Harley-Davidson: Preparing for the Next Century
I. Nature of the case and decisions to be made
Harley has been one of the top growth stocks from 1989 to 2003 but is now facing challenges related to brand perception, an aging customer base and heavy competition. In 2005, the stock price declined as Harley announced reduced sales estimates. In the early 1900â€™s Harley was an innovator, standardizing parts, developing new technology and implementing a marketing plan that centered on becoming part of a lifestyle. Harley controlled the market for motorcycles until the late 50â€™s when Japanese manufacturers entered the market offering low-price, dependable bikes and taking more than ...view middle of the document...
There are several options that Harley can execute depending on the demographic they want to focus on. First, they can continue to focus their efforts on the younger and women demographic by investing in marketing their low-cost, high-performance range of the market through their Buell acquisition and sportster line of products. They can complement the strategy by a larger rollout of the riderâ€™s edge and rental program to introduce new riderâ€™s to the products Harley offers and try to increase the win rate from those programs. In contrast, Harley can differentiate themselves by spinning off the Buell brand into a separate company and bringing the focus back on the raw power and lifestyle marketing that has delivered strong results in the past from their core customer base.
The risks involved with trying to bring in the younger, women and performance-oriented segment into the Harley brand is alienating the core customer base and reducing brand loyalty. Harley has spent 100 years developing its image and brand confusion could drive customers from all segments away from their motorcycles. However, due to the slowdown in the cruiser segment Harley will have a very difficult time meeting their unit projections by 2007 without tapping into the performance segment. Harley unit sales only grew 8.4% in 2003 and 7.3% in 2004. Early indicators of the sportster line have shown promise among Harley enthusiasts as second bikes, so there is a potential opportunity to up-sell to an existing customer base.
Another option is spinning off the Buell brand into a separate company and rolling out a performance line of bikes under that brand to create a clean break and a clear branding image to two...