1. Executive Summary

[Work in progress]

2. Situation Analysis and Service Description

Bike sharing is a global phenomenon booming across continents. North America markets are now catching up to their European and Asian counterparts with service in more than 30 cities. In the U.S., service rapid growth has led to multiple implementations in major metro areas and many more cities are considering adaptation. The success in recent growth can be attributed to city infrastructure improvements of dedicated biking lanes, public transportation authorities’ extension of service coverage, and most importantly, consumer awareness of health and environmental benefits derived from riding instead of driving.
Table . Major U.S. metro markets[?]
|CITY |LAUNCH YEAR |STATIONS |NUMBER OF BIKES |
|NEW YORK, NY |2013 |332 |5850 |
|WASHINGTON, DC |2012 |300 |2500 |
|BAY AREA, CA |2013 |70 |700 |
|BOSTON, MA |2011 |140 |1301 |
|CHICAGO, IL |2013 |400 |4000 |
|COLUMBUS, OH |2013 |30 |300 |

Markets welcomed the new offering. Service in New York City had 9,000 customers signed up before launch and attracted $41 million in sponsorship from Citi Bank (CBS/AP 2013)[?]. 22,000 members of the D.C. service avoided 4,400,000 miles of driving a year and reduced carbon emissions as well as traffic congestion (Gunther, 2014)[?].
Chicago is a prime city for bike sharing service. The city is designed to have multiple destinations within riding distance and offers great scenery along the ride, especially the lakefronts. It has high concentration of the three main groups of users: commuters, recreational/errand riders and tourists. It also has many universities and colleges within the greater Chicago area, generating additional demand and potential market growth.
Chicago is a seasonal market, riding conditions are rough and demands are generally nonexistent during the winter seasons. This is beneficial to our future operation, because of the off season can be used for maintenance and repairs of equipment, and the downtime can lower annual operation costs. The harsh winters also give boom other seasons, where people tend to enjoy the outdoors more and have a greater demand for the service.
The City of Chicago also has excellent infrastructure. The city already has more than 200 miles of biking lanes. By 2020, the city is planning to triple its biking lanes to a 645-mile network and provide biking accommodation within half mile of every Chicagoan (CDOT, Chicago).[?]
Ubike is a privately-funded bike sharing service provider, operating on a national level and aiming to provide affordable on-demand solutions to our users. Unlike other service providers that are funded in part or wholly with government grants and operate in one city, Ubike will be able to provide our users access to services across the nation with consistency, and continue to extend our network to meet new demands.
Ubike is taking full advantage of recent advancements and cost reductions in the GPS and wireless technology fields; integrating a service platform from the user’s smartphone to our big-data processing center via a phone APP. This allows the tracking, recording and study of user behavior. Through algorithms and learning, we can anticipate user demand on both of the individual and citywide level, as well as taking external factors such as weather condition and city events into consideration. This technology that is only available to Ubike enables us to offer on-demand solution to our customers at a low cost with high efficiency.
Ubike utilize a hybrid approach to service coverage with location based share points and mobile delivery trucks. Share points are contracted from garages and parking lots across the city, mostly ground floor spaces unsuitable for parking vehicles but great fit for our bikes. The delivery trucks follow routes determined by our data center, based on current and anticipated demand for drop-offs and pickups. We will have a greater coverage and service area that is based on actual demand and can grow organically in comparison to the station based competition.
Our target consumers want to ride bikes that are physically appealing and comfortable, and we want our users to ride the bikes they want to buy. Therefore we are basing our bike design on the most popular style sold to our target consumers. The design will increase our popularity and recognition, also serving as a deterrence to bike-ownership.
Once our users sign up with our service via our phone APP, they can
Check availability of our bikes nearest to them
Schedule a delivery, if no bikes are already nearby
Use the bike for however long they need
Park the bike anywhere they deem safe with our “self-stand and easy lock” feature
Return the bike parked from anywhere within our service area they deem safe without being present
Avoid hassles in storing, maintaining and repairing of bikes in case of ownership
Manage their membership, rewards and payments
Enjoy their membership status while visiting other cities where we have service
Based on above research and analysis, we have determined our strength, weakness, opportunity and threats.
Strength
Total convenience in service offering
Greater coverage areas
Ability to grow and contract operation scale based on demand
Value from national chain and brand
Weakness
Lower visibility with no outlaying stations
Difficulty accessing city control resources
Need to quickly mass a critical amount of subscribers to maintain service profitability
Do not have existing local relationships with businesses and organizations
Opportunities
Market gaining acceptance from current services
Consumer becoming more aware of service benefits
The city’s plan to extend bike related infrastructure
New industry, new market and entering into high growth stage
Threats
Potential hostility from the city to protect their sponsored service
Law and regulatory changes that could negatively affect the service
Biking environment changes incentivize bike-ownership
Irresponsible riding causing accidents and lead to negative public opinion
The key to success is to hit our growth targets in phases A, B and C on time to secure long term market domination as well as sustainable profits.
|Target |Phase A |Phase B |Phase C |
|Subscription |20,000 |40,000 |60,000 |
|Market Share |30% |50% |60% |
|Time line |2015 |2016 |2017 |

We are hoping by the end of Phase C, our service will be able to demonstrate to the city government that our business model is better suited in providing bike share services and the city do not need to waste tax payers’ money to keep Divvy running. Leaving room of a potential merger or take-over of the competitor and be the sole service provider in Chicago.

3. Target Market

Ubike’s target market is urban young adults, including young professionals and college students, who leads an active lifestyle and frequent destinations within 5 miles of their home, work and school. This is based on several findings in related studies (Table 2) as well as internal assessments. The target consumers have the following characteristics: between ages of 18 to 35
Live in multi-unit structures
Earning/have Bachelor’s degree or higher
Access to credit cards
Have smartphones and comfortable using technology
Table User Demographic[?]
[pic]
Table Population, City of Chicago[?]
|TOTAL POPULATION |2,695,598 |100.0 |
|UNDER 5 YEARS |185,887 |6.9 |
|5 TO 9 YEARS |166,077 |6.2 |
|10 TO 14 YEARS |164,466 |6.1 |
|15 TO 19 YEARS |182,933 |6.8 |
|20 TO 24 YEARS |223,027 |8.3 |
|25 TO 29 YEARS |276,139 |10.2 |
|30 TO 34 YEARS |239,412 |8.9 |
|35 TO 39 YEARS |200,508 |7.4 |
|40 TO 44 YEARS |177,631 |6.6 |
|45 TO 49 YEARS |171,862 |6.4 |
|50 TO 54 YEARS |166,875 |6.2 |
|55 TO 59 YEARS |144,611 |5.4 |
|60 TO 64 YEARS |118,238 |4.4 |
|65 TO 69 YEARS |85,070 |3.2 |
|70 TO 74 YEARS |66,025 |2.4 |
|75 TO 79 YEARS |50,700 |1.9 |
|80 TO 84 YEARS |39,104 |1.5 |
|85 YEARS AND OVER |37,033 |1.4 |
| | | |
|MEDIAN AGE (YEARS) |32.9 |( X ) |

Out of the total 2.7 million Chicagoans, about 33% fall in target age segment. Also 33% of age 25+ have bachelors or higher degree. 70.6% live in Multi-unit structures with a median household income of $47,408 and average commute time of 33 minutes.
Based on the initial research, we believe the city of Chicago has a large base of our target consumers, who are likely to use technology for solutions, take advantage of convenience and align our values with theirs.
4. Competition
Prior to the implementation of large scale bike sharing service, Chicago has a few bike shops and tourist’s venues offering rental services. These are rather small in operation and cater to very specific market segments e.g. enthusiasts and tourists. In June of 2013, a bike share service called Divvy began operation, funded by the city’s Department of Transportation and operated by Alta Bicycle Share, Inc. who also provides the equipment, bikes and management. Alta is a competent and experienced operator that manages similar services in other city markets under government contracts.
After the first year of operation, Divvy reports a 23,000 annual membership base, 250,000 daily pass sold, with 1.6 million trips taken and traveled a total of 3.5 million miles (CODT, Chicago)[?].
Chicago is at the initial growth stage of the bike share service market. The only significant competitor is the city sponsored operator entering its 2nd year of service.
Comparing DIVYY we have the city rolling out Ventra card system, for the city’s transportation. A new fare-card system intended to make the passenger experience easier by allowing customers to use their credit cards or smart phones to load the card on the go, previously a significant hassle for Chicago commuters. Although this looks very convenient and was meant to offer passengers a single fare card for the city’s three major transportation services, it came with bit of issues too. Few of the cards issued to public schools and college students during the initial roll out has been void of balance or just not been working. This led to questioning the city’s management of the roll-out as well as the partnership it negotiated with Ventra.
The Divvy bike sharing program has successful forebears in New York and San Francisco. It is managed by Alta Share which was awarded by a contract by the city in return for the proceeds from these bike rentals. These blue ubiquitous bikes have constantly flashing headlamps are available from Loop to Logan Square. The stations where these bikes are rented from are solar powered and placed on corners in busy and quiet neighborhoods. They are more useful for members who have an annual membership. Divvy has a customer friendly technology for better usage and solar powered touch screen at the stations where the bikes are docked. This facilitates the users to book and ride the bike directly from the station. The market for alternative transit options in Chicago is especially high, engendered by the well-designed public transit systems already in place. Biking is especially popular in the city.
But what is a blockage in this industry from growing are the city’s regulations, mismanagement, and liability issues which remain ever-present problems. Limitations to potential revenue from either partnership Lack of responsiveness to passenger demands and interests (slow improvements to station glitches with Divvy, general disinterest in fare system changes for Ventra) make it more difficult to operate successfully.

The day after Divvy – a bike sharing system in Chicago operated by Alta Bicycle Share – started signing up members, enrollment dropped by 80.2%. The next day it dropped by 57.9% and then 55.7% after that.
In a system that has so far focused on a few stations in neighborhood, the memberships were low from the period enrollment opened to the first station being installed. It did not catch people’s attention unless being told or word of mouth.
With the annual membership fee being $ 75, currently most trips are taken by 24-hour pass holders, and the most popular stations are near the lakefront, and is used mostly by tourists who are looking to explore the city. The main idea behind using this bike by residents for a daily commute or for transportation purposes has not been achieved so far.
Comparing to our biking system Ubike, there are a few factors that clearly stands out in terms of advantages. 1) On demand and door to door deliver of bikes 2) Pay per use feature which does not restrict the consumer to dock the bike back into the station within thirty minutes in spite of having the 24 hour passes. 3) Divvy has docking stations across the city and you have to find the docking station closest to your destination to avoid the fee which would be charged if the bike is not docked back within 30 minutes of riding where Ubike has a pick up and drop off facility wherever you are located and don’t have to be at the docking station particularly. The GPS mechanism will facilitate this and make it more convenient to the riders. 4) Lastly the membership fee is charged for the season and not for the whole year. In a city like Chicago where winter takes over most of the months, membership by season enables riders to use it to the maximum and take full advantage of this facility. 5) With no docking stations, online payment or payment via app will make it convenient for the riders to book online and get delivery. This saves them the time to go to the docking station and book a bike.

5. Pricing
Divvy Pricing
Divvy is a transit system that provides option for quick trips around Chicago. Before you ride, you’ll need to purchase an Annual Membership ($75) or a 24-Hour Pass ($7), depending on your needs. Because Divvy is intended for quick trips to help you get from Point A to Point B, you’ll get unlimited 30-minute trips within the period of your Membership or Pass. Overtime fees (listed below) are charged for trips over 30 minutes.
Trips that are completed by Annual Members under 30 minutes are included in Membership, but trips longer than 30 minutes incur overtime fees. After the initial 30 minutes, Members will be charged an additional $1.50 for the following half hour, $3.00 for the next, and $6.00 for every half hour after that. A trip begins when a bike is unlocked and ends when the bike is securely returned to any Divvy station.
The 24 hour passes can be purchased from the divvy kiosk and require a credit or debit card. After purchasing the ride, a ride code will be provided to unlock the bike from the dock and the rider can begin the ride. Trips under 30 minutes are included in the pass but over thirty minutes will incur a fee and the fee differs for a day member to annual member. After the initial 30 minutes, it’s an additional $2.00 for the second half hour, $4.00 for the third, and $8.00 for every half hour after that. A trip begins when a bike is unlocked and ends when the bike is securely returned to any Divvy station.
|Annual Membership Overtime Fees | |
|0–30 minutes of each trip |INCLUDED |
|30–60 minutes |$1.50 |
|60–90 minutes |$4.50 |
|Each additional 30 minutes |+$6.00 |
|24-Hour Pass Overtime Fees | |
|0–30 minutes of each trip |INCLUDED |
|30–60 minutes |$2.00 |
|60–90 minutes |$6.00 |
|Each additional 30 minutes |+$8.00 |

Ubike Pricing
With Ubike our initial target riders would be around 20000. The fee per season would be 35$. This will not be annual membership but instead would be seasonal membership. In a city like Chicago where summers are short and riders may not use the bike in the winters so much. Ubike will provide the riders added advantage through the seasonal membership and enable them to take maximum advantage during the season they are actually paying for. The day passes are pay per use saving the rider from the worry of returning the bike within a specified time period and incurring a fee. Ubike provides an added feature to the rider to take the bike alongwith them on trips for a couple of days to a week, use them for a couple of days without having to buy the seasonal membership. Once the use is completed they can return the bike. Below is a snapshot of the charges and fees depicting the revenues for Ubike.
|Pro Forma per season | |
|Revenue | |
|Target # of riders with seasonal | |20,000 |
|membership | | |
| |a)fee/season |$35 |
|Membership income | |$700,000 |
|Riders using pay per ride | |15,000 |
| |b)fee/ride |$5 |
|Income from single rides | |$75,000 |
| | | |
|total Revenue |a + b |$775,000 |
|Expenses | | |
|Parking Rental | |$80,000 |
|# of Employees |30 | |
|Salary per employee |9000 | |
|salary Total | |$270,000 |
| | | |
|Operation Expenses | | |
|gas |$45,000 | |
|other |$30,000 | |
|Operating Expenses | |$75,000 |
| | | |
|Total expenses per season | |$425,000 |
|Gross income | | |
|Gross income per season | |$350,000 |

Assumptions:
Employee salary averages $ 3000 per month
Gas costs about $ 500 per day
Season pass is for 3 months
Membership fee is $35 per season
Single rides are $5 per ride
The above statement shows an annual membership number of 20000 @ $35 per member and day membership number of 15000 @ 5 per member giving total revenue of $775000. The salaries come up to $270000 and Operating expenses are $75000. This gives a Gross income of approximately $ 350000.

[1] [2] Information based on service provider data, http://www.altabicycleshare.com/locations

[i] [ii] CBSnewyork/AP (2013, May 24). “Bloomberg Says Market Will Decide Success Of Bike Sharing Program”. CBS news. Retrieved from URL: http://newyork.cbslocal.com/2013/05/24/bloomberg-says-market-will-decide-success-of-bike-sharing-program/

[iii] [iv] Marc Gunther (2014, March 5) “Start-up bike-sharing programs make inroads in US cities”, The Guardian. Retrieved from URL: http://www.theguardian.com/sustainable-business/bike-sharing-programs-us-cities-green-transport

[v] [vi] CDOT, City of Chicago, 2013 Retrieved from URL: http://www.cityofchicago.org/city/en/depts/cdot/provdrs/bike.html

[vii] [viii] 2011. “Public Bike Share in North America: Early Operator and User understanding”. Mineta Transportation Insititute. P66

[ix] [x] U.S. Census. 2010

[xi] [xii] CDOT, City of Chicago, 2014 Retrieved from URL: http://www.cityofchicago.org/city/en/depts/cdot/provdrs/bike/news/2014/jun/DivvyRed.html http://capitalistcreations.com/entrepreneurs-solving-public-transit-problems-in-chicago/#sthash.IRbmkqDb.dpuf

http://www.illinoismirror.com/get-ready-to-pay-for-divvy-whether-you-ride-or-not/

http://www.chicagobusiness.com/article/20130528/NEWS02/130529844/bike-sharing-starts-with-a-bang

6. Channels of Distribution

UBike is organized for young professionals and college student who living an urban life. Thus, the company will take a direct approach where we can face with the customers directly.

According to our market targets are young professionals and college students, so, we choose the internet which will take orders directly from the customers. We will do it through the company website which can interactive consumer via its website for ablility to remember what the customers has said is made it easier when we collect customer information and for the company to communicate with our customers, social media such as facebook, twitter and instagram, as we all see that the urban life is most likely stick with the social media and it will make us get the attention from the consumers easily which is we can get to the consumers with both who already get a membershios to the new customers who is willing to be. And as per the popularity of social media nowadays, we will also use social media to turn our customers to our “sale force” by mouth to mouth by referral programs where they can get a benefit for referring a friend or a post of our message in their social media channals. Beside our website that we use to get the order directly from the customers. We will also use the mobile application which will be the faster and easier way to order the bike. In its application we will have the section that our member will be able to choose the bike they wants to ride and the bike that they will make them feel comfortable with the section that they can choose the bike frame depends on their heigh.

Beside website social media and mobile application that let our customers order the bike directly. UBike also have a section to deals with potential business clients, such as an university, apartment buildings, parks and etc where our customers are most gathered and have use our service. The sales force is dedicated to business accounts, they are not involved in making individual customer sales.

UBike will use e-commerse payment system to collecting payment. We will try to make it as simple and easiest way as we can do to make our customers happy to be our membership. Customers will be able to use credit card, debit card or paypal. They also can provide their accounting number to us incase they do not have the electonic payment. We will make our customer feel save to use the electric payment with us by sending an email to them and wait until the transaction have been confirmed through their email.

For the delivery term, UBike utilize a hybrid approach to service coverage with location based share points and mobile delivery trucks. Our share points will be contracted with garage and parking lots through the city.

As we called ourselves as a Bike on Demand, So that the user can get the bike wherever (in the city area) and whenever they needs the bike but if the user need to specific the bike, and if there is no bike near by. The user can just schedule a delivery and we will deliver the bike to them on time that they have required in application or website.

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7. Advertising/Sales Promotion/Public Relations

The promotion plan and strategy will be to delivered Ubike's mission statement to the target markets via the benificial of marketing mix.

Ubike will supply the bike that customer wants to ride basing on appealing, comfortable and suitable for urban lifestyle. We will offer our member

UBike will use the internet local's newspaper such as redeyes and radio for advertising as our target markets is young professionals and college students. Also as we are still new in the market even though people are quite similar to this kind of service such as uber but we cannot deny that we are still new in bike sharing service thus we need to create brand awareness and knowledge to the consumers. Advertisment space will be utilized in 3 main way – Internet: in our own website, social media such as facebook, twitter or instagram, youtube etc., Local's newspaper: Chicago Tribute, RedEye Chicago etc., Radio: college's radio station, public's radio station. The short and clear message that we would included this message - “UBike – BIKE ON DEMAND”. However, the message and the advertisment will be short and clear to be remembered and noticed by the consumers.

UBike will create a buzz for our service by manning a booths at the festival in Chicago and also at the University in Chicago to put the service direct to the consumers. Also we will spread the promotion through the booths to get more membership. We will offer our customer a free six months trial if they register annual membership today.

We will also use the deal of the day such as Groupon to get the attention from the consumers. According to groupon it was designed to attract a specific demographic such as young and urban professionals who want to explore their cities affordably which is perfectly fit to our company mission. We will get the benefit from joining groupon by get a free advertising and marketing. Another perk of working with Groupon is that the website shares customer information with its merchants. Thus, we can get our targeted marketing information. Even though, Groupon will takes a 50 percent cut of all sales but company will at least get new customers in the door.

The cost for overall promotion will be estimated at about $6,050.00 per month.

Promotion BUDGET

Brand and Logo Development $ 800 Website Development for Internet Site 1,400

Mobile Application 1,150

Advertisment Development via Social Media 1,100

Public Relation Event Support 800

Sales Promotion Groupon 800

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