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Running Head: The Folding Bikes Marketing Strategy In Germany
The Folding Bikes Marketing Strategy In Germany
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Introduction:
The modern-day folding bicycle would be a great introduction into Germany, also known as the Federal Republic of Germany.? Types of folding bikes include urban utility bikes, urban performance bikes, road bikes, and mountain bikes.? There is a competitive drive of motivation to innovate them to be simpler, lighter, faster, and stronger.? Most all Germans live active lifestyles and are into "green products."? These bikes can help one to keep control of their daily workout, weekly gas bill, and carbon foot print as well as help put an ease to any economic, environmental, or life pressures they may have.? From youth to old age almost anyone can ride a bicycle and Germans are big on family.? Also, according to the CIA ? World Fact book (2009) Germany is "Europe's largest economy and second most populous nation (after Russia)," which provides marketers a great deal of opportunity there.
II. The Market
A. The target market
In Germany, public transportation is extremely popular and driving yellow polo shirts a car is more of a luxury rather than a common means of transportation. Therefore, instead of people having to walk or drive to bus, train or tube stations, they can utilize the folding bicycle as a convenient and efficient way of getting to their destination.
i. Size and characteristics of target market
As of July 2009, the total population of Germany was estimated at 82,329,758 (CIA ? World Fact book, 2009). 13.7% of the population are aged 0 -14 years, 66.1% of the total population are aged 15 ? 64 years and 20.3% are aged 65 years and above. The average household income in Germany is $35,400 (23,604.72 Euros), and due to the cost of the bicycle the folding bicycle is targeted to households who have an average income of at least 30,000 Euros. (CIA ? World Factbook, 2009).
ii. Target market Segmentation:
1. Age group:
The target age group for the folding bicycle is the youth and young professionals aged between 15 and 64 years, those aged 15 ? 64 years amount to 54,384,520 which is 66.1% of the total population, also given that most businesses and universities are located in the city and many of the German youth pursue a college education; therefore, if the folding bicycle is marketed to this age group, many people will see an advantage in it and choose to invest in it making the product gain popularity quickly.
2. Gender:
Those aged between 15 ? 64 years amount to 66.1% of the total population, the number of males in this age group amount to 27,707,761 and females amount to 26,676,759, this is approximately a 1:1 ratio of males and females in this market so the folding bicycle will be targeted to both genders and will not differentiate one over the other.
3. Geographical location:
Most businesses and universities are located in the city; the target location for introducing the product will be major cities such as, Berlin. This way more people will be exposed to the product and therefore the product will easily penetrate the market and gain popularity.
iii. Rationale for target market choices:
The rationale behind the geographical area targeted market is because most universities and businesses are located in major cities; the age group is target given that these are the individuals who face transport challenges traveling to work and school. Both purple polo shirt women and men are target and this is because the bicycle is an appropriate mode of transport for both genders.
B. Competition
Direct and indirect
As indicated, the direct competition on the sale of folding bikes in Germany is expected to come from the company by the name Riese and Mueller. According to a report in the year 2007, it is reported that they sell 5,000 bikes per year. The report also shows that Germans buy 4 million bicycles per year. This therefore indicates that that it is just but a small percentage of the total bicycles that are sold (McClellan, 2007).
The major indirect competition that is expected in the marketing folding bicycles in Germany is expected to come from the non-folding bicycles. There are so many types of brands of these kinds of bicycles that are found in the German market. Most of them go for far much less prices and due to the fact that most German population is more sensitive to pricing than to other features like brand recognition, these posses a great challenge. There are also motor bikes which more powerful than bicycles and with the Germans being economically empowered people most will prefer them. Competition from various makes of motor vehicles is also expected to be encountered in Germany.
C. ?SWOT
Strengths:
Differentiation of the product by introducing a folding bicycle
High demand due to large population in Germany that face transport challenges
Opportunities:
Expand into new markets
Lower prices to increase demand
Differentiation of products
III. Marketing Strategy
a. Distribution
Michael Roos (2005) found that in Germany "geography is more likely to influence the spatial distribution of production than the distribution of consumption" (p. 605).? Germany's regulations and bureaucratic procedures encourage foreign investment, but at the same time can be quite complicated.? "While not discriminatory in the classic sense, government regulation is often complex and may offer a degree of protection to already-established local suppliers."? Germany presents "few formal barriers to U.S. trade or investment interests" and the "German government and industry actively encourage foreign investment in Germany" (German Tariffs, Trade, Taxes, Trademarks, 2000).
b. Retail Outlets
The distribution of our folding bicycles should be very straight forward.? We will be producing our bicycles in Germany so it will be very inexpensive to then distribute them to the retail locations.? The type of retail outlets that we will focus on are Independent Bicycle Dealers.? In Germany there are two massive independent bicycle dealer cooperatives named ZEG and BICO. BICO is a coalition of over 500 bicycle dealers from all over Germany (Powerful Verbundgruppe).? ZEG is a cooperative with around 1000 bicycle shops across Europe.? ZEG has about $2 billion in annual sales.? Their website lists about 100 bicycle and bicycle related suppliers and claims that they have an inventory of 41,000 bicycles (Crenshaw, 2008).? This is extremely important for our business because it allows us to go through one source to reach hundreds of bicycle retailers.? We will need to become affiliated with their cooperatives so that they will carry our bicycle at all of their retail locations.
Independent bicycle dealers (IBD) market share was 54% in 2006.? German Two-Wheeler Industry Association (ZIV) GM Rolf Lemberg estimates that the independent bicycle dealers share in terms of value of 2006 total bicycle sales was ?.53 billion, which is "more than 71%." According to ZIV this underlines a trend toward high value product purchases at independent bicycle dealers. ?Do it yourself and department stores share of the market was 37% and online sales, which includes IBD's websites sales were 4.5%.? Mail order suppliers share was the least at 2.5% (Bike Europe, 2007).? These numbers show that not only do must bicycle purchases originate from an independent bicycle dealer, but that these are normally higher end purchases.? Our bicycle will be a higher end priced bicycle so selling them at independent bicycle dealers gives us the best opportunity to capture the market we are targeting. We would not want to limit ourselves to just working with these cooperatives, but instead work with as many independent bicycle dealers as possible.
Trade fairs are another distribution method we will want to utilize.? Trade fairs are extremely important when doing business in Germany because they are business events where contracts are negotiated and deals are made.? EUROBIKE is held yearly in Germany and is considered to be the most important trade fair for the bicycling industry.? "The international bicycle trade show ended on Saturday with 39,152 trade visitors from 75 countries (an increase of six percent), 21,000 paying bicycle fans on one Open House Day (2008: 18.000), and 1,556 journalists from 36 countries" (EuroBike, 2009).? Attending trade fairs like EUROBIKE would be an invaluable resource to gain exposure for our product in the German market and to try to get orders from bicycle dealers.
c. Intermediaries
The simplest way to get into the bicycle business would be to work directly with the independent bicycle dealers and not use any wholesalers, intermediaries, or distributors.? Bicycle shops will either order bikes as orders come in for them or if it blue polo shirts is something they believe they will be able to sell quickly they will order stock to keep on hand for walk in purchases.? This allows our company to maximize profits and limit costs.? The less cost between production and purchase the greater potential for profits for both our company and the dealers selling our folding bicycles.