Marketing strategy for GT Electric Bikes
Introduction
This report seeks to analyze the marketing strategy for the GT Electric bikes and its introduction to the Australian market. I will discuss the marketing strategy used by Dorel Industries, Inc. to define available strategic opportunities, increase market growth and competitive advantage in their operating environment.
The GT brand was founded in 1972 in Santa Ana, California, by Richard Long and Gary Turner. The company is well known for the brand of its dirty track bicycle motocross (BMX), created for Gary Turner’s son for use in a competition. The GT brand has grown in the bicycle industry and is recognized by customers as an affordable, highly functional road bicycle. The success Gary Turner’s son led the competitors to contact him to build similar bikes turning his garage into a bike-making Business Empire, growing its sales to $66 million by 1996.
According to IBIS World (2018), the current data on bicycle retailing and repairing in the Australian market generates an estimated $812 million annual revenue. The industry has a total of 1,564 biking businesses employing 4,454 people. Importation in 2012 and 2013 totalled over 1.4 million bicycles, depicting an increase of 16.6% in the 2011/2012 financial year.
Brand Positioning
The biking
industry
has con
tinued to experience shifts in
market
performance, especially during the economic recession. However, there have been enhancements in the design, technological innovation, and consumer
-friendly prices, thereby increasing the GT
brand
‘s success. Recent inventions have seen the development of new pedal-assist electric bikes designed around the company’s philosophy of “going further and exploring new places is what bikes are made to do.”
Australia’s National Cycling Strategy plans to double the number of Australian cyclists by 2021, especially in the major cities (Sydney Cycling Prevention Research, 2011). The past few years have seen the demand for adult bicycles for recreation purposes rise by 73%. It has been fueled by the electric bikes’ innovation, which has shaped the bicycle industry, motivating people to take up cycling as a hobby and health benefit. Pike Research (2018) projects global electric bike sales to reach 47 million units in 2020, increasing revenues to US$11.9 billion. GT Company has a footing in the electric bike manufacturing business and has been able to capture a considerable market share in the Australian bicycle industry. The company has positioned itself as a go-to brand for quality, innovative and trendy bicycles used for recreational and competition purposes. The introduction of the electric bike has seen the demand rise exponentially to a level that the distributors are having problems importing enough stock to meet the growing demand.
GT Company is busy competing with BMW, Mercedes, Audi, Samsung, and Panasonic, who have joined the electric bike market. Electric bicycles, commonly known as e-bikes, are standard bicycles with an additional electronic motor battery pack, which is rechargeable. The motor eases pedalling effort, making it easy to ride uphill or cycle through a headwind. Customers can cover longer distances with less energy than a regular bicycle.
Consumer Adoption Process
The unveiling of the GT-E Force and GT-E Pantera electric bikes by the company in December 2019 has disrupted the market. The global electric bike market will grow by 9% to $21.1 billion in 2018 and USD$ 38.6 billion by 2025. Consumers are attracted to the bicycles due to the technology behind assisted pedalling and a fashionable and stylish outlook that meets the needs and status quo of bikers.
The go-to-market strategy for the GT e-bikes involves targeting consumers purchasing for recreational purposes. It includes both domestic and international tourists, students on campuses, nature enthusiasts, and health fanatics. The increasing global demand for people to exercise and keep healthy has seen the demand for bicycles increase as it has become trendy to exercise. Making fitness fun and sustainable has witnessed the invention of fitness tools like e-bikes. GT Company markets itself as offering BMX and mountain bikes that blend high performance with serious fun to provide good times to its customers. Their philosophy is “Fun is Serious Business.”
GT Bike is a brand that is famous worldwide; hence the company plans to use its effective advertisement strategies and customer’s word of mouth, their family and friends. Several factors affect consumer behaviour, namely, cultural, personal, and social factors (Kearney, 2009).
The company has a compelling online presence with high traffic. The distributor’s online shops in Sydney and Melbourne receive high. Targeting young and tech-savvy athletes as the early adopters and then fitness enthusiasts will significantly influence the purchase of the electric bikes.
Pricing Strategy decisions
GT Company bases its pricing strategy on targeted consumers both as a premium and middle-market segment. Consumer perception shows that customers tend to pay a little more to get quality products. The pricing for the e-bikes ranges between AUD4,500 to AUD9,000 due to the technology incorporated and brand perception. The pricing uses Cost and Value-Based Pricing while incorporating a bit of competitor pricing.
Consumers are highly sensitive to price increases as opposed to decreases, so the high price of the GT-E bikes will give the company room for a price reduction in case of changes in the market trends. The technology used makes the company’s e-bikes have a low substitution effect, allowing for price skimming. The e-bikes differentiate from competitors based on functionality and quality.
Distribution Plan
Businesses in Australia make bicycle sales through five primary and distinct channels of distribution: mass merchants, specialty bicycle retailers, full-line sporting goods stores, online shops and outdoor specialty stores. An electric bike is a product that has technically advanced components. Hence they require distribution channels, which are highly exclusive and technically sound sales representatives who can expertly guide customers through the technology used to meet their requirements.
This challenge has forced GT Bicycles to re-strategize its distribution plan to focus on;
- a) Specialty stores are highly-priced and mainly target the premium customers. Apart from the sale of electric bikes, these stores receive revenues from the sale of the bike components. Estimates show that about 30% of the total bicycle revenue spending goes to the manufacturing and selling of spare parts and accessories.
- b) GT Bicycles Online Store: Many shoppers have gone online due to the convenience of the shopping experience. GT Bike receives lots of traffic through its website and social media. The site serves as the most up-to-date source of e-bikes information and availability.
- c) Mass Retail Discount stores: These stores sell high volumes of e-bikes at discounted prices. Mass merchants have the expertise and maintenance facilities to support the electronic bike industry. They stand to provide aftersales services and deliver effectively to customers.
The Integrated marketing communications matrix and Communication Media
- a) Advertising
GT Bicycle’s advertising strategy seeks to deliver a high impact on large populations of targeted customers. The adverts costly, but with the strong brand image of the company, it often results in high demands of its products. The company uses bicycle riding and tour blogs and magazines like traveler.com, bicycle network, ride-on magazine, bicycling Australia, and cycle trails Australia. These advertising media have many followers and readers who translate to purchasing customers.
- b) Personal Selling Strategy
GT Company uses a personal selling strategy to drive electric bicycle purchases in its mass merchant and distributor stores. Electric bikes come with advanced technology that requires salespersons who are not used to the traditional BMX bikes and can adequately explain the e-bike features to customers. Sales staff assist customers in understanding the functionality of the e-bikes, servicing, and replacing the components like battery, motors, and control units, giving each customer personalized service.
The organization has a training program on customer service for staff to help customers and drive sales. Personal selling strategy increases sales, improve the customer’s experience, and build relationships with the customers (Hiam, 2009).
- c) Direct Marketing
GT Company uses a direct-marketing strategy to promote the new e-bikes. To create more impact, the salespeople target tour companies, domestic and international tourists and trade shows to market the electric bikes. Sporting organizations in colleges and Universities are also mass target segments for the e-bikes. Direct marketing strategy builds customer loyalty and ultimately influences customers to purchase the GT-E bikes.
- d) Sales Promotion
Sales promotions done by the company uses coupons and exclusive discounted offer to market to its target customers. The customers can save by using the coupons, and the special offers give customers access to discounted offers during events or Black Friday sales. These sales promotions motivate customers to buy the e-bikes, upgrade or fix their bike components like batteries, rotors, controls etc. Therefore, the sales promotion strategy attracts new buyers and drive sales, as the customers are encouraged to purchase e-bikes due to the perception of the benefits they stand to get.
- e) Public Relations strategy
The company uses public relations, primarily through solving social problems as a marketing communication mix. It includes the use of workshops, environmentally friendly technology in its production by using carbon fibre and sponsoring charity events to promote its products. This communication mix targets existing and potentially new customers to give them a unique experience of e-bikes. The brand seeks to address social problems and foster public relations by communicating to the public the health benefits of recreational cycling by making it fun and trendy.
- f) Social media
GT Company invests heavily in running online media campaigns. The social media campaigns drive traffic to its stores and drive purchases in the company’s online store.
This IMC strategy creates a buzz, especially for the new electric technology incorporated in the mountain bikes. The marketing team creates short YouTube, Facebook and Twitter videos showing athletes and riders in action riding the e-bikes effortlessly while having a lot of fun.
Conclusion
GT Bicycle has built a great brand over the past 48 years that is valued internationally. The Australian bicycle retailing industry stands at over $1 billion, which presents massive potential for electric bikes (Pike Research, 2018). Sales of electric bikes have grown exponentially, and GT Company needs to either start local assembly or manufacturing to meet the growing demand of customers. It’s one thing to market effectively, but it’s a whole different ball game striving to meet the needs and satisfy the customers. The company should focus its marketing strategy e-bikes on the young, trendy, and savvy generation. The youth are health conscious, and fitness is the order of the day. GT-E bikes use advanced technology that will attract this target market. Therefore, it should plan to increase its social media marketing, add more online videos, and partner with other companies to expand the market growth.
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