Harley Davidson - John Jedlinski

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					      Harley-Davidson




Marketing Management 445-02
     February 28, 2006
   Team #6 Futurist Team
       Ryan Davidson
          Wes Davis
        John Jedlinski
        Megan Rowe




Futurist Team, 445-02, Spring 2006
                 1
Harley-Davidson Highlights

       One of the most important highlights to mention when talking about the Harley-

Davidson company is the well known name. In North America alone their share

exceeded 48 % in 1998. This is because the name alone represents a strong company that

focuses on high quality motorcycles with proven performance. Harley- Davidson

tightens their grasp of the industry by obtaining the remaining 49% of Buell Motorcycle

Company in the same year. This is a company that focuses its energy toward marketing

to the sport side of the motorcycle industry. The sport bikes that Buell offers are based

on Harley-Davidson components.

       Another bright spot for Harley-Davidson was the opening of two very large

manufacturing plants. The first is a 479,200 square-foot facility that produces the

engines and transmissions of the motorcycles. The other new facility was created to

produce all the different models that Harley-Davidson has to offer. This facility was

created with 330,000 square feet of space. With 32 different models, including just the

touring and custom bikes, the added space will go a long way in insuring the demand is

met. Harley also has a new engine that was introduced with more power to compete

with other models offered by new competitors. There is also a Harley Owners Group, or

H.O.G. that has increased in size to over 430,000 members stretched across 115 counties.

       The chairman and CEO, Jeffery Bleustein, has also been a key aspect of the

success of the company. He attributes his success in the company to four major aspects.

These aspects include such things as: a brand centered on experience with attributes of

freedom and adventure to appeal to a wide variety of people, a belief in a strong

relationship with stockholders, a well organized and proven team of managers, and the



                           Futurist Team, 445-02, Spring 2006
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ability to bring together different combinations of products and people to create a unique

experience.

         Another highlight of the industry has been the introduction of companies that

specialize in motorcycle accessories. This has become a booming part of the industry. It

enables the consumer to personalize his or her motorcycle in a much easier fashion.

There are accessories that are available for every aspect of a motorcycle. Today the

motorcycle industry has started to act on this new venture and some of these companies

and have started offering custom ordered accessories for their models.

       Harley-Davidson and the industry realize that the internet is a very powerful

marketing tool. In order to stay competitive companies are making their online web sites

better for online purchases. This new trend in consumers switching to the internet is the

path that these companies need to be concentrated on.



Organizational Changes

       With over one hundred years experience in selling motorcycles Harley-Davidson

appears to have it down to a science. Their success can be contributed to their ability to

change and using this change as a tool. The one main thing to remain constant is their

image of freedom and self discovery.

       The organizational change that had the most impact on their company was taking

away the typical pyramid of hierarchy and transforming it into three circles referred to as

“the circle organization.” What this refers to as, “three interlocking circles that define the

interdependent core process of an organization; these are surrounded by larger circles that

represents all stakeholders.”(Merriman-Clarke) The center of the circles, where they all



                            Futurist Team, 445-02, Spring 2006
                                             3
meet is referred to as the LSC or the Leadership and Strategy Council. This council

contains only six members elected by peers not promoted or hired. The way this helped

Harley-Davidson was through everybody working together to meet the same goals. Since

the circles were all interlinked they all affected each other.

       Also, “at the philosophical core of the circle organization’s mission is its so-called

“umbrella”- values, issues, and stakeholders that feed into one vision.”(Merriman-Clarke)

The components of the umbrella remain the same no matter who has top leadership

positions with Harley-Davidson. This is very important in a time with frequent turnover

and keeps the company grounded.

       To round up the year in 1998 Harley-Davidson bought a remaining 49 percent

interest in their partners, Buell Motorcycle Company. The two companies work hand in

hand in selling their bikes. Buell helps keep Harley-Davidson a competitive edge in the

racing bike marketing segment while Harley-Davidson helps Buell with name

recognition.



Competitors Analysis

       Harley-Davidson has been and remains in control of the American touring and

custom cruiser motorcycle market share. However, in recent years companies such as

Honda, Yamaha, Polaris, and Triumph have started to make a bigger impact on the

industry as a whole. With companies that are newer to the scene being able to take

advantage of lower cost of labor and cheaper materials overseas, the competition has

become tight. Harley-Davidson and Victory, a division of Polaris Industries, are the only

two major players in motorcycle industry that are American owned. In Fact, in the U.S.



                            Futurist Team, 445-02, Spring 2006
                                             4
Honda is quickly gaining more market ground mainly because they offer a well designed

and reliable product that are priced much less. Harley, as of now, is in no way in threat

of losing their number one spot in the U.S., but they need to ask themselves how long

tradition and a name with a great reputation can carry them.

       In 1998 Harley-Davidson obtained full control over Buell. This strategic move

launched them into an entire new market. As soon as Buell started manufacturing

motorcycles designed for the motor-spot enthusiast, they also had to prepare for the high

pace competition of that market focus. One of the new competitors to Harley was Ducati.

Ducati focuses their entire efforts toward the production and performance of their sport

bikes and they have been doing it for some time. Honda, Kawasaki, Suzuki, Triumph

and Yamaha all have models offered in the sport bike category and the cruiser. In fact,

most motorcycle companies had an advantage over Harley-Davidson because they had

been in that market focus for many years. Victory is the only manufacturer that does not

offer a model in the sport bike category.



Changes in Marketing Strategies and Procedures

       Harley-Davidson has closely been associated with the rebellious loner or

motorcycle gangs. Since the times are changing Harley-Davidson has become more of a

status symbol. The demographics show that Harley-Davidson riders range from blue-

collar workers to high-power executives. Since more and more people are buying

Harley-Davidsons to show off their money or to feel like part of a group they need to

reach a wider variety of consumers.




                           Futurist Team, 445-02, Spring 2006
                                            5
       Harley-Davidson has been the leading seller of motorcycles in North America for

a very long time and for good reason. Some ways that Harley-Davidson has stayed at the

top of the market is by having huge gatherings, sometimes referred to as ‘bike week’, in

places like: Sturgis, South Dakota; Laconia New Hampshire; Daytona, Florida; Myrtle

Beach, South Carolina; Austin, Texas; and Washington D.C. These gatherings are a

great way for riders to communicate to the Harley-Davidson representatives about the

bikes and here the customers input. This approach has always been a big part of the

Harley-Davidson Company.

       Another way that Harley-Davidson has improved on its image is by having to

compete with the overseas competitors. Harley-Davidson did this by creating its new V-

Rod bike which is Harley’s version of a racing bike. It comes standard with a 1250cc V-

Twin Revolution engine which puts out 115 horses and torque. This bike reaches a

portion of the market because it is a classic looking Harley-Davidson with a big engine to

go fast. This strategy only reaches a select few of the motorcycle audience but it is a great

way for Harley-Davidson to let riders know that they are not just a cruising bike

anymore.

       A strategy that Harley-Davidson want might to try would be to get into

Motocross. If they could design an engine that is superior to the competitors and is able

to fit on a dirt bike frame, this could potentially increase sales. Loyal customers might

find that they can buy a Harley dirt bike for their son or daughter to learn how to ride.




                            Futurist Team, 445-02, Spring 2006
                                             6
Financial Developments

       Attempting to ease the difficulties with making considerable investments, such as

purchasing, maintaining, and displaying Harley-Davidson motorcycles, the company has

infiltrated a majority owned subsidiary. Eagelmark Financial Services supplies Harley-

Davidson with private label financial services programs. One such program, entitled

Harley-Davidson Credit, offers any Harley-Davidson United States dealer wholesale

financing and insurance programs. This assistance accounts for motorcycle floor-

planning, parts and accessories trade acceptance and commercial insurance brokerage.

Eagelmark Financial is only a part of Harley-Davidson’s financial assistance. “Your

Harley-Davidson motorcycle is unique. And it requires careful attention regarding its

insurance. We work only with insurance carriers that are properly set up to insure you

and your Harley-Davidson motorcycle.” (Website). Harley-Davidson makes it

unbelievably easy to navigate through their website and even acquire a personal online

quote to see how affordable a new motorcycle is for you, as well as specific coverage

options. You can also see if you qualify for other benefits such as: H.O.G. membership,

motorcycle safety certificate, multi-bike coverage, security system in place, and safe

driver benefits.



Product Recognition

       The biggest influential factor maintaining Harley-Davidson’s superior market

share is brand recognition. The name of the company solely accounts for the majority of

their strength in their designated market. Customers of Harley-Davidson show such

brand loyalty and dedication to the company many ways, some even as drastic as



                           Futurist Team, 445-02, Spring 2006
                                            7
tattooing. The company is hovering of the other competition with an overwhelming

awareness. Recently celebrating its 100th anniversary in 2003, Harley-Davidson

customers and fans gathered in Milwaukee, Wisconsin to what could have been the

largest motorcycle event in history. True, some celebrities help further the appeal of a

Harley-Davidson here in the states, such as, Elvis Presley, The Undertaker, and Jay Leno,

but there is a problem with market strategies overseas. Although this year Harley-

Davidson has had an increase in market share of ten percent, only a portion of this

percentage is a contribution from overseas. For years Harley-Davidson has prided

themselves on being an American tradition, yet it is difficult to penetrate the overseas

market with apprehension from other countries. Despite hesitation from overseas,

Harley-Davidson’s earning each year still continues to increase. (Appendix A).




                           Futurist Team, 445-02, Spring 2006
                                            8
                             Appendix A

                     HARLEY-DAVIDSON, INC.
                    ANNUAL INCOME STATEMENTS

                      2004         2003         2002      2001      2000
Gross Profit        1,899,535 1,665,566 1,417,841 1,152,970 963,774

HDMC Operating
                    710,016       668,677      626,720   539,660   476,289
Exp

HDMC Operating
                    1,189,519 996,889          791,121   613,310   487,485
Income

HDFS Operating
                    188,600       167,873      104,227   61,273    37,178
Income

Corporate
                     16,628       15,498       12,646    12,083     9,691
Operating Exp

Total Operating
                    1,361,491 1,149,264 882,702          662,501   514,972
Income

Investment
Income & Other,      17,995       16,771        3,125    10,954    33,584
Net

Income Before
Provision for       1,379,486 1,166,035 885,827          673,455   548,556
Taxes

Provision for
                    489,720       405,107      305,610   235,709   200,843
Income Taxes

Net Income from
                    889,766       760,928      580,217   437,746   347,713
Continuing Ops
Net Income (Loss)
                         -            -            -        -         -
from Disc Ops
Extraordinary
                         -            -            -        -         -
Items
Net Income          $889,766 $760,928 $580,217$437,746$347,713


                    Futurist Team, 445-02, Spring 2006
                                     9
                                      Works cited




American Honda Motor Co. Inc. (2006). Retrieved February 25, 2006, from Honda.

       http://www.honda.com/


Harley-Davidson. (2006). Retrieved February 25, 2006, from Harley Davidson USA.

       http://www.harley-davidson.com/wcm/Content/Pages/home.jsp?locale=en_US


Merriman- Clarke, Kristin. Eat My Dust Organizational Change. (2004). Retrieved

       February 25, 2006, from entire article.

       http://www.gwase.org/executiveupdate/2003/Feruary/dust.htm


Yamaha Motor Corporation. (2006). Retrieved February 25, 2006, from Star

       Motorcycles.

       http://www.starmotorcycles.com/star/products/lifestylehome/home.aspx




                          Futurist Team, 445-02, Spring 2006
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