Goodyear Tire and Rubber Company

Goodyear Tire and Rubber Company Essay Sample


• 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%)


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 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.


• 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


• 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


• 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 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 expensive.


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 Centers?

• 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 thepast 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 brand.

– 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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