The default opinion of marketers, analysts, and the general population is that Harley-Davidson has one of the strongest brands in the United States, this being confirmed by the fact that every business student in America has studied Harley’s marketing efforts if they’ve ever taken a brand management course. So why would I start a three-part series on how to fix Harley-Davidson by arguing to change one of the most revered marketing houses in the motorcycle industry?
Giving credit where credit is due, Harley-Davidson, or I should say its admirers in business school academia, wrote the book on demand generation marketing geared towards the baby-boomer generation. However, in defending this market position, Harley-Davidson has painted itself into a corner by only engaging a very small segment of the population with its product. Unless they redefine and reposition their company image and who it resonates with, Harley-Davidson is going to watch the continued erosion of its footing in the motorcycle industry, and also the continued deterioration of its only industry leading quality: its brand.
This concept of redefining and repositioning the Harley-Davidson brand is a smaller, but parallel process central to the ethos of what needs to happen on a larger scale at Harley-Davidson. No other company logo has been tattooed on more body parts than Harley’s Bar and Shield; this emblem in itself is a billion dollar industry worldwide when you consider all the merchandise and licensing agreements sold. With such a lucrative market position resting at its feet, it’s incredibly difficult for a company like Harley-Davidson to consider tampering with such a large revenue stream. However this is exactly what the company must do in order to survive the coming years.
What was once an Amazonian-sized river of dollars flowing into Harley-Davidson, has diminished greatly in this past year and a half to resemble more of a babbling brook. For those who aren’t that familiar with brand equity analysis, a brand’s total value can be derived by adding up the combination of brand related sales (merchandise & licensing), and adding in the difference between the company’s balance sheet derived stock price, and actual trading price on the stock market. This disparity is often called “goodwill” by investors, and is attributed to consumer-added value of a company’s brand. Before the economic crisis, Harley-Davidson’s perceived brand value extended beyond the revenues it tangibly created with its Harley-Davidson t-shirts, jackets, etc, and was conservatively estimated at nearing $8 billion worldwide. Recently however this value has dropped considerably, and current estimates place it closer to $4 billion today.
As the economy rebounds it is unclear how much of this lost value Harley-Davidson will reclaim; but one thing that is for certain is the fact that as Harley-Davidson’s median customer age increases, the ability for the company to maintain its brand value will continue to wane. The only way to ensure constant brand integrity is for the company to engage riders outside of its core demographic, and engage them in a new way. In order for Harley-Davidson to achieve this, I propose that it must do the following:
Fire 75% of Its Marketing Staff
That statement is purposefully made to be inflammatory, but I want to make a very strong point here. Everything that I’m saying in this article has been argued before. It is not groundbreaking. It is not new, and these points have already been raised by executives at Harley-Davidson. As recently as three weeks ago, the company released the following statement to its investors via its 10-K filing to the SEC:
“To sustain long-term growth, the Company must continue to be successful in promoting motorcycling to customers new to the sport of motorcycling including women, younger riders and more ethnically diverse riders.”
The point and purpose of this article has already been made in a Harley-Davidson conference room, and regurgitated to the investors of the Milwaukee-based company. However what we’ve seen from Harley in its marketing communications lately is the same song and dance. There is a complete divergence in what is being preached for a company roadmap, and what is happening in actuality. The glib response would be that someone didn’t get the memo, but there’s a larger problem at play here instead. This marketing schizophrenia should not be a surprise to anyone who understands that companies have cultures. For the past two decades Harley-Davidson has put together one of the best marketing teams in communicating meaningful interactions with the baby boomer generation. It is in this company’s culture to think and market they way they do, and that is something that cannot be undone overnight.
Consider these marketers as specialists in their field. While Harley-Davidson is very good at marketing to men in their late 40’s (median customer age for HD riders in 2008 was 48.0 years of age, 89% of which were men), their specialized team of marketers is toothless to engage younger riders. Consider the baseball analogy where Harley-Davidson is faced with sending in a shortstop to do the work of a pitcher. The basic skills and mechanics for each player is the same, but only a truly specialized individual does either of these jobs well, and at the caliber necessary for a true professional.
In essence, Harley-Davidson needs marketers that don’t think like its current marketing group. It needs marketers who aren’t specialists for the over 40 crowd. Instead Harley-Davidson needs to find talent from companies like Red Bull, Apple, and dare I say Ferrari. The proof of this is the marketing materials we have today. Harley-Davidson is an advertiser on Asphalt & Rubber (through Google Adsense, not directly); you may have noticed their ads recently. Their message revolves around the pitch: “Maybe you didn’t feel any stimulation from the $800 billion the government pumped into this busted-down economy.” I received this same ad in my mailbox a couple days ago coupled with an added incentive of financing a VRSC V-rod.
The problem I have with this communication isn’t the fact that I’m not interested in the VRSC, but is instead nestled with the reality that this ad potentially alienates over 60% of the country’s liberal leaning citizens. Rest assured, there are politics in motorcycling, and Harley-Davidson is making a direct reference to a hot-button political issue to regarding our economy in order to gain support for its marketing program. While this ad resonates with the conservative-devout, it does so at peril. In advertising you can draw advertisements along the lines of those that either reinforce a brand’s core demographic, or those that look to extend a brand into new demographics. Harley currently does the prior, while as we’ve seen earlier, Harley has stated that their goal is to do the latter. The appropriate internet meme for this would be “epic fail”.
Focus on Lifestyle Branding, Avoid Pigeonhole Brand Identities
The next logical step in this thought-process is the need for Harley-Davidson to move away from the pigeonholed motorcycling identities that have become the definition of what being a “biker” entails. For the past year we’ve seen the “Screw it. Let’s ride.” campaign carry on, which has Harley-Davidson continuing to play into the same demographic stereotypes that we saw the Republican Party unsuccessfully leverage in a bid for Congressional control during the Bush (Jr.) administration.
There’s a not-so-subtle point I’m trying to make here, but the big take-home message is that the politics of motorcycling are disparate force that reinforces one group, while alienating another. A strong lifestyle brand should appeal to all audiences, and as such Harley-Davidson should focus its brand messaging on things that all motorcyclists (and non-motorcyclists) identify with, for example: freedom, individuality, exploration, community, etc. Exchanging these messages for ones currently being used will allow the Harley-Davidson brand to carryover into new rider segments much more easily and with less backlash.
Focus Brand Elements on Experiences and Emotions, and Not on Mechanics
Building on the concept that branding should be lifestyle-agnostic, comes the notion that the brand elements themselves should be able to transcend all communications, and all possible company roadmaps for the future. An integral component of the Harley-Davidson brand is the v-twin cylinder configuration, and the “Harley-Davidson sound” it makes.
I’m a die-hard v-twin rider. I get the association riders have with this motor design; however to incorporate it into the company’s brand elements means you’ve locked-in your brand to be associated with this motor…forever.
There’s nothing wrong with making v-twin motorcycles, but an issue I’ll address in the next installment of this series is the need for Harley-Davidson, Inc. to move into motorcycle segments that are outside of the cruiser arena (Harley-Davidson claims a section of the touring segment, but I’ll go into why I believe that’s a false statement in the next article).
In order to expand its product offering from a niche market into other lucrative markets, Harley-Davidson will have to consider engine configurations outside of the v-twin configuration. Before anyone starts bringing up examples of Ducati, and its v-twin powered line-up I’ll divert your attention to MotoGP and the company’s V4 motor, and ask you again where that company is headed with its designs in the next five years. Despite this, Ducati is a good example of the proper balancing of mechanical and emotional brand elements.
The Italian company is of course famous for its “L” configured v-twin motors, trellis frames, and desmodromic valves, but you’ll notice rarely in its marketing campaigns does it touch on these elements by name. Instead, Ducati focuses on its racing pedigree and exotic nature. These are elements that translate well, and when it became time for Ducati to adopt a V4 MotoGP configuration and carbon monocoque frame, the company did so with relative ease because the mechanical elements were not core to the Ducati brand. Further examples can be found in Ducati’s product line expansion over the past few years, which include the successful introduction of a sport-tourer. Contrast this with the possibility of Harley-Davidson being able to achieve the same feat with its current culture and design thought process.
I still remember when the VRSC debuted with its Porsche designed motor. The HD loyal had more than a few comments about whether the bike “sounded like a Harley”, imagine the dialogue that would have occurred if the motorcycle had strayed even farther from the Harley-Davidson norm.
Without redefining and repositioning the overall Harley-Davidson brand and its underlying components, Harley-Davidson is doomed to continue being stuck in its same rutted-path, regardless of its desire to move along a different course. The way the Harley-Davidson brand is built right now lends itself to being highly skilled at achieving one singular message, but that message is unable to transcend and resonate with motorcyclists outside of its core group of followers, and more importantly it fails to resonate with consumers who are this brand’s future. If this company truly wants to change, and engage new and current riders into the Harley-Davidson family, as it has so stated its desire to do so, the brand itself must change first and lead the way for the rest of the company and its culture.
This change must come from a decisive shift in the way the Harley’s marketing department thinks, and the way its advertising arms manage their creative engagement with motorcyclists and the public at large. This means foundational changes to what elements comprise the Harley-Davidson brand, and how the company uses those elements to engage its audience.