Harley Davidson Case Study

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I) Problem/Issue Statement:
Harley Davidson, a highly distinctive motorcycle company whose success was built on its brand image, may have reached the pinnacle of its growth in the late 1990s and early 2000s. The combined effects of a market focus on a narrowing demographic group, the difficulty experienced in gaining market share in Europe, and short-term forecasting problems led to the concern of the company’s future. II) Alternatives:

a) Status-quo
b) Focus on building the Buell name brand
c) Market the Harley Davidson image to foreign nations (e.g. discovery channel)

III) Analysis:
a) Status-quo
Harley Davidson motorcycles focused a specific segment of the bike industry. Through this focus, Harley dominated the U.S. motorcycle industry. The type of bikes Harley had produced was custom bikes – custom bikes were the largest segment on the U.S. heavy weight market for motorcycles and had become the curiosity for non-cyclists in the United States. Between 1198 thru 2002 the custom motorcycle segment accounted for over 50% of the total heavy weight motorcycle market. The current strategy had proven to be a winning direction for the U.S. based corporation. In the heavy weight segment of the motorcycle industry, Harley dominated the market with approximately 50% of the market share in the U.S. from 1998 to 2003. However, market shares abroad were not as successful. In Europe, Harley held between 5 to 8 percent of the market shares from 1998 to 2003. A contributing factor to Harley’s inability to capture a larger market in the foreign countries is the segment the Harley Davidson motorcycle focuses on. As indicated earlier, Harley Davidson motorcycles were primarily custom bikes – highly priced, highly personalized, impractical vehicles. However, these types of bikes did not appeal to many foreign nations. For example, many consumers were looking for low-cost transportation due to the high cost of fuel or lack of income – e.g. Europe & China. Still in other foreign consumers tastes and preferences differ. Many consumers in Europe and Asia/Pacific preferred performance motorcycles – a type of bike Harley simply did not offer. To enable their company to grow and compensate for their diminishing focus group, Harley will need to focus on this large foreign market segment. b) Focus on building the Buell name brand

The performance bike industry was a lesser segment in the U.S. motorcycle industry in 1998 to 2002 – accounting for approximately 20% of the market share. However, during this era the performance bike segment in the motor cycle industry accounted for approximately 60 percent in Europe and approximately 70 percent in Asia in the same years mentioned above. Therefore, for Harley to address analyst concerns on the company’s future, the company must address the performance industry segment in the motorcycle industry. Hence, the development and expansion on the Buell motorcycle production in domestic and foreign nations. Development in the production of the Buell motorcycle addresses a majority of the concerns of the analyst. The concern of a declining market base and the company’s inability to experience a gain in market share in Europe would be addressed as Buell motor cycles appeal to both the younger age group (non-baby boomers) and the foreign consumers as their tastes for performance bikes are highly preferred. Buell motorcycles were in same category as the Kawasaki, Suzuki and Honda. These companies lead the industry in performance motorcycle sales. Buell, a competitively priced and quality product will be able to capture a segment of the large performance motorcycle market. Harley Davidson had purchased the Buell Motorcycle company in 1998. This expansion enabled them to increase capacity and set production records each year in the early 200s. However, this improved production and short term forecasting inaccuracies caused an oversupply of the vehicle and...
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