Developing a start up

 

Question 1 -Developing a start up

Problem

The main issue that drives the introduction of the EcoCycle is the phenomenon of climate change. Various scientists concur that the climate is changing unfavorably (Koch et al., 2013). As the carbon emissions from driving, flying and factories tear at the ozone layer, the climate is getting catastrophically different to the extent that it is causing natural disasters and destroying ecosystems. Fortunately, people are getting more conscious of this reality, and they are adopting a more environmentally sustainable way of life, according to the findings of Sheth, Sethia & Srinivas (2011). Consequently, they might welcome a sustainable mobility solution such as the EcoCycle.

The second problem is that of obesity. National obesity rates are rising exponentially (Wright & Arone, 2012). This seems to be an epidemic that not only has to do with diet but also inactivity but also changes in lifestyles that make activity difficult. Some people are too busy with their work lives to be active. Moreover, the life of convenience is also contributing to this problem. People can now drive everywhere or take an alternative means of transit which similarly do not exercise their bodies. Moreover, with the emergence of ecommerce, the same people have given up one more opportunity to be active.

Back-up sources

Climate change

Scholarly scientists have been warning of the detriments of climate change for decades, but the effects are becoming more evident in the 21st century (Mazo, 2010). Besides the rising temperatures that are melting the glaciers, climate change is disrupting entire ecosystems and changing weather patterns on which millions of people depend. There is therefore a human cost to climate change. Fortunately, there are means through which to reduce this impact. Scientists estimate that the latest that the reversal of climate change damage is possible, is the year 2050 (Abas et al., 2010).

Obesity

Regarding obesity, scholars claim that this is a problem in the US that is costing the tax payers millions per year (Cecchini et al, 2010; Wadden & Bray, 2018). To that effect therefore, this a problem that must be solved expediently and solving it could actually generate extensive cost savings for the tax payers and save lives. According to studies, just three weekly hours of activity could ward off obesity (McCullough & Hardin, 2013). With the EcoCycle, people will be able to pursue more activity by using transportation which gives them some exercise while they simultaneously progress through their day. This could reduce the impact that a busy schedule has on exercise intentions.

Urgency

The problem is indeed urgent and is a priority for most of the target customers. The scientists who have been cited prior, claim that at most, we have until 2050 to fix the problems with the climate, and the alternative is that the damage becomes permanent after then. A period of 30 years is quite urgent because this time is half a generation. Noteworthy, people are beginning to commit to fixing the problem as shown in the varied environmental protection initiatives around the world. Businesses are similarly being induced to be more sustainable, by the consumption patterns which reward sustainability (Sheth, Sethia & Srinivas, 2011).

Underserved

The problem of climate change is not as underserved as that of obesity, as illustrated by the previous paragraph. However, the issue of obesity is underserved because there are hardly any practical solutions which aim at solving the issue of obesity. However, there is no single solution which addressed both problems. If a person would like to be active and the same time conserve the environment, then they have to actually come up with a series of personal decisions. With the EcoCycle, the clients can derive both health benefits and environmental conservation from one value proposition.

Unworkable

Yes, this solution fixes an issue for which there are real, measurable consequences for inaction. By failing to act, then the environment will irrevocably be doomed in a matter of 30 years. From that point on, the only remaining thing to do, will be to count down towards the total destruction of the planet. Noteworthy, carbon emissions can be measured, so the use of the EcoCycle can provide demonstrable relief for the environment. Likewise, EcoCycle could solve the issue of obesity that is killing millions of people every year. From an individual perspective, committing to a change in lifestyle has measurable impacts such as weight loss.

Unavoidable

Fixing the problem has so far been quite avoidable. There are no rules whatsoever that require individuals and companies to engage in behavior that promotes environmental sustainability. Even in countries where such possible measures were introduced, they were later withdrawn. For example, Australia withdrew its carbon tax which was meant to entice companies to reduce their pollution. Second, there is no regulatory mandate to reduce the levels of obesity. Even in schools, children are not required by law to have healthy meals and therefore, it is entirely up to the individuals to take the initiative to find the appropriate solutions on their own.

Conspicuous

The problem is indeed conspicuous because there are a number of statistics which attest to the presence and impact of both issues on society. In the case of climate change, there are records which show that there is a consistent decline in environmental wellbeing as a result of global warming. For example, the Antarctica is getting warmer and snow bears are losing their habitats. Likewise, sea levels are rising and eliminating human habitats in some islands. It is therefore very obvious that global warming is having an adverse impact on the world. Obesity statistics are also readily available and they illustrate how much of a problem that the issue has become.

Critical

Yes, the problem is critical. As severally mentioned prior, climate change is edging towards irreversibility in a time frame that is as short as 30 years. Climate change is already causing so much damage in the form of destroying ecosystems and causing catastrophes which have severally led to the massive loss of lives. Likewise, obesity was upgraded to an epidemic by the centers for disease control and is becoming one of the leading cause of death in the US (Moreno, Pigeot & Ahrens, 2011). Both of these issues need to be solved expediently, and therefore introducing a product like the EcoCycle which addresses both of these issues at the same time is very important.

Question 2  -Developing a start up

Determination of the target customers

The target customers shall be segmented with both demographic segmentation and psychographic segmentation. The demographic identities of these customers are discussed below:

The target customers are millennial consumers between the ages of 18 and 28 years of age. The choice of this customer age group is based on various factors as discussed below:

According to Eastman et al. (2014), these are the customers who are the most environmentally conscious. Moreover, they not only hold the philosophy of environmental friendliness but they manifest this belief in their consumption decisions. Considering that they are very environmentally-conscious, these customers might be more receptive to the value proposition of a no-emission bike like the EcoCycle.

Moreover, these are the customers who earn their own income and therefore have agency over their purchasing decisions. By the age of 18 years, most people will be financially independent and therefore, this financial independence enables them to choose which items they spend their money on, and which ones not to. Targeting a younger segment would therefore not have been as financially feasible to EcoCycle.

Additionally, during the younger ages, these people are unlikely to have families yet. Since the EcoCycle only carries two people, targeting it at the age groups which have families could cause it to be unsuccessful.

Likewise, targeting the EcoCycle at the aforementioned age group will focus on people who still have the energy to ride a bike. The older generations might not have the necessary energy with which to use the Eco Cycle. It would therefore be counterproductive to target them with it.

Furthermore, the EcoCycle is cost-efficient and the age group which might find this value proposition worthy, is that of people who have not yet achieved total financial stability and comfort. Some of them are paying off student loans and others have just left their homes, so the savings in transportation are important for them.

Wants

What do the customers want from the product?

The customers need the product in order to exercise their commitment to saving the environment, while at the same time, making their bodies much healthier.

Benefits

The product is targeted at those customers who would like to contribute to environmental conservation by committing to a lifestyle that reduces the carbon footprints of these individuals. With the EcoCycle, these customers will be able to reduce their carbon footprint extensively.

The second benefit from the product is that the customers will be able to exercise their bodies while at the same times meeting their transportation requirements. Studies show that people struggle to find the time to squeeze exercise into their schedules. Resultantly, they are faced with choosing between their schedules and being active. With the EcoCycle’s property of both electric and manual operations, the users will find the time to work out while at the same time proceeding with their schedules. For example, riding the EcoCycle to work will have met both transportation and fitness needs.

Furthermore, the EcoCycle saves its users a great deal of money. These people do not have to buy fuel or recharge in which case they would be charged. With the EcoCycle, these people could just pedal energy into their bicycles so that they do not have to invest in fuel. Moreover, even the initial price of the EcoCycle will be lower than that of competing products, at a price of approximately $1,000.

Financial feasibility of the EcoCycle

Noteworthy, according to Yale (2018), 71.19% of these people care for the environment extensively. Considering these statistics, there is evidently sufficient demand for a product such as the EcoCycle. However, it is important to remember that the EcoCycle is a new product which requires people to pedal for their power. It is therefore necessary to explore whether the novelty of the product will be adversely affected by the culture of the market.

From this perspective, it is important to explore the extent to which the US culture is adaptive to change. This can be done using Hofstede’s cultural dimensions with the specific dimension of uncertainty avoidance. If the score of uncertainty avoidance is high, then the members of a culture are quite resistant to change. In this case, the US scores 46% (Hofstede Insights, n.d.) so the chances are that only 54 % of the 71.19% who care about the environment, are likely to adopt a new technology such as the EcoCycle. However, considering that there might still be millions of people who are likely to purchase the EcoCycle, the product can earn cost savings through economies of scale. Resultantly, the EcoCycle will be profitable.

Question 3 -Developing a start up

What is unique about the solution?

What is unique about the EcoCycle is the fact that it does not rely on external sources for mobility. The other sustainable options in the market rely on external sources of power such as solar and electricity. For example, the Daymak brand relies on hydro power for electric energy. On the other hand, there are models which do not utilize the pedaling power of the users. They use the conventional type of mobility which is pedaling. Relying on an external source but sustainable, may be seasonal so that if the bike depends on solar, it might be difficult to use the aforementioned bike in winter. Moreover, the bikes that use external sources of power, also lack the capacity to offer the individual a reward for their exercise, so that when they choose to pedal, then the pedaling power is wasted. In the case of the EcoCycle, the bike benefits the user by turning their exercise into energy so that it is not wasted, thereby giving them two incentives which are energy creation and exercise. Conceivably, the property of manual pedaling which turns this energy into electricity, has a clear competitive advantage over both types of bikes.

Gains to the customer

One of the gains to the customer, is that they get to perform exercise. According to the statistics from Cancer (2018), the rates of obesity in the United States rose by nearly 6% in eight years, so the country is in need of exercise. However, the market that we are targeting, might also struggle to find means through which to exercise, because of barriers such as a busy schedule. With the EcoCycle, these people can get their workout in, while at the same time performing the tasks that they are supposed to be performing. Rather than going to the gym and then to work, the individuals could cycle to work and this would save them time while improving their health.

The second benefit is that the customers get to preserve the environment on which they rely. The bike enables them to minimize their carbon footprint and therefore contribute to a healthier earth because they will not be polluting the environment.

Third, the EcoCycle will save its users money, because they will not have to engage in fuel purchases. All the energy that the bike uses will be free since it comes from the peddling power of the users.

Pains for the customers

The customers will have to sacrifice some of their speed when they are using the bike. Conceivably, peddling is much slower than taking the train or driving a car. Consequently, if the user is in a hurry, then they would be at a disadvantage if they were using the bike.

Second, the user would face the problem of generating fuel. If they do not peddle, then they will not have fuel. This design therefore limits the electric capacity of the bike, considering that it must be peddled as frequently as its electric component is used. If the owner is sick or has not used the bike in a long time, then there is a chance that they won’t be able to use the electric component of the bike and it will have been turned into an ordinary bike.

Additionally, the bike has issues with capacity and it cannot be used for all types of mobility and tasks. It can only carry two people, namely the rider and one passenger. For individuals with families therefore, the bike is at a disadvantage of space. The same applies to situations where the owner has various things to transport.

Question 4 – Developing a start up

Competitors of the company

There are various types of competitors for the EcoCycle. First, there is competition from the other types of bikes such as the pedal bikes and the electric bikes. Second, there is competition from the substitutes such as cars and motorbikes. As discussed below:

There are the manufacturers of electric bikes, and the producers of pedal bikes.

The producers of pedal bikes are not much of a threat though because the EcoCycle has a similar value proposition as these bikes. However, they still have some strengths and weaknesses nonetheless. The pedal bikes have the same features as the EcoCycle too, with the exception that when the user pedals, there is nowhere to store their power. They therefore have only one operating mode, which is pedaling and this reduces the value proposition of the pedaling bikes to the prospective users.

Conversely, the manufacturers of electric and solar bikes present some substantial competition. These companies produce bikes which operate on the power of hydroelectricity. These bikes will therefore use lithium ion batteries and are rechargeable with the use of electricity. Noteworthy though, the companies which are producing these brands with properties that are similar to the EcoCycle’s such as the electric features. However, their main difference is that they get their power from electricity while the EcoCycle gets its power from the peddling capacity of the users. Conceivably, having the convenience of a rechargeable bike might be more appealing than having a bike that must derive energy from peddling, since there are times that the user might not be in a position to peddle. These bikes also come in different frame sizes in order to cater to the broader tastes and preferences of the market. They have big, medium and sometimes small sizes.

Competitors’ target

The pedal bikes

The pedal bikes are targeting younger children who have not reached the age of driving so that they are likely to rely on unregulated means of transportation, such as bikes. They also target users who travel short distances in less populated areas where public transportation provides few economies of scale. In these places, the town and city amenities might be small enough to navigate on a bike. Furthermore, producers of the pedal bikes also target the hobbyists who still prefer to travel with bicycles or those who collect them for sentimental purposes.

Electric bicycle producers

Most of the producers of the electric bicycles on the market are producing mountain bikes. These mountain bikes are therefore targeted at people who engage in outdoor sports. To that effect therefore, these bikes seek to attract a customer who is adventurous, and an electric bike might be the only design through which they can get the relevant force for their adventures. Conceivably therefore, they are targeting adults within the age groups of between 18 and 45 who are also extremely adventurous. Since these are bikes which are meant for adventure and have extreme strengths, they would not be targeted at children or older consumers. Furthermore, they are targeting the high income earners because these bikes are quite expensive, and they range from $1500 to $10,000.

Strengths and weaknesses

Strengths

Pedal bikes

The main strength of the peddle bikes is that these bikes are environmentally friendly. According to Sheth, Sethia & Srinivas (2011), the 21st century consumer prefers brands that are environmentally friendly and socially responsible. To that effect therefore, these bikes have an advantage there.

Second, these bikes offer exercise to the users because they depend on the energy of the peddler for movement. As the US tried to address its problems with obesity, then demand for brands which promote activity, keeps rising. This is therefore an advantage for them.

Electric bikes

The electric bikes have the advantage of being speedier than the pedal bikes. Since the owner does not exclusively depend on their body energy for mobility, the business has greater chances of moving faster. With this property, the electric bikes can be used more often, for more mainstream travel needs than the case would be for the bikes that are exclusively dependent on pedaling.

Weaknesses

Pedal bikes

The main weaknesses of the pedaling bikes is the fact that the pedaling bikes will have a speed limit. They cannot satisfy the mainstream travel needs of the mainstream users because they are much slower. This limits the distance in which they can practically be used.

Second, these bikes have little storage capacity. They can barely be used to carry a sizeable number of groceries. Additionally, they cannot be used for family transportation and this means that more bikes have to be produced to accommodate a large number of users.

Electric bikes

The main weaknesses of the electric bikes are that they are extremely expensive. In comparison to the lowest price of approximately $300 for a pedal bike, the electric bikes cost between $1200 and $9,000. This is closed to the price of a small bike one can instead purchase an actual motor bike or even a used car since both would give them a lot more speed, and a car would give them better storage than the motorbike.

The electric bikes also rely on external rather than internal fuel so their maintenance can be relatively more expensive.

Minimum feasible features

    This new technology-based product is hybrid between a pedal bike and an electric bike. The bike is called EcoCycle. The bike will be sleek and lightweight to imitate the bodily features of the other bikes currently in the market, so that the users do not have a very steep learning curve.  It shall possess features that enable the bike to switch between the pedaling mode and the electronic mode. This idea owes its origin from technology that is currently available in other products such as the crank flashlight, so it is not a novel idea. The Ecocycle would utilize the same technology to create and store energy for the electronic aspect of the bike by peddling. This energy would then be stored for consumption later. The consumers could turn the bike into the electronic operating mode to use the stored energy by flipping the electric switch. After this, the user would could to twist the handles to raise the acceleration rate of the bike. This is instrumental when the user requires more speed such as during the times when they are in a hurry. Noteworthy, the energy will be stored in a battery that shall be stored under the passenger seat. It will be able to hold approximately 12,000 mAH of power, but the consumers will have the choice to attach more than one battery to the bike.

Why EcoCycle is highly valuable and rare among the competing brands

The competing brands do not have a bike with the same value proposition as EcoCycle. In fact, the competitors typically have brands that only peddle or hybrids that peddle and also use electric power. None of the competitors have a brand which creates and stores energy as someone peddles and this is one of the main differentiating features of the EcoCycle. Consequently, the unique feature of the EcoCycle might be its source of competitive advantage from the perspective that it does not rely on any external sources for energy needs. To be realistic though, this is also the main sources of competitive disadvantage for the brand, since it can easily be relegated to something that the customers use during their free time or when they are not in such a hurry. The additional attraction of the brand, is that it cheaper to purchase and to maintain, yet it is both manual and electric. Consequently, the users of the bike can make extensive savings on energy costs.

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References – Developing a start up

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