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In this sense, the company should be attempting a strategy of aggressive growth, but not the kind of growth it has traditionally sought.
In the past, Harley-Davidson has sought to maintain a kind of brand purity that has managed to develop a loyal and committed fan-base while reducing the company's market share over all. Put simply, it does not matter how loyal these fans are if they cannot afford the company's products, and maintaining the brand at the expense of the organization is foolish. Thus, while in the past Harley-Davidson could claim to be attempting a growth strategy, in reality this strategy could be characterized as growth by way of brand stability, a contradiction whose negative effects made itself clear in the company's recent declines. By locating its potential for success in the successful development of a core brand and a group of loyal customers, Harley-Davidson has effectively made itself unable to adapt to new markets and shifts, because it simply lacks the organizational capability to respond quickly and efficiently. While a committed group of core customers might be enough to keep the company afloat, it is certainly not what is need to expand and grow, something that Harley-Davidson is clearly interested in.
This is why (in the context of Ansoff's corporate strategies), the company should seek out a strategy of market development and diversification, instead of penetration and development, because it seems to be the case that for the time being Harley-Davidson has penetrated the American market as deeply as it can, and it would not be profitable to continue developing its existing, iconic products. Similarly in the context of Porter's generic strategies, the company should seek a segmentation strategy in its narrow segment in order to bring in customers looking for alternative motorcycles that still bear the Harley-Davidson brand and cost leadership strategy in emerging markets where the company has the potential to become to social standard for motorcycles. In either case, this means a strategy of growth by way of retrenchment, because the company needs to cut down on its least profitable areas (meaning its traditional product line) in order to exploit the opportunities offered by new technologies and markets.
The best opportunities for the company going forward lie in emerging markets like India as well as the cost savings offered by the exploitation of new technologies. However, successfully capitalizing on these external opportunities means being willing to be internally flexible, particularly when it comes to the management of the Harley-Davidson label. In an attempt to secure itself a spot as an iconic, timeless brand, Harley-Davidson has actually succeeded in making sure that its label, customer base, and main product line appear more and more outdated with every passing year.
By shifting towards cheaper motorcycles aimed at a lower socio-economic class than usual, Harley-Davidson could position itself to aggressively expand in developing countries while minimizing its reliance on financing in order to sell motorcycles. The economic downturn wiped out a large chunk of the company's most lucrative market by permanently erasing the wealth of many middle class Americans, so rather than getting poorer people to buy fewer expensive bikes, the company should be attempting to sell more, cheaper bikes. This would simultaneously ensure that the company maintained the ubiquity of its brand while keeping it from being reduced to a kind of boutique, exclusive marketer. If Harley-Davidson is unwilling to let go of some its brand rigidity, it will soon find itself with a dramatically reduced, albeit extremely loyal, segment of the market, and it will have gone from being the only American motorcycle manufacturer to a tiny shell of its former glory.
Harley-Davidson built its brand in the United States not by being a world-renowned behemoth, but rather by marketing to a broad swath of the American middle class by offering them the idea of freedom and autonomy. The company can attempt to replicate this success, but only if it recognizes that the success comes from tailoring the brand and product to the market, and not the other way around. Harley-Davidson essentially made its brand though a convenient monopoly and war-time contracting, and for roughly the last fifty years has attempted to maintain its success on the strength of this brand alone. This strategy has completely failed, because even as the company has managed to develop a fiercely loyal customer base, it has stumbled whenever it is confronted by new competitors. As technology gets cheaper and the international market increasingly becomes the only market, this trend will only continue until Harley-Davidson is reduced to being a luxury, boutique manufacturer of motorcycles. To avoid this fate, the company must continue its expansion into international markets with an eye on new product lines aimed at lower-income groups. This would allow the company to expand its market share while protecting the…[continue]
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