Yuba Electric Cargo Bikes – Case 2

Yuba Electric Cargo Bikes – Case 2

Competitive Strategies and Targeting

Yuba Bikes, LLC is a small business headquartered in the northern California community of Petaluma. It was started by Benjamin Sarrazin, an adventurer and a world traveler who grew up in bike-friendly Strasbourg, France, before coming to the U.S. He founded the company in 2006.

The Yuba Bicycle business model includes developing the brand label and identity, as well as sales, marketing and distribution. They have a network of distributors in place across the U.S. from Maine to Florida, Texas, Washington State, Colorado, and points in between. Our bikes are also distributed in Europe, Austrailia, Thailand, Canada and Singapore. “The goal is to expand our distributor base and our global reach into other markets, said Mr. Sarrazin. Cargo biking is really catching on.” The company has doubled annual sales each year since 2010.

The company focuses exclusively on cargo bikes and manufactures a line of both traditional and electric cargo bikes. The particular focus for this case is the electric cargo bikes. Currently, Yuba Bikes manufactures 3 models of electric bikes – Spicy Curry, el Mundo, and el Boda Boda. The base price for these electric models range from $3000 to $4500, excluding customization or accessories.

All Yuba Bicycle models are made in China and shipped to Yuba Bicycles in the U.S. for assembly and customization. A complete line of accessories and bike models are kept in inventory at the company’s warehouse and repair facility adjacent to the showroom and administrative offices in Petaluma, CA. For more information on the company and its products you are encouraged to go to their website at www.yubabikes.com.

The market

The market for electric bikes is highly fragmented with many small manufacturers. One of the largest in the United States is Pedego Electric Bikes which only sold about 10,000 e-bikes in 2015. Yuba Bikes company sales forecast for 2016 for the United States is approximately 2500 electric bikes with approximately $9.75 million in sales revenue including accessories. Total industry sales forecast for e-bike sales in the United States in 2016 is estimated to be about 152,000 units. Compare that to the Asia Pacific region where 32.8 million units are expected to be sold in 2016.

There are electric bikes for a variety of purposes from general recreational bikes, mountaineering bikes, commuter bikes, and cargo bikes. Again, Yuba Bikes specializes in only one type of electric bicycle, the cargo bikes. An e-bike is a bicycle with an electric motor. A rider can pedal without using the motor or use it for a boost.

E-bike manufacturers are just in the beginning stages of targeting the U.S. market. In fact many people in the U.S. don’t even know what an electric bicycle is. Do you? You are encouraged to read the attached article “Behold a Future of Assisted Pedaling”, which is attached to these instructions. Other information should be readily available to you on the web if additional insights would be helpful to you in making decisions.

Case Assignment:

1) Based on your assessment of the competition and the market situation facing Yuba bikes, which of Porter’s Competitive Strategies do you recommend that they follow in future marketing efforts for their line of electric cargo bikes? Why do you feel this is the best competitive strategy to pursue?

2) Based on your assessment of the market for electric cargo bikes, recommend what you believe to be the primary target market they should focus on for marketing their line of electric cargo bikes? Explain the rationale for your recommendation?