Pacific Cycle, Inc.

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Pacific Cycle, Inc.

FAST. IT'S CORPORATE POLICY. CAMPAIGN
WHAT A RIDE CAMPAIGN

4902 Hammersley Rd.
Madison, Wisconsin 53711
USA
Telephone: (608) 628-2468
Web site: www.schwinnbike.com

FAST. IT'S CORPORATE POLICY. CAMPAIGN

OVERVIEW

Hoping to capitalize on the tail end of the mountain bike and bicycle motocross (BMX) craze of the late 1990s, Schwinn Cycling & Fitness purchased GT Bicycles for $170 million in 1998. The resulting company was named Schwinn/GT Corp and was later purchased by Pacific Cycle, Inc., which now operates Shwinn as a brand. Relying on word of mouth and a century-old brand name, Schwinn typically partitioned only a small amount of its budget for advertising, usually executed by Carmichael Lynch, Inc. By 1999, however, the $5 billion American bicycle industry was waning. Schwinn was rapidly losing market share from its antiquated mode of selling bicycles through independent dealerships. In a last-ditch effort to keep from filing bankruptcy, Schwinn launched the "Fast. It's Corporate Policy." campaign to tout the speed of its new GT Bicycles. Prior to its acquisition by Schwinn in 1998, GT Bicycles handled all advertising internally.

Executed with the help of Carmichael Lynch, "Fast. It's Corporate Policy." was primarily spearheaded by Miami-based Crispin Porter + Bogusky, which named the campaign and designed its print ads, the campaign's sole medium. With a budget of $1 million, the campaign hoped to depict GT Bicycles as the "most advanced, fastest, human-powered vehicles on the planet." Within an industry that typically ran print ads of sponsored riders, Crispin Porter + Bogusky tailored the campaign around GT Bicycles employees and their obsession with speed. Print ads showed employees injuring themselves from running too fast through the office. One of the campaign's more risqué ads, "Sex Bicycles," showed an employee triumphantly raising his arms beside his girlfriend. Reclining in the back of a company van, both were covered in blankets. The ad suggested they had just finished having sex. The employee's girlfriend, looking much less satisfied, lay beside him. The tagline "Fast. It's Corporate Policy." appeared below the photograph.

Continuing through 2000 the campaign garnered two Clios along with seven Gold Lions at the Cannes Lions International Advertising Festival. GT Bicycles was also the only industry brand to report a market share gain (up 6 percent) in 2000. Because of Schwinn/GT's unwillingness to branch outside of its 1,900 independent dealerships, however, the corporation filed for Chapter 11 bankruptcy protection in mid-2001.

HISTORICAL CONTEXT

For more than half of the twentieth century, Schwinn dominated America's bicycle industry. The first major sign of the company's inability to change with consumer trends occurred during the 1970s when Americans gravitated toward light-framed European road bikes. Schwinn continued manufacturing its larger, bulkier models. Schwinn again dismissed the 1980s popularity of the BMX and mountain bike. After losing considerable market share, the family-owned Schwinn business filed for bankruptcy protection in 1992 and was later purchased by an investment firm. Even with new owners Schwinn continued relying on its brand identity and exclusive bicycle retail stores to rally back. Around the time "Fast. It's Corporate Policy." appeared, about 250 individual retailers still had "Schwinn" in their name. Industry analyst Ray Keener told Hoover's, "That doesn't sound like a lot, except that Trek is second with one dealer—the Trek factory store—and no one is in third."

Previous to its relationship with Crispin Porter + Bogusky, Schwinn outsourced advertising to Carmichael Lynch, which developed successful television spots such as "The Ride." Adweek deemed this Schwinn commercial a "top spot" in 1993. Schwinn's advertising budget was small, only reaching $1.3 million in 1998, even though the company's overall expenditures reached $37.3 million. To ward off its second bankruptcy of the 1990s, Schwinn bought the popular BMX and mountain bike brand GT Bicycles for $170 million. Previous to the acquisition GT Bicycles executed all advertising in-house and sponsored professional BMX riders such as Stephen Murray, who held the record for the longest jump.

After acquiring GT Bicycles in 1998, Schwinn/GT wanted to aggressively market the brand to overtake competitors like Cannondale Bicycle Corp., Specialized Bicycle Components Inc., and Trek Bicycle Corp. In regard to previous GT Bicycles ads, Gregg Bagni, Schwinn/GT's marketing vice president, told Adweek, "The GT ads were funny … [but] Schwinn is about escape and freedom. We're constantly looking for new ways …, to look at biking from a fun standpoint." Even though Crispin Porter + Bogusky was named agency of record for the "Fast. It's Corporate Policy." campaign, Carmichael Lynch contributed as well to position GT Bicycles as the fastest bike in the industry.

TARGET MARKET

"Fast. It's Corporate Policy." created humorous and sometimes salacious print ads to attract younger extreme sports enthusiasts. Ads portrayed young GT Bicycles employees engaging in day-to-day life events with the same speed and vigor of a BMX rider. Bill Smith, Huffy's vice president of marketing, told SportStyle, "Unlike the adult bike market which continues to soften as baby boomers mature and buy fewer mountain bikes, there is an uptick in kids' and BMX bikes which derives from the popularity of extreme sports."

The campaign's print ads deviated outside of traditional BMX advertising, which typically displayed photographs of sponsored riders performing stunts with the brand's product. Crispin Porter + Bogusky strove to brand GT Bicycles with speed and humor by making every employee at GT Bicycles appear obsessed with doing things fast. Focusing on the product instead of the brand was something the bicycle industry was often criticized for, especially inside the actual IBDs (individual bicycle dealers). "Many IBDs come from an enthusiast background—they're bike geeks and it's hard for them to let go of that," Marshall Hannum, manager of Poison Spider Bicycles, told SportStyle. "The result is that we get businesses that look more like car garages than like Nordstrom's, and most people would rather shop at Nordstrom's."

COMPETITION

During the late 1990s three brands—Huffy, Roadmaster, and Murray—reigned over 65 percent of the American bicycle market by manufacturing bikes in China and retailing them through Wal-Mart Stores, Inc. and the Kmart Corporation. The faster-growing high-end bicycles accounted for the market's other 35 percent and retailed primarily through individual bicycle dealers.

CANYON GANG

A group called the Canyon Gang is commonly credited for inventing the mountain bike. The group's four members—Robert and Kim Kraft, John York, and Tom Slifka—began riding heavy-framed Schwinn bicycles down mountain trails within California's Marin County. The members would take the wide-tired bikes, which they called "ballooners," to the peak of 2,600-foot Mount Tam and ride down trails, braking as little as possible. Schwinn, ironically, dismissed mountain bicycles as a passing fad and never designed mountain bikes during the 1970s or '80s.

The Texas-based Trek Bicycle Corporation, America's largest manufacturer of high-performance bicycles, first sponsored three-time Tour de France winner Greg Lemond and then later seven-time Tour de France champion Lance Armstrong. Besides making road bikes Trek also produced mountain, BMX, children's, recumbent, and police bikes. Brand promotion was accomplished through the sponsorship of athletes and races. Much of Trek's success inside a struggling industry was attributed to the corporation's savvy sponsorships, great customer service, greater affordability, and sleek design. "It's easy to make a few missteps in this business but you can't argue with the quality of their bikes," Mark Sani, editor of Bicycle Retailer, an industry trade journal, told Capital Times. "They're basically blowing everybody else out in terms of lower cost, customer service and great delivery."

Unlike many of its competitors, Trek also manufactured its bicycles in America, finding the cost comparable to Asian manufacturing. "Our growth is even more amazing when you consider the fact that the bike business itself hasn't been growing," Tom Albers, Trek president and CEO, told Capital Times. "We've been growing because we've been taking market share from our competitors."

Cannondale Bicycle Corp., another high-end American bicycle manufacturer, advertised by cosponsoring bike racing teams. The company struggled much as Schwinn/GT did in the late 1990s and eventually sold assets to the private equity firm Pegasus Capital Advisors. "It's a price game. It's a commodity market. And it's very difficult to make a profit," Jay Townley, a former Schwinn vice president, remarked on the bicycle industry to the Milwaukee Journal Sentinel. "Ask anybody who's done business with Wal-Mart."

MARKETING STRATEGY

To slow the diminishing of its market share, Schwinn in the 1990s made restructuring decisions like purchasing GT Bicycles in 1998 and focusing advertising on the newly acquired brand's BMX and mountain bikes. "We've come back, hit the mountain bike market, dropped down into BMX, and are looking at pushing the road bike market," Schwinn BMX market manager Geoff Hannen told SportStyle. "But we will continue efforts in BMX because we've already seen amazing growth there and [the category] holds tomorrow's mountain bike buyers."

In 1999 Schwinn awarded Crispin Porter + Bogusky a majority of its $1 million advertising budget. Creatives from the agency then met with Schwinn/GT Bicycles representatives to discuss the campaign. "We did a planning exercise with them to get to what their core attributes were," Jeff Steinhour, partner and director of account service at Crispin Porter + Bogusky, told Adweek Southeast. "They'd never been through something like that, and by the end of the second day, we were down to seven to ten words. The one that kept coming up most often was 'fast.' " The agency then went on to produce humorous print above the tagline "Fast. It's Corporate Policy."

Crispin Porter + Bogusky's Ari Merkin wrote the print's copy. Alex Burnard was responsible for the campaign's art direction. Until the end of 2000 the campaign's sole medium, print ads, appeared in popular bicycling magazines, the magazine Outside, and the Men's Journal. One print ad, titled "Sex Bicycles," showed a young, blanket-covered couple lying in the back of a GT Bicycles company van. The young man raised his arms in victory above the tagline "Fast. It's Corporate Policy." His less-than satisfied girlfriend was rolling her eyes beside him. Below the ad was a small picture of a GT Bicycle. Another ad showed GT Bicycles employees who accidentally knocked each other unconscious after running through their office. "We felt we needed to leverage 'fast' into a compelling consumer message that invites people in," Steinhour told Adweek Southeast. Another ad, titled "Speeding Tickets Bicycles," showed a parking lot filled with GT Bicycles employees, each receiving a speeding ticket from a different highway patrol officer.

Erik Proulx of the agency Brokaw explained in Advertising Age's Creativity that Crispin Porter + Bogusky's strategy was to simply exaggerate "the bejeezus" out of the product's benefit. The same could be applied to, as Proulx stated, dish detergent. The tagline would be "Maybe we make dishes a little too sparkly." The ad critic continued to say, "After all, what is 'Fast. It's Corporate Policy,' for GT bikes other than 'Maybe we make bikes a little too fast' by another name?"

OUTCOME

The "Fast. It's Corporate Policy." campaign saw Schwinn/GT Bicycles maintain $400 million in sales for both 1999 and 2000. During the campaign's last 12 months, GT Bicycles also gained 6 percent market share, the largest gain within the entire bicycle industry. The campaign collected two Clios and later seven Gold Lions at the Cannes Lions International Advertising Festival.

GT

Robert Long and Gary Turner first designed the light-framed GT Bicycles in 1979. Gary Turner was a bike aficionado, and the company's name came from his initials.

Despite its success in 2000 Schwinn/GT Bicycles filed for Chapter 11 bankruptcy protection in July 2001. Analysts cited the corporation's neglect of the 1970s road bike trends, along with the 1980s BMX and mountain bike trends. Also Schwinn was criticized for its insistence on selling bikes exclusively through Schwinn's 1,900 independent dealerships. Others cited flaws in the pricing mind-set of the entire industry's retailers. "A bike is the only product with 100-plus parts that can be bought for under $100. There's something wrong with that picture," bike industry consultant Bill Fields of Fields Associates told SportStyle. Schwinn/GT Bicycles' assets were eventually divided and sold to competitors.

WHAT A RIDE CAMPAIGN

OVERVIEW

NOTE: Since the initial appearance of this essay in the 1998 edition of Major Marketing Campaigns Annual, Schwinn Cycling & Fitness was acquired by Pacific Cycle Inc. The essay continues to refer to the company's former name, as that was the official name of the organization when the campaign was launched.

In 1997 Schwinn Cycling & Fitness Inc. launched a print campaign designed to entice the masses of mountain bike enthusiasts while altering the company's image as an out-of-touch dinosaur. Schwinn dominated the U.S. bicycle market from the 1950s to the 1970s but hit the financial skids in the 1980s, in part due to the company's dismissal of the mountain bike craze of the late 1970s and early 1980s as nothing more than a passing trend. Sales of mountain bikes climbed and by 1992 amounted to nearly two-thirds of all bicycle sales. Schwinn was left in the dust and lost $25 million in 1992. The company's market share plummeted, and Schwinn was more than $80 million in debt when it finally limped into bankruptcy court in October 1992. The Schwinn brand, once a revered American icon, teetered on the edge of extinction.

Scott Sports Group purchased Schwinn in early 1993 and implemented some major changes, including moving Chicago-based Schwinn to Boulder, Colorado, the mecca of outdoor enthusiasts. Scott cut the headquarters' workforce by more than half, hired new management familiar with the cycling industry, infused money into the company, and introduced new and redesigned models of bicycles. Also on the priority list was the task of pumping new life into the brand image. The Schwinn brand had become passé and to zealous mountain bikers was considered sedate and "uncool." A marketing executive with mountain bike manufacturer Cannondale told USA Today in 1995: "When I was a kid, if you had a Schwinn you were the luckiest kid in the world…. Ask a college kid now and they'll say, 'Oh, Schwinn? They're toast.'"

To remedy the image problem, Schwinn engaged the help of Minneapolis-based advertising agency Carmichael Lynch. Early advertising campaigns were aimed at the high-end mountain biking crowd, including biking fanatics and bike shop employees who influenced many customer purchases. Schwinn hoped for a trickle-down effect; but the trickle was slow, so Schwinn kicked off the "What a Ride" campaign to chase down the masses, namely midrange consumers. Eye-catching color print ads relating the postride musings of mountain bikers appeared in national magazines. Careful not to neglect the high-end riders, "What a Ride" also included a black-and-white print effort geared toward specialized cycling magazines. All the ads boasted a hip, slightly irreverent attitude and spoke specifically to mountain bike enthusiasts. As Gregg Bagni, Schwinn's vice president of marketing, told Advertising Age, "We're trying to stop readers dead in their tracks."

HISTORICAL CONTEXT

Before its downfall, family-owned Schwinn ruled the bicycle realm, commanding as much as 25 percent of the U.S. market. By 1995, the year Schwinn celebrated its 100th anniversary, Schwinn's market share had dropped to 5 percent of the $2.5 billion annual market, according to USA Today. Despite the company's struggles, however, its sales, attitude, and brand image were much improved since the Scott buyout, and by 1996 Schwinn was back near the top: in terms of units sold, Schwinn ranked second in U.S. bicycles sold through the independent-dealer marketplace.

Advertising forays following the company's resurrection sought to change Schwinn's tarnished image. Carmichael Lynch, which had a good track record of working with companies returning from the brink of death, suggested a campaign showing a new side of Schwinn, one with an attitude and an edge that would appeal to biking zealots. Most considered Schwinn products archaic and associated them with an older generation, and thus Schwinn desperately needed to convince consumers that the company knew and understood the customer and the product, that it was "cool," and that it was capable of manufacturing technologically progressive bicycles. To accomplish these goals, Schwinn targeted the crowd that lived to ride—bicycle shop employees, professional racers, and fanatics obsessed with mountain biking. Schwinn found that this group influenced more than 60 percent of all mountain bike purchases and thus hoped to win their approval.

The first campaign included a print ad of a bicycle messenger riding down a busy urban street. The copy stated, "Read Poetry. Make Peace with All but the Motor Car," and continued, "Schwinn is red, Schwinn is blue, Schwinn is light and agile too. Cars suck." The ad was a far cry from the polite, traditional Schwinn of old, and Bagni met with resistance when he sought the go-ahead from management left over from the prebankruptcy Schwinn days, specifically the former chief operating officer Ralph Murray. Murray found the ad offensive and nixed the campaign, but Bagni ignored Murray's complaints and ran the ad. Bagni explained his tactics to Reputation Management, saying that "once you're in this business you have to get to know the customer, you have to understand the culture. This was a guy who'd never been on a bike in his life." Bagni also asserted that the old Schwinn "was a marketing-driven company, not a market-driven company. A marketing-driven company will try to sell a warehouse full of yellow bikes. A market-driven company will determine what the customer wants first." Schwinn's plans paid off—the company's high-end bicycle sales per units sold increased 10.4 percent since the campaign began.

TARGET MARKET

Schwinn critically needed to win over the high-end mountain biking crowd to begin rebuilding its image, and the company was not shy about its intent. Tom Stendahl, Scott and Schwinn's CEO following the buyout, told Industry Week: "Our objective was to go after the top notch and make sure that the high-end consumer of mountain bikes would realize that we made a damn good product and could be proud to own a Schwinn again. Our second stage was to go after the whole middle market." The "What a Ride" campaign represented this second stage.

To become relevant to the high-end group, Schwinn produced cutting-edge bicycles in the $1,500 to $5,000 range. As a result, Schwinn exceeded its high-end bicycle sales goals in the mid-1990s. Low-end products that sold for less than $500 also fared well, but buyers who sought bicycles in the $500 to $1,500 range, who constituted a large percentage of the market, felt Schwinn did not offer products appropriate for their lifestyles or budgets. Schwinn's hope was to dispel these opinions and increase sales among midpriced mountain bikes with the "What a Ride" campaign. Specifically, Schwinn's target group consisted of affluent male bicyclists ranging in age from 28 to 42 who rode habitually but were not obsessed with bicycling. These active males desired reliable, technologically sound products and enjoyed the challenges of mountain biking. These consumers had seen Schwinn jump from manufacturing no mountain bikes to producing top-of-the-line bikes and were unconvinced that Schwinn could cater to, or even understand, their needs.

While Schwinn hoped to sway the masses buying in the midpriced bicycle range with "What a Ride," the company did not abandon its preliminary target—serious bicyclists. These high-end riders continued to have an impact on purchase decisions, and Schwinn felt it was important to maintain a strong brand identity among this group to help increase awareness and sales in the midrange market.

COMPETITION

When Schwinn entered the mountain bike market, the company faced an uphill struggle. Companies including Trek Bicycle, Specialized Bicycle Components, Cannondale, and Giant had established themselves as mountain biking leaders, enjoying tremendous growth through the 1980s and early 1990s as mountain biking surged in popularity. Trek, the market leader, sold 950,000 units in 1995 to earn approximately $300 million in revenue, according to USA Today. Schwinn, in contrast, reportedly sold about 480,000 units in 1995, up from U.S. annual sales of around 300,000 during the time of Scott's takeover, as noted in Industry Week. Schwinn's market share sagged under the 5 percent mark in 1995, but by 1996 the company had worked its way into the number-two position in terms of units sold and was striving to improve. Bagni summed up Schwinn's turnaround in Rocky Mountain News: "Considering that the patient was bleeding to death and having a heart attack simultaneously when we [new management] came on board, we've come a long way, and now we want to go to the next level…. We're not comfortable with No. 2."

Schwinn may have chosen a challenging time to launch its growth campaign, since the bicycle market had begun to shrink, dropping 5 percent in 1996. Mountain bikes continued to dominate the market, selling 68 percent of the total units sold through the independent dealer network, but sales fell 9 percent from 1995 and had been declining since mountain bike sales peaked in 1993.

MARKETING STRATEGY

Considering that the bicycle market was in decline and Schwinn's image among the target group was shaky, Schwinn's goals for the "What a Ride" campaign were high. Schwinn chose to produce ads that spoke directly to mountain biking enthusiasts, using appropriate terminology and focusing on specific product features and components to prove Schwinn's understanding of mountain biking. The campaign consisted of two print efforts—one geared toward the mass audience and one targeted toward the high-end crowd. The first included several color ads and appeared in mainstream publications such as Outside, Rolling Stone, and Men's Health for maximum exposure. Black-and-white ads aimed for the serious cyclists were published in specialty magazines, including Velo News, Bike, and Mountain Bike. Mountain biking conveyed an image of adventure and individuality, and the ads incorporated these traits to spark the attention of readers.

Schwinn's provocative color ads included "Nose," "Sock," and "Shower," and each features a close-up view of the subject of its title, accompanied by comments regarding various parts of the close-up. For instance, "Shower" provides a shot of a shower drain. Various objects—remnants of a postride shower—lay scattered by the drain, each coupled with commentary. Human hair, a bloated tick, a leaf, toxic sewage, and candy corn are among the objects. The text for the toxic sewage reads: "Toxic sewage. Thanks to your lightweight butted Cro-Moly frame, you hydroplaned through this glowing, putrid cesspool before your legs were melted to stumps." The text is humorous yet demonstrates Schwinn's knowledge of technology and components specifically of interest to the target group.

"Sock" displays a dirty sock that has just been worn on a ride. A fly, lizard tail, corn kernel, and some athlete's foot fungus are among the debris stuck to it. The text for the fly reads: "Fly. Rock Shox (front and rear) let you fly down jawbreaking bluffs while other riders barbecued brake pads. Dreaming of rodeo stardom, this tiny bronco-buster held on for the ride of his life." Again, the elements of humor, irreverence, and technological insight sought to convince consumers of Schwinn's shared passion for riding. "Nose" shows a close-up shot straight up a pair of nostrils. The ad points out a missing nose hair, a ruptured capillary, a hummingbird feather, swamp bacteria, and more. The caption for the missing nose hair states: "Your Epicenter seat stays gave you such braking power, you stopped dead. This inertia-driven follicle uprooted from nasal membrane and drove like a nail into a sapling. Ouch!" A shot of a Schwinn mountain bike along with the tag line, "What a ride," appears in the lower right-hand corner of each ad.

The black-and-white ads are simpler and subtler than the color ads, but the messages are just as strong. The minimalist design of the ads and their antimain-stream attitude conveys the target group's single focus on mountain biking as a way of life. "Veal Stall" shows two identical diagrams of a stall-like room. The first diagram is labeled, "Veal Stall," and the second, "Office Cubicle." The message to biking enthusiasts is clear—having an office job provides as much freedom as being a calf confined to a veal stall. Another ad displays a peace sign labeled "Peace" and underneath a diagram of a bicycle wheel with spokes labeled "Love." A third ad shows two triangles. One states, "Hierarchy of Needs," and within the triangle "Food," "Clothing," and "Shelter" are listed. The second triangle depicts a snow-capped mountain. The label reads "Hierarchy Revised." This ad cleverly illustrate the priorities of mountain bike zealots who live not for the basic necessities but for riding.

SCHWINN DEALERSHIPS

In Schwinn's heyday independent dealers across the country sold Schwinn bicycles exclusively. This lock on the market began to crumble in the late 1980s as dealers began to stock several brands. Suddenly customers faced choices, and Schwinn products did not always win the sale. When bankruptcy hit, many dealers were stuck with unwanted inventories of Schwinn products, and thus they were reluctant to reestablish relationships with Schwinn after the Scott takeover. Schwinn found itself convincing dealers, as well as consumers, of how much the company had changed.

OUTCOME

Schwinn exceeded its goals for the "What a Ride" campaign and continued to produce ads with the "What a ride" tag line through 1998 based on the success of the campaign. The company's market share, according to Rocky Mountain News, increased to 14 percent in 1997, while competitor Trek's share dropped to 19 percent. Schwinn continued to fare well with the high-end group, selling out of all high-end mountain bike models and increasing sales by 25 percent. Schwinn also sold out of all models of Moab mountain bikes, Schwinn's mid-priced line, and sales jumped 50 percent over 1996. Overall, Schwinn's unit sales increased 16 percent in 1997 from 1996, successfully tripling Schwinn's original sales goal of 5 percent, an impressive feat considering the mountain bike market declined 9 percent during the same period. Charles Carlson, general manager of Boulder's University Bicycles, explained to Rocky Mountain News: "Schwinn is kicking butt right now. They have an awesome bike. Two years ago we said 'There is no way we would ever sell a Schwinn mountain bike.' Now they're responsible for about one-third of our annual sales." Schwinn hoped to continue gaining momentum in the mountain bike industry to once again become the brand coveted by everyone.