Goodyear Tire and Rubber
Outline of presentation
• 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.
• 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%)
Should Goodyear accept the proposal from sears to sell their tires?
• 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
• Possible cannibalization of company owned Goodyear Auto
Service Center and Franchised Goodyear Tire Dealers
• Broadest line of tire products of any tire
• They are the second largest producer of tires in
• Market share leader in U.S. for original
equipment tires and replacement tires.
• They are one of the leading national advertisers in
• 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
• Tire dealers run frequent price promotion ads in
the local newspapers.
• The growing want for full service stations by
• Growth of discount multi brand independent
dealers increased from 7 percent in 1982 to 15
percent in 1992
• 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
– 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.
– 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.
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.
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
3-Does it make strategic sense for Goodyear to
broaden its distribution beyond company-owned and...
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