Harley Davidson Marketing Plan

Company Overview

Founded in 1903 by William S. Harley and Arthur Davidson, the Harley-Davidson Motor Company has a history of creating classic motorcycles known for winning endurance contests, hill climbs, and races throughout the USA. By 1920, with over two-thousand dealers in sixty-seven countries, Harley-Davidson became the largest motorcycle manufacturer in the world. By 1931, Harley-Davidson had eradicated most of the American competition, and by 1953 even the holdout Indian (Hendee motorcycle) had gone out of business. Harley-Davidson led the world’s motorcycle manufacturing trend, and in 1935 provided the start for Japan’s motorcycle manufacturing by providing “blueprints, tools, dies and machinery to the Sankyo Company of Japan” (Harley-Davidson History, 2010, p. 4)

Market Summary

For over 100 years, Harley-Davidson has been the leader in American motorcycle manufacturing. (Harley-Davidson History, 2010) However, in the late eighties and early nineties “Japanese manufacturers such as Suzuki, Kawasaki, Honda, and Yamaha gained a foothold in the worldwide motorcycle market” (Ong, 2010, p. 2). Although Harley-Davidson provided the start for Japanese motorcycle manufacturing, competition is often the name of the game, and the winner is the company that provides the best value to the customer. This marketing plan will focus on how Harley-Davidson can promote the use of genuine Harley-Davidson parts as opposed to less expensive after-market parts to maintain and grow their share of this important market segment.

Target Market Analysis

According to Paul Crowe (2006), “Harley Davidson, like any other company, has a customer base with certain similarities” (Para. 2). In this case, it is their taste in bikes, and their yearning for in individual sense of freedom. In the past, Harley-Davidson riders have been predominantly middle-aged white males, but to expand their demographic, HD has begun to widen their marketing strategy to include black, Hispanic, and female riders of all age groups. Each of these groups is a potential future customer for genuine Harley-Davidson parts.

Market Trends and Expected Growth

Rising gasoline prices, and increased emissions controls in many countries should make motorcycles more popular than ever, but statistics published by Web Bike World (2010) show that motorcycle sales have been falling over the past several years, and are as low now as they were in the late 90’s. (Web Bike World, 2010) However, Freedonia (2010), in their study World Motorcycles to 2013 (incl Electric Bicycles & Mopeds), states that, “Global motorcycle demand will grow 7.6 percent annually through 2013, driven by rising living standards in developing areas that make motorcycles more affordable to use” (Para. 1).

An increase in demand would lead to an increase in sales, which would lead to in increase in production over the next few years. An increase in sales would mean an increased demand for parts, so Harley-Davidson must be ready to capitalize. Even if demand and sales continue to fall, Harley-Davidson needs to be in position to take advantage of the market by offering a benefit not found in other, after-market parts.

Competition Analysis

There are literally hundreds of motorcycle manufacturers in the US and worldwide. From custom-made cycles to off-the-rack bikes, motorcycles come in all shapes and sizes, but the biggest competition for Harley-Davidson comes from Japanese manufacturers such as Suzuki, Kawasaki, Honda, and Yamaha. Since the late 1980’s, these companies have gained and held a large market share, and they don’t seem to be giving any of it up. (Ong, 2010) The same is true for motorcycle parts. Competitors offer a variety of parts at a lower cost. Our responsibility is to steer them towards genuine Harley-Davidson parts instead of these after-market knock-offs.

SWOT Analysis

Strengths – Harley-Davidson is an American company firmly rooted in the American dream of freedom and individuality. They have been around for more than 100 years and have a strong following of loyal customers. (Harley-Davidson History, 2010)

Weaknesses – Harley-Davidson motorcycles are more expensive than their Japanese counterparts are, and “negative news stories, magazines, and movies like Easy Rider” (Wilhite, 2010, p. 10) have given the brand a bad-boy reputation.

Opportunities – Many groups, including blacks, Hispanics, and women, provide an undeveloped market.

Threats – Japanese manufacturers offer inexpensive after-market parts.

Product and Location

Genuine Harley-Davidson parts appeal to buyers who want nothing but the best on their Harley-Davidson Motorcycle. After-market parts may look the part but they are nothing but a cheap knock-off masquerading as something they’re not. Through diligent licensing practices, Harley-Davidson OEM parts are only available through authorized dealers. If your dealer isn’t authorized by Harley-Davidson, you can never be sure you’re getting the real thing.

Parts are available all around the world and include more than just spokes and wheels. Included in Harley-Davidson’s definition of parts are accessories, clothing, manuals, gift cards, and more. The most important thing to look at when searching for genuine Harley-Davidson parts is to be sure your dealer has been authorized by Harley-Davidson. The cost may be a little more for genuine Harley parts, but the extra expense if worth it to know you’re getting the very best.

Marketing Budget

In 2008, Harley-Davidson’s net revenue decreased 2.3 while revenue from sales of Harley-Davidson motorcycles decreased 3.8 percent. (Harley Davidson Annual Report, 2008) Despite this historically low performance, Harley-Davidson is determined to remain on track, and do the best they can for both shareholder and customer alike.

According to president and CEO James L. Ziemer (2008) Harley Davidson’s three-pronged strategy includes investing in the Harley-Davidson brand. Harley-Davidson is using several incentive programs like the Ride-Free promotion, the introduction of a less expensive Harley-Davidson motorcycle, and the opening of their historical museum to increase rider awareness and dedication. (Harley Davidson Annual Report, pp. 3 - 4)

The Harley-Davidson brand is about more than just a motorcycle. It is about a way of life. Their mission statement, “We ride with our customers and apply this deep connection in every market we serve to create superior value for all of our stakeholders” ( Student Center - Harley-Davidson, 2010), and their vision statement, “We fulfill dreams inspired by the many roads of the world by providing extraordinary motorcycles and customer experiences. We fuel the passion for freedom in our customers to express their own individuality” ( Student Center - Harley-Davidson, 2010) form a sense of pride in owning an American dream.

Because marketing is a huge part of brand recognition, it is recommended that Harley-Davidson maintain their current marketing budget, with increases made in the coming years as profitability returns to the company. HD must avoid over-extending their finances but cutting back on marketing expenses is not the answer.

Pricing Strategy

Considering falling sales over the last several years, and in keeping with the recent recession felt throughout the developed world, Harley-Davidson needs to be smart about their pricing strategy. With some rides topping out at over $30,000, Harley-Davidson is known as one of the most expensive motorcycle brands. Harley-Davidson customers are known for their loyalty, but loyalty isn’t enough when people are unwilling to spend so much on a luxury item. (Gray, 2009)

Harley-Davidson has shown they are on the right track by introducing their new 866 series Sportster. Created with a new demographic in mind, this model sells for around $8,000, and is appealing to a younger, more frugal customer base. (Gray, 2009) Of course, this doesn’t do much for the price of genuine Harley-Davidson parts, which according to some are already grossly over-priced. While many may think a decrease in parts prices is the way to go, I beg to differ from the norm.

Harley-Davidson builds quality parts out of the strongest materials and must not scrimp on quality to provide lower prices. Instead, the company must continue to focus on how they stand out from the competition: quality. Making a case for their refusal to compromise the quality of their parts, and in turn the safety of their customers, is one way Harley-Davidson can continue to stand out in the parts department.

Recommendations and Implementation

The economic situation is sure to remain tough for the next few years. Experts tell us that the recession has ended, and that discretionary spending is on the rise, but there are still millions of people around the world out of work. It is recommended that Harley-Davidson continue to spread brand awareness through their current marketing programs. The promotions mentioned earlier must continue if Harley-Davidson is to make it through these tough times.

“Marketing Implementation is what turns marketing plans into marketing actions” (Milne, 2008, p. 2). To implement this marketing plan, Harley-Davidson needs to continue their current track. They are working at getting a feel for what the people want and increasing brand awareness to many diverse groups. Gaining a larger market share and extending their demographic is essential to their continued success.

To ensure proper implementation, steps must be in place to monitor progress. Regular reports will help the company determine what is and what is not working. Rewarding employees for a job well done will help maintain their loyalty and will encourage them to work harder for the success of the company. Now is not the time to give up. Continue to try new things while striving for excellence in everything you do.