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Channel Strategy for the New E-bike from PedalSpark

Submitted in partial fulfilment for the requirements of the course

Written Executive Communication

Instructor: Prof. Shubhda Arora

Indian Institute of Management, Lucknow

Submitted on December 5, 2019 by

Mohit Verma (PGP35124)

Section C
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MEMO

TO: CEO, PedalSpark

FROM: Mark Ellinas, CMO

DATE: November 27, 2019

SUBJECT: Recommendation for channel strategy for the new e-bike from PedalSpark.

The enclosed report contains the analysis of the various channel options available with
PedalSpark to launch its new e-bike. Based on the pros and cons of all the options, the decision
to select the best option is taken depending upon relevant parameters.

The action plan to successfully implement the strategic option is also provided.

Regards

Mark Ellinas,

CMO, PedalSpark
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EXECUTIVE SUMMARY

Mark Ellinas, Chief Marketing Officer at PedalSpark, a small maker of high end electric
bicycles, is pondering over different channel strategies to launch its new e-bike. The company
is in a dilemma on whether launch its new product on its existing official website or explore a
new option of launching it through Amazon. Considering the various criterions on which firm’s
decision can be based are evaluated. The recommendation to sell the product via existing
website is made keeping the fact in mind the low brand image of the firm and threat that
Amazon can pose. A detailed action plan to implement the short term and long term strategy is
also attached.

(word count: 108)

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CONTENT PAGE

TOPICS Page Number

Situational Analysis 5

The Problem Statement 6

The Options 6

Criteria for Evaluation 6

Evaluation of Options 6

Recommendation 7

Action Plan 7

References 8
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SITUATIONAL ANALYSIS

PedalSpark, a small maker of high-end electric bikes, has last year launched a signature bike
which was a luxury model available only through company website. This model was selling
well and had been named to a few “best e-bike” list. The company is ready for the launch of
its new model which is a cheaper, entry level model which would have a broader appeal. The
bike is targeted at price sensitive riders, people who are willing to trade higher battery life and
motor power for a lower price tag.

E-bike sales are projected to reach 40 million units by 2023; more than 30 million of those will
be sold in China. Of the total U.S. consumers who make $150000 or more, 70% are Amazon
Prime members. In present day scenario, when looking for a product online, more than half of
consumers start with Amazon. [1]Amazon is the e-commerce giant which also provides various
varied services to its end customers. Amazon has got about 130 private labels and sales through
those private label products are projected to hit $25 billion by 2022.

The company has options to sell the product on different channels. Company has already sold
2000 units last year and expects to sell 10000 units through online Amazon Channel.
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THE PROBLEM STATEMENT

▪ Tamar Nourse has an inclination towards directly selling the product as compared to
Gideon Bear’s inclination to sell product on Amazon. The decision to launch the
product on right channel using right strategy is the problem faced.

THE OPTIONS

1. Tamar Nourse’s Direct-to-consumers approach-. Keeping the new model on their

present site gives them influence to screen the business procedure intently and control the start
to finish purchasing experience. She trusts Amazon will begin gathering their purchaser
information and their edges from the minute they dispatch their new model on the stage.
2. Gideon Bear’s Amazon approach- Gideon needs the organization to go hard and fast
on propelling the new e-bicycle model on Amazon. He trusts Amazon's 100 million pool of
Moment Post utilized Amazon to sell 300,000 units in only 36 hours of Prime Day. He accepts,
Pedalspark could reproduce a similar accomplishment on Amazon.

CRITERIA FOR EVALUATION

1. Brand Dilution
2. Impact on Sales
3. Customer Information

EVALUATION OF OPTIONS

i) Tamar Nourse’s Direct-to-consumers approach

a) Brand Dilution: When selling directly, pedalspark need not to decrease its price to the
extent that it harms the company’s image as manufacturer of high-end luxury bikes. While
selling directly, PedalSpark can create a brand image which can be further used to launch the
products on other websites also.
b) Impact on Sales: If the volume of sales is taken into account, the data suggests that the
last year’s sale was 2000 units at a price of $4000/unit, which roughly indicates a sales
revenue of $8000000/year. All this sales are generated via the company’s official site.
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c) Customer Information: No consumer information which can be used to cannibalize the

sales of the company is available anywhere till now. The company holds data for the trends,
segments and customer’s willingness to try and buy the product at different reference price
points.

ii) Gideon Bear’s Amazon approach

a) Brand Dilution: If we analyse the current scenario, Pedalspark’s awareness is low and if
the company launches its bike on Amazon, it will be lost in the sea of other similar bikes and
will lose its image as high-end luxury bike. The examples cited by Gideon reject the fact that
the mentioned companies which blossomed on Amazon had a high brand equity and image
before its product were launched on Amazon.
b) Impact on Sales: If the volume of sales is taken into account, the assumption to sell is
roughly 10000 units ts at a price of $899/unit, which roughly indicates a sales revenue of
$8990000/year.

c) Customer Information: The product when placed on Amazon will provide it with the
market of the product, potential customers, feasibility and growth of the product. [2] Amazon
can easily use this observed data against PedalSpark and can launch its own similar vehicle
at cheaper price if there is a scope of the product in the market.

RECOMMENDATION

It is recommended to launch the product on Company’s existing website initially, in the long
run when company has high awareness and brand equity which cannot be diluted so easily by
Amazon, it can launch its product on Amazon.
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ACTION PLAN

1. Extensive brand communication and advertising so that the company is able to create brand
image and customer loyalty. Once customer loyalty is attained we can explore further.
2. Launch the product on PedalSpark’s official website.
3. Implement the long term plan to create customer loyalty in the segment, once we can
quantify that firm’s loyalty is high enough that Amazon’s replica can’t affect its sales, the
firm can launch the product on Amazon [4].

(Total word count:1075, 812 from Situational Analysis)

REFERENCES

[1] https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/prime-day-
and-the-broad-reach-of-amazons-ecosystem

[2] https://blog.pattern.com/5-reasons-to-think-of-amazon-as-your-second-d2c

[3] https://feedvisor.com/resources/e-commerce-strategies/how-your-direct-to-consumer-brand-
can-win-on-amazon/

[4 ]https://www.repricerexpress.com/selling-on-amazon/