A high-end line is essential to capture a good share of the market. Manufacturing mountain bikes made in the USA that are attractive, trendy and appealing will help the company achieve their goal since this is where the new image or trendier bikes are. This means, they must have a higher priced product. To capture that segment of the market, Schwinn must follow the trends, but leverage their competencies at the same time and that appears to be what they are doing.
While Schwinn experienced some difficulties and poor choices, the company had one very strong asset and that is a reputation for manufacturing quality products. Schwinn should build its marketing and that concept. Regardless of low or high end, the consumer will be purchasing a quality product.
To differentiate the two lines, Schwinn should create a new name for its high-end line. They should also manufacture these products in the United States in order to effectively compete with the top competitors. BREAKEVEN POINT
Market Share: 4% of 2.5B = 100M
Average Price: 1,000,000/400,000 = $250
Less Markup: $250 – 20% = $200 per bike
Profit Margin: $200 x 25% = $50
Breakeven: $50M/$50 = 1M
Payback: 1M/400,000 = 2.5 years
Zell/Chilmark obtained Schwinn’s brand,...