Harley-Davidson: A Cult Brand Hit by Demographic Challenges

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Case Details:

Case Code : MKTG293
Case Length :15 Pages
Period : 2000-2010
Pub Date : 2012
Teaching Note : Not Available
Organization :Harley-Davidson
Industry : Motorcycles
Countries : US; Global

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"It is a unique brand that is built on personal relationship and deep connections with customers, unmatched riding experiences, and proud history."

-Jim Ziemer, former president and CEO of Harley Davidson, Inc. in 2009.

"Harley has been on an unbelievable roll, phenomenal by any measure. But they have a number of developing issues that they're going to have to pay attention to, the most significant one being the aging of the baby boomers. The results of the demographic shift won’t be a big deal for Harley tomorrow at nine in the morning, but over the next ten years it will be major."

-Don Brown, an independent analyst for DJB Associates, LLC,1 in 2001.

In 2009, US-based iconic motorcycle maker Harley-Davidson Inc. (Harley) reported a full year net loss of US$55.1 million. Revenue from the sales of Harley motorcycles was US$3.17 billion, a decline of 25.2% over the preceding year. Income from continuing operations decreased by 89.7% to US$70.6 million compared to 2008. The poor financial performance was attributed to an aging customer base and a weak economy. "Clearly it's a challenging environment, and we're doing all the right things in this environment to position our premium brand in this marketplace to make sure we're even stronger when we're out of this cycle," said Tom Bergmann, chief financial officer of Harley.

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Harley was the world's leading designer and manufacturer of motorcycles which included heavyweight2 , touring3 , cruiser4, custom, and performance motorcycles. Besides motorcycles, the company also offered a line of motorcycle parts & accessories5 and general merchandise6. From the beginning, Harley bikes were known for their distinctive design and heavy customization. Over the years, Harley established an image of raw power which became its unique selling proposition. The brand adopted a focused differentiation strategy wherein it targeted specific products at niche segments in the market. According to experts, Harley was able to carve out a niche for itself in the marketplace due to its powerful brand image which was built on deep personal relationships with customers and matchless riding experiences. The Harley brand achieved a cult status among its loyal customers as it characterized adventure, tradition, and power. The motorcycle maker maintained a loyal brand following by catering to the needs of the customers in the heavyweight motorcycle market. The company's loyal fans and customers used words like "freedom, Americana, adventure, edgy, and cool" to describe the brand. Harley's marketing efforts centered on company-sponsored events, dealer promotions, and advertisements in magazines. The company's core customers were men over the age of 35.

Introduction Contd... - Next Page >>

1] DJB Associates, LLC, is a US-based management and research consulting firm.
2] Heavyweight motorcycles have an engine displacement of greater than 651 cc.
3] The Touring family of motorcycles is generally equipped with fairings, windshields, and saddlebags. These motorcycles include models like the Road King, the Road Glide, and the Electra Glide.
4] The cruiser segment has a distinctive styling associated with classic Harley motorcycles. The motorcycles include the Dyna, the Softail, the VRSC, and the Sportster family of motorcycles.
5] Parts and Accessories (P&A) comprise replacement parts (Genuine Motor Parts) and mechanical and cosmetic accessories (Genuine Motor Accessories).
6] General Merchandise products include MotorClothes apparel and accessories.

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