Manager: Schwinn Bicycle Company and Pricing Strategy Schwinn

Good Essays
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

You May Also Find These Documents Helpful

  • Good Essays

    Harley Davidson was seen in America as a company that produced motorcycles with “raw power.” The company was founded by Arthur and Walter Davidson and William Harley in 1903. In 1918, Harley Davidson had become the largest motorcycle producing company in the world. Their production totaled 28,000 motorcycles. Production continued to increase with the onset of World War II and the military use of Harley’s motorcycles. The mystique of the product had a tough sense to it with famous actors such as James Dean and Marlin Brando sporting the bikes. After World War II, foreign competitors became interested in the motorcycle market. Japanese competitors entered the market in 1959; Harley Davidson executives did nothing to counter the advance of the competition. Harley Davidson’s share of the industry began dropping while Japanese competitors introduced high quality products. The confidence in Harley’s reputation was causing the firm’s market share to decline steadily.…

    • 2737 Words
    • 11 Pages
    Good Essays
  • Powerful Essays

    Schwinn Bicycles

    • 2135 Words
    • 9 Pages

    Schwinn was recently sold to the Zell/Chilmark Investment fund, who is trying to turn it around by injecting new money and trying to reposition the brand from the low-end of the market to the high-end one.…

    • 2135 Words
    • 9 Pages
    Powerful Essays
  • Good Essays

    New generation riders that exists in Asian markets is more attracted to sleeker, less costly and a more swift motorcycles. Although there is a high potential for Harley Davidson to be profitable in Asian markets they are faced with barriers to trade. Such barriers includes government regulations and trade guidelines which limits foreign manufacturer’s ability to penetrate the market. Additionally one of Harley Davidson’s biggest competitors in the Asian market is Yamaha which is a Japanese motorcycle manufacturer. Due to this Harley Davison is confronted with arduous rivalry. Yamaha targets customers that are at the lower end market and focuses their manufacturing on affordable motorcycles with smaller engines, electronic capabilities and lighter reinforcement in contrast to Harley Davidson’s heavy steel frames.…

    • 866 Words
    • 4 Pages
    Good Essays
  • Satisfactory Essays

    BestBikes is a bicycle manufacturing company located in Erewhon. They currently produce one bike, a mountain bike. They compete for the bike market in Erewhon with three other bike companies of similar size and producing similar bikes. BestBikes have identified a number of unserved market segments (Racers, Leisurers, Commuters and Kids) in the bike market, and have analysed the possibility to expand in the currently served market segment (Adventurers) and entering the un-catered Racers segment. Developing products for the potentially highly profitable Racer segment fits well with BestBikes current expertise and operations.…

    • 182 Words
    • 1 Page
    Satisfactory Essays
  • Powerful Essays

    our business. As the president and the CEO of Bikes Bikes Bikes, I am proud to present to you the…

    • 11857 Words
    • 34 Pages
    Powerful Essays
  • Better Essays

    Thorr Motors Simulation

    • 1464 Words
    • 6 Pages

    Sales of the Cruiser Thorr are decreasing. The decrease is because the Cruiser Thorr’s target consumers are aging and their tastes have begun to outgrow the lifestyle that Cruiser Thorr symbolizes. Another issue is that younger consumers are more interested in lower priced motorcycles because of their lower personal disposable incomes and they do not identify with Cruiser Thorr’s lifestyle image. This scenario wanted to determine the Cruiser Thor’s position in the market by choosing four relevant parameters that will reflect the highest potential.…

    • 1464 Words
    • 6 Pages
    Better Essays
  • Powerful Essays

    | Keller Graduate School of MgmtInternational Business (GM598) Instructor: Kenneth Ninomiya Submitted By Group ASilvio AmadorAlfonso AguilarDate:…

    • 5139 Words
    • 21 Pages
    Powerful Essays
  • Good Essays

    Financial Analysis

    • 787 Words
    • 4 Pages

    Horizontal Analysis - The financial statements of Competition Bikes indicates a reverse in sales between fiscal years 6 and 7 where revenues increased to 37.5% and then a decreased 16.3% between fiscal years 7 and 8. This apparent trend is an indication that the company is moving in the wrong direction as sales have decreased. Not only is sales decreasing because of the current economic situation, but customers who also sponsor professional riders are decreasing. Reduction of sponsors will decrease advertising resulting in reduced sales. The trend in sales will have ramifications through out the entire organization as is demonstrated in further review.…

    • 787 Words
    • 4 Pages
    Good Essays
  • Good Essays

    Perceptual Map Analysis

    • 1328 Words
    • 6 Pages

    Lifestyle image; 34% said it was expensive, 44% said it signifies power, and 57% said it was a stable motorcycle, and they enjoyed riding it (General Marketing, 2012). Reason for purchase; 44% said they loved the cruiser, 53% said it fit their lifestyle and 65% strongly agreed it was a status symbol. Product characteristics; 35% said it had massive capacity, 36% said most powerful in its market, and 54% said it was the best in its market segment (General Marketing, 2012). Perception about price; the consumer did not have a large amount of cash on hand just to buy a motorcycle, he or she would need some type of financing (General Marketing, 2012) . The consumers that took the survey had cash on hand of 9,000 to 23,000 (General Marketing, 2012). Thirty three percent of the consumers surveyed said they would buy if they would have financing options available to them. Perception about service; 41% of the surveyed men thought that the services provided from cruiser thorr were not sufficient or satisfactory (General Marketing,…

    • 1328 Words
    • 6 Pages
    Good Essays
  • Good Essays

    One of the biggest opportunities in the motorcycle industry is the growth trend of 3.3% in unit sales over the past five years, mostly in the United States and Asia/Pacific markets. Also, the rapid growth of women ridership offers the potential of an even larger customer base in the future. In the sport segment in particular, growth in the next few years is expected between 2% and 3%. The history and brand recognition of Ducati will help them to attract some of these new customers related to industry growth.…

    • 1538 Words
    • 7 Pages
    Good Essays
  • Good Essays

    Bicycle and Schwinn

    • 544 Words
    • 3 Pages

    The Schwinn brand was known for many decades as for heavy duty low cost bicycles. Schwinn is working on repositioning their product into the higher end priced segment of the market. This way they are able to appeal to a broader consumer base. Offering products priced from $100 to $2,500 prevents the company from exclusively focusing on one end of the market. By offering lower prices the company is able to maintain their…

    • 544 Words
    • 3 Pages
    Good Essays
  • Satisfactory Essays

    Schwinn Executive Summary

    • 463 Words
    • 2 Pages

    In order to once again become one of the best brands in the industry, Schwinn has to compete with the existing top companies. This means they have to create a top-line mountain bike.…

    • 463 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Schwinn Bicycles - Swot

    • 711 Words
    • 3 Pages

    Schwinn has lost considerable market share due to its failure to capitalize on the increasing popularity of mountain bikes and the decline in popularity of its road bikes. Manufacturers such as Trek, Cannondale, and Specialized have become the standard for these very successful bikes leaving Schwinn in serious trouble. Since the beginning of mountain biking dominance, in the early 1980s, Trek Bicycles have become the standard, pulling almost a quarter of the entire bicycle market’s revenue in 1995. Trek’s phenomenal market share is even more so when you look at the company’s history compared to Schwinn. Trek is with 24 percent of the market was less than 20 years old while Schwinn with 7 percent was celebrating its 100th year of production. Most of their success can be directly attributed to being one of the first firms to produce quality, hand-built mountain bikes just at the time they were first being introduced and becoming popular. Trek also chooses to maintain the mountain bike segment as their lone market. This gives them a competitive advantage by specializing in one key area. Other industry leaders such as Cannondale and Specialized however, offer bikes of many different sorts.…

    • 711 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    Marketing Mix

    • 854 Words
    • 4 Pages

    After 3 years of development in the garage, Brad designed a bike he thought was competitive. He then travelled to China to find a factory that would make it to his exact specs and avoid the quality issues he’d found with other imports. After much searching, and with very little money or backing, he was lucky enough to find a French-owned company that shared his vision.…

    • 854 Words
    • 4 Pages
    Good Essays
  • Good Essays

    important that we study the consumer perceptions and behavior of the two wheeler owners which with give us feedback on how marketing strategies can be worked.…

    • 873 Words
    • 4 Pages
    Good Essays