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Trek: Peddling Ebikes to the Masses

Born in a small red barn in Wisconsin, Trek is now one of the biggest names in bikes.

From top-tier racing bikes to solid beaters for the everyday rider, its history of innovation has kept it at the front of the peloton for decades.

But with a new technology on the rise, should Trek focus on what it knows works? Or should it innovate in a new category and risk wasting time and money on an untested idea?

Today on Strategy Standoff, you'll see a choice between focus and diversification.

Can you guess which they chose?

Gary Fisher coined the term "Mountain Biking" in 1979, crafted modern prototypes, and popularised the sport. Trek bought Gary Fisher Mountain Bikes in 1993 to tap into the growth of offroad cycling.

The acquisition came during a transformative era for Trek which was also working with carbon fibre and sponsoring top of pro cycling teams. Around this time, Lance Armstrong’s infamous 7 Tour de France victories were won on Trek bikes, bringing significant attention to the brand.

Then the 2010s rolled around, and with mountain and road bikes taken care of, there was a new step on Trek’s innovation path: electric bikes.

While ebikes quickly rose to take 20% of the two-wheeled vehicle market in China, their reception was lukewarm at best in Western markets like the US and Australia.

Research showed many cyclists viewed ebikes as "cheating," preferring the sweat and effort of traditional pedalling. And the high price and limited range of early ebikes didn’t help.

A Fork in the Road:

In 2010, Trek introduced the FX+, an electrified version of their popular FX commuter bike. Despite low sales, this was seen internally as a step in the right direction for Trek, showing commuter ebikes might be viable in Western markets.

At the same time, a few bike companies experimented with a new form of ebike - the e-mountain bike. Originally produced for military use, electric mountain bikes were beginning to find a niche. Elitists, of course, continued to dismiss e-bikes as a stain on the sport.

Either way, Trek were convinced ebikes had a future. It just needed to decide what that future looked like - should their model range suit demand for city commuting or mountain fun?

This week’s Strategy Standoff:

To become a leader in e-bikes in the West, should Trek focus on the proven relevance of commuter e-bikes, or expand into the unknown with electric mountain bikes?

The Strategy Standoff

Strategy A: Commuter Campaign

Trek would focus their resources on electrifying their existing line of commuter bikes. That decision had already proven successful in Asian markets and e-bikes would offer an affordable transport option for consumers in an era of rising fuel prices.

However, the lack of bike infrastructure in many cities would make commuting unviable for many customers. Also, regulations often categorised ebikes as motor vehicles (often limiting their speed) making it hard to promote them as a commuting option.

Strategy B: Offroad Offensive

Trek would focus on developing new electric mountain bikes to encourage and grow with a new market segment. E-bikes would give mountain bikers more power climbing hills and exploring trails.

However, MTB enthusiasts would take convincing to get behind this innovation (cheating!). Unit costs could be less attractive because of the small size of the segment and cost of innovation. A distraction could make it harder for Trek to stay dominant in either segment.

answer

So, Which Did They Choose?

Cast your vote to find out!

Better luck next time, Strategy B was chosen!

Good Job, Strategy B was chosen!

But how will this work out for Trek...

Expert Facilitator Commentary By Matt

Trek took the lead in the eMTB category and legitimised motorised mountain bikes.

They continued with their e-commuter bike range, but eMTB was where they placed a big bet. Trek needed to convince mountain bikers that eMTBs were cool.

At the time, just like Google Glass (sorry to remind you about these), no self-respecting mountain bikers wanted to be seen on a mountain trail using a motor. At best they all saw it as cheating.

Matt Braithwaite-Young

Managing Partner

t +61 2 9002 3100

Contact Matt

Above: Google glass and E-Bike media commentary – building new categories is hard

But Trek doubled down and took on the huge challenge to create initial demand for the eMTB category.

Research gave them a clue

Trek research said mountain bikers rejected eMTB because they thought using a motor was obviously cheating and did not want to look or feel embarrassed using them on trails. So they needed to find a way to validate eMTB and establishing it as a fair and legitimate format - definitely not embarrassing or cheating.

Fortunately, they had a competitive advantage here thanks to their own heritage in mountain bikes, plus their association with Gary Fisher who had earlier invented the whole mountain bike format.

But first, they needed a product to sell.

A new kind of e-bike

So to appeal to recreational MTB riders, Trek launched a new eMTB, the Powerfly, in 2014. With its big battery pack and large motor dangling off the down tube, it looks clunky a decade later. But a reasonably knowledgeable mountain biker at the time could see it had a good frame geometry and suspension - and Trek had worked with Bosch on a new motor tuned to help with mountain biking uphill.

Above: Above: Powerfly - clunky by today’s aesthetics but revolutionary in 2014

Trek felt when the eMTB category took off, their product distribution and reputation in traditional MTB category would see Powerfly models basically selling themselves.

It was time to popularise and validate the eMTB category.

Enter Gary Fisher.

Gary Fisher is to mountain biking what Elon Musk is to electric vehicles.

Remember, Trek had bought Fisher bikes from Fisher and since then had, wisely, maintained a relationship with him (notoriously hard to do after a founder has worked through earn-out!).

In his promotional work, Gary Fisher used the new concept of UPHILL FLOW to point out the benefit of getting a great experience going UP the mountain (usually a tiring and manual effort, of course).

Introducing UPHILL FLOW and revealing the Trek angle

In mountain biking, the word flow had become customer word for the fun bit –enjoying the interaction with gravity and the terrain.

In a famous video, Fisher gave the validation tactic away in a single quote:

“I totally agree with this new technology called UPHILL FLOW – we are now able to have the PURE FUN we experienced at the beginning of mountain biking – but now, UP the hill!”

Above: Industry godfather Gary Fisher authorises riders to participate in eMTB

You’ll immediately spot how overtly Fisher points out his personal endorsement for the whole category.

He says: “I totally agree with this new technology”.

Then he reminds viewers about the category benefit of mountain biking (”pure fun”) and points out - for good measure - that he was there “at the beginning”.

A cherry on top: split the cost with a rich German

Like in all decent strategy, Trek made a few of decisions that worked together to get the win. A good example was to look at a supply partner to spread the cost of the promotion and leave more to invest in production.

To help pay for the Fisher campaign, Trek got Bosch, the German company that made their eMTB motors, to pony up. After all, as leaders in e-bike motors, they would benefit from growing the category.

A decade later, eMTBs make up 25% of mountain bike sales

This is helped by their higher price, which retailers love, and sales growth is now expected to stay at 10%+ every year over the next decade.

What can we learn?

This case shows the importance of understanding the barriers to success but also how understanding the unique strengths you have in your own organisation and value chain.

Most firms would have been incredibly foolish to take on the challenge of legitimising a new category. But sometimes it's the smart approach.

Experience is everything.

Above: What a difference a decade makes: Original 2014 Trek Powerfly (left) and the 2024 model (right)

Do you face challenges like Trek?

Strategy facilitation can help businesses navigate these complex decisions, helping you unlock the right strategy with industry-tested methodologies.

Your strategic visions deserve the commitment of your entire team. With Turning Leaf, you’ll create plans that not only get done, but drive transformative change within your business.

When you're ready to take your strategy to the next level, feel free to give me a call on my personal mobile at 0410 598 538.

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