EXECUTIVE SUMMARY
FreeRiders, Inc. is one of the leading specialty mountain bike design and manufacturing firms in the world, and caters to professional cyclists, primarily in the mountain bike/extreme sport sub-category. Despite its reputation as a leader in competitive cycling, FreeRiders receives the majority of its revenue through high-end mountain bike sales. Each FreeRiders bicycle is hand-made in the US in FreeRiders’ machine shop in Everett, Massachusetts, consistent with the FreeRiders mission to “produce high-quality custom, one of a kind bicycles in the USA… designed and manufactured by and for the professional road and extreme sport rider.”
As a small company with fewer than twenty full-time employees and a host of freelance and part-time help, FreeRiders, Inc. is faced with strong competition in the category from larger bike manufacturers who, in recent years, have increased their advertising and PR budgets by an estimated seventy-five percent, and offset their costs by pushing production overseas.
Economic pressures due to inflated production costs and competitors’ increased market share have lead FreeRiders to re-assess its goals for the future. This new strategic plan will unfold in several phases and include a 9-month-to-market new product line extension, a five year plan to increase revenue to between two and five million, and a long term plan to ensure the company’s viability ten years and beyond.
II. ENVIRONMENTAL ANALYSIS
FreeRiders, Inc is a small, independently owned company founded in 1999. Of the fifteen full-time employees at the company’s headquarters, four key employees will be instrumental in carrying out this marketing plan. The key players include: Bryce Andersen III, a former American Cycling Team member, who retired from the sport in 1992 and worked as a usability and safety consultant in the cycling industry before joining FreeRiders as the National Sales Manager in 2001; Sandra O’Day, CFO; Noah McDougall, Marketing Manager; and Lisa Bavin, Production and Design Manager.
A. The Marketing Environment (Each force should be at least 2 paragraphs)
1. Competitive Forces. It is estimated that over 2000 companies worldwide manufacture bicycles and cycling related products for retail. Within that group, there are approximately 100 different brands available at retail at any given time. While the majority of the bicycles sold at retail are for either transportation or recreation, only about six percent are sold in the pro/luxury category.
2. Economic Forces. While rising fuel costs may suggest a rise in bicycle expenditures, on the whole, consumers looking to save on transportation costs generally purchase ‘comfort’ bicycles at an average retail price of $350. Currently, FreeRiders’ models range from $1,500 up to $10,000.
Other economic forces include a shift in the high-end bicycle manufacturing industry toward outsourcing and overseas production, which thereby significantly decreases manufacturing costs even with lower price tags at retail.
3. Political Forces. As trade regulations are lifted in developing economies, nations such as China are providing lucrative incentives to US and European manufacturing firms. FreeRiders’ firm commitment to handcrafted, locally produced bikes places them at a competitive disadvantage with regard to manufacturing overseas.
Conversely, organizations such as Bikes Belong (www.bikesbelong.org), BikesPAC, a political action committee, and the American Bikes Coalition are working to raise awareness of bicycling. Lobbyists have asked Congress for laws and grants to build and maintain bicycle paths and bike lanes on major roads to make biking a safe and economical mode of transportation.
4. Legal and Regulatory Forces. All FreeRiders’ bicycles and manufacturing facilities comply with EPA, OSHA and other government safety guidelines. There are no other regulatory or legal forces impacting FreeRiders’ operations at this time; however, steps must be taken to insulate the company from frivolous injury-related lawsuits as well as legitimate suits brought as a result of equipment failure.
5. Technological Forces. Advances in CAD software, ultra-light, durable bike frame materials such as titanium and newer materials such as carbon fiber have allowed all bicycle manufacturers to create a demand for faster, lighter, more durable and more aesthetically appealing products. It is predicted that as the demand for these materials increases, the cost to source these materials will decrease.
6. Sociocultural Forces. One potential competitive advantage for FreeRiders is their commitment to the “Hand-made in the USA” label. The affluent Baby-Boomer generation favors products considered to be ‘hand-crafted’, ‘socially responsible’ or ‘green.’ These same values can be seen passed down to the children and grandchildren of the Boomer generation: consumers in the teen to early 40’s demographic. The net result is an increase in potential new customers for FreeRiders’ products.
B. Target Markets.
FreeRiders’ primary target market is male, age 16-35, professional racer/extreme sport mountain biker. Secondary market includes affluent and athletic men, aged 20-45, who trend toward premium and socially responsible brands.
Since 1999, FreeRiders has positioned itself as a leader in the highly competitive bicycle manufacturing industry through superior design and rigorous performance standards.
The FreeRiders brand also ranks in the high 90th percentile for all brands in the consumer sporting goods category with regard to best practices in social and environmental responsibility. In recent years, the FreeRiders secondary target market has expanded to include suburban, athletic women in the 35-45 demographic. While these new findings are promising for the company, they are currently only seen in the so-called “Blue State” regions of New England, California and the Pacific Northwest.
At this time, FreeRiders’ bicycles are only available directly through the company and at select independent bicycle shops.
