The craze and madness for red-blooded classic American Harley that gushes past like air with thunderous sound are exceptional. Harley is one of the very few brands that claim that people are willing to get the brand name and logo tattooed on their bodies. The adoration and idolization of this brand in countries like the United States and Canada are beyond imagination. Rather than a motorbike, Harley is perceived as a medium to “experience freedom” and the company has managed to build on this consumer perception to fuel growth.
Harley Davidson is an American motorcycle manufacturer founded in 1903. The company had a very modest start out of a small wooden shed where the first bike was produced. Since then, the company has been through a roller coaster ride, surviving public backlash and even the great economic depression! Yes, Harley Davidson is one of the two American motorcycle manufacturers to sail through The Great Depression. Today, Harley is a global brand with a strong presence in Canada, Europe, and Japan among a host of other nations, with revenues clocking to $5 billion.
Harley Davidson manufactures its bikes at various plants located around the world. It has plants in New York, Brazil, Wisconsin, Pennsylvania, and India(till 2020). Harley motorcycles are broadly divided in 5 families- Sportster, VRSC, Dyna, Softail, and Touring. Each family has a wide variety of motorcycles.
Intelligent Marketing by Harley
Harley has been twice on the brink of bankruptcy since the 1960s, and it was their enviable marketing strategies that fuelled growth and saved them. Unlike most brands like Dominos, Coca-Cola, Nike who achieved their status because of perpetual marketing powered by deep pockets of these brands, Harley’s success came from behind a curtain effort to sell a product on its merits. Harley does not spend too much on advertising its bikes in media instead, it focussed on its target consumers and tailored its marketing strategies that resonate with how they perceive Harley. This led to the formation of the biggest brand community in the world H.O.G (Harley Owners’ Group).
Getting communities RIGHT
Just type “Best Brand Community” on Google, and Google will churn out Harley Davidson from hundreds and thousands of brand communities. Harley uses its brand community not just for customer engagement, maintaining brand loyalty, or building customer relationships, it also leverages its community to continuously improve Harley bikes. Harley has staffed all its communities with its employees. The company mandates even senior executives to attend the community events and bring customer insights and reviews back to the company. This has helped Harley to produce bikes that are concomitant to the demands of its target audience.
The wings of Harley’s Communities are now spread across the globe. More than 1400 local communities are made by Harley with more than a million ardent individuals as its members. Harley organizes charity drives, biker rallies, adventurous trips to lesser-explored parts of the region. Harley has unlocked a completely new stream of revenue from selling items other than motorbikes. Harley sells apparel, home decor, ornaments, toys, and even video games. Unsurprisingly, Harley Owners’ Group members spend 30% more than non-member on these items.
Also Read: Ferrari – The Making Of World’s Most Powerful Luxury Brand
Marketing to military
Despite being 20%-30% more expensive than the competitors, there are a few brands that are still able to bag a market share of more than 30% in the United States. The “American Image” of Harley has fetched a lot of customers to the company. Deep association with American Military and programs like ‘Heroes Ride Free’ has cemented their position in the US.
Harley Davidson managed to sell around 15,000 motorbikes to the US military during World War 1 and sold its entire output to Harley during World War 2.
Segmenting and Targeting the right people
The segmentation by Harley has spurred the greatest period of profitable growth for the company. Harley realized that its customers were non-monolithic people with a different lifestyle, ethos, opinions who loved, owned, and rode the brand. The following was the segmentation done by the brand –
- Sensitive Pragmatist – These were primarily blue-collar workers and comprised about 29% of the market.
- Laidback and composed – These people were patriotic who bought only “Made in America” products. They tend to be Sportster owner and loved to get in touch with nature. They comprised about 24% of the market.
- Cool Headers – These were individuals with white-collar jobs and purchased Harley to experience freedom. They comprised about 17% of the market.
- Adventure Lovers – This segment purchased Harley to experience freedom, adventure, and independence. These were also firm believers of the “Made in America” tag. They made around 10% of the target market.
- Rich Capitalists – These were RUBS (rich urban bikers)- a class of wealthy winners. They were in the age bracket 45-50. They represented around 8% of the target market
Testing Times ahead
For the past few years, the company has been losing terrain both in terms of profits and sales. In the year 2020, the sales in the US declined by 17.7%, in Japan by 7.1%, in France and Canada by 27% and 28% respectively. The only positive data came from Russia and China where sales were up by 14.2% and 34% respectively.
Strategy to steer through the Crisis
In Feb 2020, Harley appointed Jochen Zeitz as the new CEO, widely hailed for turning around Puma’s near-bankrupt business. His 5-year turnaround strategy consists of restructuring processes and functions, cutting costs, and also seeking new ideas to revamp the brand.
The restructuring will entail eliminating 700 positions globally and a restructuring charge of $50 million. Harley will also quit 39 countries with low sales/profit and efforts will be channeled to boost the sales in the top 50 markets. The product portfolio will also be restructured and only one new model to be launched in the year 2021.
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