Strategic Marketing of Harley Davidson - Case Study Example

Introduction Marketing Strategy is a planning process that can allow an organisation to concentrate its resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage. It serves as the fundamental underpinning of marketing plans designed to reach an organisations marketing goals, policies and action tactics. Under the marketing strategy the company has put in place several strategies which include Growth strategies and porter's strategy that has ensured high growth and success of the company in its business. Main issues highlighted in the case The case of Harley Davidson covers a brief history of the company. Here it looks at hoe the company was started back in the year 1903. Then it looks at the development of the company throughout the entire twentieth Century. It then looks at all the strategies that have been applied by the company following a fall that the company was on the verge of facing. (Smith, 2003) This was started by the kind of products offered by the Company. This was through the introduction of a number of products that were designed to appeal to the new market. Some of these include; multi coloured motor vehicles, improvement of accessories in heavy weight motorbikes, sale of accessories individually, biker clothes like jeans and t-shirts with the company logo. Most recently, the Company has introduced a bike that has a better engine than all the other models. The Company also focused on improvement of its distribution mechanism through the employment of different dealers. It held up talks that could help dealers to improve their service provisions. It also sold some of its accessories using Alternate retail outlets. Pricing was a big part of their strategy too. The Company did not focus on price reductions but instead advocated for the purchase of motorcycles whose prices matched their quality. This was also backed up by discount offers for customers who bought small motorcycles and then traded them in for new ones. (Smith, 2003) Lastly, the company did a lot of promotions ranging from advertisements in newspapers where their catch phrase was related to the American free spirit. They also used their website to advertise and sell their items and placed inserts in magazines that depicted female bikers. All the above changes were crucial in making the Company a success in the US motor vehicle industry. This was seen when the Company was called the most Nostalgic Company in biking in 2007. Strength of Harley Davidson current position Introduction Stands for -Harley Davidson represents the Sir name of the two founders of the Company back in 1903. These were Arthur Davidson and William Harvey. They started work on motorvehicles at a tender age in the privacy of their own homes. They continue with this work until a small factory was formed. This factory grew and by the time it was 1907, they had already acquired become incorporated. (Smith, 2003) Market-The Harley Davidson Company has its market in the US. This can be deduced form demographics studies and the fact that their brand focuses on the 'American spirit'. However, most of the clients are male. In the year 2006 statistics showed that 88% of H-D buyers were male while the remaining percentage was female. It also showed that in the year 2006, most of the buyers were between the ages of forty three and forty seven. The average income earned by these customers was 82,000 dollars as of last year. Their market consists of buyers who use motorcycles for their pastime activities. This was the reason why it was necessary to use advertisements that were mainly recreational. Positioning map and perception- the Company has earned its place in the US motorvehicle industry due to the fact that it creates a feeling of nostalgia in its buyers. This is mostly due to the fact that the image of its models resembles some classy motorvehicles used back in the 1960s. It has also gained a reputation for having top of the range engines in its bikes. The Company has also established itself in the American market through its American strategy. This has earned it loyalty form its customers. The H-D brand name is very strong and most of its customers associate it with good quality for example they use steel for most of its parts and can thus be recycled. Brand equity- the Company has four major brand families under its brand name. These include; Dyna, Softail, VRSC and Touring. The company also has a number of accessories under its name. It also engages in the sale of garments for bikers. Some of these include denim jeans t-shirts etc. however, these excess products have been blamed for diluting the strong brand image of the Company. Current position Portfolio analysis by the BCG product lifecycle In the Portfolio analysis, one considers all the business nits within a given company and then ranks them according to the BC matrix. The matrix is composed of four segments rated on the basis of market share and market growth. The business units which shall be considered for this analysis are: H-D motorcycles, H-D accessories and parts and other non motor vehicle products like Christmas decorations, clothes, dolls etc. (Smith, 2003) The major business unit in the Harley Davidson motor vehicle company is its motorcycles. This is the signature product and this is what consumers the Company with. This business unit falls in the category of cash cows. HD motor vehicles are operating in a low growth market and have a high market share. It has been noted that motor bikes within the company a firm client base and most of the sales from these products are high. Motor vehicle parts and accessories fall under the matrix star category. This is because these business units were started not too long ago and generate a favourable income for the Company. This means that the products operate in a high growth market and have a high market share. These products also require the use of a high level on investment because they are still not well established in the industry. (Smith, 2003) The non motor vehicle can be placed in the dog's quadrant. This is due to the fact that these products have recorded very low sales and have also contributed very little to market shares enjoyed by the company. These products were initially in the question marks segment (had just started in the market) then the Company has not invested deeply in their sale. What HD should now do is to invest in the other products that are new or have a high growth in the market i.e. question marks and stars respectively. Porter analysis of the motor vehicle industry There are five factors that are considered during the Porter analysis. These are as follows; Threat of new entrants: The American motorvehicle industry is faced with the threat of competition from foreign companies. One such example is the Honda Automobile. These foreign companies have been known to produce motor vehicles at low cost and sing high level of technology. These companies are also known for having a high level of experience and good management skills that can easily displace local manufacturers. Power of suppliers: There are many suppliers in the motorvehicle industry. This implies that they have very little influence or powers. Most of them rely on the decisions of the manufacturer. The only problem with this is that there are possibilities of the manufacturer changing suppliers. This will imply that the supplier will be left in problems. Suppliers in the motor vehicle industry have very little clout in their field of specialty. Power of buyers: consumers in this industry also have very little influence. This is due to the fact that they normally do not buy large volumes of products. Most of them are quite sensitive to prices and may sometimes go for products from other foreign companies that sell them at a cheaper price. (Smith, 2003) Availability of substitutes: there are a number of substitutes that can replace motorvehicles because essentially these are transport products. Other consumers may go for cars, trains and other products for transportation. But it should be remembered that most riders do it for comfort and can therefore opt for other luxurious products on offer. Competitive rivalry: the industry does not focus on competition based on price. This implies that there are other factors that companies use to lure clients. The first is through warranties especially for goods bought on a long term. The second is through rebates. However, some companies have trying using the price tactic. This has resulted in low profit margins. The differentiation The company has made products that have different accessories to differentiate them. The main product which the Company has focused on is the motorvehicle section. The company has a category designed for comfort and added some feature that would assist in long distances, it has a category that is low cost and is quite simple there is also a category designed to provide customers with all the riding support and the other segment gives room for customisation and is designed for style. (Smith, 2003) Value chain analysis There are a number of activities that companies engage in. According to Porter- who came up with the idea- value chain analysis, is the process of assesing a company's competitive advantage. This is done by examining two categories of activities that may either be primary or secondary activities. The extra value is the margin that will be observed after accounting for all the activities. Primary activities are further divided into five categories. The first category is composed of inbound logistics. HD normally receives its raw materials from suppliers; these products are then moved to the assembly line. The second category is composed of operations. Here, goods are assembled to make up the motorvehicle company. It also includes some last minute touch by a certain dealer to improve the product. The third category is made up of outbound logistics. This includes all the activities that HD engages in when transporting their motorvehicles or other products to members of their supply chain. These are mainly dealers, retailers and wholesaling. The fourth category is marketing and sales. The company has performed a lot of activities in this section. Some of these are advertisements, posters, website sales and dealer sales. Lastly, the company has also focused on a number of services. These include training that has been offered to dealers through three day courses, it has also offered the service of installing accessories in motorvehicles for its clients etc. Support activities. The first is Procurement. Procurement is composed of all the activities related to the acquisition of products. These goods may include raw materials, final goods and services offered by the company's partners. Some of the other activities include outsourcing to dealers. The second activity is technological development. HD has engaged in a number of product improvements. It's most recent technological (Smith, 2003) development was the introduction of a top of the range engine system. The company also is technology in marketing and other related areas. The third category is Human Resource Management. The management in HD has involved itself management, recruitment and selection of its staff. The fourth category is firm infrastructure. HD has done a number of things in relation to this category. Some of them include accounting and management information systems for the proper control of its activities. Mission and vision Harley Davidson's mission is to fulfil dreams by giving customers a friendly service and to ensure that customers are satisfied. The Company's vision is to provide experience for its customers while at the same time providing its employees with growth opportunities. Future direction SWOT analysis Strengths: the company has a good relationship with its suppliers. This has helped it in a number of ways. These means that HD has access to resources that help it in its operations (Smith, 2003) this means that the company has improved the quality of its products the company has dealt with segments that do not earn alot of revenue. One of these include is the transportation vehicles that was liquidated and the money was used for other more productive segments. The Company has formed an association for its customers and has therefore strengthened support in the area. The company has given out it name to the sale of other products not related to motor vehicles. This implies that they can be able earn some more revenues and has enlarged its brand image. Weaknesses: the company only has a large customer base in its native country. It has recorded very few sales in foreign countries and market shares can only be found in Asia Pacific and in Europe. And eventhough they have some shares in these markets, they are very minimal. The Company's administration has also been criticised for being too confident. The company has also gained some complacency in its client base. Most of the customers are between the ages of 43-45, HD has not worked on getting new customers for its products. Opportunities: the company should focus on expanding its market base in Europe. This is because as per the year 2000, the continent was said to have the largest market for motorvehicles in the world. However, the image I uses in America should not be the same one used in other parts of the world because cultures differ. The company should also start targeting other users of motorvehicles. It has been doing most of its production in the heavyweight section. It should also do some more research on sports motor vehicles. The company should also work on its prices. It is not enough for them to think that can use the idea of quality alone to market their products. Low prices are the reason why Japanese manufacturers are doing well in the industry. The company should try to expand by buying out small players in the market. This is quite favourable because the industry's economies of scale are low. (Smith, 2003) Threats: The Company faces stiff competition from motorvehicles made in Japan. The bikes are technologically advanced and are also sold at a low price. The Company has competition in foreign markets by other manufacturers. Ansoff matrix The matrix is used for the development of policies in the organisation. It is made up of four strategies i.e. Market penetration; this involves entering into a given market. HD has penetrated into the market through the provision of accessories that improve its product, through association that create a sense of loyalty and through a strong brand image. Product development; HD has done this through the introduction of new customers for its existing clients. Some of these include clothes and gist items. This has enhanced the company's image as an innovator and has protected market share. Market development: this involves attracting new customers from a different segment. HD has done his through marketing its products to women through magazine inserts. It has also a radio show for blacks so that it can attract African American customers. Diversification: This involves changing a company's products and dealing with others altogether. The Company has some elements of this because it engages in the sale of motorbike spare parts and even provides training for its dealers on this issue. Short or long term The Company has a long term plan of improving product quality. It changed from short term strategies because it realised that that was one of the main reasons why it came close to collapse. (Smith, 2003) 2 strategies HD should use according to RACES criteria The first strategy the company should use is expansion into foreign markets. This means that the company should star changing it mode of advertisement or brand image in other countries outside its borders. Secondly, the company should not overdiversify. This is because excess products under its name dilute the image of the company. Major contingencies and recommendations 1. Poor foreign market- research and restructure marketing image in these areas 2. Different prices by dealers- coordinate activities of the company 3. Sale of unrelated products- focus on related products rather than items like dolls and clothes. Sources Smith, R. (2003): Taking the High Road - An inside Look at Motorcycle Giant Harley-Davidson; retrieved from; http://www.bus.wisc.edu/ , accesed on 20th December Read More