Harley Davidson-Marketing Principles

HND

Marketing Principles

Table of Contents

Marketing elements

Introduction………………………………………………………………………………………………………………………………….4

Marketing environment………………………………………………………………………………………………………………..4

Microenvironment………………………………………………………………………………………………………………………..4

SWOT Analysis………………………………………………………………………………………………………………………………4

Porter's 5 Forces……………………………………………………………………………………………………………………………4

Macroenvironment……………………………………………………………………………………………………………………….5

PESTLE Analysis……………………………………………………………………………………………………………………………..5

HARLEY DAVIDSON

Introduction………………………………………………………………………………………………………………………………….6

SWOT Analysis………………………………………………………………………………………………………………………………6

Porter's 5 Forces……………………………………………………………………………………………………………………………7

PESTLE Analysis……………………………………………………………………………………………………………………………..8

Conclusions……………………………………………………………………………………………………………………………………9

Recommendations…………………………………………………………………………………………………………………………9

Marketing Process……………………………………………………………………………………………………………….………10

Marketing Mix…………………………………………………………………………………………………………………..……10-11

Marketing Orientation……………………….…………………………………………………………………………………..11-12

Market Segmentation…………………………………………………………………………………………………………….12-13

Targeting Strategy……………………………………………………………………………………………………………………….14

Buyer Behaviour………………………………………………………………………………………………………………………….14

Positioning………………………………………………………………………………………………………………………………….15

Development………………………………………………………………………………………………………………………………15

Distribution…………………………………………………………………………………………………………………………………15

Pricing Strategy…………………………………………………………………………………………………………………………..15

Promotional Activities………………………………………………………………………………………………………………..16

Extended Marketing Mix…………………………………………………………………………………………………………….16

Marketing Mix for 2 different segments……………………………………………………………………………………..17

Business to Business Marketing………………………………………………………………………………………………….17

International Marketing versus Domestic Marketing………………………………………………………………….18

References…….………………………………………………………………………………………………………………………19-21

Introduction

2.1 Dr Philip Kotler defines marketing as "the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It defines measures and quantifies the size of the identified market and the profit potential. It pinpoints which segments the company is capable of serving best and it designs and promotes the appropriate products and services."

"The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself."

(Peter F Drucker)

Marketing environment is formed by the actors and forces surrounding an organisation that impact on their ability to build and maintain successful relationships with consumers.

There are two key elements in the marketing environments which are the micro and macro environments.

Microenvironment is the accumulation of all elements in or immediately surrounding a business that can affect its performance including its internal environment, its suppliers, its marketing intermediaries, its customers, its competitors, and its community. (investorwords.com, 2013)

Tools like SWOT analysis or Porter's 5 forces analysis are often used to obtain information from any business's microenvironment.

SWOT analysis is a tool often used in order to take the information from an environmental analysis and separate it into internal (strengths and weaknesses) and external issues (opportunities and threats). (investopedia.com, 2013)

Porter's 5 forces identifies and analyses 5 competitive forces that shape every industry, and helps determine an industry's weaknesses and strengths. It can be used to search for attractiveness and profitability for any segment of a business. (investopedia.com, 2013)

Macroenvironment is formed from the external elements that exist outside of a company's control that can significantly impact its performance and ability to compete in its marketplace. Examples of macroenvironment elements are the economy, government policy-making, technology, social conditions, and nature. (investorwords.com, 2013)

Pestle analysis is a tool used to identify forces in the macroenvironment, which are affecting or are likely to affect a business. It implies the analysis of political, economic, social, technological, legal and environmental factors that are affecting or will affect the business. (Allen, M; Analysing the Organisational Environment)

The difference between microenvironment and macroenvironment is that microenvironment is controllable but macroenvironment is uncontrollable.

Harley Davidson

Introduction

The purpose of this report is to analyse Harley Davidson's market environment through various analysing tools in order to formulate a successful marketing strategy for the company.

SWOT Analysis

(callisto.ggsrv.com, 2013)

Porter's five Forces

(callisto.ggsrv.com, 2013)

PESTLE Analysis

(callisto.ggsrv.com, 2013)

Conclusions: -prices are high

-maintenance costs are high

-low market outside United States

-aging customer base

-high effect on the environment

Recommendations: -expand Asian and European market

-create similar products with smaller and less loud engines

-concentrate more on the younger market demands

-decrease the prices even with a small percentage

-create a sports motorcycle and try to introduce a model into MotoGP

1.1 Marketing process is the process of analysing market opportunities, selecting target markets, developing the market mix and managing the market effort. Target costumers stand at the center of marketing process.

Marketing Mix refers to the set of actions, or tactics, that a company uses to promote its brand or product in the market. The marketing mix is made up by the 4 Ps - Product, Price, Promotion and Place. However, nowadays, the marketing mix can include several other Ps like Physical Environment, People, and Process.

Product -top quality products

-classic and sporty style

-various colours

-very strong, well-known brand

-all products are in trend

-from work interest to long relaxing trips

-warranty is always available

-various types of design for all kind of tastes

Price- Harley Davidson is using a value over price strategy.

-skimming

-penetration by expanding the Harley Owners Group to Asian Market

-psychological

-value price is very low decreasing

-discounts available for the wholesales

Promotion-demands exceeds the production so no special are necessary

-advertising through TV, website, magazines, movies, parades, etc.

-endorsements

-user trials

-leaflet

-posters

Place-multi channel

-direct sale for motorcycles is done through dealerships exclusively.

-motorcycle wholesale is available for police departments and military institutions

-peer to peer

-internet sales for all products but motorcycles

1.2 Marketing orientation can be defined of as a coordinated marketing campaign between a company and its customers. Marketing orientation of a company is used to discover and meet the desires and needs of its customers through its product mix. (Investipedia.com, 2014)

Marketing orientation can be product oriented, sales oriented, market orientated, costumer orientated, operation or production orientated and non-commercial orientated.

Harley Davidson is a product orientated company but also a market orientated company. It's a product orientated company because they sell quality products and especially because Harley Davidson is a very strong and known brand. The customers are not buying just a motorcycle, they are buying the American Icon. To promote a market orientated strategy, Harley Davidson company developed a business culture that is describes as ''Harleyness''. The employees are encouraged by the company to use the same motorcycles as the customers. Executives attend Harley-Davidson rallies to stay in touch with Harley-Davidson customers and enthusiasts. A market orientated company puts the customers at the heart of the business. (cbsnews.com, 2014)

Benefits of Harley Davidson's marketing orientation

-being marketing orientated the company will more likely develop new products which will match the needs and wants of the customers

-being marketing orientated, customers will be more satisfied with the products which will lead to sale increasing and also to brand loyalty

-making your customers the top priority can be a huge advantage in the fight with the competition

-being product orientated, buyers will know exactly what they are buying thanks to previous products and brand which is most known.

Costs of Harley Davidson's marketing orientation

-being market orientated and with most of the customers being aged men, there is the possibility of losing younger customers which chose the competition due to the lack of the innovation of Harley Davidson.

-being product orientated and trying to improve the products, Harley Davidson is in danger of losing the old school bikers which love simple, loud, heavy and not sophisticated motorcycles

Harley Davidson sells products like motorcycles parts and accessories, clothing and riding gear, licensed products(t-shirts, jewellery, toys,), other services(motor rentals, business management training programs and customized dealer software packages) but the main product is by far the Harley David motorcycle. The following report has will be concentrating on Harley Davidson motorcycles only as product, other products being strong related to it.

2.2 Market segmentation is a tool used by marketers but doesn't guarantee the success in the marketing arena. Its purpose is to separate the characteristics that differentiate a certain group of consumers from the overall market.

Harley Davidson Market Segmentation

Geographic Segmentation

Harley Davidson motorcycles are sold all over the world but the majority are sold in USA followed by Europe, Japan, Canada, Australia and other.

(Harley Davidson sales report 2011)

. Harley-davidson.com

Demographic Segmentation

The traditional customer base is formed by Caucasian men aged 35-74with a medium income of about £50.000 per annum. Harley Davidson's goal is to sell a significant amount of products to other categories as young adults aged 18-34, women, African-american and Hispanics people. (Harley-davidson.com, 2014)

Psychographic Segmentation

Harley Davidson target market is formed by adventurous, novelty seekers, passionate people which love riding the most known motorcycle in the world and which have a young heart no matter what age they are.

Behavioural Segmentation

The target market is represented by social people, active, enthusiastic, confident, conceited, assertive and loyal to the brand people.

Harley Davidson uses an undifferentiated targeting strategy .The target market is formed by people of all ages, races, religion, etc. Everybody is a potential customer, from 18 year olds high school kids to 70 year olds people. This doesn't change the fact that Harley Davidson's main objective is to increase sales to young people aged 18to 34.

2.3 Targeting strategy

The selection of potential customers to whom a business wishes to sell products or services. The targeting strategy involves segmenting the market, choosing which segments of the market are appropriate, and determining the products that will be offered in each segment. A business offering multiple products can determine if the various segments should receive one generic product (such as in mass marketing), or if each segment should receive a customized product (multi-segment), based upon the market's diversity, maturity, the level of competition and the volume of sales expected, also called targeting. (businessdictionary.com, 2014)

Target strategies can be:-single segment (concentrated) strategy

-selective specialisation (differentiated) strategy

-product specialisation strategy

-market specialisation strategy

-full market coverage strategy (netmba.com, 2014)

Harley Davidson's target strategy is the full market coverage strategy as they try to serve the entire market with the same product using a mass market strategy in which a single undifferentiated marketing mix is offered to the entire market.

2.4 Harley Davidson motorcycle buyer behaviour

Buyer behaviour is influenced by various factors as:-social class

-culture and subculture

-product

-price

-promotion

-price

-situational influences

-psychological influences

It's actually easy for Harley's buyers to decide why they want to buy the product. The decision is influenced by the fact that the main competitors have no similar products; the brand is a very strong influence as Harley has an important name on heavyweight motorcycle market. Harley Owners Group (HOG) has a big impact on Harley's buyer behaviour giving to the new rider instant companionship for organised rides and rallies. The company even publishes its own magazine to keep in touch with Harley owners. All this in addition with the improvement of the engines and new fancy options like stereo systems builds up a lot of loyalty.

2.5 Harley Davidson positioning is strongly related to the product quality, price, reliability, brand, impact on the buyer, etc. Harley Davidson motorcycles are top quality classic products, pretty highly priced, very fast, very reliable and usually used for long relaxing trips, with a very strong and known brand. It is more than a motorcycle, it's an American symbol. Harley Davidson is a luxury product which will be purchased by almost any motorcycle fan which can afford it. Also Harley Davidson has a very good customer relationship, strong financial position and superior technology to their competitors.

3.1 Harley Davidson development in order to sustain competitive advantages

In order to sustain competitive advantages Harley Davidson came up with a number of new decisions meant to increase the number of the customers and take some of the competition customers:-From the end of 2009 until March 2013, Harley Davidson opened 99 new international dealerships in emerging markets such as India, Brazil and China.

-Today are more international dealers than U.S dealers

-International sales have grown from 30.2% of total worldwide sales in 2008 to 35.3% in 2012.

-Harley Davidson strategy is to focus on young adults, women, Hispanic, as well as their traditional customer base of Caucasian men aged 35+.

-New V-Rod motorcycle in order to attract new younger customers.

-market expansion

-product diversification (Harley-davidson.com, 2014)

3.2 Distribution

Harley-Davidson motorcycles are distributed exclusively through authorized dealerships. All other products can be purchased from any dealer, can be purchased online from www.harley-davidson.com/store/

3.3 Pricing Strategy

-Harley Davidson learned very early that they can't compete with the foreign competitors on price so they came up with a strategy of value over price.

-Japanese competitors use plastic while Harley Davidson uses steel, which can be rebuilt.

-Harley was very careful not to exceed the demand with the production of their motorcycles in order to keep the prices high.

-Because the demand was not meet, a must-have attitude had been developed.

-Currently, customers must wait 6-18 months for a new motorcycle.

-The price of a 1 year old motorcycle is 25-30% higher than the price of a new one due to waiting period. (Harley-davidson.com, 2014)

-Harley Davidson sells an experience and not a motorcycle

3.4 Promotional activities

Even if Harley Davidson needs no presentation like other very strong brands like Coca-Cola or McDonalds, it still spends around 15% of its marketing budget on traditional media promotion. (adage.com, 2014)

Other promotional activities include ''epic'' experiences like the big bikers party in Rome. One of the best promotional activities is done in fact by the customers. You will have no choice but to notice a Harley passing near you. Some other promotional activities include the selling of toys, clothes or different objects with the Harley inscription or symbol on it. Harley Davidson is also promoted through the appearance in well-known movies as Ghost Rider, Wild Hogs, Robocop 2, Rocky 3, The Expendables, etc. Promotion is also done through appearances to different auto-shows, magazines, stores and events held in heavy populated areas. (complex.com, 2013)

3.5 Extended Marketing Mix

The extended Marketing Mix is also called the 7Ps and in addition to the 4Ps it includes People, Process and Physical Environment.

People

People represent the business. Peoples are the ones who build, promote, sell and buy Harley Davidson products. The first human contact between the seller and the buyer is very important as well as the lasting image provided to the customer.

Process

The process involves a number of procedures and activities needed in order to acquire the product.

Physical Environment

Physical environment involves online experience, product packaging, staff contact, sales contact, etc.

4.1 Marketing Mix for 2 different segments

Geographic Demographic

4.2 Business to business marketing is defined as the sale of products or services conducted between 2 businesses.

Business to consumer marketing is defined as business or transactions conducted directly between a company and consumers who are the end-users of its products or services. Business to consumer as a business model differs significantly from the business to business model, which refers to commerce between two or more businesses.

Harley Davidson motorcycles and other products are sold to different military organisations but also to the U.S Police Department. Today, more than 3400 police departments ride Harley Davidson motorcycles in the U.S alone. The difference between B2B and B2C is that in the B2B case there are no emotional attachments. All decisions are made by focusing on the features of the product while in the B2C case emotional attachments play a very important role. Also in the B2B a lot of decisions are to be made, most of the times negotiations take place making the whole process slower and more time consuming while in B2C everything is straight forward. (about.com, 2014)

4.3 International marketing versus Domestic marketing

International marketing is the process of conceptualizing and then conveying a final product or service worldwide with the hopes of reaching the international marketing community. Based on the regions where the company is marketing to, different strategies and actions are implemented. (businessdictionarry.com, 2014)

Domestic marketing is the supply and demand for a good, service, or security in a particular country. The advantage of domestic marketing is that the regulations and laws are well known by both parties while in international marketing at least one of the parties will need to do further researches in laws and regulations.

(thefreedictionary.com, 2014)

There are a number of similitudes and differences between domestic marketing and international marketing:-both in domestic marketing and international marketing, the success depends on satisfying consumer needs and wants.

-it is imperative to build goodwill both in domestic marketing and international marketing. The tasks will be easier to complete in a firm which is able to build goodwill of customers than in a firm which is not able of doing that.

- Domestic market could be limited in using of technology where international market allows use of latest technologies.

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