How to Save Harley-Davidson – Step 1: Redefine and Reposition The Way You Market Your Brand
Blasphemy, heresy, stupidity, sacrilige, un-American, and down right 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, and I can assure you that every business student in America has studied Harley’s marketing efforts if they’ve 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 it’s admirers in business school academia, wrote the book on demand generation marketing to the baby-boomer generation. However in defending this market position, Harley-Davidson has painted itself into a corner with the customers it is currently engaging with its brand, and unless they redefine and reposition their company image and who it resonates with, the company is going to watch the continued erosion of its footing in the motorcycle industry, and also the continued deterioration of it’s only industry leading quality: its brand.
This concept of redefining and repositioning the Harley-Davidson brand is a smaller but analogous process to the central 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, and this emblem is itself 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 to Harley-Davidson, has diminished greatly to resemble more of a babbling brook this past year and a half. For those that aren’t 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 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 drop. The only way to ensure constant brand integrity is for the company to engage riders outside of it’s core demographic, and engage them in a new way. In order to achive this Harley-Davidson, you will have to do the following:
Fire 75% of your marketing staff
That statement is purposefully made to be inflammatory, but I want to make a very strong point here. Nothing I’m saying in this article is ground-breaking or new. Nothing that’s being said here isn’t something that the executives at Harley-Davidson don’t already know themselves. As recently as three weeks ago, the company released the following statement to it’s 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. However what we’ve seen from Harley in its marketing communications lately is the same song and dance. This marketing schizophrenia should not be a surprise though, as 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.
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 that Harley-Davidson is faced with sending in a pitcher to do the work of a shortstop. 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, marketers who aren’t specialist 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. The messages 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 with the reality that on its face 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 gain support for its marketing program. While this add resonant with the conservative-devout, it does so at its peril. You can draw advertisements along the lines of those that reinforce a brand’s core demographic, and those that look to extend a brand into new demographics. This does the prior, while as we’ve seen early Harley’s purported and stated 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 segregating force that reinforces one group, while alienating another. A strong lifestyle brand should appeal to all audiences, and as such Harley-Davidson should focus it’s 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 experiences and emotions and not 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.
Not that there’s anything 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 it’s 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/aspirational 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. Contrast this with the Harley-Davidson culture and design thought process.
I still remember when the VRSC debuted with it’s 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.
Closing Thoughts
Without redefining and repositioning the overall Harley-Davidson brand and its underlying components, Harley-Davidson is doomed to continue being stuck in its 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. If this company is truly 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.
This change must come from a decisive shift from the way the Harley’s marketing department thinks, and the way it’s 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.
