Since the early days of tire İndustry Goodyear Rubber&Tire Comanpy had been known as ‘’The Gorilla’’ for its dominance of the world tire industry.By 1991 They operated total of 84 plants which 41 in Us and 43 in 25 other countries with more than 2000 distribution outlets worldwide.They had 105.000 employees and ranked 3rd in the world wide sales of new tires. From 1900’s till 1970’s there were 5 big players in U.S tire industry.These companies were Goodyear,Firestone,Uniroyal,BF Goodrich and General Tire.After 1970’s 3 important changes happened.First radial tired replaced bias tires.These tires would last for 40.000 miles while their old counterparts stood at 20.000.Second foreign competition started to enter U.S, companies like Micheln and Continantal with radial tire expertsise.Lastly the nature of deman has changed..Oil prices has increased and this led to reduced demand of tires replacement because people werent using cars like they used to after oil crisis in 1970’s and also long lasting radial tires meant less frequent tire purchases. There were 4 outcomes due to these changes;
1)Demand for tires grew slowly
2) Pricce of tired declined %25 between 1980-1990
3)Tire producing capacit outsripped demand
4) Difficult economic conditions mentioned above caused merges and acqusitions.Uniroyal and Goodrich merger in 1986 later bought by Michelin in 1990.In 1987 General Tires sold to Continental (Germany).
By 1991 Goodyear was the only american manufactorer that had not been acquired and managed to stay as a major player.The reasons for this were; First of all Good year made large investments (over 1.5bil usd) during late 70’s to convert their factories to produce radial tires.Secondly the company had also strong track record in launching innovative products.In 1977 Goodyear released ‘’Tiempo’’ first all season radial tire and later in 1981 they launced ‘’Eagle’’ first radial tire offering high speed for sports cars.
In 1980’s Goodyear diversified making large invesments in pipelines for oil and natural gas transmission.Also in 1986 Goodyear had a takover battle.These conditions led to increse in companys debt.After 1987 eventho company’s sales were increasing net income dramatically decreased between 1987 and 1991.In 1991 Goodyear was stil paying 1 million usd interest payment per day.
Market for passenger tires could be segmented 3 ways.
1)Difference between performance & broadline tires
2)Replacement vs OEM tires
3)Brand Classifications ; Major Brands , Minor Brands and Private Label
Consumer Behavior ; Good year regularly surveyed car owners and 7 most important factors that affected buying behavior from most important to least were; 1)Price
7)Convenient Working Hours
Goodyear also used research to segment their customers into 4 categories; 1)Price Constraint Buyers; These buyers bought tje best brand they could afford within their budget and had little loyatly to any specific brand. 2)Value-Oriented Buyers; They researched for their preferred brand at the best price.They were predisposed to major brands,shopped around extensively amd had little loyalty to any outlet. 3)Quality Buyers;These could be subsegmented into 2, ‘’Prestiger buyers’’ who wanted the best tire out there and ‘’Comfortable Conservatives’’ who wanted to develep strong lasting relationship with a brand. 4)Commodity Buyers ; They also were divided among 2 sub-segments who were ‘’Bargain Hunters’’ young consumers with low loyalty who tend tos hop around extensively and ‘’Trusting Patrons’’ who viewed brand unimportant and tend to buy low priced tires at preferred retalier.
Whosale Distribution Channels ;
1)Oil companies ; Majority of tires resold through franchise or company owned gas stations.Consisted %2 to %9 of sales. 2)Large Retailers;Mass merchandisers and warehouse clubs who resold at their own...
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