Goodyear Tire and Rubber Company
GOODYEAR TIRE AND RUBBER COMPANY
1. Analyze the key characteristics, metrics, and parameters of the U.S. tire markets as summarized in this case.
The tire industry is divided into two end-use markets:
1. the original equipment tire market (OEM)
2. the replacement tire market
The Original Equipment Market
OEM tires are sold by tire manufacturers directly to automobile manufacturers, and they account for 25% - 30% of tire unit production volume each year. The Goodyear Tire & Rubber Company is a perennial OEM leader, in 1991 they captured 38% market share. Firestone and Michelin each held 16% OEM market share.
The Replacement Tire Market
The replacement tire market accounts for 70% - 75% of the total number of tires sold each year. Demand for this market is directly related to the average mileage driven per vehicle, and it should be noted that the better the tires are made (longer treadlife) the less they need to be replaced. Goodyear is the perennial market-share leader in the U.S. replacement tire market.
Competition
Ten tire manufactures account for 75% of the worldwide tire production. The largest is Groupe Michelin from France, who markets the Michelin, Uniroyal, and BF Goodrich brands. The second-largest producer is Goodyear. Their biggest brands are Goodyear, Kelly-Springfield, Lee, and Douglas. Finally, Bridgestone Corporation, whose major brands are Bridgestone and Firestone, is a Japanese firm and the world's third-largest producer.
Consumer Behavior
Demand for tires in the OEM is derived; meaning, tire volume is directly related to automobile production. When a consumer goes to buy a new vehicle, the sticker price of the vehicle includes the new tires, which is predetermined by the manufacturer. The consumer does not have much control at all of tires in the OEM.
When it comes to replacement tires, consumers have in recent years become more price conscious and less brand loyal. It was previously believed that car
1. Analyze the key characteristics, metrics, and parameters of the U.S. tire markets as summarized in this case.
The tire industry is divided into two end-use markets:
1. the original equipment tire market (OEM)
2. the replacement tire market
The Original Equipment Market
OEM tires are sold by tire manufacturers directly to automobile manufacturers, and they account for 25% - 30% of tire unit production volume each year. The Goodyear Tire & Rubber Company is a perennial OEM leader, in 1991 they captured 38% market share. Firestone and Michelin each held 16% OEM market share.
The Replacement Tire Market
The replacement tire market accounts for 70% - 75% of the total number of tires sold each year. Demand for this market is directly related to the average mileage driven per vehicle, and it should be noted that the better the tires are made (longer treadlife) the less they need to be replaced. Goodyear is the perennial market-share leader in the U.S. replacement tire market.
Competition
Ten tire manufactures account for 75% of the worldwide tire production. The largest is Groupe Michelin from France, who markets the Michelin, Uniroyal, and BF Goodrich brands. The second-largest producer is Goodyear. Their biggest brands are Goodyear, Kelly-Springfield, Lee, and Douglas. Finally, Bridgestone Corporation, whose major brands are Bridgestone and Firestone, is a Japanese firm and the world's third-largest producer.
Consumer Behavior
Demand for tires in the OEM is derived; meaning, tire volume is directly related to automobile production. When a consumer goes to buy a new vehicle, the sticker price of the vehicle includes the new tires, which is predetermined by the manufacturer. The consumer does not have much control at all of tires in the OEM.
When it comes to replacement tires, consumers have in recent years become more price conscious and less brand loyal. It was previously believed that car