Market Strategy Case Study Goodyear Tire And Rubber Company Autosaved 2

Topics: Goodyear Tire and Rubber Company, Tire manufacturers, Brand Pages: 13 (816 words) Published: April 14, 2015
Goodyear Tire and Rubber
Company
Kate Rego
Nicole Montanaro

Outline of presentation

Overview
• Goodyear was founded in Akron, Ohio in 1898 by Frank and Charles Seiberling.
• In 1992 Goodyear Tire and Rubber Company were
reconsidering a proposal from Sears, initially denied in 1989, to sell their Eagle brand tires.
• Two factors contributed to the reconsideration of the sears proposal
– decline in market share
– Goodyear brand tires were being replaced annually at
Sears Auto Centers.

Industry Summary
• Tire production of 850 world wide
• Ten tire manufacturers account for 75% of
world wide production
• 3 largest account for 60%
• Two types of markets
– Original equipment tire market (20% -25%)
– Replacement tire market (70%-75%)

Problem:

Should Goodyear accept the proposal from sears to sell their tires?

Secondary Problems
• Selling Goodyear tires through sears will represent a
significant change in distribution policy and create conflict with franchise dealers
• If they accept the proposal, should they sell only the
Goodyear Eagle brand or multiple Goodyear brand tires
through Sears?
• Possible cannibalization of company owned Goodyear Auto
Service Center and Franchised Goodyear Tire Dealers

SWOT Analysis

Strengths
• Broadest line of tire products of any tire
manufacturer.
• They are the second largest producer of tires in
the world.
• Market share leader in U.S. for original
equipment tires and replacement tires.
• They are one of the leading national advertisers in
the U.S.

Weaknesses
• Goodyear has not sold through a mass
merchandiser since the 1920’s.
• Sears customers will buy the eagle brand rather
than the Goodyear brand due to being more
price-sesative

Opportunities
• Tire dealers run frequent price promotion ads in
the local newspapers.
• The growing want for full service stations by
consumers.
• Growth of discount multi brand independent
dealers increased from 7 percent in 1982 to 15
percent in 1992

Threats
• Independent tire dealers carry several different
brands for replacement buyers.
• Department stores focus on marketing their own
private label brands.
• Consumers have become more price conscious
and less brand loyal
• Replacement tire sales do not rely on the original
equipment tire market as much as it used to.
• Canalization of company owned Goodyear Auto
Centers and franchised Goodyear tire dealers if
they accept Sears’ offer.

Consumer and Competitor Analysis
• Competitors
– Groupe Michelin, Bridgestone Corp., Pirelli, Cooper Tire and Rubber, and Sumitomo, and Continental A.G.
• Competitor strategies
– sell tires through other distribution channels, such as retail tire outlets and service stations.
– Have broad product lines that appeals to most buyer segments for different types of vehicles.
• Consumers
– They are becoming more price conscious and less brand loyal. – When shopping for replacement tires, most consumers are confused due to the amount of choices. Majority buy on the basis of price, while knowledgeable buyers choose based on dealer recommendations.

Questions
1-How would you characterize the competitive
environment in the tire industry in 1991?
• Very intense in both OE tire manufacturers and
replacement tire manufacturers. The top 3 brands of
tires, advertise heavily through T.V. and print media.
• Reliability of a strong brand name, and OE tire
manufacturing to secure replacement tire sales is
slipping due to customers becoming more price sensitive.
• Although Goodyear is a large powerful brand, they need
to compete on the basis of what consumers want.

Questions
2-What is Goodyear's relative competitive position
within the tire industry?
• They compete on the basis of quality and are known
as a premium brand of tires and therefore are more
expensive.

Questions
3-Does it make strategic sense for Goodyear to
broaden its distribution beyond company-owned and...
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