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Goodyear Tire & Rubber Company

Case Analysis
by

neeru sehdev

on 20 April 2011

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Transcript of Goodyear Tire & Rubber Company

Goodyear GOOD YEAR TIRE & RUBBER COMPANY The proposal raised several strategic considerations for Goodyear: World's second largest producer of tires

20-25% of world's tire manufacturing capacity

37% of U.S. tire-making capacity! 3.2% decline in market share for passenger car replacement
2 million worn out Goodyear brand tires were being replaced annually at approximately 850 Sears Auto Centers Approximately 8,000 retail points in the U.S! The tire industry is divided into two markets 1) Original equipment tire market
Goodyear captures 38% of this segment
2) Replacement tire market Farheen Aziz,Jennifer Becker,Melissa Bordenave,Alanna Diaz, Pashtana Omar, Shannon Smith, Neeru Sehdev Accounts for 70-75% of tires sold annually
Goodyear is the market share leader of the U.S. replacement tire market Goodyear Tire & Rubber Company is reconsidering a proposal made by Sears www.corporatestoryteller.be Alternative 1: Maintain Status Quo A presentation without a scenario
is like a cart without a horse. Potential conflict with dealers and will present a significant change in distribution policy

Should Goodyear allow Sears to carry one or more brands exclusively? Passenger car, light truck & highway truck product categories Tire Market Consumer Behavior Few are knowledgeable about tires

Customers base purchase decisions on price & dealer recommendation Customers are gradually becoming more price conscious and less brand loyal Adding retail outlets is likely to increase Goodyear sales of replacement tires
Adding traditional multibrand independent dealers would increase Goodyear sales since they capture 44% of the U.S. market share
Chain and department stores only capture 14% of the U.S. market share Sears Existing Network This proposal on Sears existing network will yield negative results on its franchised dealers
Negative feedback from dealers in the Wall Street Journal
Dealers indicated they would add private label brands to their product line Alternative 2: Accept Sears Proposal RECOMMENDATION Accept Sears Proposal
Pros
-Potential for increase in market share
-Boost in brand loyalty & awareness
-Increase in points of purchase

Cons
-Disputes within existing relationships
-No guarantee of sales in Sears
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