harley strategy report
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Chris Creech 14/17/08
Harley-Davidson Strategy Report
The motorcycle market is a $21.5 billion industry, surpassing the sum of al other
powersports markets: watercraft ($1.5 billion), snowmobiles ($3 billion), utility vehicles
($1.1 billion), and ATVs ($7.7 billion). The industry has enjoyed 12 consecutive years of
growth, but with the softening U.S. economy, declining home prices, and a decline in
consumer confidence, U.S. motorcycle retail sales in the first quarter of 2008 declined
between 7 and 9 percent from a year ago.
Motorcycles are an iconic representation of freedom and individuality in American
culture. No brand has taken ownership of this image more than Harley-Davidson has.
Harley is selling brand, image and lifestyle. Theyre selling Americana, said Tim
Conder, analyst at A.G. Edwards.
It is this image that helped Harley fight out of near-bankruptcy in 1985 when
Japanese rivals were taking over a large amount of U.S. motorcycle sales. Since that point,
Harley has overhauled its factories and focused on selling not the bikes (Harley once had
persistent quality problems), but the brand. Because of this, Harley was profitable for 20
years following the low spot, and now even enjoys the largest market share in Japan.
Harleys largest category, the big cruiser bike, has a 45% share in the U.S., vs. Hondas
23% share.
Harley is not just for those hard-core tattooed bikers with short tempers, though that
is the image that comes to the average Americans mind when they think of motorcyclists.
In actuality, the average Harley-Davidson rider is a 46-year-old male making $78,000
annually, riding a $16,000 cruiser. Harley has captured the essence of the baby-boomer
lifestyle. These individuals have satisfied their 1960s rebelliousness with a motorcycle that
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attests to their 1990s success. They are using the money that they have made to express
their inner desires for individuality and freedom.
The problem is that Harleys average customer keeps getting older. From 1994 to
2004, the average age of a Harley rider rose from 38 to 46 years old. For Harley to stay
among the top brands of motorcycles, they are going to have to start appealing to the next
generation.
According to Donald Brown, an industry consultant, the ideal age for motorcycle
customers is 35 to 44. These numbers have begun to decline, and they will continue to do
so through 2016.
This market naturally wants something different from what the older generation
rode. They are looking for more coolandsleeksport bikes. Harley has responded by
coming out with the V-Rod, a bike that they feel caters to the desires of this younger
market. They have also introduced more sport bikes to compete head-to-head to the
Japanese models that dominate that category. Now they need an advertising campaign to
go with this new dedication to youth without losing their older customers. "If they ever do
anything with that [roaring] sound, they've lost their customer base," says B.K. Ellis. This
is true, as 49% of Harley purchases in 2006 were by people who previously owned a
Harley-Davidson at some point during their lifetime.
Harley has adopted several new marketing objectives to target the younger market
with its new product line: expand its current market, diversify its product line, and modify
its marketing mix to target a younger demographic.
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To accomplish the goals that Harley has set for itself, they will need to install a
national multi-media campaign promoting this new idea and their new bikes to a new
market.
The targeted market, males ages 35-44 typically relate to action movies with a
strong leading male character. The Harley brand can also relate to these types of movies.
Movies that came out during the 70s and 80s that exemplify the action and adventure that
defines the Harley experience are close to the heart of many in the target market. Harley
can use the familiarity of these movies to not only position itself as the American icon that
they have always been, but also show that Harley, like these classic action/adventure
movies, has not gone away. These movies, such as Rocky, Indiana Jones, and The Blues
Brothers are popular with all ages of males looking for the epitome ofcoolness in a leading
role. Harley can use this as a jumping point for their new Legends Never Die campaign.
For the print ads, Harley will use classically popular and recognizable movie
posters that the target market is familiar. In these posters will be a few small changes, most
noticeably will be the addition of a Harley-Davidson motorcycle displayed prominently in
the poster. This will force the connection between the iconic movies and the iconic bike.
They copy will also relate the Harley-Davidson brand to the classic movies, along with
promoting the Harley experience and community.
The television ads will be similar to the print ads, as they will also use iconic
action/adventure movies to portray the Harley lifestyle. Instead of just putting the bikes
into the movie poster however, the bike will take the role of a lead character in these
popular movies. The differing roles will also show the ability to customize each Harley to
customers desires. These ads will strongly relate Harley to the classic movies not only
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through the graphics, but also through a narration that will further stress the similarities, as
well as promote the Harley experience and community, like the print ads.
Harley owners love the internet. There are thousands of web pages created by
Harley dealers, owners, and admirers. Harley will use this information and add a micro-
site off its main interactive web site. The site will be interactive, calling for input from
users. The site will take the user on a journey to Harleywood, the Harley-Davidson
version of Hollywood, where they can select from a long list of famous movies and see a
Harley take the lead role, portraying the Harley experience. Users will also have the option
to write reviews of the movies starring Harley as well as suggest other movie roles that
Harley should take up.
The online ads, as well as the television ads, will focus heavily on the newer
models Harley-Davidsons, targeted towards the younger riders. The V-Rod will star in a
majority of the TV spots and internet videos.
Lastly, Harley will sponsor several of the most iconic actors that exemplify the
Harley lifestyle when they attend The Academy Awards. Harley will give actors such as
Bruce Willis, as well as younger actors in the same genres, a brand new V-Rod to ride to
the event and pose for pictures with as they enter the red carpet area. Harley-Davidson will
also pay to have their emblem located on the actors clothing. This will further the
connection of the Harley brand to the iconic, individual, cool persona that Harley
exemplifies and its new target market looks for.
It is this connection that will bring the Harley-Davidson brand to the younger
market where they can affectively compete against their Japanese counterparts, all while
staying true to the Harley brand experience and holding on to their valued older customers.
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Appendix:
Trendline, Industry Overview, U.S. motorcycle market is a $21.5 billion business, DaveCrocker, Powersports Business, October, 2004.
Harley-Davidson USA Web Site: http://www.harley-davidson.com
AP,Ahead of the Bell: Harley Davidson, Friday April 11, 2008 6:19 amhttp://biz.yahoo.com/ap/080411/harley_davidson_ahead_of_the_bell.html?.v=1
Harley-Davidson Investor Web Site Demographics:http://investor.harley-davidson.com/demographics.cfm?locale=en_US&bmLocale=en_US
Fortune Magazine, Harley-Davidson, Will Harley-Davidson Hit the Wall?, John Helyar,http://www.mutualofamerica.com/articles/Fortune/2002_08_01/fortune.asp
The Basic Harley-Davidson Story: http://www.soe.ucsc.edu/~callon/hd.html
webBikeWorld, Motorcycle Industry on Track for 12th Year of Consecutive Growth, Nov.18, 2004, http://www.webbikeworld.com/Motorcycle-news/motorcycle-sales-growth.htm
USA Today, On the Harley free-trade Brigade, David J. Lynch, Aug 17, 2008,http://www.usatoday.com/money/economy/trade/2006-08-17-bush-cover-usat_x.htm
http://www.harley-davidson.com/http://biz.yahoo.com/ap/080411/harley_davidson_ahead_of_the_bell.html?.v=1http://investor.harley-davidson.com/demographics.cfm?locale=en_US&bmLocale=en_UShttp://investor.harley-davidson.com/demographics.cfm?locale=en_US&bmLocale=en_UShttp://investor.harley-davidson.com/demographics.cfm?locale=en_US&bmLocale=en_UShttp://www.mutualofamerica.com/articles/Fortune/2002_08_01/fortune.asphttp://www.soe.ucsc.edu/~callon/hd.htmlhttp://www.webbikeworld.com/Motorcycle-news/motorcycle-sales-growth.htmhttp://www.usatoday.com/money/economy/trade/2006-08-17-bush-cover-usat_x.htmhttp://www.harley-davidson.com/http://biz.yahoo.com/ap/080411/harley_davidson_ahead_of_the_bell.html?.v=1http://investor.harley-davidson.com/demographics.cfm?locale=en_US&bmLocale=en_UShttp://investor.harley-davidson.com/demographics.cfm?locale=en_US&bmLocale=en_UShttp://www.mutualofamerica.com/articles/Fortune/2002_08_01/fortune.asphttp://www.soe.ucsc.edu/~callon/hd.htmlhttp://www.webbikeworld.com/Motorcycle-news/motorcycle-sales-growth.htmhttp://www.usatoday.com/money/economy/trade/2006-08-17-bush-cover-usat_x.htm -
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