Indian Motorcycles Grow Wings, Cased Study Example

In the case study, an imminent problem is described. The loyal customers of Harley-Davidson are getting older. They will no longer be able to ride their bikes in a few years’ time. As the company is mainly popular among baby boomers, it needs to find a new segment of market to target. However, the popularity of the brand among young adults is low. Competition is high, and many European and Japanese manufacturers are constantly working on dipping into the market share of Harley-Davidson worldwide. Richter, the new chief marketing officer of Harley-Davidson faces a challenge: how to target a new generation of customers and re-brand Harley-Davidson to become more appealing for those under the age of 35.

Problem Statement

The Harley-Davidson brand is still associated with older people, and is unable to appear as a young company. While emphasizing the traditional values of the organization, it is also important to modernize the brand image. When asking a person aged around 30 what would come into their mind about Harley-Davidson as a motorbike, they would most probably answer: “big, noisy motorbikes with tattooed long haired grandads on it”. This image needs to change, in order to attract the next generation of customers. The Harley Davidson lifestyle needs to be changed, and this can only be achieved by implementing advanced branding strategies.

Another problem is that the motorbikes created by Harley-Davidson are not able to compete in price with Japanese models. It is also important to note that most of the European and Japanese manufacturers are positioned on the marketplace as being known for offering good value for money and excellent precision. In contrast, Harley-Davidson is positioned as a reliable, highly priced traditional motorbike with loads of chrome in it.

The new chief marketing officer will need to make a decision on how to re-brand Harley-Davidson without taking away from the aspects of the traditional brand that make most loyal customers stick with the brand. Communicating both tradition and functionality would be a challenging task.

Exploring younger customers in developing countries would also provide a great opportunity for increasing the company’s global market share. Understanding not only American people, but the emerging and growing population in Asia that can afford Harleys should not be neglected by the company. Getting through to them, however, is hard, and a global branding strategy needs to be created. Further, Japanese manufacturers are already present in these markets, therefore, some customers might already have a brand preference for Japanese motorbikes.

Situational Analysis

Harley Davidson in 2007 enjoyed a comfortable 44.6 percent market share in the United States for 601+ cc motorbikes. However, the growth of sales volume and revenue decreased over the past few years, according to the exhibit charts. This means that other competitors are gaining market share, and the company needs to strengthen and modify its brand image in order to increase the rate of expansion.

Interestingly, the report states that the gross profit margin of Harley-Davidson bikes was 35 percent, while for Buells it was only 5 percent, due to the low volume of production. As the Buell models are more suited for younger people, and are more affordable, it is questionable why the company has not focused on strengthening the brand in America and overseas.

While the diversification of the product line has already been made by the company, and several sporty, lighter, and non-chrome bikes have been designed and offered for sale, marketing and branding strategies have not changed. Only 16 percent of respondents under the age of 35 could relate to the brand, and this means that it represents a lifestyle that is significantly different from theirs.

 Proposed Solution

It is time that Harley-Davidson created meaningful messages for younger people, communicating the versatility of the product range of the company. Instead of focusing on the traditional images, such as touring in groups and connectedness, the company needs to send out the message that it offers more than just strong and noisy bikes. As younger generation belonged to the “black world”, they had to be marketed these types of products instead of the larger, chrome-filled touring bikes.

Marketing in emerging economies is also important. Bikes are more popular in Latin America and Asian countries than in America, which is predominantly a four-wheeler culture. According to the report quoted by Bloomberg (Choudhury, para 2),  “sales of two-wheelers in India rose an astonishing 85 percent between 2007-2008 and 2011-2012, to 13.4 million units a year”. This indicates that the emerging market has plenty of buying power, and the brand could increase sales if it successfully marketed products for customers who prefer using strong, reliable, and practical bikes in the crowded streets of the Asian country. Similar growth rates have been reported in the media. The online magazine, Mega China Monitor (para 2)  reported that Colombia was the fastest growing motorcycle market.

Target Customers Identified

Harley-Davidson already has a good market share and excellent brand loyalty among baby boomers, but not the younger generation. As current loyal customers are already “growing too old” to ride the bikes, it is important to target younger customers. The brand image currently does not match the preferences of this market, therefore, it needs to be re-designed. It is recommended that the modern, smaller street and racing bikes will be marketed to these potential customers. Younger single people who might use motorbikes for commuting, racing, or leisure will be the main segment of the market.

It is also important that the company focuses on emerging markets, such as Latin America and Asian, African countries. There is a growing middle and upper class in these countries that would be able to afford large, traditional Harley-Davidson models. Further, many customers use only motorbikes as a means of transport, in particular those who live in urban areas. The lower priced Nightster or Street Bob could be marketed for middle class people. Building upon the already strong brand reputation of Harley-Davidson worldwide, it is evident that the brand Buell should be made Harley Davidson, but with unique features. It is recommended that the new name would contain both Buell and Harley, so people can relate to the brand.

Market Segmentation

Market segmentation should be based on customer lifestyles income, and preferences. Harley-Davidson already has several bikes to meet various lifestyles, but it is currently only known by its main product: the large motor.

Younger professionals enjoying outdoors

This market segment will need to be told about modern, “black” bikes that are easy to navigate and are priced significantly lower than traditional Harleys. Further, the benefits communicated need to be re-designed. Instead of featuring touring people, road trips and outdoor events need to be featured in advertisements.

People with motor racing hobbies

Those who love motors ports all dream about an advanced racing bike, even if they never enter a competition in their life. Performance and the right design is the key to attracting these customers.

Those who use street bikes for commuting

People who choose to travel on motorbikes to work and around the town would like energy efficient, easy to park and handle, secure bikes. This segment of customers is conscious about the harm cars do to the environment. They want to save money and use less petrol, while appearing sophisticated and stylish. Modern, functional models should be marketed to these people.

Marketing Plan

Instead of “Live By It” style advertisements, which are currently featured on the television, it is important to market different uses of the bikes, not only those who are looking for strong, traditional motors. Advertising that features new target customers’ lifestyle should be featured. A good example, but not a perfect one is the feature story titled “Young riders”. It is a commissioned film from 2012, however, it still looks “old”. It lacks the energy that is present in younger generation’s lifestyle. The main features of the bikes to be communicated as benefits towards the younger population should be:

• flexibility to do what you want: no need to find parking space
• easy access to all roads and freedom
• enjoying great outdoors
• taking part in outdoor events, such as festivals in a stylish way
• more comfortable than most street bikes

It is also recommended that the company features real persons who talk about their experiences with both Harley-Davidson and Buell brands. The ads should focus on the target customer’s lifestyle, preferences, and experiences. It should answer the main question many men and women under the age of 35 would ask when hearing the brand name: “What can Harley-Davidson provide for me?” It is also important to feature women in the ads. Currently, the bike appears to be a “macho” masculine product, which means that women cannot connect with it. In order to deliver meaningful messages for target customers, people “like them” need to be featured in the ads, instead of the “typical and traditional” Harley rider who has loads of tattoos, cannot hold a job, and belongs to a gang.

Execution

Street Bob and Switchback should be in the focus of the advertisement, and each bikes should have their own introduction in the videos. The main benefit of Street Bob; easy navigation and plain black iron design needs to be highlighted in the ad. Regarding Switchback, customers should be told that the bike can easily be converted from touring to normal riding mode, and this way users can have one perfect bike for two different uses.

Social media and video marketing campaigns should be used to create awareness of the practical and affordable models. Separate TV advertisements should also be created that target those who are young at age, and not only at heart. Through social media and the Owners Club, the company should ask current owners to enter a competition featuring the bikes in use. This would not only create free promotion, but make the product videos viral, without the company having to create them. The power of social media and online marketing should not be neglected, as the majority of the target customers use the internet several hours a day. Harley-Davidson already has more than 6 million likes on Facebook. Online ads would compliment the TV advertising.

Expected Results

Due to the global coverage of internet and social media ads, the company could create awareness of the different bikes and increase its market share in street and sporting models both in America and developing countries. As many upper and middle class customers located in Latin America and Asia are active internet users, – from the marketing perspective – targeting them through this channel instead of separate TV and radio ads would be the most cost-effective option. The popularity of Buell brand would also increase, and profit margins, due to increased production could be increased over time.

Works Cited

Choudhury, C. “Indian Motorcycles Grow Wings” Bloomberg View. 2013. Web.

Mega China Motor. “Colombia: The Fastest Growing Motorcycle Market” 2012. Web.