Running Header: Harley-Davidson for Life 1 Harley-Davidson for Life Alexis Rogers BUS620: Managerial Marketing Keanon Alderson 8-27-2012
Harley-Davidson 2IntroductionAsk anyone that owns one, Harley-Davidson motorcycles are the best money can buy. Thosethat are lucky enough to own one speak mostly of the experience riding one. They are known fortheir power on the road, stability, and how long they will last if taken care of properly. Creatinga marketing plan that effectively communicates the importance of using Harley-Davidson partsrather than cheaper after-market parts to repair a Harley should be easy but with the economy introuble, motorcycle owners are looking for ways to save money. Purchasing cheaper after-market parts to repair a Harley-Davidson, could be more costly than the initial savings. Usingnon-authentic parts could possibly ruin a Harley and cost even more money. Consumers buybenefits, not products which has to be the focus of the marketing campaign (Mullins & Walker,2010). Harley-Davidson has to be able to communicate those possibilities and increaseawareness of the dangers of using non-authentic Harley-Davidson parts to their consumers. Iwill develop a marketing plan that will communicate these important benefits to the customers toincrease sales of Harley-Davidson parts and accessories.Company OverviewHarley-Davidson was born in a Milwaukee shed back in 1903 and has become one of the mostpowerful American brands today (Starr, 2003). "Harley-Davidson produces heavyweight street,customer and touring motorcycles and offers a complete line of motorcycle parts, accessories,apparel and general merchandise" (Aug, 2002). "Harley-Davidson is the parent company for thegroup of companies doing business as Harley-Davidson Motor Company, Buell MotorcycleCompany, and Harley-Davidson Financial Services" (Aug, 2002). Harley-Davidson (NYSE:
Harley-Davidson 3HOG) ships over 200,000 motorcycles a year within the United States, Canada, and overseas(Jan. 24, 2012).Executive Summary of the Marketing PlanThe issues are that Harley-Davidson owners are using after-market cheaper motorcycle parts torepair their motorcycles instead of authentic Harley-Davidson parts. Our objective is to increaseawareness of the damage caused by using after-market parts, effectively communicate thebenefits of using authentic Harley-Davidson parts, and increase our accessories and partsrevenue by 3% for next year. The strategy will be to use funds to increase the purchases ofauthentic Harley-Davidson parts for repairs by appealing and marketing to those that alreadyown a Harley. We will use a budget of $483,600.00, which is 3% of 2012s accessories and partsrevenue, to promote the purchase and use of authentic Harley-Davidson parts to do repairs onHarley-Davidson motorcycles. These monies will be used for promotions within the sales staff,repair services, and customer emailing. The funding for the sales staff will be used to increasetheir knowledge of authentic motorcycle parts and their functions. This will be achieved byattractive rewards for the sales staff that help increase revenue of Harley-Davidson parts withintheir store location. Funds for repair services will be allocated to discounting bills of repeatcustomers to the Harley-Davidson service shop for repairs. This will not only guarantee the useof authentic Harley-Davidson parts, but increase revenue for the services department. Finallythere will be emails sent to loyal and new customers promoting the benefit of using the authenticparts rather than cheaper after-market parts. There should be an increase of 0.75% in parts andaccessory revenue each quarter for a quick measurement of the progress towards our revenuegoals.
Harley-Davidson 4Target MarketHarley-Davidson has to decide who their target market is going to be. "One of the marketingmanagers major responsibilities is to analyze the motivations and behavior of present andpotential customers" (Mullins & Walker, 2010). For the last 40 years, Harley-Davidsons targetmarket have been the baby-boomers, but they are getting older and will eventually have to stopriding (2005). These loyal customers have Harley gear, Harley clothing, and even Harleytattoos! The baby-boomer generation knew more about motorcycle repair than the youngerriders coming up today. Targeting a younger market segment means realizing that these newerriders may not know much about motorcycle parts and what the difference is between usingauthentic parts vs. after-market parts. Harley-Davidson has expanded their products to try tocapture a younger market with their introduction of the V-Rod, which is promoted as a lightperformance machine (2005). They have to be careful not to offend the loyal customers withthese newer types of bikes that may not be embraced (Barrett, 2007). They have also appealed towomen riders with their lighter Sportster models which are cheaper, have lower seats, smallerhandgrips, and easier-to-pull clutch levers (2005). "Only about 12% of Harley motorcycleowners are women today-but thats up from 2% in the 1980s" (Barrett, 2007). This marketsegment could be an untapped one for parts and accessories. For those women that arentfamiliar with how to repair a motorcycle, they should be made aware of the benefits of usingauthentic parts rather than after-market ones. Harley has even been successful overseas, but it isstill a potentially bigger market for the motorcycle maker (Barrett, 2007). There are threesentences that sum up Harleys fundamental marketing challenges; no one needs a motorcycle,people must want a motorcycle, buying a Harley-Davidson is an emotional decision (Macdonald,2006). Even though the baby-boomers are aging, they arent getting "old". They are continuing
Harley-Davidson 5to do the things they like, and will have more time to do them now that they are nearingretirement or they have empty nests. Since they are the largest segment of Harley-Davidsonowners, it is their motorcycles that will need the most repairs, making them a big target marketfor our marketing campaign.CompetitorsHarley-Davidsons competitors are mostly from overseas. Honda and Kawasaki are starting tomake quality bikes that are able to compete with Harley Davidson (Barrett, 2007). These foreignbikes are more attractive to the younger market that Harley-Davidson is trying to seek since themedian age of a Harley customer is 47 (Barrett, 2007). There are also companies that makeknock-off parts and accessories for Harley-Davidson motorcycles. These companies can make apart look the same, but they are not authentic parts so the guarantee of quality is not there.Harley-Davidson motorcycles are not cheap by any means, so they are in competition withcheaper motorcycle manufacturers that undercut their prices as well. We will next evaluate the4Ps or product, price, place, and promotion (Mullins & Walker, 2010).Products and ServicesHarley products range in price from the $7,000 Sportster to $30,000 for a deluxe touring bike(Barrett, 2007). There are 38 Harley Davidson models and eight motorcycle models by Buell, acompany that Harley-Davidson owns (Barrett, 2007). Revenue from motorcycles for the fullyear of 2011 was $3.55 billion, which was a 13.3% increase over the previous year (Jan. 24,2012). Harley-Davidson also offers motorcycle gear, clothing, parts, non-bike products,accessories and services. Harley-Davidson locations also offer service and repairs of Harley-Davidson motorcycles.
Harley-Davidson 6Marketing BudgetWe will use the percentage-of-sales method for setting the promotional and marketing budget forHarley-Davidson replacement parts (Mullins & Walker, 2010). Using this method consists ofsetting this years budget as a percentage of this years anticipated sales (Mullins & Walker,2010). As of yearend of 2011, Harley-Davidson had $161.2 million in revenue from motorcycleparts and accessories (Jan. 24, 2012). Harley-Davidson wants to grow their parts and accessoriesrevenue 3% from last years take away. That means that they will use 3% of 161.2 million whichis $483,600.00 to use specifically to promote the use of authentic Harley-Davidson parts. Thesefunds will go towards increasing the sales staffs knowledge, discounts for brand loyalty in therepairs and services departments, and customer emailing.LocationThe location will be within the Harley-Davidson locations themselves. Mostly the people thatare going to buy replacement parts for a Harley-Davidson motorcycle are those that already ownone of their motorcycles. They will have bought their motorcycle from either a dealer at a localHarley-Davidson location, or from the online Harley-Davidson website. Which means that theymust have visited a Harley location before the purchase or to pick up the purchase. Harley-Davidson has to promote that their mechanics are the best at repairing a Harley so the heavypromotion will be utilized on the sales floor of the Harley locations, both at the time of purchaseand for returning customers. The online customers for the mass emailing will be determinedfrom past online customers, registered Harley riders, and forum participants. Technologies allowmarketing management to collect and analyze more detailed information about customers needs,preferences, and buying habits (Mullins & Walker, 2010).
Harley-Davidson 7Pricing StrategyThe pricing strategy used will be the customer-oriented method, where Harley will capture thevalue perceived by the customer in its price (Mullins & Walker, 2010). Because owning aHarley is an emotional decision and the value of it is the feeling you get when riding it, we willbuild from that experience to set the price of parts. Harley has the advantage here on pricingbecause their customers are already paying more for their bikes than the competitors customers.This means that they already have a high perception of value established. When marketing aboutensuring that smooth ride of the customers Harleys, which plays on their experience riding theHarley, then pricing these parts at a mid-high range will give a sense of quality commonlyassociated with Harley-Davidson. Purchasing parts for a motorcycle is considered a high-involvement purchase decision, which mean the customer are psychologically important to thecustomer (Mullins & Walker, 2010). This means that a typical Harley customer will do athorough information search and evaluation of alternatives before settling on a purchase (Mullins& Walker, 2010). Getting the appropriate information to these types of customers may ensurethe purchase of Harley-Davidson parts. It is also possible that if a family member owns aHarley, then that preference may be passed down. Family has a great and lasting influence on itsyounger members attitudes towards various brands (Mullins & Walker, 2010). Influencingcurrent Harley owners may be passed down to future Harley owners. If a customer continues to return to the Harley-Davidson location for repairs and uses Harleyparts for their motorcycle, there will be a discount applied for brand loyalty. After a customerhas used the shop once, every visit afterwards will be rewarded with a 10% off bill for servicesand parts. This will increase brand loyalty, increase revenue for Harley-Davidson parts, andincrease revenue for Harley-Davidson services and repairs. This will also create a value for the
Harley-Davidson 8customer, by giving them the discount on the service and parts bill will create a sense of savingmoney. In a tough economy, appealing to the frugal side of the customer will be in Harleysbenefit.Summary and ImplementationThe implementation will begin with the sales staff. There will be one week of intensive trainingto equip those staff with the knowledge of a Harleys working parts. This will be off location andhands on. Once the sales staff is fully trained on the working parts, they will know be able tospeak with confidence about using authentic Harley-Davidson parts rather than cheaper after-market ones. The initial training will take place in the first quarter of the year. The entire firstquarter will be training and evaluation of knowledge till satisfactory.Implementing the discounted rate for returning customers to the Harley-Davidson parts andservices department will be the easiest part.The final step is the customer emailing. This mass email has to be designed to communicatequickly and clearly the benefits of using authentic Harley-Davidson parts to the customers. Themailing list will come from past purchases, registered Harley riders, and forum participants.These will be the targeted audience for the marketing campaign online.In conclusion, using the funds allocated for the promotion of using authentic Harley-Davidsonparts for motorcycle repairs, we should hit our goal of 3% increase in revenue for the parts andaccessories division for next year. There will be an increase of knowledgeable sales staff,discounts given for brand loyally, and customer emailing to increase awareness and promote thebenefit of using authentic Harley-Davidson parts rather than cheaper after-market parts.Utilizing the high value perception already associated with Harley-Davidson will allow Harley
Harley-Davidson 9not to have to deeply discount parts. We will instead continue to promote the quality and highstandard of Harley parts and the benefit of performance that goes with them.
Harley-Davidson 10 ReferencesBarrett, R. (2007, Apr 23). Bumpy ride for Harley; as Harley-Davidsons foreign competitors improve and its customers age, the maker must target younger riders. Milwaukee Journal Sentinel, pp. 1-A.1. Retrieved from http://search.proquest.com/docview/263674052?accountid=32521Harley-Davidson, inc. (2005, Better Investing, 54, 36-37. Retrieved from http://search.proquest.com/docview/233347466?accountid=32521Harley-Davidson 100th anniversary open road tour is a treat for every sense. (2002, Aug 29). PR Newswire, pp. 1-1. Retrieved from http://search.proquest.com/docview/447478061?accountid=32521Harley-Davidson Earnings, Retail Motorcycle Sales Show Continued Strength: Worldwide Retail New Motorcycle Sales Climb 10.9 Percent in Fourth Quarter and 5.9 Percent for the Full Year (2012, Jan 24). PR Newswire. Retrieved from http://search.proquest.com/docview/917316758?accountid=32521Macdonald, C. (2006). Lessons from Harley-Davidson. Bodyshop, 36(2), 4-4. Retrieved from http://search.proquest.com/docview/204443406?accountid=32521Mullins, J and Walker, O (2010). Custom book for Ashford: Marketing Management A Strategic Decision Making Approach  (VitalSource Bookshelf), Retrieved from http://online.vitalsource.com/books/0390107328
Harley-Davidson 11Starr, M. (2003, Sep 18). Harley-Davidson workers reflect on companys long history in York county, pa. Knight Ridder Tribune Business News, pp. 1-1. Retrieved from http://search.proquest.com/docview/462928773?accountid=32521