From 1973-1983, Harley-Davidson’s market share went from 78% to 23% as Japanese manufacturers flooded the market with high quality, low priced bikes. Unable to compete on price against the Japanese producers, Harley had to establish other market values and improve quality. A Case Study of Harley Davidson’s Business Practises looks at the management, marketing, and manufacturing techniques that brought the company back.
The company started to use an emotional appeal that hooked into something bigger than just technology/features:
“The real power of Harley-Davidson is the power to market to consumers who love the product.” Harley-Davidson’s President and CEO, Richard Teerlink says the bike represents to America, “the adventurous pioneer spirit, the wild west, having your own horse, and going where you want to go – the motorcycle takes on some attributes of the iron horse. It suggests personal freedom and independence” (Executive Excellence 6). Brand loyalty for Harley-Davidson is emotional. They are considered more than motorcycles-they are legends. It is an American icon brand. The Harley-Davidson symbol is based on a pattern of associations that include the American flag and the eagle; reflective of the passion and freedom Americans enjoy…
A desire to escape the routine and become anyone you like. While their competitors base their advertising on product technology and features, Harley promotes: a mystique appearance, individualism, the feeling of riding free, and the pride of owning a legend. With Harley, you can live out your fantasies, as well as experience camaraderie with fellow bikers.
Telling a story makes such a deeper connection than a feature list.
No feature list here.
It’s also interesting to see how Harley chooses not to compete on price and intentionally fails to meet demand:
Harley-Davidson quickly learned it could not compete with the foreign manufacturers on cost. Not only did Honda have a low priced product, it was able to defeat Harley in advertising 40-1. Therefore, Harley developed a strategy of value over price. This was created through the development of mini-niches and the heavy construction of the parts. Japanese manufacturers used plastic while Harley used steel, which is able to be rebuilt and rebore. Harley was careful not to exceed demand in production of their motorcycles. Currently, people must wait six to eighteen months for a new motorcycle and the price for a year-old Harley is 25% to 30% higher than a new one. By not being able to meet demands, an attitude of must-have has developed. Therefore, Harley has plans to double capacity to 200,000 motorcycles annually by 2003.
Harley Shifts Gears [Fast Company] discusses the company’s success and how Harley tries to build a life-long relationship between the company and its customers.
Harley extends its learning to its family of owners: the Harley Owners Group, or HOG. A 15-year-old initiative to build a life-long relationship between the company and its customers, HOG is the world’s largest factory-sponsored motorcycle club, with 325,000 members and 940 chapters. Harley offers HOG Seminars, sessions for the club’s 7,000 chapter officers to help answer questions on whether and how to incorporate, how to draw new members, or how to organize an event.
The company’s CEO says watching real customers use the products is the most important way Harley gathers information.
The company’s most important intelligence gathering comes at Harley-sponsored events such as the Daytona Bike Week, where dozens of company volunteers — ranging from Rich Teerlink, chairman, president, and CEO of Harley-Davidson Inc. to factory and office workers — interact with customers.
“This is real-time market research,” Teerlink says. “Our engineers see what our customers are doing with their motorcycles, and they come back with things we could improve on or new ideas we could try.”
We’re thinking of trying something like this too. Stay tuned.