Harley Davidson: Marketing Success and Customer Loyalty

Harley Davidson, an American motorcycle company founded in 1903 by William S. Harley and Arthur Davidson, has become an iconic figure in the motorcycle industry over its 108-year history. Despite economic fluctuations, the company solidified its position as a major player by securing contracts to supply 60000 motorcycles to the American military during World War II. This greatly enhanced the reputation of the Harley Davidson brand among servicemen. Through effective marketing and positioning strategies, Harley Davidson successfully rebranded itself and expanded its appeal beyond the traditional biker image to attract a diverse global audience.

In this report, we will evaluate the current state of Harley Davidson Motorcycle Company and analyze its marketing strategies that have contributed to its success in today's highly competitive business environment.

According to Oliver, cited in Sorce (2002), there are several key factors for cultivating customer loyalty. First, the product must be perceived as superior by a significant portion of the firm's customers in order to generate profit. Second, the product must inspire adoration or focused commitment from customers.

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Third, the product should have the ability to be integrated into a social network. Finally, the firm must allocate resources to create a community (Sorce, 2002).

This report highlights Harley Davidson's impressive achievement in achieving high levels of customer loyalty through active customer engagement and nurturing long-term relationships. Instead of simply selling motorcycles, Harley Davidson creates a lifestyle image that is associated with their brand; the motorcycle itself represents this image rather than directly projecting it (Fırat, Dholakia & Venkatesh, 1995).

2. Situational Analysis

2a. Strengths

Harley Davidson possesses numerous strengths and opportunities that surpass their threats and weaknesses. As per Harley Davidson (2011), in 2010, they achieved approximately 55% market share in the heavy weight motorcycle sector within the USA, indicating a slight increase from 2009 and a substantial rise compared to 2008. This demonstrates a promising trend despite uncertain economic conditions. The brand recognition of Harley Davidson continues to be a clear advantage over competitors, particularly in the American market. Additionally, Harley Davidson has actively pursued a broader customer base by offering a diverse range of motorcycles. By the conclusion of 2010, Harley Davidson emerged as the leading seller of heavy weight motorcycles among women, Hispanics, and African-Americans.

Harley Davidson successfully targeted and attracted young adults aged 18-34, a market segment they were previously criticized for neglecting. In 2010, they secured the number one position in this demographic (HD, 2011). One of their significant triumphs in target marketing is the establishment of the Harley Owners Group (HOG), which offers membership to customers who purchase a new Harley Davidson motorcycle. HOG members enjoy benefits such as roadside assistance, access to HOG magazine, rental deals for fly and ride services, touring information, and event details. According to the HOG group's website, it is more than just a motorcycle club; it is a global community of one million individuals who share a common passion: turning the Harley-Davidson dream into a way of life" (HD, 2011). However, weaknesses should also be acknowledged.

Although Harley Davidson has a strong presence in the USA market, their international market share has been growing slowly. They face tough competition from heavyweight manufacturers like BMW, Triumph, Honda, and Kawasaki, despite having loyal customers in the USA. In Europe particularly, there is a high demand for heavy weight motorcycles. However, Harley Davidson has only been able to capture less than 13% of this lucrative market (HD, 2011).

Harley Davidson faces both opportunities and threats in its business. One notable opportunity is the potential for international expansion. Currently, Harley Davidson holds less than 13% of heavy weight motorcycle sales in Europe, but it remains the second-ranked player in this market. This indicates that there is no monopoly by competitors and suggests weaker customer loyalty compared to the USA. Additionally, Harley Davidson has the chance to attract more women riders. The company has been increasing its marketing spend since 2007 and introducing bikes specifically tailored for women, resulting in a rise of women's contribution to Harley Davidson sales in the USA to 12% (Clothier, 2010). However, there are also threats that present challenges to Harley Davidson's business.

Harley Davidson is encountering rivals in the heavyweight market and economic uncertainty that impacts manufacturers. The ongoing economic situation in the USA may not harm Harley Davidson's market share, but it could put its financial stability at risk. While loyal customers are improbable to forsake the brand, they might postpone upgrades and apparel purchases. Global markets present a higher danger due to financial pressures and fluctuations in foreign exchange rates. If these pressures result in dealer closures, it could lead to lower motorcycle prices, decreased retail coverage, weakened servicing capabilities, and an adverse effect on the Harley Davidson brand (HD, 2011).

3. The analysis of the Harley Davidson case study reveals that the company's value proposition, as stated by Joanne Bischmann, VP of Marketing, is centered around fulfilling dreams and providing exceptional motorcycles and customer experiences (Pearson Prentice Hall, 2011). This value proposition ignites a passion for freedom and individuality in their customers.

In fact, Joanne Bischmann herself has been convinced by this value proposition and expresses that she would rather give up most other things than her Harley. Additionally, it is customary for Harley Davidson executives to attend HOG rallies to fully immerse themselves in their product and gain insight into their customer base (Berry, 2002).

A key marketing strategy that has proven to be highly successful for Harley Davidson is the creation of the Harley Owners Group (H.O.G). This group not only provides ongoing and authorized access to customers but also fosters the development of a strong brand community.

H.O.G has created a brand community that fosters a relationship between the customer, the company, the brand, the products, and fellow customers. The rallies and functions organized by H.O.G bring together customers and groups who share a mutual appreciation for Harley Davidson products. This has helped Harley Davidson deliver on their promises of value, turning them into a reality rather than mere words. By employing strategic marketing tactics, Harley Davidson has developed a loyal customer base who consistently receives the benefits they desire. In essence, Harley Davidson has cultivated a following of "True Friends" as described by Armstrong and Kotler. The company aims to invest in maintaining and nurturing these customers in order to encourage their loyalty and growth. H.O.G exemplifies this definition exceptionally well.

They unite passionate individuals and groups who are fiercely loyal to the Harley Davidson brand. It is hard to believe that the members do not enthusiastically talk about their adventures and travels with H.O.G, attracting a whole new range of potential customers for Harley Davidson. When considering the Harley Davidson brand community, it is likely that the groups Armstrong and Kotler (2011) refer to as Strangers or Barnacles make up a minimal portion of their customer base. With the presence of so many "True Friends," Harley Davidson has definitely established a large customer equity base. It is not only the fact that a Harley owner is a devoted fan; approximately 75% of them are repeat buyers. The customers have embraced the romance and lifestyle associated with the brand, supporting the idea that "investment in a Harley is more than financial and the role of the bike is more than functional" (Schembri, 2008). Furthermore, this principle may lead to actual financial equity as indicated by MacAlexander et al. (2002) - many loyal customers tend to invest in the company's stock due to their emotional investment in the company's welfare and desire to contribute to its success.

Customer loyalty is a significant factor in Harley Davidson's customer equity. However, the company places even greater emphasis on the quality of their products. Without top-notch products, no amount of marketing can attract new buyers or convince current customers to repurchase motorcycles. To meet the needs of their outreach customers, Harley Davidson has modified their product range. They have successfully achieved the number 1 position in the market for women buyers by introducing motorcycles that are better suited to them. For instance, certain models of their Sportster range have been adjusted specifically for women riders, with lowered seats and reduced weights by 150lbs (HD, 2011).

Harley Davidson's main markets are the USA and Europe, which made up 83% of new motorcycle sales in 2010 (HD, 2011). However, expanding in the USA is challenging due to its large market share and uncertain economy. In fact, there were 36 Harley Davidson dealers that closed in the USA in 2010, with more expected closures in 2011 (HD, 2011).

To grow in the US market, Harley Davidson should focus on reaching out to customers and tailoring their marketing efforts towards them. Despite economic uncertainty, there is still potential for growth internationally for Harley Davidson.

However, financial instability in Europe is a concern for any company trying to expand its non-essential items business there. It may be wise for Harley Davidson to wait and observe how European markets recover before making major moves. Since Europe is the largest international market for heavy weight vehicles (HD, 2011), it is important for Harley Davidson to maintain a strong presence there.

In addition to targeting outreach customers in Europe, there are also indications of potential growth for Harley Davidson Finance. Having internal finance options available is crucial as it increases the likelihood of providing easier financing options for buyers.

5. References

Armstrong, Gary and Kotler, Philip 2011, Marketing: an introduction, 10th edition (pp. 50-51), Pearson Prentice Hall, USA.

Oliver, Richard L. (1999). Whence Consumer Loyalty? Journal of Marketing, 63, 33-44

Sorce, P. (2002). Relationship marketing: A research monograph of the printing industry center at RIT. New York, USA: Rochester Institute of Technology

Firat, F., Dholakia, N. & Venkatesh, A. (1995). Marketing in a postmodern world. European Journal of Marketing, 29,(1)40-46

Harley Davidson Inc.(2011). Harley Davidson Inc. 2010 annual report.Retrieved from http://www.harley-davidson.com/en_US/Content/Pages/home.html Clothier,M.(2010 ,September30). Why Harley is showing its feminine side.Bloomberg Business Week. Retrieved from: www.businessweek.com

Pearson Prentice Hall(Producer).(2011). Creating & capturing customer value [Video].USA.

Berry,L.(2002).Relationship marketing of services-perspectives from 1983 and 2000.Journal of Relationship Marketing, 1,(1)59-77

MacAlexander,J.,Schouten,J.& Koening,H.(2002). Building brand community.Journal of Marketing ,66 ,38 -54

Schembri,S.(2008). Reframing brand experience: The experiential meaning of Harley–Davidson. Journal of Business Research. doi :10.1016/j.jbusres.2008.11.004