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
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Harley-Davidson Highlights
One of the most important highlights to mention when talking about the HarleyDavidson 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
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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
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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.
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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 bluecollar 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.
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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 VRod bike which is Harley’s version of a racing bike. It comes standard with a 1250cc VTwin 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.
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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 HarleyDavidson 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 floorplanning, 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
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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 HarleyDavidson 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).
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Appendix A
HARLEY-DAVIDSON, INC.
ANNUAL INCOME STATEMENTS
2004
Gross Profit
HDMC Operating
Exp
HDMC Operating
Income
HDFS Operating
Income
Corporate
Operating Exp
Total Operating
Income
Investment
Income & Other,
Net
Income Before
Provision for
Taxes
2003
2002
2001
2000
1,899,535 1,665,566 1,417,841 1,152,970 963,774
710,016
668,677
626,720
539,660
476,289
1,189,519 996,889
791,121
613,310
487,485
188,600
167,873
104,227
61,273
37,178
16,628
15,498
12,646
12,083
9,691
662,501
514,972
10,954
33,584
673,455
548,556
1,361,491 1,149,264 882,702
17,995
16,771
3,125
1,379,486 1,166,035 885,827
Provision for
Income Taxes
489,720
405,107
305,610
235,709
200,843
Net Income from
Continuing Ops
889,766
760,928
580,217
437,746
347,713
-
-
-
-
-
-
-
-
-
-
Net Income (Loss)
from Disc Ops
Extraordinary
Items
Net Income
$889,766 $760,928 $580,217$437,746$347,713
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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
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