Despite their conception in 1903, Harley-Davidson and the motorcycle industry as a whole didn’t really take off until after the Second World War. Many people rode motorcycles during the war, with Harley-Davidson themselves supplying almost 90,000 motorcycles for the U.S. military during this time. Many veterans chose to purchase motorcycles upon returning home, as they enjoyed riding during the war and wanted to continue riding in their civilian life. This generation known as the baby-boomers quickly became the main target audience for many of Harley-Davidson’s marketing efforts. With sales increasing and the industry growing, many motorcycle clubs and rallies were introduced. Unfortunately, due to the lewd behavior displayed by most people associated with these clubs and rallies, bikers typically had an image of being disorderly and raucous. Harley-Davidson’s image itself took a big shot due to the Hells Angels. This was a motorcycle gang wishing to become notorious for drug trafficking and other organized crime activities, who used only Harley-Davidson motorcycles. All of this combined to lead to a decline in demand and sales throughout the entire industry during the 1960’s. The industry was really helped out with the release of the Hollywood film Easy Rider in 1969. This film helped change the public’s perception of bikers and sparked an increase in motorcycle demand which has lasted to this day. The motorcycle industry offers products which can be viewed as luxuries or wants as opposed to necessities. When concerning Harley-Davidson, most motorcycle owners have purchased their bikes as a second vehicle, using them more during weekends and off-time instead of during the work week. This implies that the motorcycles serve for recreational purposes and thus are an item which can be expendable at times. This has hurt the industry recently with the slight recession the United States economy is facing. Another interesting thing to note about the motorcycle industry is the different appeal bikes carry in different global regions. In the United States for instance, Harley-Davidson has had much success because of the market trends and tastes people enjoy. Harley-Davidson has benefited from a U.S. market which enjoys casual and recreational riding. This isn’t necessarily the case overseas, as in Europe the trendy pick is a sleeker street bike, with a focus on speed and handling as opposed to power and comfort. Despite these somewhat unfavorable market characteristics, Harley-Davidson has found success in the motorcycle industry. Some key factors in order to achieve this include having a strong and adaptable brand image, having a strong marketing effort (both domestically and globally), and having a strong network of dealers. Harley-Davidson has found ways to turn these factors into strengths while pursuing a strategy using focused differentiation to sell its products. This implies that the company sells a high-quality product at a premium price. The company is looking to differentiate itself from its competitors by offering motorcycles that have more power, custom accessories, and carry the Harley-Davidson brand name and logo. Harley-Davidson has tried to implement this strategy with various techniques, with the main one being creating a strong sense of community between Harley-Davidson owners. Harley-Davidson has created a network among its clients known as the Harley Owners Groups (HOG) which allows for people in certain geographic regions who own Harley-Davidson motorcycles to socialize or ride with other owners. This has helped create strong brand recognition, easily making Harley-Davidson the biggest and most recognizable names in the industry. Another thing which Harley-Davidson has done to gain more control of the market share is to incorporate apparel and accessories into its product line, which has helped in many areas where consumers don’t have the resources to purchase a motorcycle, but still wish to maintain the biker image or are supportive of the brand name. In regards to the Five Forces Analysis, Harley-Davidson stands in rather strong position. When looking at the rivalry from competitors, Harley-Davidson is doing very well domestically, controlling nearly fifty percent of the market share within the United States. In terms of their global positioning, Harley-Davidson has fared fairly well with a strong positioning in the Asia-Pacific market. In the European market however, larger motorcycles are not used as frequently as are smaller and more efficient bikes, leading to a lower market positioning. When analyzing the potential new entrants to the motorcycle industry, one must look at it both from a domestic and global perspective. Within the United States, the Harley-Davidson brand is relatively safe from competition due to a strong brand loyalty that has been built up throughout the last century. There is fear that the brand will lose many of its customers because of the aging baby boomers, however the brand has enough recognition to survive the decline of its primary consumers. On a global scene, Harley-Davidson faces many challenges because of the different market trends overseas and the stiff competition it faces. In both the European and the Asia-Pacific market, most people prefer smaller and more economic bikes such as scooters, mopeds, or sleeker performance bikes. The main competition the Harley-Davidson brand faces comes from Honda, BMW, and Yamaha, as these companies have all adapted to the needs of these overseas markets. When analyzing the substitutes available in the motorcycle industry, there is strong competition. The main substitutes available are cars and many people choose these over motorcycles because they are proven to be safer and also they provide protection from the weather elements which might make it difficult to drive motorcycles. Another substitute which is available to consumers is the different types of recreational vehicles. These include RVs, motocross bikes, all-terrain vehicles, and more. Many people opt for these instead of motorcycles because of their various uses and entertainment purposes. When examining the suppliers to the motorcycle industry, one would have to say the industry is weak. Most of the parts are manufactured by the company themselves and thus suppliers are not very necessary. The buyers in this industry have a low to moderate impact, as there is relatively no price negotiating associated with these products. Also, in the United States most buyers are conscious of the brand image Harley-Davidson carries and thus are more likely to purchase a Harley than any other bike. Overseas, the buyers also have some impact in that they are typically more price sensitive than American buyers. This implies that they will likely opt for a more economic bike rather than a Harley-Davidson. Some driving forces in the motorcycle industry include a general income increase in such emerging markets as China, India, and Southeast Asia. Consumers in these markets prefer performance bikes which typically are more cost-friendly than Harley-Davidson bikes. Due to the income increase in these areas however, people may be more likely to purchase Harley-Davidson motorcycles instead of performance or street bikes such as Honda, BMW, or Yamaha. Another important thing to note is the aging of the baby-boomer generation and what kind of impact that will have on Harley-Davidson. The baby-boomers are known to be the company’s main supporters and purchasers of touring bikes, but with their decline in health and advancement in age, it is suggested that consumer demand will switch to sportier, faster, more agile motorcycles. Also, recent trend suggests that lightweight motorcycles such as mopeds and scooters will account for the largest growth in the motorcycle industry in the immediate future. This implies that Harley-Davidson must adjust its product line in order to keep up with the changing times. This is the main reason Harley-Davidson merged with Buell Motorcycle in 1998. Buell Motorcycle has a product line which is known for speed and handling, and Harley-Davidson has done a good job of incorporating these motorcycles. When examining Harley-Davidson form a financial perspective, one can see that they are in a rather strong position at the time of the case study. In the competitive strength assessment which includes such things as breadth of product line, market innovation, and brand recognition, Harley-Davidson holds a high position in terms of its competitors with a score of 43 as opposed to that of BMW (39), Honda (37), and Suzuki (34). When analyzing Harley-Davidson as a company using a SWOT analysis, one can see that the strengths clearly outweigh the weaknesses. For Harley-Davidson, strengths include customer loyalty, connection to freedom, and marketability. The connection to freedom is a big part of the Harley-Davidson strategy as well, as they seek to offer people a sense of exhilaration and independence on the road. These strengths are opposed to weaknesses which include an over-availability of products and a negative image of most bikers in the mid-1900’s. The opportunities for Harley-Davidson are ever-present with the Buell division/product line. If Harley-Davidson sought to do so, Buell Motorcycle could easily become a household name within the motorcycle industry carrying a strong line of performance and speed bikes. Another opportunity is a possible merger with Ducati, which like Buell Motorcycle offer a wide variety of speedier and sportier bikes. One possible threat to Harley-Davidson is the aging of the baby-boomers. It is still unknown just how much of an impact this will have on the company, but it is sure to have some backlash. In response to the case, Harley-Davidson has not seen any significant drop-off in terms of production or sales, with net revenues actually rising from the end of the case study in 2003 to its most recent report. The share price of Harley-Davidson’s stock has stayed pretty much the same, with it trading for $39.73 on April 8, 2003 and $39.34 exactly five years later on April 8, 2008. One recent issue which has hurt the company was a workers strike in February 2007. This strike occurred in the York, PA plant and lasted all of two weeks. Although the strike was relatively short-lived it dealt Harley-Davidson quite a blow, as all production was stopped in the plant. Another recent trend Harley-Davidson has pursued is a marketing effort towards women. This is helping the company to increase its brand recognition and popularity among different social groups. Going into the immediate future, there is some economic trouble as we head into 2008. Harley-Davidson had a difficult year in 2007, as it saw a decline in share price, revenues, and profits from the previous year. This may be due to the slight recession being faced in the United States as people are less and less likely to spend their money on something that may be seen as recreational or a luxury item.
Posted on: Mon, 07 Jul 2014 13:20:59 +0000
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