Internal Analysis
Introduction
Harley Davidson Inc. has managed to successfully establish itself as the premiere heavy bike brand in the world, through a corporate strategy that has relied heavily on careful brand positioning, continuous innovation and adaptation as well as an intensive focus on its core product. With a history that involves operations in three different centuries, HD has succeeded in overcoming several obstacles and navigating past difficult periods encountered throughout its existence, by reinforcing its key strengths and nullifying weaknesses. Harley Davidson’s position in a highly competitive and continuously evolving industry has been firmly entrenched through centuries of hard work and there is much cause of optimism for the future, however the company will have to ensure that their strengths continue to remain a competitive advantage and that their weaknesses can be overcome. The strengths and weaknesses of the company have been stated below.
Strengths
- Brand Image: HD’s brand image is possibly its greatest strength and has taken decades of unique promotional activities and quality products to cultivate. According to pcmotors (2007) HD’s success has been built on the fact that customers see HD as a lifestyle rather than a manufacturer of bikes. This perception has been formulated through various brand associations and through the heavy propagation of key brand ideals such as rebellion and non-conformity (Rooney, 2013). Another key factor which enabled HD to develop its strong brand image comes from its use of non-traditional media, according to McCarthy (2013), a meager 15% of HD’s total marketing is expenditure is allocated towards traditional media, the organization’s primary means of promotion is direct interaction with customers and the creation of an experience, which further emphasizes the lifestyle aspect of HD. The strength of its brand image has compelled several producers of unrelated goods to seek out promotional partnerships with HD, so that HD’s logo and brand identity can be used in association with their products (PR Newswire, 2013).
- Brand Loyalty: HD generates brand loyalty through a variety of initiatives which are unique and innovative. The most important of these is the Harley Owners Group (HOG). This initiative has resulted in various communities of HD and heavy bike aficionado’s around the world who gather together at different times of the year for rallies, product launches and general discourse (cultbranding, 2010). Each HOG chapter is sponsored by A HD dealership, a move which has not only increased sales but also in generating additional loyalty towards the brand on the consumers part by virtue of the fact that the brand becomes an integral component of their lives.
- Research/ Development/ Innovation: HD’s domination the international heavy bike market can partly be attributed to constant product development and innovation, through which the HD product has always been considered as the best available. This constant innovation product development is achieved through heavy expenditure on research and development as well as a dedicated Product Development Center tasked with the development of new products (Global Data, 2012). HD has also demonstrated a great deal of innovation and adaptability in terms of other business processes such as employment practices and inventory management. For instance, after being thoroughly outshone by Japanese competitors in the 1970’s HD decided to implement a Just In Time system of inventory management which had resulted in great dividends for its Japanese competitors (Kotha and Dutton, 1996).
Weaknesses
- Product Recalls/ Quality Issues: Despite HD’s significant expenditures on product development and the constant revamping of production techniques, the company has suffered from product quality issues in the past which have resulted in mass product recalls. As this is a problem that has afflicted HD throughout its history it remains a significant weakness as recalls particularly related to safety issues such as the recall of 300,000 in 2011 (newswarped, 2011) have the ability to considerably reduce the strength of the company’s brand image. HD has made an attempt to control the possible fallout from such recalls by offering repair services, but this is largely a reactionary measure and the company needs to more to ensure that future product lines are free from any and all defects.
- Lack of Diversification: While HD has clearly established itself as a market leader in the niche market which it caters to, it has suffered from the lack of diversification throughout its history. HD’s portfolio consists of a very limited range of products that can be considered to be a luxury good due to their relatively high price. By limiting itself to heavy bikes of over 700cc horse power, HD has willingly foregone the lucrative small motorbikes mass market and becomes increasingly dependent on the loyalty of heavy bike enthusiasts who can afford HD products. Economic downturns have resulted in the decline of sales and revenue due to the decrease in consumer spending on non-essential goods. This lack of diversification leaves HD vulnerable to a fluctuating economy and allows much larger heavily diversified competitors such as Honda and Kawasaki to engage in price based competition with HD. While HD has attempted to develop new products such as Trikes, these efforts will not prevent the company from being at the mercy of the ebbs and flows of the economy, whereas the production of smaller less expensive bikes would present it opportunities to increase its market share, increase revenues and thereby reducing reliance on its core product line.
- Global Market Penetration: While HD has made significant strides in increasing its presence in international markets and has recently achieved great successes in China and South America. Harley Davidson’s core market remains the United States. Its market share in the international motorbike industry is dwarfed by competitors such as Kawasaki and Suzuki who can truly be considered as global motorbike manufacturers. The cost of Harley Davidson products is a barrier to the successful penetration of international markets and the company needs to consider the development of lower cost products for these markets.
Conclusion
The Harley Davidson brand is one of the most recognizable in the world and its presence remains strong in popular culture and in the minds of all heavy bike enthusiasts. Its brand identity seems to be immortal and throughout its history it has maintained the impression of a brand that represents the rebels. Its expansion across continents and its efforts to target new demographic segments should ensure new revenue streams of the organization. A bright future is entirely possible for the organization if it manages to continue to accentuate its key strengths of product development and unique promotional strategy. However, there are still significant threats to the future success of the business with large Japanese competitors constantly attempting to garner a share of HD’s market and a unionized workforce which does not compromise on wages and work hours even during times of economic recession. Furthermore, the company’s lack of diversification makes it particularly reliant on particular demographic segments and product quality issues, may threaten to derail HD’s brand image.
References
Cult Branding (2010). Harley Davidson Cult Brand Profile. Retrieved from http://www.cultbranding.com/cult-brands-profiles/harley-davidson-cult-brand/
Global Data (2012). Harley-Davidson, Inc. - Financial and Strategic Analysis Review.
Kotha, S. and Dutton, J. (1996). Transformation at Harley-Davidson. [report] New York: Stern School of Business, pp. 1-24.
McCarty, M. (2013). CMO: Harley-Davidson Is About Lifestyle, Not Transportation | CMO Strategy - Advertising Age. Retrieved September 12, 2013, from http://adage.com/article/cmo-strategy/cmo-harley-davidson-lifestyle-transportation/242952/
Pcmotors.com (2007). History of Harley-Davidson Motor Company. [online] Retrieved from: http://pcmotors.com/harley2.html [Accessed: 12 Sep 2013].
PR Newswire (2013). Two American Legends: Ford and Harley-Davidson -- re> LOS ANGELES, Jan. 6 /PRNewswire/ --. [online] Retrieved from: http://www.prnewswire.com/news-releases/two-american-legends-ford-and-harley-davidson-71971422.html [Accessed: 17 Aug 2013].
Rooney, J. (2013, May 30). Behind The Brand: Harley-Davidson's 'Original Social Network'. Forbes. Retrieved from http://www.forbes.com/sites/jenniferrooney/2013/05/30/behind-the-brand-harley-davidsons-original-social-network/
Warped. 2011. Mass recall of Harley-Davidson motorcycles | NEWSWARPED.COM. www.newswarped.com - World news, Entertainment and Sports. Retrieved September 12, 2013, from http://www.newswarped.com/2011/10/mass-recall-of-harley-davidson-motorcycles/
