Corporate Restructuring of Zippo bicycles.

Opportunity :-

• Cycling  is  becoming   the most popular form   of  sports in  Uk
• Cycling  is here to stay    because    becoming  environment conscious  is the latest fad  which   is going  to  attract    more people towards  cycling.  
• Bicycle as the form   of exercising  and recreation has become   the most common  use .

Threat :-

• According to 50cycles.com .Bigger  automobile giants such as   Honda  , Toyota    are  entering  into  modern  form  of bicycling  and thus  creating  more competition.

                                                   

Some of the micro environment  factors which  should  be considered in the future for  maintaining the  competitive position in the market  can be as follows .

According to  cobr.co.uk ,Govt initiatives  in various  cycling  enhancement  programmes  such  as "National cycling strategy " and   emergence of various non   profit organisation such as "Cyclists' Touring Club"     which  organises event  such as  National bike week , which attracts  quarter-of-a-million participants each June.

According to Icc.org.uk ,In the big cities of UK  such as London , organisation such as  London Cycling Campaign's    are  encouraging cycling  in  London  in a  big way, and they  have  been   successful in   encouraging    cycling as a convenient and preferred  mode   of  transportation ,and by introduction of   congestion zone and cycling zones  cycling as got  a  further boost.

Technological changes   such as   increase  in  use of BMX  bikes "BMX bikes account for probably 10 percent of the total UK bike"and  electric  bikes  which is   highly automated     is changing the phase   of the bicycle industry in  UK and suggest   that   more  and more  people   will   be  attracted  towards  bicycling

 .

3.0 Role  of  Segmentation, Targeting  and   positioning  in achieving long   _        term strategic  objective :    

3.1 Segmentation

Market segmentation is the division of a market into distinct groups of buyers who might require different products or marketing mixes (Kotler, 2000,pg 263). It is the division of a heterogeneous market consisting of buyers with different needs and wants, into homogeneous segments of buyers with similar needs and wants.

Some    of  the  different   kind of    segmentation strategies and different possibilities  which if implemented  can enhance  the  long term  prospect   of the company  

1. Geographical segmentation 

Segmenting markets on the basis of geography involves dividing the market into different geographical units, e.g. states, regions, countries, where the company pays attention to geographical differences in needs and wants.

• In case   of  Zippo  bicycle  a   strategic    approach   to     geographical  segmentation   is  pre requisite   ,because of   geographic diversity   of  united  kingdom, some parts  are more hilly such as the  northern   England  compared to south and Wales, so it  means different  kind of bicycles and different  strategy  should   be adopted at urban  England  such as   London , and different strategy   towards  Scotland and northern England.

levels of cycle commuting in UK towns and cities

http://www.cobr.co.uk/e-cobr_information/stats_section/sections/cycle_usage.htm

 

• Cycling  at  work :- According to bikebiz.co.uk(2003),  In    the last  decade their  has  been   increasing trend  in no  of people    using  cycle as  a mode of  commuting to their  workplace .UK wide comparison of journeys to work by bike shows that no of people going to work in London is highest in terms  of growth rate and more and more people  will be attracted towards  cycling due to  high traffic  jams and high  travelling  time.  Hackney, beat districts like Cambridge and Bristol, to show the highest increase in cycling to work from 1991 to 2001. In 2001 the proportion of journeys to work by bike in Hackney was 6.83 percent - an increase of almost 70 percent from the proportion in 1991 (4.03 percent) and more than 150        percent        from 1981 (2.56 percent).
  
  Therefore    it  will be   very important  for  Zippo bicycle  to  market their   bicycles  to  office goers in  the city  of London, Cambridge and Bristol  by  effective positioning  and  creative advertising  which    will be explained in detail  in  next part .

2. Demographic segmentation 

Demographic segmentation involves dividing the market into groups based on demographic variables such as age, family size and life cycle, occupation,education,religion,race,generation,nationality,social class(Kotler 2000,pg 263).

• In the context  of   Zippo bicycles dividing    the   market   in terms of   demographics  will    can  give  them a  better   solution to  their  prevalent   problem of  growth. Some of the   solutions are as follows  

• Age  :- For  8 - 18  age group   teenagers  who   has the   high utility  of    bicycles  and  they   use   more   often for  activities such  as  going to  schools  cycling as a sports .

• 18 - 30 :- Most  of the  people in this  age  group  are   either    in  universities   or  they  have  just started  their   career ,so by  effectively  positioning the   Zippo bicycle  in this age  group can  give  them    substantial    market share ,because   if    their   product  is   marketed  has its cool  to ride   a bicycle  in the   university  and work place.
• 30 - 44 :- As  the usage in this   age  group  is  high,  a product  development  in the   product  by  integrating future  technology  can enhance its   market share .

e.g. :- If  a  multipurpose  bicycle i.e. cycles  for exercise  showing   the amount of calories burnt  and along  with  a  location     finder  using the technology  of  GPS (global positioning  system ) can   help   to penetrate  the market  and the necessary  market   premium    can  be levied    on this segment who has a  high disposable income.

• 45 - 75 :As   the usage  in this age segment  is  very  low ,and the    most fundamental  reason is convenience factor, if the bicycles are  easy to use  it can penetrate  this market in big way

3. Psychographic segmentation 

According  to Jobber(1998)  "Psychographic segmentation involves grouping people according to their lifestyle or personality characteristics".

• Lifestyle orientation  :- As    more  and more  people  are getting  health  conscious , bicycle   is getting   more  popular   as  a tool   of  exercise  and  recreation. At   the same time   as more  and more   people   are   getting   eco friendly ,they  are using  bicycle as a  form  of transportation. So its very vital  for    Zippo to integrate  the above stated features  which can  be done  by  enhancing the product features of  its present products  .The latest  trend which  can be related  in the lifestyle orientation    is  the city  bike.
• Fashion   orientation :-Bicycle  is   becoming  popular   form of fashion   element  , and     kind  of    bicycle    the individual   owns  it   shows how  cool is an  individual. This trend started with bmx and since then   it was  evolved into ATB bikes  and now the comfort bikes  where  the exterior  looks of the  bicycles  is one of the critical success   factor.  
• Benefit   sought  :- Convenience  can  be used    by the  marketer   as  a USP ,because  not  only   bicycles are  easy to use  but  it is  also  a   source   of  enjoyment .Along   with  that   it  is a  perfect   value  for  money  product .
• Values  and  attitudes  :-  Cycling   is synonymous   to   achievers ,cycling   is also   the  sign    of achievers ,its  also  the  sign   of independence , optimistic  ,perseverance  and it  can be   portrayed as   " I  will  do  it"    attitude   of a person.        

4. Behaviour segmentation 

According  to ADCOCK (2000)Behaviour segmentation is where buyers are divided into groups based on their product knowledge, usage, attitudes or responses. For example,  Zippo could segment the cycle  market based on the benefits sought by cycle  buyers: Benefit  as follows  :-

• Sports  and recreation :-Some  people   use   bicycles  as  source  of  being  fit  and enjoyment  perspective  is also  the   important  consideration  which  shouldn't  be   neglected.
• Experience :- Cycling  in a beautiful   countryside   is  an experience  in itself, some  people  solely  buy   bicycles   for this  reason .

3.2  Target   marketing.

According to Kotler (2000,pg 263),Market segmentation conducted by the company would reveal the various segments the company's market consists of. The company now has to select which segment(s) it wishes to target.

Selecting    the  market  segments

Having    evaluated different  segments, the  company  can consider  five   patterns  of target   market selection .

• Single - segment  Concentration

The company may  select  a single segment .Through   concentrated  marketing  ,the firm  gains  a strong   knowledge of the segment's  needs and achieve a strong market presence..

In   the  case  of  Zippo bicycle   can  target   one particular  segment   such  as     youngsters between  the  age   of  8 -16,or    above 44  group  or   any other geographical  segmentation

• Selective    specialization    :-

     Here    the firm selects a number   of segments  ,each  objectively  attractive and appropriate .This  multi segment  coverage  strategy  has  the advantage  of diversifying  the firm's risk.

Here   the    Zippo bicycle   can target  its product  to office goers  as well  as the trendy youngsters  and  at  the  same time  catering to the needs  of   elder people  

• Product  Specialization :-

Here   the firm  specializes  in making  a certain product  that  it sells  to several  segements.Through  a product  specialisation strategy, the firm  builds a strong reputation  in the  specific product  area  

In  this case  it  can either  make  specialist  mountain bikes for hilly regions  or  high  end  electric bikes  which  has   automatic  features  fulfilling  the  needs  of both  elderly  people  and  other  middle age   people  using it for transportation .or specialised  bikes  for  sports such as cycle racing.

• Market  specialization :-  

The  firm  concentrates on serving many needs of a particular  customer segment ,

Such as fulfilling the  transportation needs and at the   same time   satisfying the   recreational needs  such as   exercising  and joy rides.  

3.3 Positioning

According to  trout & ries(1986)  "Positioning is what  you  do  to the mind of the prospect." and  not  what   you do to  a product, i.e., product should be  positioned  in the mind of the prospect.

• Confused   positioning  :-   At present      Zippo bicycles   is    not adopting   appropriate   positioning   strategies  because   from  the   case   it  can been seen  that  Zippo  either  occasionally  advertised     in trade  and consumer   magazines  or   take stands  at leisure  and sport exhibitions .On the  contrary   their  should  be  frequent    advertisement   on the    bicycle  magazines and their should be   advertisement   in the mail order  catalogues  such   as    empire  and little woods  which is more accessible  to older   people   who are   the   target   market    of the company.

• Convenience  &  cool   :-  It should  be marketed as a lifestyle product   and  it's   copy  in the  magazines  and  brochures  should  create    excitement   in the mind of the prospect .Therefore  it can be   marketed  as cool  and eco  friendly  way  of  transportation at the  same time   Convenience  and affordability    features of  the bicycle  should be  effectively  communicated  to the  target audience .

4  Marketing    strategies  for    future  growth  

"Cravens stated that Marketing strategy  is  a  process of strategically analysing environmental, competitive and business factor affecting business units and forecasting  future  trends in business areas of interest to the enterprise. Participating in setting business objectives and formulating corporate and business unit strategy. Selecting target  market strategies for : the product -markets in each business unit, establishing  marketing objectives ,and developing, implementing and managing  program positioning strategies for meeting target needs"                                                                                                                                                    

Some  of the strategic  options  for the future    can be   as  follows

Ansoffs   Matrix

A common tool used within marketing was developed by (Igor Ansoffs) in 1957. His model gives organisation five strategic business options. Some of strategic  marketing options as  mentioned  below  if  implemented  in a sequential manner  adopting  the Ansoffs  matrix by the  top level management  can  result into  long term  profitability  and brand equity .

 

                      Ansoffs ,I .,(1987) Corporate strategy pg  109

1. Market Penetration: According to Ansoff (1957)Market Penetration involves increasing sales of an existing product and penetrating the market further by either promoting the product heavily or reducing prices to increase sales.

In   case  of Zippo  bicycles   some of the  strategies in  order to penetrate  the  market as follows :-

• Re-launching   the   bicycle -: By  giving  a bicycle a different    perspective, by  launching it  again  as  a lifestyle ,trendy   and by creating a   sophisticated  product  ,which   has  a utility   by   the  whole   family  and   promoting   it  has  "Bicycle  for all "    which cater   to each   age  group  as  stated in the segmentation  page will   help   in  obtaining   optimum   market  penetration .
• Discount  and  bulk  discounts :- Offering   a    timely  discounts  such as during   the festive season   of  Christmas  and   during  special  occasions ,such  as    during   cycle competition  ,such as cycle marathon, will  give them   much   needed   exposure  to the target   market.
• Heavy advertising  and   innovative  sales  promotion :- Advertising  through a proper    medium  in  a   best   possible way  which   goes in  hand   with   positioning  strategy   of the  company .In  our  case  the advertising   should   be done in  the    following magazines  such as

• Mountain Biking UK (Future Publishing) which is  top selling bicycle  daily (online)
• Other titles include: Cycling Plus; Cycling Weekly, Cycle Sport, Mountain Bike Rider.(online)
• Cycle Touring & Campaigning (CTC).and niche titles such as Ride BMX        and        Dirt.(online)
• Active  participation and showcasing  its latest products in two main bike exhibitions such as  cycles and leisure show and bike show        
                                                                                              
• Sponsorships  of  different    cycle events   and  participating   in   more govt  aided   cycle   projects . can also  be  effective strategy   which can yield   high   premiums  in  the  future
• Working  with   non profit   organization  such as  London cycling  campaign  and also   be   active  member  of cycling  touring  clubs

2. Product Development : According to ANSOFF(1957)The organisation develops new products to aim within their existing market, in the hope that they will gain more custom and market share.. Similar to the case  of new market development, new  product development  carries more risk than  simply  attempting to increase  market share.

e.g. Continuous   improvement  is  one   of the   key  ingredients   to  survive  in  this  competitive era. ,the  same applies  in the  case  of Zippo. Following  types  of  strategies can be  applied

A prototype   model    of   bicycle is developed as described below    which not  only reduces the  commuting time by  half  but    is   also   the most convenient  and fast  way   to reach work in a  hectic and   crowded   city  streets  of  London .It  is   based   on  the  latest    model   of  bicycle in Japan.        

• Developing   the    new   range  of bicycles :- Developing   a   bicycle  of   future  which  takes  care of  future needs of   the customer .i.e. a bicycle should be made         which  combines the best features of folding and electric bikes in one gorgeously futuristic, truly flexible machine. some  of the features should be as follows  , which will  be  the major success  factor of the product

• Anytime, anywhere:-

 The  bicycle would have  light spare parts and can be  folded in seconds it  will be light enough to carry onto trains and buses, and elevators. All moving parts and gears can  be tucked inside the bike making it available  anytime anywhere.

http://www.50cycles.com/index.htm

• Performance
  The  bike  for  the  future   will consist of advanced NiMH battery  which is recharged in  2½ hours and its illuminated charge indicator can display power at the push of a button. Along with three gears  there will be  also three power modes: OFF, ON and ECO. In ECO mode, the bike's circuitry boosts can  boost  the pedalling when an individual is going uphill. This kind  of  product  can be particularly  targeted  at hilly regions where   the  market penetration is  very low .(http://www.50cycles.com/index.htm)
• Safety

It also takes care  of the  safety  .It   has  special  tyres  which  prevents  slipping  of  bikes  during  rainy season and it also takes care of the strain when the individual keeps  your head up and eyes on the road when   driving  uphill. Accessories like lights are easily fitted because everything is built to standard bicycle specifications.

http://www.50cycles.com/index.htm

• Lean,        green, economical        :-This nifty little machine his the bicycle of   future ,which  is going to be the most preferred way of transportation and also  the coolest way  to go  around the city quickly, safely and securely.

http://www.50cycles.com/index.htm

• Build  a specialist   bicycle  As  cycling   as  become one of the most  popular  sports  in UK ,a   speciality   bicycle  catering to  the needs   and  requirement  of   the cycle  enthusiasts ,which  has   a multi functionality  of   participating in the  specialist sports and  as well  as  having  the function of    tailor made   workouts  for  exercising    

3. Market Development: According to Ansoff(1957)The organisation here adopts a strategy of selling existing products to new markets.  Because the firm  is expanding  into a new market, a market development strategy typically has more risk  than  a market penetration  strategy

The  market for   Zippo bicycle can  be developed    in   number  of ways  :  

• Increasing the usage   in cities :-  According    to the  bikebiz.co.uk analysis  and research ,it  shows that   their is increasing towards cycling  in  big cities .Cycle  usage  in  London has increased    by  16 % (Transport  for London, may 2003 ),it means   due  to   heavy   traffic    and congestion most of the people   in  big cities  such  as  London, Birmingham ,Manchester   are   encouraged  to use cycles  to go to  work, university  and hence   enhancing  the usage and thereby  leveraging  the  marketing resources   of the company  and by effective  positioning  of the  bicycles  increasing  the market share .
•    Increasing   usage   in   hilly   areas   :- In  hilly areas   such   as Matlock, Derbyshire ,Wakefield, where   the bike usage is relatively low   due  geographical irregularities    ,so  if a   electric bikes   and folding bikes   which  are  easy to use  and highly   automated can be  marketed   easily   and hence    effectively   developing the market .      

4. Diversification: According to Ansoff(1957) Moving away from what you are selling (your core activities) to providing something new.

In  the  case   of     Zippo bicycle   if they are   adopting  diversification strategy   it   would   be as follows

• Making   motor  cycles   :-   A   logical expansion  for Zippo bicycle would be    making   motor cycles  e.g.  Same way    Honda started  making     high end   bicycles  .
• Making    wheel chairs   :-   making wheel  chairs  for     hospitals   and   handicapped  people    would be a another appropriate strategy    

      5.0 Most strategic competitive   options

The    most   sound    option in terms of   Ansoffs   matrix   is  adopting product development  and market  penetration  strategy simultaneously  ,when  taking the    long  term perspective  of  the company, but  at   the  initial  stage  it  should  implement a good  market  penetration strategy to enhance  the  brand  awareness  of  the company.

             Product  development   plays a most vital part in the well being  of an organization, its  an  continuous  process  which involves   lots of  market research which  indicates  the market  trends  and key success  factors.

 

                  Some   of the  key factors in choosing  this strategy   is has follows :-

• Increase in road traffic and congestion Govt Initiatives:- Due to  traffic jams  in  big cities  and  high level of  pollution because  of   which    the  commuting  time  has  increased   ,which   has  led    to a alternative  way  of  commuting     to work  place   and  short distance   travel, and  due  to govt  sponsored   cycle friendly  initiatives   ,cycle   industry  has received  much  needed boost  which   will drive  competition  and innovation in cycle industry.

• Ageing population:- As  the major  chunk  of the UK  Population  consist   of  old  people  ,who in turn  have more leisure time at their disposal  and  they are  more inclined towards experimenting  and experiencing   nature in   its  natural form. And  since  the latest   product which will be developed  by   Zippo, which is  easy to use  fits perfectly  to  their benefits  

 

• Changing  product trends  :-Folding bikes and comfort bikes are the latest fad ,whose  product  features such as anywhere  ,anytime   has a much   wider  appeal and  which    also give the optimum   performance  and higher  safety standards  

• Higher  leisure  time :- People    nowadays   are   investing more   time   in family and leisure  activities  ,cycles   is  becoming   one   of the important  priorities   in most of   the  people  schedules, which again suggest  increasing  trends towards  new product development .

• Trends towards  eco tourism :-As  more   and more   people   are   getting environment  friendly, they   want  to explore environment  without  actually  destroying   it ,and exploring  by the means of cycling is one of the best doing that which therefore suggests  their is  a greater  scope of  further market  development .

5.2 Key  strategic  marketing  recommendations  for  sustaining  _        future profitability

Some  of the   marketing  recommendations   for sustaining long  term future profitability are as follows which should be carefully  considered and implemented by the top level  management .

• Effective value segmentation :- Having  a well defined  segments  whose needs and requirement  are  fulfilled  on a regular  basis ,and  their  future needs should also be taken  will  be  the  key  to future  sustainability .
• Striking Emotions  :- By  effectively meeting the emotional needs of the   potential customers and by invoking a positive emotions in the mind  of  the  prospect can help them   to enhance the market share.
• Targeting the  virgin markets:- Targeting   the    markets  such as hilly areas and urban   areas where  the  cycle usage  is less due to geographical constraints ,by means of  creating a product  which  will  satisfy there needs  
• R &D and innovation:-Continuous and  innovative improvement in product features of the bicycles will be the key future driver for success in this competitive  market.

• Outsourcing  of  manufacturing   facilities :- Outsourcing is  now  become an  important and very vital part for cost reduction in the

present scenario a pre requisite  for assuring quality service., outsourcing the manufacturing facilities  to cheaper  destination   like  china  with   a strategic partner in  china ,will  help in establishing the  brand image of the  product  and can be  a major differential factor  

In the end  according to Sherlock Holmes(1896)" When the spirits are low, when the day appears dark, when work becomes monotonous, when hope hardly seems worth having, just mount a bicycle and go out for a spin down the road, without thought on anything but the ride you are taking."

References   & Bibliographies

Book references

 

ADCOCK.,(2000)Marketing strategies for competitive advantage, Wiley 121 -124

ANSOFF.I (1987),Corporate  strategy, The Penguin business library, 108-110

DOMBERGER ,S.,(1998) . The contracting organization : a strategic guide to outsourcing . Oxford : Oxford University Press ,8-12

FIFIELD .,P.,(1998) Marketing Strategy. Butterworth Heinemann, Second edition, Oxford

Jobber.,D.,(1998)Principles and practices  of marketing, ,Second edition , McGraw-Hill,171-181

KOTLER.,P.,(2000). Marketing Management .Prentice Hall International.,263-268

McDonald ,M.,LEPPARD,J.,(1994).The marketing Audit :Translating Marketing Theory into practice. Butterworth Heinemann, Oxford,142-147

Ries, A.,  Trout,J ( 1986).  Positioning : the battle for your mind. McGraw-Hill. 1-5

Online references

REID ,C., Bicycle Business (2003) .Trade magazine online version issue November 2003

Last accessed at 28 Nov 2003 at

Cycle industry statistics and trends .Last accessed at  30 Nov 2003 at

Cycle industry statistics and trends-publications(as indicated in market penetration of Ansoff Matrix) .Last accessed at  30 Nov 2003 at

London cycling   campaign (2003).Last  accessed  at  2 DEC 2003 AT

National cycling  forum.(2000) last accessed at 30 Nov 2003 at   

National cycling  forum.(2000) last accessed at 30 Nov 2003 at  

.

Bike for future (2003).Last accessed  at  3 DEC 2003 at

http://www.50cycles.com/index.htm