3. There are very few products that are so exciting
that people will tattoo your logo on their body-
Richard Teerlink-retd. CEO HD
4. 112 year old cult brand
America’s top growth stocks since its 1989 IPO
Average age of Harley riders- 35 to 47
5. Arthur & Walter Davidson and William Harley founded HD
in 1903
Company filed incorporation in 1907
HD became world’s largest motorcycle company in 1918
Focused on R & D and came out with V twin design, 4
cylinder engine etc
Post world war II , its sales declined
6. The Raw power
V-TWIN ENGINE
Introduced in 1909
It gave an aggressive appearance
Unique thump sound
7. Image & lifestyle approach
New colors, decals, & stylized designs in late 1930s
Promoted through biker magazine & word of mouth
Used by
US Military Highway patrol Hell’s angels Hollywood rebels
8. Image at late 1950s
Leather clad rugged &
tough riders
9. Entry of Japanese bikes in US
HONDA discovered a segment who didn’t like the ‘tough’ Harley bikes
Introduced 50cc bikes- 1959
Communal sweet and family oriented
After the success more powerful bikes introduced- 250cc
10. Others
followed too
Smaller, quieter & fuel efficient
Low maintenance & easy to ride
Attracted young riders, women & those who cant afford Harley
11. Tough competition
Demand of motorcycles increased in 1960-1970
85% sales went to Japanese from total US
motorcycle sales
Highly skilled manpower- mass production
Ad spend were many multiples than HD
Technically sound
HD’s market share declined
12. Imitating Japanese didn’t work
AMF acquired HD and pumped capital to expand production
Less skilled workers added
Quality issues overlooked
Reliability & quality reputation dropped.
Produced low priced bikes but dealers couldn’t sell it because
of low margin
13. The Japanese target HD
Year 1975
HONDA Goldwing 1000cc Kawasaki H2R 800cc
HD share declined by 80% by 1970-80
14. Year
1980
Harley’s profitability down, started looking out for buyer
Goal was
simple
15. Benchmarking HONDA
HD senior managers visited Honda’s Ohio plant
They found following there:
Neat assembly line
Minimum paperwork
Just in time system
Bikes built to order
Workers responsible for quality
16. The New approach
The Productivity Triad
Employee Statistical
involvement JIT/MAN operator
control
17. Result
Inventory turn increased from 2 to 17 a year
Productivity went up by 50%
Work in progress inventory reduced by 75%
International revenues went up by 1.7 times
Operating profits increased by $59 million
Market share increased by 97%
HD listed on NYSE
18. The Transformation of HD
Informal formal
Leadership institute
program
Eliminated positions of senior VP in marketing & operation.
Create demand team & product support team
Saved lot of time!
19. HD for workers
Substantial changes in JD, responsibilities & production
process
Increased job enrichment & worker empowerment
New rewards & incentive system
Pay for performance
20. Harley Davidson ownership group
Formed in 1983 to encourage active involvement.
By 2004 900000 members whereas HONDA’s Gold wing riders group had
75000 members only
22. HOG Activities
Organize rides
Training courses
Social events
Charity fund raiser
Special HOG group for women
‘’The Ladies of Harley’’
As per Exhibit 3 10% of customers were female at 2004
23. Change in leadership
Teerlink retired at 1997
Jeffrey Bleustien retired in 2005
James L Ziemer retired in 2009
Keith Wandell is the current CEO
24. Preparing for the next century
Robust growth from 1996-2000
But declined from 2002 to 2004
Average growth rate is 7% to 9% per year
Slowing trend shows that the HD products are maturing
Baby boomers were aging (Born between 1946-64)
Loosing its focus on youth
25. Youth’s inclination to
Japanese bikes
Younger, sleek, high reviving sports bikes.
Median age was 33 where as for HD 47
HD was priced higher and was beyond the reach of youth
26. HD’s Strategy
The stronger the brand is with older generation, the
weaker it is with younger generation. Eg: Levis
Al Ries
Population segment will remain constant till 2020.
Boomers live more adventurous life. Youngest baby
boomer are just entering 40s. HD is addressing shifting
demographics to attract more younger generations
HD
27. Buell Acquisition
To get into sports model bikes HD acquired Buell in 1998
Lower priced with high power
Except Japan & Australia sales were going good till 2004
28. HD For youth
V ROD 1000cc
Combine fuel injection
Overhead cams
Liquid cooling
600 pound
Designed to appeal hip Americans
29. Introduction of liquid cooled
engine
Teamed up with Porsche to build.
Allows boosting acceleration.
Big departure from HD’s traditional air cooled engine
30. Other offering
Sportster in 2004 Street Rod in 2005
Entry level bikes for young riders & women riders
Low priced
31. Rental program
Rental program launched in 1999
Offered by 250 dealer in 52 countries
A good percentage of people who rent HD turn up to buy it.
Helped sales of accessories too.
32. Rider’s edge program
Program launched in 2000
It offered riding lessons for 4 days at $350
70% participants purchased a motorcycle in 18
months.
Not all dealers could execute it due to its higher
cost
33. HD revises its sales estimates
At the end of 2005 company stock price
declined by 17%
Lowered its sales estimates by 10,000 units.
Financial forecast is predicted to rise till 5% to
8%
34. Fan Machine
Harley-Davidson launched a new Facebook app,
called “Fan Machine,”
That allows fans to submit advertising ideas directly
to the company via Facebook.
The goal is to provide an outlet for the brand’s
“passionate” fans, and also to connect with younger
audiences
35. HD MUSEUM
The Harley-Davidson Museum is a North American
museum near downtown, Milwaukee, Wisconsin
Contains more than 450 Harley-Davidson motorcycles
The museum attracts an estimated 300,000 visitors
annually
37. The brand excels at delivering the benefits customer truly
desire
8
Introduced V-Rod in combination with fuel injection, overhead cams &
liquid cooling.
Harley-Davidson focused on:-
New product development
Upgraded manufacturing technology.
Capacity and processes.
Modernized and strengthened dealer network.
38. The brands stays relevant
9
Despite sagging economy Harley-Davidson invested in R & D and
came out with:-
V-twin design.
Four-cylinder engine.
Improving reliability of machines.
Harley came up with a first ever new motorcycle dedicated solely to
female motor- journalists.
Continuous support for various bike rallies focused on minorities.
39. The pricing strategy is based on consumers’ perception of value
Harley-Davidson stands for independence, freedom, individuality, 9
expressing one’s self, adventure on the open road, and experiencing
life to its fullest.
40. The brand is properly positioned
8
American by birth. Rebel by choice.
Harley-Davidson focuses on riders between the age of 35 to 64.
Majority of the youth generation is more or less aging to 30 years.
Younger generation favors sleek and high revving sports bikes.
Harley-Davidson have to address the shifting demographics.
41. The brand is consistent
10
In 1908 Harley came up with V-twin engine, clutch, internal expanding
rear brakes & three-speed transmission.
Acquisition of Buell in the year 1998.
In 1999 Harley launched rental program.
In 2000 Harley initiated Rider’s Edge program.
In 2001 Harley introduced V-Rod, first motorcycle to combine with fuel
injection, overhead cams and liquid cooling.
43. The brand makes use of and co-ordinates a full repertoire of
marketing activities to build equity
9
Brand name designed:- Name originated from the name of Arthur and Walter
Davidson and William Harley.
Slogan:- American by birth. Rebel by choice.
Brand awareness:-
Harley organized two events for leading national women’s media.
Harley hosted its first ever new motorcycle dedicated solely to females.
HOG meets
45. The brand’s managers understand what the brand means to
consumer
10
Harley-Davidson formed a group called Harley-Davidson Owners
Group (HOG).
Close to customer marketing.
Harley launched rental program.
Harley initiated Rider’s Edge Program.
46. The brand is given proper support, and that support is
sustained over the long run
10
Harley nearly went to bankruptcy but came back strongly.
When Harley was loosing its market share they benchmarked
Honda.
Acquisition of Buell.
Harley came up with “Productive Triad”:-
Employee involvement.
Use of JIT Inventory practices.
Statistical operator control (SOC).
47. The company monitors sources of brand equity
10
Harley’s logo tattooed on bodies.
Hosting number of events around the United States.
Merchandise is another huge source of brand equity for
Harley.
People who do not own Harleys often wear clothes featuring
the logo.
HOG was launched and online communities were watched for
insights.
48.
49. QUESTIONS
B1/B2
Q1. Why do you think some people will tattoo the Harley Davidson logo on their
body? Explain?
Q2. Is Harley Davidson taking us to next century or going back to the old?
Comment?
C1/C2
Q3. What Should Harley Davidson do to enhance connect with the Youth
globally, in the near future?
Q4.Do you think Enfield Bullet is the ‘Indian Harley’? Explain your point of view?
D1/D2
Q5. What strategies is Harley Davidson adopting to build a brand community? Do
you think this will help attract new customers?
Q6. Has Harley Davidson been able to convert its cult brand equity into strong
financial performance & growth? Explain your view?