Good Year

COMPETITION

With regards to securing sales for the aquatred tires in the passenger car replacement market, Goodyear faced a few competitors in the same market. Their competitors could essentially fit into two distinct categories: Primary (manufacturer-level) and Secondary (retail-level) Competitors.

Primary Competitors

Goodyear’s primary competitors are other tire manufacturing companies, both foreign and domestic, such as Michelin, Firestone, Bridgestone, etc. (Also, “private label” tire manufacturers fit in this category?) The industry had, in the last year, experienced many acquisitions or takeovers of smaller tire companies by dominant firms with a bigger market share. The disappearance of the smaller players was indicative of a mature market, thick with price competition, yielding economic conditions that have almost completely annihilated profit margins for all players. At the same time, consumers were becoming savvy about the need for reliability and longevity in their replacement tires, which made it critical for surviving companies to adhere to the new demands.

Of all the competing tire companies, Michelin and Bridgestone, in particular, posed the biggest competition to not only Goodyear as a company, but the aquatred as a superior tire. The major key points are that:

i. Michelin and Bridgestone were planning to introduce a new tire in the next two years with an improved warranty of 80,000 miles. This was as a result of increasing demand for longer-wearing tires by the typical consumer. In contrast, Aquatred only had a 60,000 mile warranty and this point of product differentiation was bound to have an impact consumers.

ii. Michelin had a much stronger brand loyalty in the market that Goodyear did. This was as a result of Michelin successfully positioning its products amongst quality and value conscious buyers.

iii. Michelin had recently achieved a much larger share gain (from 75% - 80%) in both the OEM and Replacement markets. This...