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Harely Davidson Situation Analysis

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Harley Davidson Situation Analysis

Situation Audit


The legendary motorcycle company, Harley-Davidson was founded in 1903, by William D, Walter, Arthur and William S. Harley right in their own backyard. By 1909, they had introduced the first V-twin engine, which is the company standard to this day. Harley-Davidson motorcycles were found to be useful during World War I, where they supplied 20,000 to the military. After this war, the depression threatened the motorcycle industry, and Harley-Davidson and Indian were the only ones to survive through the 1930's. Then during the Second World War they found themselves in the light again, this time supplying 90,000 motorcycles. In 1953 their competitor, Indian closed and Harley-Davidson was the only American motorcycle manufacturer for the next 46 years. By 1970 the United States was importing motorcycles from Japan that were lower priced, imposing on Harley-Davidson's market share. By 1986, after convincing the International Trade commission to remove tariffs on imported heavyweight Japanese motorcycles one year early, they regained their place at the top of the heavyweight market beating Honda. President Regan was amazed with the company and called them an "American success story." After this, the company continued to grow and in 2003, Harley-Davidson Inc. celebrated their 100th year anniversary.

Mission and Vision

The mission of this company is to "fulfill dreams through the experiences of motorcycling, by providing to motorcyclists and to the general public an expanding line of motorcycles, branded products and services in selected market segments." Harley-Davidson wants to have happy customers that will continue to buy this brand for life. Their vision states that they are an "action oriented international company," and that they are committed to improving its relationships with stakeholders. They believe that through balancing their stockholder's interests and the "empowerment" of employees to concentrate on valued activities they will find success and continue to be successful.

Products and Pricing

The Harley-Davidson company is divided into two segments; the motorcycles and related products, and financial services. The motorcycle and related product segment consists of motorcycles, motorcycle parts, accessories, and merchandise. The financial segment is the Harley-Davidson Financial Services, Inc. (HDFS). This company provides financial services to Harley and Buell dealers as well as consumers throughout the U.S. and Canada.

The heavyweight motorcycles are divided into four segments: standard, performance, touring and custom. Standard motorcycles stress simplicity and cost. The performance segment emphasizes handling and acceleration, hence the word 'performance.' The touring segment, just as the name implies, focuses on comfort for travel, and leisure. The custom segment allows consumers to basically build their own bike. Their custom motorcycles can cost up to 50 percent more than the competitions, and it is the segment that makes up the highest number of motorcycles. They make 28 different models of the touring and custom heavyweight motorcycles. These motorcycles range from $5,975 to $27,995.

The 883cc Sportster is Harley's custom model that is priced competitively with other motorcycles available. This model's purpose is to be a introduction bike for new customers. The hope is that consumers who buy this bike will come back and buy a higher priced bike the next time. There is market research which shows that 92 percent of consumers intend to repurchase, so there is a good chance that this lower priced bike will bring consumers back to get something more appealing.

The motorcycle line that appeals to the performance and standard segment is The Buell line. The retail prices of these motorcycles range from $8,795 to $13,700. In 2000, the Blast was introduced at a price of $4,595, as a smaller and lighter version of the Buell. This bike also offers a single-cylinder engine so more women are interested in this bike because it is easier to handle for first time users.

Marketing and Distribution

There are 630 Harley-Davidson dealers in the United States that offer full service. Marketing is done through dealer promotions, magazines and direct-mail advertising, customer events, and public relations. Some important events that this company participates in are sponsored racing activities, special promotional events, rallies and most importantly they participate in all the major motorcycle consumer shows, which draw in many potential customers and loyal customers. HOG is the "Harley Owners Group" which was established in 1983, and currently has 750,000 members worldwide and happens to be the biggest company sponsored motorcycle organization. The BRAG, Buell Riders' Adventure Group was formed in past years and has approximately 10,000 members. Both of these groups sponsor events such as rallies, and rides across the United States and around the world.

Recently Harley has decided to market the people that are the nonriding public. In an attempt to capture this market they have licensed their name with the production of t-shirts, jewelry, small leather goods, toys and other products. There are also two Harley-Davidson Cafй's located in New York and Las Vegas. Another marketing effort is the Academy of Motorcycling, which is for people that do not know how to ride a motorcycle. This academy teaches these people how to ride, and teaches them about the different models to chose from. One of their biggest marketing efforts comes from the online catalog where you can purchase accessories and merchandise.


Competition in this heavyweight class is based on quality, reliability, price, style and customer preference. The competition that Harley faces comes from Honda, Suzuki, Kawasaki and Yamaha, but it maintains its dominance with 48 percent overall market share in the United States heavyweight motorcycle market. The next largest competitor is Honda with only 18 percent market share. A recent threat to Harley is a company named "Polaris" who sells snowmobiles and ATV's, but have recently started to produce "Victory" motorcycles. These motorcycles are lower in price than Harley; they have 300 dealers in the U.S., Canada, U.K, and Australia with hopes to expand. They vow to not give up and to be in the motorcycle market for long-term. Suzuki and Kawasaki have found themselves formed in a



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