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Harley Davidson - Marketing Strategies: Past, Present and Future.
- 1. Ali Mirza Asif A. Ali Justin Joshua Chieffallo Matt Conley Raj Gill Shana Tannis
- 2. Harley Davidson: Summary ThePast: The Good, The Bad and the Ugly The Present: 2007 – 2012 The Future: Where is the brand going? Conclusion
- 3. Harley-Davidson was founded in 1903 in Milwaukee, Wisconsin. Thecompany incorporated in 1981 and went public in 1986. Theycurrently sell at 1,300 different dealerships in 70 countries.
- 4. Built a Community and Fostered a Sense of Belonging Repositioned Brand without Alienating Traditional Customer Base Built an Extremely Strong and Highly Recognizable Brand Created Added Value
- 5. • Sponsorship of Harley Owners Group (H.O.G.) in 1983 • “We are committed to motorcycling. It’s not hardware; it is a lifestyle, and emotional attachment. That’s what we have to keep marketing to.” - Richard F. Teerlink, Harley's former chairman and former chief executive
- 6. • Association with the Muscular Dystrophy Foundation Group begin riding for charity (1980s) • Harley Davidson Foundation Supports educational, health, and environmental causes in local communities
- 7. • “All-American” brand that symbolizes freedom • Recognition dates back to World War II • Culture promotes and represents: Individualism Freedom Non-conformism Empowerment • “Most people can’t understand what would drive someone to profess his or her loyalty for our brand by tattooing our logo onto his or her body – or heart. My fellow employees and I understand completely.” - Richard F. Teerlink, Harley's former chairman and former chief executive
- 8. Ride Free marketing campaign Aftermarket for Harley parts and customizing kits Value of used Harleys has skyrocketed
- 9. Poor Quality Brand Over Extension Narrow Target Market Negative Perception
- 10. Over Production Leads to Poor Quality • Oil Leaks Competitor Bikes • Lighter • Quieter • Better Handling
- 11. Began to Extend the Brand Too Far • Wine Coolers • After Shave and Perfume • Cake Decorating Kit Upset Brand Loyal Consumers • Wanted Company Focus on Bikes and Bike Accessories.
- 12. Middle Aged Men (Ad) • Limited Consumer Base • Put Harley Davidson in a Niche Market Only Targeting Middle Aged Men Ultimately Limiting Harley Davidson’s Out reach
- 13. Harley Davidson known as a Hells Angles bike.
- 14. “One-size-fits-all” agency solution. Market Share dropped from 48.8% to 45.6%. US sales dropped 9.4% in first quarter 2007. Target new segments: Youth Women & Minorities
- 15. Research showed they liked less-chromed, light and smaller bikes with heritage classic style. H-D added a product line: “Dark Custom” Price was an obstacle: 883 Iron Sportster. • “About six bucks a day. Cheaper than your smokes, A six-pack, a lap dance, a bar tab, another tattoo, a parking ticket, a gas station burrito or more black T-shirts” Negative connotation • AD Result: Young-adult segment went from being worse to best performing segment in 2008.
- 16. Empowerment and Liberating theme. Garage parties and women riders month: Women only environment, sharing experiences and learning. Educational Program: learn to ride over the weekend, meet other riders. One in four riders is a woman.
- 17. Crowdsourcing: and user generated content. New targeted segments: Mass customization “Build your bike, build your freedom”
- 18. Theme: Liberation, Individuality, Independence, Empowerment… Campaign: “No Cages” • AD (Liberation)
- 19. Social Media Campaign: #StereoTypicalHarley AD
- 20. Traditional styling e.g. features and design Building a positive image Organizing promotional events • Milwaukee.
- 21. Extending the brand e.g. merchandise Extending the enterprise Adding value Training new riders
- 22. Harley-Davidson is a relevant brand because it represents America. The brand relies on two factors: • Relevance to Americans • Global Admiration of American Culture
- 23. Nearly 1 in 5 Americans will be an immigrant by 2050. Current ratio is 1 in 8. Americans of Hispanic origin will be 1/3 of the population by 2050.
- 24. It’s not quite new… apparently the Harlista group is 50 years old … but it has been growing quickly in recent years.
- 25. Alejandra is a Harley-Davidson fan … http://www.harley- davidson.com/en_US/Content/Pages/harlistas/harlista_s tories.html?locale=en_US&bmLocale=en_US#
- 26. In 2006, Harley-Davidson opened its first full service store in Beijing. Today, it has 8 different locations across China. Typical customers in China are between the ages of 35 and 55 years Use in China is for leisure riding only
- 27. Inrecent years, Harley-Davidson has increased sales % Internationally.
- 28. Inrecent years, Harley-Davidson has increased sales % Internationally. Sales have declined 5.2% in 2012 in the US Latin America sales (Brazil and Mexico) have increased by 32% Sales in Asia are up 9.8% Overall International Sales 7.6%
- 29. Harley-Davidson’s core strength is their ability to maintain their image, through any means and methods possible. Their success is not contingent on bike quality. The day they stop being American or America stops being admirable … they won’t be around.
Editor's Notes
- In 1983, the first company-sponsored club for Harley riders was created. The Harley Owners Group, or H.O.G., was started as an organization that would sponsor rallies, offer special promotions, and keep Harley riders in close contact with the company and with each other. The sponsorship of this group has been noted as one of the most creative and innovative strategies that has significantly enhanced the experience of Harley’s products. Without realizing it, Harley executives had pioneered a new paradigm that would be increasingly embraced by other industries in their quest to increase profitability by converting their product into a lifestyle and fostering emotional attachment.The Harley Owners’ Groups became immensely popular; it allowed motorcycle owners to feel as if they belonged to one big family, fostering a sense of brand loyalty unparalleled in the industry. In 1987, there were 73,000 registered members, and by 2005 that number had grown to approximately 450,000 members.The biggest problem with this group, however, was the negative connotation that was attached to it because for many Americans, the sight and sound of an entourage of Harleys roaring into town meant that “Hells Angels” had arrived.Slide: “We are committed to motorcycling. It’s not hardware; it is a lifestyle, and emotional attachment. That’s what we have to keep marketing to.”http://www.strategy-business.com/article/12878?gko=ffaa3http://www.webpronews.com/case-study-harley-davidson-2005-07
- So, in order to turn the group’s image from negative to positive, the VP of business development (Mr. Fessler) pushed hard to get H.O.G. associated with the Muscular Dystrophy Foundation and groups began riding for charity under the club’s banner. Slowly, the perception began to change as the company’s image was slightly softened through this, and its other giving-back initiatives such as the Harley Davidson Foundation which is dedicated to providing community support through funding various programs related to education health, and the environment. All of this, however, had to be achieved in a way that would prevent the alienation of Harley’s traditional customer base. Luckily, Harley, from the get-go, developed one the strongest brand personalities in its industry – one that personified toughness, rebellion, and embraces challenging the status quo. And it is because of this personality that this All-American brand has been able to generate hundreds of thousands of fans instead of customers. http://www.strategy-business.com/article/12878?gko=ffaa3http://www.harleydavidson.com/en_US/Content/Pages/Foundation/foundation.html?locale=en_US&bmLocale=en_UShttp://drypen.in/branding/brand-personality-of-harley-davidson-the-rebels-brand.html
- Since its inception, which occurred in 1903 when William S. Harley and Arthur Davidson built and made available to the public the first production Harley-Davidson motorcycle, (which stems back to before the second world war) Harley Davidson worked to develop and transcend a culture that was grounded in American roots.In fact, when America was plunged into WWII, in 1941, production of civilian motorcycles was almost entirely suspended in favour of military production and the company’s Service School was converted back for the training of military mechanics.And when the war ended in 1945, Harley-Davidson had produced almost 90,000 WLA models for military use, further demonstrating its devotion to America and its belief in freedom.In addition to this, Harley has benefited from its unsought association with outlaw bikers and films like “The Wild One” (1953) and “Easy Rider” (1969) which exude themes relating to non-conformism, individualism and freedom – themes that play an integral role in the company’s culture. The company even willingly embraced this idea when it provided motorcycles for the making of “Wild Hogs” (2007) another movie that was associated with themes relating to excitement and adventure. The key to its success in sustaining its culture is that Harley not only communicated this emotion across to its consumers, but its management team also had an intuitive connection to the brand and genuinely believed in what it strived to represent.This eventually led to a significant transformation in the company’s strategy as its focused changed from wanting to generate high volumes of output to wanting to manufacture quality bikes at a slower pace.Slides: 1943 “Harley-Davidson receives the first of its four Army-Navy “E” Awards for excellence in wartime production. Overseas, many American servicemen get their first exposure to Harley-Davidson motorcycles, something they would not forget when they would return stateside.Slide: “Harley reflects many things Americans dream about. They’re a little bit naughty, a little bit nice, which is a very attractive brand image to have.”Slide: “Most people can’t understand what would drive someone to profess his or her loyalty for our brand by tattooing our logo onto his or her body – or heart. My fellow employees and I understand completely.”http://www.harley-davidson.com/wcm/Content/Pages/H-D_History/history_1940s.jsp?locale=en_CAhttp://www.imdb.com/title/tt0064276/http://www.imdb.com/title/tt0486946/http://www.strategy-business.com/article/12878?gko=ffaa3
- In the late 1980's, Mr. Fessler created a marketing campaign called Ride Free, designed to move owners up to bigger, more expensive motorcycles. The company promised owners who bought new Harley Sportsters, the entry-level bike, that they could trade them in a year later for a bigger Harley and get the full amount credited toward the price of the new bike. The company’s brand extension also generated a huge aftermarket for Harley parts and customizing kits. Personalizing a Harley by paint jobs, scads of new chrome, and expensive saddlebags became a Harley tradition.In addition to this, production shortfalls over the past years have led to waits of up to two years for new bikes, the value of used Harleys has skyrocketed and owners can often sell their motorcycles for more than they originally paid. http://www.strategy-business.com/article/12878?gko=ffaa3
- Throughout the many years of Harley Davidson’s existence, just like many other companies Harley Davidson has also had to face many cons. The cons associated with Harley Davidson were the poor quality, extension to every product category, the target market they chose, and finally the negative perception associated with Harley Davidson.
- Over production of the Harley Davidson bikes made the company suffer in terms of quality. Many of the Harley Davidson’s leaked oil or broke down. Also when compared with competitors like Honda and Suzuki Harley Davidson wasn’t quite as light, quiet, and also didn’t seem to have as good handling.
- Harley Davidson also made a mistake when they began to extend their brand too far. Harley Davidson extended their brand to products that did not represent Harley Davidson. Wine racks and perfumes were not something that could be related to Harley Davidson as a though brand. This upset loyal customers as they believed Harley Davidson was losing their focus on the main priority which was producing bikes. Consumers wanted to see products related to bikes like gloves rather than baby outfits.
- From the commercial we see another problem that Harley Davidson had to face was the choice in target market. Harley Davidson’s target market was middle aged men. This initially limited their consumer base right off the start. By Harley Davidson targeting middle aged men as they’re main consumer base it put Harley Davidson in a niche market. This ultimately limited Harley Davidson’s outreach.
- Harley Davidson also faced many problems with the Perception of the company. Many people associated the brand Harley Davidson with the Hells Angels. Due to many of the Hells Angels riding Harley Davidson’s it created a negative perception for the company.
- So until now, H-D was using “one-size-fits-all” agency solution. The results were really bad. US sales dropped 9.4% in the first quarter. Over all market share of the global motorcycle market fell from 48.8% to 45.6%. Problem: Need to find new riders.
- Youth Movement:H-D Delved into new consumer segments to increase appeal among riders under 35. H-D riders are baby boomers; 42-47 years old in 2004. Younger riders were in danger of tagging the classic chromed-out, big engine Harley as their father’s bike or worse yet, their granddaddy’s ride. They also had to remove the negative connotation as Raj mentioned earlier. So, H-D did some research into what under-35 riders were favouring in company’s product line, what values attracted them to Harley? They found out that riders under 35 were buying across all Harley’s bike categories. But the bikes they favoured shared some characteristics; they were not big, had much less chrome and had a classic cut-back “old school” look. So the problem was that H-D was already making these products, but customers couldn’t find them because they were scattered on the showroom floor. They needed to make it easier for these customers to discover these products they wanted.Hence, a new product variety launched called “Dark Custom”. The new category made it easier for younger customers to go straight for the bikes they were likely to buy.For some of these young riders, price was an obstacle. H-D needed to fight this price obstacle but didn’t want to tarnish the brand with a flat-out price message. Instead, ads for the first product 883 put the new cycle’s relatively low cost (about $8000) in terms that jibe with the rebel image: “About six bucks a day. Cheaper than your smokes, A six-pack, a lap dance, a bar tab, another tattoo, a parking ticket, a gas station burrito or more black T-shirts” Results: The young adults went from being the brand’s worst-performing customer segment in 2007 to its best next year.
- Beside the youth, women and visible minorities were the new segments for Harley Davidson to explore. Today 1 in 4 bikers are women. And these are not just the so called “biker chicks”, these are women from all sorts of different backgrounds. Today’s women don’t want to ride on the back of their husbands or boyfriends, rather they want to ride their own bikes. The freedom and empowerment that is associated with riding a Harley worked great for the women. But they saw that some of these women, are not quite comfortable with the macho and masculine environment of the Harley riders; and many of them were new to biking. So they introduced and sponsored women-only garage parties and educational programs over the weekends where they taught them how to ride. They could ride, bond, and share experiences with other riders.
- 2010 – Split with Carmichael Lynch of Minneapolis after a 31-year relationship, and turned to ‘crowdsourcing’ technique as the source of its main creative marketing department under Victors & Spoils. Vision: Create a new way of working where the people who love H-D brand the most get to work on it. Harley Davidson wants to tap into customers’ passion, as well as the ideas they openly share with them to bolster the brand.Harley Davidson enthusiasts tend to have considerable creative energy that is often shown off in how they personalize their motorcycles. Crowdsourcing is kind of an extension to that, H-D has a very creative owner base – they are full of life and risk-takers. About 2000 people around the world received the brief and 650 ideas were submitted by 160 participants.
- On the heels of a popular launch of the “No Cages” campaign, Harley-Davidson was ready to evolve the theme with their next TV spot for the 2012.5 model year. Victors and Spoils briefed the crowd and encouraged everyone to push “No Cages” outside of visual metaphors and traditional riding footage into new creative territory. How could we inspire potential riders to free themselves from whatever kind of “cage” they might be in with a Harley? Ben Swan answered the call all the way from Sioux Falls, SD with his script entitled, “Liberation.” In this spot, being cage-free is about more than riding an H-D motorcycle. It’s about spreading the power of a cage-free life to all living things. Even the furry little four-legged ones.
- When you think of Harley-Davidson, you probably think of a grizzled old cuss straddling his Road Glide while cruisin’ to a biker bar. Which is all good. Except it’s not exactly the sort of image that helps draw a younger, hipper generation to the brand. So with the latest evolution of the “No Cages” campaign Victors & Spoils wanted to challenge these brand misperceptions and stereotypes. The idea came from a H-D fan through an app called ‘Fan Machine by V&S. The film works to challenge #StereotypicalHarley assumptions by featuring real, young Harley riders alongside their rides. The film is tied to social media by leveraging this Twitter hashtag and the riders’ actual Twitter handles.
- 1. Traditional Styling:-Continuing to produce products using traditional styling methods, which give consumers a sense of nostalgia (1940’s-1950’s)-For example, old Harley models that established the Harley Davidson motorcycle as a chopper for it’s outlaw touches.2. Building a Positive Image for the Harley Community:-Changing the way that people think about the Harley Davidson community from negative to positive, by organizing charity events.3. Organizing Events:Harley Davidson has given it’s owners a place to belong by allowing these individuals to attend promotional events such as the Harley Davidson anniversary and reunion.
- Extending the Brand:-The organization requested that all retailers carrying their merchandise to remodel their stores. -This remodelling later contributed to the overall success of merchandise sales and makes up approximately $210 million a year in revenues.Extending the Enterprise:-The organization continues to keep close ties within it’s supply chain mainly with it’s dealers. -As a result, they offer educational programs to teach dealers more about the company and it’s products and also how to operate a successful business. Adding Value:-To add value to Harley Davidson motorcycles, the organization allowed owners to credit and trade in their used vehicles for bigger vehicles. -In addition, custom bikes can add value for the consumer in the long run. Training New Riders:-It is important for the brand to try and engage consumers who do not own a Harley Davidson motorcycle, but may be willing to try one. -This will allow the organization to establish potential or future customers. -In order to further the present or future purchase decision making, Harley Davidson should offer such things as riding lessons for new drivers. -As a result, this would lead to a higher chance of non-riders to purchase a motorcycle.
- Harley-Davidson is a relevant brand because it represents America. The branding is very heavy on American symbols such as bald eagles, flag motifs, as well as messaging centred around freedom and liberty. Therefore, one could make the case that Harley-Davidson is very dependent on perceptions of American culture.More specifically, the brand relies on two factors:Relevance to Americans and Global Admiration of American Culture.
- In order to stay relevant in the domestic market, Harley-Davidson needs to reflect Americans. However, the “typical” American is changing. According to the Pew Research Group, 1 in 5 Americans will be first generation immigrants by 2050. This is a significant increase from the current ratio of 1 in 8 Americans are first generation immigrants. In addition, nearly 1/3 of the American population will be of Hispanic Origin.Therefore, it would be advisable for Harley-Davidson to begin to appeal to this group.Source: http://www.pewsocialtrends.org/files/2010/10/85.pdf
- In order to accommodate this change in American culture, Harley-Davidson created the “Harlista” community. They didn’t create it recently, Harlistas have been around for the last 50 years, however the community has grown in recent years. This has an appeal to both Hispanics living in the United States and in Latin America itself. Source: http://www.harley-davidson.com/en_US/Content/Pages/harlistas/harlista_stories.html?locale=en_US&bmLocale=en_US#
- Let’s Meet Alejandra.Alejandra is a young, independent, latin-american woman, living in Puerto Rico. She is seeking empowerment and a sense of belonging. After taking a weekend Harley-Davidson course, she learns how to ride a motorcycle, finds that sense of empowerment, feels that she is looking after herself, and finally feels like an American. What a perfect success story for Harley-Davidson! All she needed was the bike and what it represented it!It may come across as too perfect and the idea of a bike having all these magical powers come across as too far of a stretch. However, the appeal comes from the image that the bike represents. It has nothing to do with the performance. In this case, it is purely a marketing pitch.
- In China, most bikes are smaller models or moped type bikes. The maximum engine size of a typical Chinese bike is 600 cc. Harley-Davidson’s engines are a minimum 800 cc and go up to 1600 cc. Given regulations in China, only wealthy people can afford a Harley-Davidson and they can only use it for leisure riding outside of the major cities. China has specific regulations on the size of bike and emission standards that can be used in the cities. Harley-Davidson does comply with municipal standards and therefore can only be ridden in the country. Still, Harley-Davidson still has appeal in China among a certain demographic.Source: https://www.chinabusinessreview.com/public/1201/miller.html
- According to Harley-Davidson’s website, their % of international sales have increased and their % of domestic sales have decreased. This is not a very informative chart. It doesn’t quite tell us where sales are happening.Source: http://investor.harley-davidson.com/phoenix.zhtml?c=87981&p=irol-demographics&locale=en_US&bmLocale=en_US
- Upon further investigation, we can confirm that sales are down in the United States. The primary reason that was given was tough competition in quality by competing brands. However, as stated earlier, Harley-Davidson’s optimal strategy emerges from maintaining their image, not through the quality of the bike itself. Therefore, if the brand can refocus on making the image relevant again, sales may improve.On the other hand, international sales are up. This indicates that American culture is still relevant and the Harley-Davidson image can be imported abroad, this should be continued.Source: http://www.trefis.com/stock/hog/articles/150510/harley-davidsons-sluggish-us-sales-offset-solid-international-growth/2012-10-24