Student's Analysis on Goodyear Tire and Rubber Company Essay

Student's Analysis on Goodyear Tire and Rubber Company - Essay Example Reconsidering the retail of Goodyear tires by Sears also meant that Goodyear has to review their distribution policy. Goodyear now faces several problems and a few dilemmas. Should we allow Sears to retail our products Should we only license them to market the Eagle brand Which brands, and how many should we allow Sears to carry Distribution through Sears would definitely increase the sales of passenger replacement tires of Goodyear. But what would the repercussions of this be on the company-owned and franchised Goodyear tire dealers How much loss would they incur The replacement tire market is responsible for 70 to 75 percent of tires sold every year. Passenger car tires are 75 percent of annual sales. The average mile driven per vehicle affects the principal demand for this market. Each 100 mile shift in the average number of miles traveled per vehicle there is a result of 1 million unit change in the sales of the replacement car tire market, and this is supposing that a tire has an average treadlife of 25,000 to 30,000 miles. Because of the longer treadlife of new tires, worldwide unit shipments have remarkably decreased. In 1987, a total of 204.8 million tires were sold. Of these, 151.9 were replacement tires. The following year (1988), a total of 209.4 tires were sold and 155.3 million of these were replacement. There was a decline of sales in 1989: only 205.1 million tires in total were sold and 153.8 million were replacement tires. It further declined in 1990 with only 199.5 million tires in total; of these were 152.3 million replacement cars. It did, however, increase the following year (1991) out of the 205.3 million tires sold, 155.4 million were replacement tires (Peterson and Kerin, 2007). Retail Tire Marketing Independent tire dealers normally carry brands of several major manufacturers and some discount-priced private label brands. This is to offer buyers a wide range of choices. It is usually more advantageous for manufacturers to have a broad product line to appeal to different customers with different vehicular requirements, and price affordabilities. Sears, for instance, usually carries manufacturer's brand tires and markets their own private-label tires. Most buyers buy from the retail store that they trust, and only a few really know about which tires are best. Most just follow the advice of the storeowners or salespersons that they usually do business with. For these reasons, Goodyear is considering the offer of Sears to retail their Eagle products. Goodyear Tire and Rubber Company The principal activity of the company is to develop, manufacture, market, and distribute tires and rubber products. Goodyear has maintained the leading market-share in the U.S. replacement tire market. This is until Michelin acquired Goodrich Tire Company, the second largest U.S. tire manufacturer in late 1990. 83 percent of Goodyear's corporate sales were composed of tire and tire tubes in 1991. Along with this, the company also owns Kelly-Springfield Tire Company, Lee Tire and Rubber Company, and Delta Tire. And in addition, Goodyear also produces private-label tires. 20 to 25 percent of the world's tire manufacturing industry, and in the U.S. tire industry,