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Learning
Insight
Question
Answers
Case
Content
Harley-Davidson
Ella Emily Derek Jordan Kevin Mok Maxwell
We ride free!
1
Arthur DavidsonWilliam S. Harley
1903 Serial#1 bike
2
Learning
Insight
Question
Answers
Case
Content
Background
High Performance
1905, H-D motorcycle wins a 15 mile race in Chi...
Learning
Insight
Question
Answers
Case
Content
Background
Innovation
Reputation
Army-Navy "E" Awards
Endorser
1956, Elvis ...
Word of Harley-Davidson's
extremely tough motorcycle
spreads rapidly.
Had a solid 70% of the motorcycle market in its firs...
But from then on....
6
Learning
Insight
Question
Answers
Case
Content
Honda’s invasion and
Harley’s reaction
Early
1960s
1965 1981
AMF
1986
Vaugh...
Learning
Insight
Question
Answers
Case
Content
•Honda began to penetrate the U.S.
market, but with a distinctly different
...
Learning
Insight
Question
Answers
Case
Content
Timeline
1960-1989
Timeline (1960-1989)
9
Learning
Insight
Question
Answers
Case
Content
Timeline
1960-1989
From 1960 to 1981
Model Light weight motorcycle Heavy we...
Learning
Insight
Question
Answers
Case
Content
Timeline
1960-1989
Timeline (1960-1989)
• Promotion strategy
To compete wit...
Learning
Insight
Question
Answers
Case
Content
•In 1965, the company faced a struggle for control soon after its first pub...
Learning
Insight
Question
Answers
Case
Content
Vaughan Beals led a team that used $81.5 million to
complete a leveraged bu...
Learning
Insight
Question
Answers
Case
Content
Timeline
1960-1989
Timeline (1960-1989)
1986
Struggle
back
1989
• Bealss an...
1990s Harley Davidson is on its way
15
Learning
Insight
Question
Answers
Case
Content
Licensing Business
Marketing
Product Demand
Export Potential
Specifics of t...
Learning
Insight
Question
Answers
Case
Content
1990s Success
Licensing business
•Unauthorized usage of company logo on the...
Learning
Insight
Question
Answers
Case
Content
All it seemed to take was the Harley name and logo.
Harley black leather
ja...
Learning
Insight
Question
Answers
Case
Content
USD0
USD50
USD100
USD150
USD200
1991 1992
USD130.3000
USD155.7000
Non-cycle...
1
Question
Answers
Case
Content
1990s Success
•Product oriented Market oriented
Bealss Joined HOGs (Harley Owners Group), ...
Learning
Insight
Question
Answers
Case
Content
By 1993, Demand>Supply
High customer loyalty
1990s Success
Product Demand
21
“Quantity isn’t the issue, quality is the issue.”
------ Richard Teerlink
22
Harley-Davidson had such a loyal body of customers
that delays in product gratification were not likely to
turn many away t...
Harley-Davidson had such a loyal body of customers
that delays in product gratification were not likely to
turn many away t...
Harley-Davidson had such a loyal body of customers
that delays in product gratification were not likely to
turn many away t...
Harley-Davidson had such a loyal body of customers
that delays in product gratification were not likely to
turn many away t...
Harley’s Recent Development
27
Harley-Davidson had such a loyal body of customers
that delays in product gratification were not likely to
turn many away t...
Harley-Davidson had such a loyal body of customers
that delays in product gratification were not likely to
turn many away t...
Harley-Davidson had such a loyal body of customers
that delays in product gratification were not likely to
turn many away t...
Harley-Davidson had such a loyal body of customers
that delays in product gratification were not likely to
turn many away t...
Harley-Davidson had such a loyal body of customers
that delays in product gratification were not likely to
turn many away t...
Harley-Davidson had such a loyal body of customers
that delays in product gratification were not likely to
turn many away t...
Learning
Insight
Question
Answers
Case
Content
Vaughn Bealss
Q1&H1
Development
Q3&Q4
Mystique
Q2&Q5&H3
Japanese
Competitor...
Learning
Insight
Question
Answers
Vaughn Bealss
Q1&H1
Case
Content
Questions & Hands on exercises
35
Learning
Insight
Question
Answers
Vaughn Bealss
Q1&H1
Case
Content
Questions & Hands on exercises
“Do you think Beals’s re...
Learning
Insight
Question
Answers
“Do you think Beals’s rejuvenation strategy
for Harley-Davidson was the best
policy?”
Di...
Learning
Insight
Question
Answers
“Do you think Beals’s rejuvenation strategy
for Harley-Davidson was the best
policy?”
Di...
Learning
Insight
Question
Answers
“Do you think Beals’s rejuvenation strategy
for Harley-Davidson was the best
policy?”
Di...
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
Q1
Other Possible
Strategies
“Do you think B...
Learning
Insight
Question
Answers
“Do you think Beals’s rejuvenation strategy
for Harley-Davidson was the best
policy?”
Di...
Learning
Insight
Question
Answers
“Do you think Beals’s rejuvenation strategy
for Harley-Davidson was the best
policy?”
Di...
Learning
Insight
Question
Answers
Vaughn Beals
Q1&H1
Case
Content
Questions & Hands on exercises
• Be a Devil’s Advocate.
...
Learning
Insight
Question
Answers
• Be a Devil’s Advocate.
• Your mutual fund has a major investment
in Harley-Davidson, a...
Learning
Insight
Question
Answers
• Be a Devil’s Advocate.
• Your mutual fund has a major investment
in Harley-Davidson, a...
Learning
Insight
Question
Answers
Mystique
Q2&Q5&H3
Case
Content
Questions & Hands on exercises
46
Learning
Insight
Question
Answers
Mystique
Q2&Q5&H3
Case
Content
How durable do you think the Rubbies’
infatuation with th...
Learning
Insight
Question
Answers
How durable do you think the
Rubbies’ infatuation with the
heavyweight Harleys will
be?
...
Learning
Insight
Question
Answers
How durable do you think the
Rubbies’ infatuation with the
heavyweight Harleys will
be?
...
Learning
Insight
Question
Answers
How durable do you think the
Rubbies’ infatuation with the
heavyweight Harleys will
be?
...
Learning
Insight
Question
Answers
How durable do you think the
Rubbies’ infatuation with the
heavyweight Harleys will
be?
...
Learning
Insight
Question
Answers
Mystique
Q2&Q5&Q9
Case
Content
Questions & Hands on exercises
Q5
“Harley-Davidson’s resu...
Learning
Insight
Question
Answers
“Harley-Davidson’s resurgence is
only the purest luck. Who could
have predicted, or infl...
Learning
Insight
Question
Answers
“Harley-Davidson’s resurgence is
only the purest luck. Who could
have predicted, or infl...
Learning
Insight
Question
Answers
“Harley-Davidson’s resurgence is
only the purest luck. Who could
have predicted, or infl...
Learning
Insight
Question
Answers
Mystique
Q2&Q5&H3
Case
Content
Questions & Hands on exercises
H3
• As a staff assistant ...
Learning
Insight
Question
Answers
• As a staff assistant to Vaughan Bealss
when he first took over, you have been
charged ...
Learning
Insight
Question
Answers
• As a staff assistant to Vaughan Bealss
when he first took over, you have been
charged ...
Learning
Insight
Question
Answers
• As a staff assistant to Vaughan Bealss
when he first took over, you have been
charged ...
Learning
Insight
Question
Answers
• As a staff assistant to Vaughan Bealss
when he first took over, you have been
charged ...
Learning
Insight
Question
Answers
• As a staff assistant to Vaughan Bealss
when he first took over, you have been
charged ...
Learning
Insight
Question
Answers
• As a staff assistant to Vaughan Bealss
when he first took over, you have been
charged ...
Learning
Insight
Question
Answers
• As a staff assistant to Vaughan Bealss
when he first took over, you have been
charged ...
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
Development
Q3&Q4
64
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
Development
Q3&Q4
Q3
ı A Harley-Davidson sto...
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
A Harley-Davidson stockholder criticizes
pre...
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
A Harley-Davidson stockholder criticizes
pre...
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
A Harley-Davidson stockholder criticizes
pre...
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
Development
Q3&Q4
Q4
Given the resurgence of...
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
Given the resurgence of
Harley-Davidson in t...
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
Given the resurgence of
Harley-Davidson in t...
• Range from $50 to $60
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
Given the resurgence...
• Range from $50 to $60
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
Given the resurgence...
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
Given the resurgence of
Harley-Davidson in t...
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
Given the resurgence of
Harley-Davidson in t...
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
Given the resurgence of
Harley-Davidson in t...
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
Japanese
Competitors
Q6&H2
77
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
Japanese
Competitors
Q6&Q8
Q6
“The tariff in...
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
“The tariff increase on Japanese
motorcycles...
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
Q6
How did tariff save
Harley-Davidson?
Dire...
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
Q6
In the case, both politics and
management...
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
Japanese
Competitors
Q6&Q8
• As a vice presi...
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
• As a vice president at Harley-Davidson in ...
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
• As a vice president at Harley-Davidson in ...
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
• As a vice president at Harley-Davidson in ...
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
• As a vice president at Harley-Davidson in ...
Learning
Insight
Question
Answers
Case
Content
Questions & Hands on exercises
• As a vice president at Harley-Davidson in ...
Learning
Insight
Learning
Insight
Case
Content
Learning Insights
Question
Answers
Case
Content
88
Learning
Insight
Learning
Insight
1. Quality vs. Quantity
Marketing Implication
Quality first!!
Why?
Focus on quality cont...
Learning
Insight
Learning
Insight
Limited Product Line
User-friendly name
Macbook ------ For common users
Macbook Pro ----...
Learning
Insight
Learning
Insight
June 2008 “Starbucks to Close 600 Stores”
Global expansion From profit to loss
Lower cul...
Learning
Insight
Learning
Insight
2. Relationship Marketing
Marketing Implication
Relationship First!!
Why?
Keeping a curr...
Learning
Insight
Learning
Insight
Question
Answers
Case
Content
93
Learning
Insight
Learning
Insight
Relationship Marketing is not only for
Luxury Products
Big Brands
but everyone, like
Set...
Learning
Insight
Learning
Insight
3. Yell out your brand
Marketing Implication
Spirit First!!
Why?
Exposure to Icon to Spi...
Learning
Insight
Learning
Insight
Question
Answers
Case
Content
Dream & Happiness
96
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Marketing Mistake For Students

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Marketing Mistake For Students

  1. 1. Learning Insight Question Answers Case Content Harley-Davidson Ella Emily Derek Jordan Kevin Mok Maxwell We ride free! 1
  2. 2. Arthur DavidsonWilliam S. Harley 1903 Serial#1 bike 2
  3. 3. Learning Insight Question Answers Case Content Background High Performance 1905, H-D motorcycle wins a 15 mile race in Chicago with a time of 19:02 1908, Walter Davidson scores a perfect 1,000 points at the 7th Annual Federation of American Motorcyclists Endurance and Reliability Contest Distribution channel 1917, one-third of all Harley-Davidson motorcycles produced are sold to the U.S. military Early time success 3
  4. 4. Learning Insight Question Answers Case Content Background Innovation Reputation Army-Navy "E" Awards Endorser 1956, Elvis Presley Uncommonly quiet! Early time success 4
  5. 5. Word of Harley-Davidson's extremely tough motorcycle spreads rapidly. Had a solid 70% of the motorcycle market in its first 60 years. 5
  6. 6. But from then on.... 6
  7. 7. Learning Insight Question Answers Case Content Honda’s invasion and Harley’s reaction Early 1960s 1965 1981 AMF 1986 Vaughan Bealss Struggle back 1989 Timeline 1960-1989 Timeline (1960-1989) 7
  8. 8. Learning Insight Question Answers Case Content •Honda began to penetrate the U.S. market, but with a distinctly different strategy. •Lightweight cycles and an advertisements approach directed toward new customers •Harley’s market share fell dramatically •No reaction at all on the early stage! •The management saw no threat in Honda’s thrust into the market with lightweight machines. •The company actually attempted to fight back by introducing an Italian-made lightweight in the mid-1960s, but far too late. Honda’s invasion and Harley’s reaction Early 1960s Timeline 1960-1989 Timeline (1960-1989) 8
  9. 9. Learning Insight Question Answers Case Content Timeline 1960-1989 Timeline (1960-1989) 9
  10. 10. Learning Insight Question Answers Case Content Timeline 1960-1989 From 1960 to 1981 Model Light weight motorcycle Heavy weight motorcycle Function Transportation use Leisure-time use Style Practical, functional, features Cool, stylish, American spirit Target customers Mass People pursuit freedom, individualism, life style Communication strategies Aggressive, Direct approach to new customers Passive Production control Excellent Poor Product quality Excellent 5% failed quality-control check Poor 50%-60% failed quality-control check Operating cost 30% lower than Harley-Davidson High Timeline (1960-1989) 10
  11. 11. Learning Insight Question Answers Case Content Timeline 1960-1989 Timeline (1960-1989) • Promotion strategy To compete with Harley, Honda adopted an advertising slogan that countered this tough image. The “You meet the nicest people on a Honda” campaign became the overriding theme of Honda. Armed with the slogan, Honda launched the SOHC inline 4-cylinder 750 in 1969 which became very successful. • Product Strategy Honda focused fully on lightweight motorcycle market, which is exactly different from Harley’s products. 1. Production advantage: Cheaper labor cost 2. Problem handling • Distribution Channel 1. Store location: Honda established its stores in downtown area. 2. New market, new customers: renting service Honda’s analysis 11
  12. 12. Learning Insight Question Answers Case Content •In 1965, the company faced a struggle for control soon after its first public stock offering, which made Harley with no choice to merge with AMF, an American company with strong interests in recreational equipment. •The marriage was troubled, and quality was going down just as fast as production was going up”. •AMF suffered an average $4.8 million operating loss for eleven years. •Market share fall to a record low 3% in motorcycle market 1965 1981 AMF Timeline 1960-1989 Timeline (1960-1989) 12
  13. 13. Learning Insight Question Answers Case Content Vaughan Beals led a team that used $81.5 million to complete a leveraged buyout of Harley-Davidson. •Who is Vaughan Beals? Why he was so magical? •In 1983, Congress passed a huge tariff increase on Japanese motorcycles, from 4 percent to 45 percent! •Key to rebuild market share was restoring confidence in the quality of its products. 1981 1986 Vaughan Beals Timeline 1960-1989 Timeline (1960-1989) 13
  14. 14. Learning Insight Question Answers Case Content Timeline 1960-1989 Timeline (1960-1989) 1986 Struggle back 1989 • Bealss and other managers visited Japanese plants in Japan and Honda’s assembly plant, then results of the production improvement Management technique introduced Functions Results changed in 1988 Just-in-time inventory Control and minimize all inventories both inside and outside the plants Inventory reduced by 67% Material-as-needed (MAN) system Quality circles (QCs) Increase employee involvement in quality goals and to improve communication between management and works Productivity up by 50% Scrap and rework down 2/3 Defects per unit down 70% Statistical operator control (SOC) Employees are responsible for checking the quality of their work and making proper collecting adjustments 14
  15. 15. 1990s Harley Davidson is on its way 15
  16. 16. Learning Insight Question Answers Case Content Licensing Business Marketing Product Demand Export Potential Specifics of the Resurgence of Harley-Davidson 1990s Success 1990s success 16
  17. 17. Learning Insight Question Answers Case Content 1990s Success Licensing business •Unauthorized usage of company logo on the products of poor quality •image damage •Licensed goods were popular and were even being bought by new customer segments •indicating high growth potential -> a great source of revenue •high customer loyalty 17
  18. 18. Learning Insight Question Answers Case Content All it seemed to take was the Harley name and logo. Harley black leather jackets $500 Fringed leather bras $65 Shot glasses $12 1990s Success Licensing business 18
  19. 19. Learning Insight Question Answers Case Content USD0 USD50 USD100 USD150 USD200 1991 1992 USD130.3000 USD155.7000 Non-cycle business sales of Harley-Davidson Non-cyclebusinesssales(Million) 1990s Success Licensing business 19
  20. 20. 1 Question Answers Case Content 1990s Success •Product oriented Market oriented Bealss Joined HOGs (Harley Owners Group), Hard-core loyalist of Harley- Davidson, to understand their concerns and needs The company learned that it needed to give the customers a choice and now offers a variety of models, including Athletes, Super Glides, Low Riders etc. Marketing •Brand Image Perfectly match with American Culture •Customer relations HOG was founded 20
  21. 21. Learning Insight Question Answers Case Content By 1993, Demand>Supply High customer loyalty 1990s Success Product Demand 21
  22. 22. “Quantity isn’t the issue, quality is the issue.” ------ Richard Teerlink 22
  23. 23. Harley-Davidson had such a loyal body of customers that delays in product gratification were not likely to turn many away to competitors. Learning Insight Question Answers Case Content 150.0 237.5 325.0 412.5 500.0 1992 1993 1996 280 345 420 Harley’s Output bikesmadeperday Harley-Davidson had such a loyal body of customers that delays in product gratification were not likely to turn many away to competitors. 1990s Success Product Demand 23
  24. 24. Harley-Davidson had such a loyal body of customers that delays in product gratification were not likely to turn many away to competitors. Learning Insight Question Answers Case Content - The European big-bike market grew by an astounding 33% between 1990-1992. And Harleys had become very popular in Europe. - But company had promised its domestic dealers that exports would not go beyond 30%. 1990s Success Export Potential 24
  25. 25. Harley-Davidson had such a loyal body of customers that delays in product gratification were not likely to turn many away to competitors. Learning Insight Question Answers Case Content - So, Harley could only maintain a 9% - 10% share of this market. - To enhance its presence in Europe, Harley opened a branch office of its HOG club in Frankfurt, Germany, for its European fans. 1990s Success Export Potential 25
  26. 26. Harley-Davidson had such a loyal body of customers that delays in product gratification were not likely to turn many away to competitors. Learning Insight Question Answers Case Content Year Revenue Net Income 1982 210 def.$25.1 1983 254 1.0 1984 294 2.9 1985 287 2.6 1986 295 4.3 1987 685 17.7 1988 757 27.2 1989 791 32.6 1990 865 38.3 1991 940 37.0 1992 1,100 54.0 1993 1,210 68.0 1994 1,537 83.0 stock sold$7 stock sold $39 market share 63% market share 12.5% Harley-Davidson’s Growth in Revenue and Income (million of $), 1983-1994 1990s Success Specific Resurgence of Harley Davidson 26
  27. 27. Harley’s Recent Development 27
  28. 28. Harley-Davidson had such a loyal body of customers that delays in product gratification were not likely to turn many away to competitors. Learning Insight Question Answers Case Content - 1990s, demand grew with the mystique as strong as ever. - 1997, a new engine plant in Milwaukee. - 1998, a new assembly plant in Kansas City. Recent development Recent Development 28
  29. 29. Harley-Davidson had such a loyal body of customers that delays in product gratification were not likely to turn many away to competitors. Learning Insight Question Answers Case Content U.S. Exports 1997 96.2 36.1 1993 57.2 24.5 Revenues ($M) Net Income ($M) 1997 1,763 174.0 1993 1,217 18.4 Motorcycle shipments (in thousands of units) Growth in revenues and income Recent development Recent Development 29
  30. 30. Harley-Davidson had such a loyal body of customers that delays in product gratification were not likely to turn many away to competitors. Learning Insight Question Answers Case Content - Despite continuous increases in production, U.S. consumers still had to wait to purchase a new Harley Davidson bike, but the wait only added to the mystique. - 1998, Wolverine World Wide entered into a licensing agreement with Harley to use its name for a line of boots and fashion shoes. - In January 7, 2002 issue, Forbes declared Harley to be its “Company of the Year”. Recent development Recent Development 30
  31. 31. Harley-Davidson had such a loyal body of customers that delays in product gratification were not likely to turn many away to competitors. Learning Insight Question Answers Case Content - Jeffrey Bleustein was diversifying into small, cheaper bikes to attract younger riders, as well as women, who represented only 9% of Harley riders. - The cult image was stronger than ever. - Around 4,000 company’s employees rode Harleys around the country for pleasure and to promote the company. - In 2002, there were 640,000 owners and the Harley- Davidson name was on everything from blue jeans to pickup trucks. Recent development Recent Development 31
  32. 32. Harley-Davidson had such a loyal body of customers that delays in product gratification were not likely to turn many away to competitors. Learning Insight Question Answers Case Content Recent development Light sports bike designed for American men 25 to 34 rose to 90% from 1998 to 2001. Trend: younger generations of Americans prefer the sleeker, sportier and lighter types of motorcycles as opposed to the big cruiser bikes so closely identified to Harley's brand. Harley’s reaction this time? Harley has introduced new models designed to attract the youth. The $17,000 Harley V-Rod is one of these bikes targeted for the younger generations. Future: Harley will need to compete with Honda head-on. Recent Development 32
  33. 33. Harley-Davidson had such a loyal body of customers that delays in product gratification were not likely to turn many away to competitors. Learning Insight Question Answers Case Content - 2003-2005, developed classic style motorcycle. And clothes for not only men but also women and kids . - 2006, Harley-Davidson entered mainland China’s market. - 2008, an all-new museum opened in Milwaukee. Recent development Recent Development 33
  34. 34. Learning Insight Question Answers Case Content Vaughn Bealss Q1&H1 Development Q3&Q4 Mystique Q2&Q5&H3 Japanese Competitors Q6&H2 Questions & Hands on exercises 34
  35. 35. Learning Insight Question Answers Vaughn Bealss Q1&H1 Case Content Questions & Hands on exercises 35
  36. 36. Learning Insight Question Answers Vaughn Bealss Q1&H1 Case Content Questions & Hands on exercises “Do you think Beals’s rejuvenation strategy for Harley- Davidson was the best policy?” Discuss and evaluate other strategies that he might have pursued. Q1 36
  37. 37. Learning Insight Question Answers “Do you think Beals’s rejuvenation strategy for Harley-Davidson was the best policy?” Discuss and evaluate other strategies that he might have pursued. Case Content Questions & Hands on exercises Q1 “Beals’s rejuvenation strategy” 1. Production improvement by acquiring Japanese management techniques 2. From product oriented to market oriented 3. Massive lobbying in order to impose heavy tariff for the Japanese motorcycles import 4. Licensing program on merchandised goods 5. Sponsor HOGs to strengthen customer loyalty “best” – the way or the solutions to make Harley Davidson re-lead the heavyweight motorcycle market as much as possible. Definition 37
  38. 38. Learning Insight Question Answers “Do you think Beals’s rejuvenation strategy for Harley-Davidson was the best policy?” Discuss and evaluate other strategies that he might have pursued. Case Content Questions & Hands on exercises Q1 Internal Situation • Harley was falling down on quality. ı “If you’re buying a Harley, you’d better buy two - one for spare parts.” – Dexter Hutchins • Passive Marketing Strategy • Product-oriented • Outdated management techniques and old equipment delay the development. 38
  39. 39. Learning Insight Question Answers “Do you think Beals’s rejuvenation strategy for Harley-Davidson was the best policy?” Discuss and evaluate other strategies that he might have pursued. Case Content Questions & Hands on exercises Q1 External Situation • Market Share fell down deeply. ı Early 1960s – solid 70% market 1981 - Only contain 3% market after buyout • Japanese manufacture flooded the market with high-quality lightweight motorcycles. • 1977 - Honda grabbed 47% of the motorcycle market in U.S. 39
  40. 40. Learning Insight Question Answers Case Content Questions & Hands on exercises Q1 Other Possible Strategies “Do you think Beals’s rejuvenation strategy for Harley-Davidson was the best policy?” Discuss and evaluate other strategies that he might have pursued. 1. No action 2. Switch the focus 3. Grab the customers 40
  41. 41. Learning Insight Question Answers “Do you think Beals’s rejuvenation strategy for Harley-Davidson was the best policy?” Discuss and evaluate other strategies that he might have pursued. Case Content Questions & Hands on exercises Q1 Comparison Pros Cons Bearl’s Strategy •Hit the core problem •Reduce competition •Learn but can not exceed • No Action •No potential risks •Good for company’s steady operation •No good future •dilemma situation Switch Focus •May attract new customers •Diversification for the company •The company image will be diluted •Need time and money to adjust strategy Grab customers •May beat challengers •Head on competition 41
  42. 42. Learning Insight Question Answers “Do you think Beals’s rejuvenation strategy for Harley-Davidson was the best policy?” Discuss and evaluate other strategies that he might have pursued. Case Content Questions & Hands on exercises Q1 Beals’s strategy outcome Tariff leads to entry barrier Magnificent production improvement Inventory reduced by 67% Productivity up by 50% Scrap and rework down 2/3 Defects/unit down 70% Market share increase to 63% in 1993 42
  43. 43. Learning Insight Question Answers Vaughn Beals Q1&H1 Case Content Questions & Hands on exercises • Be a Devil’s Advocate. • Your mutual fund has a major investment in Harley-Davidson, and you are concerned with Vaughn Beals’s presence at motorcycle rallies, hobnobbing with black-jacketed motorcycle gangs. He maintains this is the way to cultivate a loyal core of customers. • Argue against Beals’s practices. H1 43
  44. 44. Learning Insight Question Answers • Be a Devil’s Advocate. • Your mutual fund has a major investment in Harley-Davidson, and you are concerned with Vaughn Beals’s presence at motorcycle rallies, hobnobbing with black-jacketed motorcycle gangs. He maintains this is the way to cultivate a loyal core of customers. • Argue against Beals’s practices. Case Content Questions & Hands on exercises H1 Definition – “You”= Mutual fund investor, care about the profitability of HD – “Loyal core of customers”=HOG members+ Rubbies – “Beals’s practices”=present at motorcycle rallies,communicate with HOG members 44
  45. 45. Learning Insight Question Answers • Be a Devil’s Advocate. • Your mutual fund has a major investment in Harley-Davidson, and you are concerned with Vaughn Beals’s presence at motorcycle rallies, hobnobbing with black-jacketed motorcycle gangs. He maintains this is the way to cultivate a loyal core of customers. • Argue against Beals’s practices. Case Content Questions & Hands on exercises H1 Arguments • Beals’s practices would: • Harm the company’s public image – The public will associate the company’s image with the CEO’s practice – HOGs are regarded as the potsmoking, beer-drinking, woman-chasing, tattoo- covered, leather-clad biker • Ignore the new market segment – The Rubbies (rich urban bikers) • E.g, Bankers, doctors, lawyers, and entertainers 45
  46. 46. Learning Insight Question Answers Mystique Q2&Q5&H3 Case Content Questions & Hands on exercises 46
  47. 47. Learning Insight Question Answers Mystique Q2&Q5&H3 Case Content How durable do you think the Rubbies’ infatuation with the heavyweight Harleys will be? What leads you to this conclusion? Q2 Questions & Hands on exercises 47
  48. 48. Learning Insight Question Answers How durable do you think the Rubbies’ infatuation with the heavyweight Harleys will be? What leads you to this conclusion? Case Content Q2 Questions & Hands on exercises Definition “Durable” – The length that customers’ fascination to Harley Davidson lasts. ı “Rubbies” – the rich urban bikers, and high prices for bikes did not bother them in the least. “Infatuation” - The state of being completely carried away by unreasoned passion or love; addictive love for Harley Davidson. 48
  49. 49. Learning Insight Question Answers How durable do you think the Rubbies’ infatuation with the heavyweight Harleys will be? What leads you to this conclusion? Case Content Q2 Questions & Hands on exercises Rubbie’s infatuation Harley-Davidson’s Share of the U.S. Heavyweight Motorcycle Market, Selected Years, 1983-1993 49
  50. 50. Learning Insight Question Answers How durable do you think the Rubbies’ infatuation with the heavyweight Harleys will be? What leads you to this conclusion? Case Content Q2 Questions & Hands on exercises Why infatuation? • The company culture is fascinating. ı Harley Davidson stands for “Strength”, “Style”, “Respect” and “Freedom”, which match with the American spirit. • The company has earned high reputation through over a hundred year’s operation. • Identity recognition. ı It’s a symbol of identity. 50
  51. 51. Learning Insight Question Answers How durable do you think the Rubbies’ infatuation with the heavyweight Harleys will be? What leads you to this conclusion? Case Content Q2 Questions & Hands on exercises How long will the infatuation last? • Environment Change (financial crisis) • Philosophy Change (Sense of worth) • Values and Tastes 51
  52. 52. Learning Insight Question Answers Mystique Q2&Q5&Q9 Case Content Questions & Hands on exercises Q5 “Harley-Davidson’s resurgence is only the purest luck. Who could have predicted, or influenced, the new popularity of big bikes with the affluent?” Discuss 52
  53. 53. Learning Insight Question Answers “Harley-Davidson’s resurgence is only the purest luck. Who could have predicted, or influenced, the new popularity of big bikes with the affluent?” Discuss Case Content Questions & Hands on exercises Q5 •Resurgence: its market share rebound from 3% to the leading position of heavy weight motorcycle market •Purest luck: the company did nothing and regained its market leader position •The affluent: bankers, lawyers, professionals or managers with high household income about $45000 Definition 53
  54. 54. Learning Insight Question Answers “Harley-Davidson’s resurgence is only the purest luck. Who could have predicted, or influenced, the new popularity of big bikes with the affluent?” Discuss Case Content Questions & Hands on exercises Q5 •Its high quality and charismatic products which tailors the needs of the target customers •Its company culture, every employee engage in producing the best Harley Davidson motorcycles. •Its brand image which perfectly match with the culture of American Not purest luck 54
  55. 55. Learning Insight Question Answers “Harley-Davidson’s resurgence is only the purest luck. Who could have predicted, or influenced, the new popularity of big bikes with the affluent?” Discuss Case Content Questions & Hands on exercises Q5 •Vaughan Bealss •took a leading role in understanding the needs and concerns of HOGs and modified the products to cater the needs of target customers •HOGs •Super-loyal customers to make HD survival during the down period •HD’s true spokesperson who are representing American Spirit which attract more Americans Influencer 55
  56. 56. Learning Insight Question Answers Mystique Q2&Q5&H3 Case Content Questions & Hands on exercises H3 • As a staff assistant to Vaughan Bealss when he first took over, you have been charged to design a strategy to bring a mystique to the Harley-Davidson name. • How would you propose to do this? • Be as specific as you can, and defend your reasoning. 56
  57. 57. Learning Insight Question Answers • As a staff assistant to Vaughan Bealss when he first took over, you have been charged to design a strategy to bring a mystique to the Harley-Davidson name. • How would you propose to do this? • Be as specific as you can, and defend your reasoning. Case Content Questions & Hands on exercises H3 – “You”= staff assistant to Bealss – “Mystique”= an aura of heightened value or interest or meaning surrounding a person or thing Definition 57
  58. 58. Learning Insight Question Answers • As a staff assistant to Vaughan Bealss when he first took over, you have been charged to design a strategy to bring a mystique to the Harley-Davidson name. • How would you propose to do this? • Be as specific as you can, and defend your reasoning. Case Content Questions & Hands on exercises H3 Ways to develop/ acquire a mystique 58
  59. 59. Learning Insight Question Answers • As a staff assistant to Vaughan Bealss when he first took over, you have been charged to design a strategy to bring a mystique to the Harley-Davidson name. • How would you propose to do this? • Be as specific as you can, and defend your reasoning. Case Content Questions & Hands on exercises H3 Differentiation • For a company to achieve a mystique, certainly its product has to be unique. • Unique product can help a firm achieve differentiation, but far from mystique. Focus on product differentiation 59
  60. 60. Learning Insight Question Answers • As a staff assistant to Vaughan Bealss when he first took over, you have been charged to design a strategy to bring a mystique to the Harley-Davidson name. • How would you propose to do this? • Be as specific as you can, and defend your reasoning. Case Content Questions & Hands on exercises H3 Image-building advertising • Build brand identity and personality (HOGs/Rubbies) • Attitude branding – the choice to represent a larger feeling, which is not necessarily connected with the product or consumption of the product at al • Highlight the people that customers might wish to emulate. • Founder’s story – It's a classic American story. Boys get idea. Boys start company. Boys make lots of money. • Company museum 60
  61. 61. Learning Insight Question Answers • As a staff assistant to Vaughan Bealss when he first took over, you have been charged to design a strategy to bring a mystique to the Harley-Davidson name. • How would you propose to do this? • Be as specific as you can, and defend your reasoning. Case Content Questions & Hands on exercises H3 • Harley Owners Groups (HOGs) – The old group of core customers – Very loyal to Harley-Davidson – Represent the classic image of Harley-Davidson • Rich urban bikers (Rubbies) – The new group of key customers – Loyal to Harley-Davidson – Rich and willing to spend a lot on Harley-Davidson bikes – The Rubbies brought Harley back to a leading position in the industry by 1989 – Their demands are growing rapidly, from 10% (1983) to 63% (1989) Focusing on the target buyers 61
  62. 62. Learning Insight Question Answers • As a staff assistant to Vaughan Bealss when he first took over, you have been charged to design a strategy to bring a mystique to the Harley-Davidson name. • How would you propose to do this? • Be as specific as you can, and defend your reasoning. Case Content Questions & Hands on exercises H3 Related/Unrelated Expansion • Expand the reach of the name/logo to other goods – Related expansion • E.g Jackets,helmets,boots, etc – Unrelated expansion • E.g Parjamas,sheets, towels, etc 62
  63. 63. Learning Insight Question Answers • As a staff assistant to Vaughan Bealss when he first took over, you have been charged to design a strategy to bring a mystique to the Harley-Davidson name. • How would you propose to do this? • Be as specific as you can, and defend your reasoning. Case Content Questions & Hands on exercises H3 • Besides the strategy talked before, there’s some other ideas we could use. Like: • Personalization: carve the customers’ names on their own motorcycle. Customers could join designing and the color choosing. • Advertisement: consistent style (Black background), Broadcast time (Before action movies in cinema), Sponsor (for competition like boxing, car racing) • Some standard or rules to the customers in order to increase their ownership and loyalty to HD. Also create a mystery image to potential market. 63
  64. 64. Learning Insight Question Answers Case Content Questions & Hands on exercises Development Q3&Q4 64
  65. 65. Learning Insight Question Answers Case Content Questions & Hands on exercises Development Q3&Q4 Q3 ı A Harley-Davidson stockholder criticizes present management: “it is a mistake of the greatest magnitude that we abdicate a decent share of the European motorcycle market to foreign competitors, simply because we do not gear up our production to meet the demand.” Discuss. 65
  66. 66. Learning Insight Question Answers Case Content Questions & Hands on exercises A Harley-Davidson stockholder criticizes present management: “it is a mistake of the greatest magnitude that we abdicate a decent share of the European motorcycle market to foreign competitors, simply because we do not gear up our production to meet the demand.” Discuss. Q3 • “Mistake” – no further actions while the demand in Europe is always larger than production • “abdicate” – Harley Davidson won’t even consider the Europe market unless the domestic market is fulfilled. Definition 66
  67. 67. Learning Insight Question Answers Case Content Questions & Hands on exercises A Harley-Davidson stockholder criticizes present management: “it is a mistake of the greatest magnitude that we abdicate a decent share of the European motorcycle market to foreign competitors, simply because we do not gear up our production to meet the demand.” Discuss. Q3 • The abdication is reasonable • Quality cycle & Distribution center • Loyal customers won’t leave. • Harley Davidson is highly appreciated for its Customized motorcycle • Also create a mystique to potential market. At that time… 67
  68. 68. Learning Insight Question Answers Case Content Questions & Hands on exercises A Harley-Davidson stockholder criticizes present management: “it is a mistake of the greatest magnitude that we abdicate a decent share of the European motorcycle market to foreign competitors, simply because we do not gear up our production to meet the demand.” Discuss. Q3 What about now? • Increase 31% market share in Europe (2007) • Buyout MVAgusta Group,Italy (2008) • 10+% increase of market share three years in a roll 68
  69. 69. Learning Insight Question Answers Case Content Questions & Hands on exercises Development Q3&Q4 Q4 Given the resurgence of Harley-Davidson in the 1990s, would you invest money now in the company? 69
  70. 70. Learning Insight Question Answers Case Content Questions & Hands on exercises Given the resurgence of Harley-Davidson in the 1990s, would you invest money now in the company? Q4 Definition “You” means Public Investors “NOW”=2005 (when the book was published) 70
  71. 71. Learning Insight Question Answers Case Content Questions & Hands on exercises Given the resurgence of Harley-Davidson in the 1990s, would you invest money now in the company? Q4 Considering Factors Financial statistics Stock Market Company Development 71
  72. 72. • Range from $50 to $60 Learning Insight Question Answers Case Content Questions & Hands on exercises Given the resurgence of Harley-Davidson in the 1990s, would you invest money now in the company? Q4 Financial Statistics 2005 2004 2003 Net Income $959,604 $889,776 $760,928 Shares 280,303 295,008 302,271 EPS 3.42 3.02 2.52 •EPS is increasing steadily every year •PE is about 12 to 15, which is in average level 72
  73. 73. • Range from $50 to $60 Learning Insight Question Answers Case Content Questions & Hands on exercises Given the resurgence of Harley-Davidson in the 1990s, would you invest money now in the company? Q4 Financial Statistics 2005 2004 2003 Total assets $5,255,209 $5,483,293 $4,923,088 Current finance debt 204,973 495,441 324,305 Long term finance debt 1,000,000 800,000 670,000 Total finance debt 1,204,973 1,295,441 994,305 Not much finance debt, cash flow will be good 73
  74. 74. Learning Insight Question Answers Case Content Questions & Hands on exercises Given the resurgence of Harley-Davidson in the 1990s, would you invest money now in the company? Q4 Stock Market 74
  75. 75. Learning Insight Question Answers Case Content Questions & Hands on exercises Given the resurgence of Harley-Davidson in the 1990s, would you invest money now in the company? Q4 Company Development • Introduce new product line – the Street Bob and the Street Glide • Work with the dealers to create a better customer experience 75
  76. 76. Learning Insight Question Answers Case Content Questions & Hands on exercises Given the resurgence of Harley-Davidson in the 1990s, would you invest money now in the company? Q4 Answer Yes HOG is the stock worth of investing 76
  77. 77. Learning Insight Question Answers Case Content Questions & Hands on exercises Japanese Competitors Q6&H2 77
  78. 78. Learning Insight Question Answers Case Content Questions & Hands on exercises Japanese Competitors Q6&Q8 Q6 “The tariff increase on Japanese motorcycles in 1983 gave Harley-Davidson badly needed breathing room. In the final analysis, politics is more important than management in competing with foreign firms.” What are your thoughts? 78
  79. 79. Learning Insight Question Answers Case Content Questions & Hands on exercises “The tariff increase on Japanese motorcycles in 1983 gave Harley- Davidson badly needed breathing room. In the final analysis, politics is more important than management in competing with foreign firms.” What are your thoughts? Q6 It depends. 79
  80. 80. Learning Insight Question Answers Case Content Questions & Hands on exercises Q6 How did tariff save Harley-Davidson? Direct competitor Japanese company, Honda, introduced lightweight cycles of good quality. Harley-Davidson’s market share decrease dramatically to 3%. US imposed a 45% tariff for coming 5 years. New tariff policy increase the cost of Honda substantially. And it helps prevent the foreign automobile companies from entering US market. Harley-Davidson began to rebuild market share by restoring consumer confidence on its products quality. “The tariff increase on Japanese motorcycles in 1983 gave Harley- Davidson badly needed breathing room. In the final analysis, politics is more important than management in competing with foreign firms.” What are your thoughts? 80
  81. 81. Learning Insight Question Answers Case Content Questions & Hands on exercises Q6 In the case, both politics and management are essential to the company competing with foreign firms. Management Politics Inventory reduced by 67% Increased entry barriers for new foreign competitors Productivity up by 50% Decreased the bargaining power of existing foreign competitors Increased product quality Benefits “The tariff increase on Japanese motorcycles in 1983 gave Harley- Davidson badly needed breathing room. In the final analysis, politics is more important than management in competing with foreign firms.” What are your thoughts? 81
  82. 82. Learning Insight Question Answers Case Content Questions & Hands on exercises Japanese Competitors Q6&Q8 • As a vice president at Harley-Davidson in the 1990s, you believe the recovery efforts should have gone well beyond the heavyweight bikes into lightweights. • What arguments would you present for this change in strategy, and what specific recommendations would you make for such a new course of action? • What contrary arguments would you expect? How would you counter them? H2 82
  83. 83. Learning Insight Question Answers Case Content Questions & Hands on exercises • As a vice president at Harley-Davidson in the 1990s, you believe the recovery efforts should have gone well beyond the heavyweight bikes into lightweights. • What arguments would you present for this change in strategy, and what specific recommendations would you make for such a new course of action? • What contrary arguments would you expect? How would you counter them? – “You”=Vice president of HD in 1990s – “this change in strategy”= enter the lightweight motorbike market Definition H2 83
  84. 84. Learning Insight Question Answers Case Content Questions & Hands on exercises • As a vice president at Harley-Davidson in the 1990s, you believe the recovery efforts should have gone well beyond the heavyweight bikes into lightweights. • What arguments would you present for this change in strategy, and what specific recommendations would you make for such a new course of action? • What contrary arguments would you expect? How would you counter them? Arguments for entering the lightweight market H2 • Heavyweight motorcycle market is just a niche market, whereas lightweights is a mass market and a growing potential one. • There are more younger riders,as well as women, who ride smaller and cheaper bikes. 84
  85. 85. Learning Insight Question Answers Case Content Questions & Hands on exercises • As a vice president at Harley-Davidson in the 1990s, you believe the recovery efforts should have gone well beyond the heavyweight bikes into lightweights. • What arguments would you present for this change in strategy, and what specific recommendations would you make for such a new course of action? • What contrary arguments would you expect? How would you counter them? Recommendations for such a new course of action H2 – Introduce the Harley-Davidson lightweight motorbikes – Harley-Davidson lightweights can mainly target the young females. – Promote the American values (seek for freedom and adventure) 85
  86. 86. Learning Insight Question Answers Case Content Questions & Hands on exercises • As a vice president at Harley-Davidson in the 1990s, you believe the recovery efforts should have gone well beyond the heavyweight bikes into lightweights. • What arguments would you present for this change in strategy, and what specific recommendations would you make for such a new course of action? • What contrary arguments would you expect? How would you counter them? Contrary arguments H2 – Harley-Davidson might not be able to compete with Honda in the lightweight market. – Harley-Davidson is only for men, not suitable for women. 86
  87. 87. Learning Insight Question Answers Case Content Questions & Hands on exercises • As a vice president at Harley-Davidson in the 1990s, you believe the recovery efforts should have gone well beyond the heavyweight bikes into lightweights. • What arguments would you present for this change in strategy, and what specific recommendations would you make for such a new course of action? • What contrary arguments would you expect? How would you counter them? How would you counter? H2 – Honda is regarded as a transportation vehicle, while Harley-Davidson is an American icon. Harley-Davidson lightweight motorbike can target a different group of customers who appreciate the American culture. – Harley-Davidson does not target at all the females. The feminist can be a perfect match to the Harley-Davidson lightweight motorbike. 87
  88. 88. Learning Insight Learning Insight Case Content Learning Insights Question Answers Case Content 88
  89. 89. Learning Insight Learning Insight 1. Quality vs. Quantity Marketing Implication Quality first!! Why? Focus on quality control Increase urgency of buying Show high status Richard Teerlink, “Quantity isn’t the issue, quality is the issue...” Question Answers Case Content 89
  90. 90. Learning Insight Learning Insight Limited Product Line User-friendly name Macbook ------ For common users Macbook Pro ----- For more “Pro” users Macbook Air ----- Thin as “Air” No R65 or VGN-Z550N Controlled Distribution channel Apple store (iTunes) Apple store (Retails) Other qualified distributors Question Answers Case Content 90
  91. 91. Learning Insight Learning Insight June 2008 “Starbucks to Close 600 Stores” Global expansion From profit to loss Lower cultural added value Lower service quality Decentralized staff training Capacity challenge (e.g. queue) Question Answers Case Content 91
  92. 92. Learning Insight Learning Insight 2. Relationship Marketing Marketing Implication Relationship First!! Why? Keeping a current customer is more profitable Building Brand Loyalty Word-of-mouth Marketing from them HOG Question Answers Case Content 92
  93. 93. Learning Insight Learning Insight Question Answers Case Content 93
  94. 94. Learning Insight Learning Insight Relationship Marketing is not only for Luxury Products Big Brands but everyone, like Seth Godin Marketing Guru Bestselling Author e.g. <Permission Marketing> How does he build relationships with his readers? By his Blog (Most viewed one in the world) After you subscribe, you can get Sample of his new book PowerPoint of his new book Videos which is talking about his new book and you will spread it to your friends You are not only his reader, but also his evangelist! Question Answers Case Content 94
  95. 95. Learning Insight Learning Insight 3. Yell out your brand Marketing Implication Spirit First!! Why? Exposure to Icon to Spirit Licensing Question Answers Case Content Rebellion & Freedom 95
  96. 96. Learning Insight Learning Insight Question Answers Case Content Dream & Happiness 96

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