Cyclos Ltd is a bicycle store in UK located in county of Hampshire in Portsmouth city. For over the past five years the company has been dealing with high quality bicycles in the city. The company deals in all types of bicycles, accessories, and parts of the fixed bicycles and because of the strong financial base the company wants to broaden the customers base by including up market electrically powered bicycles. The cost of bicycles will reduce as the company controls the manufacturing and they can cut down on costs, which would help reach higher profits. Due to increase in traffic roads, there has been a high demand in bicycles and as a result people have started to turn up on the market and the sales has been risen. As Cyclos Ltd is a well-established brand in the bicycles market for the past five years we have built good relationships with our customers.
MARKETING PLAN
The UK’s bicycle sales were at £745 million in 2013, up 14 per cent in five years from £639 million in 2008. The industry has benefited as the public has become more aware of the positive effects associated with a healthy lifestyle. Riding is an excellent cardiovascular exercise and a great stress reliever. People are becoming aware of its health benefits and it is continuing to grow in a city were a big percentage is the students of the university and the colleges. The Bicycle industry and Cyclos Ltd in general are positioned to cash in on this trend. The industry can be impacted by the weather conditions, which exists in this area of the country and furthermore changes in the economy. It will shock the growth of the road bikes for over the past two years with volumes sales up 4.2 per cent, reflecting the success of British riders in general and in our city specifically. Additionally, oil and gas prices have been risen the demand for bicycles nationwide as people look for more affordable means of transportation. Portsmouth is a student city with a major age group of 18-25 years. Bicycle sales have been increasing due to the increased number of international students who require a cheap mode of transport. Our shop is in the heart of the city, which approximately houses 20.000 students. The primary market of our customers is from the university population, which has a turnover of 25%. As far as Cyclos Ltd is the biggest seller and the exclusive dealer for one big manufacturer, the company also surrounding population of over 100.000 people including university and other three colleges in the city and the general area of Portsmouth. However, there are three competing bike shops, but none of them can offer the brands and the services of our company can do.
MARKET ANALYSIS
TARGET MARKET
Cyclos Ltd mainly target to the market of students and faculty of the University of Portsmouth. The department is made of 18-25 years old that are active and participate regularly in outdoor activities of the university life. As the campus is relatively spread out, with a few students of them driving most of them are walking and when the weather conditions are bad the prefer to use the university bus.
MARKET SIZE
The University is educating approximately 20.000 full-time students. In addition to this in the campus are located three other colleges within the city, where our company can supply to. There is an estimated percentage of 25% turnover among the student population yearly, as new students enroll and graduate. Cyclos Ltd, serves a population of 100.000 people. With only three other bike shops supplying the same area, Cyclos Ltd will be able to capture a large amount of the market share due to the special services, the unique location and exclusive distribution agreements.
MARKET TRENDS
As a trend, the bicycle market has made a simplification growth. The last big trend is the growing demand for electrically powered bicycles. Moreover, the fuel prices are increasing so the last year many people turned to the bicycle market and the demand has risen for electrically powered bicycles and this is because many of the customers live in the greater area of Portsmouth and the campus and the need to save time make them to use buses and many more taxis. This is the main reason that this has caused a demand to bicycles which has a motor, where markups are often 50% or greater. Service sales have also increased as more often people are tuning up old bicycles with motors and regularly maintaining the new ones.
Thus, we must secure sales and the marketing has to be strong. Portsmouth has a lot of international students with international driving licenses. This is the main reason we must make them with small displacement motors in order not to be needed driving license. To secure the sales amongst this target market the internet and the university union must be used. This will spread awareness amongst the students.
DEVELOPMENT PLAN
SWOT ANALYSIS
STRENGTHS
• More economical than fuel-powered ways of transportation, and cheaper than buying an electrical vehicle for the city
• Foldable format which is designed to be stored in student’s hall or on arrival at the university
• Provides excellent customer service including: bike fittings, training and instruction on proper use, safety tips and repair
• Sells a wide variety of bicycle accessories and parts
• Only e-bicycle specialty retailer in Portsmouth
• Located on Commercial street, where there is sufficient foot traffic
• More comfortable as far as the rider can cover bigger distances within less time needed.
• No need for driving license as the cc is too small and it’s considering as a moto bicycle
WEAKNESSES
• Prices are relatively high in addition with the simple bicycle
• There is a limited range of km, although it can vary on how the motor is used
• Traditional bicycles are still the least contaminating option as they don’t need batteries and the service costs are less
• We are addressing to students, which means low budget customers
OPPORTUNITIES
• Increase the new way of life of sports and training
• Area is facing population growth
• County of Hampshire decided to budget significant money for the construction of bicycle paths and road signs
• University provided and promoted bicycle growth
• University located less than 0.5 miles from store
THREATS
• Online bicycle sales as well as catalogue sales and service
• Price pressure from mass merchants and large discount chains
• Fluctuations in the economy that affect discretionary spending
The main weakness is the high prices of the additionally electrically bicycle. However once manufacturing will start producing the new electrically bicycles, prices will fell about £130 per bicycle, which is cheaper than buying it from our supplier. To design our new type of e-bicycle a new design team is required. The process will cost about £1000. Once the design is done, then a prototype needs to be made, which will cost £500. There will be no need of workforce as far as only three workers will be needed. With our machinery, will be able to produce about 10 of our new type e-bicycle per day. This machinery costs £20000. The startup costs add up to £22500, wages for new employees included. E-bicycles will be sold in the price of £200. So, from this price Cyclos Ltd will have a profit of £70 per bicycle. The first month of our production our company will approximately produce about 300 of e-bicycles as demand will be high as the new product will hit the market. Thus, they will be sold quickly as expected. If all the stock e-bicycles will be sold the profit will be £21000. If everything goes as expected more workers will be employed to maximize the production to 600 quantities of the new product in one month. The total investment is £22500 and will be spend in a period of three months. Fixed costs will be added so it will raise up to 25000 plus variable costs of £130 of each product. To break even Cyclos Ltd will have to sell (25000/70) =357 e-bicycles in the period of three months. Debt can be paid back in two and a half months, if 150 e-bicycles will be sold in thirty days