Applying the Blue Ocean Approach December 3, 2012 Problem Statement B-cycle charges an annual fee in range of $50-100 for membership thereby making its offering uncompetitive against mass bicycle merchandizers like Wal-Mart and Target who sell bikes at highly discounted and cheap prices. Analysis Plan/Data Used/Key Assumptions Analysis Plan: We will use the Blue Ocean Strategy Canvas & the Four Actions Framework to assess steps B-Cycle needs to take to stay ahead of its red ocean bike dealership competitor. Key Assumptions:
1. Purchasing a bicycle is a discretionary spend 2. There is a strong market for cheaper substitutes to owning a bicycle Data: 1. B-Cycle charges an annual fee in range of $50-100 (Source: B-Cycle website) for its membership while its usage fee is relatively cheaper in range of $5 for 24 hours to $15 for 7-day rental
2. Mass merchandizers like Wal-Mart & Target dominate Bicycle Dealership & Retail industry, which is a $6.1 billion industry, with 75% market share (Source: IBIS Industry Report)
3. A mass merchandizer like Wal-Mart sells a comfort & cruiser bike at a starting price of $69-88
4. B-cycle charges fees up to $1200 for loss and damage to its bike (Source: B-cycle website) Data Analysis & Conclusions B-cycle annual membership fee is at same price point as the retail price of a comfort or cruiser bike sold by WalMart which makes buying a bike a more tempting proposition as opposed to renting a bike.
The Essay on Business Cycle Theory
In this model, economists pursue the sluggish adjustment of nominal wages path to explain why it is that the short-run aggregate supply curve is upward sloping. For sticky nominal wages, an increase in the price level lowers the real wage therefore making labor cheaper for firms. Cheaper labor means that firms will hire more labor, and the increased labor will in turn produce more output. The time ...
B-Cycle does not offer liability protection for bike damage and customers could end up paying up to $1200 in damage fees which makes it very expensive proposition compared to owning one’s bike. In order for B-Cycle offering to compete effectively against mass merchandizing bicycle dealership like Wal-Mart, B-Cycle should make its price proposition more attractive for customers so they can rent a bike as opposed to buying a bike.
Recommendations to Management Eliminate Membership Fees. Create a loyalty program for its members that rewards members based on usage. Reduce customer liabilities against damage or loss of a bike by offering protection program. Increase locations across the country to gain footprint and market share in the bike rental segment.
