Harley-Davidson

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Preparing for the Next Century

English 3345 - Business Team #4:
Natalie Martell Martha Martinez Virginia Lopez Myles Melendez

development. and focused . With a sagging economy in 1920. They experimented on the famous V-twin design. they started investing in research and development. They were always looking to improve and make the best machine there could be. This race was one of many that Walter would go on to win with his Harley. and so began its 100 year journey. Walter. so they filed for incorporation of the company. built a new four-cylinder engine. in a small shed in the Davidson family backyard in Milwaukee. William D. (Nolan & Kotha. which were their hands and brains. built their first motorcycle using the best available tools..History. In 1907. to be the best bicycle rider. What started out as an ambition for Walter Davidson. turned out to be a step into a multimillion dollar business. In 1908 the reputation of the company was raised a level higher through the winning victory race of Walter’s Harley motorcycle with the V-twin engine which they designed themselves. 2007). along with their long time friend William S. and by 1918 Harley-Davidson became the world's largest motorcycle company by producing 28. The Davidson’s and Harley were always trying out new innovations to make their motorcycles better and faster.000 motorcycles. and they sold 50 motorcycles. they had one full-time employee. and eventually transformed the company into the world's leading producer of motorcycles. Harley. The Harley – Davidson Motor Company was put into motion in 1903 when they built three of the first model motorcycles. & growth: The birth of the Harley-Davidson legend began around the 1900’s. and Arthur Davidson.

By the mid-1950s. the Hell's Angels. including actors James Dean and Marlon Brando. highway patrol officers. described as "a voice: a bassoprofundo thump that makes other motorcycles sound like sewing machines. (P. this roster expanded to include young "Elvis types" attracting dates with their Harley motorcycles. balloon tires. that continues to this day. The growl of the Harley engine was. customers. These advertisements cultivated an image of Harley motorcycles as tough because they were often associated with people who were willing to break the traditional mold or willing to live on the edge. 5). and Hollywood rebels. and still is. (Dutton &Kotha. In the late 1950s. Harley.S. Reid. military dispatch riders. Over time.S. flag and the bald eagle. This association resulted in unprecedented brand loyalty. Given this customer base. The image reflected rugged individuality and the frontier spirit of the United States. Its motorcycles were advertised in "biker" magazines and promoted mainly by word of mouth. the firm's advertisements often depicted leather-clad riders. The Harley motorcycle not only looked different.Davidson managed to remain profitable even though sales declined before World War II. Harley-Davidson became the undisputed leader of the motorcycle market. or police officers on motorcycles. America's national symbol. and standardized parts. .on improving the reliability of its machines by adding an electric starter. especially among U. By introducing larger and more powerful motorcycles. Harley motorcycles were used by the U. the Harley motorcycle became a part of American iconography and was associated with the U. it sounded different.S. p. military. The V-twin engine's simple design allowed owners to tinker with their engines since motor cycle mechanics did not exist at that time. 1996).

the firm went public after 60 years of private ownership. the then CEO and a small group of Harley-Davidson managers were able to come up with a fraction of the $81 million buyback price. in order to expand production and raise capital for new products. Their goal was simple: survival (Fortune. Honda. and fast. This new approach involved employee involvement. Harley-Davidson's share declined by over 80%. & GOALS By 1980. not quality. 1996). they realized that HarleyDavidson’s production system was basically flawed because they gave the worker responsibility for quantity. Other Japanese firms. riders who could not afford the more expensive Harley motorcycles. Yamaha. and older riders. Suzuki.In 1965. Reid. 6). and Kawasaki. (Dutton &Kotha. Vaughn Beals. This debt forced Harley's new owners to pare down costs and cut back motorcycle production. use of JIT inventory . But unable to attract enough capital. women. Using Japanese production methods as a blueprint. Beals and his management team realized that Harley's entire manufacturing system needed to be modified. 2002). Between 1970 and 1980. and facing severe pressures from other competitors. they marketed smaller. p. VISION. and took the rest as debt. and those who could not muscle them around steep curves. MISSION. top management teams formulated and implemented what they termed the productivity triad. These characteristics attracted younger riders. bikers who did not want to tinker with the motorcycles. ( P. with Harley's profitability down. a heavy-industrial conglomerate looking to diversify into leisure products. and more fuel-efficient motorcycles that required little or no maintenance and were easier to handle compared to Harley bikes (Harley motorcycles weighed between 450 and 800 pounds). Harley-Davidson was acquired in a friendly takeover by AMF. quieter. After touring the Honda plant in Ohio. AMF began looking for a buyer. soon followed.

under the leadership of Jeffery Bluestein. The company. In 1989. grabbing riders from rival brands and abroad with a radical new motorcycle. Davidson. challenges. and statistical operator control (SOC) (Industry Week. p. During this time. 1993). In 2003 Harley-Davidson. heavyweight motorcycle industry. which almost went bankrupt in 1970. celebrated its 100th birthday.practices. (J. encouraged Harley-Davidson owners to become more actively involved in the sport of motorcycling. Harley-Davidson was accomplishing what it set out to do. cheap bike in more than 20 years. p. . was responsible for product design and for keeping the company's loyal and hard-core customers informed about the struggles. the company began to transform itself from an informal to a formal organization. and Harley differentiated itself from its Japanese manufacturers by offering support to various enthusiast and social groups. became CEO and chairman. The Harley-Davidson Owners Group (HOG). (Dutton &Kotha. a new generation of “Hogheads” was born. and changes at the company.000 at the end of 2004. Under Teerlink's leadership. which was its first small. which was formed in 1983. (Business Week. had successfully shed its product and marketing doldrums and was once again the market leader of the U. the firm's CFO for six years. the grandson of one of the founders. Teerlink. Moran. By breaking from 65 years of tradition. and was gradually became the industry's largest company-sponsored motorcycle enthusiast organization. 2007).5).S. The HOG worldwide membership had grown to 900. 58). and creating the V-Rod. V. Willie G.

Harley-Davidson’s had a tremendous amount of market share in the motorcycle business. vice president of motorcycle sales. Harley launched a second bike as part of the V-Rod family. The company also redesigned its sportster family of entry-level. leaving Harley-Davidson with little or no market share for this new customer segment. the company was attempting to position the new sportster within the grasp of a younger group of riders. they promised to change and become a dominant motorcycle once again. COMMUNICATION STRATEGY During the 1950’s.500." 2005). Moreover. foreign companies such as Honda began penetrating the market. With prices starting at $6. However. along with Willie G. which were their loyal followers. police department and they had a loyal. lowerpriced bikes in 2004 to appeal to younger riders and women riders. producing lightweight. and learn of complaints or concerns they had with their machines. Their machines were used by almost every U. These two leaders drove to Harley-Davidson rallies to meet their customers.S. Vaughan Beals. the quality of Harley-Davidson motorcycles became a question on the mind of many consumers. ("A n O dd D uck from H arley-D avidson. Specifically. led Harley-Davidson to a resurrection. which it named the "Street-Rod. were the forefront leaders of this movement and spoke of great . Harley-Davidson was forced to reconsider their overall strategy. These companies approached a new type of customer. more fuel efficient motorcycles. grandson of the company’s founder.In early 2005. quality was the key to their strategy. and women whom it hoped would grow loyal to the Harley-Davidson brand. Furthermore. Davidson. “tough looking” customer base. The HOGs (Harley Owners Group).

Although Harley-Davidson was successful in repositioning itself. tattoo-covered. Harley-Davidson raised its standards to meet product improvements. woman-chasing. As a result. 2009). Once again. inventory reduced by 67%. and defects per unit reduced 70%. the company constantly faced an image problem. Research in the Wall Street Journal stated “One in three of today’s Harley-Davidson buyers are professionals or managers. Even though the company needs no help in bringing in revenue. this company was gaining huge market share (Hartley. Therefore. it wouldn’t hurt to gain more attention from the younger audience.” (Hartley. beer-drinking. The company should analyze changes in order to communicate with its younger generation. Harley-Davidson began attracting a new customer segment. [and] their median age is 35. From leather jackets. Between 1981 and 1988. Furthermore. to sheets and towels. . scrap and rework went down by two-thirds. About 60 percent have attended college […]. otherwise known as Rubbies (Rich urban bikers). HOGs were stereotyped as “pot-smoking.things to come. the company began licensing its name and logo on an array of products. and is growing bigger each decade. productivity increased by 50%. HarleyDavidson faced threats from imitators and bootleggers who began tarnishing their brand image on poor-quality products. SWOT ANALYSIS Harley Davidson’s history and success has thrived. 2009). These riders helped bring back Harley-Davidson into market dominance. leather-clad bikers.

The generations of baby boomers have contributed hugely to the gross sales but once they get older. The opportunities they are facing now and in the future have to be chosen wisely because their sales are dropping as their majority of their audience are getting older. The biggest strength in this company is the name and reputation this company has built and constructed for over 100 years. Harley Davidson is faced with major conflicts in the future.Strengths – Harley Davidson is known by the quality and new developments of their products. Their products vary from leather boots to build-your-own-motorcycles. Baby boomers have already past their midlife crisis and big expenditures are past their objectives at this point. The company doesn’t only provide a product but at the same time provides financing their products for the good of the company and a benefit to their consumers. . With their complex and vivid internet official site you can read feedbacks and stories from loyal customers. Its current operations provide the consumers with different styles and mechanical options to choose from. Weaknesses – Harley Davidson is a huge company that struggles in targeting the younger audience. Opportunities – Harley Davidson has developed an image only related to the baby boomer generation. The median age of an actual Harley Davidson rider ranges from 42 to 49 and they’re not getting any younger. They either need to make products that can create more attention to the company from the younger audience or fail in doing so and watch the company collapse in trying to sell their bikes. The company has created varieties of method of purchasing their products.

. fashion or the toys they buy. Unfortunately. the lack of acceptance by the company's dealer network. the Motor Company is having a communication problem. Suzuki. It's almost universal that the younger generation rebels against the older generation. This is evident with the recent shut down of its Buell motorcycle line. but the choice and selection that this generation has shown is far from the Buell look in motorcycles. . lack of funding in . with companies like Yamaha. whether its music.Threats – The decrease demand in purchases of bikes is threatening this company in continuing to be a traditional loyal brand of motorcycles. These threats are crucial for the company to analyze and implement in their present and future operation decisions.” (Nolan & Kotha. 2007). which was acquired by Harley in 2003 and the Sale of its MV Augusta brands. Both of these were used at the hopes of entering the sport bike and standard bike market. The company has to change in ways in communicating with the younger audience if it wants to continue for another 100 years. Harley Davidson is anticipating traditions to take place in audiences of ages 20-30 in ten years from now to choose Harley Davidson. The stronger the brand is with the older generation. Kids want something different. Harley isn’t taking this advice to heart. . This generation is looking more for slimmer sports like bikes which Harley Davidson doesn’t manufacture. PROBLEMS HARLEY-DAVIDSON FACES Harley is a highly respected brand in the motorcycle industry. sleeker and faster bikes. the weaker it is with the younger generation. Basically. their sales are declining. . . however. and Honda creating cheaper. . Marketing Consultant Al Ries states: “Harley's close association with boomers could make the brand harder to sell to younger customers when they have cash to splurge.

They need to encourage innovation and creativity in order to have an advantage over their competitors or at least be seen as a potential threat. what designs drew them in. There are many different riders and the company needs to communicate to the younger generation how versatile they can be. what features sold them. MV Augusta. By going and getting the information from their younger consumer target market themselves. and creating a buzz with younger consumers kept Buell from getting any real foothold in the already established markets that Harley had hoped to break into.building the brand name. These brands could have done great things for Harley. Instead they are going to incur a 125 million dollar loss because of a lack of research and investment. had it taken the time to find out what exactly younger consumers were looking for in a sports bike. Investing in focus groups at different locations across the country. they will be able get a good sense of what . The President needs to understand that the "biker guys" aka “the baby boomers” aren't the only ones who like bikes. then how can they stress to the Harley Davidson Motor Company President that changes need to be put in place. PROPOSED SOLUTION Focus Groups and Market Analysis Focus groups can give Harley that insight that it needs to improve its motorcycles. If top management and marketing departments aren’t taking this information seriously and not there to listen or gather the feedback. it can be assumed that Harley just didn’t know what to do with it. They have created a narrow identity for themselves and it is proving difficult to shift it in another direction. they can gain valuable information about their needs. a good look at trends and opinions.

Conducting a thorough in depth market analysis will help Harley to get to know younger consumers. their view of Harley. what features draw them to other brands. By doing this they are alienating a large segment of people who buy motorcycles that do not fit this image. They can pass out surveys and conduct interviews in the sense of getting information on: why younger consumers aren’t purchasing Harley bikes. fresh faced marketing team could bring in new ideas for innovation and creativity marketing wise. Marketing Harley has positioned itself as a “bikers” motorcycle. They can segment the market by age brackets and get information on what each bracket likes and dislikes. A new marketing campaign that shows Harley as a bike for anyone could be very helpful in pulling in new consumers.the majority wants. and what would get them to purchase a Harley motorcycle. What gets these consumers to purchase a product? Are we assuming the wrong things about these consumers? What do they really want out of a product? A good market analysis will give Harley plenty of information about how to go about drawing in younger consumers. . Even hiring a younger.

T he June Barlow. p. 2005. (2009.Price Motorcycle brands such as Honda offer cheaper motorcycles. MV Augusta brands. R. October 15).com. J. www. 2005. Finally.dailyfinance. V. T. Hoboken: John Wiley & Sons. Marketing Mistakes & Successes. Harley-Davidson to shut down Buell.com/2009/10/15/harley-davidson-to-shut-down-buell-mvaugusta-brands-finally/ Business Week. They can start to create greater revenues in the long run.5. Hartley. (2009)." investment report by Ryan Beck & Co. Harley has a good amount of loyal followers. p. August 2. Harley needs to find a way to make a cheaper bike with high quality. May 17. but imagine how much more profitable they can be if they start creating brand loyalty a younger age. by attracting consumers at a younger age. August 9. "Hog Heaven. 1993. but they also offer quality. 2005. A drawback to Harley is that their prices are higher than other motorcycles."New York Tim es. Industry Week. 58.dailyfinance. F. . Works cited “A n O dd D uck from H arley-D avidson. 26. Retrieved from http://www. Moran.

P.L. Harley Davidson: Preparing for the Next Century.. (2007). Reid. 5-7. . Well Made in America (New York: McGraw-Hill. p. R.Nolan. Harvard Business School. "Transformation at Harley-Davidson" by Professors Suresh Kotha and John Dutton. Stern School of Business. New York University. 124. 2002. 1990). & Kotha. p.A ugust 12. 1996. S. "W ill H arley-D avidson hit the w all?" F ortune.

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