Goodyear Marketing
Introduction
It has been principally tires - for wheels of all kinds - that carried Goodyear from an unknown to one of the world's best known and largest industrial corporations. With a business philosophy of continually searching for new markets and new product applications, tires continue to be Goodyear's biggest single sales factor.
Over the years, the company became a highly diversified corporate enterprise, the product line has blossomed from its limited initial output of bicycle tires and a few molded rubber products. Today the company makes tires for virtually every vehicle except bicycles.
The diverse product line includes chemicals, automotive components, automotive belts and hose, industrial hose and conveyor belts, polyurethane and composite plastic panels, shoe soles and heels. At times, the line has included polyester for tire cords and bottles, form cushioning, metal wheels and rims, packaging films, aircraft brakes and wheels, aerospace products, computers, and enriched uranium for atomic energy.
In recent years, a subsidiary, Celeron corp., built the fist oil pipeline to carry petroleum 1,200 miles from the West Coast to refineries in Texas and other points east. While diversification helped propel the company's sales and earnings, it was mastery of the tire and rubber business that ranked Goodyear as a world leader.
Marketing Orientation/Strategy
Goodyear is very successful in terms of ensuring that factors in its external (macro) environment and the various market actors with which it relates are accommodated within its marketing strategies.
Take for example the Goodyear plant in Akron, Ohio. Goodyear North American Tire develops, manufactures, and markets tires through its network of independent dealers and retailers. Accounting for nearly half of Goodyear's worldwide total tire sales, Goodyear North American Tire operates 19 manufacturing facilities in the U.S. and Canada and has a network of 5,000 dealers.
Goodyear's marketing strategy used the aid of IBM Net.Commerce and Lotus Domino to create a state-of-the-art order management platform to serve its dealer network. This is called Goodyear's e-business solution and has empowered dealers with more robust and flexible inventory management capabilities while reducing its own costs. The result of this marketing strategy has been process improvements across its entire supply chain.
Numerous factors influenced Goodyear's e-business strategy formulation, ranging from trends prevalent across the industry, to the need to update its own internal processes. At the outset, Goodyear defined its most fundamental goal as the reduction in costs associated with the administration of - and communications with - its dealer network.
The most significant business process changes that are occurring as a result of the broadening adoption of the e-business platform relate to dealer communications and the more efficient processing of dealer transactions. Dealer communications have seen the most important process improvements in areas where the physical mailing of printed documents is being replaced with Web-based publishing.
A good example of this within Goodyear is the monthly mailing to dealers notifying them of special pricing deals. Previously, Goodyear would e-mail these promotions to its regional offices, which would then print and mail them to over 5,000 dealer locations. Not only did this consume time and money, but the inherent lag of physical mail also delayed each dealer's ability to act on the monthly specials until more than a week into each month.
Telephone communications are also being streamlined significantly, as dealers increasingly capitalize on the self-service enabled by this e-business solution of Goodyear. In fact, online inventory management presently represents the largest share of Internet usage for Goodyear's dealers.
Goodyear's pay-back from the e-business solution has the earmarks of an ideal supply chain solution: a strong benefit stream accruing to members all along the value chain. These include improved information quality and faster delivery of information to dealers. This, in turn, translates into a higher-volume of pull-through business. Dealers, on the other hand, have gained more control and flexibility in their inventory and order management processes.
Another strategy of Goodyear is the Impact processing system. Several aspects of Goodyear's vision already are in place and operating, under the umbrella of the company's Impact (Integrated Manufacturing/Precision Assembled/Cellular Technology) processing system. Company executives speak about replacing capital-intensive internal mixers with extruder-based continuous mixing (Davis, 2001).
The tire maker has gained valuable experience with extrusion-based compounding through its work with the hot-former, a series of extruder-fed profiled calendars linked by a conveyor belt that pre-assembles up to 12 truck tire casing components. Considered the heart and soul of the Impact process, the hot-former saves space, reduces assembly time, improves quality and reduces process steps and tire weight, Goodyear claims. Because the hot-former operates at a comparatively pedestrian pace, however, Goodyear execs liken it to the tortoise and hare fable, calling the hot-former a ``steady state'' tortoise (Davis, 2001).
The firm also developed what it calls ``spider'' dies to facilitate uniform feed rates and eliminate scorching during the extrusion process as it is applied to the hot-former. The circular die has a number of triangular outlets around the circumference, giving the extruded rubber a pleated look that allows it to be routed 90o to the calendar (Davis, 2001). In 2001, hot-formers were already in place at three Goodyear plants. In 2004, the company is expanding the network to seven factories.
Continuous mixing offers a number of benefits for Goodyear, including improved cycle times, more uniformity, lower labor cost per pound, and the elimination of one heat cycle in the life of the rubber on its way from compound to vulcanized product. Continuous mixing also offers the chance to eliminate a number of stabilizing materials needed to keep rubber fresh between processing steps. That results in a cost savings (Davis, 2001).
Goodyear has many sub-units or departments all over the world. Even with these numerous sub-units and departments, the organization has been successful in ensuring cross-functional responsibility for marketing operations within/across its own sub-units or departments.
In 2005, Goodyear Tire & Rubber Co. announced that it wants to slash high-cost manufacturing capacity by 8 to 12 percent during the next three years to save $100 million to $150 million annually. Overall, it is looking to save $750 million to $1 billion in three years, while incurring restructuring charges of about $150 million (McNulty, 2005).
To achieve its goals, the company said it will shut down high-cost sub-units, departments or factories around the globe, although it did not disclose how many plants will be closed or where they are. Goodyear also plans to trim its cost structure, increase Asian sourcing for low-end products, upgrade manufacturing, accelerate tire introductions and generate capital to support further investment in its core tire business (McNulty, 2005).
In 1998, Goodyear Tire and Rubber Co Chief Executive Officer Samir Gibara has outlined a strategic plan for the company to boost sales and prepare the company for the 21st century. The tire manufacturer aimed to expand its businesses by selling more tires and improving its distribution networks in both developed and developing countries. It also planned to collaborate with other companies either through joint ventures, strategic alliances or acquisitions. Still another growth strategy for Goodyear involves the development of product and process technologies (Shaw, 1998). All these are strategies that Goodyear has achieved within the last few years.
On of the organization's goal was to grow existing businesses at twice the industry rate: 5-6 percent per year, compared with an industry figure of 2.5 or 3 percent per year. This means selling more tyres and winning market share from the competition.
In order to do that, Goodyear followed two parallel paths. First was the introduction of new tyre products faster than the competition. Company executives said that they want to be known as the innovator in the business; the company which introduces more products than any other company in the industry. This allows Goodyear to improve its margins, because it is easier to persuade people to pay a premium for an innovative product. It helps improve Goodyear's margins by positioning the new tyres at the right price levels.
Another way of selling more tyres, according to Goodyear's strategies, is to improve the distribution systems in both developed and developing markets. Over the last 5 years, Goodyear has increased the number of outlets which carry the Goodyear brand in the US by 40 percent, and it expects to continue increasing the number of outlets by 10 percent per year. In addition to all these, the company also aimed to make each outlet more efficient and more effective as a Goodyear sales point (Shaw, 1998).
So a second arm to the strategy is to work with other companies either through acquisitions, joint ventures or strategic alliances to take advantage of the new markets now available to Goodyear and the other tyre companies.
Thus, Goodyear Tire and Rubber Co. company executives are already forming partnerships and joint ventures with some organizations and still planning to form partnerships and joint ventures with other companies in order to keep up with the demand for their products. Goodyear may also opt to include non-tire automotive components or in other areas where it is not actively involved. The company has also realized the need to keep pace with its global customers and is formulating strategies for it.
Strategic alliances, joint ventures and other types of cooperative ventures will play an increasingly important role in Goodyear Tire & Rubber Co.'s future, according to Samir Gibara, president and chief operating officer, especially in emerging market places (Davis, 1995).
Goodyear's joint ventures in China and India are prime examples of this thinking, Gibara pointed out, but the strategy could be extended to cover non-tyre automotive components in Europe, for example, where Goodyear does not have a manufacturing presence currently (Davis, 1995).
Goodyear's market-driven strategies are therefore excellent and have provided further advantage for the tire manufacturing company. These strategies should therefore remain and use as future market-driven strategies to be used by the management team of Goodyear Tire and Rubber Co.
References
Davis, B. (1995). Goodyear to Seek Alliances. European Rubber Journal.
Davis, B. (2001). Unbroken Circle: Continuous Production Goal of Impact System.
Rubber and Plastics News.
McNulty, M. (2005). Goodyear Plans to Make Major Cost Cuts: Goal is to Save
Up to $1 Billion in 3 Years. Automotive News.
No Author. Goodyear North American Tire: Driving E-Business Technology. \
Retrieved from: http://www-8.ibm.com/hk/e-business/case_studies/manufacturing/goodyear.html
No Author. How Tires are Built. Retrieved from:
http://www.goodyeartires.com/about/diversity/how_built.html
No Author. (1998). The Goodyear Tire and Rubber Company: A Synopsis.
Caribbean Today.
Shaw, D. (1998). Goodyear Announces Strategies. European Rubber Journal.
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