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Challenges facing Goodyear

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Introduction

Problem Statement There are several challenges facing Goodyear in the current environment. Our sales have leveled off in the past few years and we need to increase our market share in order to improve these numbers. Our debt is high and our interest payments are eating away at our profiles so we need to get more income to pay down this debt. The more immediate question is if Goodyear should launch its new line of Aquatred tires. The trend has been toward higher mileage tires and the Aquatred tire is not in line with this trend, being more of a higher end tire. Additionally, if we do determine that we are going to launch the Aquatred, do we start the advertising during the Olympics when we don't have all the tire sizes available? We are also determining if remaining with our current distribution channel is the best approach or if we need to expand the way our tires get to market. If we decide that we are going to expand our distribution channels, we then have to determine which tires, we are going to offer in the new channels. Finally, our market share in the replacement market is lacking not sure this is true, and since consumers feel that buying tires is a necessity we have to find a way to make them excited about purchasing our product. Goodyear used to be considered the Gorilla in tire producers, but with increased competition in recent years, that is not longer the case. Issues: Consumer model and expectations Essentially, consumers fall into 4 basic segments. ...read more.

Middle

Independent dealers cost Goodyear money as well. Goodyear does support some advertising with the independent dealer if certain requirements of the advertisement are met. Additionally, Goodyear assists with training on inventory and accounting systems as well as training in auto services. Goodyear also provides the independent dealers with market trends from the research studies that we have done. All of these services cost Goodyear money yet we do it to keep a good reputation with the independent dealer to hopefully get them to be more efficient sales people and promote our brand more in their stores. This represents more a summary of case facts (good) and less an analysis (not so good) Competitor analysis and strategies Michelin has been moving steadily toward independent dealers and away from company-owned outlets. Most of their independent dealers have Michelin as their signature brand, but do sell other brands as well in their stores. Additionally, Michelin has been selling tires to warehouse clubs as well as mass merchandisers. This seems to be the trend with the other big tire brands as well. They are getting their product out in front of as many people, in as many places as possible, and are moving away from the more expensive company-owned outlets. Michelin and Goodyear have been close in sales for the past few years. Surveys showed that Michelin had a stronger image among value-oriented and quality buyers, and we had a stronger image among price constrained and commodity buyers. Our main competitors are planning on introducing new 80,000 mile tires in the upcoming months, which is right in line with the latest market trends. ...read more.

Conclusion

We will not sell our higher end tires in these environments as the type of consumer that would purchase these tires would not generally shop at the warehouse club for them. We should advertise our Aquatred tire in the Olympic advertisement time that we have already purchased. In addition to just advertising the Aquatred tire, we should promote that fact that Goodyear is always looking out for the consumer's safety. This will hit a huge market, and even those consumers that are not interested in the Aquatred tire, would realize that effort and concern was put forth by the company to try to make tires as safe as possible. This is a positive spin on the company as a whole, which should translate to higher sales for our other tire products. In conclusion, we have a unique opportunity to take advantage of a niche market that is as of yet untapped. We have already purchased advertising time at the Olympics for which we are going introduce our new Aquatred tire, as well as promote Goodyear's continuing quest for safety and quality. We are going to open up new distribution channels for our lower end tires so as to increase market share in these areas, while ensuring that our independent dealers sales are respected and promoted as much as possible. This is a very exciting time for Goodyear and the Aquatred tire. A little long, but I like your plan of action. Figure 1. Most important attributes for consumers when purchasing a new tire: 1. Tread Life 2. Wet Traction 3. Handling 4. Snow traction 5. Dry traction Figure 2. US market for Passenger Tires Replacement OEM Total Industry 152.0 43 195 Goodyear 22.8 16.3 39.1 Goodyear's percent 15% 38% 20% ...read more.

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