Harley Davidson, Marketing Plan Example

Executive Summary

The marketing strategy for Harley focuses on exploiting   a mix of its product, placement, price and promotional resources to enhance customer experience and achieve competitive advantage. The report examines these 4 essential components also known as the Marketing mix. It also seeks to address a major marketing challenge facing the organization. In recent years Harley Davidson has faced financial losses because customers are opting to use fake motorcycle parts for their Harley Motorcycles instead of genuine parts manufactured by the company The report discusses the company’s existing strategy and how it is influenced by the company’s external environment .These include variables such as the country’s legal political and cultural environment which may pose a hurdle for the Companies Operations. The paper conducts a full analysis of these factors by using analytical frameworks such as the SWOT, Porters Five Forces and Pest. The paper concludes by recommending future strategy options for Harley and how it can change its existing marketing strategy to change customer pretences  and increase sales of its genuine auto spare parts division.

Company Overview

Harley Davidson is more than just the world’s top motorcycle manufacturer it is a global  brand name associated with quality and style. When it comes to heavy weight motorcycles Harley holds  half the market share  in the US and one third of the market share  internationally .The Harley Davidson range of motorcycles  caters to the high income luxury vehicle market and focuses on design and quality  as its unique selling proposition. Last year the company posted total revenues of 1.1 billion from its motor cycle sales alone. International sales increased by 11.3 percent and European Sales  by 22.7%. (Harley Davidson, 2011)

Harley seeks to increase both business activity and profits generated from its auto parts business by increasing its base of new customers and encouraging existing motorcycle customers to use genuine Harley Davidson parts as opposed to less expensive after-market parts. However this quest is not easy and involves a multitude of factors. These factors include variables such as the country’s legal political social and economic environment which affect the company’s operations. (Griffin, and Pustay 2006).The paper examines   how the company’s external environment can be evaluated through the use of  analytical frameworks such as the SWOT and the  Porters Five Forces The aim of the plan  is to draft a new marketing strategy which focuses on providing the auto parts customer a superior product experience and is instrumental in increasing auto parts sale in the future.   The paper will analyze each component of the marketing mix in detail. It is this strategy of identifying the customer’s requirement and catering to it that has made the company   achieve the kind of popularity and success that it has garnered.

Industry Analysis

When developing a marketing strategy it is essential to examine both the internal and external factors influencing the industry and the organization. The internal strength and weaknesses of the organization and the opportunities and threats that it faces can be discussed using an analytical tool known as the SWOT analysis. (Below, Morrissey & Acomb, 1990)

Using the SWOT Analytical Approach

One of key strengths of Harley Davidson is the strong brand recognition and awareness that the product commands in the market. This along with a high market share lends the company considerable brand equity which can be used to gain competitive advantage.

The major weaknesses of the company are that by its inherent nature the sale of the product is dependent on technology used. Therefore the product has to be frequently modified to accommodate the changing technology being used in the bikes. A Harley Davidson automotive spare part manufactured in 1990 will now be outdated and not work in a bike manufactured in 2010 and vice versa. Another weakness is that the sale of the product is dependent on the sale of the bike. If a model of a bike does not sell well in a particular year then the sales of its auto parts products will also be affected.

One of the threats that Harley faces is the possibility of cut throat competition. The industry is extremely price competitive and houses a large number of competitors. These include manufacturers who imitate the technology used by Harley Davidson and produce similar looking auto parts which they sell for lower prices in the market..Other threats include the reduction in disposable incomes because of the onset of the global recession. Large scale unemployment has reduced customer’s propensity to spend on extras like automotive parts and they would prefer to spend a smaller proportion of their income on such extras

One Opportunity that Harley benefits from is the brand loyalty of its customers.(Harley, 2011) The company can build on this loyalty by encouraging customers to inculcate habits that favor buying genuine spare parts produced by the Harley Davidson Company as opposed to fake parts manufactured by competitors.

Adopting Porters Five Models in Building Strategy

Building on the external environment analysis it is also important to analyze the factors influencing the industry in which the company operates using a Porters Five Forces Model. This model provides an analysis of the company’s competitive environment and can be presented as follows:( De Wit & Meyer, 1998)

1. The threat of substitute products or services: Common substitute for genuine spare parts are lower priced after-market parts. These are produced by both local and global competitors and often offer alternative options to consumers.
2. The threat of the entry of new competitors: As this is a growing market with high potential of profits there is a huge threat of entry by new competitors and an absence of laws to limit this entry.
3. The intensity of competitive rivalry: Since there are many spare part manufactures existing in the market one of the major ways that competitors retain an edge over one another is through price differentiation. There is a huge price rivalry in the industry with companies competing against each other by offering lower prices
4. The bargaining power of customers
5. Since this industry has a larger number of suppliers the buyer has more bargaining power and can easily move from one spare part product to another if  it  is being sold at discounted rates.
6. The bargaining power of suppliers: since there are more competitors and the market is price sensitive the bargaining power of the supplier is lower.

Products and Corresponding Target Markets

When formulating a Marketing strategy it is essential to define the type of consumer that the company is trying to attract through its marketing endeavor. The majority of Harley Davidson customers are male and in the 35plus age range. Demographics indicate that a vast majority of these customers lie in a higher income bracket. The brand has a huge customer loyalty and is a symbol of quality and prestige. (Harley, 2011) Harley customers don’t use their motorbikes for daily commute and tend to have other motor vehicles in addition to the bike. The bike is usually used for leisurely rides on the weekend and on holidays. Trends indicate that the demographic of Harley Davidson customers is getting older. The average age of a Harley Davidson customer is 48 years. The younger generation of motor bicycle users prefers to use smaller cheaper Japanese bikes and do not like the heavier and larger Harleys  (Harley Davidson,2011)

Marketing Strategy

Harleys ’s marketing strategy focuses on exploiting   a mix of its product, placement, price and promotional resources to enhance customer experience and give them the desired value for their money. Let us examine the 4 essential components of  Harley’s marketing strategy Also known as the marketing mix these components can be defined as follows (Fred,1995)

• Product: To give its patrons a higher level of customer experience the company positions its auto parts products as being superior in both quality and technology. The auto parts have been designed exclusively keeping in mind the design of the Harley Davidson range of motor bikes and follow strict quality control specifications. Their design and quality work in conjunction with the bikes and are guaranteed to give the customer a superior riding experience.
• Placement: Harley’s distribution strategies focus on delivering its automotive  parts through their own store outlets and also through the outlets of other specialized auto parts  In recent years the internet has evolved into a major resource in facilitating the sale of Harley spare parts. Many retailers now list the availability of these parts on their online stores and then proceed to ship the desired product to the customer by mail or courier.
• Price: The price of the product depends upon the nature of components and the level of technology used in its construction. Genuine spare parts are priced in the higher range and follow strict quality and technological specifications. The imposition of tax further adds to the price of the product. The company’s pricing strategy focuses on rewarding existing and repeat customers in the form of discounts and rebates. The more a customer buys its genuine spare parts the greater the discount they can expect to avail from the dealer

Promotion: The Company’s promotional campaigns are designed to increase awareness of its product and also to attract both repeat and first time customers (Vetter 2008) The Company does not do a lot of direct advertising for it range of spare parts. Most of its promotional activities are in store and focus on price rebates and discounts on specific products. The three main concepts that the company seeks to convey in its promotional activities is that its products are technologically advanced, follow superior quality specifications and are on the higher market spectrum.

Measurments

There are certain measures that the company can adopt in its marketing strategies to set standards and bench marks. This includes a process of gauging customer feedback measuring how satisfied the customer is with the product. The company should adopt a policy of asking for feedbacks from consumers and then tailoring its products to meet client recommendations. Through a series of customer satisfaction surveys Harley can ascertain what most of their customers are looking for when buying a spare parts.   Based on its knowledge of customer preferences the company can adapt its product to suit customer tastes and preferences and thus achieve product differentiation which serves as a competitive advantage in the long run.( Hamel  and Prahalad, 1994)

Recommendations for Future Strategy and Marketing MIX Implications

• Since Harley spare parts are priced at the higher end the company should continue to offer sales related rebates and discounts to attract more customers. It is also recommended that the company offer special prices for bulk buying.
• Harley should also employ more creative strategies in its promotional campaigns. This includes the use of efficient promotional vehicles such as the internet or event sponsorship for its marketing effort.
• Harley should also implement schemes that attract younger demographic of buyers so that it can sustain market share in the long run without alienating its core customers.

Forecasts and Financial Analysis as a Result of Strategy Implementation

The new strategy will have a significant impact on variable costs and breakeven analysis Variable costs can be described as an expense that fluctuates in proportion to a company’s level of activity. In comparison to the fixed costs which are a constant expense incurred by a business and include costs such as rent salary etc variable costs are expenses that increase as business activity grows. Advertising and promotional activities comprise a variable cost and impact the business by increasing the total cost incurred. (Griffin and Pustay, 2006) In the new fiscal year with the implementation of new promotional activities, Harley’s variable costs will increase and so will the firm’s point of break-even sales. As costs increase Harley will have to calculate a new sales breakeven point which has to be met for the firm to make profits.

Conclusion

The marketing plan presented above aims to increase the Company market penetration. It seeks to do so by analyzing all variables that constitute and influence the target market and then using a combination of the price, product placement and promotion mix to outline a plan on how to increase market share. The promotional strategies recommended in the report are designed to be in line with the specified budget constraints. .The above plan will help the company increase both its profits and business activity by helping it retain existing customers and increasing new customers by opening up new markets

Works Cited

Below, Morrissey & Acomb, 1990. The Executive Guide to Strategic Planning , Jossey-Bass, San Francisco.

De Wit, Bob & Meyer, Ron, 1998. Strategy: Process, Content, Context, Thomson Publishing Company, London.

David Fred ,1995, Concepts of Strategic Management, (5th Edition) Prentice-Hall. New Jersey.

Gibson, J, 2003. Organizations. Boston: McGraw-Hill.

Griffin, R. W. and Pustay, M. W, 2006. International Business: A Managerial Perspective. London: Prentice Hall.

Hamel G and Prahalad C.K, 1994. Competing for the Future. Harvard Business School Press, Boston.

Harley Davidson (2011) Company retrieved May 29 2011 from the website http://www.harley-davidson.com/wcm/Content/Pages/HD_News/Company/newsarticle.jsp?locale=en_US&articleLink=News%2F1038_press_release.hdnews&newsYear=&history=

Harley Davidson (2011) Demographics retrieved May 29 2011 from the website http://investor.harley-davidson.com/demographics.cfm