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Unit 10: Market Structure – Perfect Competition

number of bike shops has kept falling over the last seven years, but here again, no retail Notes
organization has grown to the point that it can create barriers to market entry.
And what about the current independent bicycle retailer that has been in the market the
longest? He is clearly at a dangerous place, but is the only one of the players who can
break away from the state of perfect competition that has a strangle hold on the rest of
the industry and the specialty bicycle retail channel of trade. By the way, this retailer was

made aware in advance by the brands, first that the Trek flagship store was going in a mile
from him, and next that Erik’s Bike Shop was going to locate a new store within about the
same distance from him. He has reacted by remodeling the interior of his current location.
I have not spoken with this particular retailer since the news about the location for the
new Erik’s store, but I have E-mailed, and when I do talk to him, here is what I am going
to suggest.
1. Hyper-differentiate your store. This is a term coined by Mike Basch, former CEO of
YaYa! Bike, and it means differentiate your store totally from any other bike shop or
bicycle retailer in your market so that you stand out as the brand in your market. It
will be important to keep the adult enthusiast cyclists that are now customers - but
the key will be crafting and marketing features and benefits to retain them as clients

for life. The battle between the two big bicycle brands is going to test the “loyalty”
of the adult enthusiasts in the market - but their loyalty is a question of personal
attachment, relationships and the deal they got most recently, so there is marketing
room for the independent to establish client loyalty programs and establish ongoing
communications so the relationship is maintained and strengthened. Items 7, 8 and
9 discussed below become very important here.
2. Market to and really welcome casual cyclists, women, minorities, baby boomers
seniors - everyone that is now underserved by all-the-other bike shops and concept
stores. This is a key strategy for growth. It involves a product selection that will give
all the non-enthusiast adults a truly enjoyable bicycle riding experience while not
forgetting about the kids. Proactive market outreach in the form of demographics
within zip codes and direct-response is essential, along with a formal referral-
marketing program to drive word-of-mouth.
3. Focus totally on the consumer. Our channel of trade is now very product focused,
and we think everyone that walks in the door is also product focused. This is a
false premise. Shoppers, all shoppers are looking for an enjoyable experience, and
that experience includes focusing on their wants and needs, while making them
comfortable in the store. Adult enthusiast cyclists want and seek out product
orientation, but also appreciate a more enjoyable experience. Casual cyclists and
non-cyclists, where the growth potential is, are seeking the shopping experience and
want to be comfortable with and develop a relationship with a consultant who’s
expert advice about bicycle products will best meet their wants and needs.
4. Educate your whole organization to focus totally on shoppers and customers.
Because of the current product focus of our channel of trade, we don’t educate our
employees about the vital importance of focusing totally on the shopper, and not
making any snap judgments about who a cyclist or customer is, or isn’t. Hiring and
educating customer service naturals is way more important than in-depth product
knowledge. Educating them to really listen to shoppers and customers wants and
needs is vital to building lasting, lifetime relationships.
5. Make it all about them and an extraordinary shopping experience. There is no
retail selling today - everything a retailer does, everything retail employees do is
marketing. The whole store, and the whole attitude has to make it all about them
from the parking lot to the windows to the front door to the greeting - through
Contd...

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