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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The Japanese Invasion

During the late 1950s, Japanese motorcycle manufacturers entered the US market beginning with Honda Motor Co., Ltd (Honda). Honda focused on smaller, faster, and less expensive motorcycles compared to the Harley bikes. Other companies like Yamaha Corporation , Suzuki Motor Corporation , and Kawasaki Motors Corp soon followed. They marketed smaller and more fuel-efficient motorcycles that required little maintenance. These Japanese bikes attracted younger riders who could not afford the expensive Harleys and older riders who could not power them around steep curves...

Marketing Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

The Revival

In 1981, a group of senior Harley executives with support from the then CEO Vaughn Beals (Beals) reacquired the company from AMF. In a leveraged buyout , thirteen members of Harley's senior management pooled US$1 million in equity and borrowed US$80 million from Citibank , thus making Harley an independent company again. Among them was William Davidson, grandson of the founder, Arthur. During this time, Harley's market share continued to fall as the overall demand for motorcycles dropped drastically in the US. Reduction in sales resulted in a large inventory of unsold products.

After reacquiring the company, Beals and his management team felt that the entire manufacturing system at Harley needed to be modified. Using Japanese production methods they formulated a new approach called productivity triad which focused on employee involvement , use of JIT inventory practices , and statistical operator control (SOC)...

Marketing Approach

Over the decades, Harley emerged as the most powerful and focused motorcycle brand in the US. The company's marketing strategy was based on focused differentiation wherein it targeted specific groups with focused products. Harley exclusively focused on the heavyweight motorcycle segment. It concentrated on mini niches such as customized, touring, and standard motorcycles in the heavyweight division. The company's family of motorcycles included the Sportster, the Dyna, the VRSC, the Softail, the Touring, the Trike, and the CVO motorcycles.

Harley bikes had a characteristic design and were known for heavy customization. The heavy use of chrome and the styled tail fenders highlighted the bike's unique image. The bikes were associated with a distinctive attitude and a lifestyle. They were considered to be "the ultimate biker status symbol...a quasi religion, an institution, a way of life"...

The Harley Owners Group (HOG)

Central to Harley's marketing strategy was the focus on building a strong bond with the customer, maintaining a close relationship, and providing them with an engaging and interactive brand experience. To keep Harley riders more actively involved in the sport of motor cycling, the HOG was established in 1983. Considered to be the industry's largest company-sponsored motorcycle enthusiast organization, the group sponsored motorcycle events, including rallies and riding events, for Harley enthusiasts at local, regional, national, and international levels. The rallies featured live music, food booths, games, prizes, and vendor stalls. During the rallies, potential customers were given demonstration rides and they could even register their bikes and buy merchandise. Harley employees and senior executives also took part in the rallies. Analysts said that such events strengthened the community and gave Harley owners a sense of belonging. The most famous among these rallies was the Black Hills rally in Sturgis, South Dakota. "The rallies, like the one in Sturgis or Daytona Bike Week (in Florida), really serve as our product development centers. We see thousands of bikes and what our customers are doing to them. We get new ideas through our discussions. And then the riders take demo rides on our new models and give us feedback. If you want to know what Harley-Davidson is all about, how we develop a design strategy, just make the scene at a rally and listen to our riders. They set the tone, and believe me, they're not bashful,"...

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