PROBLEMS FACED BY HARLEY DAVIDSON INDIA

Back in 1901, William S Harley completed a blueprint to fit an engine into a bicycle. After 30
years, the first Harley Davidson with two cam engines is made available to the public. The top
speeds being 85 100 mph. The eagle logo design is painted on the tanks. Harley Davidson
receives the first award in its kitty for excellence in wartime production in 1943. The American
made image was being built around it. Containing two gas tanks the Fat Bob enters the market in
1980s. Now, relating to the elite people, Harley Owners Group community is born.

Harley began its journey in India First India Founders Ride in New Delhi in 2009. In 2011, they
began assembling motorcycles in India in Haryana. India is the 3 rd country after US and Brazil to
have a Completely Knocked Down assembly unit.

The Harley Owners Group (HOG), is the official riding club that provides with a bundle of
benefits, options and events. Its a community binding people with a common passion. The
Indian chapter organizes rallies, India bike week, etc. The group has helped Harley Davidson
adopt an overall integrated approach to creating a unique lifestyle. Brands with community
remain relevant because they are constantly adapting to changes. In a way, this helps the
company to come up with customized solutions, but a trap that firms often find themselves is that
of only looking at current customers for expansion and innovation and not the market and non-
users of the product.

The problems and different influences (internal and external) will detail on the current business
situation of Harley Davidson. The factors from the view point of both the customers and internal
company is seen to come up with a solid reason or change in consumer thought process which
has led to the problem. The iconic brand which enjoyed a superstar status in the minds of
customers and shareholders is now facing a slump in its sales. The number of units sold in India
were down by 20% in the FY 2017. In the previous year Harley Davidson India sold 10,093
bikes, compared to 3690 bikes in the current financial year.
The fall in sales is not unique to India but its the situation faced in different markets across the
world. The number of units across different geographies are mentioned below:

Region Overall Sales Percentage Difference

United States 33,316 -5.70%
Canada 2,361 -4.40%
Latin America 2,342 24.20%
Europe/Middle East/Africa (EMEA) 10,167 -0.40%
Asia-Pacific 6,863 -9.30%
Source: https://auto.ndtv.com/news/harley-davidson-q1-2017-sales-down-worldwide-1685195

The number of units sold in March 2017 was 317 compared to the 451 units sold last year in the
same month. The company has launched a new motorcycle branded as Street Rod. This product
was built on the same platform of last years Street 750 which is the most selling bike in Harley
Davidson Indias product portfolio. It contributed to 59% of the total units sold in FY 2017. Both
these products were launched to appeal to the urban youth as the company couldnt increase its
revenues based on the products launched for its target customers who were boomers.

The number of units sold in Asia Pacific have seen the highest decline compared to the last
financial year than other markets. The merchandise business of Harley Davidson which is an
indicator of the brand equity has also seen 21% drop in revenue globally.
 Source: Bloomberg Intelligence

EXTERNAL FACTORS
Competitors & Technology

1. Search Harley Davidson on Rent in Delhi/Bangalore/Mumbai you would get a hundred

dealers in your city who are ready to rent out different models of the bike and super bikes of
other brands. The rates for a weekend trip for 48 hours would cost you around Rs.10K. When
you look at the price per se, one may feel that its on the higher side. But when one knows that
such trips are very seldom, why would one go for a buy and not the rent.
Social
2. Riders, who are thinking of buying this bike, will not be swayed against buying due to high
fuel charges in the market. But, the environment friendly part of them will question them deep
inside. The super bike is known for its sound, the only motor sound to be protected by copyright.
The questions lies are we heading into a world with more caring and eco friendly people

Economics

3. When you talk to people who are cult riders and fans of super bikes, you would find a good lot
of people who aspire to buy a Harley Davidson once in their life time. Having said that, this
would be a second vehicle (first being a car for the family). Also, the price plays a vital role, all
though he/she has dreamt of owning one. The price difference with a lower super bike of the
same style from either Royal Enfield or Bajaj Avenger is much cheaper.
4. On 8th Nov, India saw a drastic change Demonetization. This is considered a very big factor
due to which sales have been affected in India. Disposable income was low enough for people to
spend Rs.9L on a Harley Davidson.

INTERNAL FACTORS
Change in Motivation
1. As per a research study on the core customers of Harley Davidson, the following seven types
were noted -
a. Adventure Loving Traditionalists
b. Sensitive Pragmatists
c. Stylish Status Seekers
d. Laid Back Campers
e. Classy Capitalists
f. Cool Headed Loners
g. Cocky Misfits

But, there is a decrease in the time available for the target segment. The investment is too high
and the time to utilize the investment too low.
Change in Need
2. Along with having very less available time to go on rides and trips to places, consumer wants a
motor cycle with dual utility. An office going geek would want a bike to go to office and the
same bike for a riding tour.
Change in Personality
3. There is a high increase in the market for sports bike. Customers are now shifting more to
sporty looks and speed. Such changes are being brought up by companies on the lines of
Yamaha, Ducati, Hayabusa and Kawasaki. This can be seen by the surge in sales of motorcyles
sold by Ducati holding company which enjoyed a growth of 1.2% by selling 55,451 bikes in
2017. These bikes are slim, agile and easy to ride as compared to cruisers. This shift has been
seen in cars as well with Swift, i20, Baleno coming with sports version vehicles to lure
customers with such likings.

PRIMARY RESEARCH FINDINGS:

The primary research revealed the positive and negative associations for the Harley Davidson
brand. The indepth interviews conducted revealed the below qualitative comments which have
been categorised into positive and negative

Negatives
1. Existing customer base think that HD needs to double the big vintage styled cruisers &
stop focusing on entry level machines built for kids and girls. This they refer as
cognitive resonance.
2. A customer wont pay the premium price for heritage.
 3. Price of entry level bikes are too high to penetrate the Indian markets. Although HD
introduced Street models as entry level bikes that are considered cheaper, but they are
still overpriced when considering comparative performance. This is giving away a
perception that they are not real Harleys.
4. Street 500 and 750 are low technology motorbikes and it is downright insulting to be
charging a premium from the South Asian customers.
5. Moving from two valves per cylinder to four does not qualify HD to have the latest
technology. They havent made much improvements in areas like power, vibration, heat
and emissions.
6. Motorbikes/scooters are primarily a mode of transport. They are not just toys for the
flamboyant, affluent, weekend-warriors, etc. How long can elite brand survive only
making expensive products that get used occasionally on holidays and high days without
another product to bail them out all the time
Customers want legitimate contemporary designed motorbike & HD should stop playing safe.
They could hire designers from Yamaha, Ducati, etc. to do this job. models. The motorcycles
from the company arent perceived to be technologically advanced when it comes to engine and
electronics as compared to the rival brands.
1. The customers considering the entry level bikes to be overpriced shows that the customer

Positives
1. Popular because HD bikes have a pre-war style look
2. HD is HD and not a copycat of some Japanese bike. HD is a premium brand and it will
stay that way. They dont want to look for explosive growth.
3. They have the best technology for the sake of riders and not just to be technology-abled.
Especially on their touring bikes one can see the latest technology. Harleys are Euro 4
compliant. They have also worked on vapor recovery and tuning.
Based on the above qualitative comments we can see that the Harley Davidson especially in
India is perceived to be an overpriced motorcycle especially when it comes to the entry level
perceives that the bikes to be underdelivering on the value proposition. Customers in India who
dont associate Harley with the same military heritage as in United States arent willing to pay
the extra premium.
The Attributes Toward Object Model gave us the below results:

HARLEY DAVIDSON DUCATI YAMAHA

ATTRIBUT PRESEN PRESENCE PRESEN PRESENCE PRESEN PRESENCE
ES' CE OF x CE OF x CE OF x
IMPORTA ATTRIBU IMPORTA ATTRIBU IMPORTAN ATTRIBU IMPORTA
ATTRIBUTE NCE TE NCE TE CE TE NCE
DESIGN 4.67 5.00 23.33 5.00 23.33 4.00 18.67
TECHNOLOG
Y 4.00 3.00 12.00 4.00 16.00 5.00 20.00
COMFORT 3.67 4.00 14.67 3.00 11.00 2.00 7.33
POWER 5.00 5.00 25.00 4.00 20.00 4.00 20.00
HANDLING 4.33 3.00 13.00 4.00 17.33 4.00 17.33
COMMUTABI
LITY 3.67 1.00 3.67 2.00 7.33 1.00 3.67
TOURING 2.67 3.00 8.00 1.00 2.67 1.00 2.67
TOTALS 99.67 97.67 89.67

The totals show that the respondents believe that Harley Davidson is a marginally better bike
than the other two bikes but in terms of commutability and technology it is considered to be an
inferior choice. The perception of the respondents in this case is that Harley Davidson is better in
terms of comfort, power, and touring.

In order to address the perception of the customers in terms of commutability and technology
Harley Davidson introduced two new motorcycles Street 750 and Street Rod but as per the
survey conducted it hasnt changed as Harley Davidson would have wanted.

RECOMMENDATIONS FOR SOLVING THE PROBLEMS FACED

IN GIVEN PRODUCT/SERVICE CATEGORY

Luxury value is captured in Financial Value, Functional Value, Individual Value and Social
Value. The possible factors/drivers for increasing the consumption of luxury goods can be group
into the following 5 categories
Perception of Luxury Goods: These perception associate with comfort, beauty and
sumptuous lifestyle. Affect, characteristics, status, gifting and involvement. All these
perceptions have been properly mapped in the mind of the consumer.
Country of Origin: The native country of production or the firm can form perceptions
about the product. Harley Davidson stands high in this regard.
Availability of counterfeits: Counterfeits are not an issue for the firm as of now.
Sense of Belongingness: This factor needs to be rekindled. Passionate bikers are renting
out bikes from dozens of bike rental ecommerce firms that have come in the recent past.
The one outcome that customers miss out on is the opportunity to be part of the elite
community. A group of people with similar traits and passion for long tours. Harley has
been able to successfully create the group (HOG) , but needs to encash on the benefits of
being a part of this group. The message should communicate that its not only a vehicle
for long drives on dusty roads, but the people you are with and the community you
belong to.
Economic Factors: In terms of luxury goods, even during economic downturn, snobbish
buyers often are found purchasing such goods. This may not be relevant in case of our
product category.

Buying super bikes and cruiser, is a high involvement purchase. As seen earlier, there is a
inclination towards sports biking. Sports bikes have gained momentum. To persuade a rider to
switch to cruiser bikes or more vintage style bikes like the Harley, a two pronged approach can
be taken-
1. Change decision parameters on which the customer judges and compares as to which
motor cycle to buy either the sports style bike (Ducatti, Hayabusa, Ninja, etc) or the
cruisers (Harley, Royal Enfield). Sports style bikes are not suitable for long rides due to
the discomfort in seating, which is often only for short hauls. Hence the duality of the
new models in Harley Street 750 and Street Rod for being agile enough for city
commute and comfortable for long tours. An increase in such communication and
promotion of long rides will serve the purpose.

2. Change in Normative Belief (Belief about the extent to which other people who are
important to the customer think they should or should not purchase) through proper
communication can further help in the shift. The communication should be able to answer
the following questions for the consumer. The same has been explained through the Self
Attributions Model

Scenario Distinctiveness Consistency over Consensus

Time
I am deciding to How distinct will my Will I be able to use If I ask my friends
purchase a purchase be? Do many the motorcycle with whether I should
motor cycle people buy? Will I be same intensity and buy the motorcycle,
part of a select group passion? Will I be will they agree?
of people able to give time to
the motorcycle
(Maintenance)

Secondary research revealed, how the core group is facing identity crisis due to the introduction
of Street 750 and Street Rod, which decreases the exclusivity associated with Harley Motor
Cycles as luxury product. The positioning has also changed with the communication now being
on commute biking. This can be eliminated through creating a sub brand for such models.

How your recommendations are going to solve the problem.

The company by launching the new Street series under a different brand will help will deal with
the negative emotions rising from the core segment of Harley Davidson

The Street series should have different events unlike HoG as the bike is for the urban setting
used for daily commute. This would solve the problem of not having acceptance in the current
HoG events

The sportiness of the new Street bikes would be communicated to the youth by separating it
from the identity of Harley Davidson touring and cruiser bikes
Through sense of belonging, the riders who often rent motorcycles form the rental dealers will
have a motivation to own the bike in a bid to be a part of the elite community. Instead of
perceiving the buying decision as a expense, they will view it as an investment instead.

Harley Davidson will be able to make the customers think on the lines of touring as one of the
primary reasons to buy a motorcycle. Rather than going by the current pull towards sports bike,
he/she may think on the lines of utility. This can be fulfilled through the new models in the
portfolio of Harley Davidson motorcycles.

By reviewing self attributes and answering the questions stated above, Harley may be aiding and
directing consumers to look for Harley as a prospect. This will be augmented by the
distinctiveness portrayed by the extended self-imagery through conferring status and
symbolically making the person feel better.