Channel Surfing...

When in my 20's I remember bringing my car back to a Goodyear dealer because a portion of steelbelting was protruding from the sidewall. They swapped my spare and told me to come back that evening. When I returned, my wheel -- and a bill -- were waiting for me...

"That'll be $43.50," the counterman said.

"Huh? There's only a few thousand miles on these. What about the warranty?"

"Not covered by the warranty. It's bad driving practices," he said.

"Bad driving? I haven't been driving on the sides of my tires!" I responded.

The dealer obviously wanted to avoid getting stuck with a warranty job.

Today, Goodyear is in a bad slump. The once over-achieving tire reseller network of the 70's and 80's is faltering according to December's Business 2.0. The reason? The article says: Distribution Conflict or what I call Channel Cannibalism.

That's when a manufacturer pits one distribution channel against another. Like selling direct. In this case, the problem is the pricing structure. Until recently, Business 2.0 says, some smaller Goodyear dealers could actually pay more for tires wholesale than Sears charged retail. And dealer fill rate is as low as 50%. Yet, dealers were expected to honor warranties and recalls.

Goodyear's story is a good example of bad channel management. But, to be fair, it's a tough balancing act for any manufacturer: courting the big guys while keeping the little ones happy.

One solution for a manufacturer is to provide more advertising and training support to smaller specialty or exclusive dealers. This allows the smaller shops to compete with more focused marketing and better customer service.

If you're a small retailer, you need to push for co-op ad dollars, signage, manufacturer training and/or exclusive lines.

How did I resolve my problem with Goodyear? I called corporate and got the dealer to waive the cost. (I was young, not stupid.)

- Phil Sasso