Making inroads Harley Davidson Inc by zhangyun

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									Making inroads: Harley Davidson Inc.

Cult brand Harley Davidson, Inc. commands such iconic status that it currently ranks No. 45 in
Interbrand’s best 100 Global brands (2006) and is frequently listed in Forbes U.S. 100 best big
companies. From its humble beginnings in 1903 Harley Davidson has for the past 17 years
enjoyed market share leadership with a 48% market share of heavy motorcycles in Northern
America in 2004 while it’s closest rival Honda had 18.5% (Mintel 2005).

Harley Davidson has attained record global revenue growth for 19 consecutive years according
to Mintel (2006). This is expected to continue as revenue increases of between 7 and 9% are
forecast to 2010. (Data Monitor 2006).

This can be attributed to a number of factors, not least Harley Davidson’s formidable premium
brand image and aspirational values. It has been associated with free-spiritedness and
rebelliousness, notably through product placement. For example in the classic film “Easy Rider”;
Harley bikes carried beer drinking, freedom-seeking, rebellious characters across the West’s
open roads. While its bad boy image has been diluted slightly the brand’s personality still
resonates with connotations of freedom, adventure, non-conformity and passion which appeal
to “pleasure” riders who are happy to pay premium prices to connect with this seductive brand.

The passionate and loyal core customer group are identified as male baby boomers; desperate
to relive the passions of their youth one more time, before exchanging their engines for rocking
chairs.

                Harley Davidson Demographic Profile

        47.50
        47.00
        46.50
        46.00
        45.50                                      Average user age 2002-
  Age




        45.00                                      2006
        44.50
        44.00
        43.50
        43.00
                2002   2003   2004   2005   2006
                              Year


Adapted from www.harleydavidson.com 2007
Harley Davidson’s demographic profile (2002-2006) earned an average annual income of
$81,000 for the period. The company reported that
     51% had owned a Harley Davidson motorcycle previously at any point during their
        lifetime
     34% owned a competitive motorcycle within the past five years
     15% were new to motorcycling or had not owned a competitive motorcycle for at least 5
        years
     In 2002 10% of users were female increasing to 12% in 2006
However, whilst holding a commanding position for the past two decades, the company could
not afford to be reticent because of several market factors. Ageing baby boomers would not be
able to physically handle or ride their bikes indefinitely. Harley Davidson had to actively find
other demographic target groups, including the Y generation and females, if they were to remain
competitive. Neither of these target groups would aspire to the traditional values of the brand,
nor would they be able to afford premium prices. Female riders might find heavier bikes difficult
to manage. Global competitors such as BMW, Yamaha, Honda, Kawasaki and Suzuki were
already producing motorcycles based on new technology and design, offering ranges of bikes
that catered for all needs, at lower prices. Harley Davidson expanded their product range to
attract a younger, more diverse customer which helped their move into the global market. In
2004 the U.S. accounted for 81% of Harley Davidson revenues while Europe; their second
largest geographical market commanded 9.5% and Japan approximately 4%.
Europe
Harley Davidson does not enjoy such strong brand equity and market performance in Europe
compared to the U.S. Its combined market share was only 9% in 2004 and it faces intense
competition from other players according to Data Monitor (2006).

UK
The value of the UK motorcycle market accounts for 10.3% of the European market. Data
Monitor (2005) forecast this market will grow by 17% in value to £536 million by 2010. It
attributes current growth to an increase of female participation and the rise of disposable
income. White collar workers are the predominant buyers. Harley Davidson has 8 th largest
market share behind Japanese giants Honda (market leader) and other brands such as Suzuki
(Japanese) and Piaggio (Italian). However, while Honda and Piaggio’s market share dropped in
2005 Harley Davidson’s share grew by 4.6%. (Mintel 2006).

UK Marketing Communications
Main media supported by motorcycle brands include TV and press. However TV advertising
declined over the period 2003 – 2005 and although press advertising expenditure had also
fallen, it still remains the primary advertising tool for this market. Of the top ten UK brands, all,
bar three, reduced their main media spend to concentrate on other forms of promotion. Harley
Davidson chose to target the mainstream by doubling its advertising and promotion budget. Its
pull strategy was to reinforce its iconic image and associated values amongst the diverse target
groups without alienating its core customer group. Print advertisements were used to show its
new products with straplines such as “Pure Harley, Not pure fantasy” and “It’s going to be a big
bad year” In order to reach main stream customers, it chose newspapers such as The Sunday
Times and the Mail on Sunday, as well as motorcycle enthusiasts specialist magazines for its
campaigns in 2005.
One of the company’s strengths is the level of loyalty amongst current users. This is generated
through HOG, the Harley Owners Group. Launched in 1983 HOG is the largest company-
sponsored enthusiast organization with almost 1 million members worldwide. Harley Davidson
describes it as much more than a motorcycle organisation. “It’s one million people around the
world united by a common passion: making the Harley Davidson dream a way of life”. When the
company purchased Buell in 1998 it set up BRAG, the Buell Rider’s Adventure Group which has
10,000 members. Membership to these groups is free for bike owners. Members are provided
with a membership manual containing details of “everything you need to know before you go”.
Other benefits include a European version of the brand’s bi-monthly magazine - Hog Tales;
which is currently distributed to 20,000 members in the UK. This is the company’s main
communication channel, containing news of HOG happenings around the world, UK HOG
events, informative articles, entertaining features, stories for and by riders and for promoting
current competitions. Members are given access to an exclusive range of Motor Clothes riding
apparel and collectibles.

Belonging to the Harley Davidson community enforces loyalty. Devoted members come
together in a public display of H.O.G. pride. They are encouraged to take photographs at
organised events and write about their experiences which are printed in Hog Tales.
Competitions include the mileage Programme award, a way to collect pins and patches. The
website promotes the award as a great way to tell the world “Hey! I love riding my Harley!” In
fact every pin and patch that Harley Davidson awards has a story behind it. Be it to indicate
membership of a local chapter, to honour an accomplishment, to celebrate a holiday or for
participation at a rally or tour.

To widen the net, Harley Davidson encourages non-riders to join HOGS too. Enthusiasts are
offered a variety of licensed products including t-shirts, jewellery, small leather goods and toys.
The company provides other services including financial and insurance and a Harley Davidson
credit card, all of which increase awareness of the brand.
Other programmes include the Riders Edge motorcycling safety courses for new and
experienced riders. In 2007 these are being offered across the country including Wales,
Northampton, Skegness and Cheshire. Harley Davidson’s research of the same programme in
the U.S. found that 45% of Riders Edge participants are female and nearly half are under 35
years of age.
HD targets women specifically by launching their annual “Ladies of Harley Motorcycling
Memories contest” whereby female owners are asked to submit a photo of themselves with their
Harley and a one page story recounting their favourite motorcycling experience. Recent
research reveals that women ride bikes for personal challenge, empowerment, to control
personal safety or for reasons of kinaesthetic pleasure. Female riders have subverted the
traditional roles of femininity. (Martin, Schouten & McAlexander 2006)

The U.K Harley Davidson organisation provides key opinion informers and leaders with bikes,
such as the staff of a new radio station called RockTalk (Banham 2007). It supports regional
charities and exhibits in many UK motorcycle shows. These strategies generate very positive
PR and word of mouth.

Harley Davidson’s push strategy includes providing dealers with service and management
training programmes; customized dealer software packages; a motorcycle trial, rental and tour
programme and of course Riders Edge, the company’s rider training programme which
encourage purchase.

This edgy brand has “softened its image without making it too sweet” according to Bleustein,
chairman and CEO of Harley-Davidson.

India

Harley Davidson’s global expansion plans continue with efforts to break into the Indian market.
However, this has not been easy as there were several problems which had to be overcome.
Sourced from the USA, the first Harley Bikes reached India this year. Only time will tell whether
Harley Davidson can successfully take some market share in India.

								
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