Harley Davidson is one of most oldest and prominent motorcycle manufacturers around the world. Originated from United State of America, they have their operational facilities around the world (Harley-davidson.com 2017). Having huge brand value and premium offerings enable them to penetrate in new markets more easily. Along with this, they follow a certain marketing strategy and with a specific kind of products, unlike the diversified products portfolio of their competitors. Thus, there is some sort of uniqueness in their marketing approach. In addition, there are several competitive advantages of Harley Davidson which helps them to sustain in the present scenario of competitive market.
Harley Davidson constitutes of various competitive and core competencies that help them to maintain their leadership position in the global market (Drucker 2017). This report will analyze these aspects along with their critical success factors. Different marketing models will be applied to evaluate the effectiveness of the above said aspects. Operating environments of Harley Davidson will be analyzed to determine their future prospects. This analysis will help to gain an understanding about the success factors of Harley Davidson and how it enables them to stay ahead in the competition.
Figure: 1. Porter generic strategies
According to Porter’s generic strategies, cost leadership, differentiation and focus are the three main areas of competitive advantages that an organization possesses (Teeratansirikool et al. 2013). In the case of Harley Davidson, cost leadership is the least preferred area among all. This is due to the reasons that, they mostly cater to the premium segments, where price is not a key determinant of sales. Moreover, quality control and maintenance is a prime criterion for them and thus, they do not opted for aggressive approach in reducing the average operating costs. Focus is the next strategy which is being maintained effectively by them. According to the Harley Davidson, they have a specific target market (Weinstein and Cahill 2014). They mainly cater to the premium segments with their product portfolio of cruiser bikes. They produce and market only cruiser and chopper bikes rather than diversifying in other segments. In addition their target customers are only the customers looking for heavyweight motorcycles. They do not want to be the mass market leader by offering lower capacity models. Thus, to operate in the premium segment, they market and produce their products according to the taste and preference pattern of the higher end customers.
Focusing on the premium segments increases their exclusive appeal to the customers around the world. Harley Davidson gains a competitive advantage of acquiring goodwill and reputation in the market. Most of their competitors are catering to both the heavyweight and lightweight motorcycles around the world. Thus, in that case, customers will not have the feeling of exclusivity in purchasing those motorcycles. Harley Davidson tries to capture this factor of the customers by operating in only one segment with single type of motorcycles (Griffin 2013). Due to this reason, they always portray themselves as a classy, exclusive and rare brand around the world.
The last strategy is differentiation strategy. Harley Davidson always tries to differentiate their products from their competitors by offering more than just the mode of transportation. According to them, motorcycles are not only a mode of transportation but a source of leisure and luxury. Due to this policy of them, Harley Davidson offers accessories for biking also. They offer a holistic model of experience to their customers purchasing their bikes. These include test ride facilities, activities of Harley Owners Group and various events round the year. Therefore, while other motorcycle manufacturers are selling their products to the customers, Harley Davidson is offering a whole lifestyle to them (Corey and Millage 2014). Another differentiation policy of Harley Davidson is customization options for their motorcycles. According to this policy, customers can customize their motorcycles according to their taste. This strategy helps to have a distinctive image in the market.
Due to the differentiation policy, Harley Davidson is attracting more customers by offering distinctive service. Moreover, they have created a distinctive image among all their competitors in the market (Makadok and Ross 2013). This helped to develop the brand image of Harley Davidson as a seller of lifestyle. This competitive advantage enables them to stay ahead in the competition.
To determine the business strategy of Harley Davidson, this report will use the 4 p of marketing mix. It will enable this report to determine the strategies taken by them in fulfilling the various aspects of marketing.
Figure: 2. Marketing mix
Product refers to the tangible or intangible goods offered by the organization to their customers. In this case, Harley Davidson offers two wheelers and accessories to their customers. However, in providing motorcycles, they maintained a unique proposition which differ them from their competitors. As their products are targeted for the higher end customers, thus the motorcycles are rich in quality and are of high capacity (Hiziroglu 2013). This is due to the reason that, the target customers of Harley Davidson are not using their motorcycles for daily transportation rather than they use it for long drives. Hence, this is their strategy to introduce higher capacity motorcycles which will meet their requirements.
Their motorcycles always carry a distinctive aesthetic value with them or a wow factor for the customers. Unique exhaust note of the motorcycles and cruiser style designs are the key identities for a Harley Davidson motorcycle. They have implemented another strategy to increase the customer satisfaction by having the customization options (Tseng and Hu 2014). Extensive customization options are being provided by them to offer more personalized product to the customers. Another key strategy of them is having a large product portfolio of cruiser motorcycles which offers more options for the customers.
As earlier discussed that Harley Davidson is targeted for the premium customers, therefore the pricing strategy of them are also implemented by considering the particular segments (Nagle, Hogan and Zale 2016). Due to the fact that Harley Davidson deals with higher capacity motorcycles and maintains qualities which are the benchmarks in the industry, the price is always on the higher side. According to their strategy, higher pricing helps them to offer their exclusivity in the market which is expected by their targeted customers. Therefore, pricing strategy of Harley Davidson enabled them to position their products in the market as a premium product over their competitors.
Place is where the customers will have the access of the product they are buying. It is the meeting point of the organization and their customers (Jahanshani et al. 2014). Harley Davidson stores around the world catering to different regions. Their stores are not only about offering the motorcycles but also various biking accessories and other aesthetic products. According to them, their stores are providing a whole new concept of lifestyle to their customers. The distinctive approach of Harley Davidson is not only limited to their motorcycles but also in providing customer service and convenience.
However, one issue they are facing is regarding the import duties in various countries. Harley Davidson has their manufacturing units only in India and Brazil outside United States. Thus, they have to import their motorcycles as completely built unit (CBU) from their manufacturing facilities to other countries, which attracts huge custom duties. It leads to the further increase in their price.
Promotions refer to the marketing activities in reaching out to the potential customers. Harley Davidson maintains a distinct approach in their promotional policy also. Majority of their competitors are being opted for extensive marketing strategies involving various marketing channels (Rosenbloom 2012). However, Harley Davidson has certain specific way of promotions through which they reach out to their targeted customers. Most of the promotions of Harley Davidson are being done through movies. This helps in maintaining their standard among the customers.
For promotional activities, Harley Davidson mainly organizes various rallies and rock concerts which are related with the cultures of the owners of Harley Davidson. They have Harley Owners Group (HOG) consists of existing Harley owners (Singh and Sonnenburg 2012). They promote different rallies and road shows with them which help in raising the customer loyalty and positive word of mouth. Therefore, all the four marketing aspects of Harley Davidson are having a unique approach which helps them to make a distinctive position in the mind of the customers.
VRIO framework
Figure: 3. VRIO framework
Harley Davidson creates value among their customers in terms of providing an entirely new way of lifestyle. They are not only providing motorcycles but also the attached cultures with it. Thus, the core competency of Harley Davidson over others is offering more than the core products (Drucker 2017).
Harley Davidson is rare and exclusive product in the markets. Moreover, the brand image and personality of Harley Davidson is quite rare which can acquire by the customers only by having them. This cannot be provided by their competitors.
The market position of Harley Davidson is difficult to imitate. A specific culture is being attached with them which cannot be imitated (Corey and Millage 2014). In addition, the involvement of the Harley owners with this particular lifestyle is also cannot be imitated. This is another core competency of Harley Davidson.
The knowledge and managerial capabilities that has been possessed by Harley Davidson is the main core competency of them. They are the best and have the organizational capabilities in encouraging the associated cultures or lifestyles. Employees and organizational structures of Harley Davidson are being designed in such as way that it will promote the culture that they portray to their customers.
Porter five forces
Figure: 4. Porter five forces
Porter five forces state the potential threats for an organization which can pose challenge for them in the future (E.Dobbs 2014). The first aspect of this theory is the presence of the existing competitors in the market. In the case of Harley Davidson, there are high numbers of competitors present in the market providing nearly similar kind of product. Hence, this factor is the strong force for them. Harley Davidson competes with various international brands and domestic brands in different regions (Ngantung 2013). Harley Davidson also faces competition in other forms such as public transportation and four wheelers. Thus, competition is high for them and will be more in the future. To sustain the competitive advantage, Harley Davidson must maintain their quality, and penetrate in newer markets to reduce the associated risk.
The second aspect of this theory is about the bargaining power of the customers of the organization. This aspect states about the factors that influence the buying decision of the customers. In the case of Harley Davidson, the bargaining power of the customer is strong force due to the presence of several competitors. Moreover, switching cost is also not high due to presence of affordable options in the market (Barroso and Picon 2012). Hence, customers have the upper hand in bargaining with Harley Davidson. To sustain with this factor, they should maintain their distinctive attributes which cannot be provided by the competitors. This will only reduce the bargaining power of the customers.
The next aspect of this theory is about the bargaining power of the suppliers of Harley Davidson. Bargaining power of suppliers is low in the case of Harley Davidson due to the presence of a few numbers of suppliers. Moreover, the suppliers are mostly depended on Harley Davidson for sells as they have no forward integration (Spiegel 2013). Hence, in this case, Harley Davidson has the upper hand. It will help them in maintain the quality of the materials from their suppliers (Stenbacka and Tombak 2012).
This aspect refers to the pressure of having substitutes in the market. Harley Davidson has a huge number of substitutes in the global market. Thus, the threat from the presence of substitutes is high (Ngantung 2013). However, one favorable factor for them is the unique characteristic of their motorcycles over their competitors. Customers willing to have a higher end cruiser motorcycles will likely to go for Harley Davidson. Thus, the main factor to sustain their competitive advantage in the future is to maintain their distinctiveness over others.
The last aspect of this theory states about the threats of having new entrants in the market. Introduction of new products by the new entrants in the market will have a negative impact on the sales chart of Harley Davidson. Thus it the strong force for them. However, entry barriers such as huge initial cost of investment and high economies of scale for the new entrants will restricts the entry of new competitors (Shim and Lee 2012). Thus, to maintain these barriers, Harley Davidson has to maintain their operational cost.
Conclusion
Having analyzed the competitive advantages and core success factors of Harley Davidson, it can be concluded that they are holding an important aspect in providing added value with the motorcycles. The main competitive advantage of Harley Davidson is having a unique characteristic in the market. They became a part of the culture for their customers. Future potential challenges to be faced by them are also being discussed along with the measures to sustain their advantage in the future. Therefore, it can be concluded that, following the measure given in the report will help Harley Davidson to sustain their advantage in the future and expand their market in a more effective manner.
References
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