A Marketing Opportunity for Powerbike in Thailand - Assignment Example

Executive summary Cycling has health, environmental and social benefits to the cyclist; in terms of health, experts recommend at least 30 minutes cycle or walk to maintain a healthy lifestyle. This is because it stretches the body allowing formation of muscles thus contributing to avoidance of lifestyle diseases. Environmental benefits go far and wide as it does not use fuel which contributes to high levels of carbon emissions; it is an ideal alternative to vehicles which are major pollutants. Socially, they are cheaper options to cars and hence even the rural poor are able to afford one; according to statistics, over 75% of world’s population can afford one. In this report, we find that there are on-going developments that are supporting the bicycle sale business. The major one is the will by the government to support plans leading to use of bikes for short trips within towns and also by students to go to school. This is meant to promote a healthy lifestyle among the citizenry. The residents have also accepted the bikes as they are flexible and can be used to go to other areas that cannot be accessed by vehicles. In Powerbike’s move to change its production base to Bangkok, the company is faced with stiff competition from other well established industry players for instance, K.C.I Bicycle & Part Company. However, by focusing on customer needs and developing on its strengths, our company will manage to stay ahead of competition and remain profitable in this urban market. Introduction Thailand is one of the rising Asian countries experiencing rapid economic expansion because of improved governance and high rates of foreign direct investment (FDI). This expansion brings with it pressures on social amenities as more people move from the rural areas to look for gainful employment in towns. The boom years made Bangkok one of the most active and heavily congested cities. Major pressure exerted by this population explosion is on public transport as the locals have to commute daily from residential areas to their places of work. This then necessitates adoption of other modes of transport to ease pressure on vehicular transport. This report focuses on the Thai bicycle market taking a deeper analysis of the consumer behaviour, demographics and psychographics. It gives advice on appropriate ways to maintain market share and weighs likelihood of entry to the Bangkok market which is characterised by dense population and chaotic public transport. This is done by analysing both external and internal business environment on factors supporting or discouraging expansion programs for instance, competitive forces analysis. Market segmentation, targeting and positioning is used to give a picture of the specific products Bangkok consumer market demand from bike manufactures. History of Powerbike Powerbike was founded by two siblings, Nui and Ning, in 2006 at a small town in north eastern part of Thailand called Roi Et. It is a family owned business that has grown leaps and bounds over the 5 years it has been operation due to strong market presence and the cycling culture of the community. Right from childhood, the two siblings used to watch how their father repaired bicycles that were presented to their shop for servicing; and they eventually developed an interest that made them opt for this line of business. After they got the necessary academic qualifications necessary to run this kind of an enterprise, they decided to bring in professionalism in order to keep it profitable and better managed using the right kind of approach. Marketing credentials attained enabled them analyse market trends and package their campaigns well for them to be responsive to consumer needs. Product and service description The company offers a wide range of bike products for different terrains; it has bikes for the normal level roads, mountain bikes and speciality bikes for other riders. It also conducts quality repair work to maintain these bikes in a sustainable manner; this is because the local people, who form the major part of its consumer base, are people who have relatively higher poverty levels and cannot just discard a bike when one or some of its components stall. The following is the categorisation of products offered by this company: Children bikes: these come in varied sizes and meant for the young for transport and recreational purposes. Hybrid bikes: come with additional features to appeal to a specific market segment making it ideal for recreational functions and commuting. Road bikes: these are used for races and for recreational purposes; they can further be modified to high performance depending on client’s demands. Mountain bikes: they are long lasting bikes meant for rough terrains. Motocross bikes: made for sportsmen and stuntmen who are involved in activities such as dirt jumps, street rides and races. Women’s bicycles: are fitted with features making it ideal for this segment for instance, a smaller frame, attractive colours and ladies’ saddles. This is meant to give them a comfortable riding experience. It also produces other bikes meant for special projects in conjunction with the government and nongovernmental organisations meant at improving the livelihoods of the members of the community. For instance, the company, in conjunction with the Thai government produced bikes to be used for electricity generation in rural primary schools. This is a venture aimed at lighting up the rural areas that are far removed from the national power transmission lines as well as promoting healthy living since these bikes are cycled by students during fitness classes. Competition and buying patterns Thailand has experienced an influx of major bicycle sale and repair companies not because of its modest population compared to neighbours such as Indonesia and Philippines, but due to changing consumer lifestyles. Thai’s are known to be skilled in bike production and other mechanics. This is why these companies are setting their production bases to get the necessary expertise to manufacture bicycles as well as ready market for their products. The major competitors in this market are: Asia Cycle Company limited: this is a bicycle distributor with its production base in Samut Prakarn; it deals in sales of bicycles and its parts including rims, spokes, nipples and pedals. Deestone International Company Limited: this is an international company that has several outlets spread in Thai’s major towns. It is a relatively high end bicycle parts distributor and specifically manufacturer’s bicycle tubes and rims. Ecolux International Company: this is involved in production of electric bicycles which is a slight variation from the traditional bike designs available in the Thai bicycle market. It offers competition to Powerbike’s hybrid product line. K.C.I Bicycle & Parts Company: this is a big company involved in manufacturing of bicycle and bicycle parts. It commands almost three quarters of the Thai spare part market and distributes to retailers or sells directly to end users. It has more than 50 branches scattered across major towns in Thailand. Motorcycles are replacing bicycles as a means of transport within the major towns; this is bringing a lot of competition to the market as these are faster and require less human energy to power. This is especially a major concern when deciding on entry to the urban Bangkok market characterised by wealthy personalities who can afford big and classy motorcycles. However, bicycles have carved a niche for itself as there are tourists and families who still consider it ideal for daily or leisurely movements within the city. They also use these bicycles for movements from the small market streets to the main highways and back in Bangkok. Bicycle customers tend to favour one type of manufacture for certain reasons; the main variables that influence this mindset are pricing, availability of products at the required time and terms of purchase. For instance, adopting price leadership by giving quantity discounts to clients who make large purchases and conducting after sale services in terms of repair work makes customers stick to one supplier. Differentiation of Powerbike from competitors Powerbike offers its products to the market in various types, reflecting market segmentation; differentiation ensures that consumers are treated differently. This company manufactures bicycles for children, women, racers, tourists and general bikes used by men for daily transport routines. The company notes that quality is important to maintain a customer satisfaction in order to have a positive growth trajectory. They then produce goods that appeal to market specifications and hence are efficient in production to minimise oversupply. The company sells its products either directly to the users or some retail outlets comes to make purchases and sells to members of the public. There are also institutional buyers who make orders for a specified number of bikes to be used by their members for moving around towns and rural settings. They offer flexible payment terms that does not overburden the consumer; it has a hire-purchase scheme that ensures those earning little but steady income are able to afford a bike by paying for it in small instalments. Market analysis The predominant market for Powerbike is students residing within Roi Et; we also cater for local employees, sportsmen and the greater Roi Et population. Demand in the local market is driven by lack of financial might among the population because they cannot afford vehicles. Bicycles are then used to make short trips and transporting farm produce. Thai government has a plan to make every school going child own a bike to avoid time wastage walking to schools and also to promote healthy living. Bicycle transportation is cheap, and saves both time and space. So long as there is goodwill by the government to encourage cycling, Powerbike’s segment growth is assured. Segmentation School going children are our main target; however, bikes are bought for domestic use and for moving tourists around within ancient temples and towns. High birth rate contributes to high number of school going children. Lack of adequate parking space in major towns and the general flexibility that bikes offer motivates the locals to use this means to move within the markets characterised by narrow streets. The government subsidizes acquisition of these bikes by primary and secondary school students to encourage uptake. There are also speciality bikes used in schools in rural Thailand to generate electricity; they are cycled by students during physical exercise lessons. There is a new enthusiasm for customised and hybrid bikes; customised ones are for instance, women bikes and family bikes used by special groups. They have slight structural modifications; those used by women have smaller frames and are available in warm colours. Family bikes have an extension at the rear used to carry children when making short trips within town; the same design is used to move tourists as they sample Thai sceneries. Figure 1: A Thai family bicycle With increasing use of bikes, demand also escalates for bicycle accessories and repair services; this is another core function that Powerbike undertakes. Citizens are increasingly becoming health conscious, hence use bikes to avoid health complications resulting from an attitude of laziness. Thai’s are increasingly adopting sport biking; this is offering new opportunities for mountain bike product line and other fast racing bikes. Riders mount their bikes on their cars and head for the extensive Thai mountains. This is also coupled with ecotourism efforts promoted by the government through various authorities. Figure 2: Segmentation, targeting and positioning. Targeting This is conducted after identifying the different market segments. Our company has established itself as a major player in Roi Et, manufacturing, repairing and selling bike accessories including spokes, brakes and brackets to the local population. Our reliability and production of cheap but quality products has resulted to good customer satisfaction and repeat business (Tedder, p. 41). In moving to the Bangkok market, a number of competitors are identified including Asia Cycle Company Limited, Deestone International and Ecolux International; Ecolux produces hybrid bicycles that incorporates electric hind wheel hub system to its structure. Powerbike will emphasize on its strong points including its culture of reliability and personalised approach to gain a market share and eat into competitor’s clients. Positioning This is the actual implementation of the plans identified through segmentation and targeting. It is done by conducting thorough marketing campaigns to make the product known to the consumer. The points to consider when handling this process are outlined in the subsequent stages of this report. Promotional plan Our promotional plan is based on psychoanalysis that the company has conducted to determine the culture and lifestyles that customers within Thailand lead. It should be noted that effective marketing must lead to higher sales volumes and hence choosing the right channel minimizes wastage of time and financial resources. Message This highlights on the strengths of Powerbike; this outlines to the consumers what to expect of our company’s products. They include: Quality at an affordable price, Efficient and appropriate repair work, Powerbike offers high end consumers the opportunity to use hybrid bikes, It offers consumer the prestige of “handmade in Thailand”, Comfortable products and Reliable bikes. All these, or a combination of some points, are incorporated into the adverts done through any of the channels identified below. Channels Advertising in the print media; this includes daily newspapers and bicycle magazines. The images should be glitzy to attract readers to the page. Outdoor advertising in posters and billboards; these are situated at strategic locations and must provide all the information relating to the product and the company. Buses are also common along major towns in Thailand; bus boards can then be used too. We will also use broadcast advertising on television and radios since these are the most commonly consumed channels by the local people; these adverts should be aired at prime time for maximum coverage (Tedder, p.18). Use of brochures and newsletters to appeal to masses; these are positioned at our outlets to be issued to visitors and other passers-by. Catchy phrases and images are used to create visual appeal. Participating in trade fairs and exhibitions in conjunction with other industry players; for instance, the transport ministry might organise a fair promoting the use of bicycles within towns. The company has to position itself in such initiatives and will even go to an extent of co-sponsoring. The sample advert used in this report is a billboard advert situated along in one of Bangkok’s streets. It is simple but self explanatory as it gives the audience at a glance information on the benefits of using a bike to avoid traffic jams within the city. A car is also shown blowing smoke; this depicts bikes as an environmentally friendly alternative to highly polluting vehicles (David, p.7). Figure 3: Biking to avoid traffic jams. Future expansion to Bangkok In considering their future growth plans, Powerbike has decided to move its production base to Bangkok to seize opportunities in this densely populated urban setting. Such a venture requires heavy investment since it has to construct production centres, conduct aggressive marketing and establish bike distribution channels. The following are the contributing factors to Bangkok’s suitability as a market for Powerbike products: Population: the city has a population of approximately 6.5 million people which is a high figure by any standards. This forms a big market for this company as most of the city occupants earn relatively higher wages compared to the rural folk. This means that they have the disposal income to make substantial purchases in order to lead a healthy life in the city. Traffic jams: this is a perennial problem within the city and is caused by high population pressure exerted on the available transport facilities. Introducing bikes will give them alternatives they can use to make short trips within the city. The road system has lanes dedicated to these bikes to avoid accidents and general disorder. Government policies: the Thai government is promoting several campaigns aimed at improving use of bikes; ‘Bangkok Cycling Tours’ and ‘No Child without a Bicycle’ are such campaigns used to promote their use in tourism and providing means for transportation to school children respectively. These initiatives are life changing and hence bring positive sentiment in the Bangkok market. With adoption of cycling tourism, the city has experienced an influx of tourists who use this medium to visit places inaccessible by vehicles. University locations: most of Thai higher learning institutions are located within city boundaries; Thai students are known for flexibility demands as they ply between lecture halls and places of residence. Entry of Powerbike to the city will offer them cheap and reliable alternatives to commonly used transportation channels. Competition: the city has other industry players already selling bikes to the locals; however, it is not saturated yet because demand keeps on swelling. These competitors also offer specialised products to the market and hence with elaborate market segmentation, Powerbike can eat into this market. Conclusion The company is well placed in the Roi Et market going by the positive market sentiments highlighted in this report. The company will go ahead with its plans to open branches in Bangkok because it can use the same model applied to ensure success in the parent store. This is because Thailand’s bicycle market is homogenous and hence focusing on quality and affordability will result to sales in Bangkok. However, the biggest strength lies in customer service as this is the key to sustainability in a highly competitive market. The increase in demand of bicycles due to rapid population growth rates and government’s initiatives to promote healthy living will offer new markets. This will be realised greatly when Powerbike partners with the government and other private businesses to supply bicycles to the less fortunate members of the society and school going children. However, solid market foundation will be dependent on the marketing approaches employed which familiarise and reinforces the messages to the market. Works cited David, Michael . "Grasshopper Adventures Bangkok Night Bike Tour Review « Bicycle Thailand." Bicycle Thailand. N.p., 31 Mar. 2012. Web. 6 June 2012. http://bicyclethailand.com/grasshopper-adventures-bicycle-touring-company- bangkok-night-bike-review/. Tedder, Dr. Lorna. "Key Elements of any Promotion Plan." Writers Write -- Writer's Blog and Writing and Publishing Resource. N.p., Web. 6 June 2012.. Read More