description
MiniBrake – a German startup that produces a remote-controlled brake system for children’s bikes – is ready to sell its product to a mass market. Should it enter the German home market and rely on specialized bicycle stores to sell the product? Or should it license the technology to an established player in the US who, in turn, would market and sell the product under their brand name?
Citation Note
Based on field research; 15 pages.
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Objective
Learning objectives:
The teaching note exhibits three overall learning objectives. These objectives are strongly content interrelated and build on one another in terms of structure: 1. Elucidating the relevance of an appropriate market selection for a first international product launch. The case gives the target audience insights about the firm’s two strategic market options and their respective opportunities and challenges. By analysing the two different markets including industry-specific, cultural and macroeconomic factors the reader can understand the importance of the right market selection and the different analytical options for investigation. 2. Raising the understanding towards pitfalls and benefits of entry modes in terms of retailer selling or licensing.
Readers are able to raise the understanding of the two presented different entry mode approaches; Retailing and licensing. By examining and discussions of the advantages and pitfalls of the two in regard to the specific markets, readers are able to ponder what approach displays a strategic fit to the startup and decide for one. 3. Elaborating the necessity of creating a trustworthy brand in a global context. The case triggers the discussion regarding the criticality of new firms to initially establish a trustworthy brand and long-term firm reputation, after selecting a market, in order to find and maintain customers and fruitful partnerships. The case allows the reader to evaluate different strategic branding options and sources for startups and its effects on the firm’s brand and reputation in the two different target markets.
Abstract
It was in 2012 at the incubator Idea Manufactory in Budapest when Marcell, Daniel and Peter realized the potential of MiniBrake, a remote controlled brake system, which could be applied to children’s bikes. The main target groups were children between the ages of 2 and 5 and their parents. MiniBrake’s future looked promising, having won prize money from start-up competitions and having received positive international press coverage. In October 2014, the start-up was ready to sell this innovative product to a mass market, but could not decide where and how to start selling it. The first option was to enter Germany’s market under the MiniBrake brand and rely on specialised bicycle stores selling it. The second option was to license MiniBrake’s technology to an established player in the U.S. who in turn would market and sell the brake under its own brand name. The case covers the German and U.S. bicycle markets and explains the selection criteria for MiniBrake. The risks and opportunities of direct selling through retailers and of licensing are evaluated. It also addresses the question regarding how an unknown, foreign start-up can establish trust and convince consumers of a product that is close to consumers’ hearts (to protect children from accidents).
