Challenges Facing Goodyear Essay

Challenges Facing Goodyear Essay

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Challenges Facing Goodyear

Problem Statement

There are several challenges facing Goodyear in the current
environment. Our sales have leveled off in the past few years and we
need to increase our market share in order to improve these numbers.
Our debt is high and our interest payments are eating away at our
profiles so we need to get more income to pay down this debt. The
more immediate question is if Goodyear should launch its new line of
Aquatred tires. The trend has been toward higher mileage tires and
the Aquatred tire is not in line with this trend, being more of a
higher end tire. Additionally, if we do determine that we are going
to launch the Aquatred, do we start the advertising during the
Olympics when we don’t have all the tire sizes available? We are also
determining if remaining with our current distribution channel is the
best approach or if we need to expand the way our tires get to
market. If we decide that we are going to expand our distribution
channels, we then have to determine which tires, we are going to offer
in the new channels. Finally, our market share in the replacement
market is lacking not sure this is true, and since consumers feel that
buying tires is a necessity we have to find a way to make them excited
about purchasing our product. Goodyear used to be considered the
Gorilla in tire producers, but with increased competition in recent
years, that is not longer the case.

Issues:

Consumer model and expectations

Essentially, consumers fall into 4 basic segments.

§ There are Price-constrained buyers who buy the best brand they can
afford. They do not show any loyalty toward any brand and tend to
shop around for tires so we would have to get our tired in front of
them and be the best priced.

§ There are the Value-oriented buyers that shop around a lot to get
the best price, but would generally buy major brands only so we would
probably be able to capture this buyer because of our brand name, but
we would need competitive pricing.

§ There are the Quality buyers who were loyal to the outlet and the
brand of tire. These consumers were generally upscale and are going
to be our main target audience and the challenge here would be to get
the tire to the outlet that the consumer is comfortable buying at and
communicating the difference in our tire verses our competitors.

§ Finall...


... middle of paper ...


... and concern was put forth by the company to
try to make tires as safe as possible. This is a positive spin on the
company as a whole, which should translate to higher sales for our
other tire products.

In conclusion, we have a unique opportunity to take advantage of a
niche market that is as of yet untapped. We have already purchased
advertising time at the Olympics for which we are going introduce our
new Aquatred tire, as well as promote Goodyear’s continuing quest for
safety and quality. We are going to open up new distribution channels
for our lower end tires so as to increase market share in these areas,
while ensuring that our independent dealers sales are respected and
promoted as much as possible. This is a very exciting time for
Goodyear and the Aquatred tire. A little long, but I like your plan of
action.

Most important attributes for consumers when purchasing a new tire:

1. Tread Life

2. Wet Traction

3. Handling

4. Snow traction

5. Dry traction

US market for Passenger Tires
Replacement OEM Total

Industry 152.0 43 195

Goodyear 22.8 16.3 39.1

Goodyear’s percent 15% 38% 20%

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