A friend of mine just bought a bicycle for $24, seriously $24! No, not on eBay, Craigslist or some other outlet for used bicycles. This was a brand new mountain bike, certainly not a titanium/carbon-fiber speed machine like you might find in a real bike shop, but a 20+ speed bike straight off the aisle at mega-retailer Wal-mart. My aim with this post isn't to tackle the "Wal-mart is the incarnation of evil" / "Wal-mart is the foundation for the global economy" debate, plenty of people on top of that one. For me, this $24 bicycle stirred up a handful of insights I thought were worth covering.
There's a business model for a $24 bicycle - Certainly there must be more to making a $24 bicycle a viable business than utilizing cheap off-shore labor? The cost of materials, manufacturing, distribution and selling required to support this pricing are hard to fathom. Why, you could even double the retail price of this bike and its still amazing to think about. The very fact this $24 bike is possible should smack us all right between the eyes. This kind of seismic change is at play in all industries, we ignore this at our peril.
People will buy $24 bicycles - There are many who would scoff at these kinds of bikes, I don't imagine we'll be seeing many of these in this year's Tour de France, but there are plenty of people out there who would be thrilled to own one of these bikes, the nice red paint job certainly doesn't hurt.
The new disposable - At $24 this won't be a bicycle my friend will see passing from child to child over the years. "If it lasts the Summer and then explodes, it's still a great deal!" There's a disposable mentality creeping into product categories that have historically been focused on long-lasting, durable offerings. The messaging is implicit, but attitudes about product longevity are being dramatically altered.
Quality = Sustainability - As the quality threshold in some categories goes down, the demand for products designed for longevity is likely to build. Many consumers want high-quality, conscientiously-made products as the antithesis to cheap, semi-disposable products of unknown manufacturing origin. This aligns with the powerful "sustainability" movement and presents a huge opportunity for companies capable of creating quality products.
From a marketing standpoint, the $24 bicycle has big implications for all of us and acts as a microcosm for many of the dynamics happening in the world. I encourage you to think about what's happening in your marketplace and think about who's building the $24 bicycle in your industry.
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