Harley-Davidson Case
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Executive Summary
Harley-Davidson, Inc. is the parent company for a group of companies known as Harley-Davidson Motor Company and Harley-Davidson Financial Services. Harley-Davidson Motor Company manufactures and produces heavyweight motorcycles and parts. Harley-Davidson provides its customers with form unity by encouraging customers to customize their bikes to reflect their individual personality and true self (Harley-Davidson.com). Harley-Davidson must find a way to appeal to younger audiences without devaluing the brand. Harley has been extremely successful appealing to the Baby Boomer market with their luxurious, heavyweight, cruising motorcycles. However, the Baby Boomer market continues to age, and as a result, the average Harley customer has been aging by six months per year for the last twenty years. Also, the children of Baby Boomers generally do not want heavyweight motorcycles, which make up more than 80% of Harleys sales. Younger generations favor the faster, smaller, cheaper motorcycles offered by Japanese companies. Suzuki, Honda, Yamaha, and Kawasaki combine to make up 92% of the lightweight motorcycle market in the United States. These lighter, sportier, and less expensive motorcycles appeal to the 25 to 34 year old male demographic. Currently, Harley sells almost two and a half times more heavyweight motorcycles per year than the number of lightweight motorcycles sold by all manufacturers combined (Prestige Custom Motors). Harley-Davidson values the emotional connections that are created with their customers through their products, services and experiences. Harley-Davidson is guided by brand loyalty and the trust that their customers have that they will continue to deliver a high quality product. Harley-Davidson sustains a loyal brand community which keeps active through clubs, events, and a museum.
Situational Analysis: Harley-Davidson is the brand and the industry is motorcycle manufacture. The US market for motorcycles is a $14.6 billion industry and is set to see its 13th year of consecutive growth. Growth in new motorcycles is expected to increase in the medium-term but not at the same rate as in years past. The competitive environment is made up of over 4,000 manufacturers which include 15 top companies that rival Harley-Davidson. Harley-Davidson three top competitors are Ultra Motorcycle Company Inc., Triumph Motorcycles Limited, and Viper Motorcycle Company. Ultra Motorcycle Companys goal is to stay competitive with Harley-Davidson by manufacturing and selling V-twin powered cruisers which include the Groundpound and the Intemidator 300. These chopper-style bikes feature customized parts and accessories (Hoovers.com). Triumph Motorcycles is a British based motorcycle designer and manufactures and has been in business since 1902. They manufacture such brands as the Cruiser, Classic, Supersport, Roadster, Adventure, and Touring. Triumph also offer a line of clothing and accessories line designed to enhance both the bike and the riders style. The US and Canada represents 25% of Triumphs yearly sales (Hoovers.com). Viper Motorcycle Company is a Minnesota based manufacturer and developer of a custom line of V-Twin cruiser motorcycles, V-Twin aftermarket engines and related products (Hoovers.com).
Potential future opportunities are to manufacture lightweight weight motorcycles to compete with Japanese makers. Another opportunity would be to continue to expand their market internationally. By 2016, the global motorcycles market is forecast to have a value of $96,172.8 million, an increase of 35.8% since 2011 (Global Information, 2012).
Product Positioning Strategy: Harley-Davidsons success in part can be attributed to their advertising strategy. This strategy is centered on the relationship they have with customers. Innovative marketing strategy utilizing research and development they have implement strategies that will ensure brand loyalty, an increase in international promotion (TDI Media, 2010). Harley-Davidson should choose a strategic direction that would include targeting a younger market that is technologically conscious in order to increase their share in the performance cruiser market space. With its introduction of the new V-Rod motorcycle, Harley-Davidson is in the position of acquiring a sizeable share of the performance cruiser market. Targeting the younger market with this new product line, the company will be able to implement the following marketing objectives: expand its current market, diversify its product line, and modify its marketing mix to target a younger demographic (Thompson, 2006).
Following the elements of the marketing mix Harley-Davidson can continue to be successful. Product strategy – the V-Rod creation and introduction was to attract and meet the need of a younger target market as well as gain a greater market share.
Pricing strategy – priced starting at $17,000, Harley-Davidsons V-Rod has the second highest price tag in the performance cruiser market. At the present time Harley-Davidson has a 22% share of the total market; Harley-Davidsons pricing strategy has three main factors that have influenced the price of the V-Rod. These factors are the used motorcycle market, lower priced motorcycles, and their failure to keep up with demand. To be able to gain a larger market share, Harley-Davidson will have to examine how these three factors will repeatedly play a role in pricing and adjust as a result of these factors.
Promotion strategy – Harley-Davidsons primary promotions the Harley Owners Group (HOG). Print ads and commercials have been focused around female images. Harley-Davidson uses another promotional campaign through its cafes, located in most dealerships. They also have an interactive website. The website allows the company the opportunity to expand its operations online as well attracts potential new customers. The most important promotion tool Harley has is the brands image as a truly American product.
Distribution strategy – the networks of Harley-Davidson dealers are situated in areas that provide access to the largest concentration of potential customers. The dealerships distribute products, accessories, and merchandise.