Scooter market growth steady – battery-powered scooters
Market Memo: Home care
Companies in the battery-powered scooter market are expanding their product lines and offering a wider range of prices. This strategy is a result of increased competition, limited Medicare reimbursement and consumer demand for product variety and more affordable prices.
About 20 vendors sell scooters in the United States through durable medical equipment dealers, direct sales to end-users or a combination of the two channels. Scooters are available for indoor and/or outdoor use in various designs and weights. Some vendors are selling four-wheel units for supermarket and department store shopping, a niche that more vendors will try to pursue. List prices range from about $800 to $4,000. An extensive list of scooters and their features appears in the June 1992 “Mobility Focus” supplement to Homecare magazine.
The primary end-users are elderly people who have difficulty walking long distances. The over-65 population continues to grow and thus will increase the potential candidate pool for scooters. The U.S. Census Bureau projects that there will be more than 35 million people over age 65 by 2000. Other customers include people afflicted with muscular diseases, such as muscular dystrophy and multiple sclerosis, people who have suffered heart attacks or strokes, or people with other conditions that limit their mobility. There are an estimated 43 million disabled Americans.
The companies named most often by scooter suppliers as the major players in the market (in terms of volume) include Ortho-Kinetics Inc., Waukesha, Wis; Amigo Mobility International Inc., Bridgeport, Mich.; Electric Mobility, Sewell, N.J.; Pride Health Care Inc., Pittston, Pa.; Leisure-Lift, Kansas City, Kan.; Fortress Inc., Clovis, Calif.; and Bruno Independent Living Aids, Oconomowoc, Wis.
Invacare Corp., which now has a small share of total scooter sales, is predicted to become a strong contender over the next few years. It has two scooters on the market–Tri-Rolls, which lists for $2,700 and Tri-Scoot, which lists for $1,700. The Elyria, Ohio-based company is the country’s largest supplier of home medical equipment.
“The scooter market is in our field,” said Hymie Pogir, Invacare’s vice president of marketing. “It makes sense to exploit it as best as we can. We see scooters as a long-term commitment.”
Market is growing
Suppliers’ estimates of the size of the U.S. scooter market range from 45,000 units to 65,000 units.
Invacare estimates that 50,000 to 60,000 units will be shipped by the end of 1992, translating into a $60 million market based on an average scooter price of $1,200. Annual growth is predicted in the 5% to 10% range. Frost & Sullivan Inc., a New York-based market research firm, places the dollar value of scooter sales in 1992 at $114.5 million, with projected annual growth of 8% through 1996. Sales in 1996 are forecasted to reach $151.3 million.
Barriers to entry in this market include restricted Medicare reimbursement, a depressed economy that reduces consumers’ TABULAR DATA OMITTED disposable income and solid manufacturer/dealer relationships, which will make it difficult for a new player to get visibility. “When a new product is introduced, there has to be a significant incentive for us to walk away from a product we have a commitment to,” said Randy Brooks, general manager of The DME Shop, Naperville, Ill., one of the largest scooter dealers in the Chicago area.
The strongest barrier, according to Pogir, is the cost to promote and support the product. “The scooter is not a great technological feat, but it takes a great deal of money to market it,” he said.
Consumers base their purchasing decision on a variety of factors, including quality; price; maneuverability; ride and comfort; safety; hand control; maintenance; and customization, according to one leading supplier. Dealers select a vendor based on price, quality (features and function), service availability and product availability in that order, the vendor said.
The DME Shop says it looks for product features that are innovative and/or not available on competing units, pricing, whether it has a long-term relationship with the vendor, vendor support and the methods the vendor uses to promote the product.
The DME Shop carries scooters from Ortho-Kinetics, Amigo, Invacare, Pride, Bruno and Ranger All Season Corp., George, Iowa. Brooks believes that Ortho-Kinetics and Amigo are the leaders in product dependability and availability, meeting shipping commitments in inventory and parts and providing technical support.
The shop carries 10 different scooters at all times and 50 units in total to meet the varying needs of end-users, Brooks said. Its best selling units are Ortho-Kinetic’s Bravo (front-wheel drive unit designed for indoor use); Ortho-Kinetic’s Sierra (front-wheel drive, indoor use); and Amigo’s Centra (rear-wheel drive, indoor/outdoor use).
Amigo markets reputation
The originator of the three-wheeled scooter, Amigo has sold over 50,000 scooters worldwide during its 25 years in business. Seventy percent to 80% of its sales are in the U.S.
The company had $14 million in retail sales in 1991 and just under $10 million in revenues. Amigo is projecting fiscal 1992 revenues of $12 million and retail sales of $17.6 million. It has a 10% to 12% share of the scooter market, the company said.
Sales have been growing between 15% and 20% this year and Amigo expects to sell about 5,000 units by year-end, according to Mitch Reno, director of marketing and advertising. Amigo would like to slow down this growth, he said, to the 5% to 10% range.
“You need to balance every part of your company and you have to make sure that training and service are kept up. Our production facility also needs to be expanded.”
During the past five years, the company has had periods of both slow and strong revenue growth. In the mid-1980s, a dozen competitors entered the market and Amigo’s revenues fell, Reno said. After 1987, revenues started to rebound.
The growing elderly population has had a strong impact on Amigo’s sales, Reno said. His research indicates that 20% of the over-65 age group has the disposable income to make a scooter purchase.
Another potential boost to scooter sales is the Americans with Disabilities Act, which became law earlier this year. The ADA prohibits employers from discriminating against job applicants who are disabled and requires new public transportation vehicles and public places to be accessible to disabled people. The law, Reno said, may prompt corporations to offer accessibility vehicles to their employees.
Amigo sells its scooters through several channels: a franchise organization of a dozen mobility centers; 600 home health care dealers; and some 200 direct sales reps, many of whom are Amigo scooter owners. These Amigo owners provided the means for distributing the product when the company was started. Amigo also has a commercial and international division.
International markets in the Far East present promising opportunities for scooter sales, according to Amigo. Its vehicles already are sold in 22 countries. The company has just begun marketing its scooters in Japan, Hong Kong and South Korea and has set up its newest distributorship, Amigo of Korea.
Promoting the products involves exhibiting at trade and consumer shows and advertising in trade and consumer publications. The shows include the Abilities Expos, home health care meetings and international equipment exhibitions. Advertising has appeared in Homecare, Home Health Care Dealer, Independent Living, Accent on Living, Mainstream, Inside M.S., Paraplegic News and others.
Amigo also puts out a magazine for its Amigo owners called Friendly Wheels and gives them monetary awards for product referrals under its “Gold Program.”
Customizing scooters is how Amigo primarily differentiates its products, Reno said. The company also provides a three-year warranty and a 24-hour service hotline.
Amigo’s best selling unit is the Amigo Rear Wheel Drive Deluxe, which lists for $2,995.
Electric Mobility: convertibility
Electric Mobility entered the scooter market with its own line in 1981. Prior to that, it sold electric tricycles, electric bike motors, and a few Amigo front-wheel drive scooters.
The company sells through dealers and a direct sales force of 200 reps to end-users. The advantage of selling direct is the ability to get immediate feedback from the end-user, according to Michael Flowers, president.
“Dealers are knowledgeable, I want to stress that, but the experience that users can pass along is a tremendous benefit,” he said.
Thirty days after the sale is made, the direct salespeople call customers and conduct a satisfaction survey.
Using both sales channels does not present a conflict, Flowers said, because the direct reps and dealers market distinctly different models with different names–the Rascal and the Chauffeur respectively. “We try to give dealers different brand recognition and a product with a better appearance,” he said. “This keeps the direct marketing separate and prevents price wars.”
The company differentiates its scooters through features including differential drives, on-board battery charger, aluminum frame and sealed differential drive with spring suspension. Flowers said his company was the first to introduce these features.
A feature for which Electric Mobility has a patent is the ability to convert to different front sections. It introduced this concept to the marketplace in 1990 with The Rascal ConvertAble model. Scooters in this line can be converted to a “compact four-wheel powerchair for indoor maneuvering” from a three-wheel scooter. The switch can be made by changing the front end sections.
“The benefit to the user is that he doesn’t have to buy multiple machines,” Flowers said. “The advantage for the dealer is that he has less money tied up in inventory.”
This year, the company introduced the Heavy Duty Rascal, a three-wheeler designed for riding over rough surfaces, hills and inclines. This product also can be converted into a lighter four-wheeler for regular use or a four-wheeler for indoor use. Electric Mobility plans to introduce a four-wheel Rascal ConvertAble for outdoor use by the end of the year.
The company has about 1/3 of scooter sales in the U.S., Flowers said. Its units range in price from $1,500 to $5,000.
Pride counts on dealers
Pride considers itself to be one of the top three players in the scooter market. It would not reveal its market share. Amigo called Pride the strongest gainer in scooter sales in recent years.
The company entered the scooter market about three years ago with the Shuttle, which accounts for most of its scooter sales, according to Ron Kornfiend, Midwestern regional sales manager.
Its first product was lift chairs, a market segment that Pride dominates. Sales of scooters are now equal in dollar volume to sales of lift chairs, Kornfiend said. Pride has separate scooter and lift chair divisions.
In contrast to Amigo, Pride sells only through dealers and distributors of home medical equipment, such as McKesson Corp. “You’re competing with your own dealers if you sell direct,” Kornfiend said. “You can’t play the game both ways.”
Pride is seeing more upgrade and trade-in business this year. “People want the most attractive product and the latest technology–the motors have become more efficient,” Kornfiend said.
Offering a wide variety of models, which is done in the wheelchair market, is key to attracting dealers, Kornfiend said. Pride’s newest model is the four-wheel Shoprider, which it introduced in February.
Research and development has increased much more in the past to develop the latest technology and the most durable and value-oriented components, according to Dan Meuser, vice president of domestic sales.
To promote its scooters to dealers, Pride does telemarketing, provides news bulletins with product information updates and runs service schools throughout the U.S. The company also has a standard co-op advertising program and sponsors dealers at trade shows, disability expos and country fairs.
Since Pride does no direct advertising to consumers, the relationship with its dealers is critical to end-user satisfaction, according to Meuser.
“Pride seeks dealers to be partners in every aspect: promotion, service and end-user satisfaction,” he said. “We feel that the manufacturer/dealer link-up is critical to the end-user’s happiness with the product because of the on-hand service that only a dealer can offer.
“An unhappy customer is worse than no customer,” he added. “These people are gregarious, and world-of-mouth promotion is very important to us.”
Price is an important factor in the purchasing decision of end-users, but dependability and the scooter’s fit are the major criteria, Meuser said.
Pride offers six different scooters that range in list price from $800 to $2,000.
COPYRIGHT 1992 J.B. Lippincott Company
COPYRIGHT 2004 Gale Group