Because bicycles are a smaller category than many other consumer

Huffy has also extended its product line to include more brands. An early success with this differentiated customer-facing approach was in rapidly adding an in-line scooter in 2000. Huffy had had a scooter which usually sold 200,000 units a year. As sales of the new scooter took off, Huffy was rapidly able to expand its supply. Yet the capital expenditure budget for this rapid ramp-up was zero. Under the old business model, most of the gains would have been missed while the investment would have been significant. In the process, the company's focus has gone from inventory risk management to rapid trial of promising new concepts. How did the company find the opportunity to make the transition?

First, Mr. Graber had long experience in the international group at Black & Decker, which gave him a good sense of what international manufacturers can do today. When Huffy people reported that it was cheaper and better to make bikes within the company, Mr. Graber requested that some trial orders be placed in competitive quantities in order to find out what costs, quality, and delivery would actually be. The results exceeded all expectations, and the Electric Bicycles Company company never looked back. As nice as those cost and investments savings were, Mr. Graber was far more interested in being able to do a better job for consumers.

Because bicycles are a smaller category than many other consumer goods, it's not practical to launch large television-based advertising. The company seeks to use promoting new bicycle events, word of mouth, Web sites, and specialized advertising as a substitute. As skill develops, the business model will expand further in this direction of low-cost branded marketing. With more listening to consumers, the company's ability to identify opportunities for new products and brands should also improve.

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