Harley Davidson

In 2006 Harley-Davidson had a record sales year and maintained a commanding share of the heavyweight motorcycle market for the previous decade. They had brand loyalty, a large customer base, and had a strong presence in Japan where it was the market leader for heavyweight motorcycles. (Roese & Kompella, 2013) However, there loyal customer base was aging and because of their strong brand community and resonance they never saw a need for marketing. In 2007 Harley-Davidson hired, Mark-Hans Richer as their chief marketing officer (CMO), a position Harley-Davidson never had before. Mark had two distinct problems. Tapping into a new generation of riders and a more diverse customer base, all without losing current customers. As well as time, the average tenure of a CMO in 2007 was only 27 months and a complete new product development cycle would take a minimum of four years. (Roese & Kompella, 2013)

Harley-Davidson has taken its brand and turned it into a national symbol. They sell more than motorcycles, they sell values, ideals, and lifestyles that defined the personal identities of its customers. This is why Harley-Davidson customers have brand resonance and loyalty. The customers had a psychological bond with the brand and the level of activity it prompts. Their loyalty embraced not just repurchase but also commitment, in which the individual placed large stakes on continued affiliation with the brand and its community. Such company sponsored brand communities like Harley Owners Group (H.O.G.) was open to any Harley owners that paid dues. It was an opportunity for customers to spend time with management and attend social events, rides, and rallies with Harley-Davidson dealers. As a result, H.O.G. creates a more loyal customer base and gives management a way to solicit product ideas from its 600,000 members. (Roese & Kompella, 2013)

Using situational analysis, I carried out a SWOT (see Exhibit 1) in which I present all relevant internal strengths and weaknesses and external opportunities and threats. Harley-Davidson’s strongest strength is its brand loyalty mentioned above. Interestingly enough their strongest weakness is young riders not fitting into the definition of Harley’s brand culture. There biggest opportunity is reaching out to “outreach” customers: Young Adults (18-34), Caucasian Woman (35+), Hispanics (35+), and African-Americans (35+). (Roese & Kompella, 2013) Conversely their biggest threat is Harley-Davidson’s aging Core segment, Caucasian Men (35+), which drew mainly from the Baby Boomer generation (who in 2007 were between the ages of 43 and 61). (Roese & Kompella, 2013)

Harley-Davidson took the first step towards eliminating potential future threats by hiring Richer and giving their Harley-Davidson a strong marketing leadership presence to ensure that the company executes the right activities. Richer joins a company whose reputation as a world-class marketer far exceeds its budget. He’ll command approximately $30 million in spending, a slice of what he is accustomed to at previous companies. (Halliday, 2007) In the preceding few years before Richer, the marketing team made efforts to connect with Outreach audiences and had some success with Harley-Davidson’s Garage parties, small woman-only events held at dealers, and the Rider’s Edge new rider training program. Still Harley-Davidson used 83% of its marketing budget on Core customer base. (Roese & Kompella, 2013)

Attracting to Young Adults would likely require more than increased spending. In 2007, Harley-Davidson conducted a study of Young Adults that identified barriers to buying a Harley-Davidson, including “haven’t seen the right bike,” “may not belong” (i.e., may not fit into the Harley brand culture), and “dealership aversion”. Of these dealership aversion represented the biggest barrier to conversion. (Roese & Kompella, 2013) Young Adults found visiting the dealership to be an intimidating process and additionally Young Adults assumed the cost of an entry level Harley-Davidson was approximately $20,000 when they actually start at $7,000.

Given the time constraints presented above I believe Richer’s best course of action would be to leverage its product line rather than completing a new product which would take approximately four years. Richer can do this by marketing its sports bike line, Buell or marketing a heavyweight motorcycle, the Iron 883. Both have their strengths and weaknesses but which one is the