The History Of Harley-Davidson's Foundation
Harley-Davidson was founded in Milwaukee, Wisconsin, in 1903, and by 1920 the firm became the largest motorcycle manufacturer in the world (Harley-Davidson.com, s.d.). Today, this legendary company, is one of the most iconic brands, not only in the motorcycle industry but in the imagination of every consumer. Harley-Davidson created one of the most committed fan community in the world, associating its brand not only to the product itself but to an entire lifestyle. The secret behind this centennial success is the ‘’on the road’’ philosophy and the sense of freedom which Harley-Davidson was able to develop. Harley-Davidson motorcycles, moreover, are highly customizable, and consumers can purchase a wide range of official products, from clothing to household gadgets, and various accessories. However, despite the history of this company, Harley-Davidson is now experiencing hard times.
On January 30th the firm reported its fourth straight year of declining sales, and this negative trend is expected to continue (Exhibit 1), with revenues and shares that in 2017 have fallen respectively by 6.8% and 4.7% (Tangel, 2018). This sales decline is even more accentuated in the U.S., where the sales have fallen by 8.5%, and for this reason, the company is targeting to boost international sales to 50% of its total sales volume, from the present 43%. However, the increase of tariffs on imported steel and aluminum introduced by Trump administration on June 2018, did not help Harley Davidson, which was forced to move some production overseas to avoid the European tariffs over motorcycles which were raised 6% to 31% in response to Trump’s decision. (Kessler, 2018). But which are the reasons behind the fall of this legendary brand? The first reason relies upon a demographic trend, therefore, as reported by The Los Angeles Times, bikers are getting older and older, and millennials are adopting motorcycles at a lower rate.
In 1990, the median age of Californian motorcycle owner was 33 years old, but this average rose up to 45 years in 2012 (Fleming, 2014). Even if Harley-Davidson has some of the most loyal and passionate devotees in the world, the Milwaukee’s manufacturer cannot rely only on the current declining pool of riders, but it needs to attract younger consumers, especially from the millennials segment. The company however, has some specific difficulties in attracting younger consumers because of its brand identity and its history; its motorcycles, therefore, are perceived as a product for old people, and not for younger consumers, which tend to prefer more innovative brands like BMW and Ducati. Another reason because Harley-Davidson is losing ground over its competitors, is because it has decided to focus more on its marketing strategies rather than on the innovation of its products. The range of models offered by firm is limited, all the bikes are targeted to a similar customer segment, which is represented by the wealthy middle-aged man. The firm, therefore, doesn’t have many alternatives models such as scooters, sport, and off-road motorbikes which, instead, are offered by its competitors like BMW, Ducati, Honda, and Yamaha. Furthermore, most of its motorcycles are priced over $10.000, but the high price does not reflect better performances, Harley-Davidson bikes indeed, have lower horsepower if compared to the ones produced by other brands.
Related to the millennial’s customer segment there’s another social aspect that should be analyzed; all the Millennials have experienced the financial recession which started in 2008, and this had a strong influence on their spending habits. For this reason, Harley-Davidson motorcycles are perceived by Millennials as too expensive, and even if the brand seems to target the average working man and his adventurous spirit, the prices are in the same range of Ducati and BMW bikes which are considered expensive and luxury brands. Finally, Harley-Davidson bikes are famous all over the world for their sound, their travel comfort, and their shapes, however, the younger generation is now looking for different features in a motorcycle, such as speed, new technologies, and agility.
The charm of this iconic brand is still alive even among the youths, who will probably transit to this kind of motorbikes as they will get older, however, the firm cannot wait, and hope, that they will start buying its motorcycles when they will turn 40 years old, but it needs to attract and to drag them into the Harley-Davidson world as soon as possible. The ambitious objective of the Milwaukee’s manufacturer is to increase its customers by 2 million within 10 years but to do that it will need to better attract and reach the millennials segment. To approach the millennials, Harley-Davidson should look at the strategic plan implemented by Lilly Pulitzer, which is described in a Harvard Business Review’s article published on March 2016. Lilly Pulitzer had the same problems that the motorcycle company is experiencing now: it needed to attract the new younger market segments, otherwise, it would have not survived only with its existing customers, but it could not focus only on Millennials, disregarding its loyal consumers.
The clothing brand needed to design a tailored experience for its new consumers, but to do that, it needed to collect a lot of data and to better understand them. Lilly Pulitzer implemented then, AgilOne, a marketing cloud solution, able to collect and integrate data to provide a deeper understanding of customers’ experiences and of their preferences. Through these analyses, they immediately recognize the relevance of online shopping for the younger buyers, but also the strong influence that Millennials can have to other customers, particularly on social media. They started developing highly personalized advertisements to engage consumers, that could be easily shared on social media and in this way improve the brand awareness among the youth.
As stated by an article from MIT Sloan, called ‘’The Right Way to Market to Millennials’’, millennials, having grown with social media, tend to prefer visual contents like photos and short-video, rather than the verbal advertisement. In this perspective, I think that Harley-Davidson has a big advantage, motorcycles therefore, are products that can be easily advertised in an effective way through visual formats. The MIT’s article also suggests to use and to exploit micro-influencers, which are perceived by millennials as more authentic and honest, and they have a 400% higher rate of engagement. Harley-Davidson should leverage micro-influencers’ storytelling skills, and their innovative ideas. It should promote its products with creative and unconventional marketing campaigns, and it should involve millennials, inspiring them to act through contests, showcase, events, in order to grab their attention and to make them feel like part of the Harley-Community.
This community therefore, cannot longer be just a group of bikers who meet in the weekend to ride together, but it must become also an online community where new people can easily join and experience the Harley philosophy, even if they don’t have a motorcycle. The company should also provide a platform where riders and fans can share their experiences, interact among them, and propose their own ideas to innovate Harley-Davidson’s products. I really appreciated the idea to open the Harley-Davidson racing academy where people can learn how to drive and experience a real Harley motorcycle. Furthermore, I would try to make partnerships with different brands, which are popular among the youths, designing some limited editions, that will not have to be produced on a large scale, but that will generate a stronger visibility among the Millennials.
Harley-Davidson, however, has already announced a new strategy to renew its brand. Its future strategy has three main focuses:
The introduction of several new models, in what has been defined by the company as the biggest ever product development project (Hincks, 2017). Among these new models, there is a more affordable, small-displacement, motorcycle, designed for Asia emerging markets, which will be manufactured with local partners, and the announcement of LiseWire, which will be the first Harley-Davidson electric motorcycle.
The improvement of customer experience through an omnichannel strategy
The strengthening of the dealers’ network Harley-Davidson has certainly some important challenges in front of it, however, I believe that the company has already recognized which its problems are, and they are ready to solve them, even if this will mean to change some important aspects of an iconic brand, but any company in any industry must adapt, because even the most historical firms cannot survive if they remain immobile.
