Schwinn's Pricing Strategy: A Case Study

Schwinn’s pricing strategy encourages great opportunity to target specific niche markets and align pricing with competition to increase industry market share. Although the brand’s biggest challenge is its traditional image, Schwinn’s pricing can be considered affordable for college students. In regards to pricing perception, market research can be conducted to determine if this particular market will associate low prices with product quality and if they are willing to pay higher prices. Along with younger cyclists, retirees that are less price-sensitive will purchase the product based on familiarity and brand loyalty. Given that “The Cruiser” appeals to these specific markets, Schwinn has the ability to ensure that various models mirror this pricing structure in order to maintain a competitive advantage. In addition to that, taking into account demographic factors such as the location and economic strength of potential buyers will be beneficial in providing more visibility of potential sales. By adapting the going-rate method and adjusting the selling price to that of its competition, Schwinn has the opportunity to increase its less than five percent market share in the retail bike market. Amongst the ten competitors that manufacture bikes retail-priced at $400 and more, Schwinn can consider the average price of comparable models of the leading brand and set the price based on factors such as profitability and prior reactions of other competitors to price changes in the industry. Given that the company currently resides alongside the lower percentile of the market, there is a great possibility for growth when considering those factors along with cost structure of its competitors. With the desire to once again dominate the bike industry and sell about 400,000 redesigned bikes, Schwinn can charge high prices for its newer bikes. By using this approach they are able to position themselves as a traditional, high-end mountain bike provider which will result in the strengthening of their overall brand image. Due to Schwinn being portrayed as old-fashioned, it may be difficult to immerse themselves among other bike companies that are high priced and include impeccable technology. If Schwinn decides to charge $700 or more for its newer models, individuals may question what distinguishes it from other competitors whether it is special features or simply current trends. Buyers may believe that the high priced models are too expensive when comparing it to other brands that are leaders in the bike market. Since the company is no longer a top U.S. brand, other leading brands are …show more content…
When evaluating different factors that contribute to overall costs, it is easy to identify the key areas that will help structure the price changes at each level. The low cost spectrum of the bike brand maintains a reasonable advantage when factoring in psychological costs. Individuals such as beginner mountain bike riders, senior citizens, and perhaps a handful of college students may not initially consider the trendier and more expensive options. Along with this group, parents that are loyal to the brand may find comfort in purchasing the low cost kids’ bikes for their children. This potential set of buyers may prefer to simplify the purchasing process. By avoiding the need to assess the pros and cons of more expensive and technical products, the low cost option alleviates the stress as well as risks that are correlated with major