Implement the choice: Explain how you will implement the choice and overcome the obstacles. Very often students do good analysis and suggest poor implementation. This lowers the value of the analysis.
Due to fierce competition in the tire industry resulting in a declining market share in the tire replacement segment and a $38 million loss in 1990, the top management of Goodyear Tire and Rubber Company was tasked to reconsider Sears, Roebuck and Companys proposal from 1989 to sell Goodyears top Eagle brand tire in its Sears Auto Centers where 2 million worn-out Goodyear tires are replaced every year. The deal might increase Goodyears tire sales and would complement Searss product mix, however before broadening distribution the tire company has to consider several issues. First of all, selling its products through a mass merchandiser would be a major change in their distribution strategy. In addition, the company has to decide whether a potential agreement includes only its top Eagle brand or all of its brands. Furthermore, an awareness must be created that a broadened distribution could potentially lead to cannibalization effects between Goodyears Auto Service Centers as well as franchised Tire Store dealers and Sears Auto Centers. This leads to the ultimate question whether Goodyear should accept the proposal and, if so, under what conditions?
Since Goodyear Tire and Rubber Company has been dealing with a loss of $38 million along with a decrease of 3.2% in the tires replacement market share, Goodyear has to list out different possibilities in order to increase their sales again. In 1989, Sears offered to reconsider their deal of the possibility of either selling Goodyears Eagle brand tires or selling all Goodyears tire brands. Thus, leading to alternatives on what should be the next step for Goodyear to increase their market share in the tires replacement market.
Alternative 1: Maintain market position
Goodyear will maintain their market position by operating under the current marketing strategy. There will not be any additional advertisements or promotional ideas involved. Thus, Goodyear will reject the proposal that Sears has offered to them.
Alternative 2: Accepting Sears proposal by allowing them to sell the Goodyears Eagle brand
Goodyear will accept the proposal that Sears offered them under the condition that only the Goodyear Eagle brand tires will be distributed. Thus, Goodyears Eagle brand tires will be sold throughout all Sears Auto Centers.
Alternative 3: Accepting Sears proposal by allowing them to sell all Goodyears products
Goodyear will accept the proposal that Sears offered them along with opening up to all Goodyear brands being distributed. Thus, Goodyears Eagle brand tires along with all other Goodyears tire brands will be sold throughout all Sears Auto Centers.
Pro – tire has no expiration date so they can stay in warehouse
- Expanding distribution channel
- Brand image – Possible decrease on brand image due to association with low price retailer
- Increased competition with lower prices tire manufacturers
- Promotional items shifting focus on safety features
- Coupons mailed to loyal customers to buy off retailers
- Controlling prices so price point is equivalent all across
- Offering incentives to buy Goodyear tires in Sears and tackle competition
- Training program to Sears employs
- Franchises do promotion from their own pocket, try incentive program to help them promote brand