Bikes R Us Emily Foster, Emily Pelley, Jillian Marchand, and Zac Konings

OVERVIEW OF FINANCIAL RESULTS Bikes R Us provides high quality mountain bikes for an economical price of $535/bike 2013 Results Include:  Sales of Nearly: $8,700,000  Almost 25,000 units sold  Costs of around $4,500,000  Profits of close to $1,400,000  Share Holder Value of $12.17  Earnings Per Share: of $1.37 Overall the year has proved favourable with sales up almost 8% and profits up over 17% from 2012

Pricing Analysis  Strong sales appear to be driven by price – Bikes R Us increased it’s sales 7.6% compared to the industry average of 2.4%  Prices have recently been undercut by SpinAway, resulting in their 13.6% sales increase  Market tends to be concentrated in higher range(average of $555)

Awareness Analysis  Awareness increased 4.3% in 2013, just missing the industry average of 4.4% while falling far below the near 17% increase realized by SpinAway. No firms are close to target of 50%.  SpinAway’s high product awareness of 0.28 can be attributed to their $1.5 million advertising campaign and $400,000 branding strategy.  Although SpinAway sold roughly equal volume they failed to realize high profitability  A strong promotion strategy is clearly integral to high sales volume Firm2011%2012%2013 Petal Pushers Pro Bike Swag Corp.0.26(11.5) SpinAway0.26(7.7) Firm (7.4)0.25 Bikes R Us0.26(11.5)

Branding Analysis  Bikes R Us pursued a modest branding campaign in 2013 spending and additional 20% to increase branding costs to $300,000  With an industry average of $390,000 Bikes R Us spent less than SpinAway ($400,000) and Pro Bike Swag ($750,000)  Overall increasing branding had a relatively weak positive correlation to sales as those with low branding(Petal pushers/Firm4) sold less than those with high branding

Public Relations Analysis  With an industry average of 18%, Bikes R Us falls considerably behind at 12% and also behind Spin Away at 14%  Mountain Bikes sales are extremely insensitive to increased PR.  Pro Bike Swag’s spending of $600,000 and Firm 4’s spending of $1 million on PR offer insights into future Road Bike Plans

Distribution Analysis  High distribution rating relative to industry average of 0.23, while only failing to meet SpinAway by 0.01 with distribution rating up 24% from last year  High price firms - Petal Pushers and Firm 4 - chose to stay well below the recommended distribution level of 50%  High sales of the two firms is a result of the close negative correlation between low retailer margins and higher retail sale values Firm2011%2012%2013 Petal Pushers (33.8)0.14 Pro Bike Swag Corp SpinAway Firm Bikes R Us

Conclusions  Sales are up about 8% from last year, and profits are rising fairly steadily at a rate of 17-18%  Highest retail sales as a result of favourable retail margins and channel support of $280,000 which is above the industry average  To maximize potential profit we must continue to penetrate more retail outlets and marry push and pull strategies of marketing  Largest threat is SpinAway’s recent price action of undercutting our firm, although unreasonably high expenditures have made the firm relatively unprofitable

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