Strategic Analysis of
Brompton’s Business
tutor2u
Brompton’s Bicycle Models
• Brompton produces three models, M, P and S
– the X version of each model indicates a superlight specification made out of titanium
M (and MX model)
• The all round, general purpose bike
• A best seller with room for luggage at the front
• UK RRP = £630 (and £1,050)
• Weight = 11.5kg (and 10.5kg)
P (and PX model)
• The touring bike, with a rear rack for luggage
• UK RRP = £765 (and £1,185)
• Weight = 12.2kg (and 11.3kg)
S (and SX model)
• For a more ‘sporty’ ride
• UKRRP = £630 (and £1,050)
• Weight = 10.7kg (and 9.8 kg)
tutor2u
The Market for Folding Bikes
• The market is growing fast at 20-25% pa by volume
• The clear market leader is Dahon, based in Los Angeles, who have a market
share of about 66%
• Brompton is a small, niche player
– sales of about 20,000 bikes per annum
– one of only two volume producing manufacturers based in the UK, the other being
Pashley
• There are healthy profits to be earned in this growing market which means that
– there is an incentive for other companies to move into this product space
– there are opportunities for competitors to challenge the Brompton USP at a much
lower price
– as Will Butler-Adams, Managing Director, Brompton says:
“There is always the risk that someone could turn up with a bike just as good and
compact as ours but for two thirds of the price”
• Three key buying criteria in the market are
– ride quality/performance
– compactness/folding
– price
tutor2u
Routes to Market
• Evidence C and D refer to some of Brompton’s competitors in the folding bike
market. There are three routes to market:
• Traditional bike dealers (independents, bike shops and chains)
– Work closely with the manufacturer
– Provide a full after sales service / repairs
– Medium and high priced bikes
– Higher margin, lower volume
• Mass market, discount retailers such as Tesco and Argos
– Retail bikes on behalf of manufacturers
– Little or no after sales service
– Low and cut price bikes
– Low margin, growing volume
• Internet retailers such as Daudbikes
– UK based importer
– Outsourced own brand production and wholesaler for other bike brands
– Provide internet/mail order delivery and no value added
– Very low prices (from £69)
– Low margin, emerging market
tutor2u
Some of Brompton’s Competitors
Competitor Production Summary
Airnimal UK High performance bikes. Good folders. From £800.
Dahon China Wide range of bikes including small and large wheels. USA based. Sold as
Dahon or made by Dahon and sold under other brand names. £250 to £2,000
Di Blasi Italy Very wide range of bikes including trikes and mopeds. Good folders.
Giant Taiwan Wide range bikes. Giant Halfway is the best known. A good folder from £350.
Go-Bike Taiwan New entrant to the folding market. 20” wheel.
Green Gear USA Good riding performance. Custom built bikes. Leading brand is Bike Friday.
Cycling From £900 to £2,000.
Mobiky France Good folder, but quite heavy.
Moulton UK Fast, sporty performance bikes. Poor folders. Expensive from £5,000.
Riese und Taiwan German designed. Leading brands are the Birdy and the Frog. Good folders.
Muller From £800.
Pashley UK The UK’s other volume supplier besides Brompton. Specialist, unconventional
models such as trikes, unicycles and delivery bikes.
tutor2u
Brompton Bicycles Limited: Business Model
Production Distribution & Sales Buyers
Folding bikes
Factory in London: & spare parts Bike Shops
Design and Build for servicing (in UK and USA)
(skilled machining & & repair Bicycle
complex engineering) Customers
Distribution Network
(in Rest of the World)
Outsourced production
(non core elements)
tutor2u
The case study raises a number of interesting questions
about Brompton Bicycle Limited’s business
Can production processes
be undertaken more
efficiently?
Production
Distribution & Sales Buyers
Folding bikes
Factory in London: & spare parts Bike Shops
Design and Build for servicing (in UK and USA)
(skilled machining & & repair Bicycle
complex engineering) Customers
Distribution Network Can new products be
(in Rest of the World) successfully targeted and
launched?
Outsourced production
(non core elements) How fast can they
move into new
How fast and by how
geographical markets?
To what extent is
much can production production in the UK
capacity be increased? a benefit or a cost?
tutor2u
Brompton Bicycles’ capability to compete successfully in
the market for folding bicycles will be affected by the
company’s strengths and weaknesses
Marketing Operations
Key Strategy Question:
What are Brompton
Bicycles’ Strengths,
Weaknesses and Issues in
its four main business
activities?
Human
Resources Finance
tutor2u
MARKETING:
Brompton has marketed itself successfully as a niche
market player…
Target Market
• People who need a folding bike to enjoy a sense of freedom and independence
and who are prepared to pay for reliability and durability (perhaps people with
limited storage space)
• City dwellers and commuters (to avoid the traffic, perhaps used in conjunction
with public transport
• Boat owners and caravan owners (to cycle to the shops and around the
countryside)
Company Growth
• Brompton is selling more bicycles year on year
– 2005 = 14,000 2006 2007 2008
– 2008 = 19,000 expected
– Plans for 50,000 in the future Sales 4.89 5.28 7.00
Revenue £M
• Sales revenue has increased year on year
Year on Year 8% 33%
Growth
tutor2u
MARKETING:
… with a strong brand name and strengths across the
marketing mix…
Product
• A range of rear suspension bikes that fold within 20 seconds to the size of a small
suitcase and which can then be stored in a luggage rack, cupboard or under a desk
• Spares - additional revenue is generated from the sale of spare parts, all made by
Brompton, for service and repair work done via the shop and distribution network
Price
• Selling prices of £550 to £1,200, targeted at the higher end of the folding bike market
Place
• Sales to bike dealers through a distribution network
– Direct to bike shops in the UK (100 shops) and the USA (10 shops) – these shops become
stakeholders
– Via distributors in other parts of the world
• No internet sales because of the importance of after sales service with shops and dealers
• Sales income is distributed: Europe and the Far East = 65%, USA = 5%, Rest of the
World = 30%
• Sales are made in 27 export markets
Promotion
• Word of mouth marketing is very important
• Lots of personal selling – dealers come to the Brentford factory to “try and buy” the bikes
• Brompton World Championship (BWC) race is in its fourth year. It is a 13km race on
Brompton bikes around Blenheim Palace. Tour of Spain winner Roberto Heras holds the
world record time, set in Barcelona two years ago.
tutor2u
