A new global brand management strategy for Harley-Davidson

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Harley-Davidson is one of the most mythological brands in the world. Every Harley-driver has its own stories and every Harley-bike its own history. In the last decade however, Harley-Davidsons’ core …

Harley-Davidson is one of the most mythological brands in the world. Every Harley-driver has its own stories and every Harley-bike its own history. In the last decade however, Harley-Davidsons’ core driver has become much older.

The aim of this project was to develop a new global brand strategy for Harley-Davidson to attract younger consumers. After some research it became crystal clear that Harley-Davidson is a real lovebrand and that it cannot do anything it wants. The risk of loosing loyal customers was too big. Following is the conclusion of the research:

Research shows that the new generation values authenticity and uniqueness more than ever. This is good news for Harley-Davidson which distinguishes itself from competitors with these values. Harley-Davidson has to seize this opportunity by sticking to its values by introducing modern techniques and modern design touches combined with the old elegance of Harley-Davidson. Retro design with a modern touch has never been cooler before.

Furthermore, Harley-Davidson has to stay away from categories that will harm the brand DNA and brand equity. Racing and performance motorcycles do not comply with the brand identity and cannot be introduced unless under a different brand name. The values of the target group for this kind of motorcycles will never comply with Harley-Davidsons’ brand values.

And finally, all this, has to be done without chasing away the current Harley-buyer. This customer still has to be able to identify itself with the brand. Therefore the feeling to belong to a strong community is more important than ever. HOG is a very successful marketing programme and it has to be supported all year long.

By applying these techniques, Harley-Davidson will remain a real lovebrand with high brand equity. Harley-Davidson stands for fun, experience and happiness with a little touch of rebellion. Every Harley-rider has its own story, but everyone single one of them has the same dream: Freedom

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  • 1. GlobalBrandManagementHarley-DavidsonJoren Lemiegre – A4040228
  • 2. Global Brand Management: Harley-Davidson1 EXECUTIVE SUMMARYHarley-Davidson is one of the most mythological brands in the world. Every Harley-driver has itsown stories and every Harley-bike its own history. In the last decade however, Harley-Davidsons’ core driver has become much older.Because of the ageing Harley-consumer, the brand itself suffers from an old-fashioned image andhas problems of selling its bikes to younger consumers. These consumers seem to be moreattracted by performance and speed than what Harley-Davidson can offer today.This does not mean however that Harley-Davidson does not have high brand equity and a strongbrand identity. With the help of a brand audit, the strengths of the brand have been analysed.The recommendations on page 20 show how Harley-Davidson can take advantage of theseproperties to differentiate itself from other competitors while becoming more attractive toyounger consumers.These findings will be further elaborated in the brand communications strategy which can befound on page 22 and which gives insights in the brand strategy needed to appeal to youngerconsumers.All these findings have been wrapped into four action points which can be found in theconclusion. By applying these action points, Harley-Davidson will again become a strong brandthat has a place in every consumer’s heart. 1 Joren Lemiegre – A4040228
  • 3. Global Brand Management: Harley-Davidson2 TABLE OF CONTENTS1 EXECUTIVE SUMMARY 12 TABLE OF CONTENTS 23 INTRODUCTION 34 CONSUMER ANALYSES 44.1 Consumer profile all brands 44.2 Harley-Davidson consumer profile 55 BRAND INVENTORY 65.1 Brand mantra 65.2 Brand elements 65.3 Supporting marketing programmes 75.4 Branding strategies 95.5 Brand portfolio analysis 95.6 Competitive brands profile 95.7 Points of parity & points of difference 105.8 Strengths & weaknesses 116 BRAND EXPLORATORY 126.1 Brand associations 126.2 Brand positioning analyses 126.3 Brand perception analyses 137 BRAND EQUITY 147.1 General market approach to brand equity 157.2 Customer-based brand equity models 177.3 Brand asset valuator 188 RECOMMENDATIONS 208.1 Branding to generation Y 208.2 General recommendations 219 BRAND COMMUNICATION STRATEGY 2210 CONCLUSION 2411 BIBLIOGRAPHY 2512 APPENDICES 2812.1 Appendix 1: Description of main competitors 2812.2 Appendix 2: Industry background 30 2 Joren Lemiegre – A4040228
  • 4. Global Brand Management: Harley-Davidson3 INTRODUCTIONHarley-Davidson is one of the leading companies when talking about heavyweight motorcycles,motorcycle parts, accessories and apparel. (DATAMONITOR, 2011a) Harley mainly operates inthe US where it has a market share of over 50% and employs about 6,900 people. In 2010, thecompany sold more than 130,000 motorcycles in the USA and almost 80,000 motorcyclesworldwide.Furthermore, Harley-Davidson is one of the strongest brands in the world with a very high levelof brand recall. Originally created to avoid bankruptcy, the Harley-Davidson community todaycounts more than 1 million members worldwide. (FOURNIER, Susan and Lee, Lara, 2009)Customers are not only buying a motorcycle, they are buying “the Harley-experience”.However, Harley-Davidson cannot count on baby boomers forever to sell its products. Thetypical HD-consumer is in its late 40s or older, not far from the group that buys Buicks. (ALIANO,Alyson, 2005) In order to appeal younger consumers, Harley-Davidson will have to adapt itsstrategy. 3 Joren Lemiegre – A4040228
  • 5. Global Brand Management: Harley-Davidson4 CONSUMER ANALYSES4.1 CONSUMER PROFILE ALL BRANDS4.1.1 AGEWhich consumers are buying motorcycles differs strongly from brand to brand. From a globalperspective however, there are some notable similarities between motorcycle buyers all overthe world.Different market reports from different countries mainly show the same figures according togender and age.Most motorcycle owners are men but the amount of women riding a motorcycle has beengrowing in the past 15 years. Women now account for 21.3% of motorcycle drivers.(DATAMONITOR, 2011b)The biggest group of motorcycle drivers can be found in the group older than 35. The percentageof drivers under 19 is also very high but this is because of the inclusion of scooters in thestatistics. These are very popular among this category and account for a great part of themotorcycle sales in this market.All adults 100.0SexMale 78.7Female 21.3Age15-19 16.020-24 10.525-34 8.935-44 27.545-54 16.855-64 9.465+ 10.8Table 1: Profile of motorcycle, moped and scooter owners by sex and Age (% of households owning)(KEYNOTE, 2008)4.1.2 USE OF MOTORCYCLESThere’s a big difference between continents in the use of motorcycles. While motorcycles indeveloped areas like Western Europe are mainly used for leisure and personal transportation,they are mainly used as working tools in Latin America. (FROST & SULLIVAN, 2002)This has an effect on the type of motorcycles that are bought in different countries. Knowledge ofthis use is indispensable for a successful market expansion. 4 Joren Lemiegre – A4040228
  • 6. Global Brand Management: Harley-Davidson4.2 HARLEY-DAVIDSON CUSTOMER PROFILEAccording to Scott (SCOTT, Missy, 2008), the typical Harley-Davidson rider in the USA issomewhere between 30 and 40 years’ old and has an average household income of $ 84.300.Nearly two-thirds of Harley-buyers have studied at least one year after high-school and 30% ofbuyers have a college degree.In its annual report, Harley-Davidson says the following about its consumers: “we’re number onein U.S. heavyweight market share across a broad swath of outreach customers. We are the leaderamong young adults ages 18–34. We’re number one with women. Number one with Hispanic riders.Number one among African-Americans.” (HARLEY-DAVIDSON, INC., 2010)This consumer profile is however limited to the American market. In developing countries,Harley-Davidsons consumer profile is different for education and income. In India for example,the typical Harley-Davidson buyer belongs to a higher class, is highly-educated and has one ofthe highest average incomes in India. The reason for this is the high price for the Harley bikes inthese countries. (HARLEY DAVIDSON MOTOR COMPANY, 2011)Even countries with similar cultures as the US show significant differences. In the Europeanmarket for example, Harley-Davidson has a very low market share and is not very popularamongst young people. This is one of the major weaknesses of Harley-Davidson. The companyfocuses too much on the US market and is not really following consumer trends in othermarkets. 5 Joren Lemiegre – A4040228
  • 7. Global Brand Management: Harley-Davidson5 BRAND INVENTORY5.1 BRAND MANTRAHarley-Davidsons brand mantra “Enjoy the ride” immediately shows that Harley Davidson isabout more than only transportation. The Harley-Davidson brand is all about escaping the dailyhumdrum of life and the experience of the products that Harley is selling. Ron Hutchinson,senior vice president of product development for HD, states it as following: “Let me be very clearabout one thing, Harley-Davidson is not in the transportation business. We are, however, in theentertainment business” (CAREY, W. P., 2008)5.2 BRAND ELEMENTSAccording to Keller (KELLER, Kevin Lane et al., 2012), “brand elements can be chosen to enhancebrand awareness; facilitate the formation of strong, favourable and unique brand associations orelicit positive brand judgements and feelings. “ Because these brand elements help to define brandequity, Harley-Davidsons’ brand elements will be analysed in the next paragraphs.5.2.1 NAMEIn 2011, Harley-Davidson ranked 100th in Interbrands top 100 brands. (INTERBRAND, 2011)This may not seem very spectacular, but regarding the sales of HD-motorcycles compared tomarket leader Honda, this is a big achievement.Keller states that a good brand name is easy to pronounce or spell, familiar, meaningful,different, distinctive and unusual. (KELLER, Kevin Lane et al., 2012). Harley-Davidson may notbe meaningful or easy to spell, the name has been used over such a long time that is has becomea statement. Changing this name would be a very bad idea.5.2.2 LOGOThe Harley-Davidson logo is easy to remember, easy to spotand obvious. The orange letters on a black background areimmediately recognisable and just like the brand name, the logois very famous and well-known all over the world. During theyears, there have been some minor adaptions to the logo butthe logo is still recognisable as the original Harley-Davidsonlogo.5.2.3 SHOPS Figure 1: Harley-Davidson logoWhile POS may not be part of Keller’s definition of brandelements, shops are very important for the Harley-Davidson brand. The HD-shop is easilyrecognisable, offers a wide range of Harley-Davidson products and above all, the employeesworking in the shops know all about the motorcycles and the brand. These are the places wherecustomers get in touch with the brand and are therefore indispensable for the Harley-Brand.(DATAMONITOR, 2011a) 6 Joren Lemiegre – A4040228
  • 8. Global Brand Management: Harley-Davidson5.2.4 SLOGANSHarley-Davidson has had a lot of different slogans during its lifetime. However different, allslogans have one thing in common. They are consistent with the brand mantra and show whereHarley-Davidson stands for. Freedom, entertainment and easy-riding."Its not the destination, its the journey.”“Live to Ride, Ride to Live”“The Road Starts here. It never ends”.“Its time to ride.”“Until youve been on a Harley-Davidson, you havent been on a motorcycle”5.3 SUPPORTING MARKETING PROGRAMMESWhen taking a look at the different Harley-Davidson marketing programmes, the assumptioncan be made that Harley works really hard on integrated marketing. Every single campaign,initiative or event depicts the brand mantra and brand identity. Every country can decide aboutits own campaigns and budget, but the boundaries to do so are set by the headquarters.The result of this approach is that Harley-Davidson’s advertising campaigns are specificallyadapted to each target market while following the global brand values. There are too muchdifferent programmes to evaluate, but the most important global initiatives will be analysed inthe following paragraphs.5.3.1 JUMPSTARTThe jumpstart programme is an experiential marketing programme aimed at new customers andpeople who have never driven a motorcycle before. In order to convince new customers thatthere’s nothing like being on a Harley-Davidson motorcycle, Harley offers the opportunity to tryone in a controlled environment. (HARLEY-DAVIDSON, INC., 2010)Therefore, people can try a Harley-Davidson bike in-store all over the world. The bike ismounted on a support stand so people can try shifting, throttling and steering without being onthe road.5.3.2 HOG OR HARLEY-DAVIDSON OWNERS GROUPOne of Harley-Davidson’s oldest marketing programmes that is still running is the Harley-Davidson Owners Group. As mentioned earlier, this community created by HD, counts more than1 million members worldwide. Because of the connection between the brand and the consumers,Harley-Davidson uses this group to receive feedback on products and to make improvements. 7 Joren Lemiegre – A4040228
  • 9. Global Brand Management: Harley-Davidson5.3.3 BRAND MANAGEMENT EXTENSIONSIn order to analyse if these marketing programmes are applied correctly, Kapferer’s model forbrand management extension will be applied. Kapferer states that if a brand wants to stayrelevant in the long term, it has to work on the depth of the brand. Therefore, he has createdthree levels of brand depth. Functional satisfaction, experiential enchantment and aspirationalfulfilment. (KAPFERER, Jean-Noel, 2008) Brands that play at the Aspirational product level arenormally the strongest brands as the relationship with their consumers is very strong.The different programmes used in the above paragraphs each have their own place in thismodel. The jumpstart-programme for example focuses on functional satisfaction and short-termtransaction. It fits in the lower left corner of the model.A completely different programme is the HOG. This programme clearly fits in the upper rightcorner of the model. These two extremes are necessary in order to maintain a good relationshipwith the customer. A relationship with a brand can only exist when a consumer has tried orbought the product. Therefore, a brand has to start in the lower left corner to become a strongbrand in the consumers’ mind.Figure 2: The extension of brand management (KAPFERER, Jean-Noel, 2008) 8 Joren Lemiegre – A4040228
  • 10. Global Brand Management: Harley-Davidson5.4 BRANDING STRATEGIES5.4.1 SUB-BRANDSAll motorcycles produced by the company, are sold with the name Harley-Davidson but subbrands are used to define the type of motorcycle and the target group. Examples of these subbrands are Superlow, Nightster, Fat Boy and Soft-Tail.5.4.2 BRAND EXTENSIONSNext to these sub brands, Harley-Davidson uses some line extensions. A good example of a lineextension is the Fat Boy Low. It has the same design as the normal Fat Boy Motorcycle, but toappeal to women, it has been made lower so it is easier to handle and ride.Another branding strategy of Harley-Davidson are category extensions. Harley does not onlyoffer motorcycles, it also offers a wide range of apparel, gadgets and much more. However itgives added value to the brand in a consumers perspective, Harley-Davidson has to be carefulwith these category extensions. The launch of a Harley-Davidson perfume proved to be a steptoo far for most Harley-Davidson fans. Haig puts it as following: “If your values are ‘strong,masculine and very rugged,’ you shouldn’t be selling perfume.” (HAIG, Matt, 2011)5.5 BRAND PORTFOLIO ANALYSISHarley Davidson produces different types of motorcycles ranging from Touring models toSportster models. All these motorcycles are sold with the Harley-Davidson brand name.Until 2009, Harley-Davidsons’ brand portfolio comprised two brands, HD and Buell. While thetypical Harley-Davidson customer is 47 years’ old, Buell bikes were produced to attract ayounger audience. (VAUGHAN, Mike, 2010) In 2009, production of Buell bikes stopped andHarley-Davidson does not sell this brand any longer. Vaughan thinks this is a major mistake, butif Harley-Davidsons own sales figures can be trusted, his vision is wrong, at least if only the USmarket is taken into consideration.5.6 COMPETITIVE BRANDS PROFILEAccording to Datamonitor (DATAMONITOR, 2011b), BMW, Honda, Suzuki, Yamaha and Polarisare the biggest competitors of Harley-Davidson. Both BMW and Polaris are not part of the topfive in terms of market share described in chapter 12.2, but are strong competitors of Harley-Davidson because of their connection with the up-level and heavy-weight motorcycle market.A short description of every competitor and its products can be found in Appendix 1. 9 Joren Lemiegre – A4040228
  • 11. Global Brand Management: Harley-Davidson5.7 POINTS OF PARITY & POINTS OF DIFFERENCE5.7.1 POINTS OF DIFFERENCEHarley Davidson has some major points of difference compared to its competitors. The brandstands out in different areas.Harley-Davidson Owners Group: First of all, Harley-Davidson has a very strong brandcommunity, the Harley Owners Group is very famous among consumers and Harley owners.They gather for races, trips and much more.Engine sound: The sound of the Harley engine is unique and immediately recognisable.Everybody who hears it knows it is a Harley-Davidson driving by.American Heritage: One of the strongest POD’s on the American market for Harley-Davidson istheir American heritage. The brand is not afraid to show it is purely American and loves to be so.Design: Together with the American heritage, the design of Harley-Davidson motorcycles is verydistinctive from other brands.Selling points: Harley-Davidson sells its motorcycles primarily in its own shops. These shopsare independently owned but Harley-Davidson gives guidelines about what is possible and whatnot. In this way, customers visiting a Harley-store will get the same level of service andassistance worldwide.These are all very strong points of difference but it are these pod’s that could become a dangerfor Harley-Davidson in the future. Not everybody considers these pod’s as sufficient to buy amotorcycle.5.7.2 POINTS OF PARITYTechnology: If there’s anything Harley-Davidson is not standing out at, it is the technologybehind the motorcycles. While BMW is constantly innovating, Harley-Davidson is lagging behindand applies old technologies every brand already uses.Quality: However the quality perception of Harley-Davidson may be quite high, Harley-Davidson bikes don’t have an exceptional level of quality. Compared to other motorcycles,quality of HD may even be considered low.Performance: Harley-Davidson bikes may perform very well, compared to competitors, theperformance of HD motorcycles is quite average. This can be a big disadvantage to attract youngconsumers. 10 Joren Lemiegre – A4040228
  • 12. Global Brand Management: Harley-Davidson5.8 STRENGTHS & WEAKNESSESFigure 3: SWOT-analyses Harley-Davidson 11 Joren Lemiegre – A4040228
  • 13. Global Brand Management: Harley-Davidson6 BRAND EXPLORATORY6.1 BRAND ASSOCIATIONSFigure 4: Brand associations based on personal experience and (ROBERTS, Kevin, 2004)6.2 BRAND POSITIONING ANALYSESAccording to Kapferer, positioning a brand means “emphasizing the distinctive characteristicsthat make it different from its competitors and appealing to the public” (KAPFERER, Jean-Noel,2008)These distinctive characteristics are also backed by Jobber. He describes brand positioning aschoosing the right target market and defining the right differential advantages. (JOBBER, David,2010).6.2.1 TARGET MARKETAs pointed out in chapter 4, the typical Harley-Davidson targets where white, masculine babyboomers who are attracted to freedom and rebellion. This generation was getting old very fastand Harley had to target other groups. Recently, HD introduced special motorbikes andmarketing programmes aimed at women. These programmes still have to prove theireffectiveness, but are one of the hopes of HD. Furthermore, other social groups like youngsters,the black community and Hispanics have been targeted more recently.6.2.2 DIFFERENTIAL ADVANTAGESThe differential advantages have already been discussed in “5.7.1 Points of difference”. Aspointed out there, Harley has some clear differences with other motorcycle manufacturers butthe question remains whether the contemporary motorcycle buyer is interested in these pointsof difference. 12 Joren Lemiegre – A4040228
  • 14. Global Brand Management: Harley-Davidson 6.2.3 A BRAND FOR WHEN AND A BRAND AGAINST WHOM ? Maybe more interesting for Harley-Davidson’s positioning are the two elements Kapferer adds to positioning: “A brand for when?” and “a brand against whom?” (KAPFERER, Jean-Noel, 2008) A brand for when is an ideal positioning method for Harley-Davidson since they are already focussing on this in their brand mantra. A Harley-Davidson is not only to get from A to B; it is to get there in a very pleasant and exiting way. This focus can help to further improve the positioning “against whom”. Harley-Davidson positions itself against other motorcycle manufacturers who go for speed instead of pure driving pleasure. A good example of this can be found in a lecture from Ken Schmidt at Westminster College where he tries to show the difference between Harley-Davidson and other motorcycles: “I want everybody to lean as far forward as you can, and if your back doesnt hurt, youre not doing it right. You are now going to ride one of those imported bikes seen zipping around the streets.” 6.3 BRAND PERCEPTION ANALYSES The perceptual map helps to measure brand equity explained in chapter 7, but can also be helpful when assessing the brands position in the customers mind compared to competitors. Figure 5 shows an example of a perceptual map applied to Harley-Davidson and its main competitors. It has been based on personal experience and research conducted by Tiwari on the Indian market. (TIWARI, Vinayak, 2011) Advanced Technology / Innovative Traditional Trendsetter High PerformanceFigure 5: Perceptual map based on personal experience 13 Joren Lemiegre – A4040228
  • 15. Global Brand Management: Harley-Davidson7 BRAND EQUITYIn order to understand the meaning of Harley-Davidson as a brand, a good understanding ofbrand equity and how it can be measured and leveraged is necessary.Kotler defines brand equity as “the added value given to products and services. Brand equity andvalue is reflected in how consumers, think, feel and act with respect to the brand, as well as theprices, market share and profitability that the brand commands for the company” (KOTLER, Philipet al., 2009)This is a good definition of brand equity but it does not show how a higher level of brand equitycan serve the company. Therefore, Keller’s definition of brand equity is better: “Brand equity isthe differential effect that brand knowledge has on consumer response to the marketing of thatbrand” (KELLER, Kevin Lane et al., 2012)One of the shortcomings of Keller’s definition is that it is purely customer based. Aakerapproaches brand equity from a business perspective and defines it as following: “Brand equitycan be considered as the additional cash flow achieved by associating a brand with the underlyingproduct or service.” (AAKER, David A. and Biel, Alexander L., 1993)Stemming from these different definitions, two main approaches with their own models can beapplied onto Harley-Davidson. The customer-based model according to Keller, and the generalmarket approach by Aaker. 14 Joren Lemiegre – A4040228
  • 16. Global Brand Management: Harley-Davidson7.1 GENERAL MARKET APPROACH TO BRAND EQUITYA AKERAaker’s brand equity model mainly focuses on added value. Both the added value for the brandand the consumer are studied in this model. Aaker identifies five dimensions to measure brandequity. Awareness, association, perceived quality, brand loyalty and other propriety brandassets.Each dimension delivers in its own way added value to the consumer and the brand. Figure 6illustrates Aaker’s brand equity model with its five dimensions and how each dimension deliversadded value.Figure 6: David Aakers brand equity model cited by Keller (KELLER, Kevin Lane et al., 2012)In the following paragraphs, Aaker’s model will be applied to Harley-Davidson. This will help todetermine Harley-Davidsons’ brand equity and to improve it.Brand loyalty is key for Harley-Davidson. Since the introduction of the Harley Owners Group,the repurchase rate of Harley-Davidson has been very high. According to Scott, (SCOTT, Missy,2008) more than 80% of Harley-buyers, buys a new Harley-Davidson when they want anothermotorcycle.Aaker states that a high brand loyalty helps to reduce marketing costs and to attract newconsumers. A big part of Harley-Davidson motorcycles is sold through word-of-mouth. Reducingmarketing costs however, is not the same as doing no marketing at all. Coca Cola for example, isthe biggest brand in the world, but still spends billions of dollars on advertising each year. 15 Joren Lemiegre – A4040228
  • 17. Global Brand Management: Harley-DavidsonHowever high the brand loyalty may be, this does not prove that Harley-Davidson is doing agood job. More than 50% of Harley-bikes sold today, are sold to previous Harley-owners. Thatmeans that in the long run, Harley-Davidsons buyers’ group will become smaller and smaller.Brand awareness: There is no academic proof that Harley-Davidson has high brand awarenessbut, considering Harleys positioning in Interbrands’ Top 100, the assumption can be made thatthis is the case. This high brand awareness helps Harley-Davidson to be added to a newconsumers’ consideration set and to help the consumer to make its choice. Since the brand isalready known, there is less need for the consumer to be made aware of the existence of Harley-Davidson.Perceived quality: When talking about the quality of Harley-Davidson, there is a big differencebetween perceived quality and actual product quality. According to Datamonitor, poor productquality is one of the major weaknesses of Harley-Davidson. (DATAMONITOR, 2011a). Last year,Harley-Davidson had to recall more than 100,000 motorcycles. Luckily for HD, the perceivedproduct quality does not match the real product quality.The weight, image and looks of Harley-Davidson help to maintain a high quality perception.This helps HD to charge a higher price for its motorcycles than competitors and to motivatepeople to buy a HD-bike instead of other brands. In the future however, Harley-Davidson willhave to work on its real product quality. Perception may be very important; delivering low-quality products followed by product recalls can seriously damage the brand and will lead to alower quality perception in the future. A good example of a brand that has had this problem isToyota. When they had to recall cars because of problems with the acceleration, the perceivedproduct quality dropped instantly.Brand associations: Harley-Davidson makes one think about a lot of different things as shownin chapter 6. These associations help Harley-Davidson to differentiate itself from competitorsand to give consumers a reason to buy. Consumers on their side are helped by these associationsin the search for a motorcycle.Other proprietary assets: A quick search on FPO’s search engine learns that Harley-Davidsonhas 541 patents. Compared to other companies like Yamaha, which has over 9000 patents, thatis rather insignificant. Patents can help companies to establish a competitive advantage and evento block other companies of releasing a product. In the long term, this lack of patents could harmHarley-Davidson. A problem Google faces at the moment with Android OS. 16 Joren Lemiegre – A4040228
  • 18. Global Brand Management: Harley-Davidson7.2 CUSTOMER-BASED BRAND EQUITY MODELSB RAND E QUITY P YRAMIDKeller describes four steps for building a strong brand. Establishing the brand identity, creatingan appropriate brand meaning, eliciting positive brand responses and forging brandrelationships with consumers. (KELLER, Kevin Lane, 2001)These four steps are used to create the brand equity pyramid with six so-called “brand buildingblocks”. These blocks are necessary to build a strong brand and are illustrated in Figure 7Figure 7: Customer-based brand equity pyramid (KELLER, Kevin Lane, 2001)In order to assess Harley-Davidsons brand equity, the CBBE-pyramid has been applied to thebrand in Figure 8. Loyalty Community Stylish Freedom Unique Enjoyment American-style Rebellious Good Quality Epicurean MotorcyclesFigure 8: CBBE-pyramid applied to Harley-Davidson. Based on (KELLER, Kevin Lane, 2001) 17 Joren Lemiegre – A4040228
  • 19. Global Brand Management: Harley-Davidson7.3 BRAND ASSET VALUATORAnother interesting tool for measuring brand equity is the Brand Asset Valuator designed byYoung & Rubicam. The BAV is built on four pillars which diagnose the strength of the brand andthe brand stature or emotional capital. These four pillars are: differentiation, relevance, esteemand knowledge. The difference with other models is that BAV measures how well a brandperforms vs. the other brands in BAV. (YOUNG & RUBICAM GROUP, 2003)Figure 9: The four BAV-pillars (YOUNG & RUBICAM, 2010)Crucial for diagnosing the health of the brand is the relationship between these four pillars.According to Young & Rubicam, a brand has room to grow if differentiation is bigger thanrelevance. This is the case for Harley Davidson. The other way round means that the analysedbrand is a commodity brand such as Minute Maid. 18 Joren Lemiegre – A4040228
  • 20. Global Brand Management: Harley-DavidsonAll these factors together help to build the BAV power grid. With help of this power grid, abrand’s strengths and weaknesses- as well as its growth prospects can be mapped out. (YOUNG& RUBICAM, 2010). Harley Davidson is a typical example of a brand with a high level ofdifferentiation, combined with a lower level of relevance. On the other side, the knowledge of thebrand is quite high while the brand-esteem is not that big. Therefore, Harley-Davidson fits in thedecline section of the BAV power grid. It is still a strong brand, but the fundamentals on whichthe brand has been built, start to erode.Figure 10: The BAV power grid applied to Harley-Davidson. Based on (YOUNG & RUBICAM, 2010) 19 Joren Lemiegre – A4040228
  • 21. Global Brand Management: Harley-Davidson8 RECOMMENDATIONS8.1 BRANDING TO GENERATION YThe goal of this paper is to get insights into the Harley-Davidson brand and to make it moreattractive to young people outside the US. In the following paragraphs, generation Y and howthey can be targeted more efficiently will be described by using research of Van den Bergh onthis subject. (VAN DEN BERGH, Joeri, 2011)8.1.1 AUTHENTICITY/ REALNESSVan den Bergh states that authenticity is still one of the major drivers for young people toconsider a brand. (VAN DEN BERGH, Joeri, 2011). Authenticity however, is not anymore aboutorigin, history and heritage but all about being honest to yourself, to your consumers and tosociety. The classic interpretation of authenticity should never be shouted but only bewhispered. Eristoff has used this insight to build its “Pretty honest for a vodka-campaign”Recommendation 1: If Harley-Davidson wants to appeal to young people, it has to keep itreal and it has to stay true to itself.8.1.2 SELF-IDENTIFICATION WITH THE BRANDThe new generation are stimulus junkies. They have grown up in a society where advertisingand stimuli are omnipresent. They know advertising is there to sell products but they couldn’tbe bothered less about it. Content is king but they have more trust in people than ever. Friendshelp this generation decide what to buy and employees or shop personnel are key to sellproducts. Brands that appeal to this generation use social media and don’t push their messagesbut engage the new consumer by offering him control.Recommendation 2: Harley-Davidson has to engage with young people through socialmedia and offer them the power to become brand ambassadors. Harley-Davidson has tofriend its consumers.8.1.3 UNIQUENESSAnother thing that is very important for branding to young people is uniqueness. On this subject,Van den Bergh’s theories are aligned with the preliminary paragraphs about brand equity. Inorder to appeal to young people, brands have to be unique, that is, they need to positionthemselves with a unique brand DNA or brand identity. Furthermore, this complies with Aaker’smodel because it is all about brand perception. In order to make this work, a consistentpositioning through the years is indispensable. A brand that is doing very well in this area isLynx which has been using the same brand mantra for decades: “helping man to attract women”.Recommendation 3: Harley-Davidson has to stick to its brand positioning and brand DNA.Trying to change this identity will damage the brand. 20 Joren Lemiegre – A4040228
  • 22. Global Brand Management: Harley-Davidson8.1.4 BRAND LEVERAGEAccording to Van den Bergh, traditional brand equity models as described in chapter 7 are nolonger sufficient. Instead of these traditional models that focus on awareness, image and loyalty,he adds the Net Promoter Score (NPS) as key brand metric. In research he conducted, a clearrelationship was found between consumers talking about the brand and brand leverage. “Ifgeneration Yers highly rate your brand on each element, your brand image will improve and theywill talk about your brand which will have a positive effect on your brand strength (brandleverage)” (VAN DEN BERGH, Joeri, 2011)Recommendation 4: Stick with Van den Bergh’s CRUSH-model and keep the Harley-Davidson brand and communication Cool, Real, Unique, Self-identifiable and Happy.8.2 GENERAL RECOMMENDATIONS8.2.1 QUALITYAs mentioned in chapter 5, the product quality of Harley-Davidson is one of its weaknesses. Thiswill have to be fixed.Recommendation 5: If Harley-Davidson wants to keep high brand equity, it will have toimprove the quality of its products.8.2.2 BRAND MANAGEMENT EXTENSIONIf the brand wants to stay relevant for every consumer, Harley-Davidson will have to developmarketing programmes for every life stage of the consumer. New consumers and old consumersboth have a different depth of relationship with the brand but both need tailored communicationplans.Recommendation 6: Apply Kapferer’s model for brand management extension and adaptmarketing programmes to different consumer life stages.8.2.3 BRAND EXTENSIONSHarley-Davidson made a mistake by launching too much category extensions like perfume butnot only this kind of category extension can harm the brand. It is not wise for Harley-Davidson tostart producing bikes in the race category or performance category. First of all, extending theHarley-Davidson brand in these categories will damage the brand DNA and secondly, buyers ofthese kinds of motorcycles will never be convinced about Harley-Davidsons brand values. Theyhave other values and they will never match those of Harley-Davidson. Creating a new sub-brand can be a solution if it is financially possible.Recommendation 7: If Harley-Davidson wants to avoid brand dilution, the brand has to bemore careful with category extensions.Line extensions on the other side, can help to strengthen the brand and to make it moreattractive to certain target groups.Recommendation 8: Continue introducing line extensions but avoid too much lineextensions to remain profitable. 21 Joren Lemiegre – A4040228
  • 23. Global Brand Management: Harley-Davidson9 BRAND COMMUNICATION STRATEGYPlacing the brand communication strategy behind the recommendations may seem a bit strange,but since this brand communication strategy is based on the recommendations, it is better topresent it here.T ARGET AUDIENCEThe target audience of the new brand communication strategy are young people between 20 and35 who are attracted by values like freedom, pleasure and dreams with a touch of rebellion. Menas well as women have to be taken into consideration, eventually with different but consistentcommunication plans.Because of the current customer profile of Harley-Davidson, the new brand communication hasto appeal to baby boomers as well without driving them away from the brand.O BJECTIVES - Making Harley-Davidson more appealing to young consumers and raise sales in this category without repelling existing consumers. - Creating a real relationship with each type of consumer - Keeping a strong brand equity throughout all consumer groups - Improving the brand image among young consumersC REATIVE STRATEGYThe new creative strategy will be based on the CRUSH-model to appeal to younger consumers.The focus will lay on realness, uniqueness, self-identification with the brand and happiness witha rough edge. As seen in chapter 8, young people are attracted by these values and this kind ofcreativity. Every marketing campaign will have to respond to this model.Furthermore, the creative strategy will mainly focus on user-generated content. Harley-Davidson is a strong brand with lots of fans who like to show this. Engaging these fans bystimulating them to create their own content and sharing it, will give the creative boost Harley-Davidson needs. 22 Joren Lemiegre – A4040228
  • 24. Global Brand Management: Harley-DavidsonM EDIA STRATEGYThe new media strategy will mainly focus on social media. Harley-Davidson already has a strongFacebook-page but more content-creation and interaction is required in order to appeal toyounger consumers. Social media are also very suitable for user-generated content as mentionedin the creative strategy.Next to social media, traditional media can be used in combination with new techniques to drawthe attention to the brand. Examples are print media combined with QR-codes, NFC-enabledbillboards or virtual reality set-ups as used by Lynx to promote its new fragrance.In addition to that, smartphones will be used to engage consumers even more. An application toshare “Your Harley-moment” could be interesting. Especially if this application adds extra valueby using the GPS to show beautiful places for a road trip, interesting motoring spots and all thiscombined with the possibility to share with other Harley-drivers.P RODUCT STRATEGY 1. Improve the quality of the products by applying a total quality management system where every step in the production process is checked. 2. Introducing more line extensions to appeal to different target groups while avoiding to drift away from the brand DNA. It is important to stay loyal to the design while incorporating cool and modern touches like nonglossy paint. 3. Making the Harley-Davidson apparel more fashionable for younger consumers and women without removing the rough edges. 23 Joren Lemiegre – A4040228
  • 25. Global Brand Management: Harley-Davidson10 CONCLUSIONHarley-Davidson is still a strong brand which appeals to a very large group of consumers. Thebrand has made some major mistakes in the past, but seems to be on the right way to refocus onthe brands key strengths. This strategy seems to work in the US where Harley-Davidson isselling more bikes to young people and new target groups than ever. In order to appeal to theglobal market however, there are some major problems to be tackled.First of all, Harley-Davidson has to adapt its communication strategy to younger consumers. Thiscan be done by updating the used media with new techniques and to engage on social networkswith new and potential consumers.Secondly, research shows that the new generation values authenticity and uniqueness morethan ever. This is good news for Harley-Davidson which distinguishes itself from competitorswith these values. Harley-Davidson has to seize this opportunity by sticking to its values byintroducing modern techniques and modern design touches combined with the old elegance ofHarley-Davidson. Retro design with a modern touch has never been cooler before.Furthermore, Harley-Davidson has to stay away from categories that will harm the brand DNAand brand equity. Racing and performance motorcycles do not comply with the brand identityand cannot be introduced unless under a different brand name. The values of the target groupfor this kind of motorcycles will never comply with Harley-Davidsons’ brand values.And finally, all this, has to be done without chasing away the current Harley-buyer. Thiscustomer still has to be able to identify itself with the brand. Therefore the feeling to belong to astrong community is more important than ever. HOG is a very successful marketing programmeand it has to be supported all year long.By applying these techniques, Harley-Davidson will remain a real lovebrand with high brandequity. Harley-Davidson stands for fun, experience and happiness with a little touch of rebellion.Every Harley-rider has its own story, but everyone single one of them has the same dream:Freedom 24 Joren Lemiegre – A4040228
  • 26. Global Brand Management: Harley-Davidson11 BIBLIOGRAPHYAAKER, David A. and Alexander L. BIEL. 1993. Brand equity & advertising: advertisings role inbuilding strong brands. New Jersey: Lawrence Erlbaum Associates Inc.ALIANO, Alyson. 2005. He really got Harley Roaring. BusinessWeek, 21 March, p.70.BUSINESS MONITOR INTERNATIONAL LTD. 2012. Brazil Autos Report. Ipswich.CAREY, W. P. 2008. Enjoy the ride: Harley-Davidsons user community. [online]. [Accessed 14February 2012]. Available from World Wide Web:<http://www.knowwpcarey.com/pdf.cfm?aid=435>DATAMONITOR. 2011a. Harley-Davidson, Inc.: Company profile. London.DATAMONITOR. 2011b. Industry Profile: Global motorcycles. London.DATAMONITOR. 2011c. Bayerische Motoren Werke AG (BMW Gorup) Company Profile. London.DATAMONITOR. 2011d. Suzuki Motor Corporation. London.DATAMONITOR. 2011d. Yamaha Motor Co., Ltd. London.DATAMONITOR. 2011e. Polaris Industries Inc. London.DATAMONITOR. 2012a. Honda Motor Co., Ltd. Company profile. London.FOURNIER, Susan and Lara LEE. 2009. Getting brand communities right. Harvard BusinessReview. 87(4), pp.105-111.FROST & SULLIVAN. 2002. Motorcycles market in Latin America. Booming? [online]. [Accessed 17February 2012]. Available from World Wide Web:<http://www.frost.com/prod/servlet/market-insight-top.pag?docid=IMAY-58FLP5>FROST & SULLIVAN. 2008. The impact of rising fuel prices on consumer behaviors. [online].[Accessed 17 February 2012]. Available from World Wide Web:<http://www.frost.com/prod/servlet/market-insight-top.pag?docid=137517607>FUREY, Cynthia. 2010. Marketing the Harley Way. Dealernews. 46(8), pp.56-56.HAIG, Matt. 2011. Brand failures: the truth about the 100 biggest branding mistakes of all time,2nd edition. United Kingdom: Kogan Page Limited.HARLEY DAVIDSON MOTOR COMPANY. 2011. Harley-Davidson opens Asia Pacific headquarters.Marketing Weekly News, 4 June, pp.1-1.HARLEY-DAVIDSON, INC. 2010. 2010 Annual Report. [online]. [Accessed 17 February 2012].Available from World Wide Web: <http://www.harley-davidson.com/en_US/Media/downloads/Annual_Reports/2010/HD_Annual2010.pdf> 25 Joren Lemiegre – A4040228
  • 27. Global Brand Management: Harley-DavidsonHONDA MOTOR CO., LTD. 2011. Annual Report 2011. [online]. [Accessed 15 February 2012].Available from World Wide Web:<http://world.honda.com/investors/library/annual_report/2011/honda2011ar-all-e.pdf>INTERBRAND. 2011. 2011 Ranking of the top 100 Brands. [online]. [Accessed 15 February 2012].Available from World Wide Web: <http://www.interbrand.com/en/best-global-brands/best-global-brands-2008/best-global-brands-2011.aspx>JOBBER, David. 2010. Principles and practice of Marketing, 6th edition. Berkshire: McGraw-Hill.KAPFERER, Jean-Noel. 2008. The new strategic brand management - Creating and sustainingbrand equity long term. London: Kogan Page Limited.KELLER, Kevin Lane. 2001. Building customer based Brand equity - A blueprint for creating strongbrands. Cambridge.KELLER, Kevin Lane, Tony APÉRIA, and Mats GEORGSON. 2012. Strategic Brand Management - AEuropean perspective, second edition. Essex: Pearson Educatioon Limited.KEVIN, Keller Lane. 2009. Brand Planning. [online]. [Accessed 13 February 2012]. Available fromWorld Wide Web:<http://www.marksherrington.com/downloads/Brand%20Planning%20eArticle.pdf>KEYNOTE. 2008. Market review 2008: Motor industry. Middlesex.KOTLER, Philip, Kevin KELLER, Mairead BRADY, and Malcolm GOODMAN. 2009. MarketingManagement. Essex: Pearson Education.ROBERTS, Kevin. 2004. Lovemarks - The future beyond brands. United States: powerHouse Books.SCHEMBRI, Sharon. 2009. Reframing brand experience: The experiential meaning of Harley-Davidson. Journal of Business Research. 62(12), pp.1299-1310.SCOTT, Missy. 2008. Harley-Davidson Motor Company - Corporations that changed the world.United States: Greenwood Press.TIWARI, Vinayak. 2011. Brand image of motorcycles and the colour survey for the bike colours.[online]. [Accessed 11 February 2012]. Available from World Wide Web:<http://www.scribd.com/doc/43696994/Brand-Image-of-Motorcycles-of-Yamaha>U.S. DEPARTMENT OF ADMINISTRATION. 2009. Motorcycle Trends in the United States. [online].[Accessed 14 Feb 2012]. Available from World Wide Web:<https://1bts.rita.dot.gov/publications/special_reports_and_issue_briefs/special_report/2009_05_14/pdf/entire.pdf>VAN DEN BERGH, Joeri. 2011. How cool brands stay hot - Branding to generation Y. UnitedKingdom: Kogan Page Limited.VAUGHAN, Mike. 2010. What was Harley thinking? Dealernews. 46(3), pp.60-60. 26 Joren Lemiegre – A4040228
  • 28. Global Brand Management: Harley-DavidsonYOUNG & RUBICAM. 2010. BrandAsset Valuator. [online]. [Accessed 20 February 2012].Available from World Wide Web: <http://young-rubicam.de/tools-wissen/tools/brandasset-valuator/?lang=en>YOUNG & RUBICAM GROUP. 2003. Brand Asset Valuator. [online]. [Accessed 20 February 2012].Available from World Wide Web: <http://www.scribd.com/doc/30927697/Brand-Asset-Valuator> 27 Joren Lemiegre – A4040228
  • 29. Global Brand Management: Harley-Davidson12 APPENDICES12.1 APPENDIX 1: DESCRIPTION OF MAIN COMPETITORSHONDAHonda is the largest manufacturer of motorcycles in the world. In 2011, Honda sold more than11 million units worldwide. (DATAMONITOR, 2012a)Honda produces several motorcycle lines including sports, business and commuter models. Theengines range from 50cc to 1,800cc.The way Honda motorcycles are sold differs by country. In Japan, Honda mainly sells itsmotorcycles in Honda outlets while in the rest of the world, Honda motorcycles are sold byindependent dealers.Honda motorcycles are well-known in the performance and racing segment. The bikes are fast,reliable and stylish. While Honda chose to sub brand some models in the seventies like the“Honda Dax” and the “Honda Fury”, nowadays Honda bikes don’t have real names anymore.Instead of names, Honda has different series. Some of the best-known Honda series are theXR/XL-series for dirt-racing and dual-sports, and the GL-series that compete directly withHarley-Davidson in the touring segment.BMWBMW is a rather small player in the motorcycle market. BMW sells and produces BMW-motorcycles and Husqvarna-motorcycles. In 2010, BMW sold approximately 110,000 units.(DATAMONITOR, 2011c)BMW’s focus mainly lays on R&D and manufacturing efficiency. BMW-motorcycles are highlytechnological and advanced. BMW is all about transportation and comfort and speed are veryimportant.SUZUKISuzuki is the third largest producer of motorcycles in the world. With a production of almost 3million units, Suzuki has a global market share of 6%. (DATAMONITOR, 2011d)Models range from scooters over dirt bikes to bikes specially designed for motorsports. In thedomestic as well as in the overseas market, Suzuki bikes are sold by subsidiaries that can freelydecide about marketing and sales.The strengths of Suzuki are the strong orientation towards R&D, the strong strategic alliancesand the image built through the years. 28 Joren Lemiegre – A4040228
  • 30. Global Brand Management: Harley-DavidsonPOLARISPolaris is a very small player in the world market but one of Harley-Davidson main competitorson the American market. Polaris specialises in off-road vehicles and heavy-weight motorcyclesfor transportation and recreation. (DATAMONITOR, 2011e)Polaris products are sold by a network of independent dealers which is one of the strengths ofthe firm, next to the wide product portfolio.YAMAHAYamaha is the second largest motorcycle producer in the world. Next to motorcycles, thecompany sells boats, snowmobiles, engines and much more.In 2007, Yamaha sold over 4 million motorcycles worldwide and produced three of the best-selling motorcycles in the UK. (KEYNOTE, 2008) 29 Joren Lemiegre – A4040228
  • 31. Global Brand Management: Harley-Davidson12.2 APPENDIX 2: INDUSTRY BACKGROUND12.2.1 TRENDSThe motorcycle industry has been growing all over the world in the last decade. Especially indeveloped countries, motorcycles became more and more important. According to Keynote(KEYNOTE, 2008), sales of motorcycles reached a 5-year high in 2007. The same trend wasnoted in the USA. Between 1997 and 2007, motorcycle registrations have grown a whopping75%. (U.S. DEPARTMENT OF ADMINISTRATION, 2009)Last years however, the sales of motorcycles slightly dropped and the growth rate of the globalmotorcycle market over the period 2006-2010 was only 3.1%. (DATAMONITOR, 2011b)Especially the sales of the large-engine motorcycles dropped in favour of scooter-relatedvehicles. The main reason for this behavioural change can be found in the raise of fuel prices.(FROST & SULLIVAN, 2008)Table 2: Global motorcycles market volume: million units, 2006-2010 (DATAMONITOR, 2011b)12.2.2 BRANDS & MARKET SHAREThe most important player in the global motorcycle industry is Honda. With a market share of26%, it stays far ahead of the competition. Yamaha, the second biggest motorcycle company,follows with a market share of 18.8%. Harley-Davidson may be a well-known brand, on theglobal market, the company cannot be found in the top five motorcycle companies.Table 3: Global motorcycles market share: % share, by volume, 2009 (DATAMONITOR, 2011b) 30 Joren Lemiegre – A4040228