Segway Case

Executive Summary

The analysis of Segway Inc. showed a company in its early stages with an innovative product the Segway Personal Transporter that failed in total sales to a mass market in the U.S. for a period of time and had even slower growth in sales internationally. However Segway Inc. new direction towards a niche market in law enforcement, public safety, and tourism and with businesses increased success in the U.S. They also found success through global expansion in Europe (Germany) with this same business approach. Segway found success with its global expansion by its business model and product agreeing with German commercial consumers, market entry and distribution strategy and economic climate.

1. Company Background

Dean Kamen a successful entrepreneur and inventor founded Segway Inc. in 1999 and based its operations in New Hampshire. His vision was to develop transportation that was efficient in space and fuel emission using his patented dynamic stabilizing technology. What the founder and his research and development team created was the Segway personal transporter that maneuvers in minimal amount of space, operates on sidewalks and gives zero-emissions. The Segway PT the world's first and only electric, two wheeled, self-balancing transportation device made its debut to the world in December of 2001 on Good Morning America. Its inventor, Dean Kamen, famously predicted in a 2001 Time magazine interview that the Segway "will be to the car what the car was to the horse and buggy." (msnbc.msn.com; 2006)

Segway became a rising star as a technology company and received a total of 176million U.S dollars from initial investors and the support of heavy weights in the technology industry like Apple's Steve Jobs, Amazon's Jeff Bezos (msnbc.msn.com; 2006). Venture capitalist John Doerr even speculated Segway would "be the fastest company to reach $ 1 billion in sales" (Time.com; 2001). Unfortunately the total sales in the U.S. did not match the hype of the company. Segway sold less than 30,000 total units between the years 2001-2007 (Forbes.com 2007). Yet an untapped opportunity globally was available when you consider the international sales only accounted for 5% of Segway's business.

Segway's shifted its marketing strategy from commuters to a growing niche market domestically and internationally among law-enforcement agencies, "with more than 100 departments around the world now signed on as customers and many others testing the device" (msnbc.msn.com; 2006). Segway Inc. also entered the tourism industry through its new program Segway tours at large landscaped hotels such as the JW Marriott at San Antonio Hill County resort (Segway.com). "The niche market, coupled with a burst of interest from Europeans struggling with gas prices much higher than in the U.S., have breathed new life into the Segway". Segway's new business model and the economic climate created an increase in international sales from 5% to 40 %.( USAToday.com).

1. Country Background

The outlook of Germany using the Global Competitiveness Report 2012-2013 provides strong insight for Germany's potential for foreign investment. The global competitiveness of Germany placed it 6th out of 144 countries showing its economy has a strong level of productivity. They are 3rd in infrastructure which displays their top rate facilities for transport. Germany is ready to accept innovative technology and has advance distribution channels that rank each 4th and 3rd respectively (weforum.org).

The rankings are a reason for Segway to understand why Germany economically is the world's fourth largest economy when you consider GDP. Germany's population stands at 82 million making it the European Union's largest consumer market. The German consumer market is highly receptive to products that are focused on technology, high quality and is innovative (export.gov).

1. Entry Strategy

As Segway transitioned into the international market they saw that their foreign sales increased by 15% from a few years ago and next year half of all revenues would come from foreign sales (Time.com 2006). This optimism in sales has Segway establishing a footprint in countries such as Germany. Segway has been consistent in their overall business model of selling to a niche market which includes airport security and personnel (Time.com 2006). It is through these business to business relationships that 95% of their sales are generated. Segway also has international distributors in Germany to deliver the product to their German customers and fully supported service center in Germany (Segway.com). The licensing agreement allows the independent distributors to be authorized to use the Segway trademark, receive product discounts, sales incentives marketing support, service training and qualified leads. Segway receives an entrepreneur with knowledge of the German market.

1. Marketing and R&D Strategies

Segway is focused on commercial consumers who are identified as law enforcement and security personnel, tourism, and businesses who desire an environmentally friendly approach to personnel transportation that is efficient in function and uses the current infrastructure of the consumer (Segway.com). The company provides the consumers a standardization and customization options when purchasing a Segway PT. They can choose the standard models of its personal transporter the I2 and X2 that are complete in the design and designated functionality. An alternative to customize is available through, "... an online product configurator that allows customers to build their own personalized Segway PT and send the specifications to their nearest dealer" (transportationinnovator.com).

Entrepreneurs and authorized dealers provide new business opportunities that give additional distribution channels to meet the commercial consumer personal transporter needs (Segway.com). Segway Inc. global campaign starts with their redesigned corporate website (transportationinnovator.com). Segway has captured the attention of their target market through print media. They have advertised in security and police trade publications and created lively brochures that include customer testimonials and showcase the Segway's innovative products. In addition the social media presence of Segway is strong by maintaining a presence on traditional sites such as Facebook and twitter but also