Case Study: Harley – Davidson

Story of becoming a “Cult”

Harley Davidson: Story of becoming a "CLUT"

 How it all Started
• Harley Davidson is a company which gave the world idea of
innovation
• William Harley and Arthur Davidson opened a small motor
shed in Milwauk in 1903
• They gave the world V-Twin engine – which resulted in high
speed and increased sales by 8 times
• During world war 1 and world war 2 they helped US military
by supplying bikes which in turn help them to race ahead of
competitors
• In 1916 HD launched enthusiast magazine which help them to
get closer to customer and get feedbacks

Harley Davidson: Story of becoming a "CLUT"

 Continues……
• Started concept of Exclusive dealer ship which help them to
create large dealership network , they became world’s largest
manufacturer of motorcycle with dealer in 67 countries
• 1947 – they started producing motorcycle jacket and
accessories – shoes & cloths
• HD offered high share of profit and product guarantee to
dealers
• In 1965 they became public from family owner
• 1970 -American machine and foundry (AMF) acquired HD –
Quality got degraded, they focus on sales rather than quality

Harley Davidson: Story of becoming a "CLUT"

 Continues……
• Problem intensified when – Honda, Suzuki and Kawasaki hit
US market , price of HD was 30 % higher
• HD faced loss of $ 50 million after buyout
• US announce policy changes that restricted imports on
Japanese motorcycle it helped HD to survive
• they introduced HD group (HOG) in 1983 to increase stronger
relation and bonds between the customer and the company
though several motorcycle rallies and tours, free trial rides,
interacting with company officials and merchandise, promote
new product to its customer
• In 1993 they started financial services to offer insurance and
finance and also launched visa cards.

Harley Davidson: Story of becoming a "CLUT"

 Importance of Innovation-
Significant situation
• 1903-First bike made uphill driving easier ,it become instant
hit.
• 1909-New V-twin cylinder engine concept
 distinct rumbling sound
 speed over 60mph
 Sales increased 8 times in 3 years
• 1913-First mover advantage among 150 new entrant in US
bike manufacturing market
• 1916- Launching of Bike Dedicated Magazine
• Stated producing biking gears

Harley Davidson: Story of becoming a "CLUT"

 Continues…..
• 1960-Popularity and sales started grew due to new range of
super bikes for the first time.
• Introduced concept of Exclusive Dealership help them build
large dealer network.
• During 1980 when HD fighting for its survival, stoppage of
Innovation was seen as the main cause for it .
• Establish HDGroup (HOG) – stronger relations bonds between
the customer
• Organized dealer training programs
• Branding - Sell cloths at retail stores
• Insurance and financing- Started financial services

Harley Davidson: Story of becoming a "CLUT"

What factors have been responsible for Harley
Davidson become a cult
Macro Factors:-
• Technology:
 Design of Twin type V engine
 Front Brake system and unique tear drop shaped gas tank
 the new range of super bikes – sportster (1957), Duo
glide(1958), Electra- Glide (1965) and super glide
• Sociocultural :-
 It symbolizes freedom loving and carefree attitude of US
people.
 Loud and heavy weight bikes soon became symbol of counter
culture.

Harley Davidson: Story of becoming a "CLUT"

 Continues…..
 Peter Fonda’s Blockbuster movie easy rider epitomize,
tattooed motorcycle enthusiast travelling across US on their
HD Chopper.
 Expanded to niche market that were looking for other than
heavy weight bikes.
• Political and legal:-
 US import policy – Helped HD to survive.
• Economic:-
 To help all the customer segments HD Setup financial
services which offered whole sale insurance and financing
of the bikes

Harley Davidson: Story of becoming a "CLUT"

 Continues…
Micro Factors:-
• Consumer:-
 Adaptability to the taste of Female bikers.
 Established HOG (Harley-Davidson Group) & BRAG(Buell Rider
Adventure Group) for strong customer bonding.
 HD Merchandising and Cafes were launched, helped in
capitalizing tough image of brand.
 Launch of the Enthusiast Magazine.
 Made Bike available in more color shades
• Channel partners:-
 high profit share

Harley Davidson: Story of becoming a "CLUT"

 Continues…
dealer network in 67 countries
Training imparted
Helped them against bootlegged merchandizing through
trade mark licensing program
Dealer oriented policies- 120 days credit policy.
•Competitors:-
Supply to govt. agencies holds them in good state than its
competitors during great economic depression of 1930
Closing of Indian Bike Company helped them to become
sole manufacturer during 1953.

Harley Davidson: Story of becoming a "CLUT"

 What is Harley Davidson’s
positioning?
• Harley Davidson positioned itself with innovation philosophy
with the use of technology and engineering to support the
processes that aimed at enhancing the overall customer’s
experience.

Harley Davidson: Story of becoming a "CLUT"

 What is the secret of the fanatical
customer loyalty to Harley Davidson?
• Biking experience provide by Harley Davidson was different –
culture, sound, aesthetics
• Excellent customer relationship – HOG, The Enthusiast
Magazine
• Innovation through customer feedback – variety

Harley Davidson: Story of becoming a "CLUT"