Harley-Davison enjoys a dominating position in the US market due to its presence in the existing product segment. It started to manufacture complementary products such as the US flag and bald eagle to attract US customers. It adopted an iconography strategy that resulted in the increase of customers’ attraction towards the brand. The sources of competitive advantage of the company were diversification management strategies, strong marketing strategies, and its intellectual properties. Harley’s intellectual property was considered as the significant source for its dominant position because its trademark and brand had high recognition in the US market. Also, the management of the company had effectively applied diversification (complementary products) and marketing strategies (Easy Rider) (Nolan & Kotha, 2007). Also, the company was acquired by AMF that increased the production up to 20 percent in the year and proved to be effective in promoting and advertising the products of the company at low cost (Hill & Jones, 2012).
Harley-Davidson got into trouble in 1970’s when Japanese motorcycle manufacturers entered the market. They offered a variety of lightweight products at relatively low price. The market share of Harley-Davidson decreased by 23 percent, and the sales of the company declined due to high competition in the market. The Japanese companies captured the US market by selling differentiated products. Harley-Davidson was moving towards bankruptcy, and the share price of the company was falling in the capital market. Also, the company failed to retain its traditional customers who were familiar with the brand of the company. Although the company had high brand recognition, many competitors such as Honda and Yamaha selling cheaper products in the market disrupted its credibility. The competitors’ strategies led the market share of the company declined up to 80 percent in the US (Nolan & Kotha, 2007).
Harley Current Sources of Competitive Advantage
The current sources of Harley-Davidson are discussed in the following.
Product diversification
Harley is now engaged in manufacturing automobiles, power equipment, aircraft, and robots that reflect its diversification strategy. The objective of the company is to gain competitive in other industries as well. Historically, the products of the company were limited to motorcycles that were designed for the stylish people. Harley has recognized that it cannot compete in the market if it depends upon the sales of a single product category (Hill & Jones, 2012).
Research and Developments (R&D)
It is another source for the company that relates to making developments in the product through effective research. Harley practices this approach and adopts advanced technologies for development. The resources are utilized to bring a change in the existing products of the company. It helps the company to gain a competitive advantage by selling an advanced technological product at a low price (Hill & Jones, 2012).
Product differentiation
Harley also has the source of product differentiation due to its high brand recognition in the market. The product of the company is unique that allows customers to experience it. Harley is popular due to its luxurious look and heavy weight. It differs from other products because of the unique designs and structure of motorcycles (Hill & Jones, 2012).
Product differentiation and R&D sources are sustainable for the latest competitor moves. There was a high demand for motorcycles in the market, and customers were looking for economical products. The sources utilized by the upper management of the company allowed it to regain its traditional customers in the local and international markets. In such case, Harley would have developed its product and set affordable prices to attract customers. New customers would have increased the volume of sales for the company. The effect of product diversification would be zero in that case as the competition was high due to the increasing demand of motorcycles in the United States (Nolan & Kotha, 2007).
Competitors Suggested Strategies to Compete with Harley’s Market Share
Harley-Davidson is selling a unique product to its traditional customers. In other words, it has a single design or structure of motorcycle that attracts stylish customers. The competitors can effectively control Harley’s market share if they introduce differentiated products at a relatively low price. Honda and Yamaha are the major competitors in the industry that can give a tough time to Harley. The competitors can align their strategies to counter the brand recognition of Harley. It is possible in a highly competitive market that effective research and development will result in introducing new products that can gain higher market share. In short, the competitors can introduce differentiated products that could be close substitutes of Harley in terms of price and quality (Hill & Jones, 2012).
A company requires distinctive competencies such as research for the target audience, introducing some new features, and setting a competitive price of products. Harley has a strong brand image in the market due to its uniqueness and high-quality product. The competitors must ensure that their products have all features of Harley motorcycles and even better features. They do not have to redesign the product, but they have to introduce differentiated products that challenge the company’s products. The time and cost effective competencies need to be analyzed to face the competition in the market (Nolan & Kotha, 2007).
Challenges and Recommendations
Harley-Davidson will face challenges of the changes in the preferences of customers. In the 21st century, society is moving towards mobilization and globalization. Companies cannot rely on a single variety of product. The customers of the new millennium are conscious in experiencing innovative products at low prices. Harley cannot depend upon its traditional product, but it needs to adopt diversification approach to competing in the international markets. Also, Harley has the challenge of increasing volume of sales by attracting more customers to the product. For this purpose, it has to focus on the primary and secondary research to analyze the demands and preferences of customers towards the product.
Harley has a big challenge of high cost due to its limited production. The company needs to work on economies of scale and lower the cost of production. It should acquire new technological equipment and machinery to gain competitive advantage. However, the company has the potential to use marketing techniques and tools to compete with the rivals in the industry. It can prepare counter strategies to face the challenges of the global environment. It can utilize its resources allocated to R&D and focus on the new trend prevailing in the market. It has high brand recognition, but there is a need to introduce new innovative and reliable products (Brand Extension). Harley can retain its position in the market if it practices customer-oriented and pricing strategy.
Works Cited
Hill, Charles W. L. and Gareth R. Jones. Case Analysis on Harley Davidson:Preparing for the Next Century. 3rd. Mason: Cengage Learning, 2012. Print.
Nolan, Richard L. and Suresh Kotha. Harley-Davidson: Preparing for the Next Century. Harvard: Harvard Business School, 2007. Print.
