In mid 2012, Nautilus (manufactures and markets exercise equipment) was seeing sales of its Schwinn Upright Bikes decline. A 6 person team was tasked with turning this around. Instead of continuing to interface with buyers at Dick's Sporting Goods and Sports Authority the team focused on their Most Important Customer, the consumer. As a result of uncovering the consumer's unmet needs, the team was able to make some key changes to their Upright Bikes. Three new versions of the A10, 170 and 130 Bikes were introduced in September, 2013 and sales are already up 2X. See what the team did, what they found out and what changes they made.

1. Schwinn Cardio Product Line Case
Study
Jake Petersen, Director NPD, Nautilus
1

2. Background
March, 2012:

Directors of PD and PM attend an MVI Workshop
May, 2012:

Director of PD attends the first MCI Workshop
June, 2012:

Sales of Schwinn Upright Bikes are declining

Decision made to set up a project and use the VIP
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2

3. 150 Upright Stationary Exercise Bike




Fully Adjustable
Perimeter weighted flywheel
Quiet magnetic ECB resistance system
16 resistance levels
Two other models: 170 and A10
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3

4. Project Definition
Objectives
 Increase market share of retail Schwinn Cardio
Product Line

What will it take to win in this highly competitive
market?

Primary focus on consoles
 Introduce the Value Innovation Process® to
Nautilus
 Uncover customer insights that can be leveraged
on other products
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4

5. Project Definition
Deliverables
 “To Be” value curve from the perspective of the
most important customer (MIC)

Elements ranked & compared to “Best in
Class”
 Plan for “HOW” to deliver on “To Be” value curve
elements
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5

6. Project Definition
Project Kick-off: 6/5/12
Round 1 Interviews: 6/19/12
Round 2 Interviews: 6/26/12
Round 3 Interviews: 7/17/12
Recommendations: 7/27/12
RKL Note: VIP cycle time, 7 weeks!!
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6

7. Value Chain

8. Amazon
Sporting Goods
Store
Consumer
Consumer
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Consumer
8

9. 3 Questions to identify the
Most Important Customer
1. Who has to fix the problem?
2. Who loses financially?
3. Who sees the Value?
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9

10. The 3 Question Template
Who has to fix
the problem?
Who stands to
lose
financially?
X
Amazon
Sporting Goods
Company
X
X
X
Dept Merchandiser
Buyer
User/Consumer
Who sees
the Value?
X
X
XXX
X
X
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10

11. Amazon
Consumer


Sporting Goods
Store
Consumer
Consumer
Up until March, 2012 Nautilus talked exclusively to Buyers
In June, 2012 Nautilus determined Users/Consumers were
the Most Important Customers
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11

12. Value Curves

13. “As Is”
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14. Ca rd io Co nso les
N autilus FIN AL
1
Value to Hom e User
Low
# Prog ram s
20
H ig h
20+
# Prog ram s
2
Ip od
No
Data
N o = 0, To Sp eak ers = 2.5, D ata = 5
3
Sp eakers
No
Prem
N o = 0, Yes = 5, Prem ium = 7.5
4
Connec tivity
N o = 0, USB = 5, W ireless = 10
5
Fan
Yes
Prem
N o = 0, Yes = 5, Prem ium = 7.5
6
Console Looks
6
8
1- 10 Sub jec tive
7
Sc reen Size
Small
Med/Lrg
Sm all = 2.5, M ed = 5, Larg e = 7.5
8
Interfac e
1- 10 Sub jec tive
9
Trac king
No
Yes
N o = 0, Yes = 5, Prem ium = 7.5
10
Read ing Rac k
1- 10 Sub jec tive
11
Brand
7
11
N LS Survey PM '11 Unaid ed %
0.0
Schwinn 840
Best in Class
2.8
5.5
8.3
##

15. Contextual Interviews

16. Contextual Interview Details
 Seven interviews conducted over a five day
period for rounds 1, 2, and 3
 Two participants were paired in each interview
 Participants were located across the United
States, owned a piece of cardio equipment, and
worked out consistently at home
 Interviews were conducted via the phone for
rounds 1 and 2
 Round 1 interviews were recorded and
transcribed
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16

17. Contextual Interview Details
 Used Webex for round 3 interviews so that
participants could see the concepts presented
 Interview questions were sent out 2 to 3 days
ahead of time
 Participants were given a $100 gift card after the
third interview
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17

18. The New Products

19. “To Be”
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20. Copyright, Value Innovations, Inc 2004-2014 All rights reserved
20

21. Ca rd io Co nso les
N autilus FIN AL
1
Value to Hom e User
Low
# Prog ram s
20
H ig h
20+
# Prog ram s
2
Ip od
No
Speakers Data
N o = 0, To Sp eak ers = 2.5, D ata = 5
3
Sp eakers
No
Prem
N o = 0, Yes = 5, Prem ium = 7.5
4
Connec tivity
N o = 0, USB = 5, W ireless = 10
5
Fan
Yes
Prem
N o = 0, Yes = 5, Prem ium = 7.5
6
Console Looks
6
8
9
1- 10 Sub jec tive
7
Sc reen Size
Small
Med/Lrg
Lrg
Sm all = 2.5, M ed = 5, Larg e = 7.5
8
Interfac e
1- 10 Sub jec tive
9
Trac king
No
Yes
N o = 0, Yes = 5, Prem ium = 7.5
10
Read ing Rac k
1- 10 Sub jec tive
11
Brand
7
11
N LS Survey PM '11 Unaid ed %
0.0
Schwinn 840
To Be
2.8
5.5
8.3
##
Best in Class
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21

22. Primary Upgrade: Over-sized console with
26 total programs including a second display
Additional Upgrades for the User:









Second console display
MP3 music input port
Speakers
Console fan
Water bottle holder
Transport wheels
Extra-wide seat
Oversized pedals with toe straps
Comprehensive warranty coverage
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22

23. 1’ 33” Video
http://www.amazon.com/Schwinn100336-170-UprightBike/dp/B00D4LEEYA/ref=sr_1_1
?s=sportinggoods&ie=UTF8&qid=138429718
8&sr=11&keywords=schwinn+170+uprig
ht+bike
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24. The New Products
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25. What’s Happened?
September, 2013 - Introduced:
 3 Upright Bikes
 A recumbent bike
 An elliptical
October, 2013
 User feedback from Amazon..very positive
 150 suggested retail price, $499. Offered at $299
 Sales up dramatically
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26. What’s Changed?
Nautilus:
Now doing face-to-face interviews
Use Value Curves on all projects even if the
project is not going through the VIP
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