59. Cyclemakers Group of Washdyke near Timaru (New Zealand) is lifting its profile locally and overseas in the cycling world through its custom-built bike service.

Although the prospect of sitting astride a 10-speed may not be everyone’s idea of relaxation, at least now they can dictate their choice of seat—or for that matter, their choice of frame, wheels, gears, and the other bits and pieces that Cyclemakers imports from the major branded overseas manufacturers. The company has built simulators so people can try out a range of configurations to see what measurements suit. They can then choose from an enormous range of components of varying sizes and prices including the color and style of the paint job.

“We’re doing it at a price not much greater than an off-the-peg production bike because we use a computerised system. The idea has proven very successful here and in Australia. It’s not a large percentage of business yet but has provided a lot at the top end,” says Bryan Jackson, managing director.

a. Why would Cyclemakers be able to produce custom-made bicycles for almost the same cost as mass-produced ones?

b. Would you expect the quality of the custom-produced bicycles to be higher or lower than the mass-produced ones? Discuss the rationale for your answer.

c. Why would the custom-made bicycles “provide a lot at the top end” (show a high profit margin)?