Building Customer Relationships | TP030247

Executive Summary

Harley-Davidson Motor Comany (H-D) is motorcycle manufacturing organization

established in 1903 and incorporated in 1991. It designs and manufactures motorcycles, spare
parts, accessories and merchandise. It has an extensive product line including the models VRod, Dyna and Softail, each with customization options. The website also sells motorcycle
parts and apparel for both men and women. The products are sold in various regions across
the globe through independent dealers including North America, Europe and Asia.
In addition to motorcycle related products H-D Inc also operates a financial services division
that provides wholesale and retail financing and insurance.
The purpose of this report is to highlight the target market of the company, conduct an
analysis of some its competitors and discuss the relationship marketing strategies employed.
Harley- Davidson Inc is well known for its loyal customer base and this report explain the
sense of community the products have created among its consumers.
Finally a few recommendations on how to improve the customer relationship management
has been identified and explained.

Building Customer Relationships | TP030247

Table of Contents
Executive Summary...................................................................................................................1
Part A..........................................................................................................................................2
Target Market.............................................................................................................................2
Competitive Analysis.................................................................................................................3
SWOT Analysis..........................................................................................................................5
Part B..........................................................................................................................................8
Q1- Innovation of relationship marketing practices...................................................................8
Q2- Mass marketing to one-to-one marketing.........................................................................12
Q3- Customer Relationship Management recommendations..................................................14
References................................................................................................................................15

Part A

Building Customer Relationships | TP030247

Target Market
Demographic
The core customer base of Harley-Davidson products in the U.S. are Caucasian men over 35
years of age. In 2014 H-D were the number one seller in that demographic, which consists of
mainly older men (Investor.harley-davidson.com, 2015). However in the recent past the
company has been marketing to a wider audience focussing on women and young adults
(aged 18 to 34). This includes redesigning bikes to appeal to non-caucasians, hosting womenonly Garage parties and holding rallies to encourage new riders (Kelleher, 2013).
The women-only Garage parties have become social events that allow women to learn about
basic motorcycle controls, riding etiquette and provides guides on how to customize a bike
while meeting other women who share these interests (Harley-davidson.com, n.d.).
Income status of the customers also matter has the unique, customized bikes are considered to
be a luxury cruiser and is targeted at the upper or upper middle income classes.
Geographic
64% of net sales H-D bikes in 2013 was reported in the United States. The company has
regional locations catering to South America, Europe, Middle East and Asia-Pacific regions
but the outreach is limited by high export costs which drives the already steep price up. The
mass appeal of heavyweight cruisers is also not prevalent outside the U.S. To counter that HD has released lightweight street bikes Street 750 that cost lower that has peaked in interest
I India
Psychographic
H-D has always promoted a Harley Davidson lifestyle which involves groups of bikers
cruising down open roads. The sense of community and shared values among Harley riders
who usually sport H-D branded merchandise as casual attire have lead them to a formidable
official riding club known as the Harley-Davidson Owners Group or the HOG.
Membership offers exclusive event privileges, access to the HOG magazine and even road
side assistance (Members.hog.com, 2015).

Behavioural
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As mentioned above Harley Davidson has a loyal following that goes beyond simply
purchasing products. There are over 1400 local chapters of HOG I the U.S alone that hold
rallies and other member events. Their readiness to purchase H-D products is high, from bike
accessories to clothing. The company encourages customization so that the buyer can build
their own bike with personalized features and welcomes new riders to try out bikes to
increase interest.

Competitive Analysis

Harley- Davidson Inc faces competition from various automobile manufacturers. As a

premium brand its toughest competition is from other premium brands such as BMW, Ducati,
KTM and Triumph. H-D bikes are immensely popular in the U.S. but has so far failed to
capture a large market a globally. This mainly due to the expensive nature of the products. In
addition to the high price tag exporting costs also add to the international markets price.
Meanwhile European and Japanese brands are cost-effective. The willingness to embrace the
lifestyle of a Harley Owner (HOG) is not sustainable outside the U.S. at present. This could
change if more people purchased H-D products allowing for communities or charters to be set
up just like in the U.S.
While the differences in the various models are difficult to compare, the following is a
general comparison of the popular models of each brand.

Criteria

Harley-Davidson

BMW

Global reception

Very popular in the Very

Ducati
popular

in U.S is the top buyer

U.S. and emerging Europe

with

almost

9000

markets in Europe,

units sold in 2014

South America and

Asia-Pacific regions.
Notable Model

Switchback

R1200GS

Monster 1200 S

Price range

USD 17,000

USD 20,000

USD 15,000

Features

Smart

security Was the most popular Excellent

system, closed loop BMW model sold in combination

of
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exhaust
iconic

system, 2014.
Evolution

engine

proprietary

Utilizes

liquid

traction

control and brakes.

cooling system, has Electronic

fuel

an extremely stable injection system

suspension

and

flexible ergonomics
Mileage

:82

Mileage : 34 miles
per gallon

miles

per gallon
Customization

Multiple components Available in multiple Sport,

options

and

touring

accessories colours with option urban

available

in for accessories.

and

packages

available.

customization
gallery. Consultation
provided.
(Source : www.ducati.com, www.bmwmotocycles.com, Harley-davidson.com, 2015)

SWOT Analysis
Strengths

Weaknesses

1.Brand recognition

1. Less global outreach

Harley Davidson is a well known motorbike While popular in the U.S. Harley Davidson
brand that has served customers for over 100 bikes do not have a wide appeal worldwide.
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years.

The

promotional

strategies

and This is mainly due to the high price of the

branding has ensured that H-D is instantly bikes. Currently with only 3 manufacturing
recognized. The designs are iconic and are and assembly plants, it is difficult to fulfill
constantly ranked among the worlds most the global demand for a lower price.
valuable brands.
2. Loyal customers

2. Over concentration on domestic market.

While a large amount of their revenue does

H-D customers are as unique as their bikes. come from domestic sales there is a
Their ardent following has achieved a cult limitation in terms of growth as H-D bikes
status. More than two-thirds of the customers attract a specific customer base. While not as
are domestic (U.S.A) and have a strong sense wide as in the U.S. there is still an appeal for
of community among them.
3. Product and service portfolio
H-D products all have a signature style that is

H-D bike across the globe. These markets

have not been explored sufficiently.
3. High prices drive sales down

instantly recognizable. They design and While the bikes are unique and desirable the
manufacture heavy weight touring and expensive price tag definitely turns away
performance motorcycles and provides spare potential customer who would opt for less
parts and branded merchandise. H-D also expensive brands.
operates a financial services division to
provide financial assistance to customers who

4. Lawbreaker perception

would like to purchase a product and to aid The stereotypical biker image associated with
gangs and criminal entities put off some
motorcycle dealers.
4. HOG rallies

people. While H-D tries to clear the

perception, misinformation and social stigma

Regular gatherings of Harley Davidson around bikers may reduce the pull of the
Owners Group members to ride or attend products.
events build the sense of community and
declares their presence. These events could
be for pleasure or to raise awareness for a
cause.
5. Business Development program
H-D endorses inclusion of women-owned
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and minority-owned businesses in its supplier
list to promote diversification. They also
provide scholarships to executives seeking to
improve their business management skills
and expertise.
Opportunities

Threats

1. Global market expansion

1. Substitutes

H-D already has an emerging presence in Many of H-Ds competitors offer a wide
India and in Brazil. They are already leading range of motorcycles at a much lower prices.
the motorcycle market in the 800cc+ and the Triumph racing bikes, Polaris electronic
new lightweight street motorcycle is gaining bikes have recently peaked in popularity.
popularity among the younger customers Electronic bikes may not loo as unique as H(Team, 2014). With the growing popularity in D bikes do but they are lighter and greener
European markets, there is a n opportunity and appeal to the younger generations. While
increase sales if some marketing strategies unique in appearance, sound and experience,
are applied.
2. Expand target market
Even with an extensive outreach marketing
program to attract a wider audience for H-D

H-D could lose its foothold in the luxury

motorbike market to competitors offering
premium models for a lower price.
2. Cost of parts

products, the core customer base still remains Harley Davidson relies on mostly American
in the Men older than 35 years of age manufacturers for most of the raw materials
demographic. Appealing to younger riders and components necessary to build the bikes.
could potentially increase sales.
3. Low priced bikes

This is to comply with the Made in

America tagline the company endorses. The
drawback is that the components tend to be

With the popularity of the Street 750 model, expensive and maybe limited to one supplier
it is clear that there is a demand for lower which could potentially lead to delays in
priced H-D bike especially among young production.
adults. Manufacturing an entire line of
3. Aging target market
models will attract more of this demographic
to purchase bikes.

While H-D is striving to reach other

demographics outside the core customer base,
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it is clear that most of the customers still fall
under men older than 35. The average age of
the buyer is close to 50 and their need to but
new product is dwindling.

Part B

Q1- Innovation of relationship marketing practices

Relationship marketing (RM) is the process of identifying, developing, maintaining, and
terminating relational exchanges with the purpose of enhancing performance (Palmatier,
2008). Advances in communication and computing technologies has increased potential
growth of market share as access to foreign markets is possible. A well-developed
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relationship marketing and customer relationship management strategy would improve
customer loyalty which will lead to increase in sales and profit. The best way to connect
to customers through the internet is to present a informative and interactive website. This
will act as a conduit between the consumer and the management and the way the
information is presented is crucial so that the user can obtain information they need
hassle-free.
Harley-Davidson Inc (H-D) has been operating for over a century and has amassed a loyal
fan base over the years. The motorbikes are quite large and uniquely designed with a
distinguishable engine sound that act as an identifying factor. The website provides the
customers with useful and visual information such as the product lines, support services
and event information. The organisation understands their customers needs and ensures
that every demographic of their target market is supplied with the information they
require. While their core customer base may not be technologically inclined and most
often obtain their information from the dealers directly, the interactive website definitely
appeals more to a younger population.
Harley Davidsons brand identity is used to appeal to the customers. The content feature
slogans like The Street is where I live and Ride hard or stay home to promote product
lines immediately states the lifestyle embraced by a regular rider. The customer can
select from a wide range of bike models and customize features according to their
preference. These include the models Sportster, Dyna, V-Rod and Softail each of which
has its own sub category of bikes. The website features photographs of the said models so
that the customer is aware of how the product looks.

Selection of models (source: Harley-davidson.com, 2015)

Building Customer Relationships | TP030247

Each of the products have detailed specifications, photos and videos and a 360 degree
view of the bike with highlighted special features, customization options, payment
options and an option to locate the nearest dealer.

360 view gallery (source: Harley-davidson.com, 2015)

H-D1 Customization service provides the user with the capability to design their own
personalized bike. The website a comprehensive guide to customization that even a
novice can follow along with consultation services with expert if the customer requires it.
There is also an inspiration gallery so users could get ideas on what parts or accessories
would work for their bike. The result is that the customer can do all this in the comfort of
their own home and collect the finished bike at the nearest dealer.

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Customization aid (source: Harley-davidson.com, 2015)
Another feature of the website is the ability to compare different H-D models before
selecting the most suitable model.

Model comparison option (source: Harley-davidson.com, 2015)

If the wish of the customer is to visit a dealer directly, the website also provides
information and locations of the nearest dealers. Below are the three location at which HD products are available in Malaysia along with the map and directions.

Harley Davidson Dealers in Malaysia (source: Harley-davidson.com, 2015)

H-D products are branded as ultra-premium and thus are above average price. The company
aims to maintain a high quality in its products and utilizes the best components to do so,
driving the price up. However the strong customer base has ensured that the brand value
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retains the high position and the high price in turn adds to the ultra-premium feel to the
products. H-D understands that not everyone could afford a full payment and that the
customers would be limited when purchasing. Harley Davidson Financial services provides
loans and insurance to buyers along with instalment payment options.

Harley Davidson Financial Services (source: Harley-davidson.com, 2015)

Relationship marketing extends beyond customers. Dealers who deal with daily operations
are crucial to an organization such as this. Dealers are also given financial support from the
financial services division to aid with business. A bike designing challenge Custom Kings
was also opened for dealer to showcase their talent and passion for the motorcycle brand.

Q2- Mass marketing to one-to-one marketing

Being a century old organization H-D is a pioneer in employing marketing strategies to
attract their target market. This is mainly done by organizing events and rallies that bring
together like minded individuals. This community promotes the brand with every bike,
accessories and motor wear. Considering the loyal customer base it is clear that theyve had
success in their marketing.
While changing demographics, ageing of the core customer base and rising interest among
women and young adults, will affect the way marketing should be handled, H-D has always
been successful in retaining customers (Crowe, 2006). The customer-centric marketing tactics
has been centred on the customer lifetime value. This means ensuring the current customers
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always comeback for more. Adding accessories and motorcycle wear has opened other forms
of revenue for the organization.
The major shift from mass marketing to one-to-one marketing is customization and
personalization options made available to the customers. The Build your own feature lets
the user personalize the bike of their dreams and the necessary information about function
and performance along with a guide price is provided instantly. The price is broken down
into base price, factory installed option and dealer installed options.

Buid you own feature (source: Harley-davidson.com, 2015)

In an effort to appeal to the global audience H-D introduced a much cheaper model the
Street 750 to promote urban riding. The company introduced the new model at the 2014
India Bike Week and since has become quite popular in India. To encourage young adults
to try H-D products they organized an urban festival named Barcelona Harley Days which
included a skateboarding competition (Ar.harley-davidson.com, n.d.).
One of the most effective marketing strategies is the exclusive membership privileges
received for owning a H-D motorcycle. The Harley Owner Group is a group of passionate
riders who are permitted to conduct events and rallies under the H-D brand name. this is an
ideal area to show case new products. As this taking the promotion to the customers, it can
be considered as a grassroots marketing strategy and in the recent years these have been used
to promote personalized marketing campaigns. Bike enthusiasts can demo bike and get free
test rides to determine the right fit. The introduction of the low riding touring bikes for
shorter statured people was in response to customer feedback. To appeal to women,
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dealerships host Garage parties where bikes are available to test drive. Instructions on riding
and bike care are given.
H-Ds most recent marketing campaign Roll your own showcases unique Harley riders and
their unique vintage bikes driving in various conditions and performing stunts. While these
bikes might not be on sale, the purpose of the campaign is to break the stereotypical view of a
motorcycle rider and elevate it to a higher social standing by proclaiming that the rider
decides the way to ride (Kiser, 2015).
The H-D Visa Signature card is a rewards card that awards 3 points for every $1 spent. This
rewards the customer with occasional gifts and the annual fee is waived if the customer has a
good credit score. This will provide discounts on services and spare parts.

Q3- Customer Relationship Management recommendations

1. Expand marketing on target demographics and adding value
As explained in this report Harley-Davidson Inc is a well-established company with a loyal
following. However it is important to reach a wider audience to sustain the business in a
competitive world. This involves attracting younger adults and women. Owning a H-D bike
goes beyond a owning a transportation mode, it is a lifestyle and should be reflected in the
website. Additional information for female riders and young bike enthusiasts is
recommended.
Adding value to the current offering is quite a task the products are rated premium. However
with a high price tag the customers could be attracted with well-crafted offers, added rewards
for purchases made would increase customer satisfaction.
2. Social media management

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With the hope to encourage millennials to take up riding, one of the best ways to reach a
younger audience is through social media. This new potential market does not communicate
as the older customers did. Engaging potential customers on social media is a guaranteed way
of reaching out. Social CRM facilitates a collaborative social experience which can aid the
business design around customer needs (Heller Baird and Parasnis, 2011)
3. Develop an integrated mobile platform
Currently there is ride planner mobile application. Being a mobile customer, it would be
essential to have a mobile presence. With the need for younger people to become customers,
keeping up with the updates on rallies, ride tours and product launches will encourage
younger customers to participate. While the traditional method of Owners communities is to
meet up, a mobile platform allows user to be connected even when no events being held.
Enhancing the customer experience is definitely the way forward. Mobile applications
capabilities doesnt have to end with customers, the application could be used to connect with
dealers, vendors and suppliers as well.

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