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Goodyear tyres case study. In early 1992, the Goodyear Tire and Rubber Company decided to reconsider the offer from Sears to sell Goodyear's Eagle brand tires.

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Introduction

I. Factual Summary The tire industry is divided into two end-use markets: 1. The original equipment tire market 2. The replacement tire market The Original Equipment Market (OEM) OEM tires are sold by tire manufacturers directly to automobile and truck manufacturers, and they account for 25% to 30% of tire unit production volume each year. The Goodyear Tire & Rubber Company is a perennial OEM leader, in 1991 they captured 38% market share. Firestone and Michelin each held 16% OEM market share. The Replacement Tire Market The replacement tire market accounts for 70% to 75% of the total number of tires sold annually. Demand for this market is directly related to the average mileage driven per vehicle, and it should be noted that the better the tires are made the less they need to be replaced. Goodyear is the perennial market-share leader in the U.S. replacement tire market. Some non-obvious facts are as 1. Price is the key factor in replacement tire market. 2. Low brand loyalty 3. Large consumer market. II. Case Problem/Opportunity In early 1992, the Goodyear Tire and Rubber Company decided to reconsider the offer from Sears to sell Goodyear's Eagle brand tires. ...read more.

Middle

* Better distribution channels allows for greater sales to a wider market. Allows for better brand recognition. Threats * High competition. III. Feasible Solutions 1. Reconsidering the offer made by Sears and selling only Goodyear Eagle brand passenger car tires through Sears. 2. Not to accept the offer made by Sears, instead continue selling its tires through the franchised dealers. Management needs to analyze and match each alternative identified with the uncertainties existing in the environment and assigns quantitative value to the outcome associated with each match. Based on the case, Goodyear is left with two choices, which are either to accept the proposal from Sears, or to decline it. Thus, upon analyzing the case, we need to recognize the advantages and disadvantages each of the decision. Advantages Disadvantages Accept * Increasing the distribution channel would increase sales and revenue for Goodyear * Goodyear be able to recapture the market of replacement tires for Goodyear * Change the distribution policy. * Could create conflict with its franchised dealers. Decline * Can concentrate on the promotion with the current dealer. ...read more.

Conclusion

5.Goodyear will have more competition in regards to the price and preference as Sears carries a huge product line from different manufactures. In this case, Goodyear would partner with Sears, allowing it to carry all its Eagle brand of tires. This would enhance Goodyear's sales and minimize its cost, as the cost of promotion for the Eagle brand would be borne by Sears. Thus, Goodyear could enhance its promotional strategy through advertisement such as television, auto racing from the additional savings, and further promote the rest of the line of products. In addition to that, Goodyear could have its own personal dealers, to help it in selling and marketing the other 11 products. This can be done by Goodyear, or franchised to franchisees willing to carry the products. V. Conclusion From the case, it is clear to see that Goodyear was suffering from loss in market share and profits, thus it is essential that the decision made be executed to ensure that Goodyear would regain its competitive advantage, regain its market share, and most importantly, turn its losses into profits. Although the decision would upset the franchise dealers and some might carry other brands in addition to that of Goodyear. But overall market share and the profits of the company would increase. ...read more.

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