Harley Davidson: Bonding with the Biker

PESTLE ANALYSIS

* Harley Davidson Motor Co was established in 1903.

* Despite faring badly in the 1970's due to the threat that Japanese Competitors posed, by 2006 the company held over half the share of the US heavyweight motorcycle market, and a third of this market worldwide. This was as a result of a new strategy that was implemented in the 1980's, that shifted the focus of the company onto its customers.

* Harley Davidson was introduced to the South African market in 2006. Since then, 6 new dealerships have opened, nationwide.

* While the growth of the company locally has been tremendous (largely attributed to the weather, that encourages people to be outdoors), the South African market accounts for only 0.29% of the total Harley market.

* Locally, Harley dominates its market by holding 67% of the total market share.

* The Riders Academy and HOG are initiatives that have boosted the company's status in the minds' of customers. These customer-orientated services are what have differentiated the company from competitors, in the minds of customers.

* The average purchaser of a Harley Davidson motorcycle is male and in his mid-forties, with an average income of R596 000 (these purchasers make up 88% of the market). A large percentage of these riders are married, professionals.

* Female purchasers account for 12% of the market and are usually career-orientated, independent and unmarried women who are around 29-30 years of age. South Africa has the highest representation of female riders worldwide. Research has also indicated that female riders are buying more expensive bikes (ranging from R137 000 upwards).

* There is growing interest from the black diamond segment in South Africa, but the volatility and a pull towards cultural values as opposed to more western ideals have made this market difficult to target.

* A customer will spend on average around R47 500 per annum in a Harley store, and the majority of sales of new, and trade-in bikes are made to existing Harley customers.

* Harley Davidson motorcycles fall into the cruiser category in South Africa and its competitors include Triumph, Honda, Yamaha, Hyosung, Kawasaki, Loncin and Suzuki. These competitors have recognised the opportunity to supply motorcycles at cheaper prices.

* The most common model in South Africa is the Sportster, which is not uncommon in emerging markets.

* In South Africa, the rental market presents an attractive offer to foreign tourists wishing to take guided tours around cities or landmarks, or travel around the country on a Harley. This has been bolstered by the poor exchange rate. It was also advertised to HOG members wishing to bring friends to HOG rallies- but the rental market has not been capitalised on.

* Items such as boats, jet skis, quad bikes and other such luxury items all represent competitors for the South African consumer's disposable income.

* Grey products (motorcycles that have been found in scrapyards and that have been restored, but not registered through Harley channels) form a huge part of the motorcycle industry in South Africa and are competitors to Harley's market share.

* The weak rand against the dollar and its fluctuations have made motorcycling an expensive sport for many to pursue.

* In South Africa (which is considered to be an independent market and thus, does not have its own distribution warehouse), stock has to be ordered directly from the USA, thus driving up the prices of motorcycles and accessories.

* Noise pollution and emissions are concerns for environmentally friendly customers and for some countries across the globe.

Question One: Critique Harley Davidson's product policy. What are the core benefits of owning a Harley?

* Harley Davidson specializes in offering heavyweight motorcycles and accessories (including baby clothing, toys, accessories for motorcycles, and clothing for adults). Their motorcycles and parts are known for their quality. Part of their offering includes services, such as HOG and the Riders' Academy.

* They offer a variety of motorcycles that range in price and a new motorcycle is launched each year. The excitement and hype created around this launch is key, as many Harley riders are collectors and wait in anticipation for these new products.

* You do not however need a driver's license to be part of the Harley family. Harley Davidson toys and restaurants allow children to be part of what their parents' are experiencing. Their experiences could possibly nurture the next wave of Harley owners.

* They guarantee quality rather than push every last sale. However, this strategy could backfire- especially in South Africa where they do not have a warehouse and have to order stock from the USA. Customers may be unwilling to wait for a bike to come in, and this gap between supply and demand represents the opportunity for the Japanese competitors to take market share and build customer loyalty of their own.

* Their focus on quality extends to the business partners they choose: e.g. they partnered with Zippo (and not Bic) to produce a lighter. This creates an aura of exclusivity around their products. Their member group adds to this feeling of exclusivity that is not based on wealth or occupation, but rather on a love for the quality, make, feel and sound of Harley Davidson motorcycles and their high quality products.

* While they license and offer a variety of products, this hasn't distracted them from their core business of selling motorcycles and the lifestyle that goes with owning a Harley bike.

* The core benefits of owning a Harley include:

- It gives you access into an extended family of sorts, where the common factor that brings people together is the love they share for their motorcycles and the freedom or excitement it represents.

- The first year of HOG membership is free. This then encourages new members to go to these meetings and get to know other HOG members. It provides a networking opportunity for those in business, and provides the company with an opportunity to make these people lifelong customers through identifying with the brand.

- Each new rider wanting to be part of the HOG community must take a course at the Riders' Academy where they learn how to ride in a group and other safe techniques. This reinforces the fact that Harley doesn't just sell you a bike: they're concerned about your well-being, and want every member to enjoy this hobby in a safe manner. Upon completing this course,