Case Study #8: Brammo Enertia – A Green and Lean, But Not As Mean Hog

In recent times, more exclusively fuel-powered transportation product segments have a pre-operational alternative-powered counterpart. Chevy Camaro, meet Fisker Karma. Fisker Karma, meet Chevy Camaro. Kia Soul, meet the Riversimple Urban Car. Riversimple Urban Car, meet Kia Soul. Now, motorcycle manufacturers have an alternative-powered counterpart. This morning, I read in The Wall Street Journal that Best Buy will be selling the Brammo Enertia, an electric motorcycle that can travel 45 miles at the speeds 50 miles per hour and plugs into a standard wall outlet for re-charging.

This is a great time to be an alternative-powered transportation solution start-up company. The stimulus bill will invest more than $2 billion in plug-in technology, putting vastly more numbers and kinds of plug-in electric vehicles on the road (Friedland, Jay. “Stimulus Bill Boosts Plug-in Electric Cars” California Progress Report 19 February 2009). Not only does Obama call for one million plug-in vehicles on the road in 2015, but he also mandates that passenger cars and light trucks get an average of 35.5 miles per gallon by 2016 (Valdes-Dapena, Peter. “Obama gets tough on fuel economy” CNN Money 19 May 2009). A few alternative-powered transportation solution companies are funded to be operational as early as next year. To compete, established brands must analyze the long-term costs of achieving Obama’s fuel economy mandates with existing models versus converting the powertrains of those models to run on alternative energy.

The Brammo Enertia is a fundamental product of a “stratelytical” approach.

The company was supposed to launch a product that would be a direct competitor to the Tesla Roadster, but given the high program costs and long ride to profitability, it sold the production rights to its original investor. With streamlined operations, extensive market research and an environmentally conscious approach to production, president Craig Bramscher expects to ramp up production into the tens of thousands and hire 80 to 100 people by the end of the year (Hall-Geisler, Kristen. “An Electric Glide, at a Price” New York Times 4 June 2009). There are skeptics that feel that the price point is too high for a product that is under-powered against its main competitors. Also, the product is being sold through a multi-product retailer that is not fully trained in the electric vehicle category.

The first issue can be remedied by points of post-sales, service differentiation (product delivery, Brammo Enertia branded merchandise, extended warranties, loyalty cards, Best Buy product synergies). While this may impact profitability in the short-term, it builds brand confidence that enables the company to drive positive financial results that will recover those losses in the long-term. The second issue can be remedied by letting Best Buy allocate its retail space for a Brammo Enertia showroom that is completely differentiated from the rest of its product space. In this distressed economy, companies should invest in market-facing, confidence-building activities, even if it is to buy a leaner and greener “hog” to be parked next to the Chevy Camaro