Creating new consumer demand through innovation: Shimano
Shimano is the leading bike parts manufacturer.
In 2003, Shimano was comfortable with its profit growth but it realized that their existing market was near to decline.
Shimano’s consumer base was made of “bike obsessed” who were inspired by Lance Armstrong, the world champion at that moment.
Actually, Shimano’s growth was coming from the introduction of more expensive professional bikes, while the convertion of new consumers was critical.
Shimano had a great reputation with the bike makers and excellent relationships with the bike’s dealerships who sold them to the public.
Shimano took a strategic decision: to focus on the 161 million American adults who didn’t ride a bike.
For them, biking was too complicated and expensive and it was too intimidating to walk into a bike store full of strange terminologies.
They wanted something simple that they could roll out of the garage and use. And, their only aspiration was to interact socially and to loose weight.
These insights were a total departure from the kind of technical conversations held at Shimano. But, the company did listen and it took action.
Shimano developed the platform for the “coasting bike” and the “coasting experience”. The seat was wide and the gears were hidden in a box and they changed automatically depending on the terrain. This thanks to a microprocessor invented by Shimano.
Shimano showed the prototype to its three biggest customers: Trek, Giant and Raleigh. The three bought the idea and they created their distinct models using Shimano parts.
Furthermore, the three manufacturers worked with bike dealerships on how to sell the bikes to this new class of consumers.
Shimano identified the most “bike friendly” cities in America to lobby for more safe places to ride and let people know about them.
“Bicycling” magazine also gave its blessing choosing to give away coasting bikes in its annual Biketown promotion.
Shimano, bike manufacturers and bike distributors had great benefits from this innovation turning around a stagnant market.
The features of the coasting bike all existed before, but Shimano was capable of integrating all pieces together.
Very importantly, Shimano did all this while the company’s financial results were still good.