By choosing to sell through Sears, Goodyear will be relinquishing its brand exclusivity. It will also have to become more sensitive to retail marketing practices and may lose control over its own retail policies.
By going with Sears proposal, the company will be accepting a dual distribution option. But this option also means catering to a different clientele. Different channels cater to different kind of customers.
Selling through Sears may at first appear like a defensive move. Some may even question the loyalty of the new management to old policies and strategies of Goodyear's. however before any final decision is made, the company needs to consider important things like sales made through Sears and compare them with sales of replacement tires made by Goodyear tire dealers.
From the case we find out that
Sears has 5.5% of replacement tire market share
Goodyear's market share of replacement tires is 15%
Sears Auto centers in the U.S. are 850
Goodyear's auto centers and franchises are 7,964
The replacement tire volume is 155.4 million
Some basic calculations will now reveal the volume of sales through these two channels.
Replacement Tires Sold Through Sears Auto Centers:
[155.4 million Tires x 0.055] / 850 = 10,055 tires
Replacement Tires Sold Through Goodyear Outlets:
[155.4 million Tires x 0.15] / 7,964 = 2,927 tires
SWOT analysis
Goodyear is the leading tire manufacturer in the U.S. And thus enjoys a good reputation with the customers and retailers. It has 15% market share of replacement tires segment which gives Goodyear upper hand in the proposal.
Goodyear's distribution network is wide but exclusive which means customers might find it difficult to replace their Goodyear tires since they first need to locate a Goodyear outlet. Goodyear also does not enjoy a very stable relationship with its retailers which can be detrimental in the long run.
The tire industry in the U.S. is highly robust and there are great opportunities for expanding market share since customer loyalty is tied to convenience and...
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