Harley-Davidson Case Study
Introduction of the Company
In 1903 William Harley and Arthur Davidson produced the first Harley-Davidson motorcycle for sale to the public. The first year’s production was only three motorcycles with one dealer. In 1909, Harley-Davidson introduced the first? V-twin engine, which is still the company standard today. Harley-Davidson rapidly grew to the largest motorcycle manufacturer in the world by early 1920s, with 2,000 dealers in 67 different countries.
By the 1930s all of the American competition was gone. Harley-Davidson suspended production of civilian motorcycles during World War II, and only built motorcycles for the military, exclusively. When the war was over, Harley-Davidson converted back to civilian production. Harley-Davidson's growth was fueled by acquisitions as well as capitalizing on new technologies. In 1969 Harley-Davidson merged with American Machine and Foundry (AMF). By the 1970s other competitors were entering the global market, and many of them were from overseas.
In an attempt to transform the company, in 1981,a senior executive of Harley-Davidson bought the company from AMF and turned the company around dramatically. Harley-Davidson emerged with new products and innovations along with a new commitment to quality, creating the dynasty Harley-Davidson has become today.
Harley-Davidson's success continued to grow as they received tariff relief from the International Trade Commission on 700cc motorcycles. Another event contributing to Davidson's renewed success was the formation of the Harley Owners Group (H.O.G.). This company sponsored club consisted of riders who transformed motorcycling into a family-oriented social sport. It continues to be very successful with 600,000 owners and 1,200 chapters worldwide.
Economic Indicators
Internationally, Harley-Davidson revenue has exceeded $816 million, which accounts for 18% of the net revenue for motorcycles. The Harley-Davidson emblem is an international icon and the sound of V-twin engine is unmistakable. Harley-Davidson is the number one motorcycle manufacturer and is also the number one seller of heavyweight bikes in the U.S. They also sell a line of clothing and accessories as well as make bikes under the Buell nameplate. Harley-Davidson’s attire has attitude and rightfully so, there is no other motorcycle as classy as the “Harley”. One Harley-Davidson ...
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... and strong brand recognition, it may appear as if they can’t improve much more than they already have. As with any business, the one thing Harley-Davidson can do wrong is be too confident in their success. They have to search for new markets and continuously improve their current products. They need to remain flexible and knowledge of their internal and external strengths and weaknesses. As with any company in the lead, competitors will seek to copy what they have or improve upon their technologies.
Harley-Davidson’s loyal market is aging and they have not been successful in tapping into the female riders or the African American riders. Recently Harley-Davidson commercials have begun appearing on certain networks targeted for these markets. The new commercials also feature the female rider. If Harley-Davidson is successful is attracting these new markets, they will also have to expand their products to meet the demands of the new demographic.
Harley-Davidson appears to be poised to go after this market and if history repeats itself, Harley-Davidson will continue to stay in front on their strategies and continue to remain a force to be reckoned with in this industry.
Needless to say, that experience has changed over time. It began from a simplistic design in 1904 as a motorized bike. However, as time progressed it brought about the introduction of the biker gang era. These were the bad asses image riding their heavy bikes down the highway, rebels who refused to give in to society’s pressures. It was the time of the Hell’s Angels, with their patches, long hair, and untidy beards that became the symbol of freedom on the road. They created the mantra of the bad ass dude on a bad ass American bike and no one was gonna tell him what to
When Ford introduced the Mustang in 1964 there was no immediate reaction from General Motors, but by August of '64, just four months after the Mustang's introduction, GM realized the appeal of a four seat sports car. Ironically, the Mustang was created in response to the Chevrolet Corvair Monza!
Harley-Davidson owns a twenty percent market share followed closely by Honda, Yamaha, and Kawasaki. One thing they have had to overcome in the marketplace is the stereotypical image associated with motorcycle owners. It seems the publ...
The next ratio we will review is gross profit margin. Gross profit margin (GPM) measures the percentage of each sales dollar remaining after the firm has paid for its goods. The higher the gross profit margin, the better. Harley Davidson's gross profit margin was 35.08% for 2001, 34.09% for 2000.
"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 them-selves as full-size motorcycles' manufactures, not in the transportation, or even the entertainment industry. They believed no one bought motorcycles for transportation, but rather for leisure time use.
HD has chosen the strategic direction of targeting women and the younger market that is technologically conscious in order to increase its share in the first time motorcycle owner market space. With the introduction of the new VRSC’S, and the new lowered sporster 833 L and the 1200 L, design for small riders who want more power, also promoting the already existing HD motorcycle owners to step forward and purchasing a bigger model. HD is in a position of attaining a sizeable share in the first time motorcycle owners, the young males, and females’ marketplace. To target the women and the young market with the new product line, the company has adopted the following marketing objectives: to expand its current market (market expansion), diversify its product line (product diversification), and modify its marketing mix to target women and the younger demographic.
These same sorts of systems could easily be added to, or modified as needed, to track the new motorcycle lines HD will produce to attract both women and young adults. These systems have been an invaluable means for HD to reevaluate itself in the past and thus are ‘tried and true’ making it a moot point to replace them. HD, however, needs to concentrate some effort on implementing a system to determine the most appropriate locations for future dealerships. This new evaluation system will aid HD in determining effective locations for new dealerships and assist in providing further market share penetration for the company in essentially ‘untapped’ consumer areas.
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.
Since Harley-Davidson is already a big player in cruise market, to be profitable in this sector might be time consuming and difficult for Ducati. Also, Harley-Davidson has a loyal customer base which might make it tougher for Ducati to attract more customers towards its side.
Allstate insurance is the second largest property and casualty insurance company by premiums in the United States. Allstate insurance handles about 12% of the U.S home and auto insurance market. (Allstate, 2014). Many of Allstate’s customers fall under what one could refer to as a traditional selection of insurance for automobiles. Recently, Allstate has noticed a major shortcoming in lifestyle insurance, which includes coverage for motorcycles, boats, and other recreational vehicles, in comparison to its competitors. The motorcycle insurance sector is a 10.4 billion dollar industry and growing (PRWEB, 2012). The U.S. Department of Transportation website reports some astounding figures, including that 5,370,035 motorcycles were registered three years before the article, 7,138,476 motorcycles registered at the time of the article, and grew to 9,477,243 registered motorcycles at the end of 2012 (NHTSA, 2013). It is obvious as to why Allstate would identify motorcycle insurance as a worthy lifestyle product to devote marketing research dollars into in order to develop new strategies for cornering a share of the market.
Italian manufacturer Piaggio ranks as one of the world’s top four players in its core business. It has consolidated leadership in the European 2-wheeler market. Piaggio should not miscalculate its competitors. Competition in the industry is very powerful, not only nationally but internationally as well. This is due to two well-established companies in this sector which are the Japanese Yamaha and Honda. Yamaha and Honda strengths are their long-run experience in the sector and the high quality image of products. Due to participations to the motorcycle championships, these two companies constantly receive positive feedbacks to their efforts in researching for first class products. In the future, other kinds of competitors are expected to arise: Chinese companies whose ability to imitate and create similar products at highly competitive prices is getting more and more dangerous (Piaggio, 2008)
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, ...
The mass media advertising implemented by Harley-Davidson is intended to reach as many members of the general public as possible. Generally, this type of advertisement is used because of its depth in effectively reaching people. These ads are intended to target both potential repeat customers as well as first time buyers. Locally, C&S Harley-Davidson uses direct mailings to specifically target previous owners of their motorcycles as well as owners of competing brands.
The popularity of Lance Armstrong has increased the interest on road bike, which represent 5% of the market.
Despite their conception in 1903, Harley-Davidson and the motorcycle industry as a whole didn’t really take off until after the Second World War. Many people rode motorcycles during the war, with Harley-Davidson themselves supplying almost 90,000 motorcycles for the U.S. military during this time. Many veterans chose to purchase motorcycles upon returning home, as they enjoyed riding during the war and wanted to continue riding in their civilian life. This generation known as the "baby-boomers" quickly became the main target audience for many of Harley-Davidson’s marketing efforts. With sales increasing and the industry growing, many "motorcycle clubs" and "rallies" were introduced. Unfortunately, due to the lewd behavior displayed by most people associated with these clubs and rallies, bikers typically had an image of being disorderly and raucous. Harley-Davidson’s image itself took a big shot due to the Hells Angels. This was a motorcycle gang wishing to become notorious for "drug trafficking and other organized crime activities," who used only Harley-Davidson motorcycles. All of this combined to lead to a decline in demand and sales throughout the entire industry during the 1960’s. The industry was really helped out with the release of the Hollywood film Easy Rider in 1969. This film helped change the public’s perception of bikers and sparked an increase in motorcycle demand which has lasted to this day.