MANAGING PRODUCT VARIETY: A STUDY OF THE BICYCLE INDUSTRY

Audience: MBA Students, Industry Practitioners, Academics
Abstract
Cannondale, a producer of premium mountain bikes, offers 22 models ranging in price from $500 to $3000. VooDoo, a competitor, offers 672. Each mountain bike from National is offered in 104 different colors. A bike from Specialized is offered in only one. Why are the variety practices of these four companies so different? Given differences in their product lines, are the companies' operations also dramatically different? Can such diverse strategies coexist in the marketplace? In this paper, we use field data from four companies in the mountain bicycle industry-- Cannondale, Specialized, VooDoo, and National-- to identify and analyze managerial decisions relating to product variety. We assert that successful firms must make coherent decisions in six strategic areas: (1) the dimensions of variety offered to the market, (2) the nature of the customer interface and distribution channel, (3) the degree of vertical integration, (4) the process technology, (5) the location of the decouple point, and (6) the product architecture. Many of the differences among these companies arise from different sets of decisions, perhaps equally coherent, in these six areas.