Schwinn Bicycles - Swot

I – BACKGROUND

• The Environment

o SOCIAL

Schwinn has a very diverse customer base, from parents buying their first bicycle for their child, college students, to bicycles for professional cyclists. Schwinn products reach a larger range of customers.

 ECONOMY

Some of the target market of Schwinn is price conscious because they have low to middle income. Therefore, any decline in the economy that can impact those customers will definitely impact the company as well.

 POLITICAL-LEGAL

No aspects of the political or legal environment are expected to influence our decision.

• The Industry

o Competitive Situation

Schwinn has lost considerable market share due to its failure to capitalize on the increasing popularity of mountain bikes and the decline in popularity of its road bikes. Manufacturers such as Trek, Cannondale, and Specialized have become the standard for these very successful bikes leaving Schwinn in serious trouble. Since the beginning of mountain biking dominance, in the early 1980s, Trek Bicycles have become the standard, pulling almost a quarter of the entire bicycle market’s revenue in 1995. Trek’s phenomenal market share is even more so when you look at the company’s history compared to Schwinn. Trek is with 24 percent of the market was less than 20 years old while Schwinn with 7 percent was celebrating its 100th year of production. Most of their success can be directly attributed to being one of the first firms to produce quality, hand-built mountain bikes just at the time they were first being introduced and becoming popular. Trek also chooses to maintain the mountain bike segment as their lone market. This gives them a competitive advantage by specializing in one key area. Other industry leaders such as Cannondale and Specialized however, offer bikes of many different sorts.

Cannondale for instance offers many models of both road/recreational bikes and mountain models and enjoys 12 percent of the market. Specialized, also with 12 percent of the market share, offers a wide array of road and mountain bikes but specializes in the competitive market segment, namely BMX and Freeride bikes. Much of their marketing in this segment is done through sponsorship of competitive teams that use their equipment exclusively and therefore benefit from a more youthful consumer base. Schwinn’s problems arise from a lack of early movement into mountain biking as it became popular, losing large market shares to firms such as Trek, Cannondale, and Specialized. This lack of vision has since deteriorated Schwinn’s once stellar brand-image leaving them with a lot of �catch-up’ to do in the market. Because of their late movement into the market, many feel the quality of Schwinn’s mountain bike models is lacking and not worth the premium price.

 Product Life Cycle – the product is in the maturity phase.

o Sales volume has reached its peak.

o Brand differentiation, feature diversification, as each player seeks to differentiate from competition with "how much product" is offered.