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Cyclermate Phase 2 Some suggestions on how to approach the tasks

This is primarily an exercise in Marketing and Product Planning Sir Claude is extremely excited about the future of electric bicycles after seeing this clip

http://www.youtube.com/watch?v=sXhhWXw9V7A and has issued an urgent directive to the


team to scope out the market opportunity for this type of product. On the other hand, if your team concludes that the electric bike opportunity is not viable (you need to explain your reasoning), you need to suggest an alternative market strategy that the company should adopt. This will also require you to identify volume, prices and channels in the same detail as you would for the electric bicycle. One of the key problems you will encounter is that you will not find precise answers to the questions you need to answer. Therefore the skill required is to assemble useful facts and use these to build a set of reasonable assumptions. These probably will be best estimates supported by a set of thoughts which limit the possible forecast range. This is probably the hardest skill to develop in marketing and you will need to explain how you have arrived at your results. This requires you to:1. Document the data sources you have used using Harvard referencing 2. Explain the steps and assumptions you have made from the source data to your projections 3. Write up these clearly in your supporting material to your presentation (note form is entirely appropriate) The following notes are suggestions on how you might like to break down the tasks identified in the brief. These are designed to assist you, and are not compulsory. It might be worth looking in the handbook to refresh your memory on how this phase will be assessed. Note also that since the presentation is assessed, all team members must attend. If you are unable to attend, you must obtain clearance or an Extension from CAAS, otherwise you will fail the assessment. It is not necessary, perhaps not even desirable, that all team members actually speak during the presentation, but all should be ready to answer questions.

Task

Approaches

This is desk research. Topics to investigate: What is the installed base of UK bike ownership? This will give you some idea of the replacement market To evaluate the current market for How many people use a bike to get to work might give bicycles, and identify the size and a handle on this. growth rates of the key product How many bikes are sold per year? segments Sources: ONS production and import data Market reports such as Data Monitor Mintel Annual reports of Halfords

Market segmentation How is the bike market segmented? o By price, customer, features, by outlet? Segment the market and identify the characteristics of each segment you identify; where it is sold, what market share, what end user price? The focus is on the UK market, but you might also sketch out in general terms the opportunity in the rest of Europe or elsewhere. Use ratios to estimate this population? GDP?

To determine the potential for a new Evaluate where this type of bike fits into your segmentation. range of electrically assisted bicycles What should be the specification of your proposed based on new battery technology market entry? Features, price What is your estimate of market sales for this type of product? Would it make a sensible possibility for a company such as Cyclermate? To understand the routes to market This requires an analysis of the structure of distribution of and margin structures of the bikes in the UK. channels How many channels are there? What market segments do they serve? What is the average price of products through each channel? What percent of the market is sold through each channel? What gross margin is obtained in each channel? This will be difficult. You might use annual reports of companies to build assumptions. To identify the required pricing structure for the any proposed new product(s); cost price, channel margins and selling price To estimate the sales volume per year for the first three years following launch and therefore decide which national markets need to be penetrated in order for the project to be viable. It was agreed that a clearly defined, viable UK opportunity needed to be identified for the first year. The reasoning for this was that unless the business could be profitable on home sales, the risk in taking the project international would be too great. This is where you put your assumptions together. Your task here is to estimate the UK market mix of your propsed product(s) that will be sold by channel with estimates of end user prices and ex-factory prices This requires your estimates of how many bikes you will sell in the first year of operation in the UK. By channel With sales price and ex-factory cost per channel You will need to cover what type of marketing campaign will be required and what it will cost in the first year. From your assessment of the UK market estimate the European opportunity by country (only a broad brush assessment is needed here)