The Market for Luxury Sporting Motorbikes in America - Research Paper Example

? Harley-Davidson Aaron Kochanski Columbia College BUSI-544 Dyna Street Bob Marketing Plan Legal Page - Confidentiality Agreement The undersigned reader acknowledges that the information provided by _______ in this marketing plan is confidential; therefore, reader agrees not to disclose it without the express written permission of ____________. It is acknowledged by reader that information to be furnished in this marketing plan is in all respects confidential in nature, other than information which is in the public domain through other means and that any disclosure or use of same by reader may cause serious harm or damage to ______________. Upon request, this document is to be immediately returned to ________. ___________________ Signature ___________________ Name (typed or printed) ___________________ Date This is a marketing plan. It does not imply an offering of securities. Source: Marketing Plan Pro, Pearson, Prentice Hall Table of Contents: 1.0 Executive Summary 2.0 Situational Analysis 2.1 Market Summary 2.1.1 Target Markets 2.1.2 Market Demographics 2.1.2.1 Geographics 2.1.2.2 Demographics 2.1.2.3 Behavior Factors 2.2 Market Needs 2.3 Market Trends 2.4 Market Growth 2.5 Graph illustrating market trends and growth 2.6 SWOT Analysis (see Key Terms) 2.5.1 Strengths 2.5.2 Weaknesses 2.5.3 Opportunities 2.5.4 Threats 2.7 Competition 2.8 Product Offering 2.9 Keys to Success 2.10 Critical Issues 3.0 Marketing Strategy 3.1 Mission 3.2 Marketing Objectives 3.3 Financial Objectives 3.4 Target Markets 3.5 Positioning 3.5 Strategies 3.6 Marketing Mix 3.7.1 Pricing 3.7.2 Distribution 3.7.3 Advertising and Promotion 3.7.4 Customer Service 3.7 Marketing Research 4.0 Financials 4.1 Break Even Analysis 4.2 Sales Forecast 4.3 Monthly Sales Forecast 4.3 Monthly Expense Budget 5.0 Controls 5.0.1 Revenue Monthly and Annual 5.0.2 Expenses Monthly and Annual 5.0.3 Customer Satisfaction 5.0.4 New Product Development 5.1 Implementation 5.2 Marketing Organization 5.3 Contingency Planning 5.3.1 Difficulties and Risks 5.3.2 Worst Case Risks 7.0 Works Cited Page 1.0 Executive Summary The market for luxury sporting motorbikes in America as well as the Global market is increasing and is bound to increase. Harley-Davidson has been in the industry of motorbike manufacturing and sale for the last a hundred and ten years. Over the years, the firm has met numerous challenges as well as successes. Currently, Harley-Davidson has a number of motorbikes designed and targeted at different demographic groups. Among these is the Dyna Street Bob which is a sporting motorbike targeted at the younger generations. This product is intended to bring new marketing orientation in the market. This is because although it is targeted at the young people in general, it is also targeted at women as a new market. More women are becoming more interested in motor-biking and this is a new market which Harley-Davidson should use for to expand its market share of the motorbike market. As Taylor (para 1) says, Harley-Davidson has been accused of not targeting new markets and this will be an opportunity to look at the new market. 2.0 Situational Analysis In 1907 William Harley and Arthur Davidson incorporated the Harley-Davidson Motorcycle Company. AMF acquired the company in 1969 and nearly tripled production in the following 4 years. Increased production led to poorly performing products, which led to Honda gaining market segment and eventually a buyout of AMF in 1981 by Vaughn Beals and a group of other HD managers. Over the next 20 years HD incorporated lean operating principles, acquired rival companies effectively opening new niche markets and survived an instance of a primary lender refusing to advance further cash. In 1997 a former Honda manager, Berryman, revamped HD’s supply chain management system to further reduce waste. Subsequently a focus was placed on products that would open up more niche markets and help move HD away from their typical target demographic. Today HD realizes increased profits and revenues from these changes, but also faces stiff market competition. Research more market competition and add various citations. 2.1 Market Summary 2.1.1 Target Markets Young people: The market target for the Dyna Street Bob is the younger generation who are looking for a fun and fast ride. The Dyna Street Bob is therefore targeted at people of ages 35 and below. Because of economic constraints, the lower age bracket will be age twenty five since people younger than this are least likely to have the money to buy the product. Young Women: Harley-Davidson is realizing the need to expand its market target for its products. While young males have been the main focus for most of its products, there is a need to expand the market by looking for and taking advantage of new potential markets. Young women are a highly potential market for the Dyna Street Bob and therefore this will be one of the main focus for the products. 2.1.2 Market Demographics 2.1.2.1 Geographics United States, Asia-Pacific, Canada and Europe The number of young people in these regions is more than the old, thus giving the product a big market (Martins, Yusuf, & Swanson, 198). Among these young people, at least ten percent of them are economically able to buy the product. This segment of the market will be the target for the product. In US, like in many other places, the number of females, even among the youth are more that the males. This is important because the Street Bob will be trying to break into the potential market. The same case applies for Europe apart from some countries like Germany where the number of older people are more (Tremmel, 117). Middle East The Middle East and the Latin America share the similar demographics and this meant the market strategy in these markets can be used the same way. 2.1.2.2 Demographics The young people make a larger percentage of the population in any society ( Packaged Facts, para 3 ). As a result, as Lazer (25) says, any product targeted at this market segment therefore enjoys a very big market. However, in targeting this market, it is necessary to know that they are not as economically capable as the older people and therefore the pricing of the product must consider this. Women at any age group also make the larger percentage (Vejlgaard, 90). Cutting a market share among young women is therefore a strategic way to go for a product like Street Bob. 2.1.2.3 Behavior Factors The customers who are likely to buy the product are likely to be motivated by the willingness to belong to a special group. The product will play a social function which is giving the person a sense of belonging and status as well as class. As a result, the product must be looked from this angle of view and the marketing strategies will be based on these factors. 2.2 Market Needs There is a need for high quality motor bikes which will provide the customer with value for his money. As the market for a high quality and low cost motorbike is ripe and meeting this need will be central to the firm. 2.3 Market Trends In the early years, big motorbikes such as the Dyna Street Bob were only bought by riders and other rare groups of people. However, in the current time, riding has become a mainstream thing in the America culture in particular and the global culture in general. This has increased the market for products such as the Dyna Street Bob. However, as the market has expanded, competition for these markets has also increased. To be able to take advantage of this new market for big motorcycles like Dyna Street Bob, it is necessary for a firm to be able to differentiate its self. 2.4 Market growth The market for the Street Bob has grown over the last few years and will continue to grow with time. The emerging markets and changing cultural trends will help in increasing the market for the product (Khanna & Palepu, 148). 2.5 Graph illustrating market trends and growth Graph courtesy of: http://green.autoblog.com/2011/05/02/pike-138-million-electric-motorcycles-scooters-2017/ 2.6 SWOT Analysis (see Key Terms) 2.5.1 Strengths The Harley-Davidson brand, upon which Dyna Street Bob is built is a very old and trusted brand not only in the USA but also around the world. Dyna Street Bob has been therefore for over 100 years and this has helped the fir to create special relationships with the market. It long life has also helped the firm to accumulate experience based on research which in turn has increased the quality of the brand. In this regard, the Dyna Street Bob is a brand which is well established and trusted by many people across the market. Dyna Street Bob also has a good market image because Harley-Davidson has always concentrated on producing the best quality regardless of cost. Unlike some of the competitors who in most cases forego quality and class, Harley-Davidson has never done this and has been trusted as a high quality and high class brand in the global market. This is going to be important in the marketing of Dyna Street Bob as it will already have won the trust of many people. 2.5.2 Weaknesses One of the major weaknesses that Dyna Street Bob is facing in the modern market is competition both from the local competitors as well as the international competitors. Dyna Street Bob will have to compete with other similar brands from foreign markets such as Japan (Honda) and Europe (BMW). In fact this competition has already seen affected Harley-Davidson in the past and this is one thing that must be considered in order to for the Harley-Davidson and Dyna Street Bob to have a reliable market. One of the main issues of concern with regard to the marketing of Dyna Street Bob is the fact that Harley-Davidson has had issues with quality in the past decade. In the year 2000, one of Harley-Davidson’s main customer, the US police, reported a fault in some of the products that Harley-Davidson sells (Oosting, para 2). The products were reported to have a wobble when in high speed. Since then, many state police departments have shifted from buying Harley-Davidson’s products to buying other products form competitors, especially competitors from the foreign market, BMW in particular. Harley-Davidson has also had to deal with stiff competition form Japanese manufactures. This was especially so in the 1980s when Harley-Davidson has having issues with its quality control, making it easy for Japanese manufacturers to take over the market. Increasing costs of operations and employee union issues are also a big problem for Harley-Davidson and in turn for its products such as Dyna Street Bob. 2.5.3 Opportunities There are numerous market opportunities which Dyna Street Bob can take. These new market opportunities can be classified into two categories which are local and global. In the local market, the new market opportunities have been brought abut by the fact that biking is becoming a mainstream American culture as opposed to the earlier days when biking was a subculture and only a few people would be involved in biking. The other fact that has led to the local market growing is the fact that the local women, (young women especially) are also becoming bikers (Allied Publications, 9). This is unlike the earlier days when only very few women were riders. The new opportunities in the global market have come as a result of rapid economic growths in these markets. For instance, with the economic boom in Asia such as in India and China, many people in these markets are able to buy these kinds of luxury products (Cyril, para 1). Globalization has also been helpful in making sure that culture is spread around the world, thus making such cultures as motorcycle riding a global culture rather than a local culture only. 2.5.4 Threats The main threats are from the competitors which have become more formidable over time (Hitt, 184). There are also many challenges such as traffic laws which may make the operation of such machinery as the Dyna Street Bob in the common roads. Biker rallies can also pose a threat to the firm as these rallies act as ways for the bikers to come together and among other things air their issues with regard to certain brands. If for instance such issues as the quality control issues of the early 2000s become a major item of discussion in some of these rallies, this can hurt the image and market outlook of Harley-Davidson and this would make the marketing of Dyna Street Bob harder and less achievable. Some of these rallies attract gatherings of hundreds of bikers from all over the world. For instance, the Republic of Texas biker rally attracts over two hundred thousand bikers and if any negative issues about Dyna Street Bob are discussed, this would be hurtful to the firm in terms of its market expectations. 2.7 Competition Harley-Davidson has had a number of competitors over the years. For Street Bob, the main competitors will be from Victory and Triumph. Victory is an American motor cycle manufacturer and was started by the auto-manufacturer Polaris Industries, with the main intention to face deal with competition from Harley-Davidson. The firm manufacturers motorcycles such as V92SC SportCruiser, V92TC Touring Cruiser, Vegas, and the Vegas8-Ball. These motorcycles will offer competition to Street Bob as they all offer the same features as the Street Bob. Triumph on the other hand is a UK motorcycle manufacturer. It was founded in the 1980s and has become UKs largest and most successful manufacturer. It products include the Triumph Thunderbird, Tiger 800 XC and Tiger 800. Triumph Thunderbird is the one that will give Street Bob the stiffest competition in the market, both in the US and around the world. 2.8 Product offering Although Street Bob will face stiff competition from these other products from other motorcycle manufacturers, it will survive the competition since the product is designed and geared towards the youth and WWI enthusiasts. Products such as Triumph Thunderbird are big and popular in the market but they don’t appeal to the youth as much as Street Bob which was designed with the youth, and especially the American youth in mind. The fanatic following that Harley-Davidson has managed to gather will also propel Street Bob into greater success heights. 2.9 Keys to Success Harley-Davidson as a firm has managed to have a big following from its customers. To most of its customers, Harley-Davidson and the other consumers are family. Harley-Davidson uses conferences and events as a way to bring the consumers home and make them feel that they are part of the firm and that the products are designed especially for them. Focusing on this marketing method will be important for the firm in general and for Street Bob in particular. 2.10 Critical Issues The economic recession has had a great impact on luxury products such as the Street Bob. However, as the recession is fading away and peoples income are stabilizing again, the market will be able to afford such products. 3.0 Marketing Strategy The main marketing strategy will be to appeal to the young people. Harley-Davidson have for a long time used psychological factors to carry out successful marketing. The same can be used for the product by offering the potential customers membership to a the Harley-Davidson club specifically for the buyers of this product. People usually like belonging to a special group and this is a good opportunity for the potential customers of the Street Bob because this is not a usual product but s specialty product. Due to the fact that the Street Bob is a specialty product, it will be possible to offer people membership to a club where they can be meeting and sharing their riding experiences. This will help in luring the potential customers as well as guaranteeing future market for any forthcoming versions of the same. 3.1 Mission The mission for Street Bob is be the best product to the customer at the most convenient and to be the product of choice for all the young people. 3.2 Marketing Objectives Customer relationships Creating customer relationships through membership and member events Create customer awareness about the product such as the technical abilities of the products Increase market share for the Street Bob through acquiring more market Increasing market Visibility Increase the number of people who know about the Street Bob Increase the knowledge about the product in terms of its availability and its technology Expand membership of the customers who are passionate about the Street Bob Accessing foreign markets Gaining market share in foreign market especially the upcoming markets (BRICS) Increasing awareness and creating market for the Street Bob in the foreing markets. Reclaim and retain any lost customers due to past issues (the 2000 quality issues) 3.3 Financial Objectives The most important issue with regard to the product is to have a breakeven point for the products profits and costs. This will be achieved through cost control and JIT manufacturing. The nature of Street Bob as a product allows it to be possible to use dynamic manufacturing. This will reduce production costs especially costs associated with storage. The other important thing will be to decentralize the manufacturing in order to make sure that the product will be produced closest to the consumers. Harley-Davidson has already decentralized its manufacturing by having a manufacturing plant in Brazil. Decentralizing the manufacturing will also lead to savings in that most of these new markets also offer affordable and efficient labor. 3.4 Target Markets The market for the Street Bob can be segmented in two main ways. The first way to segment it will be in terms of demographics. In terms of demographics, the market will be segmented into make and females. The Street Bob is already targeted for the younger generation so the main demographics segments which will be of interests are the young males and females. The other segmentation will be based on geography. The main segments will be USA, Europe, Latin America, Canada and Asia. 3.5 Positioning Street Bob will be positioned as the ultra youth bike for biking. This will help in making sure that the target market can identify with the product. 3.6 Strategies The main strategies will be to engage the customers so that they feel they belong. The customers will also be offered support services such as riding lessons in order to make sure that they are able to ride safely and with efficiently by taking advantage of the technology being the Street Bob. The customer will also be given other services such as after sale service which will include servicing the product. Overall, the strategy will revolve having close and personal relationships with the customers and also making the product to be easy to access. 3.7 Marketing Mix 3.7.1 Pricing The pricing of the product will take considerations of the fact that the target market is the younger generation who still have to deal with other economic responsibilities of buying a house, starting a family, and probably paying their college loans. For this reason, the pricing will be done using the Value?Based pricing which will involve looking and understanding the value the customer is willing to pay for a product and then setting the value based on that. 3.7.2 Distribution Distribution will be done through the normal motor distribution and retail centers as well as show rooms in order to make the product as available to the consumer as possible. 3.7.3Advertising and Promotion Adverting will be done through all the possible channels as follows; Lifestyle Magazines- these will be a good way to reach to the target audience and to be able to increase ht market visibility. Television- television will also be used in order to reach the wider audience. Social media- the power of social media will be used in order to reach the audience. This will be important because the target audience is likely to be avid users of the social media. 3.7.4 Customer Service As already indicated, customer service will be focus of the marketing strategy. Customer serviced will involve after sale service, ride training etc. As Smith (para, 3) says, a customer experience audit is important in making sure that the firm is able to serve its customers well. 3.8 Marketing Research The marketing research will keep in mind that the product is a lifestyle product which will need to keep up with latest lifestyle and trends. In this regard, the research will look to always understand the customer needs in terms of the lifestyle and the trends in the market. 4.0 Financials 4.1 breakeven point 4.2 Sales Forecast The sales for Street Bob will continue to increase in the next five years. This will be helped by upcoming markets as well as new markets in the USA such as young women. 4.3Monthly Sales Forecast 2014 sales Month Sales ($) January 100,000,000 February 200,000,000 March 200,000,000 April 300,000,000 May 400,000,000 June 500,000,000 July 600,000,000 August 700,000,000 September 800,000,000 October 900,000,000 November 1,000,000,000 December 1,100,000,000 4.4 Monthly Expense Budget 2014 costs Month Costs ($) January 150,000,000 February 100,000,000 March 100,000,000 April 90,000,000 May 85,000,000 June 76,666,667 July 69,166,667 August 61,666,667 September 54,166,667 October 46,666,667 November 39,166,667 December 31,666,667 5.0 Controls 5.0.1 Revenue Monthly and Annual This will be done by monitoring and controlling costs as well as increasing sales as well as finding alternative streams of revenue such as membership fees for the customers who will be willing to joining the Street Bob club. 5.0.2Expenses Monthly and Annual Expenses will monitor and new ways to reduce expenses implemented. Distributing the manufacturing so as to take advantage of affordable labor in the emerging economies will be done. 5.0.3Customer Satisfaction Customer satisfaction will be monitored trough all the available channels such as the social media, the customer service center and other channels and necessary changes made. 5.0.4New Product Development The Street Bob is a lifestyle product which means that customer needs will shift as culture changes. New models of the Street Bob must be developed in order to keep up with the market needs. 5.1 Implementation The marketing plan will be implemented starting January 2014. A marketing team will be formed with the specific purpose of marketing the Street Bob. 5.2 Marketing Organization The Street Bob will have its own marketing unit with the marketing department of Harley-Davidson. This will make it easier and efficient for the marketing strategy to be implemented without interferences. 5.3 Contingency Planning 5.3.1 Difficulties and Risks The main difficulties will include the following; Unexpected stiff competition from the already existing competitors Increased costs of raw materials making it difficult to manage costs 5.3.2 Worst Case Risks Unexpected competition from an newly invented substitute product Sudden change of lifestyle by the target market the reducing the demand for the product. 7.0 Works Cited Page Allied Publications. "Woman." New Woman, Volume 21, Issues 1-6 (2011). Cyril, Huze. Report On The State Of the US Motorcycle, Bike And Parts Industry Market. - See more at: http://cyrilhuzeblog.com/2013/10/16/report-on-the-state-of-the-us-motorcycle-bike-and-parts-industry-market/#sthash.XEO7vtpe.dpuf. 16 October 2043. 07 December 2013 . Hitt, Michael. Strategic Management Cases: Competitiveness and Globalization, 10th ed. London, UK: Cengage Learning, 2012. Print. Khanna, Tarun ., & Palepu, Krishna. Winning in Emerging Markets: A Road Map for Strategy and Execution. Boston, MA: Harvard Business Press, 2010. Print. Lazer, William. Handbook of Demographics for Marketing & Advertising: New Trends in the American Marketplace. New York City, NY: Lexington Books, 1994. Print. Martins, Jo., Yusuf, Farhat, & Swanson, David. Consumer Demographics and Behaviour: Markets are People. New York, NY: Springer, 2011. Print. Oosting, Jonathan. Why Michigan State Police moved from Harley-Davidson to foreign-made BMW motorcycles. 12 July 2012. 07 December 2013 . Packaged Facts . The Young Adult Market: Generation X Grows Up. 01 November 2006. 07 December 2013 . Smith, Shaun. Customer Experience Management Plus: Harley-Davidson. 04 March 2008. 07 December 2013 . Taylor, Alex . The Hurdles at Harley-Davidson. 03 October 2012. 07 December 2013 . Tremmel, Jorg. A Young Generation Under Pressure?: The Financial Situation and the "Rush Hour" of the Cohorts 1970 - 1985 in a Generational Comparison. New York City, NY: Springer, 2010. Print. Vejlgaard, Henrik. Anatomy of a trend. New York City, NY: McGraw-Hill, 2008. Print. Read More