Emily Hernandez

Building a Legend

The Company

● Founded in 1903 in Milwaukee, WI by William Harley and Arthur Davidson

● Largest motorcycle manufacturer in the world

● Manufactures and sells heavyweight custom and touring motorcycles, a line of motorcycle parts, accessories, general merchandise and related services

● One of the most familiar and loved brands in the United States

Business Strategy Framework● “Harley-Davidson's purpose of fulfilling dreams of personal freedom is the foundation

for the Company's core strategies, which include:

○ Delivering high-demand, profitable products and premium retail experiences○ Strengthening Harley-Davidson through agility and responsiveness to be a leader

in the global marketplace○ Extending the Harley-Davidson brand's reach beyond core customers and

markets○ Cultivating great talent, leadership and culture to enable a sustainable future”

Customer Value Proposition

Perceived benefits to customers:

● Functional● Emotional● Social● Self-Expressive

"Harley-Davidson stands for independence, freedom, individuality, expressing one's self, adventure on the open road, and experiencing life to its fullest."-Joanne Bischmann, VP of Marketing for Harley-Davidson

Harley Owners Group (HOG)● Sponsored brand community created in 1983● 1 million members● Serves to promote product, and lifestyle

○ Sponsors many motorcycle events, including rallies and rides for Harley Davidson motorcycle enthusiasts

Core Competencies

● Brand image/loyalty● Differentiation strategy● Customization or aftermarket● Wide distribution network● Skillful workforce● Efficient engine technology● Promoting lifestyle through HOG

Problem: Shrinking market share due to...

Foreign competition

● Japanese motorcycles (Honda and Suzuki)

● Stylish bikes● Cost less to

manufacture● Discounting

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High costs

● Heavily unionized workforce

● Relying on single/limited suppliers

Myopic Target Segment

● Core customers are men over the age of 35

● Baby boomers segment shrinking

● No new customers to replace current customers

Alternatives

Foreign Market Penetration New Market SegmentsLower Costs

1: Penetrate Foreign Markets

● Stop relying on U.S market● Form strategic alliances and joint

ventures to enable entry into foreign markets

● Multidomestic strategy- tailor product extensions accordingly to meet tastes of geographic market

2: Lower Costs

● Knowledge of local conditions, sharing of costs, resources, and assets● Renegotiate delivery costs of components used to manufacture the motorcycle ● Consolidate factories into geographically appropriate areas to reduce shipping

costs to dealerships● Negotiating concessions from the union to reduce man-hour cost● Analyze production line for maximum efficiency

3: New Market Segments- Women

● Develop products and services for females domestically and internationally

● 28% increase in the last 5 years● Lower CC models● Lower seat height● Lower center of gravity● Optional automatic transmission● Campaign “Don’t just go along for

the ride”

3: New Market Segments-Younger Customers

● Recruit younger customers to build lifetime customer loyalty

● Make new motorcycles more affordable with lower-interest financing

● Offer greater customization● Translate campaigns into the Digital

Age

Conclusions

In order to remain a leader in the industry, Harley Davidson should:● Be more responsive to market trends● Focus on collaboration and strong supplier relationships to deliver cost and

quality improvement in the long-term. ● Sell products and promote the experience of motorcycling to both core

customers and outreach customers such as women and young adults.

Discussion Questions

● Should Harley Davidson lower its prices to appeal to younger markets? Will this affect their image?

● Do you see any limitations to the viability and growth of HD in the future?