【正文】
dren’s: As in the mainstream segment, there are many petitors, none with more than 10% of the market The above information provides enough information to put together a picture of why profits have decreased over the past five years : Your client, with a manding position in a flat market segment (racing), expanded into new segments (mainstream and children’s). As this occurred, market share decreased dramatically in the most lucrative segment (racing), creating an unfavorable mix. The extent to which profits have decreased can be deduced from some quick math : profits have slipped from $60MM five years ago (=60% x $300MM x 33% racing margin) to $44MM today ( = (30% x $300MM x 33% racing margin) + (5% x $1B x 23% mainstream margin) + (3% x $400MM x 20% children’s margin)). The dramatic decrease in market share in the racing segment is at this point still unexplained. Questions that would help formulate an explanation include: ? Have there been any major changes in product quality in your client’s racing product? Or in its main petitor’s racing product? No ? Have there been any major price changes in your client’s racing product? Or in its main petitor’s racing product? No ? Have there been any major changes in distribution outlets for your client’s racing product? Or for its main petitor’s racing product? Yes. Previously your client and its main petitor in the racing segment sold exclusively through small, specialty dealers. This remains unchanged for the petition. Your client, however, began to sell its racing bikes through mass distributors and discount stores (the distribution outlets for mainstream and children’s bikes) as it entered the mainstream and children’s segment. ? How do the mass distributors and discount stores price the racing bikes relative to the specialty stores? Prices at these stores tend to be 15 to 20% less. ? What percent of your client’s racing sales occur in mass distributors and discount stores? Effectively none. This attempt to sell through these distributors has failed ? How has the decision to sell through mass distributor’s and discount stores affected the image of the client’s