Harley-Davidson Case Study

MARKETING

Harley-Davidson enjoyed a monopoly in the motorcycle industry for many decades. In the 1970's, Japanese manufacturers flooded the market with high quality, low priced bikes. From 1973 - 1983, Harley's market share went from 77.5% to 23.3% with Honda having 44% of the market by 1983. Harley-Davidson could not compete on price against the Japanese motorcycle producers, so it had to establish other market values and improve quality.

Simultaneously, the United States consumer base was undergoing a revolution which mandated consumer driven products. Harley had to change from a company which dictated what its customers could have to strategies based on direct input from customers. A marketing philosophy was developed based on the customers desires, gathered through surveys, interviews and focus groups.

Image

"The real power of Harley-Davidson is the power to market to consumers who love the product" (Executive Excellence 6). Harley-Davidson's President and CEO, Richard Teerlink says the bike represents to America, "the adventurous pioneer spirit, the wild west, having your own horse, and going where you want to go - the motorcycle takes on some attributes of the iron horse. It suggests personal freedom and independence" (Executive Excellence 6). Brand loyalty for Harley-Davidson is emotional. They are considered more than motorcycles-they are legends. It is an American icon brand. The Harley-Davidson symbol is based on a pattern of associations that include the American flag and the eagle; reflective of the passion and freedom Americans enjoy.

It is difficult to define an average Harley-Davidson buyer. The demographics range from a blue-collar worker to a high-power executive located all over the world. The common thread is

a desire to escape the routine and become anyone you like. While their competitors base their advertising on product technology and features, Harley promotes: a mystique appearance, individualism, the feeling of riding free, and the pride of owning a legend. With Harley, you can live out your fantasies, as well as experience camaraderie with fellow bikers.

Customer Relations

When a person buys a Harley-Davidson motorcycle, they receive a free 1-year membership to the Harley Owners Group (HOG), which was developed in 1983 as a program to keep people active with their Harley. Simultaneously, it keeps the company close to its customer. HOG has 295,000 worldwide members, 900 local chapters and is the largest company-sponsored motorcycle enthusiast group. They conduct four US national rallies, two touring rallies and 44 state rallies. These rallies encourage people to use their motorcycles and to share in the excitement of riding. The people are given demonstration rides, have the opportunity to ask questions, register their bikes and buy merchandise. According to Michael D. Keefe, director of HOG, these rallies are considered "more like customer bonding. If people use the motorcycle, they'll stay involved" (Berry, 104 ). " What the Harley management crew, who are masters of marketing, do well is listen to their customers. The result is that Harley cannot keep up with demand at current production levels" (Croghan 31). Company executives learn from their customers by maintaining a database to track consumer desires. Company officers spend almost every weekend from April through October at motorcycle events and dealerships accumulating this information.

Promotion

The primary promotional tool for Harley-Davidson motorcycles are the HOG activities. Not only does it serves as a customer relations device, but as a way to showcase and demonstrate new products. As discussed in the image section, Harley develops a strong impression within consumers. In 1983, the company developed a trademark licensing program which provides income for dealers and the factory while expanding the total Harley experience. The company program put a stop to bootlegged Harley Davidson merchandise and offered priceless advertising.

Harley has capitalized on the fact its product/image is chic. There are numerous examples of fashion models draped over the bikes and wearing company T-shirts. The company is starting to advertise in magazines geared to the general public. Twice a year, a Fashions and Collectibles catalog is produced with various Harley merchandise. Clothes sold in stores such as Bloomingdales and J.C. Penny exposes Harley-Davidson to people who may not have thought about visiting a dealership. Another marketing strategy, Harley-Davidson Cafes, have been opened in or near many dealerships to lure people into the showroom. In fact, the Harley-Davidson Cafe in New York City won one of the 1994 Restaurant and Institutions Interior Design Awards