Reinventing Harley-Davidson's Brand Strategy for the Modern Era

The provided content discusses Harley Davidson's journey and the challenges it faces in a competitive market. The company has faced several hurdles, including increased competition from foreign manufacturers, demographic changes, and decreased brand loyalty. To address these issues, Harley Davidson is focusing on social branding, building a factory in Thailand, and targeting women and young customers through marketing efforts. The content also highlights the importance of corporate governance and how it affects business success.

Running Head: Harley Davidson
Harley Davidson
Case Study

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Contents
Summary of the case study..............................................................................................................2
Strategic Position.............................................................................................................................2
Harley-Davidson’s Corporate Governance......................................................................................3
Strengths and weaknesses................................................................................................................3
Strengths.......................................................................................................................................3
Cult brand.................................................................................................................................3
HOG.........................................................................................................................................3
High customer pull...................................................................................................................4
Loyal customer base.................................................................................................................4
Customization...........................................................................................................................4
Weaknesses..................................................................................................................................4
High cost of exporting..............................................................................................................4
Over dependence on the US market.........................................................................................4
Limited suppliers......................................................................................................................5
Opportunities and Threats................................................................................................................5
Opportunity..................................................................................................................................5
Asian and European markets....................................................................................................5
Lower CC bikes........................................................................................................................5
Women and young riders.........................................................................................................5

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YouTube partnerships..............................................................................................................5
Threats..........................................................................................................................................6
Approach..................................................................................................................................6
Substitutes................................................................................................................................6
Strategic factors...............................................................................................................................6
Increasing age of customers.........................................................................................................6
Increasing number of substitutes..................................................................................................6
Need more manufacturing units...................................................................................................6
Recession.....................................................................................................................................6
Core competencies...........................................................................................................................7
Distinctive competency...................................................................................................................7
Strategies to increase sales...............................................................................................................7
Build manufacturing units............................................................................................................7
Marketing focused on women and young riders..........................................................................8
Academy to teach motorcycling..................................................................................................8
Social Media................................................................................................................................8
Focus on international markets....................................................................................................8
Image of a bike rider........................................................................................................................8
Impact of competition......................................................................................................................9
Loyal Customers..............................................................................................................................9

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Image marketing..........................................................................................................................9
Customer relationship management.............................................................................................9
Product differentiation.................................................................................................................9
Impact of changing demographics...................................................................................................9
References:....................................................................................................................................11

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Summary of the case study
Harley Davidson was founded in 1903 and continues to be a success story even today. Its
emphasis on quality product and image marketing has got the firm where it is today. After
gaining control from AMF, management commenced just in time manufacturing which implied
receiving and making goods as and when they are needed thereby leading to reduced inventory
costs. Many competitors challenged Harley’s leadership position specifically in the motorcycle
segment but in vain. By 1993, the firm acquired Buell Motorcycle Company in order to expand
its product offerings.
Harley’s attempt at diversifying into recreational industry was reversed. As Harley’s customer
base aged, it introduced V-rod which appealed to the youth. After the growth stages of 1990s,
Harley’s sales started to decline majorly for two reasons safety and pending recession. How
Harley continued to grow is discussed in the questions below.
Strategic Position
Different brands aim to position themselves in various different segments, however the most
fundamental positioning distinction comes from price (Association for consumer research, 2016).
Harley has been unique by not following the low cost strategy like all its competitors hence
Harley’s positioning is extremely critical to its success especially given that image marketing is
their strongest suits. They aim to fulfill the dreams of personal freedom. Even its vision indicates
the company’s focus on overall development of all its stakeholder’s. The vision statement also
focusses on international success which makes its expansion plans evident. Harley’s mission is to
bring exceptional service to its clients and thereby gaining their continued loyalty. Harley’s
customers are fiercely loyal. And this is also one of the most distinguishing features of the brand.
It believes it delivering people an experience and not just a motorcycle (Harley Davidson, 2017).
Its strategies also clearly indicate Harley’s intention of selling motorcycles as a lifestyle and not
just as a mode of transportation (Advertising Age, 2013). Harley continues to differentiate itself
by focusing on the experience and not the intricacies of the bike. Harley’s CMO mentioned that
Harley has an engine and wheels and it runs on road, but that is where its similarities with
respect to its competitors ends (Forbes, 2013). Harley has focused solely on heavy weight

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motorcycles and continues to ensure its products are different from competitors (Business
Insider, 2016). In the aim to sell an experience, Harley makes sure that it hires employees that
customers can relate to. Their sales employees and store workers are bikers and dressed in biker
jackets. Their knowledge about various bikes and its technicalities are in accordance with the
Harley store atmosphere.
Harley-Davidson’s Corporate Governance.
Corporate governance is the very essence of business (Forbes, 2015). Harley Davidson takes
immense pride in its excellent measures taken to achieve efficient levels of corporate
governance. Governance basically implies the art the managing any entity. It envelops leadership
roles, management styles, company policies, procedures, organizational structures and employee
conduct (Business Line, 2017).
Harley’s company policies are transparent and leave no room for discrepancy. Harley’s board of
directors come from a range of industries with decades of experience (Harley Davidson, 2017).
Harley even has a corporate governance committee in place that ensures that the company’s
policies are in place and implemented continuously. The firm’s mission, vision, values and
objectives are crisp and clear and adhered to sincerely.
Strengths and weaknesses
Strengths
Cult brand: Harley Davidson has positioned itself in the niche segment of high cc cruiser bikes
and transformed itself as a cult brand. This is also because of the sense of ownership and along
with that a sense of belongingness to the Harley family that its customers feel. Harley
merchandises like jackets, caps, bottles, key chains make sure of bringing a feeling of similarity
among its owners.
HOG: Harley owners groups are organized across the world. They meet often, discuss
experiences, and travel together. They conduct rallies and other events there by making people
feel like a part of a group (Harley Owners’ group, 2017). These passionate owners used these
rallies as a killer sales tool (Cult branding, 2011). Harley bikes were made available to people at

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these rallies so they can get a firsthand experience of riding this beast. Feedbacks were taken
from these test riders by Harley employees and changes were accordingly made to bikes.
High customer pull: Harley’s distinguished promotional strategies and branding has helped the
brand gain a huge customer base. Harley comes up with various campaigns and these
promotional ideas help consumers connect more with the brand by increasing awareness. Its
‘Live your legend’ campaign gained a high TOMA score (Top of the mind awareness) and
increased demand by $70 million in 2016 (Advertising age, 2016)
Loyal customer base: Harley’s customers are fiercely loyal owing to its image marketing and
targeting a niche segment. Also, Harley is the only brand that provides its consumers with an
option to customize their bikes via an online portal. This attracts bike enthusiasts and they
remain loyal to the brand as they do not find this facility with any other competitor. As rightly
said, such a high level of loyalty is achieved not just by a great service delivery but by
willingness to invest in individual customer’s needs (Inc., 2013).
Customization: Harley Davidson gives its customers the luxury of customizing their bikes as per
their needs. This can be done on an online tool where people can design their bikes and see it
come to life (Harley Davidson, 2017). This gives consumers a sense of individuality and
ownership with their bike. The emotional quotient attached with a self-customized bike is high
and this helps in gaining customer loyalty.
Weaknesses
High cost of exporting: Outside US, Harley Davidson has only one manufacturing unit in India
and one assembling plant in Brazil. Recently it announced the plan to make an assembling plant
in Thailand as well to cater to Asia Pacific clients. But even then the number of Harley facilities
outside of US is very less and this makes the price of exporting to other countries relatively
higher. Even though they seek a cut in import duties with various countries, nothing substantial
has been accomplished yet (Deccan Chronicle, 2014).
Over dependence on the US market: As mentioned above their lack of manufacturing units in
other countries make Harley focus more on the US market. This creates a very high dependency

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on one particular market as more than 65% of the revenue comes from the United States of
America (The Britton, 2017)
Limited suppliers: Harley suppliers go through a strenuous selection process in order to maintain
the Harley standard. This is why Harley has very few suppliers especially outside of US and in
the long run depending on such few suppliers’ increases dependency and may even lead to
delivery delay and customer dissatisfaction.
Opportunities and Threats
Opportunity
Asian and European markets: Harley has a very strong hold in the US market but with time it
must be noticed that the demand in the developing Asian and European markets is consistently
on a rise and there are almost no other players especially in high cc cruiser bikes segment. This
makes for a very attractive opportunity for Harley.
Lower CC bikes: Harley Davidson has kept its focus completely on high cc and heavy weight
bikes but Harley can immensely increase its customer base by introducing low cc heavy weight
bikes as the demand and market for these bikes is much higher. Especially now that Harley is
focusing on targeting a younger clientele, this is a definite opportunity to expand base.
Women and young riders: Harley can put advertising to efficient use and encourage women and
younger riders into biking. In 2006, women accounted for 12% of total bike sales across the
globe. At present, demand for motorcycles among women is at an all –time high (JS Online,
2016). This is a growing number and it marks a golden opportunity to introduce these budding
riders into the Harley cult club.
YouTube partnerships: Recently there is an emerging trend of bikers uploading their travel
experience videos on YouTube. So much so that YouTube has become a better travel influencer
than Instagram (Business Standard, 2017). These v-loggers have a huge fan base and it helps
them earn money as the viewership for their videos is very high. Harley can associate with these
bikers and provide them with Harley merchandises. These bikers also organize meet-ups with

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their fans in the different cities they travel and Harley Davidson can partner by offering their
venue. This would also increase the footfall at the store and hence higher sales.
Threats
Approach: given the market scenario, consumer needs are consistently changing. This is the time
to understand those needs and bring in efforts to fulfil them. Being myopic can significantly hurt
Harley sales. Another factor is that at the moment 65% of the revenue comes from US and such a
high level of dependency can cause internal distress.
Substitutes: Based out of US Harley must keep in mind that a stronger economy means more
competitive threats (Forbes, 2012). There are many emerging players in the market who are
offering heavyweight motorcycles at a lesser price like Royal Enfield, KTM, Triumph
motorcycles etc. Harley’s most endangering substitutes are Yamaha VMax, Suzuki Intruder,
Ducati Divel, Ducati Multistrada and Suzuki Hayabusa.
Strategic factors
Increasing age of customers: As the case elaborates that a lot of Harley sales were conducted in
the late 1990s. This means most of them are over 50 years of age, mostly male and mostly white
(The guardian, 2016). Rider over the age of 40 account for 40% of the fatalities caused by bike
accidents. This becomes a major issue as increasing number of accidents by Harley Davidson
bikes is sure to impact its brand image. Also almost all Harley’s competitors are focussing on
targeting a younger generation and it is high time Harley begins to capture that market.
Increasing number of substitutes: Harley Davidson is no more a solo player in the heavy weight
bike segment. Motorcycle companies like Royal Enfield, Suzuki and Triumph are slowly gaining
markets with their ‘heavy weigh bikes at a lower price’ strategy. Harley’s target customers
belong to the high income segment but substitutes offering low price goods is sure to eat away
from Harley’s market share.
Need more manufacturing units: Lack of manufacturing units in different countries makes the
cost of exporting really high and time consuming. Secondly it somewhat reduces the trust in the
minds of consumer by increasing service delivery time. Although, opening manufacturing units

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is a tedious and expensive investment to make, but given Harley’s increasing brand awareness, it
is about time to make a rational change in the operational structure of the firm.
Recession: The case that we are referring to, is dated before 2008 and hence the recession is yet
pending. This black hole in the American economy is sure to affect Harley Davidson as well by
reducing people’s buying power and hence demand for high end motorcycles. Strategies must be
carefully built to tackle such macro-economic scenarios as and when they arise.
Core competencies
Core competencies are skills that the organization is best at. Core competence is the collective
learning in the organization, especially the capacity to coordinate diverse production skills and
integrate streams of technologies (Harvard Business Review, 1990). These competent abilities
may or may not give the firm an advantage over its competitors. Harley Davidson’s core
competency lies in its positioning strategies and customer management. Harley positions its
bikes in the most differentiating and innovative manner leading to customer loyalty. Harley does
not sell motorcycles for transportation but rather as a status symbol. It symbolises leisure,
freedom and a strong personality.
Harley owners groups organize various events and rallies where all proud owners of Harley
participate. This gives the brand a cult status. Harley celebrates birthdays of all its customers by
inviting them to a nearby Harley Davidson outlet and sometimes gifts them merchandise. They
make the customer feel like they are a part of the family leading to a passionate customer base
and loyalty.
Distinctive competency
Distinctive competencies of a firm include those abilities that a firm does better and differently
from its competitors. Harley’s distinctive competencies lie with its niche targeting and customer
relationship management.
Harley targets high income groups of people and sells them heavy weight high CC cruiser. This
differentiates Harley from its competitors who do not have a strong hold on this segment of

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technology and hence consumer base. Being a part of a niche market segment always makes
customers feel special.
Harley’s customer loyalty is one of its biggest assets and that is completely owed to image
marketing done brilliantly done by the team. Harley markets its motorcycles are a symbol of
freedom, independence, strength, ready to take challenges and immense force. Anyone who
associates with these qualities immediately gets driven towards Harley. Harley sells a lifestyle,
an image and a reputation, not just a bike. And this is what makes it different and even superior
to its competing counterparts.
Customization of motorcycles is one of Harley’s most special services. Harley provides its
customers with an online portal where they can design their own Harley and see it come to life
on delivery. This makes customers associate more with the brand as the emotional quotient
associated with a customized bike is very high (USA Today, 2017).
Strategies to increase sales
Build manufacturing units: As discussed before, Harley Davidson has just one manufacturing
outside US which is in India and one assembling unit in Brazil. This leads to high cost of exports
and also impacts delivery. In order to overcome this, Harley recently announced to build an
assembling unit in Thailand which will be a knock down facility to serve its Asia pacific
customers (Fox Business, 2017). Building more manufacturing units in exporting countries is the
next recommended step for Harley Davidson and this is sure bring an increased customer base.
Marketing focused on women and young riders will inspire them to enter the motorcycle
segment. This will benefit Harley Davidson sales as no other firm is targeting them at the
moment and the share of motorcycles purchased by women is much lesser as compared to their
male counterparts. Harley must also target young riders as firstly, brand loyalty will be much
higher as Harley will be introducing them to the world of motorcycle. The emotion behind the
first bike can surely be banked upon. And secondly, Harley’s customers who bought their bikes
in 1990s have reached a risky age and may affect Harley’s brand image if the number of
accidents increase.

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Academy to teach motorcycling: Harley Davidson’s ‘riding academy’ is its initiative towards
teaching biking to youngsters. This has been a major strategic decision that is expected to raise
sales. By the end of this year they aim to train 65000 motorcyclists across the country. This will
ensure a certain loyalty from this set of prospective clients (JS Online, 2016).
Social Media: According to the global digital snapshot over 40% of the world’s population are
active social media users (Web Pro News, 2017). YouTube channel partners are a fad and Harley
must take advantage of this and target a large mass of youth. Many bikers have active YouTube
pages with high number of followers. Harley Davidson can tie up with them and take advantage
of their fan base alongside with promoting their own products.
Focus on international markets: As discusses earlier, 65% of Harley’s revenue comes from its
US market. This high level of dependency and lack of diversification in the consumer segment is
rather unsafe (Fortune, 2012). Any macro factors affecting the economy of America will directly
impact the company’s performance. Harley Davidson must strategies and increase its focus on
international soil by building manufacturing units and service stations in other countries. This
will lead to efficient service delivery and an increased base of customers.
Image of a bike rider
Bike riders are often associated with strength and a risk taking aptitude. They symbolize
rawness, speed and power. They are filled with pride and responsibility. They seem fearless and
extremely passionate about travel. They are strong willed and living on the edge and their life is
filled with enthusiasm and energy.
The biker image portrayed above is surely a huge help to Harley Davidson’s image as the brand
reflects all the same values. The high CC of Harley bikes shows speed, power. The heavy
exterior symbolises strength and robustness. The HOG members signify passion and pride. This
is exactly what Harley Davidson has banked upon. This image marketing by the brand has led to
aggressively loyal customers and a very high emotional quotient attached with the purchase of
the bike.

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Impact of competition
Like every other brand, sales are bound to get impacted with the presence of higher competition.
Also despite the presence of other brands offering lower prices for heavy weight high CC bikes,
Harley Davidson consciously made the decision of protecting their iconic brand image by not
engaging in discounting activities.
However, Harley continues to hold the highest market share in unites states of over 65% which is
expected to grow by 2-2.5% annually (Forbes, 2014). Polaris has been Harley’s biggest
competitor with its sales growing 23% year over year which is more than Harley and this is
surely a matter of grave concern (Forbes, 2016).
Loyal Customers
Harley Davidson customers’ loyalty is world renowned and often a reason for envy among other
brands. This is predominantly because of three factors which are Harley’s greatest competencies.
First being image marketing, second being their customer relationship management and third
being their product differentiation.
Image marketing helps its customer associate with a certain image every time they own or ride a
Harley Davidson bike. Customer often wish to continue being associated with this image and
hence remain loyal to the brand. They like the perception that they leave in people’s minds when
they are owning a Harley Davidson bike.
Customer relationship management of Harley is done in the manner that the customer feels like a
part of a family. HOG events and rallies are conducted often where all the Harley owners get
together. They all have shared passions and personality traits that they relate with and hence they
have made a cult and continue to be loyal towards it.
Product differentiation has occurred mainly because of the absence of too many competitors in
the niche segment of high cc heavy motorcycles. Styling of the bike, its exteriors, high engine
power are factors which are not easily available with other brands. Hence customers are loyal
towards Harley Davidson.

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Impact of changing demographics
Changing demographics are a major opportunity in the form of increasing potential clients for
Harley Davidson. Women are increasingly gaining interest in and ability to ride bikes. This is a
potential market for Harley bikes as they can invest in marketing strategies to target this segment
of the society.
People are now beginning to ride their first bikes at an early age and also people’s inclination
towards healthy living has got people above the age of 50 also to ride bikes. In fact old rider
clubs are getting formed where senior citizens of the country meet and travel together.
However Harley must continue to cater to its current customer base who are above 50 years of
age as Americans over 50 control 77% of the total net worth in the country. And across the
country 39% of the motorcycles are owned by people aging between 51 and 69 (JS Online,
2015).
Harley must invest wisely in the marketing of these segments as they are still niche and any kind
of association with bikes at this stage with ensure a continued relationship.

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