Krista Dace

February 12, 2017

Jan Rauk
Bus 190
Mikes Bikes Individual Paper Assessment of Traveler

My initial strategy was to sell my mountain bikes at a medium price in hopes of decreasing risk

in an unknown market. My results showed that this strategy was effective in that Travelers SHV

increased by 26% in the first year alone. However, although my SHV was increasing, my market share

continued to decrease yearly despite pricing lower than my competitor (Figure 2). This suggested that

my pricing strategy or marketing mix was, although profitable in the short term, not allowing for an

effective long-term business model in this particular market. Therefore, upon diversification into the

youth bike, I changed my marketing mix to incorporate a low pricing strategy with incremental changes

to price following product development. This strategy would allow Traveler to quickly gain market share

while remaining flexible and able to later adapt to specific preferences of each market.

When comparing Traveler to companies on Mikes Bikes Hall of Fame and even some companies

within the class, this strategy may not appear as effective at increasing market share but I believe it can

claim success as a stable, long-term business model which quickly attracts customers with low prices

and keeps customers by investing primarily in quality and product development. By the end of five

years, I had increased Travelers SHV by 189%, achieved majority market share in road bikes, 50%

market share in youth bikes, and had begun regaining the lost market share in mountain bikes.

It is worth noting that at this five year mark, Travelers SHV fell behind that of MountainTop

Cycles but due to the long-term focus of my strategy, Traveler regained the lead within three years

(Figure 1). After 10 years, Traveler had a SHV of $117.57. Its competitors was only $73.80. In addition,

Traveler had a 59.3% market share in road bikes, a 63.4% market share in mountain bikes, a 62.9%

market share in youth bikes, and trends showing continual growth in the company (Figure 2).
Krista Dace
February 12, 2017
Jan Rauk
Bus 190
A key point I learned in Travelers success was flexibility. Holding on the initial, supposedly low-

risk strategy of medium pricing would probably have led to a much less profitable company. Being able

to notice the flaws in my strategy and change it, more specifically to change it into a more fluid strategy

in and of itself, improved my business model by an unknowable degree.

This fluidity was helped immensely by the side-by-side comparisons provided of Traveler and

MountainTop Cycles. Learning more through practice and observation of outcomes than reading, I did

little more than skim the players manual. I was helped much more by the ability to directly compare

what I was doing with what my competitor was doing. This, combined with a bit of supplemental

research on definitions and impacts of different variables on SHV, ultimately allowed me to learn quickly

and logically think out solutions to any problems I faced such as decreasing market share.

Figure 1: Multifirm
Traveler's % Market Share Shareholder Values

70

60

50
% Market Share

40

30

20

10

0
2015 2020 2025 2030 Figure 2: Travelers %
Road Mountain
Year
Youth Market Share