One thing I respect more than a company that can nearly go
bankrupt twice, yet continue to survive for over 112 years, produce revenue of
$5.5 billion dollars in 2014 and have an estimated market share of 36% in 2013,
are the customers that ride and buy their products. I am talking about American Icon Harley
Davidson (H-D). This is a company that successfully
captured what I would consider to be the most loyal customers in the
World. The distinguishable sound and
rumble of a Harley Davidson and the quality, time, and detail put into their
motorcycles is untouchable by competitors.
Although extremely successful, even the best companies venture off their
proven strategic path and find themselves in unfamiliar and, due to other large
experienced players, unprofitable territory.
Harley Davidson’s customers not only love to ride their bikes,
but love to wear the H-D logo and brand merchandise accounted for $300 million
dollars in 2014 sales. Today this ranges
anywhere from t-shirts, riding jackets, and lighters, but in the 1990’s
aftershave, perfume, infant clothing, ornaments and wine coolers were a few untraditional
brand items offered on their shelves.
Matt Haig said it best in his book Brand
Failures “Harley Davidson owners aren’t just loyal. They love the brand.” The company recognized this brand loyalty in
the 90’s and began producing untraditional merchandise in addition to
traditional merchandise in hopes of increasing revenue and finding profit in
different markets.
While reading The
Coherence Premium this week, I started to research companies that had major
brand failures. After reading about
Harley Davidson’s product line push in the 90’s, I quickly saw that they lost
focus on what they do best. Build strong American motorcycles. Customers were happy to purchase a nice
leather jacket to wear while riding, but the responsive to the release of Harley’s
new untraditional product lineup was not positive.
Conducting an internal organizational analysis and determining
which new markets H-D may have an opportunity to enter into would have been beneficial. Entering into an oversaturated market, with
little or no experience, resulted in failure.
Anheuser-Busch made the same mistake when they launched Eagle Snacks. While
their reasoning of “beer and salty snacks go together” was true, they did not
fully analyze the snack market and were quickly overpowered by Frito-Lay. Harley Davidson thought that, for example, offering
an entire line of kids wear would be appropriate because mom and dad wore the
clothing while riding. They created little value in the market space and it
resulted in removal of many merchandise products.
After reviewing Harley Davidson’s website and merchandise
page, in general they are only selling traditional brand items. Understanding that some of their products
were producing a negative impact on loyal customers and removing those products
was a great move. If they did not remove
these products they would have hurt the brands reputation and the result would
have been a loss of loyal customer’s.
Sources:
Market share of major motorcycle
manufacturers in the U.S. in 2013. http://www.statista.com/statistics/252210/market-share-of-major-motorcycle-manufacturers-in-the-us
Harley
Davidson 2014 Annual Report. file:///C:/Users/Adiemus/Downloads/2014%2010-K%20as%20filed.pdf
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