Bicycle Industry Background Demand for bicycles is booming. Canada's long-term fitness trend has been strengthened by the pandemic's need for safe, outdoor activities. Governments have responded by investing in bike path infrastructure. Bikes have become specialized for mountain biking and road racing while e-bikes are making inroads with recreational riders and commuters. Most bikes in Canada are manufactured internationally and assembled locally. A typical mountain bike costing over $5500 has tires from Taiwan, Shimano gears from Japan, frame from China, front forks from Taiwan, grips from the USA and front disk brakes from Malaysia. Due to weather concerns, sales skew to the spring and summer months as follows: / Quarters % of Drivers sales lan-March 10% Off-road fitness training, commuters April -June 30% Tune-up, preparation, end of winter May: Bike Safety Month May: Ride to Work Week July-Sept 40% July/August: Major Mountain Bike and Road Race events September: Back to School Oct-Dec 20% Christmas Tota 1004% The Key segments can be described as follows: . Recreational Riders o Families with children, Seniors. Historically valuable as influencers, referrals. 0 40% of sales, 20% margins, declining due to competition from mass merchandise chains o Basic bikes and peripherals: helmets, baskets, lights, emphasis on safety o Seasonal sales bumps at start of school year, Christmas, and spring- Commuters o Working millennials, male and female o 10% of sales, 50%% gross margins, sales are increasing due to infrastructure investment (bike lanes) o Potential upgrades to e-bikes, and added weather protection, panniers Volume even year round Weekend Road Warriors o Fit millennials, boomers, male and female 0 30% of sales 40%% gross margins, sales are flat as the fad is fading. o Long- distance road-bikes, spandex uniforms, shoes, helmets. o Often ride in groups or races on weekends o Sales bump in spring, and at Christmas D Seek known brands, complete outfits and maintenance. Mountain Bikers 0 16-30-year-old adventure seekers.o 20% of sales, 30%% gross margins, sales are climbing but margins are slipping due to price competition and price sensitivity of buyers. Special bikes, GoPro cameras and padded gear. Seasonal sales bumps in Christmas and spring Seek known Brands, prefer to do their own maintenance. On average, people buy a new bike every 5-7 years, but there is significant interim value in maintenance, repairs, replacement of peripherals and referrals of new buyers. Bob's Bikes History Starting with a single store in Vancouver in the 1960's, Bob's Bikes now has six stores spread across the Lower Mainland. The founder was a hippie and resisted modernizing his marketing activities in the belief that his great products and service would be enough. For a long time, this worked. Everyone remembers getting their first bicycle from Bob's Bike Shop (but haven't been back in awhile). They also remember his collection of antique bikes and unicycles which the staff rode in annual community parades. Current situation The founder is retiring, and his adult kids are taking over. Out of respect for their father, they will keep the name, "Bob's Bikes" and slogan "Best for Bikes." Research shows the name is well known and trusted within the region. However, sales have been slowly declining as consumers are attracted to specialty shops and discount outlets (Amazon, &port-bal. The IMC plan needs updating. The new managers want to achieve sales of $10 million in the coming year and are willing to spend $1,000,000 on their IMC plan to profit from the rising demand for bikes. Communication objective To convince all bicyclists in Vancouver that Bob's Bike Shop is their best source for riding advice and equipment. Current Strategy Vision: To be Vancouver's first choice for bicycles Mission: Everything you need from the people who know Values: Fair dealer to suppliers, employees and customers Offering: Bikes, advice, service/repair, peripheral gear, have a website showing products, prices, and availability. Always want to be first with new products. Do not sell bike racks or take trade-ins. Will accept bike donations to repair and donate to charities. . Our competitive advantage is our friendly, experienced customer service staff. Media: BBS currently advertises in local newspapers and radio to announce sales promotions. They have a website showing their products and contribute prizes to charity events when asked. The service department keeps track of return customers to offer regular tune-up packages. Spending has been inconsistent and driven by sales events. This is the focus of the new IMC plan.5. Reality Check: Agility. A key theme in this course is that Marketers must be agile and able to respond to changes. a. If you had to cut your budget beyond the available continency what would go first? Why? b. If Bob's Bikes increases your budget, where would you spend it? Why? c. Imagine a new competitor opens in Vancouver. They promise to be aggressive and attractive to your current customers. What will be your recommended response? d. Due to the growth of biking worldwide, Bob's Bikes is having trouble keeping up with inventory. Some bikes have a waiting time of 6 months., driving some riders to search online for alternative sources. The situation is expected to last a yea r. What is your marketing strategy and how will you communicate it? 6. Social Change: You've been asked to help create a public safety campaign to teach teenagers the rules of the road and safety. Given what you know about teenage behaviour, what do you think is the best strategy