Harley-Davidson Case Study

I. Executive Summary

Harley-Davidson is the largest market share holder of motorcycles over 750cc in the United States. After the expansion of our production and distribution capacity, we will be in the position to meet the increasing demand for our motorcycles and other products, including a new line of clothing specially design for women. Growth potential appears very good especially in the overseas market and the young and mature women and younger market. Gaining a larger market share in this area may require a further increase in production and distribution capacities. We must plan for expansion and build new strategies how to target the woman, younger market, as well as the already HD owners and continue to grow as a company.

II. The Challenge

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.

III. Situation Analysis

Company Analysis

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. Third, HD has to set an appropriate marketing mix that will help attract a younger consumer base. By using the low-end approach, which involves attracting a young audience to a brand name product with a low price tag (similar to what Jaguar and BMW have done), HD can expand its popularity to the domestic and international market.

Harley-Davidson's (HD) positioning strategy can best be defined by its mission statement: "We fulfill dreams through the experience of motorcycling- by providing to motorcyclists and to the general public an expanding line of motorcycles, and branded products and services in selected market segments." Now in its 105th year, the ideal of owning an 'American Icon' has slowly dwindled out of the public's mind, due mostly to the competition from Japanese manufacturers like Honda and Yamaha, HD is aiming to change this, bringing back the true American pride and sense of freedom and liberty. HD's strength's of its powerful brand image, maintaining good customer relationships, strong financial position, and superiority of technology and design are hindered by its weaknesses related to product capacity and unfulfilled demand for their products.

Customer Analysis

Approximately 51 percent of the population is women (Health Resources and Services Administration

U.S. Department of Health and Human Services), and about 12 percent of all Harley motorcycle sales are to women, roughly 32,000 new bikes in 2006, compared with 4 percent in 1990, 9 percent in 1998 and 10.6 percent in 2003. Women will spend about $300 million on Harley bikes this year in the United States, not including accessories, riding gear and clothes. (MIC)

According to the Motorcycle Industry Council, the number of women in the country operating motorcycles increased 34 percent to 4.3 million in 2003, from 3.2 million 1998. The number for men rose a little more than 20 percent in that period.

Today American women are the fastest-growing part of the motorcycle business, buying more than 100,000 of them a year. Even though aging baby-boomer men, with money to spend and time on their hands, have played a big role in expanding the market in recent years, motorcycle companies are trying hard to win women buyers.

Competitor Analysis

For all of Harley-Davidson’s new marketing efforts, it lags slightly behind its competitors Kawasaki and Suzuki in percentage of motorcycle sales to women in large part because the Japanese companies offer a wider range of smaller bikes that are less intimidating to many novice female riders. Suzuki last year introduced a new line of clothes called Suzuki Girl with tight-fitting riding jackets in pink and baby blue. Few companies, though, are doing more than Harley in reaching out to this group. Its dealers hold frequent garage parties for women, to let them learn about bikes, including the best way to stand up a 750-pound motorcycle that has tipped over (crouch down, with the small of your back against the seat, and push up and back while holding onto the bike).

IV. Market Segmentation

Description

HD is producing more motorcycles that are low to the ground вЂ" so women and short people can plant their feet firmly at rest вЂ" with narrower seats and softer clutches, and adjusting handlebars and windshields to make bikes more comfortable for smaller riders, also HD is selling more clothes, too, in bright colors and with rhinestones, rather than the standard-issue black and orange leather jackets. Even the skull motif that appears on some clothing sold at Harley outlets has undergone a friendly makeover to include wings and flowers. Introducing to the public entire clothing lines especially design for women.

Percentage of sales

American women are the fastest-growing part of the motorcycle business, buying