Case Study: Is there a Trek bicycle for everybody?

Trek bicycle, founded in 1976, get a marketing boost whenever high profile professional racers speed off on their trek bikes or world-class cyclists power through dirt-bike races. Trek has US$800 million in annual sales and a worldwide network of 1000 dealers in 90 countries. Knowing it can’t be all things to all cyclists, Trek focuses its marketing efforts on satisfying the needs of serious cyclists seeking top-quality, high-performance bicycles for athletic training and competition, recreation or commuting. For example, Trek has found that the lifestyles and behaviour of consumers who like mountain biking are distinctly different from those of consumers who ride in city streets. Even among mountain bikers, some consumers prefer to feel the rough terrain under their wheels, while others want a smoother ride. Similarly some urban riders are interested in style, while others care about a bike’s environmental impact. Professional athletes want the very best performance, whether they’re competing in a fast-paced triathlon or the gruelling Tour de France.

Targeting the segments it can satisfy most effectively, Trek now offers two separate lines of mountain bikes, ‘hardtails’ for feeling the ride and ‘full-suspension’ for comfort. For urban riders, it makes seven models of pedal-power bikes and five bikes equipped with electric motors. For consumers who wheel around on bike paths or take a spin on city streets, trek offers a wide variety of options, including the one tandem model. The company’s triathlon bicycles are designed with aerodynamics in mind, to help speed cyclists on their way to victory or through a high-powered workout.

Because one size does not fit all cyclists, Trek also designs bikes specifically for women. In addition, customers can design and equip their own bikes online using Trek’s Project One Configuration Tool. To ensure proper fit, customers must visit a local dealer to be measured before their bikes are manufactured and delivered.

Trek’s choices of product names reflect the interests of each targeted segment. For example, the Madone product line, for dedicated athletes, is names for Col de la Madone, a French mountain famously known for testing cyclists’ strength. Some of the commuter models are named after cities where cyclists can be seen pedalling along, such as the Soho (New York). Prices for Trek’s high end Madone models can top $14,000, depending on exact specifications and customising touches. The urban bikes range in price from $500 to more than $1500. Many of its children’s bicycles are priced above $200. These are well-made bicycles for people who want advanced engineering, stylish looks and a great riding experience – and are willing to pay for it.

Just as Trek tailors its bikes to the needs of each customer group, it also tailors its promotional efforts. These include targeted advertising, training programs to help cyclists build their skills and product demonstrations at parks and sporting events. Trek uses Facebook, blogs, Twitter, online videos and email newsletters to stay in touch with customers, answer questions and gather feedback.

Supporting charitable groups such as the Breast Cancer Research Foundation helps the company show its commitment to social responsibility. Trek also funds Dreambikes, a not-profit organisation that recycles used bikes and trains teenagers in repair and retail sales techniques. Dreambikes asks for donations of bicycles that are unwanted or in disrepair and hires high school students to refurbish and resell the bikes, which are priced for affordability. Currently, Dreambikes has two stores in the U.S, with more in the planning stage.

Trek started with the mission of building the world’s best bicycle. Today it markets the bicycle as a way to be fit, reduce traffic and make the world a greener place. Its Eco Design bicycles incorporate environmentally friendly materials and can be disassembled to recycle the parts at the end of their useful lives. The company practices what it preaches about environmental issues, using renewable power to run its manufacturing plant and providing convenient parking for employees who bicycle to work. Green targeting helps Trek attract like-minded customers as well as employees. Employees – cycling enthusiasts, like their customers – often come up with new product ideas and enjoy testing new products along the way. Where will targeting take Trek next?

Answer the following three questions.

Q1.      How is Trek positioning in the marketplace? (5marks)

Q2.      Is Trek using an undifferentiated, concentrated or differentiated strategy for targeting? Justify your response. (worth 7 marks)

Q3.      Identify the segmentation variables that Trek is applying to consumer markets.          What additional variables would you suggest that it apply and why? (worth 8     marks)

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