Harley-Davidson at Strategic Crossroads

Harley-Davidson is the name for the motorbike enthusiast. The company had gone through ups and downs since its inception and every time fighting an almost bankruptcy. However, with the present economic recession in the US, and depleting consumer demand, there has been pressure on the company’s revenue and sales figures. The company aims at cutting employee strength by almost 10 percent (Harley-Davidson, 2009). Market conditions are rough due to decreased demand and there is still a competition that Harley-Davidson faces from competitors like Honda and Kawasaki. Therefore, the company has opted for a new strategy to revive its sales and profit. Given the adverse market conditions, Harley-Davidson is aiming to take up three strategic initiatives (Harley-Davidson, 2009; Vasilash, 2009):

  1. Invest further in Harley Davidson brand. For this, the company has decided to do discontinue its Buell product line and divest in a previously acquired European brand MV Augusta. Therefore, the strategy is to focus on the Harley-Davidson brand.
  2. Make changes in the cost structure of the company so that there can be cost cutting which will increase operating profit. It aims at undergoing a restructuring process so that production efficiency can be increased to manage operating costs.
  3. Look for funding for HDFS (Harley-Davidson Financial Services). This is an important strategy for the company as many of its retail sales are delayed or curtailed due to lack of credit available at the stores. Therefore, the company aims at gaining more financers to support the financial service segment so that customers are not lost due to lack of availability of finance. The company advertisements are no longer restricted to print advertisements. They have their club at social networking sites and have are going beyond conventional print and TV advertisements to promote their product.

The brand image of the company is the key to its success and appeal. Harley-Davidson has been known for the branding of the ‘Harley-Davidson experience’ (Rovito, 2009). The company’s marketing policy has historically been to promote the customer’s emotions, and experience. The main seller for the bikes has been the brand personality – the “Hell’s Angel” image of the brand. However, in the past, the company had realized that too intense image and customer loyalty of the brand was eroding the same of the company (Imperato, 1997). However, the new strategy of the company has been to maintain its brand image the way it is and increase its customer loyalty program.

Customer loyalty is key to Harley-Davidson’s success (American Motorcyclist Association, 2009; Rovito, 2009; Taylor, 2009). The study has shown that at Harley-Davidson almost three fourth of the customer’s repurchase (Warner, 2002). Customer loyalty is very high, as the branding exercise is not aimed at branding the product but the “experience (Schinwald, 2005). Therefore, the customers too are important. So far, the company continually targeted only the baby boomers and people who associated with the “bad boy” image. The target market has already been expanded from baby boomers to professionals and managers who are called Urban Riders or Rolex Riders (Schinwald, 2005). However, the new strategy aims at targeting untouched markets like women riders and Hispanics (Rovito, 2009). The company’s new museum will not only create a brand identity among the old and new alike (Vella, 2008). It will serve as nostalgia for the Harley-Davidson loyalists and create new customers amongst the generation next.

Another step that the company must take is to increase efficiency at the production front. When Harley-Davidson was at its peak in the 1990s, it failed to meet customer demand due to a lack of supply (Imperato, 1997). Efficient operations and increased sales also mean increasing the availability of the product when there is customer demand. Therefore, the company must continue implementing its just-in-time production strategy for increased efficiency.

The present strategy of the company is therefore to reinforce its brand image. However, the target is not restricted to the traditional loyalists, but new target groups. The company aims to diversify into new markets, both in the domestic and international market, and sustain through the present economic woes.

References

American Motorcyclist Association. (2009). Updated: Harley-Davidson announces third-quarter results and long-term strategy; discontinues Buell line. Web.

Harley-Davidson. (2009). Harley-Davidson. Web.

Harley-Davidson. (2009). Harley-Davidson announces 3rd quarter results, Unveils long-term business strategy. Web.

Imperato, G. (2007). Harley Shifts Gears. Fast Company , p. 104.

Rovito, R. (2009). Harley to focus strategy on women, minorities. Web.

Schinwald, J. (2005). Case study: Harley Davidson. Web.

Taylor, D. (2009). Harley at a Crossroads on the Branding Highway. Central Penn Business Journal.

Vasilash, G. S. (2009). No Guts, No Glory. AD&P , p. 6.

Vella, M. (2008). The Harley Museum Goes the Whole Hog. Web.

Warner, F. (2002). Curb Your Enthusiasm. Fast Company Issue 54 , p. 32.

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