Bicycle Analysis

Table of Contents

Executive Summary Page 3

Competition Page 4

History Page 5

Marketing Page 6

Accessories Page 7

SWOT Analysis Page 8

Works Cited Page 9

Executive Summary

Statement of the Problem- Schwinn is not attracting the younger market and its sales are suffering because of increasing competition and loss of market share especially in the mountain bike market segment.

Background- Schwinn is a bicycle brand that for years had 25 percent of the market. Schwinn did not adapt to the mountain bike trend in the 1980's and as a result its sales suffered. The sales suffered so bad that Ignoz Schwinn sold the company to Zell/Chilmark. Schwinn's turnaround seems to be going well. Today Schwinn has five percent of the $2.5 billion annual retail bike market. Schwinn's image as yesterday's bike is hurting sales. People see Schwinn as "the bike their parents rode" and today's bike market wants the trendier bikes with the latest technology.

Discussion- Schwinn needs to capture more of the market share. Much of the bicycle market share is under the age of 30. Schwinn does not have a strong brand image for this younger crowd. This younger crowd wants bikes that are on the cutting edge of technology. By creating a new line of bikes that offers the trendy features, Schwinn will have a product that offers the younger customer what he or she wants. This will also make Schwinn much more competitive in bike shops that carry a number of brands. Every new product line needs a marketing plan. Schwinn needs to get the product out in the stores to promote the new image. Schwinn also needs to have advertisements that will spread word about Schwinn's new image. If Schwinn can get this new image out to potential customers, we will see Schwinn's sales increase along with their market share.

Recommendation- Schwinn needs to market and develop a new line of bikes that offers the trendy features that the consumers are looking for.

Competition

Schwinn has lost considerable market share due to its failure to capitalize on the increasing popularity of mountain bikes and the decline in popularity of its road bikes. Manufacturers such as Trek, Cannondale, and Specialized have become the standard for these very successful bikes leaving Schwinn in serious trouble.

Since the beginning of mountain biking dominance, in the early 1980s, Trek Bicycles have become the standard, pulling almost a quarter of the entire bicycle market's revenue in 1995. Trek's phenomenal market share is even more so when you look at the company's history compared to Schwinn. By the time of the case, 1995, Trek with 24 percent of the market was less than 20 years old while Schwinn with 7 percent was celebrating its 100th year of production. Most of their success can be directly attributed to being one of the first firms to produce quality, hand-built mountain bikes just at the time they were first being introduced and becoming popular.

Trek also chooses to maintain the mountain bike segment as their lone market. This gives them a competitive advantage by specializing in one key area. Other industry leaders such as Cannondale and Specialized however, offer bikes of many different sorts.

Cannondale for instance offers many models of both road/recreational bikes and mountain models and enjoys 12 percent of the market.

Specialized, also with 12 percent of the market share, offers a wide array of road and mountain bikes but specializes in the competitive market segment, namely BMX and Freeride bikes. Much of their marketing in this segment is done through sponsorship of competitive teams that use their equipment exclusively and therefore benefit from a more youthful consumer base.

Schwinn's problems arise from a lack of early movement into mountain biking as it became popular, losing large market shares to firms such as Trek, Cannondale, and Specialized. This lack of vision has since deteriorated Schwinn's once stellar brand-image leaving them with a lot of 'catch-up' to do in the market. Because of their late movement into the market, many feel the quality of Schwinn's mountain bike models is lacking and not worth the premium price.

History

Ignaz Schwinn and Adolph Arnold founded Schwinn then named "Arnold, Schwinn & Company" in 1895. The company's first bicycle was named the "Roadster" and was a single speed bike weighing 19 lbs. In an attempt to get the company name well known, Schwinn enters into the bicycle-racing program which all big name bicycle companies were already a part of. By the end of 1896, Schwinn had won more competitions than any other bike company. By winning so many races, Schwinn was able to sell bikes at the price of $150 per bike. This would be about $27,500 in today's value system (Schwinn).

With the advancement of the automobile in 1908, bicycles decreased in demand and sales dropped. To compensate for this, Schwinn dropped their prices and made bicycles affordable for younger kids. Four years later Schwinn started buying up other companies such as Excelsior Motor Cycle Company and Henderson Motor Cycle Company. In 1933, the balloon tire was invented which some see as the greatest invention in bike technology ever (Schwinn).

In 1967, the company changed its name from "Arnold, Schwinn & Company" to "Schwinn Bicycle Company." Ten years later mountain bikes became very popular and started taking a major part of the bike sales market. Schwinn saw this as a trend and decided to not change the company's image and stay with the old look for the bikes they sold. Eight years later Schwinn filed for bankruptcy and new management took over (Schwinn).

Marketing

Schwinn has been a successful