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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Excerpts Contd...

Dealerships

Harley retailed its products through an independent dealer network which offered Harley's motorcycles, parts & accessories, general merchandise, and licensed products and carried out servicing for the motorcycles. The dealers also sold through non-traditional retail outlets such as Secondary Retail Locations (SRLs), Alternate Retail Outlets (AROs), and Seasonal Retail Outlets (SROs). As of 2010, Harley distributed its motorcycles through 1,334 dealers worldwide. The company offered various services to its independent dealers including service and business management training programs and customized dealer software packages...

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Promotion

Harley's advertising strategy was based on creating a specific image and lifestyle for the product. The company did not spend much on advertising and Harley bikes were promoted mainly through word of mouth. Employees personally marketed the brand by modeling in the company's Motorclothes catalogue, attending rallies, and acting as tour guides at the manufacturing plants. "We're not dependent on advertising or other traditional marketing techniques as automobile companies or even our competitors are. They're selling transportation. We're selling dreams and lifestyle. There's a big difference. Because our bikes are so visually and audibly compelling, you get a bunch of them together, whether by the dozen or the thousands, there's going to be excitement and curiosity Add to that the fun associated with motorcycling and you've got natural word-of-mouth promotion. In a very real sense, our customers are the sales force, and the bikes, accessories, and clothing serve as our calling cards," said Ken Schmidt, former director of communications at Harley...

Shifting Demographics

Between 1996 and 2000, Harley witnessed robust growth in the heavyweight motorcycle registrations. However, the growth slowed down considerably between 2003 and 2004. The drop in sales was attributed to the economic downturn and an aging market. George Brown, an independent marketing consultant based in California who watches the motorcycle business, said, "Harley-Davidson is facing some long-range challenges such as changing demographics. Their prime market has been the Baby Boomers. If they can catch Generation X and Generation Y, which is the next big bubble, they'll catch the next wave"...

Bumpy Road Ahead?

Harley planned to adopt new strategies to reach out to younger customers while maintaining its growth in the traditional segments. Wandell said he was focusing on diversifying the buyer base of Harley by extending the reach of the brand beyond its core customers. However, he added, "That's a touchy situation ... our core customers have allowed our company to be successful - so there's a certain amount of jealousy, if you will, around the brand."

In late 2010, Harley decided to adopt a multi-generational and multi-cultural marketing strategy in order to increase sales to non-core customers such as women, young (25-34-year-old men) and ethnically diverse adults. The company wanted to change its marketing approach from a "one size fits all" agency-based marketing approach to a consumer led model. "We've always listened to our customers," said Mark-Hans Richer, chief marketing officer for the Milwaukee-based motorcycle manufacturer...

Exhibits

Exhibit I: Harley-Davidson's Bar& Shield Logo
Exhibit II: Median Income of Harley Davidson Buyers in the US ('000)
Exhibit III: Market Share of Harley Davidson (in the US)
Exhibit IV: Harley-Davidson Demographic Profile
Exhibit V: Harley Davidson - Income Statement
Exhibit VI: Harley-Davidson-Motorcycle Shipments


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