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Detroit Bike Case Study

Essay by   •  March 1, 2019  •  Case Study  •  1,680 Words (7 Pages)  •  19 Views

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Goal

        Detroit Bike’s goal is to become a largest bike manufacturer in North America. For the very first goal is to increase annual sales to 50,000 bikes per year from current annual sales of 8000 bikes.  

Situational Analysis

Industry Analysis

        U.S. market for bicycle is estimated around 6 billion U.S. dollars (Statista, 2018). The figure has been increasing recent three years (from 2013 to 2015). However, the majority of the products are manufactured in China and Taiwan (95% in 2016). Along with the U.S. government’s effort to boost manufacturing industry and increase the employment of U.S. labour, Detroit bikes has potentials to take over the market by Asian countries.

Competitor Analysis

        The popular bike brands in the United States are Trek (22.5%), Giant (10.5%), Specialized (9.5%) (Exhibit 1). Among them, Trek is a comparable competitor in the price point. It has the largest brand representation and known for US manufacturing. However, they have overseas prduction facilities abroad for cheaper labour to keep the low cost. Other competitors’ products are manufactured abroad.

Company Analysis

        The company introduced basic models ‘A-type’ and ‘B-type’ which focuses on the balance of affordability and quality. It has potential to manufacture customized model and enough capacity for large-volume production to other businesses such as New Belgium brewing co and Citibike bike sharing program in NY.

Customer Analysis

        Even though bicycling population decreased in the 2000s and switched to vehicles with the benefits of low gas price, adult bicyclists has increased between 2000 and 2013 (Statista, 2018). Over half of US cities recently developed bicycling-friendly policies and citizens are encouraged to use bikes to commute to work or school (Mcleod, 2016). Also, consumers are more paying attention to the environmental problems and green energy and looking for alternative commuting ways.


SWOT Analysis

Strengths

Weaknesses

  • U.S. Manufacturer using U.S. materials
  • Skilled employees with experience in motor companies
  • Production Capacity for large volume of production
  • Reputation for the contribution of Detroit Economy

  • Limited selection of products
  • May fail to meet various customers’ preferences and tastes
  • Higher price than average due to the use of U.S. labor and materials
  • Low brand representation in other areas than Detroit

Opportunities

Threats

  • Customer loyalty to US made bikes
  • New product introduction in different level of prices..
  • Expansion to Overseas market especially in Canada
  • Good Relationship with retailer
  • New target to young riders

  • Entry of new competitors
  • Seasonal decline in sales and idle  capacity  – layoff labour
  • Short bike infrastructure – protected bike lanes, bike park and shared bike in US compared to other countries
  •  E-bikes take over traditional commuter/urban bike market

Market Segmentation

  1. Behavioral – Value seeker for the product they purchased

                 Frequent user of bikes for commuting to work or school, or for leasure

  1. Psychographic – Emotionally connected for U.S. made bikes
  2. Demographic – All ages regardless of genders
  3. Geographic - U.S. cities with good bike infrastructures

Target Market

        Target Market consists of people from young age to adults regardless of genders who ride bikes as a mean of transportation or for leisure which keep their lives healthy. Especially, the company aims at young children as a new target market who are potential loyal customers to Detroit Bikes.

Market Positioning

        Detroit Bike distinguishes itself from the competition by being proud of Detroit originated, providing high quality product made from U.S. materials at an affordable price. It will also provide a lifetime warranty and full service of 30 days after the purchase with the technologically advanced experts.

Marketing objectives

The company increases customer awareness and try to meet the customers’ differentiated needs for Detroit bikes, and finally expand the market reach to whole North America.

Marketing Program

Product Strategy

        Quality and Selection

        Currently, the company produce 2 types of models to general customers. The two basic models aim the balance of affordability and quality which allows easy to maintain and durability. The company produce the basic models as their signature products for penetrating the existing market as well as customized models for business customers such as New Belgium Brewing’s fat tire model and citi-bikes.

        However, more product lines should be added to satisfy customer’s tastes and preferences. First, Detroit need to absorb young riders as well as high-end customers who would like to experience Detroit bike, there should be new product lines to boost sales. For high end customers, the company should offer customizing options for seats, colour and braze-ons. Also, Currently A-type and B-type models equipped with three level of gears. To compete with the competitors and for the consumers who likes to enjoy the bike for leisure purpose, the 8 gear should be introduced.

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