Goodyear Case study Essay

The moil effort is separate into two shutdown-use food market places, the passkey equipment travail market and the reliever discharge market. Original equipment moils argon sold by drop makers directly to elevator motor gondola car and truck makers. Good grade is the second largest wear thin producer worldwide. It operates 44 endure intersection plants in 28 countries and 7 rubber plantations. Goodyear has the broadest line of tire products of all(a) tire producer. It is one of the best known and recognized fault name calling in the world. Goodyear is also one of the leading interior(a) advertisers in the U.S. Goodyear is the market leader for original equipment tires at 38%. Replacement passenger car tires throwaway for 75% of annual deals for Goodyear. They be the market handle leader in the U.S. exchange tire market. Passenger car tires account for 15%, light truck tires for 11% and street truck tires for 23%. Goodyear cross tires have the broadest s ell coverage with al near 8,000 retail points of change or 20% of all US replacement tire locations. tight 2 one million million million which accounts for 5% of replacement tires atomic number 18 being replaced yearly at 850 Sears Auto Centers. Discount, multi- gull independent mongers market constituent rose from 7% to 15% between 1982 and 1992. Market piece of ground for replacement tires captured by retailers not serviced by Goodyear has bad from 17% to 35% (1982-1992). Goodyears market component part declined 3.2%, or 4.9 million units between 1987 and 1991. Goodyear stores reported a 1% decline in replacement tire market share to 9%. 2.0CASE PROBLEMThe Sears proposal raised several strategic considerations for Goodyear. First, as a matter of distri bution policy, Goodyear has not sold the Goodyear tire brand through a mass merchandiser since the 1920s, when it sold tires through Sears. decision to sell Goodyear brand passenger car tires again through Sears would co nciliate a significant change in distribution policy and could form conflict between its franchiseddealers. Second, if the Sears proposal was accepted, several product policy questions loomed. specifically should the arrangement with Sears include (1) only the Goodyear eagle Brand or (2) all of its Goodyear brands? Sears would provide a great opportunity for Goodyear for several different reasons. Sears is a large National seller with 850 Auto Centers with potential sales on 2 million replacement tire sales per annum. It gives Goodyear the opportunity to turn back the bleeding of market share 3.2% loss over brave out 4 years. They could take advantage of Sears sponsored promotions for those consumers that have become much impairments sensitive and slight brand loyal. They can also position themselves as the premium national brand at Sears. 3.0GOODYEAR TIRE AND RUBBER COMPANYGoodyear Tire and arctic come with, headquartered in Akron, Ohio, was founded in 1898 by Frank and Charles Seiberling. The fellowship began as a supplier of bicycle and carriage tires, but soon targeted the fledgling automotive labor. The Goodyear Tire & Rubber ships company, incorporated on August 29, 1898, is a manufacturer of tires. The Company, together with subsidiaries and joint ventures, develops, manufactures, markets and distributes tires for a range of applications. The Company also manufactures and markets rubber-related chemicals for several(a) applications. The Company is an operator of commercial truck service and tire re ill-useing centers. The Company operates approximately 1,300 tire and auto service center outlets where it offered its products for retail sale and provided automotive repair and other services. The Company manufactures its products in 52 manufacturing facilities in 22 countries, including the United States. It operates through four operating segments representing its regional tire businesses North American Tire Europe, Middle East and Africa Tire (EMEA) Latin American Tire, and Asia Pacific Tire 4.0SEARS, ROEBUCK & COMPANYSears, Roebuck & Company, ordinarily referred to as Sears, is an American multinational section store chain headquartered in Hoffman Estates, Illinois, in great Chicago. The company was founded by Richard Warren Sears and Alvah Curtis Roebuck in 1886, as the R.W. Sears Watch Company in Minneapolis, Minnesota. Julius Rosenwald took control in 1895 and expanded its sales and profits greatly. In 1925, it began opening localdepartment stores. The business peaked in the mid-fifties and 1960s, and then began a long, slow contraction. In 2005, it was bought out by Kmart, which renamed itself Sears Holdings. In 1973, it opened a new headquarters in the Sears Tower, a 108-story, 1,451-foot (442 m) skyscraper that was the tallest structure in the world until 1998. Until October 1989, Sears was Americas largest retailer, when it was surpassed by Walmart in domestic revenue. Target, Best Buy, and Home Depot h ave also surpassed Sears since. As of 2012, it is the fourth-largest U.S. department store company by retail sales and is the 12th-largest retailer in the United States, leading its competitor Macys in 2013 in price of revenue. 5.0INDUSTRY BACKGROUNDWorld tire production in 1991 was approximately 850 million tires. North American production accounted for 29%, Asian production was 28%, and Western European production accounted for 23%. The tire intentness is divided into two, broad segments original equipment (OE) tires and replacement tires. The OE segment accounts for 20-25 component of tires sold annually and these unit sales are trending downward. The replacement tire segment accounts for 70-75 percent of tires sold each year and this unit sales trend is savourless. Passenger car tires account for 75 percent of annual sales and the remaining 25% go to commercial and miscellaneous usage. Although 10 tire manufacturers account for 75 percent of worldwide production, only three firms account for 60 percent of all tire sales sold. These three firms are Michelin, Goodyear, and Bridgestone. These firms compete in both the OE and replacement tire segments.Although Goodyear is second to Michelin in worldwide production, it is the U.S. market leader in both the OE and replacement segments. evening though the OE segment is smaller, it is viewed as strategically important by tire manufacturers because prominence in the OE segment provides volume related scale economics in the production of tires and it is believed that car owners satisfied with their OE tires on new vehicles willing buy the same brand when they replace their worn tires. It should be mention though that passenger replacement tire buyers are becoming to a greater extent price sensitive and less likely to simply replace their mark OE tire with the same brand of replacement tire if they are significantly more expensive. Demand in this market is directly related to the medium mileage driven per vehicle, therefore, the durable a tires tread life the less they need to be replaced. ambition in this industry is intense in both the passenger OE and replacement tire segments. Competition in the OE segment revolves around the major vehicle manufacturers and supplying almost or all of their tire needs for the new model year cars and trucks. Competition in the replacement tire segment occurs across the selling mix. major(ip) tire manufacturers compete on the basis of product vicissitude and innovation, retail points of sale, price and promotion Goodyear is the second largest tire manufacturer in the world, behind Michelin which manufacturers and markets the Michelin and Uniroyal/Goodrich brands.The Goodyear brand is the single largest brand, in terms of sales to the OE tire segment. Its share of this segment is 38 percent. It is noteworthy however, that Michelin with its Michelin and Uniroyal/Goodrich brands combined capture 30 percent of the OE tire segment. Goodyear brand ti res capture the largest portion of sales in the U.S. replacement tire market 15 percent of passenger car tires, 11 percent of light truck tires, and 23 percent of highway truck tires. Companywide share increases in each category when sales of its Kelly-Springfield brand are included. Goodyears relative agonistic position is also due to the fact that they have the broadest line of tire products of any tire manufacturer and have the broadest retail coverage with almost 8,000 retail points of sale, most of which are company owned or franchised. 5.1DistributionMajor manufacturers of tires capitalize on their study and experience as producers of building strong wholesale and retail dealer relationships and networks through which to sell their brand name replacement tires to vehicle owners. The industry uses retail points of sale to gauge the retail coverage of tire manufacturers and their brands. Goodyear has the broadest retail coverage with almost 8,000 retail points of sale. Indepe ndent tire dealers usually birth the brands of several major manufacturers and a discount priced private label brand to give a full assortment of qualities, brands, and price ranges to choose from. Retail tire outlets there were owned or franchised by the manufacturers carried only the manufacturers name brands and maybe a private label discounted price line. Department stores and major retail chains (like Sears) occasionally carried manufacturers brand tires but usually marketed only their own private label brands. In most communities, price is the dominant agonistic appeal in anintensely competitive industry. Many dealers feature and push their private label brands of tires because the profit margins are higher. Dealer sponsored private label tires accounted for 15 to 20 percent of fundamental replacement tire sales in the US in 1991. For this reason, it would be beneficial for Goodyear to consider providing a private label brand for Sears, if they break up to use them as a re tail channel, to capture this growing market. 5.2 tradeMajor tire producers often use network TV campaigns to promote their brands, take in new types of tires, and pull customers to the retail dealer outlets. Network TV budgets commonly run from $10 million to $30 million, and their budgets for cooperative ads with dealers run from $20 million to $100 million. Print media is also commonly used extensively. 5.3Customers fewer replacement buyers are very knowledgeable about tires and many end up choosing a tire based on price and whatever just follow the recommendation of their local dealer. Consumers are becoming more price sensitive/conscious while abandoning brand loyalty. This is important to phone because it defeats the purpose of presence in the original equipment segment. Therefore, being in a market segment, which is not as profitable, for a reason that is no longer viable, might be a strategic error? Most replacement tire customers do not have a preference, which makes it easy for tire salespeople to switch customers to private label brands that deliver higher profit margins 6.0DECISION qualification PROCESSDecision to suggest Goodyear to accept the proposal offered by Sears and set apart Sears to sell Eagle brand tire. The decision made was appropriate. From the case, it is clear to chit-chat that Goodyear was suffering from loss in market share and profits, thus it is inborn that the decision made be executed to ensure that Goodyear would regain its competitive advantage, regain its market share, and turn its losses into profits 7.0conclusion and recommendationGoodyear vindicatory strategy would consist of changing their retail structure, declining market share in the replacement tire segment and have a flat original equipment volume. As for changing their retail structure they could do this by having non company owned or franchised company stores which are capturing a larger percentage of the tire replacement market. Discount, multi-brand inde pendent dealers market share rose from 7% to 15% between 1982 and 1992. The reason that Sears is a honourable viable option is because of the declining market share in the replacement tire segment. Market share for replacement tires captured by retailers not serviced by Goodyear has grown from 17% to 35% (1982-1992) and market share loss of 3.2% over last four years. As for original equipment tire volume, the replacement tire market which represents 60% of Goodyear sales worldwide is more profitable that the original equipment market. Goodyears unit volume has plateaued in this segment at 38%. So I believe that only selling high performance Eagle brand tires at Sears is the best alternative for Goodyear.References1. Roger A.K & Robert A.P (2013). Strategic Marketing Problems. Cases and Comments.(Thirteenth Edition).England. 2. Marketing Strategy. In Wikipedia. Retrieved October 25,2014 from http//en.wikipedia.org/wiki/Marketing_strategy3.Goodyear Tire and Rubber Company. In Wikiped ia Retrieved October 27, 2014 from http//en.wikipedia.org/wiki/Goodyear_Tire_and_Rubber_Company4.Swot Analysis. In Mind Tools October 29, 2014 from http//www.mindtools.com/pages/ obligate/newTMC_05.htm