Market Planning of Trek Bicycles - Essay Example

? Contents Introduction 3 Trek Bicycles – Mission ment 3 Trek Bicycles – Vision ment 3 SWOT analysis 4 Competitor Analysis 6 Schwinn Bicycle Company 6 Giant Manufacturing Co. Ltd. 7 Electra Bicycle 7 Marketing Objectives 8 Proposed Marketing Strategy – Electric Bikes 9 Target Customers 9 Marketing Mix Recommendations 9 Product 9 Price 10 Promotion 10 Place 10 References 11 Introduction Founded as small family run bicycle manufacturing company, in Waterloo, Wisconsin, in 1976, Trek Bicycle Corporation today is one of the leading bicycles manufacturing company in the world with its overseas operations prominent in Japan and 7 European countries. Trek Bicycles are now available in over 90 countries across the world. Trek has around 70 distributors and 10 subsidiaries around the globe (Plunkett, 2006). Trek Bicycles – Mission Statement Trek Bicycles was started with the following simple mission: Build the best bikes in the world (TrekBikes, 2012) But as the company has grown from strength to strength and diversified its product line, it added the following to its mission statement: Help the world use the bicycle as a simple solution to complex problems (TrekBikes, 2012) Trek Bicycles – Vision Statement The following vision statement can be derived from the various content and promos of the company on the web: We believe in bikes. We believe in a better world (TrekBikes, 2012). Trek Bicycles’ vision is to make the world a better place by using bicycles as a tool. Bicycles are the most efficient form of human transportation. Trek Bicycles’ vision is to contribute to making a world a better place as use of cycles will help to combat climate change, help people to be fitter, reduces traffic congestion, and has many more positive effects. SWOT analysis Swot analysis is an important tool that helps to carefully evaluate the opportunities and threats (external to the organization) of an organization along with its strengths and weaknesses (internal to the organization) (Griffin, 2011). Following is the Swot Analysis of Trek Bicycles Strengths Weakness Outside of China Trek Bicycles is the biggest bike company (Phillips, 2008). This is the company’s biggest strength. Trek’s main weakness is its poor understanding of customer demographics. It is unaware of who their core consumers are (Johnson, 2008). The company has established itself as one of the best bicycle manufacturers and suppliers with great innovative products, eco-friendly bicycle development, dynamic partnerships (Bikes Belong and Bikes Around the Community), efficient dealers and exceptional customer care (Johnson, 2008). Because of the great brand equity that the company has built, it has developed a very aggressive management style (Johnson, 2008). The brand image of the company is exceptional. Lance Armstrong has been instrumental in given the company a great brand image. By winning Tour De France 7 times he has contributed in demonstrating the quality of Trek Bicycles (Guffey & Loewy, 2010). The company also sponsors/funds other sportspersons and competitions. Human resources are also a major strength of the company. The employees of the company are driven and committed to working towards the company’s mission and vision. Trek Bicycles is mainly focused on the mountain bike segment. Unlike, its competitors it has not tried to dominate all segments of the bicycle market. This has helped trek Bicycles to specialise in a single key area. But Trek has diversified inside the segment to meet the requirements of different customers. It has also expanded into offering various biking accessories, clothes, training, road support, etc (Electric Bikee, 2011). Trek’s R&D has excellent capability. It manufacturers numerous products in broad product range that are affordable and it achieves this by effectively using its low cost manufacturers (Griffin, 2011). Trek’s green strategy is another important strength of the company that differentiates it from its competitors and gives a competitive edge. This green strategy not only attracts like-minded consumers but also attracts like-minded employees (Pride & Ferrell, 2010). Opportunities Threats The rise of fuel prices and the increased awareness among the consumers about global warming as opened new markets and created great opportunities for alternate mode of transportation (Donovan, 2008). Biking is one of the most efficient alternate modes of transportation and this automatically Trek Bicycles the frontrunner to capture the new markets. Even though Trek Bicycles has been able to establish itself as one of the best brands, the competition is constantly going to grow as the bicycle industry is expected to grow. This means that there will be new companies entering the market as well as old companies will aim reinventing themselves capturing a greater share in the market. The advent of internet, mainly online shopping sites like e-bay, has opened new channels for sales of both old and new bikes. This has created an opportunity to reach a larger consumer base spread across different countries (Griffin, 2011). Japan is huge threat for Trek as they have consistently come up with new innovative and quality products that are technically very superior. Trek must always be on its feet and try to be a step ahead to retain and continue on its growth curve. Between 2008 and 2009, cycling has increased by 26%. In 2007 alone, there were twice the number of bicycles (130 million) produced than cars (52 million) worldwide. There has been a 15% increase in the participation in the biking races (Bikes Belong, 2012). The trend is only expected to improve and this is a great opportunity for Trek. The number of bike races is increasing worldwide and this gives Trek the opportunity to sponsor these activities and the participants. This helps Trek to penetrate local markets. The economy worldwide is taking a hit and it is feared that the current Euro crisis would grow into a global one (European Affairs, 2011). This has lead to increase in the prices of the commodities and the bicycle prices have gone up by 15-20%. At the same time the consumers are not in the spending mood. Trek Bicycle has to come up with a strategy to overcome this. Competitor Analysis Following three are the primary competitors of Trek bicycles: Schwinn Bicycle Company With a history of over 100 years Schwinn is one of the primary competitors. Schwinn has acquired the brand of an entry level bike at an affordable price. Schwinn bikes range from $100-$500 (Schwinn, 2011)and this is the main competitive advantage that the company has over other competitors in the market. Also, it caters to 8 different target markets with a wide product range. The target markets of Schwinn are mountain, road, BMX, electric, commuter, cruisers, comfort and kids. When it comes to avid bikers, Schwinn fails to get thumbs up for quality(Johnson, 2008). Giant Manufacturing Co. Ltd. The largest bicycle manufacturer in the world, Giant Manufacturing Co. Ltd is Trek bicycles biggest competitor. It has a great supply chain and its products are sold in over 60 countries (Electric Bikee, 2011). Unlike Trek, Giant Manufacturers bicycles are sold not just to bike dealers but alto to retailers. This has given the company access to a larger customer base and this show in the market penetration of the company. The company serves 7 target markets which include road, mountain, comfort, mode bikes, family cycling bikes, indoor cycling and specialty bikes (Giant, 2011). The company also manufactures products for other bicycle companies in its manufacturing plants Europe, china and Taiwan. Giant also manufactures “e-bikes” or electric bikes which is a young market which is growing at a rapid rate. This early entry has given a competitive advantage in the market. The pricing strategy of Giant caters to a large consumer base as it ranges from $300-$8000. Electra Bicycle Electra bicycle has adopted niche focus. It mainly offers a wide range of cruisers which are mainly single speed and have a retro-trendy look. The main focus of the company is comfort, affordability and style. Electra bikes range from $350-$800 and are mainly targeted at general commuters (Electra Bicycle Company, 2012). Electra bikes are now available in the USA, Japan and Europe. The niche market focus has allowed the company to be focused on a single market and gain the loyalty of the customers (Johnson, 2008). Marketing Objectives Ansoff’s growth matrix is a tool that helps an organization their strategy on market and product growth (Waters, 2006). Source: ansoffmatrix.com Following are the marketing objectives for Trek Bicycles: 1. Trek must try to penetrate the Asian and European markets but at the same time must not compromise on its IDB strategy. It must continue to use its exclusive supply chain and not go public. This will give the company brand equity and credibility. 2. New innovative products must be continuously introduced into both existing and new markets. This will help the company to stay ahead of the competition. 3. Continue to build its brand by sponsoring and recruiting athletes. 4. Invest heavily in R&D as it is essential to compete in the global arena. Proposed Marketing Strategy – Electric Bikes As a company Trek has been doing very well in the market and promises to continue on the growth curve with their current organizational strategy. But it’s high time that the company gets into the “e-bike” or electric bike market. Electric bikes are the future of the bicycle industry and Trek must start exploring the market before the market gets crowded. Target Customers The target customers will be daily commuters who use bicycle and comfort bikers. The age group of the customers can range from anywhere between 10 and 60+ years. Anybody who uses a bicycle daily would love to use an electric bicycle which would make their experience better and more comfortable. Also the target customers will include those who would want to use an alternate mode of transportation but not opted for bicycles because physical demands. The electric bicycle would be more appealing to the consumers who want to shift towards eco-friendly practices. Marketing Mix Recommendations Product Electric bike as a new product choice is justifiable as it is the future of the bicycle industry. It is an alternate mode of transportation that will soon be used worldwide. As a product, it is still in its growth stage worldwide and it makes great marketing sense to come up with an innovative and technologically superior electric bike. Price The best pricing strategy to adopt is cost-plus pricing as there aren’t many competitors in the market. This would help the company to make a decent profit of the sales and also gives an opportunity to understand the customers. Promotion Trek should continue promoting the products the way it is doing. It should get athletes such Lance Armstrong on board to endorse the products on a global stage and it also sponsor events that will give the company direct access to the customers. Other channels such as social media, television ads are also very effective. Place The current supply chain where in the bicycles are introduced to the market through the IDB network is apt and should be continued. This will help to gain the trust of the consumers and build brand equity. References Bikes Belong (2012). Participation Statistics. Available at: http://bikesbelong.org/resources/stats-and-research/statistics/participation-statistics/. Accessed on 22 Dec 2011. Donovan, S., Genter, J., Petrenas, B., Mumby, N., Hazledine, T., Litman, T., Hewison, G., Guidera, T., O’Reilly, L., Green, A. & Leyland, G. (2008). Managing transport challenges when oil prices rise. [Online]. Available at: http://www.solgm.co.nz/NR/rdonlyres/F8EFD9EC-10CC-4839-9B41-B6D71957FB73/60179/ManagingTransportChallenges.pdf. Accessed on 22 Dec 2011. Electra Bicycle Company (2012). Electra Bikes. [Online]. Available at: http://www.electrabike.com/. Accessed on 22 Dec 2011 European Affairs (2011). Euro Crisis Recognized As Challenge for Global Economy. [Online]. Available at: http://www.europeaninstitute.org/August-2011/euro-crisis-recognized-as-challenge-for-global-economy-923.html. Accessed on 22 Dec 2011. Electric Bikee (2011). Bike Industry Growing – The Numbers. [Online]. Available at: http://www.electricbikee.com/bike-industry-growing-the-numbers/. Accessed on 21 Dec 2011. Gaint (2011). Giant Bicycles. [Online]. Available at: http://www.giant-bicycles.com/?global=true. Accessed on 22 Dec 2011 Guffey, M.E. & Loewy, D. (2010). Business Communication: Process and Product. OH: Cengage Learning. Griffin, R.W. (2011). Fundamentals of Management. OH: Cengage Learning. Johnson, S.T. (2008). Trek Bicycle Corporation – Situation Analysis. [Online]. Available at: http://issuu.com/aboutsara/docs/trek_brand_analysis#download. Accessed on 21 Dec 2011. Phillips, M. (2008). Trek Hits Pay Dirt. Bicycling. January/February 2008. P94-95. Plunkett (2006). Plunkett’s Sports Industry Almanac. TX: Plunkett Research, Ltd. Pride, W.M. & Ferrell, O.C. (2010). Marketing. OH: Cengage Learning. Schwinn (2011). Schwinn Bikes. [Online]. Available at: http://www.schwinnbikes.com/. Accessed on 28 Dec 2011. TrekBikes (2012). Believe - We believe in a better world. [Online]. Available at: http://www.trekbikes.com/uk/en/company/believe. Accessed on 28 Dec 2011. Waters, D. (2006). Operations strategy. London: Thomson Learning. Read More

 

Read More