GOODYEAR TIRE AND RUBBER

UNCERTAINTIES / DILEMMA
1. Growth of warehouse membership club stores and discount tire retail is eating away
sales and volume
2. Multibranding among mass merchandiser also contributed to both erosion of sales and
volume
3. Biggest competitor just made an acquisition and overtook Goodyear as no 1 tire supplier
in the world

PROBLEM STATEMENT
Is looking into direction on how to capitalize on the growh of warehouse membership club stores
and discount tire retail in order to stay competitive but at the same time not alienating the
current franchisees of Goodyear brand tires.

UNCERTAINTIES IN THE COMPETITIVE ENVIRONMENT

The growth of 2 distribution channel namely warehouse membership clubs and mass
merchandisers are putting a small dent into Goodyear volume and profitability. Goodyear is
currently evaluation whether or not to enter these new distribution channel by partnering with
Sears in a way that will not or at least minimizing the impact to its current distribution channel.

SWOT ANALYSIS
STRENGTH
1. Largest Marketshare in the OEM Passenger car tires
2. No 1 brand in the US in terms of sales in the replacement tires category - passenger car,
light and highway truck
3. Large distribution network either by Goodyear Auto Service Center or Goodyear
franchised dealers

WEAKNESSES
1. Non-existence market footprint among warehouse membership clubs and mass
merchandiser such as Sears
2. Over-reliance on Goodyear Auto Service Center and Goodyear franchised dealers which
had stagnant growth for replacement car tires

OPPORTUNITIES
1. Sales growth for replacement tire through multi-brand independent dealers and
warehouse clubs
2. Sears proposal ensure good entry point to the warehouse membership clubs channel

THREAT
 1. Risk of being left in the current growth distribution via the warehouse membership club
and mass merchandisers
2. OEM Tires market being less important as customers are less brand loyal to specific
brand by default on their new vehicle
3. Risk of backlash current Goodyear franchise owner that “being through Goodyear
through thick and thin” upon going to the new distribution channel via warehouse
membership club or mass merchandiser

PEST ANALYSIS
POLITICAL
1. Potential unrest in Goodyear franchise owners upon partnership with Sears, which being
seen as a threat to them

ECONOMICAL
1. OEM tire market importance to secure future customer has dwindle
2. Growth in the mass merchandiser and warehouse clubs channel for tire replacement in
the US
3. Potential cannibalization of current Goodyear sales from its current distribution channel
in areas / location where merchandiser and warehouse clubs have the upper hand

SOCIOCULTURAL
1. Vehicle owners can now get their Goodyear tires at their warehouse membership clubs
and mass merchandiser

TECHNOLOGY

RECOMMENDATION
We recommend the Goodyear management to go ahead to partner with Sears in order to gain
an entry to the growing mass merchandiser and warehouse club markets. However in order to
reduce the risk of unrest (which should be minimal) among current franchise owner, Goodyear
should start with private-label contracting or provides its lesser brand available first. From there
more further research and studies should be made regarding the impact or this new channel.

BEST ALTERNATIVE
Going with market penetration strategy using the mass merchandiser / warehouse clubs formula
on current auto center and franchised dealers. Goodyear can offer membership card with added
benefits e.g. discounts and points collection. Also Goodyear needs to be more aggressive by
opening more franchise / auto centers in the area where mass merchandiser / warehouse clubs
have a big footprint to try and split the market.