Aspects of the Shared Bicycles Service

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Introduction

A bicycle is a convenient, environmentally friendly, and healthy transport. More and more European and American cities are building bike paths and purchasing municipal bicycles to introduce shared bicycles. The most outstanding example is Amsterdam, where movement around the city center takes place exclusively by bicycle. As a result, locals save on public transport and benefit from quick relocation opportunities. This paper aims to discuss the relevance of implementing the shared bicycles project on the college grounds.

Brief Service Description

The college occupies a relatively large area, and students have to cover considerable distances on foot to get from one classroom to another. Therefore, the launch of the shared bicycles project will be in high demand among students, as it will help them save time during breaks between classes and keep a good shape. Moreover, cycling is fun and can help clear the mind after a dose of challenging academic information.

Concept Statement

The concept will be implemented by installing bicycle parking at each educational building and purchasing enough bicycles for shared use by college students. To prevent bikes from being stolen, several cameras will need to be installed around the college grounds’ perimeter and periodically checked the number of bicycles. They can also be painted using college symbols, which will psychologically become an obstacle to theft. A deposit or payment system could also be introduced – for example, 1 or 2 pounds to guarantee that the bike will be parked in the proper place.

Target Market and Service Positioning

The primary consumers of the service will be college students, teachers, and visitors to the campus. Since the service is aimed at the well-being of the entire community, high payment for the service should not be involved. However, since the purchase will be made at the college’s expense – that is, at the cost of all students, and only those who wish will use the service, payment systems can be installed on bicycles. Through it, customers will pay for trips with a smartphone using a QR code.

The service price can be symbolic – for example, 10 or 25 cents; however, since bicycles will be used by many people every day, the costs of purchasing bikes and installing parking blocks will be reimbursed during the first semester. Before implementing the shared bicycles project, it will be necessary to conduct an anonymous vote among students. In it, they will express their desire or unwillingness to use the service. Students will also submit their proposals on the project website – such a website will be easy to make using WordPress.

Marketing Objectives

Marketing objectives are an essential part of strategic planning as they provide a clear perspective for a business or initiative. According to scientists, goals should be SMART – specific, measurable, accurate, realistic, and timely or targeted to motivate all project participants (Richardson, 2019). ‘Accurate’ means the goals should be aspirational and achievable; ‘realistic’ implies that the chosen objective will deliver the required changes. ‘Timely’ means that the team needs to have enough time and resources to achieve the goal, whereas ‘targeted’ means that the objectives target the appropriate segment. Besides, when setting goals, the SWOT or TOWS scale can be used, starting with SO and ST.

Moreover, when setting goals, a brand awareness and distribution strategy should be developed, and tactics that will ensure the first trial and repeat purchase. Besides, a competitive strategy for market positioning will have to be created. According to scientists, the company’s competitive positioning is a statement of market targets or where the company will compete and differential advantage or how the company will compete (Hooley et al., 2020). In the presented case, the shared bicycles’ business initiative will be a monopolist in the target market. Therefore, the competitive advantage was embedded in the concept of effort. Social media will be used to raise brand awareness and as a distribution strategy, since this approach has proven effective (Cheung et al., 2020). Besides, an advertising campaign will be developed in the form of bright posters and flyers for a student rock band’s concert to inspire students, teachers, and guests of the college for the first trial.

Simultaneously, the low price and convenience of the service are guaranteed to ensure repeat purchases. To be more specific, marketing objectives will include developing brand awareness and distribution through the one-month social media campaign. The first trial will have to be achieved among 50% of students during this period, and after the rock concert, this figure will presumably increase up to 75%. Moreover, the repeat purchase of the same amount is awaited among consumers of the shared bicycles service.

Financial Objectives

Financial objectives will include achieving a sales level high enough to cover the project implementation costs. The contribution of material and intangible resources implies material costs for purchasing bicycles and parking blocks, payment systems, printing posters, and flyers (Kamasak, 2017). Intangible costs are creating a website for the initiative, labor, and time spent on developing a campaign on social media and student radio, designing posters and flyers, and organizing a student rock band concert.

According to scholars, getting the highest market share is a common goal for most companies. Moreover, market share is defined as the market’s proportion supplied by the company’s product or service (Engle et al., 2016). The market share will be 100% since we are monopolists, but it will not provide us with high sales, since they will depend on the level of students’ interest. Therefore, our goal is to maximize sales while also considering the low elasticity of the market. It means that the initiative’s success will depend solely on our efforts with minimal external influence (Edeling & Himme, 2018). It is noteworthy that lower elasticity is characteristic for markets with a large number of participants and service markets compared to the product markets.

Societal Objectives

Achieving societal objectives is at the heart of the concept of our business initiative. According to scholars, societal goals are usually linked to social problems to be addressed (Dhiab et al., 2020). In the presented scenario, the leading social problem is that students do not always have enough free time to rest during the breaks as they have to cover long distances between buildings on foot. In the next academic year, the initiative will be especially attractive for the freshmen, as they will have to spend time remembering the location of buildings and auditoriums. In this regard, some of the posters will include a campus plan, and maps will be printed on advertisement flyers. It will attract new users of the service and will help to achieve social objectives.

Another essential societal aim is to improve the general health of students, teachers, and college guests. When cycling, the body absorbs more oxygen as blood flows faster through the veins. Accordingly, more oxygen enters the brain, which allows it to work more efficiently, creating more new neural connections. Exercises also reduce blood cortisol levels, whereas the increased cortisol leads to irritability, stress, anger, and panic attacks. Moreover, both regular and one-time activities cause the release of endorphins responsible for a stable state of the psyche and good mood, forming in a person the traits characteristic of optimistic people.

Spending time outdoors and exposure to sunlight have the same effect. Besides, sunlight increases melanin production, without which a person becomes indifferent, tired, apathetic, and energyless. The emergence of the shared bicycles’ service will attract many students who will ride bikes for their pleasure. Therefore, students will reduce the time they spend near the computer and will communicate more, which, in turn, will have a positive effect on their mental health.

Marketing Mix

As part of the development of a marketing strategy, it is necessary to determine the marketing mix components. According to scientists, “marketing mix is the combination of all of the factors at the command of a marketing manager to satisfy the target market” (Proctor, 2020). The marketing mix includes the 4P model, which has later been expanded to the 7P model. The new model includes physical evidence, people, and process indicators in addition to the initial product, price, place, and promotion indicators.

It is noteworthy that when starting businesses that provide services, scientists propose relying on the 7C model. This model implies the customer-oriented approach (Meral, 2019). Therefore, it will be most relevant for the project of the shared bicycles. According to scientists, the product should reflect customer needs and wants; price should be seen as a cost to the customer, and the place should be related to the customer’s convenience (Meral, 2019). Promotion can occur through communication, people should be cared for, processes must be coordinated and complete, and the physical evidence of a business should be expressed in comfort and cleanliness.

To be more precise, the product – the shared bicycles service will be available to the public for a small fee and will have the brand names ‘Rocket Bicycles’ and ‘Butterfly Bicycles.’ The artists who specialize in graffiti will paint the bicycles and thus increase their attractiveness to students. Each bike will have a ‘rocket’ or ‘butterfly’ logo so that potential consumers can choose the bike they like best.

The bikes will be of two types – with and without frames and two sizes – medium and large. Besides, the bells will be attached to reduce dangerous situations. This diversification will make bicycles more comfortable to use and attract more customers. The design will be developed individually, taking into account the interests of all students. For example, pictures may include sports games, names of musical groups, names of cities and countries, items used in various professions. Therefore, a daily choice will turn into a game, since every bike will be unique.

The price per trip, as mentioned above, will be extremely low to increase sales. It is reasonable since the price should be considered in terms of how acceptable the customer’s costs will be. Within the framework of this concept, the rate can be increased if a financial need arises. It will also be possible to introduce a bicycle rental service for a day – for trips within the city limits, and such a rental can cost 1 or 2 pounds. Since the student’s information will be reflected when paying with a credit card, the likelihood that someone will steal, lose, or break a bike is extremely low. It is because every student will understand that they will have to pay a fine in such a case. Given that the service is a monopolist in a small market for college students, the price could not be compared with competitors’ prices. Therefore, the decisions will be made, relying on fairness and financial calculations.

The location should be convenient for the customers, and the bicycle parking blocks will be located near the entrances to the college buildings and college territory. Places of selling a product or service are usually understood as channels of distribution. Therefore, bicycle parking blocks will act as channels of distribution. However, the service does not provide for the existence of target retailers or distributors, since this would require high additional costs. Besides, there is no need for distributors’ services since the service will be provided on a self-service basis.

Further, the promotion will be carried out through communication with customers. In addition to an advertising campaign to attract first customers and provide trial and repeat purchases, advertising campaigns will be launched from time to time to support the brand. Therefore, the first ad campaign will be based on the dissemination of brand awareness through social media and posters that will be spread within the college campus. The flyers with an invitation to a student rock group concert will also be distributed to support the initiative. In two or three months a repeat concert will be held to consolidate the success and attract new customers. Therefore, to successfully promote our service on the market, up to five events during the year will have to be organized to achieve full brand awareness and customer loyalty.

The factor of people in the shared bicycles’ initiative will be taken into account through the caring attitude, as the scientist’s advice. In particular, since our effort aims to solve social problems and achieve societal objectives, its concept is based on a caring attitude. The caring attitude will also be expressed in the advertising campaign framework through the distribution of the college maps, where classrooms and buildings will be indicated. As cycling improves health, flyers will also be made with infographics on the benefits of sports. The comfort and cleanliness of the shared bicycles will express the physical evidence of the service provided. Therefore, once or twice a month, a particular paid service company will repair, wash, and clean bicycles. Finally, all business processes that the service includes will be coordinated and complete. For ensuring this, detailed plans will be developed for each of the stages of the service implementation.

Sales Forecast and Financial Evaluation

Before starting to implement the project, it is necessary to conduct its financial evaluation. The financial assessment usually includes a sales forecast for one year and five years and the rationale that describes how the sales forecast was made. The next step in financial evaluation is to determine service costing, marketing budget, net contribution, and rationale of how these all were calculated. In general, to forecast sales, there is a need for information on sales in previous periods.

In the absence of such information, it will be possible to simulate it, taking into account the expected demand or start making a forecast after gaining real accounting data for two quarters. The sales forecast formula is as follows: Sales forecasted = trend + average seasonality (Stambolinska, 2017). In this case, the ‘trend’ means “a gradual change in sales, which moves in a certain direction from quarter to quarter and can be represented by a line or curve on the graph” (Stambolinska, 2017, para. 5). Simultaneously, ‘seasonality’ refers to “a periodic, usually regular and predictable pattern of levels of business activity in which most or all sales occur in a given quarter” (Stambolinska, 2017, para. 5). Besides, ‘average seasonality’ means the average value of seasonality for the same quarter in different years.

If there are indicators for the previous two quarters, then the calculations will be based on them. Anyway, a sales forecast cannot accurately predict the future (Berry, n.d.). Instead, forecasting is about “understanding the driving forces of sales and interdependencies to connect the dots by looking at the plan and actuals each month and easily make course adjustments” (Berry, n.d., para.2). Therefore, the next step of financial evaluation will be to determine service costing, marketing budget, and net contribution.

Service costing will reflect the cost of maintaining the business. The case presented, will include the services of a company providing maintenance. The service cost unit will have to be determined to calculate the service cost. It will be named bicycle/day and express the cost of servicing one bicycle per day. Service costing includes fixed costs or standing charges and variable costs or running expenses.

The calculation formula is as follows: Cost per service unit = Total costs for the period / Number of service units in the period. The service cost will not include the parking price, as this is a project for college students. Still, if a similar project were carried out in different conditions, parking costs would be included in service costing. Besides, service costing here does not include the wages of retailers or distributors. However, if such workers were hired, their salaries would be reflected in the service costing calculation.

The marketing budget is usually calculated for a year and includes the costs for organizing events aimed to achieve the marketing objectives. Most of the marketing activities will be done in-house – distributing leaflets, designing posters, painting bicycles, performing a rock band concert, and maintaining social media webpages. Therefore, marketing costs will be reduced to the costs of printing posters and flyers and purchasing paint for decorating bicycles. The budget calculation can be done using a template and a simple formula that assumes the addition of all costs associated with marketing.

Therefore, the net contribution or the amount remaining after all the necessary deductions will be the estimated amount of profit from the shared bicycles project. If this figure is positive, the first step will be to pay artists who will paint bicycles, designers who will make posters, and the rock band who will play five concerts. If, after deducting these costs, the amount is again positive, it can be spent on charity, the university’s needs, or in support of other social or business initiatives.

Time Plan

A time plan is usually drawn up to control the implementation of the project. The prelaunch period will take two months; the first month will be spent on preparing detailed plans for implementing the above stages. The preparatory work will take another month – the purchase of bicycles, installing parking blocks, design development, printing posters, painting bicycles, preparing a concert of a rock band, and organizing cooperation with a maintenance company. Further, during the first year, financial records of sales and costs will be kept. Based on these data, in the future, it will be possible to make a real sales forecast, to adjust the price for the service and current costs.

Monitoring and Control

Several tools can be applied to monitor and control the conduct of business. The most common is a benchmarking method, determining the most critical aspects of running a business – for example, sales level, customer satisfaction, improving student health, and giving marks on these indicators. Another monitoring tool is determining critical success factors for the subsequent development of an integrated approach to consolidate success. However, it will be possible to apply monitoring tools only based on the existing business and assess the processes taking place in it.

Business control can include an annual plan, profitability control, production control, and strategic control. A yearly plan is usually drawn up to create a structure and direction for the business’s further development. At the same time, profitability control implies the need to track sales, profits, and expenses and reflects the profit-earning potential of a product or service. Production control is monitoring the processes of providing the service of production processes. Further, to handle strategic control, organizations usually draw up strategic plans and try to adhere to them. A distinctive feature of strategic control is the need to deal with uncertainty and ambiguity at various stages of the control process. Finally, there is a contingency, which describes how the organization will act in particular circumstances that threaten the business or if the implementation of the original plan becomes impossible. In the case presented, such unforeseen circumstances could be the closure of a college due to a new surge of COVID-19, or problems with bike maintenance.

References

Berry, T. (n.d.). How to forecast sales. Web.

Cheung, M. L., Pires, G., & Rosenberger, P. J. (2020). Exploring synergetic effects of social-media communication and distribution strategy on consumer-based brand equity. Asian Journal of Business Research, 10(1), 126-149.

Dhiab, H., Labarthe, P., & Laurent, C. (2020). How the performance rationales of organisations providing farm advice explain persistent difficulties in addressing societal goals in agriculture. Food Policy, 10(19), 1-14.

Edeling, A., & Himme, A. (2018). When does market share matter? New empirical generalizations from a meta-analysis of the market share–performance relationship. Journal of Marketing, 82(3), 1-24.

Engle, C. R., Quagrainie, K. K., & Dey, M. M. (2016). Seafood and aquaculture marketing handbook. John Wiley & Sons.

Hooley, G. J., Piercy, N., & Nicoulaud, B. (2020). Marketing strategy and competitive positioning. Pearson Education.

Kamasak, R. (2017). The contribution of tangible and intangible resources, and capabilities to a firm’s profitability and market performance. European Journal of Management and Business Economics, 6(5), 252-275.

Meral, Y. (Ed.). (2019). Tools and techniques for implementing international e-trading tactics for competitive advantage. IGI Global.

Proctor, T. (2020). Absolute essentials of strategic marketing: a research overview. Routledge.

Richardson, N. (2019). Sustainable Marketing Planning. Routledge.

Stambolinska, V. (2017). How to forecast your sales through simple calculations. Web.

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