Harley Davidson: Preparing for the Next Century
NATURE OF THE SITUATION
Harley Davidson (HD) sales have endured a roller-coaster history of growth and decline since its start in 1903. From extreme growth in its initial years, to declines during WWII, HD made its come back with larger, more powerful bikes and its image of “raw power” and enjoyed a 60% market share. Its popularity soared to iconic level in the 1950’s and became a lifestyle with unique brand loyalty. New, Japanese competitors, in particular Honda moved the market towards a smaller, quieter, less expensive bike; and by 1965, Honda represented half of all bike sales.
HD employed every technique to raise capital from going public in 1965, to selling to AMF, to selling back to the employee group, and to once again going public. In doing so, they toured their competitor, Honda, and decided to make changes to take advantage of the manufacturing efficiencies that they observed at Honda. HD increased inventory turnover and productivity, decreased problems in products, increased revenue and operating profits, and, finally, increased its market share.
They continued to innovate programs such as HOG (HD owner’s group), and developed their market strategy on two main stages, one, to reach younger customers and, two, to maintain growth in its traditional market segments. The HD customer base was aging, and although there were repeat customers, new, younger customers were few. In order for HD to compete with Japanese competitors, it had to reach the youth. In 2001, HD released a high performance motorcycle for the first time, the V-rod, to target both the young, hip American and the Europeans.
HD knew that while its established customer base was aging, baby-boomers were staying active longer which extended the demographic of HD’s market, projecting a steady base until 2020. Continuing to target new segments, HD re-designed the Sportster family of entry-level, lower priced bikes for new, young, and female riders. HD discovered that rather
Harley Davidson (HD) sales have endured a roller-coaster history of growth and decline since its start in 1903. From extreme growth in its initial years, to declines during WWII, HD made its come back with larger, more powerful bikes and its image of “raw power” and enjoyed a 60% market share. Its popularity soared to iconic level in the 1950’s and became a lifestyle with unique brand loyalty. New, Japanese competitors, in particular Honda moved the market towards a smaller, quieter, less expensive bike; and by 1965, Honda represented half of all bike sales.
HD employed every technique to raise capital from going public in 1965, to selling to AMF, to selling back to the employee group, and to once again going public. In doing so, they toured their competitor, Honda, and decided to make changes to take advantage of the manufacturing efficiencies that they observed at Honda. HD increased inventory turnover and productivity, decreased problems in products, increased revenue and operating profits, and, finally, increased its market share.
They continued to innovate programs such as HOG (HD owner’s group), and developed their market strategy on two main stages, one, to reach younger customers and, two, to maintain growth in its traditional market segments. The HD customer base was aging, and although there were repeat customers, new, younger customers were few. In order for HD to compete with Japanese competitors, it had to reach the youth. In 2001, HD released a high performance motorcycle for the first time, the V-rod, to target both the young, hip American and the Europeans.
HD knew that while its established customer base was aging, baby-boomers were staying active longer which extended the demographic of HD’s market, projecting a steady base until 2020. Continuing to target new segments, HD re-designed the Sportster family of entry-level, lower priced bikes for new, young, and female riders. HD discovered that rather