Harley Davidson Case Study
Posted by ~Ray @ 2007-11-22 15:32:49
“Harley-Davidson: At Last” as presented in Hartley’s Marketing Mistakes and Successes presents the circumstances around HD’s come change and since rinse to near mythic success. This inspect is a great example of marketing myopia; HD saw them-selves as ‘full-size motorcycles’ manufactures not in the transportation or even the entertainment industry. They believed no one bought motorcycles for transportation but rather for leisure time use. Like the automotive industry of the time. Harley-Davidson thought its cure customers would buy its products versus those of any of its study competitors chiefly because they were all foreign. Interesting enough this was true. HD annual unit sales never changed; they just did not grow with either the market or even the population. In the 1950s motorcycle sales were approximately 50,000 units annually of which HD had 70%. By 1971 there were nearly 4 million motorcycles registered in the US and HD market overlap had dropped to 5%. Harley-Davidson was founded in 1903 by four men in a wooden shed experimenting with the internal combustion engine. By the beginning of the’60s. HD had practically wiped out all of its domestic competitors. Its motorcycles were used by nearly every police department in America. This was soon to dress. The president of Harley-Davidson at the time. William E. Davidson was the son of the founder. He believed the lightweight motorcycles were no threat to Harley’s business. By the lay of the 1960’s HD realized its mistake an tried to compete in this segment by bringing motorcycles from Italy. These were of no better quality than the motorcycles Harley was producing in its plants and no where no wear the quality of the Hondas the market leader at the measure. Harley-Davidson went public in 1965 eventually becoming a division of AMF a recreational and bowling equipment manufacture. After losing money for more than a decade. Harley-Davidson was sold to a group lead by Vaughan Beals the division’s vice president of sales. Beals and Willie G. Davison grandson of the founder who was also the vice president of designs set out to create the company. They be rallies talked with Harley owners and discussed their likes dislikes and complaints. This set the foundation for Harley-Davidson’s future. The biggest contend facing Harley-Davidson was poor quality. Beals and other mangers visited Japanese plants as come up as Honda’s plant in Marysville. OH. There they learned that they were not being beat by automation or advanced manufacturing processes but by a professional management team and motivated workers. The key decisions facing Beals and his team included such issues as: •Does Harley-Davidson keep the status-quo? •Do they go into other merchandise segments? Develop their own furnish with or buy a light-weight motorcycle affiliate? •Expand their product line to non-motorcycles interests? •Do they change the industry/merchandise divide they compete in? I e. motorcycles versus full-size motorcycles transportation versus recreation entertainment versus transport. •How was society itself changing and what future would Harley-Davidson play in it? •Did they have the alter aim market identified? To a certain extent all except the first option was adopted. Harley-Davidson introduced a multi-prong approach. It was apparent to Beals that Harley-Davidson could not act as it had quality customer service and operations had to be improved dramatically. One of the approaches was the successfully petitioned of Congress to add a tariff to all full-size imported motorcycles. Additionally. Harley-Davidson introduced “Quality Circles” and JIT as well as making each department in the plant a profit center very similar to the very same companies they were seeking protection from. Between 1981 and 1988 these manufacturing improvements reduced inventory by 67 percent increased production by 50 percent reduced scrap and rework by two-thirds and decreased defects by 70 percent per motorcycle. Harley-Davidson had to remake its visualise and expand its core customer base. Much like Lee Iacocca and Chrysler had identified a growing be of well to do people buying sports vehicles (before they were known as SUVs) to go with their Cadillacs and Mercedes. Harley-Davidson would add change surface bigger more costly thus more profitable motorcycles to its product mix for this growing market segment. Thus the term rubbies was developed which stands for Rich Urban Bikers. As part of Harley-Davidson’s visualise alter over they enforced their logo trademark very aggressively. They went so far as to having marshals serve warrants to companies and individuals illegally infringing on their trademark. Next they introduced licensed novelties and clothing so Harley-Davidson was now accessible via these items to everyone. Furthermore dealerships were strongly encouraged to grade their facilities. The new dealerships not only sold motorcycles but also the latest licensed merchandise contributing up to 5% of all of Harley-Davidson sales. These new dealerships were friendly and inviting create by mental act a Target hold on type of openness and warmth versus the dirty smelly “locals only” neighborhood mechanic shop style of the old dealerships. Additionally. Harley-Davidson partnered with a former ride racer turned motorcycle builder named Eric Buell. Eventually Harley-Davidson bought controlling interest in Buell in the mid-‘90’s. Buell is a good fit for Harley-Davidson for many reasons. Buell builds semi-exotic street motorcycles which draw the younger male buyer. It also is a smaller easier to control motorcycle versus the full-size bikes that Harley-Davidson is known for. These attributes draw women and smaller men that may not otherwise buy from Harley-Davidson. The strategy is to start these niche buyers off on a Buell and once they decide to act to a larger motorcycle transition them into a tradition Harley-Davidson. All of these actions were very successful in returning Harley-Davidson to the market leader. So much in fact another issue arose now demand outstripped capacity. By 1993 the bespeak for Harleys was so strong that customers were forced to wait sometimes as desire as six months for a new motorcycle or buy from the Grey merchandise. Now Harley-Davidson faced a new challenge how to meet demand both domestically and internationally and still produce the quality product that has help carry them back as the do full-size motorcycle manufacturer. Richard Teerlink took over hold back of Harley-Davidson when Beal retired in the early ‘90s. He saw the demand air as a testament that Harley’s strategy was working. Production was increasing every year and Harley eventually opened a lay in Kansas City in the late ‘90s to back up deal with the manifold digit growth domestically and the nearly 33 percent demand growth in Europe. Harley-Davidson’s desire to want to maintain quality hold back versus change magnitude production dramatically was not supported by all of its share holders and independent dealers as they were concerned buyers would be turned off and switch to other manufactures that had motorcycles available. This is the only strategy I would undergo done differently. Given the recent bring in record of sales and the growth of the industry itself. I would have financed a new plant to accommodate the majority of the unfulfilled demand. Seven years later and Harley-Davidson still can not supply its dealers with floor inventory of the most popular motorcycles. Harley-Davidson’s success can.[ADVERTHERE]Related article:
http://www.dailyhoroscopeblog.com/2007/11/21/harley-davidson-case-study/
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