HARLEY-DAVIDSON

I.

FACTS:

Harley-Davidson competes against other American and several internationally based

companies within the motorcycle industry.

Harley-Davidson also provides variety of services to its independent dealers including

service and business management training programs, customized dealer software
packages and delivery of its motorcycles.

The primary promotional tool for Harley-Davidson motorcycles are the HOG activities.

Harley has developed a very effective marketing strategy, but it is the responsibility of
manufacturing to produce high quality and reliable motorcycles.

Harley-Davidson competes against other American and several internationally based

companies within the motorcycle industry. Harley-Davidson has focused its efforts
specifically on the heavyweight segment whereas other companies have either spread
their focus amongst lightweight cycles, performance cycles and other types of vehicles
such as: cars, trucks, boats and ATVs.

Harley-Davidson has been able to successfully refocus their efforts on a more affluent
customer base by emphasizing patriotism and community involvement. This has
increased the average age and income of Harley-Davidson customers.

Harley-Davidson has marketed the Harley lifestyle rather than just a mode of
transportation and has expanded their presence from the US market to an international
strategy focusing on the European market as well.

Harley-Davidson product identify and exploited mini niches, such as customized, touring,
sport/touring and sport/street motorcycles, in the heavyweight end of the market. When
Harley-Davidson was formed, they made the V-twin engine. After that to attract
customers they made the famous 45 V-twin knucklehead engine. They only offered one
color of motorcycles - gray and three basic styles. The company learned it needed to give
the customers a choice and now offers a variety of models, including Sportsters, Super
Glides, Low Riders, Softails, Sport Glides, Tour Glides and Electra Glides, in numerous
vivid colors.

The primary promotional tool for Harley-Davidson motorcycles are the HOG activities.
Not only does it serves as a customer relations device, but as a way to showcase and
demonstrate new products. Harley develops a strong impression within consumers.

Harley-Davidson motorcycles are sold by 1,065 dealers worldwide. The company owns
54 percent of the market share in the USA, 16 percent in Japan, 10 percent in Europe, and
38 percent in Australia.

Harley-Davidson treats the dealers not only as partners, but also as customers.

Harley has developed a very effective marketing strategy, but it is the responsibility of
manufacturing to produce high quality and reliable motorcycles.

II.

SWOT Analysis:
o Strengths

Cult Brand: Harley Davidson has transformed itself as a cult brand & positioned itself in
niche segment of High CC cruiser bikes.

HOG Rallies: Harley has its characteristic rallies of Harley Owners Group or HOGS on
a continuous basis which involves Harley owners from different parts of the

country to interact & experience a different lifestyle.

High Customer Pull: Its distinguished promotional strategies & branding has helped
Harley in creating a strong customer thereby having a high TOMA score. (Top of the

mind awareness score)

Product Range: With its diversified product range like recently introduced Street 500CC
& 750 CC, Harley is trying to solve the ageing problem of the current customer base so

as to make it more promising to the younger.

Loyal Customer Base: With its strong image of quality and freedom Harley has crafted
its niche position in the market which is also backed by Harley Davidson Merchandising.

Due to a rich heritage and financial stability parent company is on the growing path.

Harley-Davidson markets their product to the customers through advertising and

promotional activities via television, radio, direct mailings, as well as electronic
advertising and social networks.

Harley-Davidson builds its competitive advantage in two ways: (1) by supporting the
motorcycling lifestyle across wide demographic range through events, rides, and rallies;
and (2) by making available the other product and services.

HOG promotes Harley-Davidson products and related lifestyle and sponsors many events
including rallies and rides.

Harley-Davidson established what it calls a Creativity Model, whereby it uses webbased crowd sourcing as a source for its main marketing creative development.

There company came up with the idea of outsourcing.

Reputation for being technically proficient and producing a quality product.

o Weakness

Outside U.S Harley Davidson has a manufacturing unit only in India & one assembling
plant in Brazil which makes price to the exported countries a bit higher. Also they are
dependent on these 3 facilities to fulfill the global demand.

Over-dependence on the U.S market: More than 65% of the revenue is coming from the
U.S market. The U.S market has its own limitation in terms of growth. So its became
more risky for Harley to generate majority of its revenue from U.S.

Suppliers: Relaying on Single/Limited Suppliers can affect the companys business in

long run. As in case of increase in Input cost will lead to increase in operational cost
which in course will affect the cost of commodities resulting capacity constraints, lower
production, financial distress to suppliers which will ultimately result in delivery delay &
customer dissatisfaction.

Harley-Davidson needs to improve product quality and productivity while reducing cost
and increasing flexibility to respond to ongoing changes in the marketplace.

Harley-Davidson has problems in gaining more market share in some European countries
(That is one of the main markets for Heavyweight motorcycles outside U.S).

Harley-Davidson customers consistently must wait to receive their bike.

o Opportunities

Asian & Europe Markets: The demand in the developing Asian & European nations is
increasing for Harley and there are very (rather no) players competing in this segment.
Thus, it is a very attractive opportunity for Harley to capture these markets aggressively.

Lower CC bikes: With its own set of loyal & cult followers, it can attract the young
customers for whom if it can launch low end heavyweight vehicles (say 350 CC) which
will help the company to increase its Customer base.

Women & Young Riders: Harley can use its increased marketing efforts to further
increase the customer base by marketing towards untapped segments. For example, in
2000, women riders were purchasing about 15,000 motorcycles per year. In just 5 years,
sales to women had jumped to over 30,000 motorcycles per year. In 2006, women
accounted for 12% of all bike sales.

Harley-Davidson defines its US core customer base as men over the age of 35 and its
outreach customers as women, young adults, and ethnically diverse.

Harley-Davidson also provides variety of services to its individual dealers including

service and business management training programs, customized dealer software
packages and delivery of its motorcycles.

Harley-Davidson defines its customer segments for heavyweight motorcycles as

traditional, Sport bike, Cruiser, Touring and Dual.

Women and younger riders are increasing becoming interested in bikes. Customers value
quality parts. Women and younger riders are increasing becoming interested in bikes.

The international heavy weight market is growing and is now larger than the U. S.
heavyweight market. Market share increasing in Europe and Asia for the last two years.
Increasing demand in US markets for bikes.

o Threats

Myopic Approach: Being market myopic can affect the Harley brand .As its 65% of sales
comes from the U.S market, this over dependence can lead to internal distress.

Substitutes: With more & more companies in heavyweight segment going global Like
Royal Enfield, Indian Motorcycles, Vector Motorcycles, Triumph Motorcycles, these
substitutes with low price offering can affect the overall business of Harley.

Some competitors of Harley Davidson have larger financial and marketing

resources and they are more diverse.

Highly competitive global and domestic markets.

III.

Conclusion:

It appears that Harley-Davidson has gained control and stability over its economic situation that
has historically plagued the company. The current management team has also created additional
focus surrounding the company image and branding which already has increased revenues
through sales of merchandise and increased the customer base.
Harley-Davidson is most likely not stable enough to expand outside of the motorcycle industry
as some of its competitors. Continuing to focus on the basic controls and facets of managing a
business will ultimately payoff for Harley-Davidsons future.
IV.

Recommendation:

Harley-Davidson must focus its energies on defining its target market and its vision. Time has
demonstrated on more than one occasion that Harleys competition produces technologically
superior products at a lesser or comparable price without customers having to wait to take
delivery of their motorcycle. Harley-Davidsons marketing strategy appears to be too segmented
which will most likely not prove beneficial for the company. The company must clarify its target
market and ensure that its mission is very clear. Harley-Davidson must remain distinctly aware
of the threat posed by its competition. Some competitors are able to produce a technologically
superior product with comparable prices.
Key Issues and Discussion
1. How do various dimensions of quality introduced in this chapter align with the quality
characteristics that are important to Harley Davison and its customers?

Performance: Harley Designs bikes for all types of riders, they have bikes that are
designed for weekend riders up to those for people who travel on nothing but their bikes.

Features: They offer different types of bikes along with options on the size of handlebars,
how many people they want their bikes to fit, to the amount of storage you can have on the
bike.

Reliability/ durability: They offer warranties on all their products so that if the bike does
break down it will be fixed. Customers keep coming back because they trust their bikes.

Service ability: Not only do they sell a lot of the parts that might break most locations are
also trained in the repairs of their bikes

Aesthetics: They sell additional cosmetics accessories for the bikes along with riding gear,
clothing jewelry and other products

2. Discuss how Harley Davidsons approaches help it to maintain a focus on its customer has
and enhance customer satisfaction, loyalty, and engagement?

Satisfaction: For a long time, Harley Davison had many issues with their bikes breaking
down constantly or parts going bad shortly after buying the bikes. They have been ranked
highest in satisfaction for the past several years beating out several of its biggest
competitors like Yamaha, Honda and Ducati. Customers also get satisfaction from
owning the product because it fulfills a dream that some people have.

Loyalty: Harley Davidson has become more than just a bike shop its a community.
These customers wear Harley shirts, bandanas; some even have tattoos to show their love
for the brand. It also seems that once a customer gets their Harley they fall in love with
the brand and the lifestyle and do not want to go to any other bike manufacturer

Engagement: Each customer wants something different so Harley listens to them and
offers up suggestions along with ways to customize your bike, employees are trying to

engage with the customers to provide exactly what the customer wants. They also host
events around the world, which allows customers to meet up and talk about their Harley
bikes and to show their love for the brand.