Professional Diploma
in Marketing (Level 6)
541 – Delivering Customer Value through Marketing
Case Study
December 2013 and March 2014
Harley-Davidson
© The Chartered Institute of Marketing 2013
Delivering Customer Value through Marketing – Case Study
Important guidance notes for candidates regarding the pre-prepared analysis
The examination is designed to assess knowledge and understanding of the Delivering
Customer Value through Marketing syllabus, in the context of the relevant case study. The
examiners will be marking candidates’ scripts on the basis of the tasks set. Candidates are
advised to pay particular attention to the mark allocation on the examination paper and plan
their time accordingly.
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closely follow the instructions given to them on the examination day. Candidates are advised
not to waste valuable time collecting unnecessary data. Case studies are based upon reallife situations and all the information about the chosen organisation is contained within the
case study. No useful purpose will therefore be served by contacting companies in the
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confusion.
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Please state any assumptions, where necessary, when answering tasks. The Chartered
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are tested on their overall understanding of the case study and its key issues, not on minor
details.
As part of the preparation for the examination, candidates will need to carry out a detailed
analysis of the case study material, ahead of the examination. Candidates will find that the
time available during the examination is sufficient to answer the compulsory tasks, but only if
detailed analysis has been undertaken beforehand. When compiling their analysis,
candidates should only use the information found within the case study, supported by their
knowledge and understanding of the syllabus.
Candidates are encouraged to use a range of analytical tools and models in order to
undertake a thorough investigation of the key aspects of the case study. This will improve
their understanding of the case study and the issues faced by the organisation(s) and/or
industry sectors to which it relates. Clearly, the analysis required will vary depending on the
specific case content but, as a guide, candidates should consider undertaking the following:
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analysis of the external environment using PESTEL analysis
analysis of the competitive environment using Porter’s Five Forces model
strategic review using Ansoff’s matrix and/or Porter’s generic strategies
stakeholder analysis
detailed review/analysis of each of the marketing mix elements
product/portfolio analysis, eg, using product life cycle analysis, BCG (Boston Consulting
Group) matrix, GE (General Electric) matrix
SERVQUAL
SWOT analysis.
The copying of pre-prepared ‘group’ answers, including those written by consultants/tutors,
or by any third party, is strictly forbidden and will be penalised by failure. The questions will
demand analysis in the examination itself and individually composed answers are required in
order to pass.
Candidates will then need to condense their analysis into a FOUR side summary (four sides
of A4 maximum, no smaller than font size 11. The content of tables, models or diagrams
must be in a minimum of font size 8. The analysis should be numbered for ease of reference
when answering the examination tasks.
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Candidates must hole-punch their analysis and staple it in the top left hand corner. They
should write their CIM membership number and examination centre name in the top right
hand corner of each page of the analysis. It should then be attached to the answer booklet
on completion of their examination, using the treasury tag provided.
Although no marks are awarded for the analysis itself, candidates will be awarded marks for
how the analysis is used to answer the questions set. Candidates are advised not to repeat
or copy the analysis summary when answering the exam questions. It is important that
candidates refer the examiner to the analysis summary, where and when appropriate, when
answering the questions.
Candidates are only permitted to take their analysis into the examination room. Candidates
are not permitted to take in the downloaded case study or any other notes. The invigilator
will issue candidates with a new clean copy of the case study at the start of the examination
along with the question paper.
Candidates may not attach any other additional information in any format to their answer
book. Any attempt to introduce such additional material will result in the candidate’s paper
being declared null and void.
The Chartered Institute of Marketing reserves the right not to mark any submission
that does not comply with these guidelines.
Important Notice
The following data has been based on real-life organisations, but details have been changed
for assessment purposes and do not necessarily reflect current management practices of the
industries or the views and opinions of The Chartered Institute of Marketing. Figures used in
tables may differ as they have been compiled from different sources, using a range of
criteria.
Candidates are strictly instructed NOT to contact individuals or organisations mentioned in
the case study or any other organisations in the industry. Copies of the case study may be
obtained from:
The Chartered Institute of Marketing, Moor Hall, Cookham, Berkshire SL6 9QH, UK or may
be downloaded from the CIM student website www.cimlearningzone.co.uk
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DELIVERING CUSTOMER VALUE THROUGH MARKETING
CASE STUDY
Preparation
In preparation for the examination you will need to analyse the case study material provided,
in order to prepare your analysis of the company. You will be given a clean copy of the case
study on the day of the examination, but you must bring your analysis with you into the
examination. Your written analysis must not exceed FOUR A4 sides and must include your
CIM membership number on each page. The written analysis must be submitted as
appendices on completion of the examination and attached with a treasury tag to your
answer book.
Role
You are a marketing consultant and have been commissioned by the Harley-Davidson board
to review a number of marketing-related areas, including:
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marketing communications planning and the use of marketing communications tools
channel management
new product development
pricing
delivering customer value and service.
The board is keen to maintain a high level of marketing orientation throughout the business
in order to retain existing customers and to recruit new customer relationships.
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HARLEY-DAVIDSON – CASE STUDY
Company history
The iconic American company was formed in the early twentieth century by William Harley
and William Davidson. The first motorcycle was designed by 21-year-old Harley – essentially
it was just a motor added to a standard bicycle. Davidson joined six years later, when a new
manufacturing facility was built.
The two young engineers went from strength to strength, entering motorcycle racing in 1914;
associations with the hog date back to this time, when a pig was carried on a victory lap after
each race won by the team – the brand is now known affectionately as ‘the hog’. A large part
of their success came from sales to the US military, which accounted for fifty % of revenue.
The ‘F’ Head engine was another source of excellence until the late 1920s. The iconic bar
and shield logo was launched in 1910, and remains largely unchanged.
Sporting prowess brought the Harley name to the forefront of the public mind as Joe Petrali
won five consecutive years of the AMA championship in the late 1930s. At the same time,
motorcycle clubs began to form. However, the Great Depression of the 1930s hit American
manufacturing hard, wiping out Harley’s American competitors. Harley stood its ground; in
an attempt to stimulate sales, graphic eagle designs were applied to the fuel tanks and other
enhancements were introduced. Engineering excellence gained the company further ground,
with the development of the flathead WR cam motorcycle in the mid-1940s, dubbed the best
racing motorcycle ever built.
Buyback of the company in the 1980s, fifteen years after AMF’s take-over saw the rallying
cry of ‘The eagle soars alone’. Along with successful new models, modern manufacturing
techniques were introduced, such as purchasing raw materials and producing components
only as needed. A new American production plant was built in the 1990s, as well as a new
product development centre.
Engineering and sporting prowess continued into the twenty-first century, with the
introduction of the twin cam engine Softtail Slim and the Sportster 48 models, and Eddie
Krawiec’s fifth dragster win in 2011. Despite twice being on the brink of bankruptcy since the
1960s, Harley-Davidson Inc. evolved into a thriving company with an enviable level of
demand.
The motorcycle market
The global market for motorcycles, scooters and mopeds is projected to reach 126.5 million
units by 2018, primarily driven by the ever-growing need for economical and easy-tomaintain transportation among urban dwellers in developing nations, and the passion for
motorcycling as a leisure activity in developed nations. The economical pricing and fuel
efficiency of two-wheelers, and the increasing number of new vehicle models being
introduced, will also drive considerable opportunities in the market.
UK motorcycle industry market shares
Sales of new motorcycles fell sharply when the economic downturn hit in 2007. Volumes in
2011 were around a third of their level in 2007, at just under 94,000 units per annum. Market
value performed even worse, suggesting that the impact of the downturn has forced
manufacturers and dealers to offer discounts to achieve sales, or that some consumers have
chosen to downgrade when it comes to buying new. The total value of the market in 2011
was 41% down on its value in 2007, at £437 million. Mintel estimates suggest that any
recovery is some way off. Both volume and value sales are set to remain depressed,
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although a slight improvement in volumes is forecast, rising from 93,800 to 94,300 units for
2012. Value sales, though, appear to be in a rut, with continuing pressure on consumer
expenditure leading to predictions of little change from $666.4 million (£437 million)1 in 2011
to $668.2 million (£438 million) in 2012.
Manufacturers’ market shares in the UK
Honda and Yamaha are the two leading brands in the UK at present, accounting for a
quarter of motorcycles sold in 2011. Other brands recognised within the UK market are
British company Triumph and Italian manufacturer Piaggio Group. There are other names
reflecting the wide range of smaller manufacturers active in the market. They include other
Japanese manufacturers such as Kawasaki and Suzuki, European companies such as BMW
and KTM, as well as Llexeter, a UK distributor of a number of Chinese brands.
The slowdown that has occurred in motorcycle and scooter sales since the economic
downturn in 2007 has resulted in mixed fortunes for the major brands. In a market where
overall sales fell back by around 35% between 2007 and 2011, some of the leading players
bucked this trend. Triumph was the most notable, growing sales overall by 24% between
2007 and 2011 to take a strong third place in the market. Equally good progress was made
by German manufacturer BMW, which grew sales 16.1% over the same period to claim
fourth place in 2011. Additional information is included in Appendix Four.
Key competitors
The market is highly dynamic, with numerous new entrants, returners, and competitors both
small and large. Major players in the global marketplace include Bajaj Auto Limited, BMW
Group, China Jialing Industrial Co., Ltd., Lifan Industry (Group) Company, Ducati Motor
Holding SpA, Harley-Davidson, Inc., Hero MotoCorp Limited, Honda Motor Co., Ltd., S&T
Motors Co., Ltd., Kawasaki Heavy Industries Ltd., Piaggio, Suzuki Motor Corporation,
Triumph Motorcycle Limited, and Yamaha Motor. Rivalry between brands is strong; there are
several camps with regard to motorcycles: not everyone sees Harley-Davidson as the ‘king
of the road’. A post on the Yamaha owners’ website states, ’Harley – the most efficient way
of turning gasoline into noise without the by-product of horsepower.’
Harley-Davidson’s hottest competition comes from four globally known and well established
companies: Honda, Suzuki, Yamaha and BMW.
BMW Motorcycle
BMW began business in 1922 and has grown into a global corporate giant. With a strong
focus on automobile and motorcycle markets, German based BMW has over 100,000
employees around the world. BMW is strong in the European Market and offers consumers a
wide array of automotive products and services, including financial services and consultation
services for information technology. BMW is Harley-Davidson's closest competitor, since
both companies share a similar brand image. Both compete intensely, and BMW fashions its
marketing strategies to appeal to Harley-Davidson’s loyal hard core of customers.
Suzuki
The Suzuki Motor Corporation is a Japanese company with over 14,200 employees, and
operations in Asia, America, North America, Japan and Europe. It manufactures and sells
motorcycles made for super sport, street, cruiser, off-road, motocross and dual purpose,
1
All dollar to sterling conversions at the following rate: $1= £0.655 (February 2013)
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amongst others. Much like Honda, Suzuki has thrived on its strong research and
development. Suzuki has a strong foothold in the Asian market, with its economy class
products designed for developing and underdeveloped economies.
Yamaha
Japanese Yamaha Motor operates in Europe, Asia, the Americas and Oceania, with over
49,700 employees. Yamaha Motor’s motorcycle operation manufactures and sells scooters;
trail motorcycles, motor crossers, road racers, sports motorcycles and electro hybrid cycles.
The company was founded in the mid-1950s and has diversified into numerous industries,
including engines, unmanned helicopters, swimming pools, fishing boats and snowmobiles.
Relative to Harley-Davidson, Yamaha Motor mainly competes as a supplier of parts to other
automotive manufacturers.
Yamaha turned to mobile marketing to promote the launch of its new FZ16 motorcycle in a
multichannel mobile effort. They used mobile ad network mKhoj (now renamed InMobi) to
provide strategy, designing, planning and execution. One of the main goals of the campaign
was to engage consumers on mobile to drive higher brand equity.
‘The objective was to popularise the motorcycle through information about it and position the
bike as a ride for adventurous people,’ said Abhay Singhal, cofounder and vice president of
global ad sales at mKhoj, in a blog post.
The FZ16 has a muscular look and is said to have redefined the 150cc motorcycle segment.
A mobile site was created for the Yamaha promotion and it lets users locate the nearest
store and refer a friend.
Honda
Since its inception in the 1950s, Honda has been the world‘s largest engine manufacturer
and market leader in motorcycles. Honda operates 120 manufacturing facilities in
29 countries and employs 167,231 people worldwide. Honda has expanded in Asia, Europe
(including the UK) and North and South America. The worldwide market share of Honda is
10.2 % and it is ranked fifth. Production of motorcycles in the United States and UK ceased
in spring 2009.
Indian Motorcycle Co.
For decades, Harley-Davidson Inc.'s biggest rival, Indian Motorcycle Co. halted production in
the 1950s and was later revived. In 2011 it was bought by Polaris Industries - a $3 billion
American manufacturer, known for snowmobiles, all-terrain vehicles and Victory
motorcycles. Polaris is redesigning Indian motorcycles from a clean sheet, intending to
capture the spirit of the Chief and other Indians from half a century ago, but using a modern
engine and other components, to make the motorcycles rider-friendly. Polaris hopes to have
the first newly designed Indian motorcycles ready to roll in late 2013.
On that level, Indian will go ‘head-to-head with Harley-Davidson’, said Indian marketing
director Darren Bassel. The motorcycles will appeal to ‘open-minded Harley riders’, Bassel
added. The original Indian, with its signature Indian-head logos, has become a collector’s
item. Polaris entered the field with its Victory motorcycles 14 years ago. The $36,000 price of
a 2012 Indian could be a turnoff for motorcyclists unsure of whether the brand has staying
power and how well Polaris will develop the dealership network. Many dealers are
suspicious of the brand, in the light of previous quality issues. Yet it has passed Japanese
competitors Honda, Yamaha, Kawasaki and Suzuki to become the number two seller of the
biggest heavyweight motorcycles (with engines 1400 cubic centimetres and up) behind
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Harley-Davidson. Currently, Polaris has more than 400 motorcycle dealerships in North
America – most of them for Victory motorcycles. Victory and Indian motorcycle sales
combined rose 40% in 2012. The company's total sales, including all-terrain vehicles,
increased 25% to a record $673.8 million (£441.8 million).
Royal Enfield
The world’s oldest motorcycle manufacturer is planning to double production in India and is
gearing up for a big export drive. Forty-one years after the last British-made Royal Enfield
rolled off a production line, sales for its Indian sister company, which inherited the brand
after its UK parent went bankrupt in 1970, are soaring. The group is moving to a new
50-acre factory, enabling production to double to 150,000 motorcycles per year. Royal
Enfield has transformed into a lifestyle company, with smart brand promotion and some
really competitive products. Blending retro-charm with modern technologies, Royal Enfield
has an expanding base of buyers seeking quality and excitement. Royal Enfield wants to
take the leisure motorcycling scene to the next level, and offers the Thunderbird 350 and
500 Twins that were launched in Mumbai.
The Thunderbird is a big departure from Royal Enfield convention, in that it offers some
factory-fitted kit that would otherwise be installed by independent mechanics. This includes
the 20-litre fuel tank that results in greatly increased range, bungee mounts to secure
camping gear, a digital trip meter to keep a tab on distances covered, projector headlamps
that make riding at night safer, and most importantly, an improved rear disc brake. All these
features make the Thunderbird Twins a proper touring package.
Harley-Davidson’s sales and market share
Harley-Davidson is the leader in the global motorcycle industry, and saw motorcycle retail
sales increase 20% in the first quarter of 2012 year-on-year, with US growth closer to 26%.
The company is increasing its full-year shipment forecast, expecting to ship between
245,000 and 250,000 motorcycles in 2012 to dealers and distributors throughout the world.
Harley-Davidson 's share of the heavyweight motorcycle market in the United States was
48.2% in 1996, virtually unchanged from the 48.5% share it held in 1991. During this period,
the overall big-bike market in the United States nearly doubled, but Harley-Davidson held its
own against stiff competition, mainly from East Asian manufacturers. Dealers say they could
easily sell twice as many Harleys as they get, but this gap between supply and demand
provides an opportunity for Japanese and other importers to form a toehold from which to
build their own brand loyalty.
Since 1987, sales have grown at a compound annual rate of 16.2%, with increased
profitability soaring to 29.2%. In 2011, the company reported sales of $1.53 billion
(£1 billion), with worldwide sales of 118,000 big motorcycles (650 cubic centimetres or more)
up from 55,000 in 1989. Projected sales for 2012 are 130,000.
In the fourth quarter of 2011, dealers sold 23,753 new Harley-Davidson motorcycles in the
US -- 11.8% more than in the corresponding quarter of 2010. For the full year, sales in the
US touched 151,683 units, a 5.8% increase over the previous year. Harley-Davidson 's
international sales also increased, reaching 16,606 units in the fourth quarter, an increase of
9.7%. For the full year, motorcycle sales hit 83,505 units, a 6.1% increase over 2010.
Harley-Davidson claim $1.27 billion (£0.8 billion) in motorcycle segment sales in 2012, up
20% from the previous year, and including $277.5 million (£181 million) in sales of parts,
accessories, general merchandise and other products. In 2011, Harley-Davidson captured
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55% of US heavyweight motorcycle sales. Harley-Davidson 's market share in the US was
59.4% for the fourth quarter and 55.7% for the full year.
Harley-Davidson’s survival has been a result of its commitment to refocusing its product
development, reducing inefficiencies, and reducing time to market. Learning and growth
have come from adapting to the market. During the early years motorcycles were all dark
colours. The company learned to give customers greater choice and now offers a variety of
models, including Sportsters, Super Glides, Low Riders, Softails, Sport Glides, Tour Glides
and Electra Glides, in many colours. Many of these models and changes appeared when
Harley-Davidson realised customers were customising the motorcycles and none of the
revenue from the work was going to the company.
Harley-Davidson’s strategic approach
Harley-Davidson’s domestic and international approach gives access to larger global
markets, but also creates the opportunity to benefit from the economic differences in
exchange rates. Additionally, the company can benefit from giving old products a whole new
life in emerging markets.
Harley-Davidson has accepted that it cannot compete with foreign producers on cost. Its
strategy is to offer value over price. Unlike its Japanese competitors, Harley-Davidson
spurns plastic in favour of steel, to give a more durable feel and greater robustness to its
motorcycles. A year-old Harley-Davidson may sell for significantly more than a new one.
Higher quality and price place Harley-Davidson’s strategy somewhere between
differentiation and focused differentiation. The user recognises added value to a particular
segment (heavy motorcycles in Harley-Davidson’s case) with a willingness to pay a premium
price. At the same time, this approach may alienate riders who seek a bike that is ‘light on its
feet’.
Harley-Davidson’s segmentation strategy is to expand its global presence and reach new
demographics in the US and in international markets. Currently, a majority of customers
reside in the US; however, international retail sales have been growing as a percent of total
sales. The aim is that by 2014 over 40% of retail sales will occur outside the US. The
assembly facility in Manaus, Brazil, the first operations outside the US, opened in 1999,
means taxes are lower, making the bikes more affordable to a larger group of Brazilian
customers.
Although Harley-Davidson has launched new motorcycles, most innovation has been in
peripheral products and services that support the motorcycles, and go towards building the
Harley community. The electric bike is a bit of a wild card, but represents an avenue they
cannot afford to ignore, despite the high costs of research and development. Other
strategies focus on building customer loyalty, and enhancing the brand and the image of the
Harley rider.
The tension between resonance and dissonance with social norms goes a long way to
creating Harley-Davidson’s mystique. Maintaining this tension is a managerial challenge.
The product draws strength from its link with outlaw counterculture; yet a link that sullies the
company image with the dark side of outlaw bikers may alienate the upscale market that
purchases new Harley-Davidsons.
Stakeholder groups
The importance of stakeholders and the company approach to managing them comes
through strongly in the company vision statement. Stakeholder groups include customers
(new and used market), staff, dealerships, supplier companies, industry bodies, general
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road-users, and the hotels offered to riders looking for holiday accommodation. All are seen
as essential to sustainable growth.
Harley-Davidson customers, dealers, suppliers and employees are committed to improving
their communities and helping others, and since 1980, they have supported the Muscular
Dystrophy Association, raising more than $65 million to aid research and programme
services for children and adults with muscular dystrophy. Customers are invited to donate
through a link on the website.
Thousands of motorcycles of every vintage and style, led by the various H.O.G. (Harley
Owners Group) chapters, attended the Ride for the Hills charity ride in Melbourne, Australia
to support bushfire victims. They raised hundreds of thousands of dollars as the H.O.G.
community gathered to offer their support. Examples exist elsewhere in the world of the
power held by this group, who share not only a passion for bike riding, but also for offering
support to people in distress. This goes some way to counter some of the negative publicity
generated towards the ‘bad boys’ of the road.
Through the Harley-Davidson Foundation, the company builds strong, skilled and
sustainable communities. With employees and dealers, they develop partnerships with
charitable organisations to improve the lives of stakeholders and encourage social
responsibility. Partnerships with charitable organisations lead to investment in education,
health and the environment. They provide community support where corporate facilities
exist, and target the areas of greatest need among underserved populations. They support
key community activities that enhance the quality of life for stakeholders, especially in
education, health and the environment.
Unlike many organisations, Harley-Davidson addresses its shareholders on the website, with
a page that provides up-to-date information on shares, performance, and the benefits of
investing in the organisation, making it sound like another natural lifestyle choice.
Harley-Davidson’s target markets
The typical US Harley-Davidson purchaser is an educated married male in his mid-forties
with a household income of $78,600. 42% of motorcycle purchasers have owned a HarleyDavidson previously.
In addition to the traditional youth market for motorcycles, Harley-Davidson targets a number
of market segments not previously thought of as motorcycle groups. The association with
Elvis and with films such as The Wild Ones and Easy Rider has established an association
with bad boys, freedom and independence that connects with middle-aged born-again
bikers.
Harley-Davidson is currently executing a multi-generational and multi-cultural marketing
strategy in the US. The success of this strategy is measured by internally monitoring market
shares within targeted customer segments of core (Caucasian men 35+), young adults (men
and women 18-34), women (Caucasian women 35+) and diverse men and women (AfricanAmerican and Hispanic 35+).
Motorcycle registration results show Harley-Davidson is the segment leader in US on-road
motorcycle registrations, both in terms of heavyweight (651cc+) registrations and all
displacement (all cc) registrations, across the targeted demographic customer definitions
listed above
Only about 9% of current US Harley-Davidson riders are women, but as the outlaw image
cleans up just enough to entice a new generation of clean-cut buyers to join a club
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synonymous with the Hell's Angels -- without losing the frisson of excitement from being a
member -- we can expect to see more women riders.
Some Harley owners feel that until they owned a Harley, any other motorcycle was just a
stop-gap. Still others begin riding motorcycles without any particular brand loyalty and
eventually develop a specific interest in owning a Harley that may or may not develop into a
driving passion. One thing is certain: among Harley owners a sizeable proportion are fiercely
loyal. One devotee categorises loyalty to Harley-Davidsons in the following manner: ‘There
are two types of Harley riders, those who if Harley-Davidsons were no longer available
would just stop riding altogether, and those who are devoted to motorcycles first, and who
happen to like Harleys.’
The most Harley-loyal group appears to be those closest to the traditional biker subculture.
Signs of their loyalty frequently include Harley-Davidson-related tattoos, bumper stickers on
their other vehicles, and the frequent wearing of Harley-licensed apparel, even at work or
other non-motorcycling activities. This group tend to have long (even lifelong) histories of
Harley ownership. A common pattern is to have begun with a ‘basket case’ (a bike in need of
extensive repair) and to have traded up several times to newer or more desirable models.
Their predominantly blue-collar status often precludes the purchase of a new Harley.
However, their tendency to customise their motorcycles makes them a good segment for
after-market parts and service – not high-profile, and involving little investment in innovation,
but making a significant contribution to Harley-Davidson’s revenues. Many riders do their
own mechanical work, many go to an authorised Harley dealer, but much is done by private
shops or other Harley owners keen to earn extra income. An ironic twist to Harley loyalty is
that much of the customisation of Harley-Davidsons involves the removal of stock Harley
parts and their replacement with other, non-Harley parts that are perceived to deliver higher
performance. For example, observation at rallies suggests it is standard procedure for
Harley enthusiasts to replace the stock Harley exhaust pipes with noisier custom pipes.
Lavish spending on custom accessories is also typical of upscale, baby-boomer (people
born between 1946 and 1964) enthusiasts; as latecomers to Harley ownership, their
longevity as owners cannot be determined, however. This group tend to dress and play at
the role of biker on weekend rides, at rallies, or for other special riding occasions, but return
to their suits and imported cars the rest of the time. Such signs of peripheral affiliation with
the biker subculture perhaps suggest a passing infatuation indulged by relatively high
discretionary incomes. If Harley ownership were to lose popularity, maintaining the loyalty of
such owners might present a significant challenge.
The subgroup of retired or semi-retired ’Ma and Pa’ bikers presents a different picture of
brand loyalty. Motivated in their motorcycling by travel and comfort, they often choose fully
dressed motorcycles with features such as radios, intercoms, heated handgrips, and
floorboards (another type of footrest). The same needs that steer them toward HarleyDavidson place them squarely in the target market for the very successful Honda Interstate
and similar motorcycles from other Japanese manufacturers.
Gen Y & Millennials
Harley’s pursuit of a sustainable target market indicates the need to engage with the
younger generation bikers. This group has its attractions, but also presents a selection of
challenges in relation to the purchase of capital items.
On the plus side, the vast majority of young adults (67%) live under their parents’ roof, the
proportion goes down amongst 22-24 year-olds, but not by much, and over half (51%) of
young men and 46% of women in that age group continue to live with their parents.
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Youngsters living at home with parents are able to save considerably more money (21% of
their disposable incomes) compared with those living in a house share (12%), perhaps as
parents are letting them live at home rent-free or at a reduced rate. Young adults living
independently spend nearly half (48%) of their incomes on rent, bills and groceries. As a
result, a quarter of them find it hard to make ends meet each month, compared with 18% of
youngsters still living with parents. Thus, young people living at home are more carefree,
and better able to socialise, choose to save for a home of their own, or enjoy their freedom,
and to make capital purchases such as a car or motorcycle. They are also tech savvy,
leading the way in smartphone ownership, and expecting to access information on the go
(through apps) or the internet.
This group are serious and practical in their outlook, with educational pursuits (42%), saving
money (40%), improving job prospects (31%) and getting a job (31%) being their main
concerns, whilst only 15% focus on partying, having a more varied social life, or going on
holiday. Living in the multimedia society, they have more awareness of the issues they are
facing, as well as ways to reduce the impact of those issues on their long-term future.
The downside is that unemployment is high, due to the recession, with many of this age
group yet to achieve their first job, and less than 60% securing a job after graduation. There
is still inequality of earnings between the genders: despite copious legislation, women still
have lower rewards. Women are, however, significantly better at saving in general and at
saving to purchase something they truly desire.
Product range
Much of Harley-Davidson's success can be attributed to its wide product portfolio, which
includes motorcycles, accessories, clothing, merchandise and GPS navigators. HarleyDavidson currently operates in 60 countries worldwide. This range of products enables the
company to up-sell, by adding accessories to every purchase, and by selling lifestyle
products to riders, their families, and brand devotees alike (obtaining free promotion of the
brand into the bargain!).
Harley owners develop both technological and stylistic advancements in motorcycle
equipment and clothing, giving Harley a ‘grass-roots R&D’ approach. Harley-Davidson's
heritage was built on this approach, from its own roots as a backyard operation. The ‘modern
age’ Harley-Davidson builds an intimate relationship with riders through activities such as
corporate sponsorship of and participation (by top-level executives, managers, staff, dealers,
and assembly-line workers) in rallies. Consequently, the design of production motorcycles,
accessories, and clothing continues to echo styles at the core of the biker subculture.
Examples include slightly extended forks, highway foot pegs (footrests), pullback
handlebars, sissy bars (passenger backrest), and a proliferation of chrome and tooled
leather, all engineered to create the look of the biker's custom ‘chopper’. Official HarleyDavidson clothing also suggests the hard-core biker style. The black leather vest with
insignia that serves as the uniform for members of the Harley Owners Group bears a striking
resemblance in form and function to outlaw style.
Despite Harley-Davidson's wide range of official accessories, a high level of consumerinitiated innovation still continues. For instance, a photocopied flyer posted in Oregon Harley
dealerships advertises a belt drive ‘designed by an old Harley rider for Harley riders’ that can
be retrofitted to old Harleys. Another Harley die-hard, dubbed ‘Chrome-Magnon’, designed a
full set of foot pegs, shifter, and brake pedal to provide a more comfortable, extended riding
position while accommodating an oversized, side-mounted carburettor on his Harley Softail.
This hardware has recently gone into production and distribution through a large Southern
California accessories retailer. Casual conversation with rally participants surfaces ideas for
other accessories, such as chrome clocks mounted on gas caps or handlebars.
Page 12
Although many custom alterations to motorcycles and clothing can be seen as personal,
expressions of product involvement as leisure behaviour, some cultural innovations, such as
the raked profile of a ‘chopped’ motorcycle, emanate from the subculture, ultimately to be
adopted more broadly.
The company manufactures and markets five families of motorcycles: Touring, Dyna, Softail,
Sportster, and V-Rod. It also makes three-wheeled motorcycles. With its feet firmly planted
in both the present and the past, Harley-Davidson offers traditional -- many say retro -- styles
and the best, most-refined 1940s technology around. That approach -- marked by heavy
machines (some models twice the size of comparable BMW machines), twin cylinders and a
throaty growl -- has been derided by high-tech motorcycling enthusiasts as an inefficient relic
of a bygone era. But to Harley-Davidson 's customers, the motorcycles are lovingly crafted
works of art and many genuine artists agree. In a recent exhibition of global design held at
London's Victoria and Albert Museum, the object chosen to represent America's design
sense was a Harley-Davidson!
The 1936 Harley-Davidson Knucklehead still tops the Motorcycle News 10 best motorcycles
listing, and there are several others favoured by Harley-Davidson’s many loyal followers. All
are based on a combination of superior engineering, iconic style, and a quirky appeal. It is
the only manufacturer that has been building motorcycles non-stop since 1903. Many of the
motorcycles show considerable longevity.
Essentially, Harley-Davidson has tapped into the growing trend for customers to seek
experiences, rather than simply buy products; Harley-Davidson sells a dream of freedom,
and open roads.
Current models
Harley-Davidson XL1200 Sportster 72
Based on the original 1957 Sportster, the new Harley Sportster ‘72’ is takes its styling cues
from the late 60s and early 70s West Coast choppers. The original 1957 Sportster has been
a cornerstone of the ‘hog’ family for nearly fifty years. It is more suited to someone who
wants a bike that is easy to ride and un-intimidating.
FLS Softtail Slim
The Slim’s classic styling aims to cater for nostalgia-seekers who want the security of
modern machinery. The bike is designed for people who want to express themselves, made
possible by the wide range of customisation options.
Switchback Dynaglide
The Switchback is a lightweight touring bike with some custom looks. It was HarleyDavidson’s only new model for 2012 and marked an important milestone in the company’s
ongoing development programmes.
FLHTCUTG Tri Glide™ Ultra Classic
This is a three-wheel Harley-Davidson using original equipment design, quality and service.
The Tri Glide™ Ultra Classic Trike is built for long-haul comfort and includes features such
as an audio system, electronic cruise control, and a trunk for storage.
Page 13
Harley-Davidson eco-friendly electric motorcycles
Harley-Davidson is considering an electric model to add to its line-up. Details are scarce,
but the company has touted its desire to return as an industry innovator – not really a
description that springs to mind for Harley-Davidson. Electric seems to be the next big
trend in motorcycling, and the brand has been exploring the idea of an electric or hybrid
ICE/electric drive train.
It’s not clear if Harley-Davidson intends this eco-friendlier motorcycle to fit into its cruiser
line-up, or if the model, should it make it to production, would fit into a different segment,
perhaps filling in as an entry-level motorcycle for beginner riders. It would make sense for
Harley-Davidson to test the waters with an electric entry-level motorcycle. The low-powered
and smaller motorcycle could be seen as far enough away from Harley’s core heavyweight
product line not to dilute the brand through its introduction.
Customising your own
Quite apart from the models Harley-Davidson offers, customers can design a bike to be built
to their own specification via the website, offering the ultimate customer involvement in the
purchase experience. A further page on the website offers customers the opportunity to
share their ‘Dark Custom rides’.
Pricing
Historically, demand was such that it could take a year or two to get a Harley, even if a
customer was willing to pay the thousands of extra dollars that some dealers were tacking
onto the list price of $15,000 (£9,800) or more. Recently, though, Harley-Davidson has
announced a round of price cuts on models as part of the firm's drive to be ’affordable’.
Savings of more than $1,070 (£700) are now available on models such as the Night Rod
Special, while the price of the Softtail Cross Bones has been slashed by $610 (£400) to
$22,200 (£14,550). Models in the Softtail family – including the re-introduced Deluxe – now
get ABS (anti-lock braking system) as standard, and other models too have added value.
Motorcycles from the entry-level Sportster family have also seen price cuts. Touring models
got more power for 2011 with the introduction of the Twin Cam 103 engine as a standard
feature on some.
These measures are designed to make Harley-Davidson ownership more accessible to new
and existing customers. The company hopes lower price tags will help customers achieve
the bike of their dreams by freeing up extra cash for the parts and accessories they covet.
Harley-Davidson Financial Services (HDFS), a wholly-owned subsidiary of Harley-Davidson,
Inc., offers a wide range of financial products and services to motorcycle enthusiasts and
Harley-Davidson dealerships.
Distribution
The biggest sales driver has been the international expansion of Harley-Davidson. In 2011, it
opened over 35 dealerships in high-growth international markets, which will help ensure
future growth for the motorcycle giant. Harley-Davidson 's focus on emerging countries in
Asia and Latin America yielded dividends, as these regions recorded a huge growth in sales.
Latin America saw a 17.5% jump in sales in 2011, helped by improved sales in Mexico and a
revamping of operations in Brazil. India is also fast becoming a lucrative market.
A dealer locator on the website helps customers find the most convenient one. Revamping
the dealership system has provided a superior customer experience and improved dealer
profitability. Harley-Davidson is also planning to launch an online portal as an alternative
Page 14
avenue for motorcycle sales. The dealer locator takes would-be riders to the dealer’s own
website, which uses the entire Harley-Davidson branding, and aims to make the customer
feel s/he has just met another family member. Dealer websites are one of the key customer
touch-points for the company, and much support is given to dealers in developing and
maintaining them. Despite the integration of the company with its dealers, each HarleyDavidson dealership has its own personalised shop logo that sets it apart from every other
dealership in the world.
A strong resurgence in the US has been driven by improved customer confidence, both in
the company and its dealers. Harley-Davidson has 635 full-service US dealerships, 69 in
Canada, and 1,347 full-service dealerships worldwide.
Second-hand market
Harley-Davidson motorcycles have set the standard for what a good motorcycle should look
like, and all Harleys hold their value well. First choice for resale value is the Harley-Davidson
XL1200X Sportster Forty Eight, Cruiser Type Bike, followed by Honda Sabre VT1300 CS,
Cruiser Type Kawasaki Vulcan 1700 Voyager, Cruiser Type Yamaha Yzf - R1 Rossi Special
Edition, Sport Bike Type Ktm 1190 Rc8, Super Bike Type.
Bike rental
For those who cannot afford to own a Harley, there is still the opportunity to feel the rumbling
power of a Harley. Renting a Harley-Davidson is the next best thing to owning one, and
EagleRider Motorcycle Rental has locations all across the United States and Western
Europe. Rates for Harley-Davidson rentals are remarkably affordable. They are typically
rented for a one-day, three-day, or weekly rental period. A major credit card will reserve a
Harley, and any qualified driver over 21 years old can rent. Rental procedures are quick and
easy.
Marketing communications
Brand development
Unlike so many enduring brands, Harley-Davidson’s brand has altered little from its first bar
and shield logo launched in 1910. The company has taken advantage of the fiftieth and
hundredth anniversaries to celebrate the brand.
Advertising
Harley-Davidson’s communication strategy is typical of an organisation with a powerful
community bonded by brand loyalty. The website is at the heart of the communications plan,
with advertising playing only a small part. The cornerstone of communications is word of
mouth between members, and out to non-members.
While the 1950s adverts might look like a rider just out having fun, the message was
carefully aimed and engineered. Harley-Davidson’s post-war customers were returning
American war veterans. The suffocating conformity of the suburbs left them looking for a way
to ‘combat the confinement of civilian life’, to quote some of the company’s official history.
But the brand was also battling negative public perceptions of motorcycling when Life
magazine ran a photo of a porky, beer-swilling Harley rider ‘terrorizing’ the town of Hollister,
California, along with other members of his biker gang, the Booze fighters.
Page 15
Social media
On the brink of bankruptcy in the 1970s, Harley-Davidson recognised its most valuable asset
was its riders. Its loyal customers were even more important than the product, so HarleyDavidson:
1) spoke to the shared interest of their community before extolling product benefits
2) brought advocates together and let them help build new relationships.
Social media and mobile marketing are now increasingly important means of reaching
Harley’s highly mobile target groups, and forming a community of riders. Over five hundred
dealerships have a Facebook page, and the company provides good materials to enable
them to customise and maintain these and to keep them fresh. Tweeting has also become
an important and very international tool. Like many luxury and prestigious brands, HarleyDavidson is making extensive use of social media as a means of integrating its
communications. Facebook and Twitter help drive traffic to the websites with news and
events. All recent ads also carry website details. The strategy works with loyal and new
customers alike, helping make them feel that the company has a great deal to engage with,
from chapter (club) meetings to celebratory events, and news of sporting achievements.
Social media and mobile case study
The Fort Thunder Harley-Davidson and Central Texas Harley-Davidson dealerships wanted
an integrated mobile marketing strategy to expand the brand of Harley-Davidson to a new
demographic, maintain conversations with loyal consumers and create hyper- awareness of
the specials and events at each dealership.
Mobile marketing with SMS enabled the dealerships to provide special deals, strengthen
loyalty and create deep conversations with both new and long-term customers. Additionally,
through the use of text messaging, the dealerships boosted sales and store visits through
VIP text memberships. This unique strategy allowed Harley-Davidson dealerships to extend
their reach to the largest demographic possible and build a robust database of loyal and
engaged customers.
The Harley-Davidson dealerships extended their offerings to a broader target audience,
expanded their brand image to more people and brought in new business through special
deals, Bike Night events and VIP mobile club memberships. New and existing customers
were invited to opt in to a mobile text messaging club to receive updates via text messaging
about special sales, events and members-only deals.
Both dealerships were able to track significant growth through their social media efforts and
mobile club. Most importantly, they saw a tremendous response almost immediately via
mobile text messaging on sales and walk-in visitors to the stores. In one case, following a
mobile message advertising a special sale, Central Texas Harley-Davidson reported the best
sales day in nine months.
Service aspects
Like so many enduring brands, Harley-Davidson has recognised that the key to sustainability
of both demand and price lies in creating an organisation that supports the brand with
excellence, not only through engineering, but also through service. This strategy ensures
that the brand delivers its promise every time, and delights its customers. Delighted
customers come back for more, and tell their friends, so the community grows. HarleyDavidson certainly sells motorcycles; they are engineered to a philosophy spurned by many,
but loved by devotees. Far more, though, Harley-Davidson sells a passport to a brave new
Page 16
world, passion, friendship and excitement: an enduring experience, in a world which is
increasingly willing to pay for the privilege.
The formula to achieve this involves a variety of things, some tangible, such as guarantees,
some ephemeral, such as the feeling of kinship gained from employees that share the
customers’ passion.
The Mission Statement says:
‘We ride with our customers and apply this deep connection in every market we serve to
create superior value for all of our stakeholders.
‘Quality Mission – Customers for life… Harley-Davidson values the deep emotional
connection that is created with our customers through our products, services and
experiences. We are fuelled by the brand loyalty and trust that our customers place in us to
deliver premium quality and the promise of a fulfilling lifetime ownership experience. We
exemplify this commitment by embracing a culture of personal responsibility and stewardship
for quality in everything we do.’
[Company mission statement, from company website, accessed 14 December 2012]
Harley-Davidson staff and customers share a passionate belief that life is for living to the
max. This is embodied in the company mission statement, and supported by the existence of
quirky books, such as Harley-Davidson and Philosophy: Full-Throttle Aristotle, which offers
‘as wide a range of opinions about riding as there are bolt-on chrome accessories’. The book
shares the same witty irreverence as Harley-Davidson, and explores the ideas of
philosophers Foucault, Hegel, Nietzsche and Plato, side by side with Hell’s Angel Sonny
Barger and actor Peter Fonda.
Guarantees
Reliability is an integral part of customer expectations for Harley-Davidson, and to support
the superior engineering, Harley-Davidson’s Extended Service Plan offers worry-free
motoring for up to an additional 7 years.
protection includes:






coverage for over 1,100 parts
expense reimbursement package
nationwide repair location assistance
minimised unexpected repair costs
contract transfer
optional tyre and wheel coverage.
Supporting customers
Harley-Davidson dealers offer service with factory-approved methods and equipment. Like
all vehicle manufacturers, they encourage customers to use proprietary technicians to
monitor 20 specific checkpoints, front tyre to tailpipe, using a ton of Harley know-how.
Quality maintenance skills are an essential part of the dealer service, but another key dealer
role is to carry the authentic Harley-Davidson message out to customers, to give prompt
responsive service, to inform customers what will be offered and when. Confident, welltrained, skilled and enthusiastic employees inspire confidence in customers that the design
and maintenance of the motorcycles will keep them safe on the roads. The company
provides a strong support system for dealers to enable them to do this consistently across
each dealership, ensuring that the customer receives the expected level of service, or
Page 17
above, in each location. The service process also ensures that jobs are done right first time,
giving customer satisfaction, making work a pleasure for employees who deal with happy
customers, and reducing costs by removing the need for reworks. Service is highly
personalised so that each customer’s particular needs are addressed, enabling them to feel
fully engaged with the organisation at all customer touch points.
Owner’s manuals for the full range of motorcycles are available online to download for those
that enjoy getting to grips with the nuts and bolts.
Harley-Davidson also offers a membership scheme, entitling members to:






roadside assistance
participate in H.O.G. events
a H.O.G magazine
a touring handbook, a road atlas
a customised GPS system
H.O.G. ABC's of Touring Contest – a scavenger hunt for rider and motorcycle.
Would-be riders can also call on the destination and journey planning service offered by the
company, if they want advice on where to go with their motorcycle. This includes a pointsbased reward scheme with Best Western Hotels, motorcycle maps, and international
motorcycle regulations. If the journey requires shipping, Harley-Davidson can do that too.
Providing finance to purchase motorcycles is another big money earner – the company's
financial services recorded a 30.7% jump in operating income as a result of improved credit
performance. This is a lesson that Harley-Davidson is carrying back from the subprime
crisis, which punished almost all lenders with bad assets and huge balance sheets. For the
full year 2011, operating income from financial services was $268.8 million (£176.2 million),
an increase of 47% from 2010.
People
The Harley-Davidson team are fundamental to the service they offer, and the strategy is to
recruit people with a passion for the brand, and a customer-focused attitude. The company
offers internships, promoted on the website and through career events. The culture is
designed to empower staff, and give opportunities for growth, as well as a sound benefits
package for employees and their families. Diversity is a strong theme, with equal
opportunities for all races, creeds, ages and genders.
Harley-Davidson also offers a highly competitive intern program called LAUNCH. Interns are
offered rotating assignments over 2 or 3 years. The programme is offered to selected
universities, with work opportunities in various functional areas:
Building the Harley Community
Harley-Davidson has built a community of enthusiasts around its brand that includes
members from very diverse groups. The king of heavyweight motorcycling keeps its fans
loyal by giving them a reason to ‘belong’. Lifestyle marketing is at the core of HarleyDavidson’s success: ‘We are committed to motorcycling,’ Richard F. Teerlink,
Harley-Davidson 's former chief executive, said. ‘It's not hardware; it is a lifestyle, an
emotional attachment. That's what we have to keep marketing to.’ Harley-Davidson
symbolises freedom, rugged individualism, excitement and a sense of ‘bad boy rebellion’.
Many Harley owners and employees (at least of the old school) feel so bonded that they
sport tattoos of the company's logo – the ultimate in employee brand engagement!
Page 18
Not surprisingly, repeat purchase is higher in its home territory, the US, with 65% of all
purchases made by previous Harley owners. Elsewhere in the world, the figure stands at
57%.
All Harley owners are invited to join local ‘chapters’ (branches of the Harley Owners Group,
H.O.G.) to share their passion for Harley-Davidson motorcycles. Chapters give opportunities
to meet with friends, have fun, support worthy causes, and ride. Currently, there are more
than 1,400 official H.O.G. chapters around the world, each sponsored by an authorised
Harley-Davidson dealership. The Chapter Locator on the Harley-Davidson website enables
customers to find a dealer nearby that sponsors a chapter.
For nostalgia seekers, the Harley-Davidson museum in Milwaukee offers all the joys of
memory lane with a full range of ‘hogs’ through the ages. As a family day out, it presents an
ideal way for devotees to inspire their children to join the Harley family.
Classes
Harley-Davidson’s desire to engage with its community, and promote safety, along with fun,
is apparent from its website, where would-be riders are invited to ‘Ride your own piece of the
legend’. They have the chance to design their own bike from a variety of options, to ‘Learn to
ride’ through a selection of motorcycle boot camps across America, and to invite friends via
Facebook and Twitter. Classes are offered at a range of competence levels, and ‘Garage
parties’ offer further engagement, specifically for women, with advice from driving and
maintenance to selecting the right Harley-Davidson gear. Jumpstart sessions provide an
opportunity for novices to sample the Harley-Davidson experience first-hand at convenient
locations. All sessions are designed with cool appeal, and engage all the senses. All the
sessions are supported on the website with video clips emphasising the fun and sensuality
of riding a Harley-Davidson bike. Previous attendees talk passionately about the freedom,
and empowerment they experience from their classes. Each Group forms a hub of the
Harley-Davidson community, and goes out to spread the word.
Accessories
‘Black label apparel’ offers male and female devotees a means of expressing their allegiance
by wearing Harley-Davidson items with a fashion appeal, such as T-shirts, plaid shirts and
denims, as well as more practical items such as leathers, protective gloves and helmets.
Shoppers spent $100 million (£65.5 million) on Harley-Davidson Motor Clothes and an
unknown amount on hamburgers and other fare at the Harley-Davidson café in midtown
Manhattan. Even kids can join in, with toys for both boys and girls. Free stickers extend the
appeal across riders and non-riders, with a choice of three designs, available through the
website.
Guaranteeing quality, rather than pushing for every last sale, ensures loyalty of the core
group of customers. Diverse brand extension enables Harley to access new customers who
may not want to own a motorcycle at all. Both strategies allow Harley-Davidson to tap more
stable revenue streams during recession. The child who receives a Harley-Davidson T-shirt
from Santa is the new customer for motorcycles in less than twenty years, so accessories
are not only profitable in their own right, but help to fuel purchase of the motorcycles.
Future of the motorcycle industry
The worst of the recession may be over, but the motorcycle market is not likely to rebound
immediately. During this time of transition, the motorcycle industry — original equipment
Page 19
manufacturers (OEMs), aftermarket and dealers alike — needs to focus on improved
marketing, offering excellent customer service and selling value over hype.
Baby-boomers (people born between 1946 and 1964) are exiting the scene and being
replaced by a possibly a bigger generation of buyers who are not only younger, but more
Hispanic, not as likely to be married or have children, and likely to be less rural. The new
generation of potential buyers brings unfamiliar spending habits, personal values and retail
demands. Serious contenders must learn how to reach these customers, who are less
interested in brands than in value. They are more concerned about knowing than showing,
and they measure personal worth differently from previous generations. Rather than money
being the standard, they value what they have gained in terms of time with family,
knowledge, and knowing what they need to know to make their life better, and they are
willing to trade cash rewards in pursuit of these values.
Industry forecasters cite a number of positive economic trends — a rise in GDP; projected
growth in non-residential spending forecast at 8.2% for 2012, compared with 7.6% in 2011;
declining home prices; the fact that the supply of unsold homes has dropped to an 8 months’
supply, compared with a long-term average of 6.5 months; a rise in the ‘affordability’ rate for
homes, now at 13.5% of median family income, compared with a long term average of
19.5% and a high during the boom years of 25%. These may all help the market to recover,
but capturing younger buyers will be the key to sustainable growth.
The shrinking attendance at races and industry events may be the start of a demographic
shift and technological change. The young don’t flock to the drag strips and race tracks, they
don’t strive to emulate the big name racers; if they show up at all, they want entertainment.
The industry may require some fresh thinking.
Current motorcycle owners and riders may know what they like and want more of it, but if
manufacturers want to attract the 18-year-olds, the physical excitement of motorcycles isn't
enough; companies need to bring in high tech.
The appearance of smartphone apps specifically designed for motorcycles could be one
small step, but maybe the electric motorcycle is another. It doesn't matter if the babyboomers (people born between 1946 and 1964) want them, they offer opportunities for
tweaking and hacking tailor-made for the hands-on geek ready to get more performance
from anything controlled by computer. Anyone planning to stay in the motorcycle business
long-term is going to have to find something to pull in more of the young, something that
latches onto the rapidly evolving technology that already has their interest, and combines it
with two wheels, speed and the feeling of freedom motorcycles so readily provide. They
cannot ignore the market they already have, but the young do not respond to the same cues
that brought baby-boomers into dealerships years ago. Some aspects of innovation may
offer hope for growth, and new sectors. Safety is always a concern, and new research on the
centre of gravity of motorcycles is helping shorten stopping distances. The US Army uses
Kawasakis that run on diesel rather than petrol, in an attempt to reduce running costs.
Internal marketing is crucial; good employees need to be taken care of so that their attitudes
remain positive and strong, and so that they are strong brand ambassadors. Training is a
key aspect, with estimates that 49% of customers are lost through poor service. Staff
throughout the supply chain can also be foundation stones for building a sound community
around the brand.
The market for eco-friendly motorcycles
With gas and oil prices going through the roof and supplies of these non-renewable
resources getting lower every day, motorcycles should continue to grow in demand, in
Page 20
particular as manufacturers introduce a wider range of ‘eco’ vehicles. Most motorcycles in
North America are ridden for fun, but it is not this way in other parts of the world. Even in first
world countries such as the UK, people ride them to enjoy the savings in gas, oil, insurance
over other vehicles. There is even some talk of car manufacturers moving into the
motorcycle market. Electric engines offer advantages that could never be offered by an
internal combustion engine, such as:
- almost no noise
- no vibration
- total linear power availability
- no moving parts.
Over 40 companies are selling eco-friendly motorcycles in the US: the competition is
growing and with it, differentiation. Appearance, performance and capability matter as US
consumers become more discerning, and manufacturers are stepping up to set themselves
apart. Targeting commuters, baby-boomers, extreme riders, green enthusiasts, and more,
e-bike companies have started specialising their products to appeal to specific groups.
Honda has announced its motorcycle racing will use electric motorcycles in the hopes of
attracting a younger enthusiast than another Superbike or MotoGP sponsorship.
In an age where mobile phones, laptops, tablets, etc, can be customised, the US electric
bike market has woken up to the fact that consumers demand customisation. Instead of
shopping for an electric bike, today’s consumers seek colour, style, graphics, and fun
accessories to project their own uniqueness into the world. Gone are the days where all
e-bike manufacturers use a generic bicycle frame: not quite a mountain bike, not quite a
cruiser, not quite a road bike. E-motorcycles are finally showing some personality, like the
people who own them. In the distant future, electric hover motorcycles may gain favour.
Page 21
APPENDIX ONE
Global motorcycles market value and forecast, 2007-16
Year
$ million
% Growth
2007
74,465.1
-
2008
78,135.5
4.9
2009
67,912.9
(13.1)
2010
65,953.9
(2.9)
2011
70,809.7
7.4
2012
73,754.5
4.2 (estimated)
2013
78,571.8
6.5
(forecast)
2014
84,002.5
6.9
(forecast)
2015
89,734.3
6.8
(forecast)
2016
96,172.8
7.2
(forecast)
Source: Redacted from Marketline, Global Motorcycles, September 2012
Numbers in brackets ‘( )’ represent negative numbers as in accounting practice
Page 22
APPENDIX TWO
Global motorcycles market volume (units) and forecast, 2007-16
Year
Thousand
Units
% Growth
2007
37,266.4
-
2008
38,637.2
3.7
2009
37,668.3
(2.5)
2010
35,693.4
(5.2)
2011
39,113.2
9.6
2012
40,238.6
2.9
(estimated)
2013
41,709.2
3.7
(forecast)
2014
43,282.2
3.8
(forecast)
2015
44,593.9
3.0
(forecast)
2016
46,230.5
3.7
(forecast)
Source: Redacted from Marketline, Global Motorcycles, September 2012
Numbers in brackets ‘( )’ represent negative numbers as in accounting practice
Page 23
APPENDIX THREE
Global motorcycles market, geography segmentation: % share, by value, 2011
Geography
2011
$ million
% share
Asia-Pacific
31,603.4
44.6
Americas
23,347.5
33
Europe
13,065.3
18.5
2,793.6
3.9
70,809.80
100%
Middle East & Africa
Total
Source: Marketline, Global Motorcycles, September 2012
Page 24
APPENDIX FOUR
Brand shares of the UK motorcycle and scooter market, by number of
new registrations, 2007 - 11
2007
2009
2011
% point change
2007-11
No.
%
No.
%
No.
%
Honda
22,164
15.3
15,671
14.1
14,639
15.6
(34)
Yamaha
17,380
12
18,415
16.5
11,133
11.9
(35.9)
Triumph
6,333
4.4
7,450
6.7
7,854
8.4
24
BMW
5,100
3.5
5,973
5.4
5,920
6.3
16.1
Suzuki
18,665
12.9
11,271
10.1
5,260
5.6
(71.8)
Piaggio
16,990
11.8
6,548
5.9
5,216
5.6
(69.3)
Kawasaki
8,327
5.8
5,519
4.9
5,123
5.5
(38.5)
HarleyDavidson
6,175
4.3
4,927
4.4
3,727
4
(39.6)
Lexmoto
*
*
119
0.1
2,259
2.4
n/a
Peugeot
3,688
2.6
2,021
1.8
2,204
2.3
(40.2)
KTM
2,998
2.1
1,046
0.9
2,083
2.2
(30.5)
Aprilia
4,394
3
3,090
2.8
1,951
2.1
(55.6)
Pulse
*
*
606
0.5
1,482
1.6
n/a
Others
32,369
28.2
28,857
25.9
24,998
26.6
(22.8)
Total
144,583
100
111,513
100
93,849
100
(35.1)
Source: Mintel, Motorcycles and Scooters - UK, December 2012
* no data
Numbers in brackets ‘( )’ represent negative numbers as in accounting practice
Page 25
APPENDIX FIVE
Motorcycle and scooter ownership, October 2012
Base: 1,968 internet users aged 17+
Motorcycle*
Scooter
%
%
I currently own
5
2
I used to own but would not own one again
6
6
I used to own and would consider owning one again in the
future
5
4
I have never owned but would consider owning one in the
future
7
8
I have never owned and have no intention of ever owning one
76
80
Source: Mintel, Motorcycles and Scooters - UK, December 2012
*Due to rounding some totals may not add up to 100
Page 26
APPENDIX SIX
Retail sales/new registrations of motorcycles and scooters, at current prices,
2007-17
£million
% annual change
2007
740
9.6
2008
710
(4.1)
2009
535
(24.6)
2010
493
(7.9)
2011
437
(11.2)
2012 (estimate)
438
0.2
2013 (forecast)
444
1.4
2014 (forecast)
454
2.3
2015 (forecast)
474
4.4
2016 (forecast)
497
4.9
2017 (forecast)
526
5.8
Source: Developed from Mintel, Motorcycles and Scooters - UK, December 2012
Numbers in brackets ‘( )’ represent negative numbers as in accounting practice
Page 27
APPENDIX SEVEN
2011
2010
2009
$000
$000
$000
Motorcycles and related products revenue
4,662,264
4,176,627
4,287,130
Gross profit
1,555,976
1,427,403
1,386,196
926,808
885,137
851,165
Restructuring expense and other impairments
67,992
163,508
220,976
Operating income from motorcycles & related
products
561,176
378,758
314,055
Financial services revenue
649,449
682,709
494,779
Financial services expense
380,658
500,836
581,059
Restructuring expense
*
*
3,302
Goodwill impairment
*
*
28,387
Operating income (loss) from financial services
268,791
181,873
(117,969)
Operating income
829,967
560,631
196,086
7,693
5,442
4,254
45,266
90,357
21,680
*
85,247
*
Income before provision for income taxes
792,664
390,469
178,660
Provision for income taxes
244,586
130,800
108,019
Income from continuing operations
548,078
259,669
70,641
51,036
(113,124)
(125,757)
599,114
146,545
(55,116)
Total assets
9,674,164
9,430,740
9,155,518
Total debts
5,722,619
5,752,356
5,636,129
Total equity
2,420,256
2,206,866
2,108,118
Statement of Operations Data:
Selling, administarative and engineering expense
Investment Income
Interest expense
Loss on debt extinguishment
Income (loss) from discontinued operations, net of tax
Net income (loss)
Consolidated Balance Sheet Data (as at December 31):
Source: Adapted from Harley-Davidson 2011 Annual Report
* no data
Numbers in brackets ‘( )’ represent negative numbers as in accounting practice
Page 28
APPENDIX EIGHT
New Harley-Davidson motorcycle retail sales, 2011 compared to 2010
Region
Change in retail
sales %
United States
5.8
Latin America
17.5
Europe, Middle East and Africa
7.7
Asia Pacific
2
Source: Adapted from Harley-Davidson 2011 Annual Report
APPENDIX NINE
Harley-Davidson motorcycle revenue distribution, 2011
Region
Revenue
Share %
$million
United States
3,155.6
67.7
Europe
781.4
16.8
Japan
229.4
4.9
Canada
154.3
3.3
Australia
141.4
3
Other
200.2
4.3
Source: Adapted from Harley-Davidson 2011 Annual Report
Page 29
APPENDIX TEN
Harley-Davidson motorcycle and related products revenue distribution, 2011
Product Line
Revenue
Share %
$million
Motorcycles
3,554.5
76.2
Parts and Accessories
816.6
17.5
General Merchandise
274.1
5.9
17.1
0.4
Other
Source: Adapted from Harley-Davidson 2011 Annual Report
APPENDIX ELEVEN
Motorcycle (engine size 651+cc) registrations, United States
Year
Harley-Davidson
registrations
(units in
thousands)
Total industry
registrations
(units in
thousands)
Harley-Davidson
market share %
2005
252.9
518.1
48.8
2006
267.7
542.9
49.3
2007
251.3
516.6
48.7
2008
218.2
480.3
45.4
2009
162
304.3
53.2
2010
142.7
259.7
54.9
2011
150.9
271
55.7
Source: Adapted from Harley-Davidson 2011 Annual Report
Page 30
APPENDIX TWELVE
Motorcycle (engine size 651+cc) registrations, Europe
Year
Harley-Davidson
registrations
(units in
thousands)
Total industry
registrations
(units in
thousands)
Harley-Davidson
market share %
2005
29.7
333.2
8.9
2006
34.3
361.3
9.5
2007
38.7
387.7
10
2008
41.1
389.7
10.6
2009
37.7
313.6
12
2010
38.3
301.3
12.7
2011
40
293
13.7
Source: Adapted from Harley-Davidson 2011 Annual Report
Page 31
APPENDIX THIRTEEN
Spending priorities, by gender
Base: 998 internet users aged 16-24
All
Sample size:
Gender
Male
Female
998
506
492
%
%
%
Saving money/paying off debt (eg credit card/student
loan)
19
20
18
Going out
16
16
16
Rent/mortgage/bills
12
11
13
My appearance (eg hairdresser, clothes, make-up)
9
6
13
Groceries
9
8
9
Music/DVDs/games/other gadgets
7
10
5
Car (including petrol, insurance, tax)
7
6
7
Mobile phone
6
6
5
Studies (eg course books, tuition fees)
5
5
5
Sports and hobbies
5
6
3
Holidays
3
3
4
Other
3
3
2
Source: Mintel - Lifestyles of Young Adults, UK, November 2012
Page 32
APPENDIX FOURTEEN
Top ten spending priorities, by current living situation
Base: 998 internet users aged 16-24
Source: Mintel - Lifestyles of Young Adults, UK, November 2012
Page 33
APPENDIX FIFTEEN
Proportion who self-identify as influencers for each area of interest, by age,
2012
Base: Survey of around 25,000 adults
Source: Mintel - Lifestyles of Young Adults, UK, November 2012
Page 34
Professional Diploma in Marketing:
Grade Descriptors Level 6
Grade A
This grade is given for work
that meets all of the
assessment criteria at
Diploma level to secure at
least 70% and
demonstrates a candidate’s
ability to:
Concept 30%
develop appropriate research
strategies for both primary and
secondary research
selectively identify valid and
relevant information from a wide
range of sources for the
discipline
manage own learning
independently
evidence comprehensive
knowledge and understanding of
the marketing discipline at
Diploma level
synthesise and analyse new
and/or abstract information and
data in the context of wide
ranging problems, using a range
of appropriate techniques
Grade B
This grade is given for work
that meets all of the
assessment criteria at
Diploma level to secure at
least 60% and
demonstrates a candidate’s
ability to:
produce detailed and coherent
arguments in response to well
defined and abstract problems
using relevant vocational
language
Time Management and
Presentation
10%
plan, review and
complete work within the
specified deadlines/time
allocated
produce reliable, valid and
incisive conclusions and
recommendations, based on
research findings and
analysis
an exceptional and
professional standard of
presentation, format and
tone
evaluate findings leading to
informative and reliable
conclusions and
recommendations
plan, review and
complete work within the
specified deadlines/time
allocated
produce reliable and
informative conclusions and
recommendations, based on
research findings and
analysis
a high standard of
presentation, format and
tone
express ideas persuasively
and with originality, applying
appropriate marketing
terminology and concepts
accurately
apply a wide variety of
illustrative examples to
underpin findings supported
by references to wider reading
and learning resources to
exemplify points
produce logical arguments in
response to a given brief using
vocational language correctly
express ideas clearly, applying
appropriate marketing
terminology and concepts
accurately
apply a variety of illustrative
examples to underpin findings
supported by some references
to wider reading and learning
resources to exemplify points
develop an appropriate research
strategy for both primary and
secondary research
evidence a basic
understanding and application
of key principles
evaluate findings leading to
reliable but limited
conclusions
complete work within the
specified deadlines/time
allocated
identify and select information
using a minimum number of
resources for the discipline
produce arguments in
response to a given brief using
sufficient vocational language
produce reliable but limited
conclusions and
recommendations based on
findings
acceptable presentation,
format and tone
manage own learning with
support and guidance
outline ideas and concepts
using appropriate marketing
terminology
little or no attempt to
evaluate findings
work not being completed
within the specified
deadlines/time allowed
evidence a satisfactory level of
knowledge and understanding of
the marketing discipline at
Diploma level
analyse information and data in
the context of explicitly defined
problems
This grade is given for
border line work that does
not meet enough of the
assessment criteria at
Diploma level to secure a
pass and is within the band
45-49%. This may be due
to:
evaluate findings leading to
incisive conclusions and
recommendations
identify and select valid
information from a suitable range
of relevant sources for the
discipline
analyse new and/or abstract
information and data in the
context of broadly defined
problems, using appropriate
techniques
Grade D
engage in effective debate in a
professional manner
evidencing a comprehensive
understanding and application
of key principles
evidence a sound
understanding and application
of key principles
evidence detailed knowledge
and understanding of the
marketing discipline at Diploma
level
This grade is given for work
that meets enough of the
assessment criteria at
Diploma level to secure at
least 50% and
demonstrates a candidate’s
ability to:
Evaluation 30%
develop appropriate research
strategies for both primary and
secondary research
manage own learning with
minimal guidance
Grade C
Application 30%
include some illustrative
examples to support findings
including minimum references
to wider reading and learning
resources to exemplify points
an inability to develop an
appropriate research strategy for
both primary and secondary
research
a lack of basic
understanding of key
principles and limited
application
insufficient sources of
information being used to
underpin research
insufficient and/or
inappropriate use of marketing
terminology to explain ideas
an inability to manage own
learning effectively
limited development of ideas
or concepts
repeating case material rather
than evidencing knowledge of
the marketing discipline at
Diploma level
few or no examples to support
findings
a lack of detail and argument
when analysing information for a
specified task
superficial conclusions and
recommendations which
lack depth
errors in presentation,
format and tone
Moor Hall
Cookham
Maidenhead
Berkshire, SL6 9QH, UK
Telephone: 01628 427120
Facsimile: 01628 427158
Website: www.cim.co.uk