Business Analysis of Harley Davidson Inc - Case Study Example

1.0 Introduction Harley Davidson Inc is a famous motorcycle company that ranks 45th in Interbrand’s 100 top brands and is frequently listed in the100 Fortune Big Best companies of the world. In USA it is the predominant player but others like BMW and Honda are fast catching up using newer technologies to produce competing bikes. Other brands too are making a foray in the market. While Harley Davidson (HD) has been seeing growth and profits for 19 consecutive years, it cannot be complacent in view of the growing competition. It has therefore set its eyes on the emerging Indian market with its predictably booming consumer market. If this takes off, the huge customer base of millions could open new doors for HD. However a carefully crafted marketing plan needs to be drawn for the purpose. 2.0 Situation Analysis HD has had a dream run for several years. It has banked largely on its Macho Image. Apart from the charisma of the HD name and fame the business needs to attract new markets like India. The Indian customer is looking for brand image as well as a greater variety as is being sold by other competitors. A new entrant in the market is women who have shed their earlier shy image and now ride bikes and scooters. In fact some competitors have opened exclusive women-only scooter showrooms. 2.1 SWOT SWOT is a very simple but effective method of analysing the current status of a business that gives the management a clear depiction of its position in the market place. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. Based on information available earlier, the SWOT analysis of HD appears as follows. (Dibbs, Simkins, & Lyndon,1996). Strengths 1. HD Brand – This carries a lot of weight and a special place in the minds of people. It has banked largely on its Macho Image which was aided by fun loving and beer guzzling characters in the classic film Easy Rider. Lately it has toned down this bad boy image but it retains the adventurous image it has built up. 2. Variety of Brands Sold – HD has made bikes for several segments and is most popular in the 18-21 and 36-55 age groups. Whoever has had a taste of HD power and performance in his teens has returned in later years to revive the feeling of machismo that invariably goes along with the brand. It is indeed irresistible as a person ages and is able to afford the premium brand that he could only admire at a younger age. 3. HOG Membership – The Harley Owners Group was created in 1983 in response to a growing demanded by HD owners to share their beliefs, passion and pride and it has gained worldwide popularity since then and has over one million members and still growing. HOG benefits include organized group rides, exclusive products and product discounts, insurance premium discounts, and the Hog Tales newsletter and the HOG is the largest factory sponsored group in the world. The HD shares on NYSE have HOG as their ticker symbol since 2006. 4. Engineering – HD has unique engineering of its products. Made entirely in-house, the engines are entirely vestigial from an engineering standpoint, but have been sustained because of the strong connection between the distinctive sound and the Harley-Davidson brand. The exhaust note is basically a throaty growling sound with some popping. These “Harley Sounds” have become an industry standard and are unashamedly copied by competition. Weaknesses 1. Premium Prices – This factor is one that restricts HD bike ownership. Rivals and competition have eaten into the market share purely on prices. Even though their performance levels are lower, a larger number of customers are necessarily from the middle and lower income groups and they look for bargains and low prices. Bikes are a means of transport first and fun and adventure later. Therefore HD misses out to a very great extent in the number of bikes it can sell due to its high prices. 2. High Decibels – The high sounds may Be macho but for the average rider and more for the average citizen who has to bear this heavy noise pollution, HD bikes are killers. This prevents higher sales and in some cases HD has to cut down its decibel levels, as was the case in EU where it was permitted to sell only when it agreed to accept the EU standards for acceptable noise levels. Opportunities 1. Expanding Market – HD now has the world as its market as its fame has reached far and wide. In 2007 it got permission to set up in India and got a unique concession of relaxation of emission norms as a special case. 2. Tie-up with Training Schools – It can tie-up with various training schools to raise interest levels of new-entrants. 3. Training facilities – HD has the opportunity to train bikers for races as its performance bikes are popular and this can raise sales tremendously. 4. Special section for women – Since women are now entering the bike ownership arena, especially in India, throwing aside earlier inhibitions, the window of opportunity has opened to develop special light-weight but high performance bikes exclusively for this segment. 5. With increasing congestion on city roads the bikes have become more popular s means of transport for executives in a hurry. This is especially true for India where populations in cities are very high and not enough roads to accommodate the growing private vehicles. Also the private cars are more expensive to run therefore the bike has exceptional cost advantage over them. Threats 1. Other competitors with Lower priced product range are having a greater market share overall in the world markets. This is especially true in the emerging markets of Asia which have a much greater potential for sales than the developed markets of America and US combined. The expanding population with increasing incomes due to global spread of international trade and commerce have far more consumers for bikes than HD has ever supplied to. It will miss out largely in these markets due to its high prices. These markets are very price conscious and the Japanese manufactures have capitalized on it. 2. Collaborations and Joint Ventures – This is another area that the competition especially the Japanese have cashed in and have made inroads. HD has already missed the bus in many areas and is not likely to make any significant breaches in the markets already captured by the competition. 3 Recommendations It is difficult for HD to change its culture or business model therefore it should make a strong point to Position itself in the emerging markets where it is attempting to get into. In marketing positioning has come to mean the process by which effort is made to create an image or identity in the minds of their target market for its brand and range of products, or the organization itself. The aim is to develop a perception in the mind of the target market about the brand and image. In India both Press and TV commercials are inexpensive as compared to the West and HD should make full use of these media to position its bikes. Another important factor is that celebrities as icons and brand ambassadors have a great effect on the Indian mindset. HD must engage some Macho celebrity either from the India Cricket Team or well bodied actors from Bollywood to mesh with the young and fun loving Indian audience. There is enough scope for its premium products as very high numbers of well paid executives can afford its bikes and it should target this particular segment. Again there is great and growing affluence in the secondary towns across India, and many Multinationals have already reaped the benefits of pushing their high priced consumer durables in these markets with astounding success. For catering to diverse segments different varieties of bikes must be displayed for sale in the showrooms. The Indian market is diverse and it is best to cater to all of them. The most popular one however will be the one which is light both in weight and on the pocket. Servicing plays a vital role and this should be enhanced with the latest machinery and equipment for both fast and quality service. It is also recommended that this aspect of business should be highlighted with sales as well as otherwise communicated to both customers and non-customers. This will lead to adding customers as those who come for service only will be attracted for their next purchase by the quality of service provided. Service also includes sales of spares and it is a profit centre by itself and therefore needs special attention and competitive pricing. It is further suggested that with every sale a few free services should be thrown in to retain the customer. While pricing has to be aggressive yet they must not be ridiculously reduced as they contribute to the bottom line. The price marking should be near about that offered by competition and instead of reducing prices it is advisable to give extra attention to quality and some extra accessories that will attract the customer and retain his loyalty for the future. An incentive scheme or a prize winning lottery scheme is also advised. There is a difference between promotion and publicity. Promotion is best achieved through organizing sales, road shows or by participation in third party events like race track appearances, exhibitions and sometimes by involving in charity or similar events that give great exposure to the company or the product. HD is advised to enter such promotion schemes so keep itself in public view and to build up an image for itself. 6.0 Bibliography Dibb, Simkin and Bradley, The Marketing Planning Workbook published in 1996 by Thomson (London). How to write a Marketing Plan available at: http://www.knowthis.com/tutorials/marketing/marketingplan1/10.htm Read More