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 advertsing 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 s ...