Schwinn Bicycles

Schwinn Bicycles.

I. Background:

A. The Environment

i. Social

The social environment of the company would be composed of people who are looking for a cheap adult bike although the company is trying to change it for people looking for high-end, high-tech bike who are willing to spend money to get a superior quality product.

ii. Economic

Historically, the company has been the biggest U.S. brand in its category with up to 25% market share. Nowadays, it has lost that position as market leader and scrapes a mere 5%.

Schwinn was recently sold to the Zell/Chilmark Investment fund, who is trying to turn it around by injecting new money and trying to reposition the brand from the low-end of the market to the high-end one.

The company has had to face a major downsizing (from 300 employees to 180) as well as having its headquarters changed from Chicago to Boulder.

iii. Political-Legal

- No known political-legal issues are mentioned in the case.

iv. Other

B. The Industry

i. Competitive Situation

Who are the main competitors?

Schwinn’s main competitors would be other high-end brands such as Trek, Cannondale, and Specialized.

What are their strengths and weaknesses?

Cannondale:

- Strengths:

Cutting edge technology in aluminum-frame bikes.

Bikes are handmade in the U.S.

- Weaknesses:

No known weaknesses are mentioned.

Trek:

- Strengths:

Cutting edge technology in carbon fiber-frame bikes.

Production is being moved back to the U.S.

- Weaknesses:

No known weaknesses are mentioned.

ii. Product Life Cycle

Bikes have been around for more than a century and many people use it in their daily lives sales. Scwhinn’s reorganization into the high-end part of the market won’t produce huge surges in demand. For this reason I believe the bicycle market to be in the maturity phase.

C. The Organization

i. Business Definition/Mission Statement.

Schwinn’s mission statement could be something like the following:

“Schwinn vies to become the leading U.S. manufacturer of high-end, high-tech bicycles whilst at the same time maintaining the values of what made it the most important bicycle brand in U.S. history”.

ii. Long-term and Short-term Objectives.

Schwinn has been created to:

Long-term Objective:

Schwinn’s long-term objectives could be to consolidate itself in the market for what it once was, U.S.’s leading bicycle brand.

Short-term Objective:

Finalize company’s turnaround in accordance with new desired position in the market.

Try to overcome traditional, old fashioned image and substitute it with a new aggressive one.

Build new cutting-edge models that will be able to face mounting competition.

iii. Strengths and Weaknesses.

Strengths:

For a long time had a big chunk of the market.

Brand synonymous with durability.

Weaknesses:

Image challenge (no longer appealing to people under-30).

Still recovering from bankruptcy court.

Most of its production is made in Asia (bad for high-end part of the market).

Entered the mountain bike segment very late.

Company is still being reorganized.

Product line in very bad shape (for company’s desired positioning).

Company’s traditional distribution methods (exclusive dealerships) no longer valid.

Technologically obsolete.

Has to do some technological catching up with competition (Cannondale-aluminum, Trek-carbon fiber).

iv. Competitive Advantage.

American Icon (established more than 100 years ago).

Very strong historical brand.

D. Current Marketing Mix Strategies

i. Target Market.

People who are looking for a high-end, high-tech bicycle (young, adventurous…).

Seniors and snowbirds who recall the brand with nostalgia.

People who are looking for low-tech, vintage looking bicycles.

ii. Product information.

Bicycles ranging from kids and to high-end, high tech specialized adult bicycles.

Vintage looking, low-tech, one speed bicycles.

iii. Pricing Strategy.

Prices range from $100 kids’ bikes to