Summary of Case Analysis: Goodyear Tire and Rubber Company Essay

Summary of Case Analysis Goodyear Tire and Rubber Company1.INTRODUCTION GOODYEAR TIRE AND RUBBER COMPANYGoodyear Tire and Rubber Company, was founded in 1898 and was the world tire production leader until November 1990 when Groupe Michelin took over after merging with Uniroyal Goodrich Tire Company.Goodyears principal business is the development, manufacture, dissemination, and sale of tires throughout the world. Its tires and tube gross revenue represent 83 % of 1991 corporate sales of $10.9 billion with corporate wide earnings of $96.9 million. It has its owned Goodyear Auto Service Centers and immunityd Goodyear Tire Dealers in supporting its distribution and sale of tires in US. Goodyear controls 20 percent of the worlds tire manufacturing capacity and 37 percent of US tire-making capacity and sales outside US represent 42 % of political party revenues. dining table 1 V Worldwide Market Share, 1990In early 1992, Sears, Roebuck and Company (Sears), owner of Auto Centers prop osed to bewray Goodyears popular brand tire, Eagle. This has raised Goodyears management consideration due to the following facts(i)Goodyear brand tires has declined 3.2 % in market share (4.9 million units) for passenger cars amongst 1987 to 1991(ii)2 million worn-out Goodyear tires were replaced with other brands at 850 Sears Auto Centers.2.THE ISSUEThe declining of Goodyear market share was believed due to the growth of warehouse membership club and the disregard tire retail. See Table 2 and 3 below. In addition to that, about 2 million Goodyear tires were replaced by other brands at Sears Auto Centers in the Replacement Tire Market.Table 2 V US Market Share of Tire Replacement by sell OutletType of Retail Outlet1982 (%)1992 (%)Traditional multibrand independent dealers4444Discount multibrand independent dealers715Chain stores, department stores2014Tire company stores109Service stations118Warehouse clubs06Others84Total100100Table 3 V Pie chart of US Market Share of Tire Repla cement by Retail Outlet The Goodyears management is considering Sears proposal to sell its Goodyears popular brand i.e. Eagle which basically affect it distribution policy.In summary, the above factors l... ...(b)Pricea.To offer high incentive in hurt of transfer of price to the franchise dealers and standard incentive to Sears Auto Centers.(c)Advertising and Promotiona.Strategize the advertising to notify and educate customers of the new and additional channels of Goodyear tire products in the TV and newspaper(d)Distribution and Salesa.To review the existing franchise contracts with the franchise dealers and provide more marketing support to both franchise dealers and Sears.b.To restrict distribution of tires, ie. Channels (franchise and Sears) will only be able to obtain distribution from authorized distributors and not directly from manufacturer, as this will train price stability. 7.CONCLUSIONThe recommendation is to proceed with the review of distribution policy in order to allow Sears to sell Goodyear tires and expand the franchise dealers business to accommodate the on-stop-service centers. This decision will re-gain market share from the warehouse club and discount independent dealers and increase sales of 2 million tires annually as the distribution channels have increase and able to tap loyalty customers of Sears.