Manager: Schwinn Bicycle Company and Pricing Strategy Schwinn
A Case Study on Pricing Strategy
Schwinn Bicycles
J. Paul Peter (University of Wisconsin-Madison)
Inside a plain brown building in Boulder, Colorado, is a shrine to an American icon; the Schwinn Bicycle. Some mud-caked from daily use, some shiny museum pieces – dozens of bikes stand atop file cabinets and lean against cubicles. Amid the spokes and handlebars, a group of zealots is working to pull off the turnaround of the century in the bike business. Brimming with energy, they are determined to resurrect the best known brand on two wheels. But as Schwinn celebrates its 100th anniversary, its management team faces a long uphill climb. Just two years ago, once mighty Schwinn had a near-death experience in bankruptcy court. Now, its trying to rise to the top of the crowded mountain bike market.
For years, Schwinn was the top U.S. brand , with as much as 25% of the market. Now, it has less than 5% of the $2.5 Billion annual retail bike market. The new Schwinn will sell about 400,000 redesigned bikes – many of them Asian-made models – that sell for $200 to $400 retail, the lower end of the adult bike market. Those models are catching on. But the turnaround won’t be a success unless Schwinn persuades cyclists to buy over $700 or more for its newer bikes. Below are market share of manufacturers for bikes retail-priced $400 and up:
Brand Market share Brand Market Share
1. Trek 24% 6. Diamondback 6%
2. Cannondale 12% 7. GT 6%
3. Specialized 12% 8. Scott 4%
4. Schwinn 7% 9. Mongoose 3%
5. Giant 6% 10. Proflex 3%
The mass market for low-priced bikes and those made for children is dominated by three U.S. manufacturers: Huffy, Murray and Roadmaster. The mass market accounts for about 8.5 million of the 12 million bikes sold in the nation annually.
Schwinn’s history as a maker of sturdy, low-cost bikes is no longer the asset it once was. Manu under-30 cyclists see Schwinn as the bikes their parents rode. They prefer trendier and modern mountain bikes, with
Schwinn Bicycles
J. Paul Peter (University of Wisconsin-Madison)
Inside a plain brown building in Boulder, Colorado, is a shrine to an American icon; the Schwinn Bicycle. Some mud-caked from daily use, some shiny museum pieces – dozens of bikes stand atop file cabinets and lean against cubicles. Amid the spokes and handlebars, a group of zealots is working to pull off the turnaround of the century in the bike business. Brimming with energy, they are determined to resurrect the best known brand on two wheels. But as Schwinn celebrates its 100th anniversary, its management team faces a long uphill climb. Just two years ago, once mighty Schwinn had a near-death experience in bankruptcy court. Now, its trying to rise to the top of the crowded mountain bike market.
For years, Schwinn was the top U.S. brand , with as much as 25% of the market. Now, it has less than 5% of the $2.5 Billion annual retail bike market. The new Schwinn will sell about 400,000 redesigned bikes – many of them Asian-made models – that sell for $200 to $400 retail, the lower end of the adult bike market. Those models are catching on. But the turnaround won’t be a success unless Schwinn persuades cyclists to buy over $700 or more for its newer bikes. Below are market share of manufacturers for bikes retail-priced $400 and up:
Brand Market share Brand Market Share
1. Trek 24% 6. Diamondback 6%
2. Cannondale 12% 7. GT 6%
3. Specialized 12% 8. Scott 4%
4. Schwinn 7% 9. Mongoose 3%
5. Giant 6% 10. Proflex 3%
The mass market for low-priced bikes and those made for children is dominated by three U.S. manufacturers: Huffy, Murray and Roadmaster. The mass market accounts for about 8.5 million of the 12 million bikes sold in the nation annually.
Schwinn’s history as a maker of sturdy, low-cost bikes is no longer the asset it once was. Manu under-30 cyclists see Schwinn as the bikes their parents rode. They prefer trendier and modern mountain bikes, with