Goodyear Tire and Rubber Company Case Study
Goodyear Tire and Rubber Company Case Study
Goodyear Tire and Rubber Company has been one of the largest and best-selling automotive tire companies since the growth of the automotive industry in the early 1900’s. In early 1992, Goodyear company executives were reconsidering a proposal made by Sears management about carrying and selling Goodyear’s tires.
The tire industry uses “retail points of sale” to measure the retail coverage of brand sales. While Goodyear boasts a high number of points of sale (8000), they still are behind Groupe Michelin whom is estimated to have approximately 14,000 points of sale. Since 70-75 % of tire distribution is in the replacement tire segment, the amount of “retail points of sale” is very crucial. The retail purchase behavior has changed from brand loyalty/recognition and more focused on price points. Exhibit 1(pg.342) showed the growth of discount multi-brand distributors and the convergence of warehouse clubs. Since retail promotions (sales) can stimulate buying behavior, the number of retailers is also important.
Based on the approximate sales calculated (attached), I would recommend that Goodyear accepts Sears, Roebuck and Company’s offer to distribute Goodyear’s product at Sears’ Auto centers outlets. Increasing the “retail points of sale” proves to be very advantageous and makes this a profitable venture of tire unit sales. Long term, the exclusivity given to the Franchises will not be greatly impacted since the target market is a “Loyal Sears” customer. In turn, this will reduce possible cannibalism of the Goodyear brand.
Calculations (Statistics And Data)
- Sear Replacement Tire Share Market was 5.5% (case Exhibit 5)
- Total Replacement Tire Sales in the U.S. was 155.4 million (case Exhibit 3)
-The case refers to 850 Sears Auto Centers Outlets
155.4 million x .055 = 8,547,000 / 850 = 10,055 approximately tires sold in 1991 @
Goodyear Tire and Rubber Company has been one of the largest and best-selling automotive tire companies since the growth of the automotive industry in the early 1900’s. In early 1992, Goodyear company executives were reconsidering a proposal made by Sears management about carrying and selling Goodyear’s tires.
The tire industry uses “retail points of sale” to measure the retail coverage of brand sales. While Goodyear boasts a high number of points of sale (8000), they still are behind Groupe Michelin whom is estimated to have approximately 14,000 points of sale. Since 70-75 % of tire distribution is in the replacement tire segment, the amount of “retail points of sale” is very crucial. The retail purchase behavior has changed from brand loyalty/recognition and more focused on price points. Exhibit 1(pg.342) showed the growth of discount multi-brand distributors and the convergence of warehouse clubs. Since retail promotions (sales) can stimulate buying behavior, the number of retailers is also important.
Based on the approximate sales calculated (attached), I would recommend that Goodyear accepts Sears, Roebuck and Company’s offer to distribute Goodyear’s product at Sears’ Auto centers outlets. Increasing the “retail points of sale” proves to be very advantageous and makes this a profitable venture of tire unit sales. Long term, the exclusivity given to the Franchises will not be greatly impacted since the target market is a “Loyal Sears” customer. In turn, this will reduce possible cannibalism of the Goodyear brand.
Calculations (Statistics And Data)
- Sear Replacement Tire Share Market was 5.5% (case Exhibit 5)
- Total Replacement Tire Sales in the U.S. was 155.4 million (case Exhibit 3)
-The case refers to 850 Sears Auto Centers Outlets
155.4 million x .055 = 8,547,000 / 850 = 10,055 approximately tires sold in 1991 @