Harley Davidson Case

1. The motorcycle industry came of age after World War II as soldiers purchased the bikes they used overseas when they returned to civilian life. The popularity of motorcycles and recreational riding steadily increased culminating with over 200,000 spectators attending the major bike rallies- Daytona Bike Week and Sturgis Rally.

Over time the industry suffered a tarnished image through the emergence of rowdy motorcycle gangs, such as the Hells Angels, and the Boozefighters. This was spread by a negative portrayal in Hollywood movies such as The Wild One. It was another film, Easy Rider, however, which elevated motorcycle riding as a trend that continued to increase steadily through 2003.

The current market composition consists of two major categories, engine size and vehicle style. Smaller motor scooter type bikes (mopeds, scooters, etc) have engines ranging from 50 cubic centimeters to 125 cubic centimeters (cc). Mid size bikes have engines from 125 cc to 650 cc. Large bikes have engines over 651 cc, which are the largest selling in North America. Europe has the highest number of registered motorcycles (of all three sizes). The small moped style bikes are most popular in large urban areas or developing countries where the populations may not have a lot of disposable income to spend on bikes and their upkeep.

The industry is extremely competitive, particularly in the heavyweight (651+) where consumers are very brand loyal to companies that produce bikes that were designed well, had high quality after sale service and support, and good value.

The motorcycle industry also faces issues with government regulation in regards to licensing, noise control and other environmental issues.

2. Harley’s strategy consists of cleaning up the retail image, promote membership in the HOG program, broadening their image with the baby boomer generation.

Prior to the 1981 reincorporation of Harley Davidson the dealerships were considered run down shops, one area that was focused on was to improve the shops to remodel the retail stores and dramatically increase the amount of apparel and brand supporting merchandise. The marketing strategy was modified, moving from traditional advertisements to being a large presence at the motorcycle rallies.

In 1983 the first Harley Owners Groups (HOG’s) were formed. The concept was simple, the company would provide a free membership to a new customer for the local HOG chapter. This quickly created a community of loyal customers, who met regularly and sponsored rallies.

By increasing their retail line and motorcycles broader appeal over the years, the demographic of bikers shifted. People felt that they were buying into a lifestyle not just a bike.