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Harley-Davidson

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This is getting a chuckle around the A&R office this morning. It looks like some Buell owners are finding some extra time on their hands now that the American street bike company is out of business. That’s ok by us, because these boys have a good sense of humor, and some balls to grab some footage from a Harley-Davidson dealer.

Taking a couple good shots at Harley-Davidson, we’re left only with the question as to whether the Extra Soft Tail Deluxe Hyperglide American Bald Eagle Historical Limited VXFR1200 Patriot Skull Edition comes in Nightster Black.

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For twelve years in a row, Arai Helmets has topped J.D. Power & Associates motorcycle helmet rankings for customer satisfaction. This is important because J.D. Power also found that highly satisfied owners are more likely to buy their brand of helmet again (that’s a no brainer, right?). The kicker though is that the likelihood of a repeat customer is nearly 10x more likely when they are highly satisfied with their helmet. In a world where it’s cheaper to keep an existing customer than to find a new one, a 10x multiple is a staggering figure on how product quality plays into a company’s sales and growth strategy.

Italian newspaper Il Sol 24 Ore is reporting more rumors about MV Agusta divesture and the company’s possible suitors. As we’ve reported already, there’s been some speculation that Paolo Berlusconi might be interested in the Italian brand, but he’s also been linked to another Italian company looking for a home. Now coming out of the woodwork are some new names, with links to Ducati & MV Agusta.

Harley-Davidson is looking to slash costs wherever they may be, and that includes its assembly/manufacturing line labor costs. HD and Milwaukee go together like peas and carrots, but Harley-Davidson has warned that if it doesn’t see lowering labor costs, it could walk away from Wisconsin all-together. At issue is nearlt $54 million in what Harley calls “costs gaps”, which the company attributes to the high cost of manufacturing at its Menomonee Falls and Tomahawk facilities.

Harley-Davidson has announced its Q1 quarterly earnings today, and the Milwaukee-based company posted a $68.7 million profit. This news comes after Harley-Davidson posted a $218 million loss last quarter, and finished in the hole over $55 million for the 2009 year. Harley’s return to profitability is partially due to the company’s restructuring of its financial services, which are once again generating money for the iconic American brand. Harley-Davidson Financial Services posted a profit of $26.7 million this past quarter, almost a third of HD’s net income in Q1.

There is no doubt at this point that Harley-Davidson needs to engage new markets and customers in order for the company to continue to succeed. Along this vein, the Milwaukee brand recently retained the services of Sassenbach Advertising to help push the biker message out onto the internet. With virtually no budget, a computer, and a webcam, the German ad agency engaged over 170,000 people per week with the Harley-Davidson brand message “Sorry I’m on the Road” on Chatroulette, the latest internet craze.

35 motorcycles, 7 model lines, 4 chassis, 3 motor families, & 1 market segment, that’s Harley-Davidson’s product line by the numbers. Where many large production motorcycle companies might have 30 or so motorcycles that span the entire gamut of motorcycling’s different sub-markets, Harley-Davidson has put all of its eggs in the heavy cruiser market. This singular pursuit of one market segment has not only been the cause for Harley’s success, but also a significant contributing factor to the company’s recent downfall, which has led to a recently rumored leveraged buyout.

As the old idiom goes, one should not put all their eggs in one basket, which is exactly the faux pas being committed here by Harley-Davidson in its product offering. Businesses, especially public ones, should always have an eye on sustained long-term growth, and a key element to that goal is a well-diversified position in their appropriate industry. Taking this lens and applying it to Harley-Davidson, one can immediately see a portfolio that has been extensively mismanaged by focusing on only one segment of the total motorcycle industry: the heavy cruiser market.

What this has effectively created is a motorcycle company that looks like Alfred Hitchcock’s take on Baskin Robins: 31 flavors, but they’re all Rocky Road.

Australian Harley-Davidson dealer, Rocky Harley-Davidson, recently released some new videos on the internet to help promote their bar & shield apparel. After all, one can’t merely ride a Harley-Davidson motorcycle, you have to have the appropriate clothing to fit your motorcycle lifestyle. The following is a loose interpretation of what the script looked like for one of those videos.

In our first scene, we see the protagonist dismount his thundering stead, with his Harley-Davidson shirt blazing like a forest fire. Confidently he walks by a bevy of women. Blonde, brunette, red head, it doesn’t matter…they are all powerless to resist the swagger and sex appeal that oozes from his cotton threads. These women are like deer in the headlights, waiting to be hit by his freight train of masculinity. This man, nay…God..walks down the street with his sunglasses firmly on at all times, keeping his gaze under control lest he fire laser from them at his next female victim, just like Cyclops from X-Men. Why? Because he’s seriously dangerous. Check the real thing after the jump, and yes…even a bonus video for the ladies.

Paolo Berlusconi, brother to Italian Prime Minister Silvio Berlusconi, is rumored to be making a play for MV Agusta as Harley-Davidson continues to look for a purchases of the iconic Italian brand. According to Motociclismo, Berlusconi’s name continues to be mentioned in the same sentence as the Italian company, as the purchase would play well into Belusconi’s holdings in scooter manufacturer Garelli.

Blasphemy, heresy, stupidity, sacrilege, un-American, and downright irreverence. Go ahead, get all those words out of your system. I’ll wait.

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.

You may remember that six month’s ago we published a rumor that AMA Pro Racing was considering the idea of adding a Harley-Davidson XR1200 spec racing class. Today, that rumor became reality as AMA Pro Racing announced at the Daytona Bike Week that it would be adding the AMA Pro Vance & Hines XR1200 Series to its calendar. The painful press release and our colorful commentary after the jump.