Established in 1903, The Harley-Davidson Motorcycle Company has travelled a somewhat rocky road to success. Saved from the brink of bankruptcy by a management buyout in 1981, Harley has succeeded in building a truly global brand that is the envy of its competitors.
Faced with a declining market, a poor economic climate and fierce competition from Japanese manufacturers, the Harley-Davidson Company was forced to re-look at its competitive strategy. The essence of Harley-Davidson's success is rooted in its repositioning strategy, which it undertook shortly after the management buyout. Prior to the buyout, the Harley-Davidson motorcycle was perceived as being an inferior quality product to that of its competitor's. By changing its focus from a product orientation to a marketing orientation, Harley was able to get close to its customers, and by so doing, offer them greater value.
This assignment aims to identify the current and potential issues and problems facing the Harley-Davidson Company, and by so doing, offer some recommendations that can aid in future strategy development.
2. Potential Issues and Problems Facing Harley-Davidson
2.1 Macro-Environmental Analysis
The P.E.S.T.L.E. framework is a useful analytical tool used to gain an understanding of the macro-environmental factors which have impacted Harley-Davidson's business in the past and which will impact the business in the future. Not all the components of the framework are pertinent to this case, however, I will identify the factors, which pose the greatest opportunities or threats to Harley-Davidson.
2.1.1 Economic Factors
Economic factors such as economic growth, interest rates and exchange rates can have a profound effect on strategy development in any organisation. Interest rate levels and economic growth rates determine consumer-spending patterns, especially for luxury items such as motorcycles. A growing economy bodes well for Harley Davidson, but in times of a sagging economy, sales of luxury items, such as motorcycles, are often adversely affected.
2.1.2 Social Factors
Harley-Davidson has traditionally targeted members of the "baby-boomer" generation. The baby-boomers are that segment of the population born between 1946 and 1964 (Aarp). Harley's core customer resides within this segment, and tends to be of above average income and education. As a large part of the baby-boomer generation reach retirement age, known as the "greying of the Baby Boom generation", the fundamentals of Harley's marketing strategy could be tested. According to Harley-Davidson, two-thirds of its customers are baby-boomers (Hiscock, 2003).
There is a new generation of young, highly educated, professionals who will need to become the Harley-Davidson customers of the future. This issue poses a significant challenge to the success of Harley Davidson. The impact of this threat to Harley, with reference to its current marketing strategies, will be discussed throughout this paper.
2.2 The Harley-Davidson Brand
One of the major competitive advantages in Harley-Davidson's arsenal is the strength of the Harley-Davidson brand. The Harley motorcycle has become an integral part of American culture, with an entire sub-culture evolving, centred on the Harley motorcycle. Loyalty to the Harley brand is unrivalled, with 45% of purchases being made by existing customers. Many Harley customers even go so far as to tattoo the Harley logo on their bodies. Brand loyalty towards a Harley-Davidson is not based on any particular product feature or technology, but rather on emotive characteristics such as the desire for "individualism, freedom of expression and pride"(Hiscock). A strong brand and intense customer loyalty provides Harley-Davidson with the following advantages:
Firstly, it acts as a significant barrier to entry for potential entrants in the motorcycle market, while, at the same time discouraging existing competitors from competing in the...
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