Qualitative Forecast Address H-D has multiple risk factors that it calls out in the annual report. Many of these factors include items identified in revenue and cost factors. One of the main increased costs that results in potential revenue is the expansion into immature markets. There are many things to consider when entering a new market such as India. First, what are the social implications and what does the brand mean in that country. Though population is high and units of motorcycle sales are one of the largest in the world, what existing product is similar to high end motorcycles? International expansion means understanding governmental affairs and working with multiple parties to open channels to sell product. Prior to 2007, H-D …show more content…
If there is a large push for electric motorcycles and H-D is not ready to mass produce units, they will not meet demand. Pressure from government agencies for regulation, testing, and more may impact performance options of a V-Twin motorcycle. Time spent on leisure goods is another variable that has risk. As new products become available, customers have the option to spend time enjoying items such as gaming, streaming movies, etc. Cost revenues are expected to increase. The largest impact of cost as noted in the previous section is raw materials and commodities. Though technology is increasing in areas of production, items such as GPS and fuel injection are new add-ons that H-D is using in its product mix. As new technology is added, suppliers may be limited compared to something like steel that has multiple sourcing options. Costs need to be contained in this area by proper supplier …show more content…
If the amount of disposable income decreases, customers may choose to leverage products outside of this industry. Harley-Davidson differentiates as they do not advertise motorcycles, they focus on the lifestyle as a rider. This challenges customers to evaluate giving up a choice in lifestyle versus a single product. According to the IBIS World Industry report, revenue volatility is very high in the motorcycle manufacturing industry. The motorcycle industry volatility is expected to be 21.6; anything above a 20 is very high. (Molavi, 2010) The University of Michigan found that the index of consumer sentiment was 80 in their March 2014 report. (Survey of Consumers - Thomson Reuters, 2014) From March 2013 to March 2014, there has been a span of 73.2 to 84.5. Consumers are anticipating decline in the economy in the next five years. Evidence of how volatile the industry can be was seen in 2009 during the
"Harley-Davidson: At Last" as presented in Hartley's Marketing Mistakes and Successes presents the circumstances around HD's near collapse and since rinse to near mythic success. This case is a great example of marketing myopia; HD saw themselves as full-size motorcycles' manufacturers, not in the transportation, or even the entertainment industry. They believed no one bought motorcycles for transportation, but rather for leisure time use. Like the automotive industry of the time, Harley-Davidson thought its customers would buy its products versus those of any of its major competitors, chiefly because they were all foreign. Interesting enough this was true, HD annual unit sales never changed; they just did not grow with either the market or even the population.
During the 1970's, HD was facing a decline in market share due to increased competition with Japanese companies. By phasing out weak models, becoming more selective, and limiting sales and promotions, HD was able to carve out a niche in the marketplace which it enjoys today. Now again faced with a period of decline, HD is relying on its newly adopted marketing objectives. First, HD needs to expand its potential customer base to include enthusiasts and non-enthusiasts young males, and females into buying HD motorcycles over any other competitor. This thought is accomplished through the introduction of the VRSC’S, and the lower and narrow Sportsters, Dyna’s, Softail’s and positioning them in the market to a younger demographic. Secondly, HD needs to position the VRSC’S, Sporster, Dyna and Softail to also appeal to first time buyers of motorcycles. HD's strong brand identity can help pull in new clients.
... increasing slowly. Currently, Labor costs have been increasing speedily for over 45% of manufacturing costs. From the previous three years, no increase in the productivity levels of the workers has been seen. If it keeps happening, the company will lose its price advantage over its rivals.
The most interesting point of this case is that Harley has different marketing strategy according to countries. Indeed, in some markets (US, Australia, Japan, Spain, Denmark) Harley-Davidson tries to attract new customers using advertisements, but in other markets such as the Europe, the strategy is more the usage of the promotion in specialized magazines. Another interesting point is tha...
There are three separate market segments: road bikes, mountain bikes, and youth bikes. Each of these segments range in differences such as size, price, product sensitivity, product preferences, and consumer viewing habits. Frequently, customers were interested in finding the lowest price to fulfill their needs. Our firm speculated the upgrading the mountain bike would encourage our customers to spend more money for a better quality bike; however, we discovered that customers were not interested in paying the extra money for an improved bike.
Harley-Davidson has a one-hundred year plus history. William S. Harley and Arthur Davidson, created the Harley-Davidson Motorcycle Company in 1903. The company started in a shed in Davidson’s backyard. During their first year of production only three bikes were sold. The company has sustained its self through two world wars and countless recessions. Harley-Davidson also provided equipment to the U.S. military during both world wars. Over the last century the company has seen competition from around the world rise and fall. From the very beginning Harley-Davidson established it’s self as a leader in sport motor biking. The history of the company gives credibility (or ethos) to this particular compelling advertisement. World War II claimed over fifty-million lives, caused trillions of dollars of damage, and started the first nuclear war. Not many companies would use a depiction of these events to advance their marketing campaign. On the other hand, not many companies were actually around during those events that are still functioning today.
The motorcycle industry offers products which can be viewed as luxuries or wants as opposed to necessities. When concerning Harley-Davidson, most motorcycle owners have purchased their bikes as a second vehicle, using them more during weekends and off-time instead of during the work week. This implies that the motorcycles serve for recreational purposes and thus are an item which can be expendable at times. This has hurt the industry recently with the slight recession the United States economy is facing. Another interesting thing to note about the motorcycle industry is the different appeal bikes carry in different global regions. In the United States for instance, Harley-Davidson has had much success because of the market trends and tastes people enjoy. Harley-Davidson has benefited from a U.S. market which enjoys casual and recreational riding. This isn’t necessarily the case overseas, as in Europe the trendy pick is a sleeker street bike, with a focus on speed and handling as opposed to power and comfort.
Harley Davidson future outlook is bright. Its decision to enter emerging markets presents growth opportunities as the income levels in these countries rise. An increasing number of people in these countries have sufficient to afford luxuries such as motorbikes. Similarly, outsourcing would permit the company price its products competitively thus it gaining a competitive edge in the industry.
Harley-Davidson was founded in 1903 by William Harley and Arthur Davidson and continued to grow throughout the First and Second World Wars, before being absorbed by American Machine and Foundry (AMF) in 1969 (James & Graham, 2004; Johan Van & Brian, 2000). Facing stiff completion from Japanese motorcycle manufacturers, AMF sold Harley to a group of executives led by Jeff Bluestein and Vaughn Beal (James & Graham, 2004; Teerlink & Ozley, 2000). A tariff on imported heavyweight motorcycles and a public offering put Harley-Davidson on sound financial footing. Richard Teerlink joined the company in 1987 as President and brought about substantial structural change working with consultant Lee Ozley (Teerlink & Ozley, 2000). Today, Harley-Davidson is a cultural phenomenon consisting of Harley-Davidson Credit and Insurance, ...
Shortly after the inception of Harley-Davidson the company’s brand image of freedom of the road became associated with their name. Also, they earn from licensing their trademarks for Jackets, T-shirts, and key chains. Moreover, the most significant strength of their brand image
Harley Davidson is unique in that their customers are some of the most loyal. Not only is Harley Davidson a product, but it has morphed more so into a culture of loyalty. The customers are typically for life, displaying the four buying behaviors of loyal customers. The customers make regular or repeat purchases, purchase everything possible that could be used, encourages others to buy, and are immune to competitors. Much of the loyalty Harley Davidson has been a direct result of listening to their customers.
Harley-Davidson’s management had much to be proud of as the company wrapped up its Open Road Tour centennial celebration that began in July 2002 in Atlanta, Georgia, and ended on the 2003 Memorial Day Weekend in Harley’s hometown of Milwaukee, Wisconsin. The 14-month Open Road Tour drew large crowds of Harley owners in each of its five stops in North America and additional stops in Australia, Japan, Spain, and Germany. Also during its 2003 centennial year, Harley-Davidson was named to Fortune’s list of “100 Best Companies to Work For” and was judged third in automotive quality behind Rolls-Royce and Mercedes-Benz by Harris Interactive, a worldwide market research and consulting firm best known for the Harris Poll. The company’s revenues had grown at a compounded annual rate of 16.6% since 1994 to reach $4.6 billion in 2003—marking its 18th consecutive year of record revenues and earnings. In 2003, the company sold more than 290,000 motorcycles, giving it a commanding share of the 651+cc motorcycle market in the U.S. and the leading share of the market in the Asia/Pacific region. The consistent growth had allowed Harley-Davidson’s share price to appreciate by more than 15,000% since the company’s initial public offering in 1986.
The second way is to achieve low direct and indirect operating costs is gained by offering high volumes of standard products and offering basic no-frills products. Production costs are kept low by using less parts and using standard components. Limiting the number of models produced to ensure larger producti...
In order to provide a deep and complete analysis of the Motorcycle industry we provide an extended Porter’s five forces framework, because as we know this framework has several flaws and we have reinforced it with the factors we think affect the industry and alter its profitability.
In light of the performance theory above, one may agree that Honda auto industry is a mixed bag of different measurements. The company’s global record sales have provided a