Specialized Bicycle Components
15130 Concord Circle
Morgan Hill, CA 95037
June 16, 1995
Dear Specialized Retailer:
It's been a terrific 20 years for Specialized. We are now looking forward to continuing our leadership role in the coming decades. We want to thank you, our dealers, for helping us to lead the industry in the evolution of cycling through product innovation, racing, and promotions. We value most the role that you have played as our key partners in this success, and we are committed to growing our relationship with you.
If you've been following cycling press lately, you know that the industry is maturing and changing every week. Despite this climate, Specialized remains committed to maintaining the integrity of the Specialized brand by not selling it into the mass merchant channels or competing with our partners in the specialty retail business. We wish to put to rest any coincerns that we will sell Specialized bikes and technical accessories into these channels.
To address the needs of our non-traditional consumers, we are launching a new, independent company and brand called Full Force, which will produce quality, value-oriented bicycles and cycling accessories for entry level cyclists. Full Force will drive our OEM manufacturing operations which will continue to produce private label helmets and waterbottles for such top name brands as Nike, Bauer, Gatorade, and Ralph Lauren. Full Force brand products will be sold through general sporting goods stores and select mass merchants.
This dual branding strategy enables Specialized Bicycle Components to maintain the integrity of the Specialized brand, while simultaneously providing new value-oriented consumers with a quaility introduction into the sport of cycling. This will make Specialized a more viable company for the long term. Profits from Full Force will be aggressively reinvested back into Specialized research and development, specialty retailers to reach these new consumers and migrate them into your channel for upgrade purchases. This move is consistent with our heritage of evolvong the sport and guiding change, rather than being steered by it.
You may have questions or comments regarding the enclosed information and the specific programs which we have designed for you, so please feel free to call me personally at (408) 779-6229 ext. 2255 or Steve Meineke at ext. 2326. My commitment to you is that we will aggressively reinvest in the exciting, innovative product, effective dealer support programs, and the people and partners that have made Specialized the premier brand that it is today.
Sincerely, Mike Sinyard President
NEWS RELEASE FOR IMMEDIATE RELEASE For more Information Contact: Peter Berkowitz (408) 779-6229 ext. 2346
SPECIALIZED BICYCLE COMPONENTS CREATES NEW COMPANY, FULL FORCE, TO MANUFACTURE BICYCLES AND CYCLING ACCESSORIES FOR ENTRY LEVEL CONSUMERS
--Company Will Also Market Private Label Helmets and Waterbottles-Move Designed to Expand Participation in Cycling by Providing Improved Entry Level Experience--
Morgan Hill, CA, June 15, 1995--Specialized Bicycle Components announced today the launch of Full Force, a new company and brand owned by Specialized Bicycle Components. Full Force will produce quality, value-oriented cycling products for entry level cyclists. It will also produce private label helmets and custom waterbottles for top name brands such as Nike, Gatorade, Bauer, and Ralph Lauren.
Full Force brand bicycles and cycling accessories will be marketed through general sporting goods outlets and select mass merchants to entry level consumers seeking a quality introduction to the ever growing sport of cycling.
Mike Siinyard, President and CEO of Specialized Bicycle Components, sees this step as an important element in Specialized's ability to grow and evolve the sport of cycling. "Over the past twenty years, Specialized has helped create and grow the sport of mountain biking through innovation and new technology, and we remain committed to the continued growth of that segment of the industry, including the specialty retailer and trhe Specialized brand. To evolve the sport while strengthening and maintaining the integrity of the Specialized brand, we are creating Full Force to introduce a different group of consumers to quality cycling products where they shop today. We plan to target those entry level cyclists with a quality cycling experience and draw them into the sport so they become long-term participants, eventually trading up to the more sophisticated equipment and accessories provided through the specialty retail channel."
Brent Knudsen, who brings a passion for cycling, extensive retail experience, and more than 10 years of experience in the mass merchant channels, has been named president of the new company. The company will be building a sales and marketing team to launch and grow the Full Force brand. "We are continuing to lead the cycling industry by bringing quality cycling products to a broad sector of new consumers. The results of this expansion will also be embarking upon aggressive consumer-oriented promotions to attraact retailer traffic to all channels and thus continue the growth of the sport. Our goal is to have entry level participants enjoy a grat experience and share our padssionate commitment to this sport," says Knudsen.
Initial product is scheduled for delivery in Fall of 1995. The complete product line will include bicycles, helmets, and a strong selection of quality bicycle accessories.
Full Force is based in Morgan Hill, California. Specialized Bicycle Componets, celebrating its 20th Anniversary continues to lead the cycling industry in product and marketing innovation, off road racing, and land access & trail advocacy support. Since 1974, Specialized has been committed to evolving the sport of cycling while innovative and functional bicycles and bicycling accessories that are "designed for the best ride."
Full Force Questions and Answers --CONFIDENTIAL--
1. What Is Full Force?
Full Force is an independant company and brand owned by Specialized which will utilize the innovative design capabilities and experience of Specialized Bicycle Components to produce quality, value-oriented cycling products. These products will be created for the entry level cyclist. The company will also continue to manufacture private label helmets and waterbottles for top brands such as Nike, Bauer, Gatorade, and Ralph Lauren.
Full Force will have its own unique identity, seperate management, and will be located at 15750 Concord Circle, Morgan Hill, CA 95037.
2. Why Are We Launching A Second Brand?
This dual branding strategy serves several purposes. First, and foremost, Full Force has been created to maintain the integrity of the Specialized brand. In the present marketplace, close to 70% of the bikes purchased in the US are sold through general sporting goods and mass merchant channels. Specialized is looking to capitalize on this already existing market in an effort to grow the industry as a whole and more effectively migrate the entry level consumer into the sport and into the specialty retail channel. We are therefore able to continue to grow the sport of cycling while reinvesting in the Specialized brand, which Specialized and our specialty retailers have so successfully developed.
3. Describe the Full Force Product
Full Force brand products will include helmets, accessories and bicycles. The brand has been created with its own unique personality and image utilizing specific logos, graphics, packaging, and design. The packaging with read "Full Force" and will feature a small Full Force logo which states, "Specialized Design". This will be the only direct connection to the Specialized brand. The Specialized name will not appear in Full Force advertising, and Full Force products will not feature any Specialized branded componentry.
4. Where Will These Products Be Sold?
Full Force branded bicycles and accessories will be marketed through general sproting goods and select mass merchants, and will be targeted for the entry level consumer looking for a quality introduction to the sport of cycling. We will not sell Specialized branded merchandise in the mass merchant channel.
5. When Will Full Force Products Be Available To Consumers?
Full Force accessories will be available in the Fall of 1995. Initially, one bicycle model will ne available for late fall delivery.
6. How Does This Dual Branding Strategy Benefit The Specialty Retailer?
This strategy enables Specialized Bicycle Components to maintain the integrity of the Specialized brand, while simultaneousle providing new value-oriented consumers with a quality introduction into the sport of cycling. It also creates a more viable leadership position for Specialized in a rapidly changing business environment, which benefits our retail partners. Profits from Full Force operations will be aggressively reinvested throughout Specialized Bicycle Components to further strengthen the Specialized brand through continued product innovation and R&D, effective dealer support programs, and aggressive marketing strategies. Dealers will directly benefit through increased off-site sales promotion support, regional/co-op advertising budgets, and the creation of a referral network to migrate Full Force customers into the specialty retail channel. We will thus expand brand recognition beyond our current audience and bring new consumers to our brand and to the specialty retail channel.
7. Which Products and Brands Will Be Sold To Which Stores?
Specialized bicycles will be sold only through specialty retailers. Full line of Specialized accessories will be sold only through specialty retailers. Selected Specialized accessories will be available through general sporting goods outlets. Full Force bikes. helmets and accessories will be sold through general sporting goods and srelected mass merchants.
8. Specifically, What is SBC Planning To Do For The Specialty Retailer This Year?
We are investing in programs that will improve sell through for your dealers. We are committed to strong partnerships with our key dealers, and we will work to drive the business with them. Key programs include: - Increased Regional Advertising/Co-op Budget-- We will increase regional ad, co-op, and merchandising dollars by 25%-30% over this year to grow brand awareness and to build stronger relationships between brand and dealer. - Off-Site Sales Programs-- A program to support dealer-designed off-site sales which have consumes to higher quality products and service. - Showcase Dealer Program-- Leading dealers and partners will receive the benefits of current Presidential dealers and more, including pricing, delivery, and ATP programs. - Enhanced Specialized University and video technical training programs for shop employees. - Automated dealer locator through the Internet.