Introduction to Problem
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. Since retail promotions (sales) can stimulate buying behavior, the number of retailers is also important. 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.
Alternatives
Good year is faced with two alternatives. The company can accept Sears offer to reopen a market channel to compensate for the accumulated losses from 1987 and 1991. This alternative is risky to Goodyear because it
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