Virtual Business World BIKERY Quarter 1

Markets

Your company will be introducing a new line of carbon fiber bicycles into selected markets in
North America (NORAM), Latin America (LATAM), Europe, the Middle East and Africa (Europe-
MEA), and Asia Pacific (APAC) regions.

Four geographic markets have been selected as sites for test marketing, one in each region.
Each city represents a different market opportunity. The mix of customers with different
potential demand will vary across each of them.

The current state of the carbon fiber bicycle market

The carbon fiber bicycle market is a niche segment of the bicycle industry. Almost all carbon
fiber bikes are very expensive. As a result, sales have been limited to high performance road
and mountain bikes by elite users. Many other riders would love to have the benefits of a
carbon fiber bike, but they have been too expensive to purchase. With the introduction of
moderately priced carbon fiber bikes, all of this could change. If things unfold as expected,
this business could actually be in the introductory stage of the product life cycle.
Other firms will be entering the market at the same time that you are. In fact, the whole
bicycle industry is interested in 3D printing. Each firm will be testing the market for these
new carbon fiber bikes.
You will be selling through company-owned sales outlets. You will not be selling through
third-party bike stores at this time. There are too many unanswered questions and it would
be best to retain complete control of this test market. Plus, you may discover that this new
distribution channel will be viable and worthy of expanding.
All competitors, including your own company, will start with exactly the same resources and
knowledge of the market.

Market Segments Among Bicycle Buyers

The bicycle market can be divided into three
major market segments - Recreation,
Mountain, and Speed. Each segment has its
own set of needs and wants. Each one also
has a price point where they are willing to
consider a purchase, should you be able to
satisfy their needs and wants.

These three segments are portrayed in the

accompanying graph. The circles are
positioned to indicate the price and
performance requirements of each segment. The size of the segment is portrayed by the size of
the circle. Each segment has different needs and wants and requires a different market strategy
to appeal to it.

The Recreation segment is looking for fun and a little exercise. These consumers are very
sociable and enjoy biking with friends and family on relatively short excursions. These
consumers are not as hardy as other bike riders; therefore, comfort and ease of handling are
very important. Bikes that appeal to this segment take on elements of both mountain and
commuter bikes. They need to be durable and able to handle bike paths and other light
terrain. Occasionally, they need to be able to carry small items, such as picnic lunches, light
packages, and even a few groceries.

This segment is moderately price sensitive. They will pay extra for comfort and ease of use,
but not for much more.

The Mountain segment wants a bike that can be taken on off-road trails. Consumers in this
segment use a bicycle for adventure, exercise, and sport. They like the challenge of riding on
difficult terrain. They take pride in their skills, and many love the excitement and adrenaline
rush that comes with tackling hills, downhill runs, and cross-country treks. Vigorous exercise
makes it all the better.

Consumers in this segment are willing to pay a premium for features that enable them to
traverse difficult terrains. Sturdy, powerful, and agile bikes are highly desired.

The Speed segment is focused on speed, as the name suggests. It is looking for the lightest,
fastest, most aerodynamic bike on the market. Pedaling quickly across the countryside
provides the exercise and sport these bikers desire. They enjoy the competitive spirit and
comradery of races and group rides, but are just as happy to bike alone.

These consumers love the physical challenge of long distance rides. They take pride in how
healthy they must be to be fast, strong, and competitive. They are willing to pay a high price
and sacrifice comfort and utility to get an edge over other riders.