The Case of Bangkok Bicycle Market - Assignment Example

The Case of Bangkok Bicycle Market Introduction This paper looks intensively at the marketing opportunities for the bicycle brand ‘Powerbike’ by understanding the Thai market in Bangkok and by identifying the strengths, weaknesses, opportunities, and threats for the aforementioned brand vis-à-vis its primary and secondary competitors. As such, this paper is divided into three parts. The first part provides an overview of the bicycle market in Bangkok by describing the demographics, psychographics, lifestyle, and behavior of Thai as regards cycling. Through this study, not only will we obtain a deeper understanding of the current, competitive, and emerging markets of Powerbike, we will also be able determine the right market that should be targeted by the brand. The second part examines the current situation of the brand by conducting a SWOT study in comparison with the competition. Through this part, we aim to solidify the strategic positioning for the brand which will guide in the development of the marketing communications campaign. The last part of this paper will explore the possibility of expanding the offerings of the brand by moving on to another category. In conclusion, this paper aims to reinforce its primary recommendation that Powerbike should focus on positioning the brand as an alternative to public transportation through the reinforcement of: (1) public bicycle transportation services and (2) private bicycle ownerships. I. The Bicycle Market in Bangkok A. Transportation in Bangkok Kenworthy (2008) opined that urban density influences both the use of private cars and the viability of public transportation in any city. As he further noted, cities with higher urban densities tend to have higher use of public transportation (Kenworthy, 2008). In this regard, Trading Economics (2012) stated that the population in Thailand has reached to 68 million in 2010, an increase of 145 percent during the last fifty years. Approximately 68% of the total population of Thailand lives in rural areas, as comprised majorly of farmers. However, massive economic and technological transformations have caused urban migration to Bangkok (Hello Siam, 2002). As a result, approximately 9.3 million live in Bangkok, reported by United Nations (2008). The increase in population through the years has immensely influenced the increase in the use of vehicles. According to Clean Air Initiative (2006), the top four means of transportation in Bangkok are private car (51.48%); motorcycle tricycle taxi (42.90%); microbus and passenger van (40.92%); and others that comprise non-motorized vehicles like bicycles (26.47%). As such, Bangkok’s vehicle fleet grew at a rate of 5.04% per annum from 1994 to 2006 primarily due to the increase in ownership of motorcycles (Clean Air Initiative, 2006). Kenworthy (2008) reiterated that the popularity of motorcycles in Bangkok can be attributed to them being cheap, small, and easy to park and navigate through the congested streets of the city. In this light, the exceptionally high ownership of cars and motorcycles in Bangkok can be compared against the minimal use of public transport vehicles. As James (2008) discussed, as opposed to other Asian countries such as Singapore, Tokyo, and Hong Kong that heavily depend on rail-based transit, the main modes of transportation in Bangkok are buses, taxis, tuk-tuks, sky trains, and underground trains. Buses are the most popular and most widely used public vehicle in Bangkok. The Bangkok Mass Transit Authority (BMTA) manages urban bus services by operating a fleet of 3,650 of its own buses, both air-conditioned and ordinary. Secondly, taxis closely follow buses as the most used public vehicle in Bangkok. Fixed with a meter, the minimum fare costs 40 to 60 Baht (Thai Ways Magazine, 2002). Over the past years, rail-based transportation has continued to gain more passengers such as the Bangkok Transit System Sky Train and the Hopewell Elevated Rail Transit. At this point, it can be claimed that the increase in both public and private vehicles in Bangkok has led to serious problems of congestion and air pollution. As stated by Pianuan, Kaosa-ard & Pienchob (1994), James (2008), and BBC (2001), heavy traffic has been one of the most definitive features of Bangkok. They pointed out the increasing number of cars and the weak road planning system as the primary reasons behind traffic congestion. Although there have been a lot of proposals to cure this problem—subway system, sky train, and water way system—the rapid increase in motorcycles seems to worsen the situation. In addition to this, United Nations University (n.d.) noted that aside from traffic congestion, another key problems faced by Bangkok are air and water quality issues. As they further commented, the increase in vehicles has dramatically led to severe air and water pollution. B. Market Study: Understanding the Aggregates In studying the possible target market for Powerbike in Bangkok, it is relevant to note the three aggregates for the brand, as comprised by the current, competitive, and emerging markets. 1. The Current Aggregate The current aggregate for Powerbike in Bangkok are comprised of individuals who ride the bicycle either as a hobby or as a mode of transport. Generally described to belong in the lower tier of the socio-economic group, these individuals are characterized by their ability to be resourceful in looking for ways to support their basic needs. In terms of market size, these individuals are relative small since majority of people in Bangkok either use public or private vehicles. 2. The Competitive Aggregate The competitive aggregate for Powerbike belong to individuals who privately own vehicles with motors such as motorcycles and cars. Members of this group belong to a vast range of socio-economic classes, thus, they have varying levels of needs and wants. Generally, however, the competitive aggregate for Powerbike do not have deep knowledge about bicycling. As such, they do not seem to see bicycles as an efficient way of going to work. 3. The Emerging Aggregate The emerging aggregate for Powerbike are composed of professional drivers of buses, taxis, and tuk-tuks. They provide transportation support to those who do not own any motorcycle nor car. C. Target Market to be Tapped Taking into consideration the observations made about the three aggregates, it can be stated that the most practical and most profitable aggregate to tap is the competitive due to its market size. If persuaded to switch, the competitive aggregate can definitely help the business boost its sales and provide a unique brand positioning. II. Strategic Positioning and Marketing Communications Campaign for Powerbike A. Brand Review In order to maintain consistency and clarity in our discussion of the current health of the Powerbike brand, we will conduct a SWOT analysis, which is comprised of strengths, weaknesses, opportunities, and threats of Powerbike. 1. The Strengths The key strengths of the brand are emphasized by its three benefits. Firstly, it provides health benefits as it helps maintain good health and physique. Secondly, it provides environmental benefits essentially because a bicycle is a pollution-free mode of transportation as it does not emit any carbon substance and uses minimal fossil fuels. Thirdly, it is more economical to use a bicycle rather than a car. 2. The Weaknesses The primary weaknesses of Powerbike are centered on its lack of market concentration. Based on the short review of its product offerings, Powerbike offers a range of road, mountain, and specialty bikes for all types, as well as accessories and repairs. This concretizes the current positioning of the brand as a one-stop bicycle retailer. However, for the brand to maintain profitability, it must trategically choose the right market segments for its products. 3. The Opportunities The opportunities for Powerbike lie on the increasing demand for environmental-friendly modes of transportation, as well as on the spreading awareness on health benefits of physical activities. Indeed, problems on air pollution and traffic congestion get more alarming each day, which has led government officials to launch social programs that are targeted to encourage the locals and immigrants to use bicycles in place of cars and motorcycles to reduce carbon emissions. Aside from this, the health hazards of city lifestyle as epitomized by stress at work, lack of sleep, drinking and smoking necessitate the advocacy for healthy lifestyle through exercise and balanced diet. 4. The Threats The threats for Powerbike are highlighted by the saturated market as evidenced by a variety of competing brands. As noted by Bangkok-Companies (2002), there are numerous biking companies that currently dominate the Bangkok market such as RBB Recreational Bangkok Biking, ABC Amazing Bangkok Cycling, Absolute Explorer Bicycle Safari, River Bicycle, and Siam Travel Bike Company. B. Positioning for Powerbike Taking into consideration the aforementioned strengths, weaknesses, opportunities, and threats for Powerbike, it can be claimed that since we are targeting the competitive aggregates—comprised of people who own motorcycles—the brand must be positioned as a bicycle that allows people to get to their destination in faster, cheaper, and cleaner way. Further dissecting this positioning statement, firstly, the term ‘faster’ can be reinforced both by the unique product attributes (high quality parts and reliable maintenance services) and the benefits that can be obtained from it (allows the customer to avoid the hassle of traffic congestion). It must be noted that in this way, the brand is able to capture the idea of ‘quality at an affordable price’. Secondly, the term ‘cheaper’ points at the economical benefits attained by using the product. Obviously, a bicycle does not need any fuel, thus, helping the customer save. Lastly, the terms ‘cleaner’ can be seen in two ways. First is on how the use of bicycle can help promote the conservation of environment as it lessens the emission of smoke. Second is on how bicycling as an activity advocates healthy living. C. Marketing Campaign for Powerbike The marketing campaign proposed for Powerbike will involve three specific phases, which are targeted to: (1) increase awareness of the target market in Bangkok about the customer value proposition (CVP) of Powerbike; (2) drive customer trial and retention through the use of brand ambassadors; and (3) sustain the image of Powerbike. 1. Phase 1: Increasing Product Awareness The first part of the marketing campaign will concentrate on using above-the-line communications (ATL) to bolster the awareness and stir interest of the target market. As such, a television commercial will be launched which will first feature the current problems in the main thoroughfares of Bangkok—pollution and traffic congestion. Then, Powerbike bicycles will be shown as a primary solution to the problem posed. The TVC, in this regard, shall showcase how Powerbike lets the customers get to their destination in a faster, cheaper, and cleaner way. Aside from a TVC material, radio ads will also be used to hype up the awareness of the target market about the brand. The ad shall begin with two people complaining about their problems getting to work—not only do they spend a lot on their motorcycle fuel, they also get stuck in traffic. Then another person will enter the conversation and will introduce a faster, cheaper, and cleaner way to get to their destinations, which is the new Powerbike bicycle. To build on this part, an explanation of the key product attributes will be stated just like in the TVC material. Lastly, a print ad will also be utilized to be placed in major newspapers and magazines in Bangkok to support the awareness building phase of the campaign. In this part, a picture of a bicycle will be placed alongside a picture of a motorcycle. Then description below such photos will explain the pros of using the new Powerbike bicycle and the cons of using a motorcycle. In all of these executions, it must be emphasized that consistency in messaging is attained since the CVP of Powerbike is communicated repeatedly: lets the customer gets to his destination in a faster, cheaper, and cleaner way. 2. Phase 2: Driving Customer Trial In this phase, the objective is now centered on driving more purchases from the target market. This will be done by using below-the-line communications (BTL), primarily through local brand activations. Through this part, the brand must be able to get brand ambassadors who can influence motorcycle users to switch to bicycling. Getting into the details, this part shall start with a program that is strategically targeted to current motorcycle drivers. In this regard, a local campaign entitled ‘Driving Faster, Cheaper, and Cleaner without Actually Driving’ will be launched in five select towns in Bangkok for five months. In each town, five lucky motorcycle owners will be asked to use Powerbike bicycles in place of their current vehicles. Throughout this program, a representative from the brand will monitor how the use of Powebike helps the customer: (1) save time, (2) save money, and (3) contribute to the conservation of the environment by living an active lifestyle. The top five performers per town will be awarded as the official brand ambassador for Powerbike which will allow them to not only participate in local activities of the Bangkok government in developing programs to solve traffic- and pollution-related issues, but will also help them further communicate the benefits of the brand by being the face of Powerbike in social media such as Facebook and Twitter. 3. Phase 3: Sustaining the Brand Image The last phase of the marketing campaign will further utilize the brand ambassadors through the creation of social programs. As such, this part shall begin with the launch of tree-planting activities in partnership with non-government organizations (NGOs). This initiative is intended to generate positive media coverage about Powerbike. In addition to this, passion groups will be created which to be also led by the brand ambassadors. This group, which will be called ‘Health Buffs’, will concentrate on advocating the importance of keeping a healthy and active lifestyle amongst the citizens of Bangkok through: (1) seminars intended to teach the importance of maintaining a healthy and active lifestyle; and (2) group activities such as mountain trekking which will feature Powerbike bicycles. Therefore, this phase is intended to elevate the appreciation of the target market about the Powerbike brand by placing it in a much wider social perspective. III. Business Expansion Possibilities for Powerbike The possibilities of business expansion for Powerbike can be understood: firstly, by looking at the current product and service offerings of the brand; secondly, by understanding the primary and secondary target markets being pursued by the proposed marketing campaign; and lastly, explaining the practicality and profitability of moving into another category based on the previous discussions. A. Review of the Powerbike Product Offerings As stated previously, Powerbike currently offers different types of bicycles that cater to different needs. Firstly, there are mountain bikes which are marked by strength and are intended to be used on any form of terrain. Secondly, there are road bikes or racing bikes which are deemed to be the fastest and the lightest form of bicycle. Thirdly, there are women’s specific bicycles which are fitted with ladies’ saddles, and have smaller frame sizes with alternative colors. Fourthly, there are children bikes. Lastly, there are hybrid bikes which are based on the design of road and mountain bikes. In addition to this, Powerbike is also noted for its quality servicing at a reasonable price. In this light, repair works are done efficiently and appropriately. As claimed by the owner Ning, customers can deal with qualified mechanics at Powerbike’s well-equipped service center. B. Primary and Secondary Markets for Powerbike To effectively tap the Bangkok market, emphasis must be placed on finding a profitable market segments for the brand. As such, this paper has proposed to target, firstly, the competitive aggregate for its high market value. Encouraging the switch of this market from motorcycle to bicycle can definitely help in boosting the market share of Powerbike in comparison to its competitors. Secondly, the current aggregate of bicycle users can be further enhanced in terms of customer base through the effective use of brand ambassadors. C. Possible Business Expansion for Powerbike There are two possible business expansions for Powerbike, as based on its health and environmental benefits. We shall discuss these in detail. 1. Health benefits Since Powerbike is positioned to promote healthy and active lifestyle among its target market, the development of an energy drink tentatively named ‘Velocita Power Drink’ can be explored by the business. If pursued, this product will be positioned as the official energy drink for cyclists, which are comprised of people who use bicycles: (1) as a primary mode of transport, or (2) as a professional hobby. This positioning is important since it provides a clear target market for the product, which helps in the clear and concise communication of its customer value proposition (CVP). As regards the branding strategy for this energy drink, it may or may not be communicated as a new product category of the Powerbike mother brand. Communicating it as part of the Powerbike mother brand helps in concretizing its target market—those who want to maintain a healthy and active lifestyle. This, in effect, can further deepen the meaning of the brand for its target market by associating it with active lifestyle. On the other hand, communicating it separately from the Powerbike mother brand can provide various opportunities for product expansion. Specifically, other energy drinks can be launched that are catered to other athletes such as badminton players, basketball players, and volleyball players. 2. Environmental Benefits Another way to expand the Powerbike business is to utilize its strong brand image that is obtained through its partnerships with non-government organizations (NGOs) in order to launch a furniture store that offers products from recyclable materials. Tentatively called ‘The Lotus Project’, this line of business can showcase a variety of decorative materials that come from non-biodegradable wastes such as papers and plastic cups. Positioned as a premium brand, ‘The Lotus Project’ can reinforce its brand offerings by communicating its brand values—The Lotus Project does not only advocate sustainable development through responsible treatment of wastes, but also foster cooperation amongst the Thai community. With this wider societal cause, ‘The Lotus Project’ can also attract more followers by sponsoring a specific community in Thailand’s rural areas. As such, part of the revenues generated by the business can be allocated to helping build schools, to procuring more medical supplies, or to buying food for the lower socio-economic classes. In the end, ‘The Lotus Project’ is targeted to garner positive media feedbacks which can also help in enhancing the brand equity of its mother brand, Powerbike. 3. Other Possibility The last possibility that this paper considers involves the tapping of the professional driving segment of Bangkok, which are comprised of tuk-tuks. In this regard, Powerbike can explore the creation of a new organization that will replace the motored tuk-tuks with bicycles. Related to this initiative is the construction of new terminals for bicycles that can be more conveniently and efficiently used by the passengers. Also, biking lanes can also be constructed in order to manage the flow of traffic once the business gets successful. This will be done through a close partnership with the local government units (LGUs) in Bangkok. The primary vision of this project is to replace tuk-tuks with bicycles, and eventually obtain followers from the bus driving segment in order to contribute in lessening air pollution and traffic congestion. Conclusion Through this paper, we are able to understand the possible target markets for Powerbike through an intensive study of its current and competitive aggregates in Bangkok. By taking into consideration market size and profitability, we are able to choose the primary target market for the brand: the users of motorcycles. This decision, as seen in the first part, is reinforced through a look at the markets’ demographics and psychographics. After choosing the target market, we are able to craft the strategic positioning for the Powerbike brand, that is, by focusing on its three main product attributes: faster, cheaper, and cleaner transport. These elements are consistently and coherently communicated through the marketing communications campaign that has been presented. In this regard, the use of brand ambassadors has been a strategic move to not only communicate the customer value proposition (CVP) of the Powerbike brand, but to also deepen its brand essence by associating it with: (1) the promotion of environmental conservation by lessening air pollution; and (2) the advocacy for healthy and active lifestyle. The last part of this paper took into consideration some possibilities for business expansion by focusing on the environmental and health benefits of the brand. As such, we were able to align the product with the Powerbike branding. In the end, it can be stated that the strengths in marketing Powerbike in Bangkok rose more as a necessity rather than as a marketing add-on. As discussed previously, the various issues that concern traffic congestion and air pollution in Bangkok can definitely help propel the popularity of bicycle brands such as Powerbike. In this light, the success in marketing Powerbike lies on its ability to: (1) obtain a unique positioning for the brand vis-à-vis its competitors; and (2) provide advertising and promotional programs that directly address the needs of its target market. Bibliography Bangkok-Companies, 2002. Thailand Bicycle Companies. [online] Available at: [Accessed 26 May 2012]. BBC, 2001. Bangkok to Combat Traffic Congestion. [online]. Available at: < http://news.bbc.co.uk/2/hi/asia-pacific/1723804.stm> [Accessed 26 May 2012]. Clean Air Initiative, 2006. Bicycle Population and Rebuilding. [online] Available at: [Accessed 26 May 2012]. Hello Siam, 2002. Population. [online] Available at: < http://www.hellosiam.com/html/thailand/thailand-population.htm> [Accessed 26 May 2012]. James, C., 2008. Public Transportation in Bangkok, Thailand: Which is the Cheapest, Easiest, and the Best? [online]. Yahoo! Voices. 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