Business Analysis of Bike Hub - Case Study Example

Customer’s Name Customer’s Course Tutor’s Name January 8, 2013 Introduction Bike Hub is not only concerned with the bikes but it is also concerned with the cycling experience that is offered to the riders in terms of the moments that are created by the products, the memories as well as the lifestyle. Bike Hubs are a network of various bicycle shops that seems to be passionate in assisting the customers in attaining the best. Their services and products range from buying a new bike, getting an old bike running smoothly as well as buying new accessories to make one ride his/her bike smoothly (Bike Hub official website 1). Most Bike Hub stores are designed in an innovative manner thus allowing the customers to have a close look at their products in an open and relaxed environment. The stores also offers the customers a pleasurable and memorable shopping experience and at the same time offers the best bikes as well as accessories brands with premium level of service as well as a comfortable environment. The business works hard so as to meet the needs of the customers and they do this by offering what the customers want and at competitive prices. The business offers free expert advice so as to assist the customers in making the best decisions and get the best out of their bikes. All the Bike Hubs are independently possessed and operated and they have a range of mountain bikes, road bikes, kid’s bikes, commuting bikes and BMX. All the stores also have all sorts of accessories so as to assist the customers in enjoying their cycling experience (Bike Hub official website 1). Market and product category Product and market categories are usually based on similar customer needs as well as an aggregate level of buying power which eventually spawn many products which in turn leads to formation of different groups, that provide alternative ways of satisfying the needs of the customers The alternatives seems to evolve over time into product types markets in small and big, declining and growing and with each of them having a set of competing brands (Effron, Gandossy and Goldsmith 56). Bike Hub seems to have needs that have been defined with a number of associations that ought to deliver value proposition and thus turns the customers into buying the product as compared to the products that are offered by the competitors. Their products offer superior performance as well as other functional benefits and thus they end up offering self expressive as well as other emotional benefits to the users. Mountains bikes seem to be the example of bikes at bikes hub and over time it continues to innovate and add more capabilities to the bike. A lot of promotions that are conducted mainly feature the capabilities as well as the added functions that the mountains bikes from Bike Hub have as compared to those from the competitors in the market. Bike Hubs seems to innovate, improve and change and thus making the mountain bikes more dynamic and the brands more interesting (Guidry 89). Segments Theoretically there at times in which there can be the perfect market segments, actually each organization or business that operates in a market will come up with various ways of determining their market segments and thus they will end up creating product differentiation strategies so as to exploit the segments. Market segmentation when combined with product differentiation offers an organization with short-term commercial advantages over its competitors in the market. Market segmentation is therefore termed as the techniques that are applied by organizations in the aim of attracting a great number of customers and also the right ones (Harvard Business Review 89). The two market segments for Bike Hub are mostly students and the local business employees. The students seems to be the main target market since they do not have a lot of money, they have no specific area that can be allocated to them in school to pack their cars and thus they may opt to use bicycles and they also seems to have a high enthusiasm of bikes. The local employees also seems to be another target segments since they have a lower turnover, they are more than willing to commute to work by bikes and they are also in need of a stable as well as comfortable bike and the products from Bike Hub offers that. The company seems to be positioned better than the competitors in the market in that they have a wide range of products offering which are of high quality and thus they seems to have an added advantage over their competitors in the market. The factors that affect the two segments buying behavior have changed since some of the local employees have been given additions to their salaries while some students have been able to get well paying jobs and thus they may opt for a more luxurious lifestyle and they may eventually decide to buy cars instead of suing bikes to commute to school to work (Hart 112). Specific product description The core product that will be marketed will be the mountain bikes from Bike Hubs. The mountain bikes seems to share some similarities with the others brands of bikes at Bike Hub, but it tend to incorporate factors that tend to enhance its durability as well as its performance when it come riding on rough terrain. After a company has decided in the distribution approach that it will apply to make their products reachable by the consumers they also need to consider the type of offer that they will have to promote. The most efficient one will mostly depend on the budget, target audience as well as the company’s objectives. Irrespective of that the company also needs to ensure that they capture the attention of their customers and at the same time stimulate the consumer’s interest and eventually create a heightened level of desire to buy the product or the brand. For the mountain bike the money off on specific products seems to be the most appropriate offers that can be adopted. Through this a greater number of consumers will be willing to buy the product (Kay & Fogg 99). There also exist three levels of an offer for every product that is provided to the consumers and they include: the core product, augmented product and the actual product. In relation to this the core product of the mountain bike is its ability to be used in rough terrains. The actual product is the mountain bikes since it can be attained through a collection of various positive attributes and lastly the augmented product is the warranties which make the customers assured and have peace of mind. Through the warranties Bike Hub is able to assure that customers that the products are of high quality and that they also have faith in them (Hasouneh and Alqeed 64). The product life cycle is termed as the stage in which a product must go through. The stages start from the introduction of the product in the market, its growth, maturity and lastly decline. Mountain bikes seem to be at the growth stage. The growth has come about as a result of acceptance of the products in the market and thus the profits associated with the product start to flow. The product will need to be repositioned in that they need to offer it in different colors and also in different prices. This will eventually lead to more purchases since some people tend to be more sensitive to the colour as well as to the price that is being charged on a product. Current pricing strategy Pricing strategies for both services and products entails three common ways in the aim of improving the level of profits that are gained by an organization. As stated by Song and Chintagunta (2003), prices seem to be the most easily adjustable elements in the marketing mix. In relation to pricing Bike Hubs applies a number of strategies as been part of their positioning strategy. Variations in price seem to be vital factors that ought to be considered when determining the success of the products in the market. Some of these aspects include allowances, offers, dealer prices, discounts as well as credit management. Most of mountain bikes are mainly prices at a sliding scale price with the low quality products been priced lowly while the high quality ones are priced highly. Bike Hub has also adopted a strategy in which it at times reduces the prices of their products and accessories so as to shield themselves from the comparative strategies that have been adopted by the competitors in the market. By the use of the sliding scale strategy the company creates a notion in the customers mind that the quality of the product seems to be directly related to its quality. The market position that Bike Hubs currently holds do not allow it to price their products and accessories below certain prices since they aim at retaining their image and that of their products as been among the premium products when it comes to quality. This is mainly based on the fact that products which are priced lowly seem to be of lesser quality and most customers mainly shun away from purchasing such products (Worthington & Britton 156). Thus Bike Hubs mainly offers their products and other associated accessories at moderately high or high prices. One of the major factors that the firm has considered in setting its prices is the quality of the products as well as the customers who are likely to purchase the products. This strategy can easily be changed if a new group of users arise but the sliding scale seems to be the most appropriate strategy that needs to be applied. Current distribution strategy Bike Hub struggles to ensure that their products are available to their customers in the exact location where they are and at any time when they feels like purchasing their products. Bike Hubs adopt a number of strategies based on the region in which they are marketing as well as the perceived effectiveness of the distribution strategy that is adopted by the company. Bike Hubs employ exclusive distributorship when it comes to selling some of their core products. For Bike Hub to be able to maintain its current position in the market in which it operates to ensure that it offers the right quality of products to the customers in the aim of ensuring that it creates a positive image in the minds of the customers (Worthington & Britton 156). Irrespective of that Bike Hub also needs some of the lower ends products that it manufactures and sells to their customers so as to be able to penetrate the market extensively. Intensive marketing is applied in some cases to enable companies to gain greater footage as well as presence in some markets where there products have not be adopted fully. Most of the products that are offered to such markets do not qualify for any of the added value services that are offered to example they do not qualify for guarantees as well as warranties. Bike Hubs use a number of methods so as to take its products to the consumers and purchasers and they usually take them to locations where it seems to be convenient for them to be able to shop. Some of these channels include the two level channels, one level channel as well as the zero channels. Distributors are at time chosen based on the advantages that is associated with the channel for example it seems to be effective and the level of return or profits seems to be high on the side for the firm (Hasouneh and Alqeed 64).In some areas the company applies one level strategies in the aim of moving the products from the manufactures to the consumers who will use them directly. In this case the company certifies a number of dealers who are tasked with the duty of obtaining the products form bike and the customers obtain the products from this dealers (Hart 112). Until recently, Bike Hub has over time started to integrate IT in most of its distribution strategy in the aim of enhancing the manner in which the customers can be able to access their products. In relation to this one can be able to find stores that are near him through the use of the company website. The website offers the different locations where the products can be found and it upon the customers to decide on the most appropriate location for him to purchase. The distribution strategy that is currently been adopted by the company will be suitable even in instances when the company changes the product that it is marketing (Peter and Donnelly 111). Promotional mix Promotion seem to be one of the most critical factors when it comes to choosing the marketing strategy of almost all products and more precisely when it comes to commodities such as bikes. Bike Hub uses a number of promotional strategies so as to sway the consumers to perceive the products they are offering in a positive manner. Promotions therefore benefits Bike Hub in that through them they are able to create a great level of awareness to their consumers on the product that they have as well as the price that they are charging on each of the products. Promotion also enables Bike Hub to be able to make information on the products, offers as the company available and thus they eventually have an influence on the consumers. Bike Hub applies advertising, direct marketing, publicity, sales promotions as well as personal selling. Bike Hubs also carry out a number of advertisements campaigns by the use of the media and other ways such as paid adverts. Most advertisements that are conducted by Bike Hub use various advertising tactics so as to be able to influence their customers and thus they end up buying their commodities (Hasouneh and Alqeed 50). Bike Hubs also use television adverts which are mostly slotted in the daily programs and thus they are able to pass the message to consumers who seemed addicted to the lifestyle trends. Bike Hub also sponsors some events so as to be able to attract more customers. Bike Hub also places a number of adverts in various high ranking newspapers and magazines around the world. This ensures that they are able to pass on their message to a great number of people since some people will eventually read the newspapers. in addition, Bike Hub distributors also places catalogues in various articles and most especially during the festive seasons seems a great number of people are likely to buy commodities during that time. Telephones, internet communication and mails are other methods that are used in advertising for their products. Bike Hub also encourages the consumers to offer their feedback and thus they are able to know the areas that they need to improve on. Bike Hubs also use posters and billboards as another method of advertising their products (Kim & Mauborg 125). Cooperative advertising which mainly involves the dealers includes the materials as well as the directions on how to go about advertising their products. Bike Hub ought to ensure that messages that are incorporated in their adverts are in line with the positioning strategy that has been adopted by the organization. Bike Hub also uses sales promotion as an added incentive to entice their consumers to be able to purchase their products and in large numbers. Most sales promotions mainly targets on the customers as well as a rise in the level of sales that are made by a company. In essence most sales promotions are aimed at attaining measurable, specific responses from the customers based on the product that have been offered to them. Some methods of sales promotions include but are not limited to early bird prize, coupons, rebates, sweepstakes, premiums, exchange offers and discounts (Kay & Fogg 99). In most instances Bike Hub applies some of the above stated promotional strategies depend on the core objective of the promotion that they are conducting. Conclusion The wide range of products and accompanying serves has enabled Bike Hub to be among the top sellers and manufactures of bikes in Melbourne. The ability of the company to entice as well as influence the consumers to perceive their firm as well as their products in a positive manner seems to be the company’s major competitive advantage. Bike Hub has been able to achieve all this through its pricing strategy, promotional strategy as well as their positioning strategy. The company has been able to continuously make new innovations on its core products and pass on the message that the quality of their products keeps on improving each and every time. Since it prices a range of high quality products, Bike Hubs seem to be justified on the pricing that it places on its products. Its justification is based on the fact that the quality of their bikes seems to be higher when compared to those that come from their key competitors in the market yet they are in the same price range. Therefore Bike Hub needs to maintain the high quality f their products so as to ensure that though they charge premium prices the customers will still be willing to purchase their products. Works Cited Bike Hub official website. Bike Hub. Effron, Marc, Gandossy, Robert and Goldsmith Marshall. Human Resources in the 21st Century. United States: Wiley, 2003. Guidry, Martha. Marketing Concepts that Win! Save Time, Money and Work by Crafting Concept Right the First Time. 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