Case 8

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Recommended: Relevance of a good distribution channel for successful marketing

Introduction
Goodyear Tire and Rubber Company specializes in the design, manufacturing, and distribution of tires worldwide. Founded in 1898, the company primarily sells passenger, light truck, and highway trucks tires for the original equipment tire and the replacement tire market. Goodyear operates 7 rubber plantations and 44 tire product plants in 28 countries. Unfortunately, the tire company loss 3.2% market share between 1987 and 1991. Sears, Roebuck and company proposed an option to sell the Goodyear’s Eagle brand in their stores. Since the 1920s, the company has not offered its tires to mass-merchandise chain stores. Because of the recent decline in market share, Goodyear Tire and Rubber Company must reevaluate the Sears’ proposal.
Definition of the problem
Goodyear’s executive must decide whether to accept, reject or modify the Sears, Roebuck and Company’s proposition to offer Goodyear tires in the mass-merchandise chain stores. The firm must consider all implications of changing its distribution policy and which tire brands to allow Sears to sell.
Alternatives and Uncertainties
The firm has four major alternatives; including limiting the offering only the Eagle brand through Sears, extending the offering to all Goodyear brands through Sears, offering to make one brand or product exclusively for Sears, or maintaining current status quo. If the firm were to offer Goodyear tires at Sears, there will be several uncertainties:
1. Dealers influence on consumer purchases
2. Product cannibalism
3. Market share penetration
Franchised dealers may influence customers to buy another brand since only a few buyers are knowledgeable enough when it comes to tires. As a consequence of selling the same or similar Goodyear brand tire...

... middle of paper ...

...oduct should be positioned as premium tire brand. The initial brand that should be offered in the Sears will only include Eagle GA. Once more research has been completed on how many sales of the Eagle brand come from franchised dealers, the firm can make that determination to move the entire Eagle brand product line to Sears.
Distribution
Distribution of the product will take place through the 850 Sears Auto Centers.
Price
The price must not exceed the cost of what a consumer would purchase the product through the franchised dealers. Sears can run promotions, but Sears Company will have to endure the loss of any retail markups.
Advertising
The advertising budget will reduce, for Sears will bear any financial costs of promotions and advertising of the Eagle GA product.
Conclusion
Based on the implemented plan described above, the firm can overcome several obstacles

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