Market Strategy Case Study Goodyear Tire and Rubber Company

Goodyear Tire and Rubber
Kate Rego
Nicole Montanaro
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
– 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%)
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
• Broadest line of tire products of any tire
• 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.
• 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
• 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.
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
• 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
franchised Goodyear tire retailers as a matter of
channel policy? Why?
• Goodyear brand is traditionally positioned as one of
the best known brand names in the world of
premium quality tires.
• Creating a new distribution channel to Sears will:
– Attract their loyal and new customers to lead them to buy
the Goodyear brand.
– Attract already brand informed customers to Sears
4-What are the strategic implications of broadened distribution
of Goodyear-brand passenger tires through Sears Auto
• With more locations of Goodyear tires being sold, It
will increase revenues with cannibalizing their
franchise stores
• Broader distribution channels gives customers easier
access and closer locations to buy Goodyear tires
– Goodyear franchise stores= around 100
– Sears stores= 850
• Goodyear should accept Sears’ proposal
– Although Goodyear’s methods have worked in the
past channels of distribution are changing due to
changing consumer preference.
• Goodyear should sell Eagle brand tires
through Sears, in addition they should sell
their lower priced options such as T-Metric
• To create awareness of Goodyear tires being sold
at Sears
– Create Ads for Television, newspapers, billboards,
radios, and racing events.
– promotions and coupons to lure price-sensitive
customers to be less brand loyal and try the Goodyear
– Corporate ads will benefit both companies and can
save on ad expense
– Build strong relationships with the franchise dealers
and do special promotions to eliminate conflict and
increase there revenue

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