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Goodyear Essay

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1. How would you characterize the competitive environment in the tire industry in 1991? The tire industry is divided into two end-use markets: First is the original equipment tire market (OEM) in which tires are sold directly to the automobile or truck manufacturers. This market represents 25 to 30 percent of the tire unit production volume each year. Goodyear is the market share leader in this segment and captures 38 percent (1991). Within this segment, price is highly inelastic due to the fact that car and truck manufacturers can easily switch to a competitor brand since the price competition in this segment is fierce in this market The second is the replacement tire market. This segment of the market accounts for 70 to 75 …show more content…

Their slogan also portrays a high quality message to consumers: The best tires in the world have Goodyear written all over them. Therefore, it is essential for them to maintain the availability of their high quality brands. 3. Does it make strategic sense for Goodyear to broaden its distribution beyond company-owned and franchised Goodyear tire retailers as a matter of channel policy? Why? It is important to consider that very few replacement buyers are knowledgeable about tires and many end up choosing a tire based on price while others follow the recommendation of their local dealer. Consumers are becoming more price conscious which is an important factor to consider when deciding if it is time to broaden distribution beyond company-owned and franchised Goodyear tire retailers as a matter of channel policy. Most replacement tire customers do not have a preference, which makes it easy for tire salespeople to switch customers to private label brands that deliver higher profit margins therefore, inability to penetrate that market segment would be a strategic error. 4. What are the strategic implications of broadened distribution of Goodyear-brand passenger tires through Sears Auto Centers? Broadening distribution through Sears Auto would be strategically advantageous because consumers

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