Spring 2009
Marketing Audit
Harley-Davidson Motorcycles
Harley-Davidson Motor Company
Group 17
Mahmoud Abdel Wahab
Justin Alexander
Katherine Arsenio
Rong He
Shirley Liu
Benson Mensah-Bonsu
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Executive Summary
Harley-Davidson aims to maintain long term relationships with its riders who embody the
ultimate H.O.G. member. Consumers that remain loyal to the company are those who live
Although the overall product for Harley-Davidson is composed of many features, there
are only two parts of the total product that consumers truly care for. The first part of the total
product that actually matters, and the most obvious, is the motorcycle. To the untrained
consumer, motorcycles are the only things that Harley sells, however the most valuable product
Harley provides is its image. The image Harley provides is the reason why Harley is able to
effectively retain its customer base and attract a great number of new consumers.
wide dealerships. These dealerships are independently owned, which means that there are no
A majority of its promotion mix revolves around public relations including being the
official sponsors of Women’s Rider month, Milwaukee Bucks and Daytona Bike Week. Personal
selling is Harley’s main point of sales as customers cannot order bikes online.
Harley-Davidson is able to use a premium pricing system because it owns close to fifty
percent of the U.S. market share. Harley’s most popular motorcycles lines, (Touring and Cruiser
product lines), range from $3,000 to $5,000 more expensive then their top competitors, Honda
and Yamaha.
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Harley-Davidson has also worked to improve the communities in which its products
exist. However, there have been exceptional incidents when Harley has acted in an unethical
2. Target Market…………………………………………………………….Page 4
3. Product……………………………………………………………………Page 5-6
4. Place……………………………………………………………………….Page 6-7
5. Promotion....................................................................................................Page 7-10
6. Price……………………………………………………………………….Page 10
8. Conclusion…………………………………………………………………Page 12-13
9. References………………………………………………………………....Page 14-15
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Harley-Davidson Motor Company began with William Harley and the Davidson Brothers
in 1903 with their first prototype of an engine designed to assist a bicycle. Within a few years,
they had produced their first trademark two cylinder, the V twin engine. By the 1920s, the
company was known for its modern design, the “teardrop” gas tank and front brake which were
part of the famous Harley-Davidson look. During the Depression and World War II, the
company prospered with orders from the military and police. They produced new models to
address the demand of a new market that consisted of recreational consumers with money to
spend. Harley-Davidson went public in 1965 and was bought by American Machine and Foundry
in 1969.
In the 1970s, Harley-Davidson was struggling to compete with the influx of Japanese
bikes. The company made a great comeback in the 1980s with the help of a tariff on imports and
its new plan to restructure. By 1987, Harley-Davidson owned about 25% of the heavyweight
motorcycle market. Sales had grown steadily since 1995. Recently, reports have shown that the
net income has dropped about 10%. Such a drop is due to the current credit crisis of the US
economy. Harley-Davidson has been forced to shut down facilities and has suffered a loss of 8%
in its shipments in 2008. Moreover, it has been reported by Goldman Sachs Group Inc. that
Harley Davidson’s 2008 financial statements state that the company has also experienced a 30%
In the mid 1980s, Harley Davidson’s targeted the markets of motorcycle riders in the
young adult age range. As they transitioned in the 1996, they started to redirect their marketing
initiatives towards targeting motorcycle riders in the middle age (40-60 years old) and old age
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(60+ years old) ranges. As a result of this redirection of the demographics Harley Davidson Inc
III. Product
The product lines of Harley-Davidson include many different products. The primary product
of Harley is the heavyweight motorcycle, which is the centerpiece of the company‘s image. Along
with motorcycles, Harley-Davidson offers helmets, jackets, gloves, eyewear, boots, tee shirts, jeans,
bags, jewelry, belts, wallets, key chains, caps, lounge wear, watches, and home collectables. All of
these complimentary products help bolster the image of the company. Consumers have an added
incentive to purchase Harley-Davidson accessories along with their motorcycle in order to complete
Currently, Harley is the number one seller of motorcycles in the United States. Despite the
dominance by Harley in the American market, the company has not done as well in the
internationally. Honda, Peugeot, Bayerische are the top 3 motorcycle international makers of
motorcycles.
The total product of Harley-Davidson is made of the core product, supplemental features,
symbolic and experimental features. As stated earlier, the core product of Harley-Davidson is the
heavyweight motorcycle. Harley offers 5 different models of motorcycles, which are The Sportster,
after sale insurance, and accessories that Harley provides. Although Harley mainly manufactures
motorcycles, the company prides itself on the service it provides to its customers, which includes
fully trained technicians, specialist engineering equipment, computerized diagnostic equipment and
technical updates. The package includes a very expedient after-sale service that includes insurance
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from the Harley-Davidson Company itself which they claim is the best insurance plan for their
motorcycles, an extended service plan which protects you from costly repairs and expensive service
bills, and an assured and affordable protection plan that covers the costs of accidents.
In completing the total product of Harley-Davidson, the company also presents symbolic and
experimental features. These features are events throughout the year that help display the Harley
image, Harley lovers come together to share their experiences with Harley and see new motorcycles
that the company plans to sell. Also, the company helps consumers plan their Harley “adventure”.
Planning for such an adventure includes favorite motorcycle routes, Best Western hotels and Shell
gas stations. In order to appeal to new motorcycle buyers, the company gives lessons that will help
consumers master their Harley. All of these accommodations allow for consumers to truly be
The mission of Harley-Davidson is to make the Harley-Davidson dream a way of life. The
core product, supplemental features, symbolic and experimental benefits enable Harley to create the
Harley-Davidson package. When someone purchases a Harley, they purchase a lifestyle that
IV. Place
In 1904, Harley-Davidson opened its first dealer in Chicago, Illinois. Presently, there are
695 dealerships located in the United States, 684 of which are full-service Harley-Davidson
dealerships. These dealerships are independently owned, which means that there are no franchise
fees, but still operate under a contract with Harley-Davidson. In terms of the suppliers, Harley-
Davidson maintains a number of long and loyal relationships to enable the production of
customized motorcycles that H.O.G members demand. However, if a supplier wishes to raise its
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price of materials, Harley-Davidson can easily switch to another firm without disrupting its own
There is no specific policy as to where they are located. However, Harley-Davidson has
its own policies to address this issue, and they are using exclusive distribution to meet specific
customers need. Also, some states have their own regulations to dictate the distances between
dealerships.
The company first conducts their own research to strategically determine where to place
the dealerships that would optimize their sales. Once an expansion in an area is determined based
on market studies, Harley-Davidson will interview candidates to run the unit based upon his/her
notified either through Harley-Davidson’s search in its own internal database or advertise in
local newspapers.
Not all dealerships provide the same services, which range from H-D Motorcycles,
motorcycles also offer the majority of their supplemental and experimental features to give their
customers the full Harley-Davidson shopping experience. Also customer can customize their
plans from 2008 and an 8.2 percent decrease from 2007 in 2008. According to Jim Ziemer, the
CEO of Harley-Davidson Inc., the firm has cut down on production so dealerships will have
lower inventory, which would be matched with the lower sales in 2008. Ziemer believes that
lowering production will be beneficial for the company and its privately owned dealerships.
V. Promotion Mix
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Advertising
They promote the image and lifestyle that Harley-Davidson embodies. The brand name has a
specific reputation, which attracts a certain type of customer. Harley Davidson produces four to
five television commercials per year; One of its commercials won best TV spot in Adweek
Magazine in 2004. Originality and humor are usually incorporated along with communicating
two ideas that Harley-Davidson intended to express: the appeal for women riders and the appeal
of male riders to females. Model Marissa Miller was recruited for an advertising campaign,
which Harley-Davidson believes will promote women riders while simultaneously appealing to
male riders. No matter what method Harley-Davidson used in promotion, it has always
emphasized “the Harley experience,” which encompasses all aspects of being a wild and free
rider.
Sales Promotion
The only short-term incentive that Harley-Davidson is currently offering is the Best
Western Ride Rewards program. It is available exclusively to members of the Best Western Ride
Rewards. This promotion entails booking travel through Harley-Davidson at a Best Western and
in return customers receive double points which include the following: free nights, airline miles,
gas cards.
Direct Marketing
They have an easy, interactive website for H.O.G. Members to address any of their upcoming
events and travel opportunities or motorcycle needs. The website is also welcoming for potential
new customers to research about the Harley-Davidson brand. On their website, they use
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Customer Identifiable Information to help cater to their customers. Visitors of the site can fill out
information related to the services, products, or programs they have requested information on.
Harley-Davidson uses this information to answer inquiries and present products, services, or
programs that Harley-Davidson or its distributors, dealers, and Business Alliance Companies
Public Relations
In the past, Harley Davidson has outsourced Public relations activities to PR firms. The
Southern Nevada Harley-Davidson branch, which owns the award winning Las Vegas dealership
hired Preferred Public Relations & Marketing to host various events to welcome in there newest
branch in the region. Villing & Company has been hired on several occasions to produce TV
Commercial and Radio ads promoting new Harley Davidson models. In recent years, Harley has
increased sponsorship and public participation in motor exhibitions and professional sports. In
February 2008, Harley Davidson agreed to a multiyear sponsorship of the NBA team Milwaukee
Bucks. The in-game segment called “Rev Up” will include the Bucks’s Mascot riding in on a
Sportster, trying to increase fan participation. They have also been the main sponsors for the
Other Public Relations endeavors includes hosting special rides for women during Women
Riders Month, a celebration of African American Riders during Daytona Bike Week and
promotions for other businesses at Electrical Power 2009. Harley Davidson bikes have made it
Personal Selling
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As Harley Davidson produces prestige priced motorbikes, it has t have a strong personal
base. Harley Davidson goes above and beyond to acquire customers and sustain relationships
after the purchase of a Harley Davidson. 90% of Harley Davidson motorbike customer will buy
another Harley Davidson within their lifetime, so sustaining a relationship is vital. The salesmen
job is to persuade and increase interest of a potential customer to purchasing a bike. The online
initiative of “RoadStore” allows customers to customize their desired purchase and continue the
sale with an authorized salesman. Motorbike purchases cannot not be completed online and
therefore need to be pasted onto a sales representative. The contact between the customer and the
VI. Price
premium pricing system. “The company believes its larger-displacement custom products continue
to command a premium price because of the features, styling and strong resale value associated with
Harley-Davidson custom products" (10-K Report, 2007). The premium pricing policy of their
motorcycles is reflective of the quality that Harley Davidson implements into their product line. As
Harley Davidson owns close to 50% of the US’s motorbike industry, it is evident to see that their
As depicted in the table above, Harley Davidson’s Touring and Cruiser motorcycle lines are
on average $3,000 to $5,000 more expensive then its competitors, Honda and Yamaha. The average
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retail price for Harley Davidson’s traditionally styled motorcycles are priced the highest on the
The Harley Davidson FXD 105th Anniversary Edition reflects the company's value based
pricing system. The cost to produce the Special Edition FXD increased by $200-$300, whiles its
For the majority of their existence, Harley-Davidson has operated ethically. Due to the
company’s success, Harley-Davidson has almost never been forced to take any unethical action
to stay in competition. In fact, the LLH Enterprises website claims that Harley-Davidson has
raised $40 million for muscular dystrophy in Canada and the U.S., as well as collecting toys for
children, and cash for the blind and homeless teenagers. Harley has long provided good
treatment and cares for their employees, providing favorable working conditions and pension
plans. Also, Harley has been long known for providing quality bikes that their consumers have
grown to love.
company’s Chief Executive Officer, James L. Ziemer, promotes fairness, financial transparency
and accountability to all shareholders of the company. The company also has an environmental
policy that was completed in 1994 by the Chief Compliance Officer and approved by the Board
of Directors in which they abide to. The policy prohibits any act of harm for the environment. It
minimization of environmental risks, the reduction of emissions and waste, and the conservation
. In order to reduce their impact on the environment, Harley dealerships have recently
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adopting LEED strategies, Harley has drastically lowered the amount of energy consumption
needed for some of their dealerships. Also, Harley is now making a strong marketing movement
to appeal to minority and female riders as well as their current consumer base.
Madison School of Business Dean's Executive Leadership Series in September of 2005 that the
company is inspired by five major guidance values: Tell the truth, be fair, keep your promises,
respect the individual and encourage intellectual curiosity. The report also includes that Harley-
Davidson has contributed a lot to the University of Wisconsin Madison School of Business.
During the late 1970s and into the 1980s, the American motorcycle market was
noticeably losing its market share to Japanese motorcycle makers. In September of 1982,
Harley-Davidson petitioned the U.S. International Trade Commission relief from the importation
imported heavyweight motorcycles from 4.4% to 49.4% for that current year. Within the next 5
years imported sales were down 20,000 units, while Harley noticed an increase between 8,000 -
10,000 units. Although this tariff did help Harley avoid bankruptcy, it is seen by many as an
2008, when sales was slowing down, Harley-Davidson Financial Services issued $700 million of
no-money-down loans through subprime lending, with interest rates as high as 18 percent.
Basically, Harley-Davidson was giving out unsecured loans without any disciplinary action.
Consequently, borrowers were not paying on loans and investors stopped buying the securities.
with UBS, Harley-Davidson was left with $80 million in debt for 2008. After this incident, the
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company’s C.E.O, James L. Ziemer, and the head of the finance unit, Saiyid Naqvi, announced
their resignation.
Conclusion
Harley-Davidson has a loyal customer base which has allowed it to dominate in the
United States. Harley should continue to emphasize the iconic lifestyle that comes with the
ownership of their motorcycles because that is how it has differentiated the company from
competitors. The devotion of their riders will guarantee Harley Davidson its stake in the
motorcycle industry.
The image of Harley speaks for itself and is bought for a bargain when compared to the
price tag. Owning a Harley has transformed the most uptight individuals into patriotic rebels.
This image, which is so accepted domestically, is an image that is somewhat frowned upon
internationally. Harley’s image is what sells the motorcycles in the United States, however the
quality of the motorcycle itself is what sells internationally. Harley’s strong sales figures are
evidence of how strong their image is in the U.S. as compared to the rest of the world.
After high-speed spread its dealerships in the previous year, Harley-Davidson will strive
to against the economic crisis. In 2009, Harley-Davidson will reduce ten to thirteen productions.
Moreover, Harley-Davidson will expand IT system to cut down the cost of operating.
They needs to direct its promotion mix to attracting younger riders as the economy is
affecting their primary target market. Harley should continue to support female riders as their
most successful product lines, the Touring and Cruiser lines, and put less emphasis on the
After performing unethically in the previous year, Harley-Davidson will strive to regain
its market share by prioritizing customer relationship management over the goal of increasing
sales and profits. For a company like Harley-Davidson that has high ethical values and an
outstanding reputation to maintain its market share, Keith E. Wandell, the new Harley-Davidson
Chief Executive Officer, will have to comply with the company’s strict governance policies in
References
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233767.html>.
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