Goodyear Case Analysis in the Research Proposal

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By choosing to sell through Sears, Goodyear will be relinquishing its brand exclusivity. It will also have to become more sensitive to retail marketing practices and may lose control over its own retail policies.

By going with Sears proposal, the company will be accepting a dual distribution option. But this option also means catering to a different clientele. Different channels cater to different kind of customers.

Selling through Sears may at first appear like a defensive move. Some may even question the loyalty of the new management to old policies and strategies of Goodyear's. however before any final decision is made, the company needs to consider important things like sales made through Sears and compare them with sales of replacement tires made by Goodyear tire dealers.

From the case we find out that

Sears has 5.5% of replacement tire market share

Goodyear's market share of replacement tires is 15%

Sears Auto centers in the U.S. are 850

Goodyear's auto centers and franchises are 7,964

The replacement tire volume is 155.4 million

Some basic calculations will now reveal the volume of sales through these two channels.

Replacement Tires Sold Through Sears Auto Centers:

[155.4 million Tires x 0.055] / 850 = 10,055 tires

Replacement Tires Sold Through Goodyear Outlets:

[155.4 million Tires x 0.15] / 7,964 = 2,927 tires

SWOT analysis

Goodyear is the leading tire manufacturer in the U.S. And thus enjoys a good reputation with the customers and retailers. It has 15% market share of replacement tires segment which gives Goodyear upper hand in the proposal.

Goodyear's distribution network is wide but exclusive which means customers might find it difficult to replace their Goodyear tires since they first need to locate a Goodyear outlet. Goodyear also does not enjoy a very stable relationship with its retailers which can be detrimental in the long run.

The tire industry in the U.S. is highly robust and there are great opportunities for expanding market share since customer loyalty is tied to convenience and price.

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Goodyear has the chance to take even more market share by expanding its distribution network.

But Goodyear cannot ignore the fierce competition that exists in the tire industry. Michelin is ahead of Goodyear in worldwide sales and it is not impossible to catch up with Goodyear in the U.S. too.

Positive 1: by selling through Sears, Goodyear will be able to capture the tire buyers market which is loyal to Sears. This way it can have access to a large number of customers which it previously could not attract through its own dealerships.

Positive 2: It will automatically grant access to 5.5% replacement tire market share enjoyed by Sears.

Negative 1: This move may cause friction in relationship with franchised Goodyear Tire dealers

Negative: dealer exclusivity will be threatened and they may turn the customers to other private labels as they have already threatened to do.

The Goodyear management has three possible actions to choose from:

1. instead of choosing only one brand, Goodyear can sell its entire range through Sears

2. Goodyear can give exclusive selling rights of one or two main brands through Sears while the franchised dealers will retain the rights to other important brands. This way they will not get in each other's way.

3. Sell only Eagle brand through Sears as was originally proposed because Eagle has the largest market share

Recommendations:

Goodyear should accept Sears' proposal because it has a chance of expanding its distribution network and thus increase its sales. Sears enjoys 5.5% market share in replacement tires when it doesn't even have a brand of its own. This can help Goodyear get its tires to more customers who will not need to drive to a Goodyear store for replacement. From the calculations above, it was clear that Goodyear is selling fewer tires through its outlets compared to Sears sales. By tapping….....

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