Market of Harley Davidson in the US - Essay Example

Introduction and Problem ment: The achievements of Harley Davidson are remarkable for giving the Motorbike industry a new face of designs and innovations. This report is conducted to analyze the performance of Harley Davidson in the US market and in the global market along with and the challenges faced by the Harley Davidson in US Motorbike industry after meeting recession in the economy. The competitive environment of Harley Davidson and SWOT of the company will also be discussed in the report. ANALYSIS: 1.1- Market of Harley Davidson in the US: Segmentation: Young adult men and women age group 18 to 34, Caucasian men age group 35 to 74, income level about $45 thousand or above in a year, people associates themselves with the image of bad guys and funky riders. Growth rate: its growth rate in the US market is in between 10% to 20% for the last 7 years. It varies with the country economic conditions. 1.2- Key economic characteristics of global and US motorbike industry: The global market consumers consider all the factors while purchasing the motorbikes because the motorbikes in most of the countries are used by means of transport or the consumers who does not afford the cost of maintaining car: 1- Good quality 2- Fuel efficient 3- Inexpensive price 4- Easily available spare parts etc The motorbike industry of US is different from the international market because the US consumers do not use the motorbikes by means of transport. So US consumers do not consider all the above factors except superior quality. 1.3-Cross country differences: Every country has its own economic conditions that are different from the other country. In motorbike industry of under developing countries the consumers consider these factors: cheap in cost, average in quality, fuel efficient and spare parts available at cheap prices. And in the developed countries the focus of the consumers on superior quality, innovative features and designs etc. the economic conditions of a country creates a big difference in the consumer preferences. 1.4-Competitors: The main competitors of Harley Davidson in the US and in the international market are: 1.5-Segments for growth opportunities: Expansion in the growing markets of Asia. For example China and India. Expand product line for younger market. Make new alliances with local manufacturers to produce in low cost. For example market of China and India. 2.0 -Competition analysis: (Porters five competitive forces) 1- Segment rivalry: (high) Industry growth is low; competitors like Honda are diverse in strategies. 2- Threat of new entrants: (low) it requires high capital investment, high research along with very expensive marketing activities. 3- Threat of buyers bargaining power: (low) the niche segment is targeted therefore it is not easy for buyer to shift on the alternative. 4- Threat of suppliers bargaining power: (low) switching cost of changing supplier is not very high and alternatives are available. 5- Threat of substitute product: (high) Japanese motor bikes capturing the interest or market. 2.1-The motorbike industry is growing very fast for the last two decades and now the total number of motorbikes in the world is around 200 million. It’s a very huge market with a huge growth every year. Many bug multinational entering in this fast growing market because in the under developing countries motorbikes is used as a means of transport and in developed countries it is used with a broad perception. Harley Davidson associates its brand image with life style of customers. Its market is increasing because today’s consumer associate it self with the product’s characteristics to build its personal image as a products image. This trend makes the market of Harley Davidson more effective and appealing. 2.2- Harley Davidson strategy in US market: Harley Davidson implemented cost/differentiation strategy in the US market and focus on the niche segment to compete effectively and efficiently. The differentiation factors include: High standard quality. Inexpensive prices. Customized motorbike manufacturing services. Harley Davidson is most selling motorbike brand in US market and containing a highest market share in the US motorbike industry. The sales and the market share of Harley Davidson in the US motorbike industry verify its successful strategies. 2.3- Harley Davidson strategy in international market: Harley Davidson differentiated itself in the market with the image of High-powered motorbikes. The target market of the company in the global market are mostly all the developed countries. A Harley Davidson product sells in the 67 countries. The company differentiate itself from competitors by superior quality, high-powered engine and customized design along with the brand loyalty. The company is succeeding in meetings its targets all over the globe with its implemented strategies of global expansion. 2.4-Strategy in Generic term: The Harley Davidson strategy continuously focuses on the product differentiation strategy and cost effective. Every model of Harley Davidson comes up with some new innovation in the market in inexpensive prices and gives competitive advantage to the company. 2.5- Financial performance of Harley Davidson: (2007 to 2011): Years 2009 2010 2011 EPS diluted $0.30 $1.11 $2.33 Analysis: The Harley Davidson meeting high revenue and profits in 2007 and 2008, but after recession came in US economy the market markets gets down and faced a decline in profits and revenue. From 2009 to 2010 the company started increasing its revenue and net income again and with innovative strategies the company brings back its profit in a fast growth mood in 2011. The EPS of the company in phase remains in the growth side and year by year it gets increased. The investors attracted with the company’s growth while the recession faced by the US economy and the growing share prices led them to invest in the shares of Harley Davidson. 3.1&2-SWOT Analysis: Strength: 1- It has superior quality products. 2- Brand recognition. 3- It has got its trade mark licensing. 4- Having good relationship with suppliers which make the supply chain affective. 5- It is providing designer store services. Weakness: 1- Prices are high as compare to competitors. 2- The production reliant on a small number of suppliers. 3- Low market share in the international market. 4- Continuing capacity constraints. Threats: 1- Loss of market share in the domestic market in recent years. 2- The innovations by competitors of Harley Davidson. 3- Laws of environmental protection. 4- High cost of production 5- Prevailing recession. Opportunities: 1- Market of younger and female riders increasing. 2- Customers are becoming quality conscious in purchasing motor bikes. 3- Expansion in the more developed countries in the international market. 3.1&2- description: Harley Davidson is the leading motorbike brand with highest market share and highest percentage of market growth in the US industry. The sales of the motorbikes is increasing with a high rate in the US market because it is the local market for Harley Davidson and very deep market segmentation is done by the company to make it a niche market for its product. On the other hand the international market of Harley Davidson is also increasing with good pace but less than the US market because different trends are followed in different countries. Segmentation and deep understanding of each country’s market is difficult. That’s why the growth of international market is less than the growth of US market. 4.1- Goal of 400,000 units sells per year from 2007 till 2011: years 2007 2008 2009 2010 2011 units sold (thousand) 330600 303500 223000 210500 233100 The Harley Davidson didn’t achieve its goal because of the recession came in the US economy and the most of the sales of Harley Davidson derived from the US market. Therefore the declared set target couldn’t be achieved by the company. 4.2- Buell Motor Company: The decision of shutting down the Buell Motor Company by Harley Davidson was taken in 2008. Because of the recession in the US economy the sales of Harley Davidson badly impacted. So the company has decided to close its operation of Buell Motors and make a strong focus on the Harley Davidson products to bring back its sales and profits at to of the level. 4.3- Impact of International sales: In 2011 the international market of Harley Davidson shoot up and give a high returns to the company. The high returns from the international market increases the demand of the shares in the market therefore the share prices of the company increases with a high percentage. Recommendations: Expand its operation in to Asia and Europe markets. Adapt product development strategy and increase the product line. Expand with the concentric diversification Expand its manufacturing in the fast growing market of India and China to reduce the cost of production. Increase its advertising in the developing markets. Read More