latesttechnology and extend the dealers services to be more holistic services likemembership club does.

Alternative 3

➢ Option 1: Accept Sears proposal by changing its distribution policy

➢ Option 2: Reject Sears proposal and maintain as before

We 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 Alternative

Recommendations

● 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 AD’s 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

PRODUCT

WEBSITE

WEBSITEWebsite of Sears

Goodyear Tires