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HARLEY-DAVIDSON, INC.
The Harley-Davidson Corporation has been dominating the motorcycle industry for many decades. Today, it continues to have a strong presence in the American market. The mission statement of the company is "To fulfill dreams through the experience of motorcycling, by providing to motorcyclists and to the general public and expanding line of motorcycles and branded products and services in selected market segments."
Harley-Davidson, Inc. is the parent company for the group of companies doing business as Harley-Davidson Motor Company, Buell Motorcycle Company and Harley-Davidson Financial Services. Harley-Davidson Motor Company manufactures five families of motorcycles Sportster ®, Dyna Glide, Softail ®, Touring and VRSC. Buell Motorcycles Company produces sport motorcycles, including four big-twin XB models, and the single-cylinder Buell Blast ®. Buell also offers a line of motorcycles parts, accessories, apparel and general merchandise. Harley-Davidson Financial Services provides wholesale and retail financing and insurance pogroms primarily to Harley-Davidson/Buell dealers and customers.
S.W.O.T. ANALYSIS
STRENGTHS
This year, Harley-Davidson celebrated its 100-year anniversary. Over the past century, the company has created a strong brand image and a loyal customer base. It maintains a close relationship with its customers through a variety of program, such as Hog Owners Group (H.O.G.), product offerings and events such as Daytona, motor shows, and rallies.
In addition, Harley-Davidson has a strong financial position, excellent supply chain management, and a superior product line, which are enabled through creative engineering technology and design. Due to the decline in the market share to Japanese companies in the seventies, Harley-Davidson phased out its weak models, becoming more selective in targeting a specific customer segment and limiting sales and promotion. This strategy created a niche market for their bikes in which the company enjoys a strong position today.
WEAKNESSES
The Harley-Davidson company has several weaknesses. First, the company is in its maturity stage and, unless it manages to protect its position, it will be faced with the decline period again. Secondly, the company's products are expensive, which limits them to a specific niche in the market and makes it difficult to grow their customer base. They also have a wait-list for certain products, which can create a substitute effect. Lastly, they are lacking a strong presence in Europe.
OPPORTUNITIES
There are various opportunities in the market for Harley-Davidson today, especially with the introduction of the new V-Rod motorcycle. The company has the innovator status advantage in the Performance Cruiser class market segment. They are expanding their partnerships with various European manufacturers, which should increase the presence of Harley-Davidson products in Europe. The corporation is well positioned to attract younger customers, and the company has plenty of room for growth due to the high demands for its products.
THREATS
Harley-Davidson is facing rigorous competition from Japanese manufacturers, specifically Honda and Yamaha. Yamaha targets the low-end market by providing a variety of products at affordable costs. Yamaha's core competencies are small engines, electronic control, and fiberglass reinforced plastic. Yamaha is currently focusing on increasing its global competitive position.
Honda is one of Harley-Davidson's strongest competitors and is responsible for one-third of all motorcycle sales in the U.S. It has a strong financial base and reliable products. It continues to improve the performance of its motorcycles by focusing on fuel efficiency and lower emissions. In addition, Honda is beginning to increase its performance in the market by introducing information technology tools through its dealerships. These tools help increase dealer performance and create a more positive experience for the customer.
FINANCIAL POSITION
Harley-Davidson currently holds a strong position in the market. However, it is in tight competition with Honda and Yamaha, as shown in the table below comparing a mid-priced motorcycle from each line
00 Potential
Competitor MSRP Market Share Revenue
Honda VTX $1,000 .6% $1M
H-D VROS $17,000 % $186M
Yamaha Road Star $1,000 0.6 $.76M
For the quarter ended June , 00, consolidated net revenue totaled $1. billion, a $17.8 million (1.8% increase) over the same period last year. Net income for the second quarter of 00 was $0. million, compared to $144. million in the second quarter of 00, and increase of 40.1%.
Below is a comparison of net revenue of Harley-Davidson and its top competitors
Revenue Growth
Yamaha 845.8M 18.4%
Harley-Davidson, Inc. 40.1M 1.6%
Honda 540M .%
RECOMMENDATIONS
Tom Condor, an industry analyst with A.G. Edwards & Sons, Inc. brokerage firm, says of Harley buyers, "When they're buying a Harley, they're buying an image and a lifestyle first and a motorcycle second." But, Harley-Davidson has to do more to ensure another 100 years of success.
Aging baby boomers form Harley-Davidson's customer base. N The median age of Harley buyers is 46, compared with an industry average of 8. This could have a damaging affect on consumer's perception of a Harley being the old guy's bike.
Harley-Davidson produces only heavyweight motorcycles (with engine displacements of 750cc or greater) that are categorized into touring and cruiser motorcycles. Harley-Davidson's subsidiary, Buell Motorsports, makes sports bikes, but it only accounted for 4 percent of Harley's bike shipments last year. Harley-Davidson needs to continue to give attention to their classical product line that has made them successful, but they need to focus more activities toward reaching out to new, younger customers.
Only Nine percent of Harley owners are women. This is a market segment that is growing at a fast rate. To be successful here, Harley needs to provide smaller, easier to handle, comfortable, and good quality bikes to build up brand loyalty.
Although motorcycles are sold internationally, there are three main geographic markets that comprise the bulk of motorcycle sales. These are North America (US and Canada account for 60% of the market), Asia, and Europe. Only 16.5 percent of Harley's revenue comes from outside the United States. The European market has great potential for Harley-Davidson since Europeans have higher disposable income and enjoy a higher standard of living. To succeed in this market, Harley-Davidson would have to modify their products to meet local needs, expand its distribution networks, and create strong customer service. Although the Japanese producers control the largest share of the world market, they are notorious for low quality service. Harley-Davidson's emphasis is good quality products and after sales service. These qualities could be used to build brand loyalty.
Today, as the feelings of American patriotism are so strong, Harley-Davidson needs to continue to strengthen its positioning strategy by building on the "Own an American Icon" slogan.
In summary, Harley-Davidson should capitalize on its current reputation and success by rapidly increasing demand, and by expanding its product line to reach new consumer markets, especially overseas. It needs to target a younger, technologically conscious and affluent market segment in order to increase its share of the market. The company is well-positioned to attract younger customers and they have plenty of room for growth due to the high demands for its products. They also need to set an appropriate pricing strategy, in order to appeal to a wider market segment.
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