Harley-Davidson Motor Company •Type
Public1984, NYSE1987
•Founded
1903
•Founder
William S. Harley Arthur Davidson Walter Davidson William A. Davidson
•Headquarters
Milwaukee, Wisconsin, USA
•Key People James L. Ziemer (CEO) Thomas E. Bergmann (CFO) James A. McCaslin (COO) Syed Naqvi (President, HDFS) •Industry
Recreational Vehicles
•Revenue
▲ 8.8 Billion USD (2008)
•Employees
9,700 (2006)
•Subsidiary Buell, HDFS •Website
www.harleydavidson.com
MISSION We inspire and fulfill dreams around the world through Harley Davidson motorcycling experiences. VISION HarleyDavidson, Inc. is a global leader in fulfilling dreams and providing extraordinary customer experiences through mutually beneficial relationships with our stakeholders. VALUES These are our values. They are the heart of how we run our business. They guide our actions and serve as the framework for the decisions and contributions our employees make at every level of the Company. Tell the Truth. Be Fair. Keep Your Promises. Respect the Individual. Encourage Intellectual Curiosity.
DEMOGRAPHICS
GENDER Male Female
2007 88% 12%
MEDIAN AGE
2006 88% 12%
2005 88% 12%
2004 89% 11%
2003 89% 11%
MEDIAN INCOME
HARLEY-DAVIDSON CUSTOMER PROFILE 2007
HDMC
INDUSTRY
Median age
44.4 yrs.
32.6 yrs.
Median Household Income $80,700
$42,500
Male Married
95% 57%
90% 49%
Blue Collar
53%
55%
White Collar
40%
31%
High School Graduate
90%
75%
College/Degree
44%
38%
Occupation
Education
52% Owned Harley-Davidson® motorcycle previously at any point during lifetime 33% Owned a competitive motorcycle previously 15% First motorcycle purchased
Competition !!! BMW, Germany Daelim, S. Korea !
02.3% 02.6% Ducati, Italia 00.9% Honda, Japan 21.7% Kawasaki, USA 13.6% Polaris, Britain 01.5% Suzuki, Japan 12.6% Yamaha, Japan 10.0% HDMC, USA 34.8%
Strategic Direction and Marketing Objectives •HD has chosen the strategic direction of targeting a younger market that is technologically conscious in order to increase its share in the performance cruiser market space. • •To target the younger market with the new product line, the company has adopted the following marketing objectives: to expand its current market (market expansion), diversify its product line (product diversification), and modify its marketing mix to target a younger demographic. • •During the 1970's, HD was facing a decline in market share due to increased competition with Japanese companies. By phasing out weak models, becoming more selective, and limiting sales and promotions, HD was able to carve out a niche in the marketplace which it enjoys today
• Possible future strategies to increase market share : •
•First, HD needs to expand its potential customer base to include enthusiasts and nonenthusiasts males in the 3544 age group • •, HD needs to position the VRod to also appeal to first time buyers of motorcycles. HD's strong brand identity can help pull in new clients. • •Third, HD has to set an appropriate marketing mix that will help attract a younger consumer base. By using the lowend approach, which involves attracting a young audience to a brand name product with a low price tag (similar to what Jaguar and BMW have done), HD can expand its popularity to the domestic and international market.
Marketing Mix Elements •The product strategy is any decision that helps the company continue to develop new products around its signature American image and positions the company in the market as such. The main reason for the introduction of the VRod was the need to create a bike that would appeal to a younger demographic and attain a greater market share for the company. By using the lowend targeting method (as discussed previously) with the introduction of the VRod, this can be considered HD's first step toward implementing its strategic and marketing objectives.
Motorcycles
>$6,999 Men's
Product Line
>$11,999 >$15,899 Accessories Womens Kids
>$14,999 Gifts Items
PRICE As for the pricing strategy, HD must be careful to implement a pricing decision based on the lowend targeting method. Priced at $17,000 MSRP, HD's VRod has the second highest price tag in the performance cruiser market. Although HD does have a 22% share of the total market, HD's pricing strategy has three main factors that have influenced how it has priced the VRod: 1) the used motorcycle market, 2) lower priced motorcycles, and 3) HD's inability to keep up with demand4. In order for HD to attain a greater market share, the company must examine how these three factors will continually play a role in pricing and adjust accordingly.
HARLEY DAVIDSON ON INDIAN ROADS Model
US $
Sportster®
$6,999
Indian Rs (approx) 5,97,000/-
Dyna®
$11,999
10,23,000/-
Softtail®
$15,899
13,55,000/-
VRSC®
$14,999
12,80,000/-
Touring®
$16,999
14,50,000/-
•Prices have been arrived at by calculating the various surcharges and import duty amounting to 103% of original rate (www.thekneeslider.com) •Exchange rate – US $ (in Rs.) 42.79/- as on 30/07/2008 •Price in US $ courtesy –www.harley-davidson.com
The Indian Connection
Meeting with Mr. Kamal Nath (Minister of Commerce and Industry) on April 2007
•
13th April 07 relaxation of emission norms
•
Quid-pro-Quo with American government
•
Initial sales target 500 units for 3 years
PROMOTION The HarleyDavidson Corporation has found multiple ways to implement its promotion strategy. HD's primary promotional tool since 1983 has been the HOG. The company's advertisements and commercials are focused around female images. Since 93% of bikers are males, the HOG advertising campaign has been successful for decades5. HD also uses another strong promotional campaign through its cafes, located in most dealerships. HD has also developed an interactive website (www.harley davidson.com). The website gives the company the chance to expand its operations online. Finally, HD's most important promotional tool is the brand image of a truly American product. Such a tool appeals to the domestic market, and owning a HarleyDavidson bike fits well into supporting the national feelings of pride for America.
Although the company generated more than $1.3 billion in revenues in 1995, it spent less than $2 million in advertising. "We're not dependent on advertising or other traditional marketing techniques as automobile companies or even our competitors are," says Schmidt. "They're selling transportation. We're selling dreams and lifestyle. There's a big difference."
EMPLOYEE
INVOLVEMENT
IN
MANAGEMENT
BCG MATRIX • •
• RELATIVE MARKET SHARE: 48% GROWTH RATE: 13.029
STRATEGY: MARKET PENETRATION, MARKET DEVELOPMENT, PRODUCT DEVELOPMENT, DIVESTITURE.
S W O T analysis Strengths American company •Huge fan following •Range of good products
Weakness Bad boy image •High cost •Poor emission records
•
•
•
• •
Opportunity
Threats
•Competitors Large untapped market •Booming tourism sector •Restrictive government policies •Movement of customers towards •Time high end products •
•
•
Historical Ratio Analysis Ratios Analysis 1992 Liquidity ratio current ratio (times) Quick ratio (times)
1993 1.57 0.81
1.75 0.86
1994 1.88 0.94
Leverage ratio Debt ratio (%) Interest coverage (times)
44.30% -19.79
68.93% -84.00
41.39% 3643.34
Profitability ratio Net Profit Margin (%) Return on asset (%) Return on equity (%)
4.87% 10.30% 16.04%
-0.98% -2.04% -3.66%
6.76% 14.11% 24.07%
Activity ratio Account receivable (times) Average collection period (days) Inventory turnover (times) Average sale period (days) Fixed asset turnover (times) Total asset turnover (times)
11.86 30.77 8.57 42.61 4.31 2.12
14.15 25.79 6.28 58.11 4.88 2.09
10.75 33.95 6.46 56.50 4.62 2.09
Net Sales and Net Income
Net Net Net Net Net Net
1994 1995F 1996F 1997F 1998F 1999F sales (w /o recom m endation) 1,541,796 1,805,023 2,160,800 2,434,060 2,702,121 3,004,958 sales (w ith recom m endation) 1,541,796 1,805,023 2,143,024 2,014,925 2,368,204 2,787,186 sales (w ith pricing effect) 1,541,796 1,805,023 2,357,326 2,216,418 2,605,025 3,065,905 incom e (loss) (w /o recom m endation) 104,272 119,463 143,009 161,094 178,835 198,878 incom e (loss) (w ith recom m endation)104,272 119,463 164,334 171,638 220,677 268,081 incom e (loss) (w ith pricing effect) 104,272 119,463 378,637 373,131 457,498 546,800
HarleyDavidson announces leadership change at Financial Services unit MILWAUKEE (January 8, 2009) HarleyDavidson, Inc. (NYSE:HOG) announced today that its Chief Financial Officer, Tom Bergmann, will take on the added responsibility of interim President of HarleyDavidson Financial Services (HDFS), effective immediately.The appointment follows HDFS President Sy Naqvi’s personal decision to resign. Naqvi joined HDFS as President in February 2007. Bergmann will serve as interim HDFS President while the Company conducts a comprehensive external search. “In the current economic environment, HDFS is an especially important priority for us and Tom has been highly involved in guiding that business,” said Jim Ziemer, Chief Executive Officer of HarleyDavidson, Inc. “I am confident Tom is the right person to lead HDFS through this transition.” Before joining HarleyDavidson as CFO in 2006, Bergmann was the CEO of USF Corporation, a $2.5 billion publicly traded transportation and logistics company. Bergmann also served as Corporate Controller and Vice President of Finance for Financial Services at Sears, Roebuck and Co., and in senior level positions at The St. Paul Companies, Inc. and Johnson & Johnson, among other executive positions he has held. “HDFS has a strong leadership team and I am looking forward to working with them even more closely,” said Bergmann. “We wish Sy well in his future endeavors,” he said. HarleyDavidson, Inc. is the parent company for the group of companies doing business as HarleyDavidson Motor Company (HDMC), Buell Motorcycle Company (Buell), MV Agusta and HarleyDavidson Financial Services (HDFS). HarleyDavidson Motor Company produces heavyweight custom, touring and cruiser motorcycles. Buell produces premium sport performance motorcycles. MV Agusta produces premium, highperformance sport motorcycles sold under the MV Agusta® brand and lightweight sport motorcycles sold under the Cagiva® brand. HDFS provides wholesale and retail financing and insurance programs primarily to HarleyDavidson and Buell dealers and customers.
HarleyDavidson creates special program to help riders share their passion MILWAUKEE (January 13, 2009) The MerriamWebster dictionary defines mentor as a “trusted counselor or guide.” Mentors can come from various backgrounds and ages, but all share a common goal of sharing their passion with others. So as the nation celebrates National Mentoring Month, HarleyDavidson is encouraging riders to share their passion for the open road with others through a special mentoring program called Share Your Spark.Share Your Spark: A Guide to Mentoring is a tool kit the Motor Company developed for current and aspiring riders featuring information on how to be a resource and support system to others during their motorcycling journey. The mentoring kit includes information for both potential mentors and mentees, including a DVD showcasing tips on how to become or find a mentor, stories from successful mentoring experiences, a special Share Your Spark pin and a planning and reflection guide. "The mentoring experiences is empowering for both parties involved," said Leslie Prevish, market outreach manager, Harley Davidson. "For the mentor, they get to share their passion with someone who aspires to live the same dream they do. For the mentee, they learn through the collective experiences of their guide. Of course, the mentoring relationship also leads to many life lasting friendships.” Prevish adds that Share Your Spark is not just for women, but the Motor Company’s research indicates many women have expressed their desire to be – and find – a good riding mentor. Over the past several years, women have increasingly embraced the sport of motorcycling – seeking the freedom and adventure associated with the open road, polished chrome and a sweet sounding engine. In fact, the number of women who have purchased new HarleyDavidson motorcycles has tripled over the past 20 years, with women now accounting for nearly 12 percent of new HarleyDavidson motorcycle purchases. What Else Harley’s Doing to Inspire Women to Ride HarleyDavidson’s We Ride is a comprehensive and inspirational overview on what a new rider or a woman interested in riding needs to know about getting into the sport. It features information on how and where women can learn to ride with details on the Rider’s Edge® New Rider Course, as well as the best way to fit a motorcycle for a woman’s ergonomic and functional needs. It also includes tips on getting involved and staying active with riding groups, including inspirational stories from real women who have answered the call of the open road. For more information, visit www.harleydavidson.com/womenriders. HarleyDavidson dealerships across the country are also hosting womenonly Garage Parties to encourage them to get involved in motorcycling. The HarleyDavidson Garage Party event provides a nonintimidating environment for women to learn more about motorcycling and meet others who are interested in riding. For more information about Share Your Spark, visit your local HarleyDavidson dealership or visit www.harleydavidson.com/womenriders. HarleyDavidson Motor Company, the only major U.S. based motorcycle manufacturer, produces heavyweight motorcycles and a complete line of motorcycle parts, accessories and general merchandise. For more information, visit HarleyDavidson's Web site
THE END