The Cycling Industry

10 Pages Posted: 16 Jun 2009

See all articles by Paul Farris

Paul Farris

University of Virginia - Darden School of Business

Daniel Hoeller

affiliation not provided to SSRN

Abstract

This note explores brand evolution in a growing industry. Four high-end U.S. bicycle frame manufacturers (Trek, Seven, Moots, and Cérvolo) compete for brand status in the $2,000-and-up mountain bike market. Challenged by a coming carbon shortage and famed cyclist Lance Armstrong's retirement, the continued domination of Asian imports, and the reduction in the number of local bike shops, this industry faces significant strategy challenges.

Excerpt

UVA-M-0744

Rev. May 4, 2017

The Cycling Industry

It was late 2005, and the market for bicycles was at a watershed moment in the United States. The American public was more knowledgeable about professional cycling than at any other point since Greg LeMond's Tour de France victories in the late 1980s and early 1990s. Lance Armstrong had become an international celebrity, having just won his seventh Tour de France in a row, and had even hosted Saturday Night Live on television. In addition, high gasoline prices brought about in part by hurricanes Katrina and Wilma translated into higher bicycle sales. Reuters reported that as a result of these trends, there were likely to be 20 million bicycles sold in the United States in 2005—an amount that had not been seen since the oil embargo years of the early 1970s. The boom translated particularly well to an increase in road bicycle sales. At the same time, advances in carbon fiber were making their way into bicycle frames and components such as seat posts and handlebars; the resulting new designs and technology spurred consumer interest in high-end road bikes costing $ 2,000 and more. Times were looking good for bicycle companies.

Several manufacturers competed in the high-end road bike space and each had unique strategies. Trek famously sponsored Lance Armstrong and his teams: the U.S. Postal Service and the Discovery Channel. The Trek sponsorship led to several innovations and new products, while creating one of the most recognized names in the business. In addition, Trek diversified by offering custom painting options, selling bicycle accessories such as helmets, clothing, and handlebars, and in guiding cycling vacations.

Seven, a 35-person company located in Watertown, Massachusetts, was singularly focused on custom steel, titanium, and carbon bicycles. Each bike was made to custom specifications designed to perfectly match the size and needs of the individual customer. Sizing was determined via an extensive questionnaire that included, among other things, key body measurements, desired ride characteristics, current bike dimensions, and paint colors.

. . .

Keywords: bicycle industry, branding strategy, consumer marketing

Suggested Citation

Farris, Paul and Hoeller, Daniel, The Cycling Industry. Darden Case No. UVA-M-0744. Available at SSRN: https://ssrn.com/abstract=1420583

Paul Farris (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-0524 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/farris.htm

Daniel Hoeller

affiliation not provided to SSRN

No Address Available

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