2.3.5 Case Study

Going back to the diagram in Section 2.1.5 1:

The companies in red framed boxes form a strategic group with X-treme ltd. These companies:

  • share the same market segment in terms of high-cost mountain bikes,
  • are of a similar size, and
  • produce similar mountain bikes.

After the analysis of the strategic group X-treme ltd. has come to apply the strategy of differentiation in the high-cost niche segment of the high-earning, hobby mountain bike athletes. The differentiation is based on the quality of the mountain bikes and the brand name. The following strategic measures were applied, in order to establish X-treme in the market:

  • End customer marketing with focus on the area of "Good looking".
  • Brand management and image consolidations by sponsoring professional mountain bikers.
  • Expansion of the distribution network via renowned sporting equipment retailers. For X-treme ltd. the production of cheaper bikes was not an option, as it would possibly lead to a distortion of the brand image.

1 The case is taken from Schmalzer, Schweiger, Wenzel (2008).