Folding Bikes Marketing Strategy In Germany

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.

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Folding Bikes Marketing Strategy in Germany

II. The Market

A. The target market

In Germany, public transportation is extremely popular and driving 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

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Folding Bikes Marketing Strategy in Germany

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 women and men are target and this is because the bicycle is an appropriate mode of transport for both genders.

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Folding Bikes Marketing Strategy in Germany

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

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Folding Bikes Marketing Strategy in Germany

Weaknesses:

Introducing the product in a market where the product already exist

Opportunities:

Expand into new markets

Lower prices to increase demand

Differentiation of products

Threats:

Competitors including Riese and Mueller Company

Competition from the non-folding bicycles

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Folding Bikes Marketing Strategy in Germany

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

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Folding Bikes Marketing Strategy in Germany

Industry Association (ZIV) GM Rolf Lemberg estimates that the independent bicycle dealers share in terms of value of 2006 total bicycle sales was €1.53 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 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.

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Folding Bikes Marketing Strategy in Germany

d. Promotion Objectives & Media Mix

The company will place ads in magazines such as DMEuro and Focus Money, which is a German version of the “Money” magazine we have here in the United States. In this magazine, the folding bicycle will be compared to other competing products in the market and will provide readers with financial information about the product, such as: Why is it a good product to invest

in? It will also be advertised in

Bike

(German edition)—a magazine devoted to biking, Neue Revue

—an up-to-date weekly magazine of what’s going on in Germany and the lifestyle there, and Men’s Health

(German Edition). Commercial ads will be advertised on sports channels such as

Super

Sports

Network

or

My Sports Germany

and will play during the evening when most people are tuned in and will also play repeatedly during big soccer games.

Overall, Germany has a 4-season climate, however the weather differs between regions, therefore, advertisements and promotional offers will differ between cities such as Berlin and Munich. In Berlin, summers are usually warm and quite sunny with a few rain showers, however, winters can get severely cold—its’ the season for snow and frost (Hochstadt). Therefore, more advertising will take place during summers instead of winters. In Munich, where the weather is pleasant throughout, the use of the folding bicycle will be greater; therefore, promotional offers and advertising will be stronger in this part of the region.

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Folding Bikes Marketing Strategy in Germany

In order to introduce the folding bicycle to Germany, we will place an introductory ad in Neue Reveue

and, one month in advance. Each week, the ad in Neue Reveue will provide readers with specifications of the product, the launch date, and the stores that will be selling them. We will place the same ad in

Bike;

however, since

Bike

magazine subscriptions publish monthly, we will place ads in this magazine two months prior to launching. This way, it will be exposed to more people, especially those who are interested in bicycles. After the product is launched, we will place an ad in

Men’s Health

,

DMEuro,

and

Focus Money.

e. Message

The major advertising media customarily used to reach the market of the folding bikes and all the other automobiles in general in Germany is the print media. This is due to the fact that one is able to give detailed information of the product being marketed at a relatively much cheaper price. The objectives of advertising the folding bicycle would be to increase its popularity and promote the product to the target market. By aiming for increased popularity, we intend more people (both within and outside the target market) to be exposed to the benefits of the product. The message in every ad that is advertised will be focused on the benefits of the product. It will be directed toward promoting faster travel, increased recreation and better health.

f. Internet Advertising

The World Wide Web is increasing its popularity by the minute and people spend more time surfing the internet than they do watching television or browsing though magazines. Therefore,

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Folding Bikes Marketing Strategy in Germany

placing ads on social sites such as Face book or My space will help advertise the folding bicycle and more people will be exposed to it. In addition, ads can also be placed on TVSPLANET.com. Sports is a big part of the German culture, however, due to hectic schedules and busy lives, people tend to follow sports online. Placing an ad on tvsplanet.com, where Germans have access to Del TV, which is a German sport channel, will be beneficial to the marketing of the folding bicycle.

g. Sales Promotions

Sales promotions will be used to peruse people to invest in the product. Our internet links will direct customers to our website where after filling out a short survey, they will have the privilege to print out vouchers to receive a discount on the purchase of the folding bicycle. Also, we will organize raffle drawings in major colleges and universities for students to enter for a chance to win a free folding bicycle.

The internet link will provide customers with a voucher for €50 off a brand new folding bicycle. The expected amount of people who will print out this voucher and use it to purchase the product is 1,000 people. Therefore, the amount we are liable to spend in the internet sales promotion is €50,000.

h. Personal Selling

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Folding Bikes Marketing Strategy in Germany

Due to the fact that we are a newly established company in Germany, we will not have a sales force but instead will be selling our bicycles directly to dealers. Retailers will be educated with required knowledge of our product so they can provide customers with any needed information of our product. In the future if we start to grow we will reconsider this decision and generate a sales force at that time.

i. Publicity

As the folding bicycle launches in Germany, the budget for creating publicity will be relatively small. Because of the fact that the population gives special attention to details of products, it is extremely important that as much information as possible is given about the product when advertising the product (Gianfranco, 2001). Therefore, as stated before, most of the advertising budget will be spent on creating TV commercials and magazine ads for the folding bicycle. This is the fastest and most efficient way to expose this product to the Germans.

j. Reach & Motivation

Overall, this promotion plan will specifically aim toward the target market due to many reasons. First of all, Neue Reveue and Bike are among the top selling magazines in Germany, therefore, placing ads in these magazines will expose Germans to the product quickly. Also, the ads will include specifications that will inform readers with details of the bicycle which is what the German society looks for when viewing print ads. Secondly, TV commercials will be aired during peak hours of the day and on sports channels, especially. Since most 20-35 year old males tune in to sports channels for leisure, airing ads for the folding bicycle during peak hours on sports channels will expose the product to more people. Also, young males spend an ample lot of time browsing the internet—whether it is for educational or professional purposes.

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Folding Bikes Marketing Strategy in Germany

Therefore, placing ads on the internet will definitely expose the product to the targeted consumers. Last but not least, raffle drawings in major colleges and universities will be extremely vital in promoting the product to the target market because most people attending college are between the age of 20 and 25. Also, many campuses are located around other businesses, so young professionals ages 25-35 will hear about the promotional offer by simple word of mouth. This is how the promotional plan will reach and motivate the target market to invest in the folding bicycle.

B. Stage in the PLC

The product is in the introductory stage in its life cycle. The product should thus be very affordable to the majority of the consumers to penetrate the market and to counter effect the competition faced (Jacobs & Stone 2001). The product should be of high quality and of good branding to attract and maintain a large consumer base. It should first be distributed selectively amongst consumers. The product should be promoted to create awareness of its presence in the market.

C. Relative advantage

There are many advantages of the folding-bike product. It is more economical due to low purchase and maintenance costs. It is also pollution free, as it does not use fuel. It compatible since majority of the population falls between 30 and 50 years ( http://www.census.gov/ipc/www

/idbpyr.html ). This range contains physically able persons.

D. Compatibility, Complexity, Trialabilty, & Observability

Due the scarcity of space in the urban areas where majority of the population is found, the

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Folding Bikes Marketing Strategy in Germany

folding bike is relatively smaller than other vehicles. It is a simple product to use, since it requires minimal training to operate. The transport infrastructure is well developed and thus usage of the product would be easier. Also, the product will come in different sizes and colors to suit the varying needs and preferences of the consumers.

E. The product and those of the competition:

The product will be simple to operate, it will be lighter, faster and stronger compared to the products in the market. The product will also be better than the competitors given that it will be the only hand built folding bicycle made in Germany, the product will also be of high quality and this will attract and maintain a large customer base. The product will also face competition from other modes of transport and the advantage will be that the product will be economical and pollution free and therefore will easily penetrate the market.

The product will also be sold at an affordable price in order to gain market size, the low

F. Product name and Logo:

The product name and logo depicts so much about why the product is better than the other products in the market, the product name and logo should contain words that are linked to something well known and at the same time related to the product, the best product name will be the German word for bicycle “fahrrad” and also will include the German name for cheetah “Gerpad”, therefore the product name will be “Gerpad Fahrrad”, this will give an indication that the bicycle is as strong and fast like the cheetah, therefore the logo will contain a picture of the cheetah and a person riding a bicycle.

G. Package sizes:

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Folding Bikes Marketing Strategy in Germany

Given that the product is a folding bicycle the package size will be depend on the size of the bicycle, however the size of the package will be easily folded to occupy less space and also enable easy carrying and storage. The product and logo name comply with the labeling required given that it does not bleach copyright laws and also there are no warning that should be indicated in the labels.

H. Product features:

The product will be categorized into sizes which include small, medium and large, this will enable individuals to select the appropriate product they prefer and also the prices will differ, this will ensure that there will be a product for each income group whereby larger sizes will be for higher income earners.

I. Warranties:

A six month warranty will be provided to consumers, products will be serviced free of charge for the first six months after purchase but only if damages do not result from negligence, however the company will continue to provide services after the six months at a lower fee compared to its competitors.

J. Major problems to product acceptance:

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Folding Bikes Marketing Strategy in Germany

Due to the advanced technology and slow change of preferences, the product meets challenges in its acceptance. The ageing population is reluctant to the acceptance of due to their physical limitations and the existence products in the market might make it less acceptable as compared to other products in the market.

K. The product and the needs of the target market:

The product meets many needs of the target market since it is economical (the high standards of living call for less expensive products), eco-friendly (the Germans are selective buyers) and requires minimal storage space (majority of the population lives in the urban regions leading to scarcity in space).

Conclusion

Germany’s large economy and population provides marketers a great deal of opportunity there. “Cyclists are heading further a field, bagging their bikes to take them on trains or buses. And businesses are responding to this new trend, offering products and services catering to these ‘traveling’ riders” (Folding bikes, 2009). The availability of media, low cost of advertising, and because there are no distribution laws affecting the product the production of folding bikes should be a relatively profitable market in Germany. Also, Germans, being an information gathering society that heavily persuades the products they buy, will be happy to know these folding bikes are becoming even more attractive, easier to collapse, and smoother to ride, so there will no doubt be more riders getting out and coming into “the fold.”

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Folding Bikes Marketing Strategy in Germany

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