Harley-Davidson Case Study

Introduction

Harley-Davidson is an American company that specializes in manufacturing motorcycles. With its rich history and brand image, the corporation has evolved into an American icon on the same level as Coca-Cola and Levi-Strauss. Harley-Davidson has managed to whether various storms throughout the years, such as increased regulation from the government, competition from Japanese brands, depressions and recessions, technological advancements and even World Wars to thrive where other aspiring manufacturers have failed using only a stable business model and the icon 45 litre V-Twin engine, handlebars and two wheels (Hitt, Ireland & Hoskission, 2015). How has the company maintained competitiveness by selling customers the American dream?

Analysis

Despite managing the impressive feat illustrated above, Harley-Davidson remains with several key issues to successfully address to navigate the coming years. The first issue in this regard is that consumers primarily see its products as leisure items. It means that most perceive purchasing one of the company’s motorcycles, parts and even expensive apparel as a luxury instead of a necessity. It leaves these products in competition with consumer budgets that can be volatile and discretionary at times. Despite generating revenue from several sources, few Harley-Davidson appeals to a consumer base that is sensitive to price, leaving the company struggling during challenging economic conditions when they work to generate good sales.

Secondly, the company faces the challenge of effectively describing the market it targets as the initial step in adequately meeting its needs. Historically, Harley-Davidson’s target market has been male adults aged 29 and 55. Still, it has sought to expand its market segments by targeting women and youthful riders in the past decade. However, this endeavour is not without its risks, as shifting attention to a new potential target may see it struggle to meet the needs of its original customer segment amply. It is imperative as adults between 29 and 55 remain the core primary consumers of its products.

Thirdly, the motorcycle market’s drivers of demand and cost are ever-shifting as competitors from overseas change their attention from being the cheapest to becoming affordable and the provision of motorcycle varieties that grants customers choices for purchase. This shift in competition trends has put Harley-Davidson under tremendous pressure to respond. It has a significant territory to protect, implying its control of over 12 and 55 percent of European and American markets for heavyweight motorcycles.

Solution

Several strategies can be utilized to address the issues listed above. One such approach focuses on the customer segment that prioritizes style, heritage, durability, reputation and adaptability. In the last ten years, the company’s premium for motorcycle sales fell to between 5 and 10 percent from 25 up until 2000 due to the Japanese manufacturers changing to selling motorcycles that were somewhat distinct for a lower than average price. However, it has remained profitable and competitive despite retaining its pricing strategy by sticking its focus to producing motorcycles that give customers value for their money. Harley-Davidson’s brand name remains its greatest weapon towards maintaining competitiveness, and it has protected this with determination over the years. Harley-Davidsons remain the premier American motorcycle for most Americans, and the company’s decision to invest more funds into branding following its separation from AMF highlights its commitment to its brand name. In addition, it aims to retain core aspects in its motorcycles despite new models that come out, even only making design changes in response to strong market trends.

In addition, this brand image is protected by encouraging dealerships to sell only their products using financial incentives, revoking licenses for inferior products and limited branded commodities that sell due to rarity. These work to maintain Harley-Davidson’s exclusivity, which is its core. Another strategy is the company’s production process which combines JIT supply chain melding, interchangeability of parts and management of production to make a unique one. In this regard, the sameness of parts is the most vital. It lets Harley-Davisson divide its markets further using various models that use similar parts; this makes their production process highly efficient and cost-effective.

Brand loyalty is also another powerful tool as the following of its products is based on existing clients, most of which are repeat purchasers. This loyalty can be seen in customers’ participation in events sponsored by the company and being part of clubs exclusively for Harley-Davidson riders. It makes customers purchase motorcycles and other branded products while ensuring they replace old bikes with new Harley-Davidson ones. Lastly, the company’s business model of only two ventures, namely motorcycles and financial services, lets it maintain focus, efficiently use resources, and enjoy economies of scale. At the same time, its new marketing to youths and women has diversified its target market.

Justification

• The policies described above are crucial to the success of Harley-Davidson in the coming years as it faces increased competition in the industry.
• The various competitors that threaten the company are grouped by the company in four ways depending on the form of competition and the market segment each serves. They include Metric Sport, Metric Cruiser, Custom Cruiser and U.S cruiser rivals. These competitors will only increase their veracity, so Harley-Davidson will require the implementation of such strategies if it remains competitive in the future.
• In addition, the company’s expansion into new overseas markets in China and India necessitates implementing new strategies. Despite achieving moderate success in India, the company severely struggled in China due to stringent perceptions towards motorbikes and city laws (Attri & Bairagi, 2020). It means Harley-Davidson will have to resort to different tools such as marketing its reputable brand image to meet its American levels.
• Lastly, the ever-shifting government regulations such as those wearing motorcycle helmets and EPA emissions necessitate the company to adopt new policies. Regarding the former, the company should maintain its long-standing relationship with its consumers to promote safety and maintain a clean brand image (Lee, 2018). On the other hand, the latter means that Harley-Davidson must focus on its production process to meet new regulations by EPA and ensure they and the company’s motorcycles emit less.

Summary

Harley-Davidson is a motorcycle manufacturer that prides itself on the American heritage symbol. It has manoeuvred countless storms like economic depressions and Japanese competitors to maintain competitiveness and regularly turn profits. It is, however, not without its issues regarding increased competition, consumer perceptions and target market definitions, all of which threaten its sustained survival. Regardless, several policies like focusing on a specific target market while venturing into others, an efficient production process, and an American brand image can be used to weather coming storms (Sarkar & Banerjee, 2022). It is crucial, particularly in light of stiff competition that is only increasing from various rivals and the company’s expansion to international markets. In conclusion, despite the problems, Harley-Davidson can successfully navigate the future if it utilizes these and other strategies to ensure its competitiveness.

References

Hitt, M.A., Ireland, R.D., & Hoskission, R.E. (2015). Strategic Management: Competitiveness and Globalization: Concepts and Cases. (11^th Edition).

Attri, R., & Bairagi, R. (2020). Triumph Motorcycles: vrooming for increased market share in India. The CASE Journal.

Sarkar, S., & Banerjee, S. (2022). Harley-Davidson HD Connect: Reviving Brand Image Through Co-creation. SAGE Publications: SAGE Business Cases Originals.

Lee, J. M. (2018). Mandatory helmet legislation as a policy tool for reducing motorcycle fatalities: Pinpointing the efficacy of universal helmet laws. Accident Analysis & Prevention, 111, 173-183.