Background of Harley-Davidson Company
This company was founded in the year 1903, and its first motorcycle was created on a part time basis in a garage. In an unlikely turn of events, the engine of this motorbike was a successful one, and this resulted to a phenomenal growth. The company decided to do the motorcycle manufacturing on a full time basis. The progress of this company has with time evolved to increase its overall quantity and quality. Despite a spectacular comeback from the edge of bankruptcy in the 1970s, this company contributes of 70% of the distribution of motorcycles in the unite states. However, just like any progressing company in the world, Harley-Davidson faced a number of problems in the routine of providing its services. One of the problems has been in the marketing sector whereby Harley-Davidson Company came across the declining market (Doug 2007)
Problem Statement
Despite the fact that this company had acquired a considerable number of customers and gained its popularity, the company’s progress was not insulated form the economic pressures. The first problem in the decline in the market took place in the early 1920s when the production declined at 10,000. However, the US production spring back to more than 20, 000 by the end of the 1920s. This decline was experienced again during the great depression years. However, the greatest blow was during the post war era whereby this company faced the strong pressure from the foreign imports of the European countries. These imported motorcycles were small in size, more power efficient and were easier to handle than the Harley-Davidson products. In addition, Indian companies that were rivals with Harley-Davidson designed a British copycat in order to attract potential buyers away from the Harley-Davidson motorcycles. This decline in sales and the demand of Harley-Davidson motorcycles needed a crucial and applicable marking plan in order top make a come back or else it collapsed for ever (Sharon & Ostermann 1993).
The Harley-Davidson mystique
In order to make a come back from this decline, Harley-Davidson shifted from the V-twin engine via its advanced heavyweight motorcycles to a new product of raw power. This was a chief selling pint. This bike had many features that attracted new and former customers of Harley-Davidson. These aspects contained heavy application of chrome on them, a low profile appearance, trimming of the front fork and thus extending the fork past the plumb and thus coming up with an appealing image. This motorcycle also had tail fenders that were stylish. The image of this new motorcycle from Harley-Davidson was totally different and also had a different sound. The engine sound had a growl that was defined as a voice: “a basso profundo thump that makes other motorcycles sound like sewing machines” (Robin 2005).
This company took a marketing approach of image and lifestyle that saw the addition of motorcycles with more colors, stylized designs and decals. These bikes were advertised all over, in media, magazines, and even by mouth. The Harley-Davidson bikes were used in high way patrols officers, celebrities such as Hollywood actors and also the US military. However, this approach received a major blow during the Second World War. This is the era that saw the Japanese enter the US market. After the Second World War the US motorcycle market created a center of attention to the Japanese manufacturing companies. They started with the Honda motorcycle, upon this bike entering the US market in 1959, it uncovered a huge customer ranges that older males and young women. This was a segment of individuals who could not suit with the heavy and powerful Harley motorbikes. The introduction of Japan to the motorcycle business can be termed as the biggest problem to the business of Harley-Davidson (Sharon & Ostermann 1993).
The Japanese used the marketing approach “you meet the nicest people on a Honda” Japan manufactures focused on bikes that were smaller, quieter and more efficient with fuel. They were also light-weight in comparison to the Harley-Davidson bikes. Other Japanese companies like Suzuki, Yamaha, and Kawasaki followed the trend of Honda. A larger population in the United States consisted of individuals who could not afford to maintain the US Harley-Davidson bikes, and for this reason they opted for the Japan products. With the entry of the Japan products, there was a significant change in the US motorcycle industry (Robin 2005).
Apart from Japan producing these motorcycles that were friendly to improve demographic situation in the US, they also produced a large number of bikes in comparison to Harley-Davidson. Japan also reduced the required time before they introduced a new model to the market. The marketing executives at Harley-Davidson showed little efforts to counter the competition from Japan. Some of them believed that the Japanese motorcycles would attract new customers for them when they decided to step up. Research showed that this belief has a truth in due to the stepping up that is common in the culture of most bikers. The greatest move to save the Harley-Davidson from the Japanese competitors was this company’s acquisition in a friendly take over by AMF. AMF was a heavy industrial corporation that was in search of a diversification to the filed of leisure products (William 2012).
The Production and Quality Problems
When this firm acquired the Harley-Davidson, the CEO noted that there was a motorcycle boom and a company could sell anything that they produced. In order to recover the Harley-Davidson production capacity, AMF committed their capital to the expenditures to this motorcycle sector. The entry of the new capital, new management and new marketing skills permitted Harley-Davidson to increase its production from 15,500 units in the year 1969 to 70,000 by the end of 1973. This was a significant incline in sales. The second approach by AMF was the introduction of less skilled worker being incorporated to the production lines. They overlooked the quality issue at that time and focused more on the quantity aspect. As a result the quality declined to an all-time low. Instead, AMF added new features in an attempt to pull more customers from all the market corners (Wagner 2003).
Conquering the Japanese Market
AMF joined efforts with Ameracchi, an Italian firm in order to challenge Japanese manufacturers. Ameracchi designed motorcycles that were of low prices and small in size and were sold in the US. These new products only expanded the Harley motorbikes but were not a threat to the Japanese manufacturers. AMF had to use another marketing strategy whereby they drove customers to the motorcycles that were big in size and of high margin. This hindered the company’s effort to break through the small motorcycle sector. Initially, Harley-Davidson was never meant to be a high production company. In order to solve this unending problem, major changes needs to be made on the marketing and manufacturing sectors of Harley-Davidson.
Changes in the Manufacturing Strategy
An approximate of 4000 employees was employed in Harley-Davidson. This move was as the manufacturing strategy that was designed in 1993 by this firm to achieve a rate of 100,000 units annually in 1996. Under this plan, the capital drive situated in Wisconsin was designated for the cellular manufacturing model. This factory was divided into three manufacturing unit whereby: the 1200cc and 883cc powertrains, the transmission group and the 1340cc powertrains group. These units reduced the work-in-process inventories and increased the employee empowerment. Line workers instead of managers were used and they inspected for quality of services. The finishing assembly plant was in Pennsylvania, the daily production of this plant was 200 motorcycles. The other recommendation that was put into application was the contemplation of two new manufacturing lines, one for the Harley touring model and the other one for the sports designs. This move was to be incorporated while meeting the production targets. After this manufacturing strategy was implemented, the major next move would be to come up with a good marketing starter for the in Harley-Davidson products (Robin 2005).
Changes in the Marketing Strategy
One of the significant strategy in the marketing of Harley-Davidson products was the division in the marketing among dealer promotions, events, customer events, public relation, direct mail advertising and via cooperative programs with the Harley-Davidson dealers. The firm also included the sales of domestic motorcycle parts and accessories. Harley motorcycles usually emphasized on traditional styling, durability, evolutionary change, ease in servicing and design simplicity. Harley-Davidson marketing approach was based on for sections: firsts, standard, and this emphasized on the cost and simplicity factors. Second, performance emphasized on the ease on handling the motorcycles and the speed. Third, the touring aspect emphasized on the comfort and services for long distance users. Finally, the custom aspect of marketing emphasized on styling and the ability of the owner to customize the motorcycle. Distribution of Harley-Davidson motorcycles was in a direct mode by dealers. The sales of that companies were differed from other competitors based on the fact that there was more of the hardware. They sold transformation instead of transportation. In addition, Harley-Davidson offered support to several enthusiasts and social groups in the US and other regions. The “ladies of Harley” are a group that was used to increase interest among young women to be motorcyclists (Mitchell 1997).