Specialized Bicycle Components Inc.

Specialized Bicycle Components Inc.

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This case study is about “Specialized Bicycle Components Inc.” known as Ride the Red “S”. Specialized was founded in 1974 by Mike Sinyard. According to Chris Murphy, director of marketing for Red “S”, specialized is for serious riders. He says, “The customer is buying the ride from us, not just the bike.” The company began to produce its own bike parts by 1976, and introduced the first major production mountain bike in the world in 1980. Specialized now has an extensive global distribution network of 5000 retailers in 35 countries in Asia, North America, South America, and Australia. They maintained a reputation as the technological leader in the bike and bike accessories. The formal mission is still the same since they established the company “To give everyone the best ride of their life.”
Specialized produces a full range of high-end and entry-level road bikes, mountain bikes, commuter/city bikes, children’s bikes, BMX bikes, and offers an extensive line of bike accessories. They divide the bike market in two categories: (1) the retailer- it only sells to the retailer because they realizes a strong relationship with the dealers is a key factor for success. (2) The end-user consumer- its focus in designing the product and broken down into the target age groups.

SWOT Analysis:
Internal Strengths

• Higher technology and enough innovation ability in design.
• Good retailer relationship and extensive global distribution network (5000 retailers in the world)
• Good advertisement.
• The people in the company and the passion which the people have for what they were doing.

• Sales amount was going down.
• Dealers don’t have the time to educate customer in each product of every line that they carry.
• Just focus on the retailer instead of the end-users.
• Competition - There are now more than 20 manufacturers in the bicycle industry and Specialized will need to stay at the forefront in order to keep its leadership.

External Opportunities

• More people (94%) have new requirements for bicycles; the customers need bikes in different fields.
• The popularity of Lance Armstrong has increased the interest on road bike, which represent 5% of the market.
• The growing interest in cycling this is result in magazine coverage and the using of bikes and accessories in window displays that related to cycling.
• The company constantly visits and context dealer to keep in touch with the changes needs and desires for the consumers and dealers.

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• This is also considered as an oppertunity for the company to gather vital feedback that can constantly enable them to produce better products which are high in quality and low in price.

• Competition and pricing – There are 20 other manufacturers and that puts a lot of pressure on Specialized to be at the forefront of their industry.
• There are fewer and fewer good retailers and people who retailers are lining up the most run and profit about companies.
• Sales and marketing - Other manufacturers are selling through other mediums other than retailers which could limit Specialized’s exposure to the end-user.

2. As part of step 2 of the planning phase and using your SWOT analysis, select target market on which you might focus for present and potential bikers.
Specialized current target markets are two age groups i.e., 18-25 year old and the 30-40 year old professionals. First, to increase their sales, the company should broaden its market groups to include the baby boomers that are at the top of their “earning” power and can easily afford to pay for the “specialized bike designs” that the company is focused on. The baby boomers not only have the money but also have the time, with most of their kids in college or on their own. It is also an alternative to other fitness programs that the boomers have gone into such as the gyms and spas, by doing that it can attract more consumers. Second, advertising their products would also be a key factor in increasing awareness by focusing not only on the “ride of their life” but also appealing to the health benefits and an emphasis on the bicycle as a “green” alternative as a mode of transportation would broaden their customer base. Third, Specialized needs to expand its marketing strategies to increase the company exposure which would lead to increase sales. It should not limit itself by selling its products through the dealers but it should also use other channels of distribution through sporting goods stores, independent retailers and mail order merchants i.e., the internet.

3. As part of step 3 of the planning phase and using your answers in question 1 and 2 above, outline Specialized’s marketing programs for the target market segments you chose.
Specialized company is a major manufacturer of bicycles and bicycle equipment, and been known as one of the best mountain bike manufacturer. In early 1990s, the company had a hard time for the mountain biking industry. The popularity of the bikes attracted a lot of competition so that companies were trying to flooding the market with mountain bikes while at the same time sales were declining. The company been struggling and competing against with 20 other bike companies. In order to remain on top, Specialized company provided different techniques to develop and expand their products in some progressive marketing programs.
It’s all about competing and developing positive strategies to gain achievements. The founder of Specialized company, Mike, he sees a commitment to top quality and design as the most important factor for futures success: “Even though we’ve been around for 20 years, this company still feels like it has something to prove. I expect it will always be that way”. This mission emphasize that the company should have a wide improvements on marketing tactics and marketing strategies.
Here are some tactics and strategies Specialized provide:
• Specialized designed its own server, the World Ride Web, on the Internet to expand the relationship and extensive global distribution network to all retailers. The Web site offers international mountain bike trail and road bike trail directories, e-mail access to Specialized engineers, a trail preservation network, and a dealer directory that connects users directly to dealer home pages.
• Specialized persuade guest appearances on TV talk shows and displays in retail shops help keep the name of the company in front of the end-user consumer.
• Specialized target its other market segment, the dealers.
• Specialized launched some activities such as “Best Ride Tour” and “Ride Before You Buy”. It loaded up trailers full of the new models and visited 30 cities nationwide, enabling retailers and shop employees to test ride the bikes.
• Specialized involved in joint ventures to keep its technological edge, including one with Du Pont that led to a more aerodynamic wheel.
• Specialized entered into a distribution relationship with GripShift, allowing the high-end gear manufacturer access to its extensive dealer network.
• Specialized sponsors races, provides racer support teams, initiates mountain biking safety programs, and is involved in trail-access advocacy groups all over the world.
• Specialized supplies bicycles and equipment too many of the top racing teams in the world, such as Domina Vacanze that raced in the 2004 Tour de France.
• Specialized sponsors a variety of professional teams, as well as supporting local grassroots "factory teams," set up through Specialized retailers.
• The company produces a variety of gear, including clothing, helmets, and parts, in addition to over 25 lines of bikes. They range from cheaper models such as the Rockhopper and the children's Hotrock up to the expensive S-Works for road and cross-country riding; and the Demo for serious freeride

Specialized have come a long way from the first mass produced mountain bike. Because Specialized had great organizational marketing strategies, a wonderful mission statement, a brilliant strategic marketing process and marketing plan. Today they make one of the most advanced full-suspension bikes on the market.
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