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  • Published on: 14th September 2019
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1. Core Problem and Current State Analysis: At a very high level, Harley Davidson's main problem is a struggle to successfully grow its market to include more loyal consumers within Young Adult segment (Roese and Kompella, 2013, p. 5). More specifically, the new CMO, Mark-Hands Richer, seeks to successfully adapting the company, its branding, its marketing and its products to best fit younger customers' current tastes and preferences without compromising the retention of its existing Core Customer segment (Roese and Kompella, 2013, p. 5) in the wake of declining revenues following economic troubles in 2007 and 2008 (Roese and Kompella, 2013, Exhibit 5) and an aging Core Customer population (Roese and Kompella, 2013, p. 7). In doing so, he faces the challenge of leveraging the company's subsidiary motorcycle brand Buell as well as the firm's primary brand of Harley Davidson in the most strategic manner in order to best appeal to the Young Adult segment as well as the Core Customer segment (Roese and Kompella, 2013, p. 7).

Gap Analysis: While the iconic motorcycle company has been able to do well historically up through 2006 (Roese and Kompella, 2013, p. 3), there was a widely held belief by Mark-Hans Richer (CMO of Harley Davidson) as well as others, including experts from reputed financial institutions such as Piper Jaffray, that there were issues in store for the company (Roese and Kompella, 2013, p. 5). This sentiment is reflected by statements from analysts such as Anthony Gikas, who stated that “'the outfit has done little to shake its image with twentysomethings as Granddad's bike. ‘They haven't kept up with the younger riders.'” (Roese and Kompella, 2013, p. 5) and that “riders in their 20s, he adds, crave fast sport bikes—Ducatis and Kawasakis—and disdain the Harley brand.”' (Roese and Kompella, 2013, p. 5).  As shown by additional information from the case, “in 1987, the median age of a Harley-Davidson customer had been 35; by 2007, it was 47” (Roese and Kompella, 2013, p. 2),  and when Richer began in his role, “The company's Core segment was Caucasian Men (35+), which drew mainly from the Baby Boomer generation (who in 2007 were between the ages of 43 and 61)” (Roese and Kompella, 2013, p. 4).

Young Adult Segment Analysis: When diving deeper into the Young Adult segment that Harley Davidson explored through Outreach Groups in 2007, the company's overarching goal was gaining greater access to this segment, as it was “the major focus of Harley-Davidson's outreach efforts and the biggest question hanging over the brand” (Roese and Kompella, 2013, p. 5) “with the balance aimed at holding on to the Core customer base” (Roese and Kompella, 2013, p. 5).  

• Young Adult Perceptions:  According to the case, this segment (of which Harley Davidson comprised 22% from 2007 data) identified various reasons that they were not attracted to purchasing the firm's products, the most prominent being negative preconceptions associated with visiting a Harley Davidson dealership (Roese and Kompella, 2013, p. 5). As mentioned, they viewed this as “intimidating” or “daunting” (Roese and Kompella, 2013, p.5), also citing various other reasons for not buying such as misconceptions of the price being almost triple what it actually was, a lack of fit with the company's products, and not finding “the right bike” with the company (Roese and Kompella, 2013, p. 5).

Executive Reaction-CMO: It is evident that the CMO, Mark-Hans Richer will need to develop a branding and product development strategy for Harley Davidson and Bruell that will allow him to leverage greater access to the Young Adult Market without sacrificing his core consumer base by adapting the company to the tastes and preferences of each segment, as outlined in the previous paragraph. (Roese and Kompella, 2013, p. 5).  The preferences for the firm's Young Adult segment as well as differences between the Young Adult and Core Segment are outlined below:

Look of Bike : As mentioned, the Young Adult segment “much preferred stripped down, elemental, dark bikes over the chrome cruisers sold to Core customers” (Roese and Kompella, 2013, p. 5).

Desired Experience for Young Adults:

Intangible: A study that was conducted on the young adult segment demonstrated that “1) a transformational journey, in which riders become who they truly want to be; (Roese and Kompella, 2013, p. 2) a means of escape from a monotonous, constraining life; and (Roese and Kompella, 2013, p. 3) a way to connect to other like- minded souls” (Roese and Kompella, 2013, p. 5).

Tangible: It was further discovered that the Young Adult Segment did not find sport bikes to be pleasant in terms of being “constricting and physically uncomfortable, mass produced and lacking in durability, and having an unappealing sound (“like sewing machines”).” (Roese and Kompella, 2013, p. 5).

Brand Alignment: When examining how Core Customers and the Young Adult segment felt about Harley Davidson, it was evident that the brand was much more relatable to Core Customers, as in a survey conducted by the firm, half as many respondents under 35 felt that they could relate to the company in comparison to those over this age (Roese and Kompella, 2013, p. 5).

Based on this analysis, it is evident that there are differences between what the Core Customers and the Young Adult segments desire, specifically in terms of what the brand means to them and the type of bike they prefer (Roese and Kompella, 2013, p. 5). Therefore, it will be up to Richer to determine how to leverage Bruell, “a separate brand manufactured by Harley-Davidson and sold through its dealer network” (Roese and Kompella, 2013, p. 6), as a means to maximize access to both segments. As mentioned, Bruell's motorcycles “were lighter, faster, sportier, and cheaper”, and thus, were viewed as a way to garner more business from the Young Adult segment, who then may “trade up to Harley-Davidson heavyweight bikes as they grew older” (Roese and Kompella, 2013, p. 6), generating greater dollar amount over the lifetime of each customers. Thus, Richer would have to, in a very succinct manner, “come up with a plan to attract them and create loyalty while preserving the loyalty of the Core Customers” (Roese and Kompella, 2013, p. 7) in his role as the company.

2. In examining this case, there are evident market indicators with regards to the way in which Harley Davidson's two main consumer segments, Young Adults (Roese and Kompella, 2013, p. 5) and 35+ white males (Roese and Kompella, 2013, p. 4) perceive motorcycles in terms of experiential value and social value (Gupta, 2014) as well as their underlying motivations (Angell, 2018) toward the company.

• Experiential Value Motivation

It is evident that experiential value (Gupta, 2014) is very important in terms of how both the Young Adult segment as well as the Core Customer segment perceives Harley Davidson. As mentioned by the case, from a purely experiential perspective,

“Membership was a “sanctuary in which to experience temporary self-transformation,” and riding itself became a spiritual experience that involved “the increased closeness to nature, the heightened sensory awareness, the mantric throbbing of the engine, the constant awareness of risk and the concomitant mental focus and, in group riding, the consciousness of oneself as an integral part of a larger group or purpose” (Roese and Kompella, 2013, p. 4).

Furthermore, when honing down to the Young Adult consumer segment more specifically, this segment, as mentioned previously, prided the idea that Harley Davidson as “(1) a transformational journey, in which riders become who they truly want to be; (2) a means of escape from a monotonous, constraining life” (Roese and Kompella, 2013, p. 6).

However, while these two segments have relatively similar ideas regarding what it might feel like mentally when riding a Harley Davidson bike, they desire different things regarding what the bike actually feels and looks like. As mentioned by the case, while Core Customers favored chrome bikes, the Young Adult segment “preferred stripped down, elemental, dark bikes” (Roese and Kompella, 2013, p. 5).

Lastly, it is also evident that the Young Adult segment places a great deal of emphasis on the experiential value (Gupta, 2014) that they derive from the act of physically going to a dealership and purchasing the bike. As mentioned, based on a study conducted of the Young Adult segment, the biggest reason that this segment was hesitant to purchase one of the bikes was due to the fact that going to a dealership appeared to be “daunting and intimidating” (Roese and Kompella, 2013, p. 5). This demonstrates how apart from developing a product that aligns with the needs of both consumer segments, the process of buying this product is extremely important as well.

Thus, it is evident that the look of the bike, the way in which the bike makes the consumer feel, and the experience associated with buying the bike (Koese and Kompella, 2013, p. 5-7) all act as external influences and internal influences with regards to how consumers perceive the value of Harley Davidson. (Angell, 2018) and help them to derive utilitarian and hedonic value from the company (Angell, 2018)

• Social Value Motivation:

It is clear that both the Core Customer segment as well as the Young Adult segments put emphasis on social value (Gupta, 2014) when making the purchase of a motorcycle, specifically for the Harley Davidson brand. As explained by the case, historically speaking, Harley Davidson represented a very distinct brand where the “customer not only bought the branded product but also lived a branded lifestyle embedded within a unique subculture” (Roese and Kompella, 2013, p. 4). Within this customer base, a study states that this brand loyalty is shown with “'visible indicators of commitment;” such as “'tattoos, motorcycle customization, club-specific clothing, and sew-on patches and pins proclaiming various honors, accomplishments, and participation in rallies and other rider events'” (Roese and Kompella, 2013, p. 4).  Furthermore, it was very common for owners to join motorcycle clubs and gangs, some of which were considered highly elite, with Harley Davidson's own “Harley Owners Group” having over 600,000 people in 2007 (Roese and Kompella, 2013, p. 4), thus representing the high emphasis on social value (Gupta, 2014) with the brand.

When examining the Young Adult segment with regards to how they perceived the Harley Davidson brand, these buyers seem to echo this same desire for social value (Gupta, 2014) in stating how the company gave them “a way to connect to other like- minded souls” (Roese and Kompella, 2013, p. 6).

Once again, it is evident hear how the social aspects derived from buying a Harley Davidson act as influences on how consumers perceive the company, perhaps playing into customers' hedonic value (Angell, 2018).

3. Based on my analysis of the case, I recommend that the CMO utilize a branded house strategy with Harley Davidson in order to successfully capture a maximum portion of the Young Adult market and Core Customer base (Roese and Kompella, 2013, p. 4) while still taking into the fact that “every passing year not only brought Baby Boomers closer to the time when riding their Harleys would no longer be physically enjoyable” (Roese and Kompella, 2013, p.7).  By utilizing a house of brands strategy like Proctor and Gamble, Richer may be able to leverage each brand to target customers more specifically, however as Baby Boomers age, Harley Davidson's core brand may suffer in the long-term (Roese and Kompella, 2013, p. 7).  

Thus, I propose that the firm launch an ad campaign called “Lifestyle” that centers around the experiential components associated with purchasing a bike from both Bruell and Harley Davidson, as it is evident that experiential value (Gupta, 2014) is a large component of the Young Adult and core customers' allure to buy from the firm (Roese and Kompella, 2013, p. 4-7). The first set of ads, “Bruell by Harley”, will showcase a unique riding experience for the Young Adult segment that is centered around a dreamlike, euphoric experience (riding in a beautiful scenic valley), camaraderie (riding in a group of many friends), and dark, “elemental” colors shown on the actual bikes in the ad (Roese and Kompella, 2013, p. 4). The tagline will be “Experience Life, together. Bruell by Harley” and the riders of the bike will all appear below the age of 30. This aligns with the problems faced by Richer as well as Young Adult buying motivations (Angell, 2018) across multiple levels. First, by including the experiential and camaraderie components, Richer would be able to tap into Young Adult motivations (Angell, 2018)  for buying through Harley, which encompass “(1) a transformational journey, in which riders become who they truly want to be; (2) a means of escape from a monotonous, constraining life; and (3) a way to connect to other like- minded souls” (Roese and Kompella, 2013, p. 4). Secondarily, by including dark colors on the bike, Richer would appeal to experiential value components of Young Adults, who likened to “stripped down, elemental, dark bikes” (Roese and Kompella, 2013, p. 4). Lastly, having the tagline incorporate the name Harley Davidson connects Bruell's product with the company more closely and aids with “the Harley-Davidson dealer universe via Buell” where Buell customers “then later trade up to Harley-Davidson heavyweight bikes as they grew older” (Roese and Kompella, 2013, p. 7). Thus, this add while drive experiential value and social value (Gupta, 2014) by appealing to customer motivation and emotion (Angell, 2018).

However, this ad must also be sure to eradicate preconceived notions that the Young Adult segment has against sports bikes, including that “sport bikes as constricting and physically uncomfortable, mass produced and lacking in durability, and having an unappealing sound (“like sewing machines”).” (Roese and Kompella, 2013, p. 6), thus detracting from the components that this segment values in terms of the experiential value (Gupta, 2014) of a motorcycle (Roese and Kompella, 2013, p. 5). However, by using the Bruell 2010 Buell Lightning XB12Ss as the face of its campaign, Richer could remove some of these conceptions given that it represents the aforementioned preferences of Young Adults with a sleek, very stripped down all black frame (Cycle World). By further making sure to outline the comfortability, smoothness, and experience associated with the bike, Richer really stands to appeal to this segment and differentiate against European and Japanese competition (Roese and Kompella, 2013, p. 5-7) by appealing to both utilitarian and hedonic value (Angell, 2018).

Secondarily, I believe that the company should release a Harley Davidson targeted “Lifestyle” campaign that eradicates negative preconceived notions that the Young Adult segment has with buying a Harley Davidson bike without compromising the existing Core Customer segment (Roese and Kompella, 2013, p. 7). These include things such as their intimidation of dealerships and the overestimation price of the bike by more than $10,000 (Roese and Kompella, 2013, p. 7). I would frame this advertisement buy first showing a younger individual going to a Harley Davidson dealership and being treated with respect and kindness. He purchases a bike and rides away into the distance where he is joined by many individuals riding similar bikes. At the end of the ad, the price will flash on the screen, with a tagline saying “You don't have to be rich to experience life or family. Join us. Harley Davidson.” This advertisement has the ability to appeal to the Core Customer segment due to its reinforcement of a motorcycle “club” type of environment which many Core Customers are in (Roese and Kompella, 2013, p. 4), while promoting the lower cost models and pleasant dealership experience that Harley Davidson's core brand offers. By keeping the bike a darker color, but true to the Harvey Davidson look, similar to that in Exhibit 3 (Roese and Kompella, 2013, Exhibit 3), the ad would further appeal to both Young Adults' preferences (Roese and Kompella, 2013, p.5) without compromising the classic Harley Davidson look in order to appeal the Core Customer segment (Roese and Kompella, 2013, p. 4). Thus, this ad will appeal highly to the experiential and economic value (Gupta, 2014) of the Young Adult segment.

Together, these advertisements will have the ability to entice customers to purchase from Bruell due to their focus on bikes more suited to the needs of younger customers (Roese and Kompella, 2013, p. 7) while showing this segment how Harley Davidson as a company aligns with their motivations and preferences in motorcycle. By ensuring that these advertisements do not polarize against the Core Customer segment either, the company can ensure that they achieve the goal of growing their younger segment without compromising current customers (Roese and Kompella, 2013, p. 7).

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