Strategic Marketing and Planning (Harley Davidson)

Executive Summary

Harley Davidson had been America’s number one brand for motorcycles and motorcycle related products since its humble beginnings in 1903. Although Harley Davidson is an iconic brand that enjoys a strong reputation for top quality and an unshakable loyalty towards its products, the initial target audience (baby-boomers in United States) is start to age. Because their strong customer base is growing older, Harley Davidson has to set its sights on new markets and new target audiences. Their competitors such as Honda, Yamaha and Suzuki are also facing a similar dilemma and had since concentrated on a younger audience. Harley Davidson realised that their international presence is very weak, and an over-dependency on only the U.S. market will soon have an adverse effect on the company. Therefore they recognised the importance of venturing overseas to establish stronger presence globally. Harley Davidson also noticed that women are an emerging market in the motorcycle industry; hence the company had taken necessary steps to target women and appeal to their preference.

The prime target audience in this plan is college-educated working Woman between the ages of 25 to 54, hold and annual income of more than $50,000. Next, Harley Davidson is also targeting audience from international regions such as Europe, India, and Japan. The company recognises that these new target audiences are more attracted to lower displacement “lighter bike” as compared to the tradition Caucasian male baby-boomers and started to invest millions in research and development to produce a motorcycle that will appeal to their new target audiences. This action resulted in the newly launched 750 – 500cc sportsters; that are mainly produced in their manufacturing plants in India and Brazil. 

To better enable customer interaction and brand association, Harley Davidson invested about US$23 million for their marketing budget over a 12-month period. Harley Davidson will concentrate more on spot advertising and work with clubs that are already in place such as the HOGS (Harley Davidson Owners Group) to increase brand awareness among the foreign markets and women motorcyclist. The 2 main objectives of this market plan are to increase international sales by about 10% and increase international market share by 5%.

  1. Mission Statement: As a traditional company we work for our customer needs and apply this profound association in every business we serve to make unrivaled worth for the greater part of our stakeholders.
  2. Financial summary

From the FY 2010 to FY 2013, Harley Davidson continuously increasing its revenue (4.9 Billion to 5.9 Billion) at the same time their gross profit is also increased by 30 %( Exhibit1). From the FY 2012 to FY2013 Harley has reduced its debt ration by 63.60% by paying back its long term debts (Exhibit 2). They also increased earnings per share by 20.6% from FY 2012 to FY 2013. The net income of the company grew by 17.6% in comparison to the previous year. The sales of Harley motorcycle is increased by 4.4% internationally. Total number of vehicles sold all over the world till December 2013 was accounted to 260,839 (week, 2014).   

  • Motorcycles segment – The Company’s worldwide motorcycle sales generated approximately 77%, 76% and 76% of the total net revenue in the Motorcycles segment during 2013, 2012 and 2011, respectively.
  • Parts and Accessories – Revenue from Parts and accessories increased by 7.7%
  • General Merchandise – Revenue from general merchandise, which includes apparel and accessories decreased by 11.1%
  • Financial Services – Operating income has reduced by 11.7% as compared to last year. (Harley Davidson, 2014)
  1. Market Overview

Harley Davidson is a world renowned motorcycle brand, notorious for its heavy metal reliability and quality, high displacement and its strong association with the image of rebellion and upbeat lifestyles, Harley Davidson had made a name for itself over the decades. Its strong market position, coupled with its undeniable reliability and performance had enabled Harley Davidson to possess a strong customer base extremely loyal to the brand. 

3.1. Target Market

Demographic

Harley Davidson target market, in general consists of Caucasian men above the age of 35 and had recently began targeting younger Caucasian women, Hispanics and African Americans from 25 to 34 with the introduction of lower displacement sport bikes (Crowe, 2006). As Harley Davidson also sees itself as a prestigious brand, the company typically targets higher income households with an annual income of at least US$60,000 and above. 

Geographic

Harley Davidson is very popular in the United States, with a strong national campaign that targets specific markets where motorcycle sales are high. Most of target audience resides in the North American region; more notably in New York and the Central, and Western states in the United States. Based on its annual report, the top 10 city sales are Salt Lake City, Minneapolis-St, Paul, Sacramento, Grand Rapids, Phoenix, Seattle, Oklahoma City, Detroit, Los Angeles and New York City. In the recent years, Harley Davidson had sought to expend internationally to emerging nations such as India and Brazil.


Top 10 U.S. Cities for Harley Davidson Motorcycle Sales

Psychographics:

As ordinary commuters would not spend so much on a motorcycle, Harley Davidson psychographic segment only includes motorcycle enthusiasts, who enjoys the distinct lifestyle and image that comes along with it. 

3.2. Value Creation for Top Priority Target Market

The key target market that Harley Davidson is currently concentrating its marketing efforts towards is the young North American college-educated working women between the ages of 25 to 54 with an annual income of more than US$50,000. This group is especially important because 70.4% of women within this age group work, and 69.2% of the female that works are within 25 to 54 years of age, 63.99% are holding at least a college education and 67.2% of the women targeted are earning more than $50,000 annually.

Harley Davidson is well aware that women are not too fond of heavy motorcycles and high powered machines. Therefore they incorporated the knowledge gained from their separate product line of lesser displacement, “smaller” motorcycles (originally intended for international markets) to be sold in the U.S. as well to cater to the preference of North American Women, as these bikes are way lighter and thus, a lot more agile and maneuverable enabling easier handling. Harley Davidson also organized many events appealing to only women. One such event is the Working Heels to Harley Wheels Event; where they launched its first motorcycle specially designed for women – the Special Edition Sportster. This event was aimed to allow women to feel like they are a part of the Harley Davidson society as it used to be a male dominated community.

3.3. Market Audit

External Market Audit:

Over the past 100 years Harley has been an admiring and recognized throughout the world today. The people who bought Harley in US had an average house hold income of 79,000USD. Youths were so much attracted to Harley, So two third of Harley’s sales come from the people beyond their high school. Women take up 9% of the total Harley sales. People in the age group of mid-forties contributed to the average sales of the company. Harley created an image in the midst of Americans as an American icon.  The company has a wide range of products based upon Performance, Standard, Touring & custom.

Some of the external forces Harley Davidson facing are Economic Forces, Technological forces, Environmental Forces, Political and competitive forces.  Their main competitors are Honda, Yamaha, BMW, and Suzuki. In the heavy motor bike market Honda is having the highest market share (35.6%) and Harley Davidson having second highest market share (27.6%). 

Internal Market Audit (Value chain)

R&D design 🡪 Purchase components 🡪 Manufacturing 🡪 Quality Control 🡪 Distribution & Inventory 🡪 Marketing 🡪 Customer services


Every year Harley invests a little in R&D and design in a selective application of modern automotive technology. In the design they mainly focus on traditional design concept. Harley has very specific inbound logistic (selective raw material suppliers). Around 400,000 unit offer limited bargain power with suppliers and they have a close collaborative relation with the small supplier so they can standardize their component purchasing. The suppliers are bounded to supply a good quality of raw material. In the value chain operation, the most important section is operation where all the manufacturing process is done because Harley is known for their customization of the product. Harley has well developed capabilities in total quality management, just in time production and the team production. To ensure its quality control Harley Davidson has the EDI (Electronic Data Interchange) and bar coding system. Their engineers have a close relationship with suppliers to ensure their quality. Harley is known for their powerful engine, sound produced by engine. Harley have their own outbound logistic were they have around 1300 dealers all around the world (Davidson, 2014). The brand linked with the American culture for the advertisement of the product. Harley invests around 89 million USD each year for advertisement. For the promotion they also have their own special event and club Harley created a heavy motorbike market based upon their quality of the product, the awareness, association and the attitude of the product. Harley is one of the brands in the market known for its after sales services and they have direct link with the customers.

3.4. Product Life Cycle


Harley Davidson motorcycles are situated in between the growth and maturity stage in its product life cycle. It is currently still lingering at the end of the growth section due to its proficiency in its product development and R&D capabilities. Harley Davidson is trying to stretch the growth to improve its position in the product life cycle by introducing attractive deals and to maintain its prestige, as well as launching new product such as low displacement motorcycles, focusing on the niche market of motorcycle enthusiasts and identifying loyal customers. 

3.5. Ansoff’s Matrix


Using Ansoff’s matrix, Harley Davidson focuses in the product development position in the U.S. market because the motorcycle company is already very well established in North America. Therefore Harley Davidson is now investing a lot in product development to achieve new high in ground breaking motorcycle technology. Conversely, Harley Davidson is in a different stage in its international market; Diversification. Because consumers from international markets are not so receptive to the concept of heavy high powered motorcycles, Harley Davidson had to downsize the displacement of motorcycles in order to capture the interest of consumers overseas. This led to the development of a new product in new markets (international), hence fitting Harley Davidson to the diversification stage.

  1. SWOT Analysis

The strengths, weakness, opportunities and the threads of the Harley Davidson Company can be analysed using a SWOT analysis


Strengths

  1. According to the research conducted in the year 2011, 65 % of the people who bought a new Harley-Davidson motorcycle in U.S have already owned a Harley-Davidson before. Likewise as of January 2014, Harley-Davidson experienced a record high 54.9% market share in the U.S motorcycle market (Fleming, 2014). 
  2. They have their own patents in the engine design, engine sound and traditional logo. For example in the mid 90’s Harley Davidson sued the Honda for copying the low base engine sound (Sapherstein, 1998). Licensed products include vehicle accessories, t-shirts, small leather goods, jewelry and toys.
  3. Harley Davidson is one of top most preferable brand in the motorbike industry that helps to retain and attract customers. The company is ranked among the top 100 global brands in the world continuously. Its brand image has significantly contributed to the growth of the company by market recognition and loyal customer base. 

Weakness

  1. The main business of Harley Davidson comes from the US market. Only around 32% of their revenue comes from other market (14.4% of the revenue comes Europe, 5% from japan, Australia & Canada accounts for 3.8% each and remaining 5.1% revenue comes from other part of the world). Any unfavorable condition (natural disaster, weather condition, demographic and population) in the US economy that can directly affect the company’s business (Harley Davidson, 2013).  
  2. In certain market (Asian and European) consumer is more price sensitive. Harley products are priced high than their competitor that leads the consumer to think of an alternative.  
  3. Product recall issues will not only affect the long time performance of the company but also affect the revenue of the company and this reduces the customer confidence. In the year 2013 company recalled more than 29,000 of its touring motor cycle. Another big recall in the year 2011 worldwide affecting over 308,000 units of their touring motorbike, trike motorbike and CVO touring motorbike (Harley Davidson, 2013).  

Opportunity

  1. Asian economy is continuously growing. China and India are the two countries which are less affected by global recession. So Harley can focus on Asian market instead of more focusing on American and European market.  
  2. The international heavy weight market is growing than the US market so the company can exploit the new market. 
  3.  Harley products are available only in the Harley outlets; they can expand their products to the other dealers that will increase the availability of the product.

Threats

  1. In the last few years number of competitor in heavy motor bike industry is increasing. In the present days Harley has a very close competition with the Honda and BMW. In the Asian market Honda has 19.1% market share where Harley has only 21.3% and in the European market Honda has 21% market share and Harley has only 6.6% (FLEMING, 2014). 
  2. The company has suppliers for its raw material and components that has to be used in manufacturing of motorcycles. So Harley Davidson depends on their suppliers that make the business dependent. For certain raw material they have single supplier. If the supplier delay to deliver the raw material, such situation leads the company risks in the term of delay the final product. That directly impact to the customer relation and business (Harley Davidson, 2013). 
  3. The motorcycle noise standard in the European Union is lesser than the US environmental protection agencies which lead to customize Harley engine sound.
  1. Issues to be addresses
  1. Harley was permitted to offer their bikes through their outlets, thus, the clients were not equipped to get the full Harley possession experience. 
  2. In emerging countries (India, china) Harley has a less popularity as compared to US. Other local motor cycle company is dominating the market. (Example: In India the local company called Royal Enfield was dominating the market) 
  3. Harley is not good in service infrastructure and customers are also facing fuel availability problems, Harley engine is generally designed for high octane fuel, which is not easily available in all location. 
  4. Another important issue is the increasing oil price. 
  1. Portfolio Summary

Harley Davidson as a bike manufacturing company established in the year 1903. Men of age group 35 to 65 are the core customer of Harley Davidson and the other customer are young adult, ethnically diverse rider and women of above average income. Harley has a wide range of product in bike and apparels. In bike they have five kind of motorcycle. They are standard, sport, cruiser, touring and duel. In apparel they have jacket, t-shirt, shoes, lighter, watch, etc.  By identifying its position is both the BCG and directional policy matrix, a better idea of Harley Davidson’s portfolio will be delivered.

BCG Matrix:


Harley Davidson has two product lines. One is apparels and another is bike. In the US, Harley’s market share is 54.9% and the industrial growth rate is 13% so Harley Davidson in the US market fits into the Cash Cow and for the apparels they fit into the Dog because they possess little market share in the apparel market with low industrial growth. In the European market Harley Davidson fit in the question mark because the industrial growth rate is high and their market share is low (7%). 

Directional Policy Matrix


In the Directional policy matrix Harley Davidson fit into the secondary opportunity, the industry attractiveness is medium because of the overall growth rate of the industry is average, there is no much market diversity and the size of the US market is limited so applying these industry attractiveness tool, and companies competitive strength is high because of Harley Davidson’s loyal customers and almost 50% of the US market share, so its competitive strength in the US market is high. And for the European market it fits in to the secondary opportunity with the medium competitive strength and high industry attractiveness.   

  1. Risk factor
  1. There is no assurance that the company will be successfully executing its long term business strategy and Harley may or may not be able to drive growth continuously over the period. 
  2. Harley Davidson planning to expand their international sale that is part of long term business strategy subjected to company risk and it may or may not be successful investment. 
  3. Changes in political events, tightening of credit, general economic condition or other factor that indirectly impact retail sales and dealers. 
  1. Strategy Formulation

8.1. Marketing Objectives

  • To increase international sales of motorcycles by 10%, or increasing sales of 26,000 units within one year.
  • To increase international market share by 5%.
  • To extend the market on a global platform by providing extraordinary motorcycles and also enhance customer experiences by using concentric diversification. 
  • Harley Davidson product mix has been explored using BCG matrix and the products, which are the most profitable, and which has a potential to be extremely profitable if right marketing tools are used have been identified.
  • To target customers of younger groups and women in particular by positioning Harley products accordingly by adopting the Marketing Mix Model.

8.2. Strategic Focus

Harley Davidson has been able to carve a separate niche for itself in the market with regard to brand and luxury bikes. The company adopted the “Go- Forward” Strategy (Harley Davidson Website). It aims at delivering results by focusing on its products and experiences, global expansion on a continuous basis, have a good demographic outreach and most importantly, providing commitment to its main customers.

Continuous product development to enhance sustainability and profitability is essential to make the company worthwhile. Harley will try to transform its operations so that it can be more flexible and customer led. By analysing in detail Porter’s (1980) five forces, Harley Davidson will be able to identify its industry position to implement appropriate marketing strategies.

8.3. Porter’s Five Forces


Rivalry among Competitors: High

  • Harley Davidson has high rivalry from its major competitors like Yamaha, Suzuki and Honda.
  • Sometimes the other companies have better marketing resources that Harley doesn’t have.
  • There are other brands in the market that offer bikes at more reasonable rates than that of Harley Davidson.
  • If the existing competitors form mergers or alliances, then it can pose as a threat to the company on a global platform.

Threat of New Entrants: Low

  • Since it is a luxury brand that offers high-end motorcycles, the chances of getting new entrants is potentially low.
  • A huge amount of financial resources is required in order to have a start up like this.
  • Moreover Harley Davidson is a well-established and a mature company that has been built over the years. So it will take new entrants a long time to get where Harley has reached.

Threat of Substitutes: Low

  • Cars, sports bikes and scooters are the main substitutes for Harley Davidson bikes.
  • The main advantage that Harley Davidson enjoys is the brand image that makes existing substitutes seem low in the market.
  • Furthermore the quality and value of Harley’s bikes is far more superior to that of other bike brands.
  • As the brand caters to only a certain community of people in the market, buyers would want to remain loyal to the brand.

Bargaining Power of Suppliers: Low

  • Harley Davidson as a well-established brand has managed to have a massive network of suppliers for its bike products.
  • It needs various forms of parts and steel for its bikes from different suppliers.
  • The suppliers here do not have an upper hand over the company. The reason being that if they increase their prices over a period of time, Harley will choose other suppliers over them (Lenz, 2010). 
  • Harley Davidson has been smart enough to build long-term contracts with its preferred suppliers so that they will not be affected by price fluctuations and mutual trust is built between them.

Bargaining Power of Buyers: Moderate

  • Each purchase of a bike is an individual one. So if one or more consumers don’t buy these bikes it will not pose as a threat to the company or its financial position.
  • Sometimes the buyers have adequate power over the company as it aims to offer customized bikes for its clients.
  • Harley Davidson should extend its market to new places so that it can get a better customer reach and response. 

8.4. Product Development and Extension

BCG Matrix

The Harley Davidson Products and services can be divided into Motorcycles segment, Parts and Accessories Segment, General Merchandise and Financial Services Segment, where parts and accessories, general merchandise are the product extensions of the motorcycles. There is a market growth of 6% in motorcycle industry, which is characterized by a high degree of fragmentation too. (Report Linker, 2014)


Star

The revenue is generated mostly from motorcycle segment and also there is scope for market growth. Stars of Harley Davidson come from its motorcycle segment. Harley had introduced new bikes under the product line Rushmore, these have seen a wide range of sales. By focusing on marketing these in different markets, they have potential to turn into cash cows. (Market Watch, 2014)

Cash Cow

Cash cows of Harley Davidson are its already established motorcycle product lines. Major revenue is contributed from touring and cruiser categories. (Harley Davidson, 2014) Parts and Accessories are also a part of this segment and their contribution has increased in past few years. There is a predicted annualized market growth of 4.4%. (IBISWorld, 2014)

Dog

General merchandise has seen a downfall in the revenue. The apparels complement the motorcycles; their demand is derived from the customers purchasing motorcycles. The jacket, caps, T-shirts and other items, became popular with non-bikers as well. The clothing and parts also had a higher profit margins than the motor cycles, it made up to as much as half of the sales at some dealers (TDI Media, 2010)

Ansoff’s Matrix and Recommendations towards Strategy


With the aid of Ansoff matrix, identify strategies to further develop the existing markets, explore new markets with the help of existing and new potential products of Harley Davidson. Harley Davidson is already an established brand, by employing right marketing tools it can expand into new markets and existing markets using new and existing products depending on the market.

Market penetration: (Existing markets, Existing Products)

  • Harley Davidson focuses on growth among young adults, women, Hispanics, and African- Americans and among traditional core customer base. (Harley Davidson, 2014)
  • Market penetration can be used in existing markets like U.S and Europe to expand customer base.
  • Harley Davidson can position itself in a more appealing way through marketing tools to gain competitors market share.
  • Harley Davidson can expand their customer base by providing a superior customer service globally and also marketing it to gain new customers.

Product Development: (Existing markets, new products)

Harley Davidson launched Project Rushmore under which it unveiled touring and trike motorcycles aspiring to cater to young urban riders around the world than its traditional “heavy bikes” customer. Through product development, these motorcycles are designed with liquid-cooled engines and touch-screen electronics more akin to luxury automobiles.

Eight new motorcycles have Project Rushmore features: the Road King, Street Glide, Street Glide Special, Electra Glide Ultra Classic, Ultra Limited, Tri Glide Ultra, CVO Ultra Limited and CVO Road King.

  • Under Dark Custom, Street 750 and Street 500 motorcycles were designed with idea contributions from young adults in cities around the world. These contributions will hence guide the development, capabilities and outlook of these motorcycles. (Harley Davidson, 2013)
  •  A large percentage of Harley Davidson’s current market of the customers comes from the professional sector such as the lawyers, doctors and schoolteachers.
  • Harley Davidson will use the “Fatten the tails” strategy to widen its customer base. Traditionally Harley Davidsons are highly priced and have high margin on their products, but it will introduce Street motorcycles with lower SMRP and lower margin, to cater to youngsters who cannot afford sports bike and also for urban road purpose. There is expected growth in coming years. (Harley Davidson, 2013)
  • Energy efficient and hybrid bikes can also be developed, making the bikes ec- friendly and appealing for environmentalists. However, hardcore Harley Davidson enthusiasts may have their reservations.

Market development: (New market, Existing products)

  • Expansion into densely populated developing countries such as those on the continent of Africa, where temperature is suitable for year round riding. These markets would be looking for alternative means of transportation that is inexpensive, lightweight and use less gas when compared to the standard car.
  • Harley will need to have their sights set on international markets by setting up a branch of the Harley Owners Group (H.O.G.) in Germany to serve European owners and fans.
  • Harley-Davidson’s main international business strategy is to bring a piece of the American dream overseas.
  • Harley Davidson has to develop advertisements specifically for different markets. They need to customise their marketing approach based on specific culture.
  • The company created a line of Harley Motor Accessories to increase their focus on customer initiatives. Offering privilege prices on its accessories and apparels with the ownership of a Harley Davidson motorcycle.
  • In Japan, these services provided caused Harley riders to increase. The owners range from middle agers to younger riders who are intrigued by the mechanics of the American image. 
  • Harley Davidson must know the culture of the area targeted for expansion. Secondly, current demographics on age and income should be used as a guide in segmenting the market. Advertisements must be created specifically tailored for the region. (TDI Media, 2010)
  • In Developing countries, Harley Davidson can focus on catering to different segments like youngsters, women etc. using the existing motorcycles lines in the USA and Europe in countries where all types of generations and people like to try riding.
  • Harley Davidson can identify markets where there is similar demography as the existing markets and also that have high potential buying power of the market to ship their existing product lines.

Diversification: (New Market, New Product)

  • Harley Davidson will introduce new motorcycles, suitable for new markets (i.e India), to cater to tough urban roads. And also low cost motorcycles to be affordable by large market segments. 
  • It can also focus on developing lighter bikes to cater to women and also market segments that would prefer to have a lighter luxury motorcycle. Accordingly branding should be done carefully.
  • Launching Leisure motorcycles in developing markets to cater to rich, and who have a passion towards adventure and creating a niche product to cater to these markets, marketing and branding plays a major role over here. (Harley Davidson, 2014)

8.5. Target Customer Groups

According to various demographics details, Harley Davidson through its constant investment has been able to reach to a wide pool of customers across the globe. It aims at moving forward by extending not only its bikes, but also its extended product line across the global market. 

  • The Harley Davidson bikes were initially very famous among the “Baby Boomers.”
  • The kind of people who generally purchase these bikes are said to have a hardcore and macho personality who are considered to be rebels, adventurous and tattoo lovers.
  • The company targets people from the upper middle class to the high-class people due to its price range. 

Currently Harley Davidson seeks a strategy that targets on young adults, women, Hispanics, African-Americans and middle-aged men (35+). 

  1. Marketing Strategies

9.1. Marketing Mix (4 hard ‘P’s)

Based on the Marketing Mix model and their division, the 4 hard P’s (ie) Product, Place, Price and Promotion and the Soft P’s (ie) Process, Physical Environment and People can be discussed with regard to Harley Davidson:

Product

Harley Davidson’s main products are sporty motorcycles, supported by parts, accessories and apparel. These products position the company as adventurous, sporty, trendy and freedom to customize as desired. Harley-Davidson motorcycle is distinguished as an American icon. (Corporate Design Foundation, 2014). This will create a strong branding for the company as, a symbol of free-spiritedness, love, and verve for living life with all your senses. This will give Harley marketing advantage over its competitors. The other main aspect of Harley Davidson motorcycles is, customizing as per the customer’s needs using superior technology. Target customer requirements are identified and bikes for urban market are designed, with sound feel of a Harley Davidson, and customizing it for urban roads with features like liquid cool muscular engine, rich paint, real steal, by doing so it is positioning itself as customer driven Motorcycle Company. 

Price

Harley Davidson motorcycles are highly priced, as the company aspires to be branded as a luxury product. However, it will also be expanding its customer base by implementing low cost pricing strategy for low-end target markets. Street 750, Street 500 is priced lower than sports bike models reach more customers markets in USA. 

Promotion

Harley Davidson will brand itself as not just another product but, an experience and lifestyle. It has cleverly done this by creating Harley Owners Group (H.O.G) whereby members receive a bi-monthly magazines and a list of services including Harley rentals, discounted products, emergency road service and networking with additional Harley owners. This ensures brand loyalty and customer inclusion. Harley Davidson also used movies to promote “bad boy” image of bikers around the globe. Harley Davidson should also use effective promotional campaign through its cafes, located in most dealerships. 

Place

Harley Davidson caters to customers through their exclusive stores. Its stores will provide an atmosphere where its customers would feel not only comfortable in coming to a Harley dealer, but use it as a meeting place, a destination that attracts not only Harley riders, but other potential customers. This strategy also improves brand loyalty and customer retention. (Clyde Fessler, 2012)


9.2. Marketing Mix (3 soft ‘P’s)

People

The greatest asset of an company is human capital which has to be potential enough to handle any market tactics thrown to them.  The company can employ trained and talented pool of people by even recruting them directly from universities. Another suggestion can be that for all the Harley fans, workshops and internship programs can be given for basic experiences. An “after sale support” department can be set up with employees who can get in touch with the consumers if they have any issues after purchase.

Process

This is one of the P that is always overlooked by most of the companies. Harley Davidson needs to give priority to how the process of assistance works and caters to its clients.  One suggestion can be offering waiting lounges for clients when their bikes are given for services. Another reccomendation can be the development of a feedback team who constantly respond to people in the form of live chats on the main website.

Physical Environment

Practically no customer will be able to “experience” the product before purchasing it.  Harley Davidson should be able to provide a “feel good” experience to its incoming customers by having a well set up environment for purchase. One suggestion can be that  a simulation of the various harley models can be kept and the customers can come and try it, for amateur experience. This will give them an idea as to what they’ll need. Another one can be a small theatre can be set up, giving them an interactive introduction about their company, its products and what it offers.  If the customers have a good perception about the phisical set up, then naturally they will also have a positive attiude with regard to what they purchase

  1. Implementation and Controls

10.1. Implementation

Although most people would perceive marketing only through advertising and promotions, it is however truly much more; as it involves the implementation and control execution of the marketing planning process. Implementation essentially means the actual steps the company will take to promote its business (Grunert, 2014). Even though there is a continuous debate on whether marketing strategy formulation or implementation execution is more important, in truth Kotler (2003) observed that both aspects are necessary and equally important for success. For example, an excellent marketing plan was conceived delivering an appropriate value proposition; however a poor implementation will not help Harley Davidson achieve its objectives, as it did not undertake the proper steps to implement the strategy. Therefore, it could be concluded that the success of its marketing plan rest on the effectiveness of its implementation and management. 

Effective marketing implementation begins with managing its marketing activities, as the process has to exhibit clear action plans with effective and efficient coordination.  Harley Davidson must identify the individuals or the teams allocated to each task and to basically know who has to do what and enforce deadlines. This phase of the marketing plan ensures the marketing activities happen in the precise time and sequence for success. Harley Davidson will go about their implementation phase by running advertisements; both traditional and non-traditional advertisements, developing their websites to be more user-friendly according to their major target market, as well as the training and development of front-line sales and service staff to possess outstanding product knowledge and service competence, to ensure clients a truly welcoming and prestigious experience.

10.2. Budgets

Marketing affects many areas of any business; therefore marketing budget is critical for Harley Davidson’s success. A detailed breakdown and planning of the Harley Davidson’s market and advertising budget should be carried out and closely monitored in order to stay competitive and maximise its profits. Harley Davidson will allocate its marketing budget into two distinct media forms; traditional media (television & magazines etc.) and non-traditional media (social media & events etc.) with a total budget of $23 million.

Traditional Media

Slightly more than two thirds of the total marketing budget of $15 million will be allocated for the traditional media. It is only appropriate as a good majority or its target market is from the older generation, avenues such as social events and networks are far less threaded. Within the traditional media, billboard advertisements and primetime television are the most expensive. Hence a good majority of the budget will be designated towards these expenses. Both these channels are especially important and effective as they allow for high viewership on a large scale basis. Newspapers and magazines advertising are of equal importance. Newspapers allow advertisement to the masses, however magazines allow for the opportunity to focus on the niche market which will include lifestyle and motorcycle magazines. Lastly, radio spots are the easiest to attain as compared to the other tradition channels, therefore less amount of money will be spent on it.

TV – Primetime $4,500,000

TV – Non-primetime $1,800,000

Billboard Advertisements $3,800,000

Magazines and Newspapers $3,300,000

Radio – Morning Drive $800,000

Radio – Evening Drive $800,000

Total $15,000,000


Non-traditional Media

As the world entered the internet age, the existing and potential customers expects immediate access to Harley Davidson’s current promotions and news. The non-traditional means of advertising acts as a support for the larger, more prominent traditional advertising ventures in order to keep the promotional messages consistent. Social media (Facebook, Twitter, YouTube etc.) allows media messages to be consistently updated according to the latest trends and topics of conversation online. They also serve as an opportunity for Harley Davidson to develop a two-way communication between brand and client, enabling the company to be better informed of customers’ ideas so as to easily identify the needs and desires of its existing customers and implement them to attract potential ones. Likewise a good portion of the non-traditional media budget will be allocated to the planning and execution of events organised by Harley Davidson, because it serves as a unique opportunity for the target audience to develop a personal interaction and association with the brand, product and other like-minded customers.

Facebook $1,400,000

YouTube $1,800,000

Twitter $700,000

Internet Cost-per-click Advertising $500,000

Internet Paid Placements $800,000

Online Banner Advertising $1,200,000

Events $1,600,000

Total $8,000,000


10.3. Control

Control is a host of tools for making sure that the company is staying on track with its marketing plan, and to catch failures in the implementation and strategy so as to develop and initiate contingency plans as early as possible to reduce potential losses (Kotler, 2003). To maximise the potential return of a marketing plan, controls must be set in place to monitor the plan’s progress. Control is critical as it basically analyses the marketing plan as it moves along and determine if the plan’s actual performance compares to the projections (Root, 2014). Therefore, understanding controls in the marketing plan enables Harley Davidson identify and develop key performance measurement indicators (KPI) to further enhance the strategy.

Customer Feedbacks

One of the ways to apply control in a marketing plan is to monitor the feedbacks of customers through the use of surveys or polls. Harley Davidson is able to reach customers directly through online surveys to rate their satisfaction of the company’s products and services by asking specific questions regarding its latest marketing campaign. Based on these feedbacks, Harley Davidson can apply new ideas and rectify existing problems appropriately to create a better experience for their customers.

Target Market Sales

After Harley Davidson had identified its target market (for example college-educated working women ages between 25 to 54, earning at least $50,000 annually), the motorcycle company has to set out to determine the effects of the marketing plan had on the target market. This will allow Harley Davidson to realise if they had implemented the right marketing tools and approaches to appeal to their target audience. Actual sales from the target market will have to be compared to the plan projections to determine if there is a need to make any amends or changes in the marketing approach if results are not as favourable. Likewise in some cases, an analysis on the current demographic and sometimes psychographic breakdown of sales may indicate that the initial target market was inaccurate and a whole new target market will emerge according to the sales data (for example, well-to-do male teenagers with a preference for lighter motorcycles).

Market Share

A marketing plan would project the desired growth in market share that Harley Davidson hopes to achieve in the next one year (increase 5% in international market share). Harley Davidson has to set milestones in the year to track the performance and effectiveness of the marketing plan. For example, since the objective of this plan is to trigger a growth in international market share by 5%, the company will set a reasonable 6 month mark for the team to achieve a 2.5% increase. If the company did not achieve this milestone, Harley Davidson will have to review its marketing plan to analyse the reason why the plan is falling short and measures to be taken to correct it.

Budget

Harley Davidson has to closely monitor its marketing budget in order to minimise spending and maximise profitability. Several controls must be put in place to monitor marketing budget, which includes traditional and non-traditional advertising approaches, to market research studies and wages for the company’s marketing department. By analysing expenses, Harley Davidson will able to maintain its budget and realise exactly where spending increases, and make the necessary cutbacks accordingly.

  1. Conclusion

Ideally, this plan will successfully increase Harley Davidson’s brand awareness to international markets to increase global market share by 5% and sales revenue by 10%, as well as amongst working women in the United States as they are the prime target market. With the implementation of creative and innovative advertising and marketing approaches, Harley Davidson aspires to be in the minds of its potential customers of the targeted markets. 

Because Harley Davidson is going after new markets with new products, the company will be running a risk that the marketing plan projections may not be met with favourable results. Another risk will include the lack of advertising efforts during the implementation process. There is a chance that during these 2 months when advertisements are not running, the target audience may be less aware of the company’s campaign for these “lighter bike” catering to international markets and women of North America. However, the heavy amount of advertising following the rest of year should be sufficient to leave a lasting impression on the targeted audience.

This marketing plan is reliable, innovative and most importantly, very achievable. The advertising plan and allocation created will increase brand awareness and sales to the targeted audiences. Implementing this plan will permit Harley Davidson to continue moving in a forward direction and to allow market growth through diversity of products and various markets; eliminating the dependency of North American Markets and attracting more people to the Harley Davidson brand.

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  1. Appendix

Appendix 1: Harley Davidson’s Financial Statements


Appendix 2: Harley Davidson Selected Financial Data


Appendix 3: Working Heels to Harley Wheels Event Promotion


Appendix 4: Harley Davidson Social Media Efforts (Facebook)


Appendix 5: Harley Davidson Outdoor advertising Efforts



Appendix 6: Harley Davidson Customer Interaction and Brand Association Efforts


 

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