Harley Davidson

Presented by :

Ashish Chatarath

VISION

No one can accurately predict the future. What I can predict with the utmost confidence are the things that won't change at Harley-Davidson - namely, our commitment to providing more great motorcycles; to enhancing the unparalleled Harley lifestyle experience; and to continuing to provide excellent financial performance.- Jeffrey L. Bleustein, Harley-Davidson CEO

MISSION

We fulfill dreams through the experience We fulfill dreams through the experience of motorcycling, by providing to of motorcycling, by providing to motorcyclists and to the general public motorcyclists and to the general public an expanding line of motorcycles and an expanding line of motorcycles and branded products and services in branded products and services in selected market segments.selected market segments.

HISTORY:

•Arthur’s brothers, William Harley and Walter Arthur’s brothers, William Harley and Walter Davidson, started Harley-Davidson Motor Davidson, started Harley-Davidson Motor Company in 1903 Company in 1903

•Inspired by a French company’s motorcycle Inspired by a French company’s motorcycle with an integrated engine.with an integrated engine.

•In 1905 a Harley-Davidson motorcycle won In 1905 a Harley-Davidson motorcycle won a 15 mile race in Chicago. By 1907 a 15 mile race in Chicago. By 1907 the Company had developed quite a reputation the Company had developed quite a reputation in motorcycle racing with numerous wins in in motorcycle racing with numerous wins in races around Milwaukee-areasraces around Milwaukee-areas..

•Harley-Davidson developed dealers helped sell Harley-Davidson developed dealers helped sell 150 motorcycles in 1907.150 motorcycles in 1907.

•Harley-Davidson developed a more powerful V-Harley-Davidson developed a more powerful V-twin engine that turned out to define the look of twin engine that turned out to define the look of the company’s motorcycles. Company also the company’s motorcycles. Company also started selling spare parts.started selling spare parts.

•Supplied 17,000 motorcycles for the U.S. Supplied 17,000 motorcycles for the U.S. military during the World War I and became the military during the World War I and became the largest motorcycle producer in the world by largest motorcycle producer in the world by 1920.1920.

•It was one of the few companies It was one of the few companies to survive the Great Depression. to survive the Great Depression.

•The popular Bar and Shield logo was used for The popular Bar and Shield logo was used for the first time in 1910.the first time in 1910.

•Suspended production of civilian motorcycles in Suspended production of civilian motorcycles in 1941 to produce almost 90,000 motorcycle for 1941 to produce almost 90,000 motorcycle for the U.S. military during World War II.the U.S. military during World War II.

• Many war veterans bought Harley Davidson as Many war veterans bought Harley Davidson as there was a strong American pride associated there was a strong American pride associated with it.with it.

•HD introduced new models for enthusiasts, HD introduced new models for enthusiasts, including the Hydra-Glide in 1949, the K-model including the Hydra-Glide in 1949, the K-model in 1952, the Sportster in 1957, and the Duo-in 1952, the Sportster in 1957, and the Duo-Glide in 1958 due to grew in the recreational Glide in 1958 due to grew in the recreational motorcycle market.motorcycle market.

•Reputation began to erode soon after its Reputation began to erode soon after its acquisition by American Machinery and Foundry acquisition by American Machinery and Foundry Company in 1969.Company in 1969.

•Company earned a bad name for poor quality Company earned a bad name for poor quality products.products.

•Market was flooded by Japanese manufacturers Market was flooded by Japanese manufacturers offering high quality low priced motorcycles. offering high quality low priced motorcycles.

•Under leadership of Teerlink a restructuring Under leadership of Teerlink a restructuring plan was implemented known as Circles of plan was implemented known as Circles of Management to bring workers and dealers Management to bring workers and dealers together.together.

•New marketing philosophy was developed New marketing philosophy was developed based on desires of customers. Positioned HD based on desires of customers. Positioned HD motorcycles as lifestyle products.motorcycles as lifestyle products.

•HD acquired Buell Motorcycle Company in 1993HD acquired Buell Motorcycle Company in 1993

•In 1995 the company acquired Eaglemark, a In 1995 the company acquired Eaglemark, a financial service company.financial service company.

•Harley-Davidson opened its 358,000 square Harley-Davidson opened its 358,000 square foot Kansas City, Missouri, plant in 1998 to foot Kansas City, Missouri, plant in 1998 to produce Sportster, Dyna Glide, and V-Rod models produce Sportster, Dyna Glide, and V-Rod models and built an assembly plant in Brazil in 1999 to and built an assembly plant in Brazil in 1999 to aid in its Latin American expansion.aid in its Latin American expansion.

•The new capacity allowed HD to The new capacity allowed HD to set production records each year set production records each year during the early 2000s to reach during the early 2000s to reach 290,000 units by year- 290,000 units by year-end 2003.end 2003.

Overview of the industry:Demand grew dramatically after world war II in Demand grew dramatically after world war II in developed countries.developed countries.

Enthusiasts began to form motorcycle clubs Enthusiasts began to form motorcycle clubs through which they socialized & participated in through which they socialized & participated in rallies and races such as Daytona Bike Week in rallies and races such as Daytona Bike Week in Florida & Sturgis Rally in South Dakota.Florida & Sturgis Rally in South Dakota.

Hell’s Angel Motorcyclist Club established in Hell’s Angel Motorcyclist Club established in 1948 in Fontana.1948 in Fontana.

Hell’s Angels made people fearful of bikers Hell’s Angels made people fearful of bikers and in turn reflected badly on Harley Davidson.and in turn reflected badly on Harley Davidson.

Honda successfully exploited Harley’s Outlaw Honda successfully exploited Harley’s Outlaw image.image.

Hell’s Angels image spilled over entire industryHell’s Angels image spilled over entire industry

Contributed to decline in motorcycle demand.Contributed to decline in motorcycle demand.

Release of the movie ‘Easy Rider’ in 1969 Release of the movie ‘Easy Rider’ in 1969 helped restore HD’s image to a great extent.helped restore HD’s image to a great extent.

In 2002, demand for heavyweight motorcycle in In 2002, demand for heavyweight motorcycle in the US grew by 17% compared to an industry the US grew by 17% compared to an industry growth rate of 10%.growth rate of 10%.

In 2003, more than 950,000 motorcycles sold in In 2003, more than 950,000 motorcycles sold in US and 28 million world wide and expected to US and 28 million world wide and expected to grow by approximately 5% annually.grow by approximately 5% annually.

A rising income level in emerging markets A rising income level in emerging markets was the primary force expected to drive was the primary force expected to drive industry growth.industry growth.

The industry was segmented into various The industry was segmented into various groups according to engine size & vehicle style.groups according to engine size & vehicle style.

Europe was the world’s largest market for Europe was the world’s largest market for motorcycles, with 1.1 million registration of motorcycles, with 1.1 million registration of 125+ cc motorcycle in 2002.125+ cc motorcycle in 2002.

Global Competition:•Rivalry centered on performance, styling, Rivalry centered on performance, styling, breadth of product line, image and reputation, breadth of product line, image and reputation, quality of after sales services & price.quality of after sales services & price.

•Great degree of price variability as compared Great degree of price variability as compared to Japanese motorcycle. Japanese offer high to Japanese motorcycle. Japanese offer high performance bike at low prices.performance bike at low prices.

•By phasing out weak models, limiting sales By phasing out weak models, limiting sales and increasing promotions HD was able to carve and increasing promotions HD was able to carve out a niche in the marketplace in the 1980s. out a niche in the marketplace in the 1980s.

•Manufacturers maintained relationship with Manufacturers maintained relationship with suppliers to produce or assemble components.suppliers to produce or assemble components.

•Dealers preferred to represent manufacturers Dealers preferred to represent manufacturers with good reputation & strong consumer with good reputation & strong consumer demand; responsive customer service and demand; responsive customer service and parts delivery; formal training programs for parts delivery; formal training programs for service technicians.service technicians.

HD

Differentiation Strategy:

FOCUSED DIFFERENTIATIONFOCUSED DIFFERENTIATION

TANGIBLE DIFFERENTATIONTANGIBLE DIFFERENTATION•Observable product characteristics:Observable product characteristics:• size, color, materials, etc.size, color, materials, etc.• performanceperformance

INTANGIBLE DIFFERENTATION INTANGIBLE DIFFERENTATION •Unobservable and subjectiveUnobservable and subjective•characteristics relating to:characteristics relating to:•image, status, identityimage, status, identity

Promotional Strategies:1.The HOG community [ the cult effect]

2.Cafes

3.Websites

4.Truly American product

5.Organizing Rallies

Targeting the younger market with the new Targeting the younger market with the new product line, the company has adopted the product line, the company has adopted the following marketing objectives: following marketing objectives: 1.Market expansion1.Market expansion 2.Product 2.Product diversificationdiversification

3.Modify its marketing mix to target a young 3.Modify its marketing mix to target a young demographic demographic

Sales and Distribution•HD dealers operated showrooms that allowed HD dealers operated showrooms that allowed customers to examine and test-ride motorcycles customers to examine and test-ride motorcycles & offered various biking merchandise. Also & offered various biking merchandise. Also responsible for distributing newsletters & responsible for distributing newsletters & promoting rallies.promoting rallies.

•Dealer and mechanics trained in subjects like Dealer and mechanics trained in subjects like retail management, inventory control, retail management, inventory control, diagnostics etc.diagnostics etc.

•Dealership courses through web-based distance Dealership courses through web-based distance learning program. 96% of company’s dealers learning program. 96% of company’s dealers participated in HDU courses in instructor led participated in HDU courses in instructor led classes and online classes.classes and online classes.

•BRAG was also supported by HD dealers.BRAG was also supported by HD dealers.

•Demo rides through out United States.Demo rides through out United States.

•Inexperienced riders and women were much Inexperienced riders and women were much more like to purchase motorcycles after taking a more like to purchase motorcycles after taking a training courses. 25 hour riders edge program training courses. 25 hour riders edge program increased sales to women by 9%.increased sales to women by 9%.

•Sold apparels and merchandise in 50 Sold apparels and merchandise in 50 nontraditional retail locations.nontraditional retail locations.

•161 dealer in Japan, 50 dealer & 3 distributors 161 dealer in Japan, 50 dealer & 3 distributors in Australia/New Zealand market.in Australia/New Zealand market.•European distribution division based in the UK European distribution division based in the UK where were 436 independent dealerswhere were 436 independent dealers

KEY POINTSKEY POINTS

•The company developed a long-lasting The company developed a long-lasting relationship with employees to ensure continued relationship with employees to ensure continued success, and joined in community affairs to success, and joined in community affairs to enhance the company's image.enhance the company's image.

•The company discontinued the operation of the The company discontinued the operation of the Transportation Vehicles segment and sold the Transportation Vehicles segment and sold the related division and paid off its debts with that related division and paid off its debts with that money.money.

•The company developed a long-lasting The company developed a long-lasting relationship with employees to ensure continued relationship with employees to ensure continued success, and joined in community affairs to success, and joined in community affairs to enhance the company’s image. enhance the company’s image.

•The company licensed the production and sale The company licensed the production and sale of a broad range of consumer items.of a broad range of consumer items.

Marketing Mix followed by the Marketing Mix followed by the company…company…•ProductProductFor survival it exploited the ‘retro’ look. Many For survival it exploited the ‘retro’ look. Many components were outsourced from foreign components were outsourced from foreign manufacturers to increase quality. manufacturers to increase quality.

PricingPricingH-D realized that it would not be possible for it to H-D realized that it would not be possible for it to compete with the Japanese manufacturers on the pricing compete with the Japanese manufacturers on the pricing front. Manufacturers like Honda not only manufactured front. Manufacturers like Honda not only manufactured a low-priced high-quality product, but also spent heavily a low-priced high-quality product, but also spent heavily on advertising their products...on advertising their products...

Distribution Distribution H-D started selling its motorcycles through its dealers in H-D started selling its motorcycles through its dealers in 1904 and has a close partnership with them till today.1904 and has a close partnership with them till today.

PromotionPromotionHas built a community of enthusiasts by creating a Has built a community of enthusiasts by creating a brand experience for customers. Heavy promotion in brand experience for customers. Heavy promotion in bike rallies. Promotion done primarily by local dealers.bike rallies. Promotion done primarily by local dealers.

Looking ahead..• First, HD needs to expand its potential

customer base to include enthusiasts and non-enthusiasts males in the 35-44 age group.

• Secondly, HD needs to position the V-Rod to also appeal to first time buyers of motorcycles. HD's strong brand identity can help pull in new clients.

• Third, HD has to set an appropriate marketing mix that will help attract a younger consumer base. By using the low-end approach, which involves attracting a young audience to a brand name product with a low price tag (similar to what Jaguar and BMW have done), HD can expand its popularity to the domestic and international market.

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