Harley Davidson Case Analysis

Topics: Marketing, Customer service, Motorcycle Pages: 20 (1289 words) Published: October 7, 2013
Harley-Davidson
Case Analysis

Harley-Davidson should tailor is product and service offerings to the 55-64 year old segment, and expand its Rental and Rider’s Edge programs to continue growing Market leader in
motorcycles

- Market leader with 50% domestic and 32% global market share in motorcycles - Stock prices CAGR since 1989: 32%
- American legendary lifestyle brand
- Loyal customers: 900,000 members in Harley-Davidson Owner Group - 50% of sales to repeating customers

Ageing customer
base and
difficulty to
attract new
clients

- Average customer age grew from 35 in 1994 to 47 in 2004
- Young customers are not attracted by the brand
- Women are still only 10% of clients
- 2005 sales target cut back by 10,000 bikes
- Stock price dropped 17%

How can Harley-Davidson continue to grow despite its ageing customer base and difficulty to attract new customers? Harley-Davidson should:
Adapt product and service offering to
cater for the 55-64 year-old segment,
retaining it for 10 years longer

Expand the rental program to
increase seeding, bringing more new
customers into the base

Expand the Rider’s Edge program to
increase seeding in the
underexplored women and young
segment

Harley-Davidson dominated the US market during the first half of the 1900’s, but lost share to the devastating competition of Japanese manufacturers towards the 70’s 1908 – 1920’s

1930’s – 1950’s

1960’s – 1970’s

Competitive advantage

Innovation
Performance in race-tracks

Strong brand image
- Famous ambassadors
- National symbol status
Powerful/large motorcycle

Strong brand image
- Ambassadors
- National symbol status

Competitors

Indian Motorcycles

European entrants

Japanese entrants
Harley-Davidson

Hands-on men; untraditional, “rugged” lifestyle
Motorcycle
Market

HDI Market share

Family, women,
younger, older
66%

60%

Japanese

15%

The Japanese entrants developed and dominated the untapped mass market of families, women and young and older bikers Harley-Davidson

Adapt offering to
55-64 yr. segment

Expand Rental
Program

Expand Rider’s
Edge Program

Implementation
plan

Risks

Harley-Davidson succeeded in restructuring itself to survive and resume growth Before transformation (70’s)

After transformation (80’s +)

Harley-Davidson

Harley-Davidson Japanese

Japanese

Breadth of target
Productivity

Impact of Harley’s transformation
• US revenues: +80%
• Internat. revenues: + 170%
• Operating profits: + $59M
• Market Share (heavy): +97%

Marketing capabilities
Innovation
Quality
Strongest

Weakest

Harley-Davidson broadened offerings and target segments, increased productivity and quality, and improved marketing strategy Harley-Davidson

Adapt offering to
55-64 yr. segment

Expand Rental
Program

Expand Rider’s
Edge Program

Implementation
plan

Risks

In 2005, the stock price dropped due to the company’s uncertain ability to continue to grow in the future, and to meet the goal of selling 400,000 bikes by 2007 Harley-Davidson
riders avg. age

+16%

2000

339.000 329.000

35

Stock: -17%

580
348 438
112 166 174 214 267
1998

-3%

47

2.453
2.064
1.763
1.531
1.350

1996

+34%

5.015
4.624
Revenues (000)
4.091

3.407
2.943

1994

Expected motorcycles
sold in 2005

2002

761 890 Earnings (000)

2004

1994

2004

Planned Adjusted

Due to an ageing customer base and inefficient new-clients attraction, management reduced by 10,000 the expected 2005 sales Harley-Davidson

Adapt offering to
55-64 yr. segment

Expand Rental
Program

Expand Rider’s
Edge Program

Implementation
plan

Risks

Harley-Davidson should increase sales by tailoring its product and service offerings to the 55-64 year old segment, and expanding its Rental and Rider’s Edge programs 1
Adapt product and service
offering to cater for the 55-64
year-old segment

-...
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