Businessmodel of Specialized Bicycle

Customer Segments

Specialized has a mass market business model, with no significant differentiation between customer segments. The company targets its offerings at consumers who like to ride bicycles.

Value Proposition

Specialized offers four primary value propositions: innovation, accessibility, risk reduction, and brand/status.

The company has embraced innovation from its start. Its history of “firsts” includes the following:

• The first foldable clincher tire, the Turbo
• The first major production mountain bike, the StumpJumper
• The world’s second mass-production carbon fiber mountain bike, the Epic The company creates accessibility by providing a wide variety of options. It sells a broad range of bike-related products, including bicycles, components, and cycling apparel for both riders and cycling enthusiasts. They are available in multiple categories, including mountain, road, transport and fitness, path and gravel, park and street, children, and equipment.

The company reduces risk by maintaining high quality standards. It operates a mountain bike racing team, whose members test its equipment before it is sold to the general public. It also runs a program called “Test the Best“, which takes its bikes on tour across the U.S. so that consumers can try them out and question its trained staff about sizing, build options, etc. Customers can also try out cycling apparel and gear such as shoes and helmets.

The company has established a powerful brand due to its success. It is one of the biggest bicycle manufacturer brands operating in the U.S., alongside Giant Bicycles and Trek Bicycle Corporation. Its StumpJumper mountain bike is considered so unique that an original model is currently displayed in the Smithsonian Institution. Its Rockhopper mountain bike is currently used by the London Ambulance Service to equip their Cycle Response Units, which travel in highly-trafficked areas of the city. Lastly, it has won a number of honors, including a BRAINy Award for “Company Advocate of the Year“  from Bicycle Retailer (2011) and a “Bicycle Friendly Business“ Gold Award from the League of American Bicyclists (2010).

Channels

Specialized’s main channels are retailers, detailers, and catalogs. The company promotes its offering through its website, social media pages, advertising campaigns, and sports sponsorships.

Customer Relationships

Specialized’s customer relationship is primarily of a self-service nature. Customers utilize its products while having limited interaction with employees. The company’s website provides answers to frequently asked questions and access to an e-mail newsletter.

It also allows customers to register their bike so that the firm’s employees can contact them should an issue with the product arise, and also provide information on new products, special events, and promotions. That said, there is a personal assistance component in the form of phone and e-mail support.

Key Activities

Specialized’s business model entails designing, developing, and manufacturing its products.

Key Partners

Specialized has formed a number of strategic alliances over the years for varying purposes. These include the following:

• The company is a founding member of the World Federation of the Sporting Goods Industry Bicycle Labor Pilot, through which it collaborates with a group of major brands and suppliers to create shared standards, tools and a supplier database via theFair Factories Clearing House.
• The company works with the Bicycle Products Supplier Association, Sustainable Apprel Coaliation, and Outdoor Industry Association to help generate recommendations to the industry on best practices in fair labor practices and sustainability.
• The company has partnered with brands that have sponsored its sports-related initiatives; for example, Mountain Dew sponsored the Specialized BMX program and Subaru sponsored its Friends O’ Trails program, which provides instruction on off-road biking.
• The company has partnered with art galleries in San Francisco and Minneapolis to showcase the design of its bicycles as part of exhibits on modern sporting goods. ### Key Resources

Specialized’s main resources are its human resources, namely the engineering employees that design, develop, and manufacture its bikes and the customer service employees that provide support. It also relies on a network of suppliers for certain parts.

Cost Structure

Specialized has a value-driven structure, aiming to provide a premium proposition through frequent product enhancements.

Its biggest cost driver is likely cost of goods sold, a variable expense. Other major drivers are in the areas of product development, sales and marketing, and customer support/operations.

Revenue Streams

Specialized has one revenue stream: revenues generated from the sales of its bicycles, bike components, accessories, and sports apparel.