Sales Of Goodyear's Tires example essay topic
571 words
Throughout the years Goodyear has been distributing its tires only through the company-owned Goodyear Auto Service Centers and franchised Goodyear Tire dealers. The decision of Goodyear Company to broaden its distribution to Sears Auto Centers will have several advantages and disadvantages related to this action. Advantages: 1) Increase in sales in the short term, which will create an increase of market share in the long term. Goodyear's sales are declined because of multi-branding among mass merchandisers by warehouse membership club stores and discount tire retailers. Also, customers are price sensitive and they seek inexpensive tires at places such as Sears.
2) Expanded distribution. Sears has a strong market presence and can significantly increase sales of Goodyear's tires. Current market share of Goodyear has decreased to 9% where Sears and other department stores have a 14% market share. 3) Department stores such as Sears run frequent price promotion ads in local newspapers making it easy for price sensitive consumers to watch for sales and buy at off-list prices. This type of advertising can enhance Goodyear's products when placed in the Sears Auto Centers and can stimulate sales in the short term.
Disadvantages: 1) Cannibalization of Goodyear's sales. The distribution through Sears could increase sales of Goodyear brand tires from the manufactures perspective. The danger would be that company-owned and franchised Goodyear Tire Dealers might incur a loss in unit sales. This will take place especially where Sears has a strong market presence, although Goodyear has the broadest retail coverage with 8,000 retail points of sale. 2) Goodyear's Tires brand image maybe hurt. Due to the fact that Sears sells mostly tires that are not premium quality, consumers may start to think Goodyear as a moderate brand and not as a high-quality product as it has been positioned.
3) Consumers of tires are becoming more price conscious and less brand loyal, thus they easily proceed into brand switching and erode the importance of securing replacement sales through original equipment sales to vehicle manufactures. 4) Dealer-sponsored private-label tires accounted for 15% to 20% of total replacement tire sales in the US in 1991. Many dealers are able to influence choices and push their private-label tires to obtain higher margins. The above decision of Goodyear Company to distribute its tires to Sears Auto Centers should be carefully implemented. As we know Goodyear tires have been positioned as high quality products and as the advertising slogan communicates, "The best tires in the world have Goodyear written all over them". This means that well studied actions should be taken when it comes to distribute to places such as Sears Auto Centers.
The customers that go to department stores to replace their tires, they are not really knowledgeable about the several types of tires. Thus, they choose on the basis of price or others patronize with their dealers. As mentioned earlier, consumers are not brand loyal and they are becoming more price sensitive. Therefore, Goodyear should distribute to Sears Auto Centers only mid-priced brands such as the Decathlon and the T-Metric because these are the types of products consumers are looking for. The remaining premium priced brands should be sold exclusively at the company-owned Goodyear Auto Service Centers and franchised Goodyear Tire dealers, where knowledgeable and brand conscious consumers will seek them.
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