Harley-Davidson motorcycles are mass-produced heavy bikes made for cruising and are known for their unique sound. Harleys are particularly known for the chopper-style motorcycle sound.
With the entry of Japanese motorcycles in the market though particularly Honda, competition for a share on the motorcycle-riding buyers get stiffer.
Honda's motorcycles came at a much later date than the Harleys. The first Honda motorcycle was on sale in 1947. The American Honda Company came into existence in 1958. The 1959 Honda C100 Super Club was the first model sold in the United States. The Honda Club holds the distinction of being the best-selling vehicle in the world with 50 million units sold. In the 1970s up to the present, Honda is the recognized largest producer of motorcycles in the world.
During the 1960s, Harley Davidson had to contend with its tarnished image due to the motorcycles' negative portrayal in Hollywood films. Harleys' large motorcycles are often depicted as driven by rough characters. Harley-Davidsons were considered synonymous with “Hells Angels” and tough men who “beat up old ladies with chains”.
To compete with Harley, Honda adopted an advertising slogan that countered this tough image. The “You meet the nicest people on a Honda” campaign became the overriding theme of Honda. Armed with the slogan, Honda launched the SOHC inline 4-cylinder 750 in 1969 which became very successful.
Harleys never competed with Honda head-on. Their marketing strategy has always been focused on selling a lifestyle instead of a mere motorcycle. It is the classic form versus substance approach. With Harleys banking mostly on its form, while Honda focuses on the practical or substance aspect of the bike.
Instead of trying to match Honda, Harleys new management tried to win back customers in the US by promoting the unique “retro” design of the motorcycles. They built machines designed to have the look and feel of earlier motorcycles. To be able to maintain high standards and sell the bike at competitive prices, Harleys outsourced the making of their components abroad. Technical improvements to the motorcycles were made and the buyers slowly took notice and returned.
A typical Harley-Davidson customer would be one earning an average of $78,000 per year. They would most probably be riding a $16,000 motorcycle which is the average cost for Harley's cruiser. Obviously, the bike is intended for above-average customers.
To be able to generate a loyal following, the Harley today focuses on fraternity rather than the machine. Once you buy a Harley, you can be assured of exclusive membership to a huge organization made up of Harley owners called as Harley Owners Group (HOG). There are 600 of them spread all over the United States and operated under the support of the dealer. Style is given due prominence for this group. It is not unusual for customers to furnish their Harleys with leather accessories and other expensive trimmings.
What Harley effectively conveyed to its loyal patrons is a lifestyle not the motorcycles like their competitors. Due to this, Harley has effectively captured the loyalty of the baby-boomers of the 1960s. Harley holds the sales leadership in the highly profitable cruiser bikes. Its lion share of 45% of the cruiser bike market dominates Honda's mere 23%. Admittedly, Harley does not make the better bikes. As a matter of fact, it had its share of quality problems in the past. What the Harleys do better than its competitor though is its brand.
Its logo is licensed to more than 100 manufacturers giving it the much-needed exposure. Its 600 plus HOG clubs also unwittingly promotes the brand. Even though Harley sells niche products, it is still one of the most highly recognizable brands in the US alongside Coca-Cola and Disney.
And there are more reasons to celebrate on the Harley's side. Its 1986 IPO gained an average 37%, a growth record surpassed only by another "86 IPO Microsoft pegged at 42%. The first half of 2002 saw Harley"s net profits rise to 27% or $264 million brought about by an 18% increase in sales or $1.9 billion. This shows enough proof that Harley still holds the biggest share of the American pie.
With the present so rosy, what would the future hold for Harley? These questions would ultimately surface. Harley banks on its broad, loyal, baby-boomer 1960s customer base. These same customers are now aging. The average age of Harley rider is now 46.
Another major cause of concern is the uncertain economic situation. A Harley is not considered a necessity. Therefore, signs of meltdown in the economy could pose huge risks for the machinery. The dwindling customer base coupled with possible economic woes could pose trouble for Harley in the coming years.
