The Pres E-bike Marketing Plan

ThePres E-bike: Marketing Plan

InstitutionAffiliation

ExecutiveSummary

Thismarketing plan presents the strategies that will be employed inlaunching a new product, Pres e-bike, into the Canadian market by thetechnology firm Prestige Tech. The Pres e-bike is a human-electrichybrid bicycle,which essentially is a bicycle fitted with an integrated electricmotor that facilitates propulsion when a cyclist pedals. Electricitybikes or e-bikes are available in many varieties depending on thedesign and the power of the electric motor. The introduction of theproduct into the market requires strategies that are unique to thecompany as well as the product. The marketing strategies of Prese-bike will rely heavily on the strong brand name that the companyhas, its efficient supply chain management and organizational cultureof technological innovation. Such strategies would also have tofactor in the effects of competition in the Canadian bicyclemanufacturing industry that has seen many new entrants that threatenthe core competencies of Prestige Tech. The company undertakesgeographic and demographic market segmentation in order to reach itspotential customers in an effective manner. Moreover, the companyproposes the use of a discriminatory pricing strategy that willexhaust the customer surplus for the differentiated bicycles. Theobjectives that structure Prestige Tech’s marketing plan includesthe provision of a product that is efficient, affordable, adaptableand environment-friendly.Given that Prestige Tech is a subsidiary of Honda that is creditedwith the e-bike technology, the company is bound to introduce theproduct and undertake product differentiation with much ease makingthe product a conceptual reality rather than a perception. Byincorporating the industry best practices into the organizationalculture, the Pre e-bike marketing plan presents the best mechanismsto launch a new product in an industry where competition is rife andcustomer preferences are ever dynamic.

Contents

Situation Analysis 4

Industry Analysis 5

Competitor Analysis 5

Consumer Analysis 7

Company Analysis 9

Company Strengths 9

Weaknesses 10

Opportunities 10

Threats 11

Segmentation Strategy 12

Positioning 13

Marketing Objectives 14

Marketing Strategies 14

Action Plan 15

Product 15

Pricing 16

Promotion 16

Place 17

Conclusion 17

References 18

SituationAnalysis

PrestigeTech is at its strongest point of business if annual revenue isanything to go by. The business is entering its tenth year ofoperation in Canada amid cutthroat competition in the Canadiantransport and technology industry in which the firm operates.Prestige Tech intends to launch a human-electric hybrid bicyclecalled Pres e-bike. The company specializes in the production andassembling of bicycles and other economical means of transportincluding the scooter and low fuel consumption vehicles. In the lastfinancial year, the company made after-tax profits amounting to $32million marking an increase of 6.7% in annual profits. Prestige Techhas a strong brand name in the industry that has enabled it tointroduce new products with relative ease as well as facilitate thecustomer loyalty and customer satisfaction efforts undertaken by thecompany. Moreover, the company relies heavily on social media andcelebrity events to market its products. In the past one year, thecompany sold over 3 million bicycles in the exhibitions and marketingfairs across Canada. Prestige Tech is reputed with the production ofhigh quality, durable and affordable products through research andtechnological innovation. In the past few years, the industry inwhich the company operates has seen an increase in new entrants whichhas increased the competition with the latest high profilecompetitors being Mobikes, Fossil Inc., Guent and Kline Stores, whichtaken together, have a 63% market share. The strong marketing skillsof Prestige Tech, product differentiation and efficient supply chainmanagement have however given Prestige Tech a competitive edge in themarket enabling it to advance proceeds even with increasedcompetition. The increased competition in the industry coupled withchanging consumer needs, however, necessitates the introduction of anaffordable, efficient and adaptable means of transport that can becustomized to suit varying consumer needs. This niche in the industryis what informed the necessity to introduce the Pres e-bike into theCanadian market. The e-bike is an eco-friendly bicycle that has aself-charging battery that propels the bike further when one pedals.Additionally, the bike is foldable making it easier for movement inthe cities where one has to use elevators or board a train for somepart of the journey. If successfully launched, the Pres e-bike willbe a game changer in the Canadian technology and bike industry.

IndustryAnalysis

Thetransport industry in Canada has exhibited a clear trend towardsenvironment-friendly means of transport in conformity with theCanadian five-year sustainable development blueprint. The market forbicycles in Canada has grown with all age and class segments findinga product that suits their various needs. The industry has registereda substantial growth in revenues this year as compared to 2014 andthe preceding years, which is attributed to the increased preferencefor efficient means of transport by most Canadians. According to the(2013-2016) Federal Sustainable Development Strategy (FSDS), theregulations and practices in the Canadian transport sector ought toaddress the three fundamental tenets of sustainable development:economic, social and environmental dimensions (Transport Canada,2015, n.p). The implementation of the sustainable developmentblueprint is expected to structure the macroeconomic environment inthe transport sector in favor of affordable and eco-friendly means oftransport. The customers in the industry are diverse andmulti-segmented in terms of age gender and age. However, the purchasebehavior in the industry is likely to be different across thecustomer segments with the younger customers preferring customizedbranded e-bikes.

CompetitorAnalysis

Althoughthere are many competitors in the bicycle market in Canada, there issubstantial concentration. Mobikes, Fossil Inc., Guent and KlineStores are strong competitors, holding 63% of the market. Mobikes andFossil Inc., have strong manufacturing and distribution skills whileGuent and Kline Stores have less extensive distribution networks butstrong name recognition in fashion.

Mobikesin particular, pose a threat to the future growth of Prestige Techdue to its strong brand and aggressive marketing strategies that havethe potential to reduce the market share for other competitors.However, the multinational has often relied on low pricing strategiesand is likely to lose a substantial market share should it adjust itsprices upwards. Therefore, the business will be unable to survive inthe long-term especially if there is a significant change in themacroeconomic variables such as influences of inflation.

FossilInc.draws most of its strengths from the diversity in the products andservices it offers. The company trades in energy transport andmanufacturing sectors, which gives it a substantial adaptabilityadvantage. It is able to invest the proceeds from other sectors intothe transport sector thereby enabling it to gain a strategicadvantage in the bicycle transport sector. However, the company isalso faced with managerial challenges pertaining to economies ofscale and bad reputation owing to the Fossil Offshore Project oilleakages.

Guentis the latest entrant in the industry and their strength lies intheir ability to use technology to produce differentiated products.However, the young company does not have adequate capital andsecurity to obtain funding for their products.

KlineStoreshave a strong supply chain and owns the largest spare partssubsidiary in Ontario. However, the company’s board of directors ispersistently embroiled in a tussle with the management. The companywas also linked to the Sable Offshore Energy Project scandal and isstruggling for credibility in the corporate world.

Giventhe strengths and weaknesses of the competitors, Prestige Tech islikely to gain a significant market share in launching the Prese-bike given its combination of strengths and opportunities. Thecompany has a strong brand name, supply chain management and isreputed for producing differentiated products in the Canadian cyclingindustry. All these advantages must be augmented into an effectivecompetitive strategy since competition is pervasive and involvescompanies competing for markets (Porter, 2008, p. 1 Amstrong, 2006,p. 668-691). Moreover, the fact that Prestige Tech is a subsidiary ofHonda (which is credited with the e-bike technology) will create acredible reception of the product due to ease of establishingcustomer trust.

ConsumerAnalysis

Theconsumers in the bicycle industry in Canada have shown a clear trendtowards affordable and efficient in the past few years. The trendtowards eco-friendly means of transport is expected to continue withthe implementation of the (2013-2016) Federal Sustainable DevelopmentStrategy (FSDS) in the transport sector (Transport Canada, 2015,n.p). The launching of Pres e-bike by Prestige Tech will definitelychange the bicycle buying habits by encouraging the purchase ofefficient but lowly priced bicycles and the first few customers arelikely to inspire more purchases. Some of the factors considered bythe customers in the bicycle industry in Canada include price,efficiency, and availability of spare parts, bicycle design and thebrand (synonymous with the company). Most commuters who cycle to workare young Canadians who live in the inner cities. These cyclists havea preference for branded and differentiated models that are made outof light metal. The younger customers are likely to spur sales in thenext few years given that they form a considerable proportion of theCanadian population. The table below shows the market segmentationfor the bicycle transport industry in Canada.

Table1.0: Market Segment for Bicycles in Canada

Age

Bicycle Buyers (%)

Percent of Population in major cities

Relative Purchase Index

Below 18

4

9

0.44

18-24

21

12

1.75

25-34

31

20

1.55

35-54

34

39

0.87

55 and above

10

10

1

Asshown in the table above, the highest purchase prevalence is observedfor the customers of ages (25-34) who purchase 75% more bicycles thatthe average customer. However, given the industry trend in 2014,young adults aged between 18 and 24 are likely to be intensepurchasers and the group is likely to be stylish and prefer brandedcustomized bicycles. The older age groups are likely to prefer anefficient, affordable and environment-friendly franchise. Concerningthe customers aged between 24 and 35 years, market statisticssuggests that more people can be lured into buying bicycles ifcompanies can produce bicycles customized to their needs. This is anopportunity in the disguise of an ability to undertake mass productdifferentiation. Using the Prestige Tech’s social media platforms,the company’s marketing team is already engaging customers onlineand the comments of the Pres e-bike are encouraging. For instance,one customer commented, “Pres e-bike is a one off!” and another“Can I make an order now?” In summary, the comments did notdisplay any reservations on the part of the customers and neither didthey mention the price. The implications are that Prestige Tech needsto launch the product as soon as possible and use discriminatorypricing, which is arguably the best pricing strategy for newtechnological and differentiated products (Zhou et al., 2014, p.676-688 Xiang, 2012, p. 1473-1477).

CompanyAnalysis

PrestigeTech is a Chinese-owned company with operations in 21 countries inthe Americas. The company currently distributes bicycles acrossCanada through Channels accounting for about 30% of bicycle sale inthe country. The company’s organizational culture ofcustomer-orientedness has been the drive in marketing strategies thathas it command a sizeable market share of consumers who preferdifferentiated products. As the company looks forward to launch thePres e-bike, it will heavily rely on the company’s innovativenessin product design, strong manufacturing skills and experience in thedistribution of its technology-driven merchandise. With respect tothe potential success of the Pres e-bike in Canada, the followingsection provides an analysis of the company-specific factors thatneed to be taken into account prior to launching a new product by thePrestige Tech.

CompanyStrengths

PrestigeTech has a strongbrand namein the Canadian cycling industry, and is reputed with the productionand distribution of durable and efficient bicycles. Moreover, thecompany has a well-structured and effective program for regularcommunity social relations (CSR) that has endeared the company to thecommunities in the respective areas where its outlets are located.The launching of a new product in the market is therefore expected torely on this brand name as a key marketing strategy. The company alsohas strongmarketing strategiesthat comprise intense social media campaigns and road shows completewith exhibitions in major events using celebrities and personalities.Moreover, the efficientsupply chain managementof Prestige Tech that is complete with industry best practices andinternational networks provides the firm with a significant marketingand distribution advantage in Canada. An organizational culturecentered on innovationand technologyprovides the company with a competitive advantage as it enables thecompany to acquire more customers and retain existing clients throughcustomer satisfaction. Innovation and technology also enable thecompany to undertake production, distribution and marketingefficiently by reducing overhead costs while producing high-qualityproducts.

Weaknesses

Thelack ofstructured internal communication strategyis Prestige Tech’s greatest weakness. The implication of thisweakness is that the company lacks a feedback mechanism that canrecognize employees for exemplary performance and respond effectivelyto customer needs. The company does not have a structuredhierarchical corporate structurethat is efficient for managing a segmented business structure. Thelack of an efficient managerial structure has led to duplication ofroles and internal conflicts at the organizational level. Anothernotable weakness as the company seeks to launch the Pres e-bike isthat the company lacks experience in the distribution of brandede-bikes in Canada.

Opportunities

Thegreatest opportunity available to Prestige Tech is the markettrend towards efficient, affordable and eco-friendly means oftransport.The market trend is bound to converge with the company’s missionand vision that all point to the company’s desire to produceefficient, affordable and environment-friendly bicycles.Additionally, thegrowing proportion of the youth (ages 18-24) isbound to increase the company revenues since this category ofconsumers buys bicycles more than the average customers by 75% (seeTable 1.0). The fact that the company specializes in producingdifferentiated products through technological innovation coincideswith the market needs of the growing customer segments. Theimplementationof the (2013-2016) Federal Sustainable Development Strategy (FSDS),which proposes that the regulations and practices in the Canadiantransport sector ought to address the three fundamental tenets ofsustainable development: economic, social and environmentaldimensions (Transport Canada, 2015, n.p) also present futureopportunities for the company that has a similar vision.

Threats

Thebiggest threat faced by Prestige Tech is industry competition.The entry of new techno-based bicycle assembling companies like Guentand Kline Stores pose a threat to the core competencies of thecompany that include technology and innovation. Fossil Inc. andMobikes are also established companies in the Canadian market withextensive operations across the country. The strategic growthpractices of Mobikes and Guent in the context of mergers andacquisition threaten the prospects of Prestige Tech since the twofirms are likely to establish a monopoly in the market throughmergers and acquisition. Industryregulationsproposed by Transport Canada that include the lifetime of bicyclesand the distance to which bicycles can ride, present a threat ascustomers are likely to be skeptical about the future of bicycles inCanada, especially new models like Pres e-bike. A changein customer tastes, preferences and attitudes fromeconomical and customer-friendly bicycles is likely to knock thecompany out of business. In summary, an assessment of the company’spositive and negative prospects reveals a more optimistic future andreception for the Pres e-bike. Most challenges faced by the companycan be mitigated at the firm level. The table below presents asummary of the SWOT analysis.

Figure2.0: Prestige Tech SWOT Analysis

Strengths

  • Strong brand name

  • Efficient Supply Chain Management

  • Strong marketing strategies

  • Innovation and technology

Weaknesses

  • Lack of an efficient communication strategy

  • Poor managerial practices

Opportunities

  • Favorable market trend

  • Growing youth population

  • Implementation of FSDS

Threats

  • Competition

  • Industry Regulation

  • Change in tastes and preferences

SegmentationStrategy

Themarket segmentation strategy adopted will be the demographic marketsegmentation. Demographically, the target market for the brandedtechno-bikes can be divided into the ten provinces of Canada as shownin the table below.

Table3.0: Geographic Market Segmentation

Province

Bicycle sales (%)

Population (%)

Index of bicycle sales

Ontario

11

6

1.83

Quebec

12

14

0.86

Nova Scotia

7

16

0.44

New Brunswick

5

4

1.25

Manitoba

11

9

1.22

British Columbia

7

12

0.58

Prince Edward Island

10

7

1.43

Saskatchewan

8

9

0.89

Alberta

11

16

0.69

Newfoundland and Labrador

9

7

1.29

Asshown in the table above, the target markets (10 provinces of Canada)exhibit a volatile trend in purchases. However, Ontario reveals aclear market prospect for bicycles since the province has the highestproportion of the country’s working class who commute to work usingbicycles. The customers in Ontario buy 86% more bicycles than theaverage customer implying that if the Pres e-bike is to besuccessful, it has to take into account the factors considered by thebuyers in the province. Prince Edward Island also shows a significantpercentage of bicycle buyers given the nature of the province’sterrain, which makes cycling be the most dominant means of transportin the province. On the contrary, Nova Scotia shows the lowestpreference for bicycles, and this can be attributed to thewell-developed railway and road infrastructure in the province. Thecustomers in Nova Scotia buy 66% less than the ordinary customers do.However, it is important to note here that this proportion isnonetheless substantial given the population of the resource-richprovince. The company will employ a systematic and sequentialapproach to market the Pres e-bike to its demographically segmentedmarket using a series of road shows, events and social mediaplatforms. The marketing strategies will be informed by the index ofbicycle sales, age proportions and cycling proportions of thecommuting population. The demographic market segmentation isjustified by the fact that cycling is a common phenomenon in Canadaand that there are marketing and distribution regulations that differacross provinces. Therefore, the most successful way to introduce anew product is to adhere to the provincial regulations and standards,which requires a strategic approach that drafts the market entrystrategy for all the ten provinces. Moreover, market segmentation byprovinces also captures the age and other psychographicsegmentations.

Positioning

Prese-bike is a product designed to take into account the efficiencyaspects and unique customer needs through product differentiation byPrestige Tech using technology and innovation. The bicycle presentsthe customers with an efficiency, affordable, comfortable andenvironment-friendly brand of bicycles, a combination like no otherin Canada. Given that Prestige Tech is a subsidiary of Honda that iscredited with the e-bike technology, the company is bound tointroduce the product and undertake product differentiation with muchease making the product a conceptual reality rather than aperception.

MarketingObjectives

Theoverriding objective of Prestige Tech in introducing the proposedbrand of e-bikes in the Canadian market is to change the markettrends in favor of economical, efficient and environment-friendlybicycles that fills the market niche that exists between normalbicycles and motorcycles. The other marketing objectives that willenable the company to be successful in its endeavors include thefollowing.

  1. To create brand awareness

  2. To change customer beliefs and attitudes

  3. To encourage brand switching

  4. To influence purchase intent

  5. To increase product market share

  6. To counter imminent competition

  7. To create positive and purposeful customer expectations of e-bikes in the Canadian market

Allthese objectives will be achieved through geographic and demographicsegmentation of the Canadian market as explained in the precedingsections of this report. The mechanisms through which each objectivewill be achieved in the market segments is informed by thequalitative and quantitative purchase information concerning thespecific market segments. SERVQUAL-structured questionnaires will beused to measure progress concerning the achievement of the statedobjectives.

MarketingStrategies

PrestigeTech will introduce a new product, the innovative e-bike, usingstrategies aimed at penetration pricing, extensive advertising, andexpanded distribution as outlined in the action plan in order toincrease revenues and business growth rate.

ActionPlan

Theaction plan proposed to introduce Pres e-bike by Prestige Tech isessentially aligned to the 4Ps of marketing (product, promotion,place and price) in order to address all the dimensions of productmarketing as concerns the nature of the project that Pres e-bike isbound to be.

Product

ThePres e-bike is bound to be a new technology product in Canada thoughit is extensively used in China where Honda, an automotivemultinational, invented it. The e-bike or booster bike as it iswidely known is an integrated electric motor that facilitatespropulsion when a cyclist pedals. Electricity bikes or e-bikes areavailable in many varieties depending on the design and the power ofthe electric motor. These varieties range from the pedelecs,which are designed to assist the rider’s pedal power to those thathave a moped-up style functionality but which are not similar tomotorcycles. The bicycles have rechargeable batteries and the lightermodels of the bicycles can cover up to 32 kilometers though thedistance varies depending on the regulation of a specific country orprovince in which they are sold. The e-bikes are classified dependingon the power of the electric motor installed in them. Broadly,e-bikes are classified into two categories depending on whether theelectric motor has a pedal-assistsystemor a power-on-demandsystem.E-bikes are preferred as a means of transport in the places where thetechnology has introduced due to their affordability and efficiency.The portability of some designs also enables the e-bike to appeal tocertain market segments such as those who use supplementary means oftransport like trains or people in offices that have elevators makingit completely different from the conventional bicycles. The companyexpects to benefit substantially from the product (core product)through product branding and differentiation (actual product) whichwill be supplemented by advertising and intensive customer care(augmented product). This premise defined the three levels of the Pree-bike.

Pricing

Giventhe preliminary market survey conducted on social media, the companyintends to use the discriminatorypricing strategysince the products will be highly differentiated and relatively newin the Canadian market. Given that the Pres e-bike involves massivecapital and human resource investments, absorptioncostingwill be employed to ensure that the costs of the product arerecovered from its sale. Absorption costing is an important marketpricing strategy because it facilitates financial prudence andprevents unforeseen losses (Hinterhuber &amp Liozu, 2012, p. 69-77Lowe, 2006). Other pricing strategies that may be available toPrestige Tech for the successful marketing of the Pres e-bike includethe marginal-cost pricing, skimming (reaming), decoy pricing, limitpricing and predatory pricing. The key pricing strategy for themarketing of e-bikes in Canada, however, is the discriminatorypricing strategy, which will allow different prices for differentmarket segments and include variations depending on the level ofproduct segmentation.

Promotion

PrestigeTech will rely heavily on its socialmediaplatforms to introduce the Pres e-bike into the Canadian market. Thecompany’s social media platforms (Facebook and Twitter) alreadyhave a massive following and market surveys show that those customerswho are active on social media are likely to be of the main targetsegment (ages 18-24). Advertisementsof the product with an emphasis on economy and environmental appealswill be undertaken in mass media on Canadian national television andradio stations. Such kinds of advertisements are bound to besuccessful since the use of mass media is still the most effectiveadvertising strategy for firms with a wide spread customer base (MMA,2015, n.p). The company already has a strong marketing strategy thatrelies on using eventsand celebritiesto introduce new products, and this approach will be key as PrestigeTech will use a Nobel Laureate (environmental conservation award) asa brand ambassador for the Pres e-bikes. Other competent strategiesto be employed by the company include direct marketing and throughpublic relations such as the annual Prestige Tech Community SocialRelations (PTCSR).

Place

Themarketing strategies will be focused on the major urban centers ineach of the ten provinces in Canada. For this reason, the companywill build mega silos in the provincial headquarters to enableefficient supply of the branded Pre e-bikes to all the targetcustomers. The supply chain structure adopted will resemble a treediagram with the national distribution center (NDC) based in Ontarioat the apex while the regional distribution centers (RDCs) will bebased in the respective provincial headquarters. The company plans torecruit several salespersons and distributors to facilitate thedelivery of the product to the consumers.

Conclusion

Themarketing strategy adopted by Prestige Tech for the launch of its newtechno-product Pres e-bike will exploit all the dimensions of themarketing mix based on the company-specific advantages andlimitations. Much as these strategies are ambitious, Prestige Techwill take into consideration a few situational factors. In order tobe successful, the marketing strategies must entail using theindustry best practices because when a new product is launched into amarket with existing firms (competitors), the competitors are like todevelop defensive marketing strategies (p. 319). According toEntrepreneurial Insights (2014), the success of any marketingstrategy for a new product will depend on the outcomes of the(internal) evaluation of the product before it is finally launchedinto the market.

References

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