make a DECISION analysis of the following question of the case study (attached below) based on the attached framework given in the picture;

QUESTION: Should pedalspark sell its new, lower-cost bike through amazon or direct-to-consumer?

For the exclusive use of A. Ward, 2022. FOR ARTICLE REPRINTS CALL 800-988-0886 OR 617-783-7500, OR VISIT HER.ORG CASE STUDY of 4 SELL DIRECT-TO-CONSUMER OR THROUGH AMAZON? AN E-BIKE MAKER WEIGHS THE TRADE-OFFS. BY THALES TEIXEIRA Sitting in his office, Mark Ellinas frowned at his computer screen. It was filled with row after row of electric bikes, Two years ago PedalSpark had hired Mark from expensive models to cheap knockoffs away from his marketing position at a children's that seemed held together by spit and a prayer, bicycle maker. That company had sold exclus Though they varied in style and price, the bikes sively on its own site, and Mark's expertise had THALES TEIXEIRA did have one thing in common: where they were served PedalSpark well with its first product. He is the Lamry being sold. The website he was looking at, flush was excited by the challenge of selling the new Family Associate Professor at Harvard with options, was Amazon. bike in an increasingly crowded market, but the Business School and the As the CMO of PedalSpark, a small maker of question was how to do it. author of unlocking the high-end electric bicycles, Mark was considering His two direct reports were split. Gideon Bear, value Chaing How Decoupling Drives strategies for selling the company's new ride. the sales manager, tended to favor aggressive Consumer Disruption The market for electric bikes had exploded in approaches. He wanted to sell the new model on (Currency: 2019). the past few years, especially in China, and it Amazon, which had, as he'd put it, "a few more HER's fictionalized case showed no signs of slowing down. PedalSpark's customers than our site."But Tamar Nourse, the studies present problems signature bike, a $4,000 luxury model available product manager who'd recently come on board, faced by leaders in real only through the company's website, was selling was worried about whether the bike would stand companies and offer well and had been named to a few "best e-bike" out on Amazon. She thought that keeping the solutions from experts. This one is based on the lists. Now PedalSpark was about to introduce new model on PedalSpark's site, where their HBS Case Study "selling a cheaper, entry-level model, which it hoped team could control the entire sales process, on Amaron at Tower Paddle Boards" (case would have broader appeal. The bike was tar- would be better over the long term. no. 572047-HOC-ENG). geted at price-sensitive riders, people who were Bzet. Mark glanced at his phone and saw a text by Thales 5. Tele willing to trade higher battery life and motor from the CEO: Where are we on the online channel David Lopez-Lengowit, which is available at power for a lower price tag. strategy? Looking forward to your presentation. HER.org 2 Harvard Business Review March April 2019 This document is author dy by Andrea Ward in 2022. For the exclusive use of A. Ward, 2022. The new model was almost ready, and prototype and finding a manufacturer in Gideon is pretty keen on the Amazon the CEO wanted a decision soon. With China that would work with her, Then Idea, though," the presentation scheduled in two days, she started selling on Amazon. Now Tamar adjusted her glasses again. Mark still had some time to think-but she's the former CEO of a company that "I get why-more customers and more not much. doesn't exist anymore." visibility. That may help us sell bikes in "Wow. What happened?" the short term, but what about the long GIVING INFORMATION TO THE ENEMY "For about a year the tablet stand got term? If people buy the new model on Mark closed his laptop and walked great reviews and sold well at $40 each. Amazon, will they be loyal to the maker down the hall to Tamar's office. He During the back-to-school season, she or to where they bought it? We built the knocked on the open door. "Hey, got was moving a few thousand a month. PedalSpark brand by selling the luxury a minute?" Then a bunch of copycat products started bike on our website. Why try to fix Tamar looked up and adjusted popping up. She had to fight them off as what's already working?" her thick.rimmed glasses, "Hi, Mark. best she could. She complained to What's up?" Amazon, but it didn't do anything, of TRYING SOMETHING NEW He sat down across from her. "So, course. Then AmazonBasics debuted That afternoon, Mark asked Gideon about the bike. In the meetings with its new tablet stand." It was a lot like to meet him in the cafeteria for coffee. Gideon it feels like you've been holding hers, though different enough to avoid a The sales manager poured milk into something back. We have to make a lawsuit. It was also half the price." his steaming cup and swirled it decision, so I need you to tell me what "E-bikes are a lot more complex round with a straw. "Amazon, Mark. you aren't telling me." than tablet stands, though. What are You know what I think. What are you She took a deep breath. "Mark, the chances zon will make one of thinking?" I'm still new here, and I don't want to its own?" "Undecided. There's a lot of risk rock the boat. But I really think selling on Tamar's lips curled into a small in selling the bike there, but a lot of Amazon would be a terrible move for us." smile, "I don't know, but if we went upside, too." "Why, though?" head-to-head against Jeff Bezos, would "Yes! I'm glad you see that. Amazon "The day we put the bike on sale, you put your money on us? Amazon's Prime has over 100 million members," Amazon will start vacuuming up private-label products are projected to and it's growing. Imagine the sales if information about our customers, our hit $25 billion in sales by 2022." a fraction of them ordered the new margins, and the market's potential. Mark shuddered. "A dark thought e-and imagine how many of them If it ever decides to get into the e-bike to have before lunch. How do you will if two-day delivery is available. business, we'll have hand-delivered all figure our chances against the Someone gets excited about e-bikes the data it needs to squash us." existing competition?" on a Wednesday, and by Friday she has "I know that worrying is part of your "We do have great bikes, but quality one of her own to ride. The possibilities job, but is it possible you're being a little isn't enough on Amazon. Whatever are endless." paranoid here?" your product is, there's always a "It's fun to daydream about, Gideon, "You should ask my B-school class- cheaper version, and usually that's the but are we set up to handle higher mate Marta." one people buy. It's a never-ending. volume and a shorter fulfillment "Who is she?" anything-goes price war there. I'm window? Orders that come through our "A few years ago she was the founder guessing that isn't what we want site have a shipping time of two weeks and CEO of a successful start-up. She'd people to associate with our brand." I'm nervous about promising something had an idea for a new kind of tablet Nodding slowly, the CMO rubbed his we can't deliver -and to a bunch of new stand. She spent a year developing a chin. "Good point, and I don't disagree. customers, no less," 1. E bike sales are projected . Amazon has a huge 1. Amazon has about 1go 4. of Pedalspark has to CASE STUDY to reach go million units by advantage over the private labels so far. in compete on price. what CLASSROOM 2023 more than 34 million of merchants on its site areas ranging from simple might be the consequences those will be sold in China What else should Mark and electronics to clothing to for its brand image? NOTES PedalSpark's leaders pet food to furniture. think about to improve their chances of succeeding? 3 Harvard Business Review March-April 9019Break 4 Backspace DECISION CASE ANALYSIS CASE STUDY: Provided during the exam DECISION YOU NEED TO MAKE: Provided during the exam. NOTE: The soft copy of this template can be found in Blackboard under: Course Materials> Assignments>Individual Assignment #2 ANALYSIS (20 points) Overall decision (3 pts) This should be a clear (good grammar, no spelling mistakes), concise (2-3 sentences), and definitive (you much choose 1 of the alternatives presented to you). Summary of major reasons (criteria) for Here I should see a summary of your inferences below your decision (3 pts) Evidence supporting overall decision (14 Here I should see data from the case for each alternative you need to assess against the 3 criteria pts you listed above. Best way to do this is with a table. Example: Criteria Option A Option B Inference Criterion A Fact 1 Fact 4 State what option you Fact 2 Fact 5 would choose based on Fact 3 Fact 6 this criterion alone Criterion B Fact 7 Fact 10 State what option you Fact 8 Fact 11 would choose based on Fact 9 Fact 12 this criterion alone. ACTION PLAN (14 points) Overall Goal (2 pts) Your overall goal should be driven by your overall decision. It's the "now what?" and should be longer term. It should be stated clearly (good grammar, no spelling mistakes), and concisely (2-3 sentences). Short-term SMART Here I should see at least 2 objectives that you need to accomplish in the short term to reach objectives (4pts) your overall goal. The objective should be specific, measurable, achievable, realistic, and timebound. Long-term SMART Here I should see at least 2 objectives that you need to accomplish in the long term to reach your objectives (4 points) overall goal. The objective should be specific, measurable, achievable, realistic, and timebound. Major Risks (2pts) List 2 risks to your action plan - i.e., are there any short or long-term objectives that present a risk to the company if they are not reached. Risk Mitigation (2pts) For each risk listed above, what can you do to lower or perhaps eliminate the risk APPENDIX (6 points) Include at least 1 analytic framework below. If you used paper to draw it out, put your name on it and pass into the professor with your case materials and name card or take a picture and insert in the soft copy of this Word doc.The new model was almost ready, and prototype and finding a manufacturer in Gideon is pretty keen on the Amazon the CEO wanted a decision soon. With China that would work with her, Then Idea, though." the presentation scheduled in two days, she started selling on Amazon. Now Tamar adjusted her glasses again. Mark still had some time to think- but she's the former CEO of a company that "I get why- more customers and more not much. doesn't exist anymore," visibility. That may help us sell bikes in "Wow. What happened?" the short term, but what about the long GIVING INFORMATION TO THE ENEMY "For about a year the tablet stand got term? If people buy the new model on Mark closed his laptop and walked great reviews and sold well at $40 each. Amazon, will they be loyal to the maker down the hall to Tamar's office. He During the back-to-school season, she or to where they bought it? We built the knocked on the open door. "Hey, got was moving a few thousand a month. PedalSpark brand by selling the luxury a minute?" Then a bunch of copycat products started bike on our website. Why try to fix Tamar looked up and adjusted opping up. She had to fight them off as what's already working?" her thick-rimmed glasses. "HI, Mark. best she could. She complained to What's up?" Amazon, but it didn't do anything, of TRYING SOMETHING NEW He sat down across from her. "So, course. Then AmazonBasics debuted That afternoon, Mark asked Gideon about the bike, In the meetings with its new tablet stand." It was a lot like to meet him in the cafeteria for coffee. Gideon it feels like you've been holding hers, though different enough to avoid a The sales manager poured milk into something back. We have to make a lawsuit. It was also half the price." his steaming cup and swirled it decision, so I need you to tell me what "E-bikes are a lot more complex around with a straw. "Amazon, Mark. you aren't telling me." than tablet stands, though. What are You know what I think. What are you She took a deep breath. "Mark, the chances Amazon will make one of thinking?" I'm still new here, and I don't want to its own?' "Undecided. There's a lot of risk rock the boat. But I really think selling on Tamar's lips curled into a small in selling the bike there, but a lot of Amazon would be a terrible move for us." smile. "I don't know, but if we went upside, too." "Why, though?" head.to-head against Jeff Bezos, would "Yes! I'm glad you see that. Amazon "The day we put the bike on sale, you put your money on us? Amazon's Prime has over 100 million members," Amazon will start vacuuming up private-label products are projected to and it's growing. Imagine the sales if information about our customers, our hit $25 billion in sales by 2022." a fraction of them ordered the new margins, and the market's potential, Mark shuddered. "A dark thought bike and imagine how many of them If it ever decides to get into the e-bike to have before lunch, How do you will if two-day delivery is available. business, we'll have hand-delivered all figure our chances against the cone gets excited about e-bikes the data it needs to squash us." existing competition?" on a Wednesday, and by Friday she has "I know that worrying is part of your "We do have great bikes, but quality one of her own to ride. The possibilities job, but is it possible you're being a little isn't enough on Amazon. Whatever ate endless," paranoid here?" your product is, there's always a "It's fun to daydream about, Gideon, "You should ask my B-school class- cheaper version, and usually that's the but are we set up to handle higher mate Marta." one people buy. It's a never-ending, volume and a shorter fulfillment "Who is she?" anything-goes price war there. I'm window? Orders that come through our "A few years ago she was the founder guessing that isn't what we want site have a shipping time of two weeks, and CEO of a successful start-up. She'd people to associate with our brand." I'm nervous about promising something had an idea for a new kind of tablet Nodding slowly, the CMO rubbed his we can't deliver-and to a bunch of new stand. She spent a year developing a chin. "Good point, and I don't disagree. customers, no less," 1. E-bike soles are projected 2. Amaron has a huge 3. Amazon has about to 4. If Pedalspark has to CASE STUDY to reach go million units by advantage over the private labelis so far, in compete on price, what might be the consequences CLASSROOM 2023. more than 34 million of merchanti on its site areas ranging from simple those will be sold in China What she should Mark and electronics to clothing to for its brand image) NOTES pet food to furniture think about to improve their chances of succeeding? 3 Harvard Business Review March April 2019 This document is authorized for use only by Andrea Ward in 2022. For the exclusive use of A. Ward, 2022. FOR ARTICLE REPRINTS CALL 800-968-0886 OR 617-783.7500, OR VISIT HER.ORG "But that's the beauty of Amazon," right? How would we look if we were one of Gideon laughed. "In my moments Gideon said, his voice rising in excite- dozens of e-bikes in Amazon's listings?" of doubt, I think of Instant Pot. It's a ment. "We have options. I know I'm "Sure, but we already have the quality appliance-not quite luxury, but telling you your job right now, but we can luxury bike selling well on our site. I good-that has a cult following and that sell product to Amazon for it to resell, or agree, we shouldn't change anything made its name on Amazon. At one point, tell the bikes ourselves and let Amazon there. But the new bike is for everyone. 90%% of its sales were from there. Do you handle the warehousing and shipping And everyone is on Amazon." know how many Instant Pots were sold or list them on Amazon and ship them Mark took a sip of coffee, thinking. on Prime Day this year?" on our own. You're always talking about "Look, I get it, you have some "No, but I'm a little surprised you do." the value of running small, controlled concerns," Gideon continued, "so let's "I cook a lot. The number, Mark, is experiments, so let's try one and see talk numbers. Based on what our 300,000. In just 36 hours. I think we what happens. If it doesn't work, we'll competition is doing, I figure if we could be the Instant Pot of e-bikes." switch tactics and adapt as we learn." put the new bike on Amazon, we can The CMO stirred his coffee. "You may He grinned. "Everyone in this company reasonably expect to sell 10,000 units be excitable, but I'll admit it's kind of agrees we have a great new product. year." contagious. I just can't shake the feeling All I want is to get it to as many people "At what price point?" that once we open the door to Amazon, as possible." "$899. That's a little higher than we've there will be no closing it. "There are three options, yes, but they been talking about, but it gives us some Gideon held up his coffee for a toast. don't give us a lot of wiggle room if things room to go lower if we need to." "To opening the door-just a crack-and go badly. We may be able to play with the "And what are the latest numbers for seeing what's behind it." bike's price a bit, but we can't lower it that luxury bike sales on our site?" much or we won't make any mor "Last year we sold 2,000 units at SEARCHING FOR ANSWERS it could make us look cheap, too. I do $4,000 apiece. Remember, the new bike Back in his office at the end of the day, think a higher price point is fair for the won't be only on Amazon. We'll sell it on Mark was staring at his computer again, bike we're selling. Even luxury brands our site, too." Tamar and Gideon seemed so sure of that sell on Amazon today hesitated Mark scratched his head. "What we what to do, but the CMO was struggling about it for a long time, and it would be a really need is a way to quantify the risk to make up his mind. good idea for us to think about why that that Amazon will enter the e-bike market. The screen of his laptop still showed is. The jury is still out on whether they It would make this so much easier." the Amazon site, with its rows of e-bikes. benefit by being on Amazon." "That's the big mystery. Amazon will Sighing, Mark opened Google and typed "You know who sells on Amazon? have all the consumer data, and we'll "What are the dangers of selling on Apple, Versace. Rolex, Jimmy Choo, have very little of it. But look at it this Amazon?" into the search bar, The query Mark-Jimmy Choo. And more will way-there are already a lot of e-bikes returned almost 250 million results. follow. Whichever companies don't will on Amazon, so they're already watching "Hard to tell whether there are more be on the wrong side of retail history." he market. Even if they do make their horror stories or more success stories," "We aren't Versace, Gideon, Besides, a own bike, that could be years away. We he muttered. "Well, this bike isn't going lot of those brands sell a very small subset might as well find new customers while to sell itself. I have to decide something, of their products on Amazon-and usually we can. People can't buy our bikes if one way or another." not their flagship ones, They save those for they don't know about them," Reprint Case only RI9cax their own sites or stores, where they can Mark stared at Gideon for a long control the buying experience. We're trying moment. "Let me ask you something SHOULD PEDALSPARK SELL ITS NEW, to raise our profile as a high-end brand," How are you so sure about all this?" LOWER-COST BIKE THROUGH AMAZON? 5. As the e bike market &. Of the US. consumers who 2. How might selling on Amozde a. When looking for a continues to grow and matar make figo,odo or more. 70% help-or hart-Pedalsparity product online, more than what factory will determine are Amiazan Prime members image as a high end brand? half of consumers (5-its) which companies succeed start with Amazon and which don't Harvard Business Review March-April 2019 4 This document is authorised for use only by Andrea Ward in 2092