Harley Feasibility Study -- Harley Davidson 1957

Harley

Feasibility Study -- Harley Davidson

1957 Harley Davidson

Harley Davidson Company has a long history of building motorcycles that have worked to actually shape culture. Its product positioning is admired by companies in most industry and most strive to develop the levels of brand loyalty that Harley has achieved. However, the company has also been negatively impacted by the recent economic downturn and is working through a rebuilding phase as market conditions are slowly stabilizing. This analysis will look at some of the industry trends that have occurred and make recommendations on Harley can continue to develop its iconic American brand.

Company Background

Harley-Davidson's mission statement is to "fulfill dreams through the experience of motorcycling, by providing to motorcyclists and to the general public an expanding line of motorcycles and branded products and services in selected market segments." (Harley Davidson, 1999). Their primary objective in the organizational goals is to have happy and satisfied stakeholders, which includes their customers, employees, suppliers, investors, government, and the society. If the company is able to satisfy the demands of these stakeholders it expects them to continue purchasing their products throughout their life time due to their unforgettable experience. Harley-Davidson makes the customer's experience with their products the core of their business and every effort is made to make this experience as enjoyable as possible.

Ultimately, the overall strategy of Harley-Davidson can be defined by its customer focus. Harley-Davidson's product mix consists of a wide range of products, services, and brand licensing agreements. Harley has developed an iconic brand over the last few centuries and places a great deal of effort in controlling this image. One of their most successful market approaches can be described best by using a tribal model. These tribal groups that the company has developed build brand loyalty and deep seated emotion commitment to the product. Such groups include the Harley Owners Group (HOG) and the Buell Riders Adventure Group (BRAG) which the organization makes available to their customers and their friends and families. This strategy has produced remarkable results for the company and it serves as one of the best examples of tribal marketing of any product out there. The company's customers have actually integrated the brand into their own self-identification.

Motor Cycle Industry - Supply and Demand

Motorcycling is among one of the most popular forms of recreation and transportation in many industrialized as well as developing markets. While in developing markets there is a greater reliance on these vehicles as the primary source of transportation, Harley Davidson primarily targets the recreational markets in the developed countries. Some estimates place the total target market of people who enjoy motorcycle activities as comparable to other recreational activities such as fishing, golfing, or camping for example.

Because these products are primarily used as recreational vehicles, they are heavily influenced by the populations' level of disposable income. In fact some even use a motorcycle index to gauge the overall state of the economy (Watson, 2012). When the recessionary period arose in 2009, the industry lost nearly fourteen percent of total market volume. When consumers' disposable income levels shirk then there budgets for recreational items fall considerably. Thus when the recession emerged, the motorcycle industry was one of the first and hardest hit. However, recent data suggests that the industry is recovering.

Figure 2 - Industry Trend (Watson, 2012)

Market Structure

The market structure in this industry can be defined by a high level of competition. Although Harley has captured a remarkable level of brand loyalty through product differentiation, competitors are constantly vying to chip away at the company's market share. The motorcycle industry consisting of five major manufacturers: Harley Davidson, and four Japanese firms including Honda, Yamaha, Kawasaki, and Suzuki. There are also some European companies, mainly BMW and some smaller companies based in Italy. Despite a large number of firms in the industry, Harley is the dominant player with over sixty five percent market share in the U.S. market (Molavi, 2010).

Figure 3 - Industry Overview (Molavi, 2010)

Many of the foreign-based producers have offshored many of the production activities away from the United States due to lower production related expenses. This is not a feasible option for Harley Davidson though because the fact that their production occurs in the United States has been at the core of marketing campaigns for several decades. If they were to implement such cost saving measures it could significantly affect their brand image and customer loyalty. However, at the same time the company has to deal with the high costs associated with unionized labor in the United States which puts them at a cost disadvantage amongst their foreign competitors.

Recommendations

Harley's core competency has certainly been developing high levels of customer loyalty. Thus it is recommended that the company pursues this strategy even more rigorously. An emerging marketing model known as tribal marketing was identified as relevant to Harley Davidson. The approach is centered on the idea of community rather than meeting the needs of one individual or customer (Cova & Cova, 2002). Instead of targeting an individual with a certain set of attributes, a marketing campaign may focus on various tribes or groups of people with certain characteristics.