Case Study: Schwinn Bicycles

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Research shows the earliest bicycle is the one that was invented by Baron Karl von Drais, in 1916, which he rode while collecting taxes from his many serf-like tenants. This bicycle was designed as a pushbike, which is powered by the rider who pushes his feet against the ground in order to propel the bike forward. In a way it was merely a platform in which to sit and let the wheels help the rider move quickly like a carriage without a horse. This idea evolved into a series of different models, each with increased improvements, to what we know today as the self-propelled peddle bicycle (Encyclopedia World – Global Oneness, 2012).

Leading manufacturers of the early bicycle included Frank Bowden and Ignaz Schwinn, each who had a major influence on the world of bicycling today. Arnold-Schwinn & Company was founded in 1895 by partners Ignaz Schwinn and Adolph Arnold just as the industry for bicycles was in a very competitive state. Within the first twenty years of its formation, Arnold-Schwinn & Co. had become known as a leader of bicycle quality within the industry. Sometime in the 1970’s, Arnold-Schwinn & Co became known as just Schwinn Bicycles (to be hereby referred to as Schwinn) (Wilson, Porter, & Rieff, 2012).

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This change came after the company had achieved sales of over $20 million in the early 1960’s. Over the life of the company Schwinn has a developed number of bicycles, including but not limited to the Phantom, Sting Ray, and Varsity. These bicycles have allowed the company to be the leader in revolutionizing cycling around the world (Schwinn Co. , 2012). In 1896, one year after Schwinn entered the bicycle market; there were already 300 bicycle companies in the US, 101 of which were based in the city of Chicago, making the bicycle industry a difficult environment to get started in.

Bicycles typically ranged from $100-$125 and weighed over 24 pounds. In 1901, a racing bicycle cost about $150, which would be about $27,450 today. In 1992, Ignaz Schwinn’s great-grandson, Edward Schwinn Jr. unfortunately led Schwinn into a major decline from 25% market share to just a mouth dropping 5%. This sent the company spiraling into a bankruptcy, resulting in a sale of the company to a group of investors led by Sam Zell (Schwinn Co. , 2012). A Current Summary

During the downside of our nation’s first modern economic collapse of 2005, Schwinn nearly experienced bankruptcy again when it fell to 3% market share after being one of the US top brands at 31%. Schwinn is currently selling 470,000 bikes at a price of $100-$400, which is considered the lower end of the bicycle market. While the models that Schwinn are selling are becoming more popular, Schwinn won’t see any financial success unless it can sway customers to purchase its bicycles at a higher price.

As of 2011, Schwinn falls in 4th place out of 10, holding 7% of the market share of manufacturers of bikes priced above $400 (Martin, 2012). Schwinn recently has found itself in a more difficult place because many modern cyclists associate Schwinn with their parents or things of the old days, and therefore prefer more popular bikes, such as mountain bikes or modern high speed touring bikes. Since Schwinn ignored the mountain bike trend of the 1980’s and continued to produce common road bikes, the company was lead to bankruptcy in 1992.

If you look at Schwinn now it has finally adapted itself to manufacture and sell bicycles ranging from $100 children’s bikes to $2500 mountain bikes (Schwinn Co. , 2012). They are hoping that this adaptation will help them gain more market share in years to come. Because the bicycle industry has evolved so much since it entered it in 1895, Schwinn finds itself fighting many of the marketing challenges that exist within the US market. Popularity with bicycle racing and the Tour de France has added a sporty need to bicycles as well as overcrowding in US cities and health concerns a need for better bikes has emerged.

While the company finally conformed to the US market demand of adaptive bikes, Schwinn is now working on the purchase of certain US manufacturers in order to possess the major marketing feature of “Made in the USA” which Schwinn did not have at the onset of the patriot zing of 2001, obviously being that the majority of their bikes are made in Asia (Schwinn Co. , 2012). Some Problems A renowned company like Schwinn is faced with a wide range of problems. Some of the problems for one is poor management and lack of vision and second is hat it is widely known as a cheap road-bike company. In a time while the most of the US is now into the variations of biking like road racing, long touring and mountain/off-road. While Schwinn faced bankruptcy only seven years ago, the company is not only attempting a complete turnaround to keep the company active, but it is also trying to be competitive within the industry and buy market share by providing the US Market with their demands. My Recommendations As I have learned in this course it is very difficult to change the mindset of any market and its major players.

When today’s bicyclists associate Schwinn as a bicycle that their parents rode, it is important the Schwinn keep up with the current “fads” that Americans are screaming for. That being said, it is imperative that Schwinn stay on top of the latest crazes, and make attempts at producing some new models that other top companies may or may not already market (Encyclopedia World – Global Oneness, 2012). Schwinn can try to further its position within the industry by doing a proper amount of market research to find out what exactly the customers are going to be looking for.

I have to go back to the lessons of qualitative research that I learned about earlier in this lesson. Qualitative marketing will greatly increase Schwinn’s knowledge about what American consumers are looking for is a quality bike that meets their needs. This can be done in a number of different ways, including polling and collecting data from customers, either within regions where cycling and mountain biking is highly prevalent, and within specialty shops and major sports shops where many bicycles are sold.

Once Schwinn has identified products that they know are going to be successful within the market as a result from market research, Schwinn can begin to create good results and a respectable amount of market share by effectively using the four P’s of marketing: Product, Pricing, Promotion, and Placement or Distribution (Peter & Donnelly, 2011). Schwinn can tackle this momentous task by providing better warranties, guarantees and support to all elements that are purchased by its potential customers.

Schwinn has always focused on prices and with our economy in such disarray they can offer discounts on certain models of bicycles to cover aspects price needs in certain markets. I feel a good promotion campaign is extremely important and can be achieved in a number of different methods, including some advertising, sales promotions at local bike shops, publicity by word of mouth and personal selling or sometimes known as concierge selling. If the customers are unaware of new and upcoming bicycles, they are sure to be a failure (Peter & Donnelly, 2011).

It is very rare that a company can put new products out on the shelves and have success in selling themselves. Giving free models of bikes to famous bicyclists in events like the X-games, the Tour de France and other events is a great way to promote new product lines. Name recognition is also important and by sponsoring new and modern events Schwinn can destroy the image of being “old fashioned. ” Distribution is of key importance and is dealt with by making decisions on where sales will take place either in specialty stores or in major sports shops as well as local novelty shops (Schwinn Co. , 2012).

In Summary While Schwinn has been through a long journey in comparison to most other companies, starting in 1895, the company has seen such a massive stagnation in business and has come to the crossroads of falling into history or busting into a new future. Overcoming the possibility of bankruptcy and finally coming into the market craze of adaptive biking, it is important for the company to remember the fundamentals of marketing to make it through this slump.


Encyclopedia World – Global Oneness. (2012, November 22). The Bicycle. Retrieved from Bike Experience Festival: http://www. xperiencefestival. com/a/Bicycle/id/1894317 Martin, S. C. (2012, November 21). Company Profile. Retrieved from Schwinn Bikes: http://www. schwinnbikes. com/company Peter, J. P. , & Donnelly, J. H. (2011). Case Study 20: Schwinn. In Marketing management: Knowledge and skills. New York City: McGraw-Hill. Schwinn Co. (2012, November 21). Timeline. Retrieved from Schwinn Bikes: http://www. schwinnbikes. com/company/timeline Wilson, M. R. , Porter, S. R. , & Rieff, J. L. (2012, November 22). Arnold-Schwinn & Co. Dictionary of Leading Chicago Businesses (1820-2000). Chicago, IL, USA.

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