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Jensen Beeler at A&R has kicked off a 3-part series on what Harley-Davidson needs to do to prevent the company from dying along with their aging demographic. He starts off with the same premise I wrote about last summer, but really drills down into the details. It’s a fantastic piece about H-D’s ongoing marketing failure. Read the whole thing.
Several days ago, I wrote a post on Harley-Davidson’s ongoing strategic marketing failure. That post has garnered quite a lot of attention in certain quarters. Today I had an email exchange about it with motorcycle industry analyst and guru Don Brown.
My previous post addressed how the MoCo was failing in its marketing, but not why. Mr. Brown provided me with some historical context that may illuminate the roots of this problem.
The trouble with Harley, in my opinion, is that they can’t shake loose from their memory of the terrible reaction of many of their customer base – mainly the older baby boomers who hated anything that smacked of being of modern technology.
Since their near-death experience and the resistance of their core customers to technological innovation in the 80s, it seems like the company’s version of “protecting the brand” has become never to do anything different, or innovative.Well, that does bring back some memories, such as the Nova 800 project, a concept for a water-cooled V-4 bike. It went nowhere, of course, although the company spent a pile of money on it, and actually produced three of them.
But it puts the company’s current fear of tarnishing the brand in historical perspective. They are rabid about doing whatever is necessary to protect the brand, as they see it. A few weeks ago, I was reading one of the industry media web sites–unfortunately, I forget which one–and they asked a HD representative about a rumor concerning the possibility of a water-cooled V-4 powerplant. The rep said bluntly, “Harley-Davidson makes V-Twin motorcycles”.
Since their near-death experience and the resistance of their core customers to technological innovation in the 80s, it seems like the company’s version of “protecting the brand” has become never to do anything different, or innovative. They play to the same customer base. They refuse to change their styling beyond shifting what bit of chrome goes where from year to year. And then they do make a change, it consists of occasionally adding non-threating bits of technology like vibration absorbing engine-mounts, incrementally larger engines, or hidden changes to the frame or suspension.
And, of course, to cut motorcycle production any time it appears an inventory may build up, in order to keep supply artificially low, and the prices high.
Now, there’s nothing wrong with that kind of conservatism in the short run. At times–and the 80s seem to have been one of those times for HD–it may even be necessary. But the danger of doing that sort of thing, if it goes on too long, is that it begins to fix itself in the corporate culture. Once an excessive conservatism embeds itself in a firm’s culture, the brand ceases to be an powerful asset to be used in leveraging innovative new products. Instead, it turns into a treasure to be hoarded.
Once an excessive conservatism embeds itself in a firm’s culture, the brand ceases to be an powerful asset to be used in leveraging innovative new products. Instead, it turns into a treasure to be hoarded.But that is never a long-term strategy for success for any brand. Markets change. Customers change. Tastes change. Competitive landscapes change.
Eventually, the brand suffers, because as the market changes, the brand gradually becomes associated with old, outmoded tastes. The brand loses its power to attract new customers, because they think, “That was the stuff my dad liked, back in the day.” That almost automatically means, “I like different stuff,” to the newer customers in the market.
This is precisely what has happened to Harley-Davidson. A corporate mania for brand conservatism has led to a situation in which amazing technologies are available for nearly every motorcycle…except Harley-Davidson. Most GenX or GenY customers won’t even look at a Harley-Davidson. They see the brand they same way they see their parents: old and slow.
That’s true literally as well as figuratively. The Harley-Davidson Sportster, about as light and as fast a motorcycle as Harley makes in stock form, runs a 13-second quarter mile. A 900 pound Gold Wing does it in 12 seconds. A Shadow Spirit 750 does it even faster.
The end result is a brand whose products cost more and perform worse than the competition’s.
A Harley Davidson customer transplanted from 1970 could walk into a Harley-Davidson dealer today, and literally see nothing that would frighten or confuse him.It’s not just the consumer market that’s changed either. The competitive landscape is radically different, too. Harley-Davidson today makes essentially the same motorcycles it’s been making for 50 years. Except for, perhaps, the V-Rod, a Harley Davidson customer transplanted from 1970 could walk into a Harley-Davidson dealer today, and literally see nothing different that would frighten or confuse him.
But what’s even worse, from a competitive point of view, is that he would also see no bike that a young, beginning rider would feel comfortable purchasing. The Sportster has an engine of the same displacement that and FLH had in 1970. It weighs nearly 600 pounds. Even if the average 20 year-old could afford it, it is still an intimidating beast to young new–or female–rider. My wife can’t even pick up any Harley except the Nighster. And she finds it frighteningly heavy even then. She almost can’t even touch the floor with her toes on any other model. That’s not a good thing, when 14% of motorcyclists are now women.
That’s emphatically not true, however, if you walk into any dealer of Big Four motorcycles. A first time rider has an amazing range of choices there, from a sporty Ninja 250, to a Boulevard S40. Yamaha dealers will happily sit a young rider on a V-Star 250, and, for less than $4,000, send him off riding happily into motorcycling world on an easy to ride, light, little cruiser.
And when they do so, they have an excellent chance of sitting him on a V-Star 650 a couple of years later. Or if he or she decides that a need for speed has to be satisfied, why, there’s a pretty little R6, sitting right over there. The Big Four grab beginning riders right out of the box, putting the youngsters astride a little Rebel, and they keep them right up until they take that last ride into the sunset on their Gold Wing.
Harley-Davidson, on the other hand, still acts as if it’s 1968, and, once you’ve exhausted the possibilities available on a BSA 500 or Triumph Bonneville, you have to buy a Harley if you want a big bike, because no one else makes one. But in 2009, you can get the full motorcycling experience–commuting, touring, naked street-fighters, or race bred literbikes–without ever having to change brand loyalty even once.
The Big Four grab beginning riders right out of the box, putting the youngsters astride a little Rebel, and they keep them right up until they take that last ride into the sunset on their Gold Wing.Harley-Davidson has no entry-level motorcycles, so they can’t grab the young 20 year-old looking for a good first bike. Instead, their task is to try and convince a seasoned rider, who has a pre-existing brand loyalty, to change that loyalty to Harley-Davidson. And that rider not only has experience with his preferred brand, but knows that his preferred brand makes similar motorcycles, at a lower cost.
That’s a tall order. Based on HD’s aging demographic, it doesn’t seem like the MoCo is capable of fulfilling it at present. They’ve abandoned the young rider demographic, and in so doing, they’ve let their competitors grab the younger riders and begin building brand loyalty from the very start of their customers’ riding careers.
Unless Harley-Davidson is willing to expand its horizons, it is in danger of becoming a much smaller maker of what are essentially high-priced boutique bikes…much like the brand they recently acquired, MV Agusta. I would hate to see that happen, but absent some serious changes in their corporate mindset, that appears to be the road on which they are traveling.
BMW recently announced that the new S1000RR superbike would be available for sale to the public in January, at a price that makes it very competitive with Japan’s Big 4. Now, it appears that this was part of an intentional strategy to go after the Japanese market share in liter-bikes. And they’re confident enough in the new bike to predict a 20% increase in sales–even in this shaky economy–and to let the Japanese know that the Bavarians are taking aim at them.
“We are going to take the Japanese head-on,” said Pieter de Waal, vice president of the company’s U.S. motorcycle operations, at an event last week in Woodcliff Lake, New Jersey.
The motorcycle’s introduction puts BMW into a niche — informally known as “crotch rockets” — dominated by Honda, Suzuki, Yamaha Motor Co. and the Kawasaki brand owned by Kawasaki Heavy Industries Ltd. The four Japan-based companies have 88 percent of U.S. market share in the superbike category, De Waal said. BMW’s offering will be priced at $13,800, close to the four most popular competing motorcycles.
While it’s always good to see Germans in a buoyantly confident mood, some observers say, “Not so fast”.
“For BMW, which has always had a reputation of being a very high-priced motorcycle, it’s certainly a lot closer to the Japanese bikes in price,” said David Edwards, Cycle World magazine’s editor in chief. “That may be for some people a reason to consider it, especially if its performance lives up to expectations. But I don’t think you are going to see a mass exodus of Japanese sportbike riders going to BMW.”
2010 BMW S1000RR Superbike
Perhaps, but a lot of the liter-bike guys are crazy for motorcycle racing, and if BMWs race version can show up the Japanese bikes on the track, it can’t do anything but help their sales. And releasing the bike for public sale here in the US allows them to meet the homologation rules for AMA Superbike, so I’d bet very good money that we’ll see a BMW race team hitting the tracks next season. If you really want to take on the Japanese–and the Italians, by the way–that’s the way to do it.
Although, having said that, Buell proved a few weeks ago that, while the AMA may have rules about homologation, they aren’t, you know, fanatics about them.
Harley-Davidson, whatever the company’s faults may be, have gotten one thing consistently right: Marketing. They are a marketing powerhouse. When you buy a Harley-Davidson, you don’t just buy a motorcycle. You buy a ticket to the “Harley Lifestyle”. The company’s marketing is ubiquitous and effective. But not perfect…
H-D’s CEO, Keith Wandell, admitted in an interview with The Business Journal that the company flubbed their forecasts of the recession’s impact on their customers’ buying choices.
[T]he company mistakenly thought the recession would push consumers toward Harley’s Sportster and other less expensive motorcycles.
The company increased production of those types of bikes, but retail sales “didn’t materialize,” he said.
Harley dealers currently have a glut of the mid-priced V-Rod models.
Instead, many consumers who have been buying Harley-Davidson motorcycles have been buying more expensive custom and touring bikes, Wandell said.
“It left us with a bigger imbalance,” he said. “We have a lot of inventory.”
As a result, Harley-Davidson will shut down final assembly operations of the Sportster and V-Rod motorcycles and V-Rod motorcycle powertrain production in Kansas City, and production of Sportster motorcycle powertrains in Wauwatosa, for 14 weeks this year, including all of the fourth quarter.
Let me put on my MBA hat here. (And yes, I do have one. An MBA, I mean. I don’t actually have the hat. But, I’m thinking of getting one made.)
Harley’s real problem, however, is not the occasional tactical marketing error, but a more fundamental strategic error that the company keeps compounding.I’m kind of stunned that the MoCo would make such a mistake about the buying habits of their customers. Sportsters certainly have their fans, but general, people buy a Sportster because they want a Sportster. I can see how someone wanting a Softtail might settle for a Dyna, but not a Sportie. At least with the Dyna they still get the Big Twin engine. Surely the company must know that the Sportster is called the “baby Harley” and “girls bike”. They must have some inkling that salesmen at dealerships constantly advise prospective Sportster buyers that they’ll quickly outgrow the bike, and want a Dyna in a year or so, so why not buy a Dyna that you won’t outgrow instead?
People who want a Big Twin–and often they already have a Metric big twin they’re looking to trade off–aren’t interested in scaling down to a smaller motorcycle. They want one of the big dogs.
And as for the V-Rod…well, I don’t know what they were thinking when they thought they’d see an increase in sales there. It’s a nice bike but it certainly isn’t the company’s most popular product line. Not by a long shot.
It’s strange to see the company make such an unusual tactical error, and now the employees are gonna pay for it, as the MoCo cuts production to align inventory with customer demand.
Harley’s real problem, however, is not the occasional tactical marketing error, but a more fundamental strategic error that the company keeps compounding.
The brand is an absolute icon for the baby boomers. Among the Gen-X set and younger riders…well, not so much. The MoCo has a serious strategic problem when it comes to marketing, in that younger riders just aren’t attracted by the Harley brand. Harley obviously knows that their customers are aging, as evidenced by the fact that they’ve started producing factory trikes, so that their customers can keep riding long after the ability to hold up a 750 lb. hunk of steel fades away.
But Harley’s challenge isn’t to figure out how to keep an aging band of retirees buying their products, but rather how to entice younger riders to the brand. It’s clear that, looking at the advancing average age of H-D customers, they haven’t figured it out. Or rather, if they have, they’ve declined to implement the obvious solution.
To properly understand the problem, we need to look back at a bit of history.
If you were born in, say, 1980, Harley-Davidson has never been the Big Dog motorcycle.I was born in 1964, so that makes me the very last of the baby boomers. When we were growing up a “superbike”–the term didn’t really exist back then–was a Norton Commando 800. A Harley-Davidson was a massive motorcycle with an ungodly large 1200cc engine. You started riding motorcycles with a Montgomery-Wards 125cc thumper, maybe graduated to a BSA 500cc, then you finally got the money to get one of the Big Dogs, a Harley.
In the 70s, that all started to change. The Japanese began producing game-changing bikes like the Honda 750Four, and the Kawasaki Z-1. Performance increased dramatically. By 1984, when Yamaha introduced the frighteningly powerful (for the time) V-Max, real superbikes were available. The mid-80s explosion of Sportbikes, like the Kawasaki Ninja, raised the bar forever in terms of new motorcycle riders’ perceptions about what a powerful motorcycle was.
Harley’s response was, and continues to be, incremental increases in engine displacement from 1200cc air cooled twins to 1600cc air-cooled twins, along with incremental improvements to frames, suspension, and, thus handling. But the styling and riding characteristics of the company’s products remained mainly stuck in the 1950s-1960s.
1965 Harley Davidson FLH1200
Don’t believe me? OK. Compare and contrast the two bikes shown here.
Can you think of any other product where so little styling has changed in the past 44 years?
So, if you were born in, say, 1980, Harley-Davidson has never been the Big Dog motorcycle. It’s been a manufacturer of heavy, slow, low-performance cruisers. You’ve grown up in a world of 150+HP superbikes–a world that did not exist when the boomers were young. Younger riders have an entirely different mental impression of how the motorcycling world is put together.
To thrive as a company Harley needs a product that is connected to the modern era, as well as the past. That doesn’t mean that Harley should jettison its classic styling completely. There’ll always be a market for that, because it has a definite appeal to some riders. But to grab younger riders Harley-Davidson–as a company, not a specific brand–has to have something else. It has to have a line of motorcycles that appeals to those younger people who want more sport than cruiser.
And, interestingly enough, Harley already has that with Buell motorcycles. And does almost nothing with them.
2009 Harley Davidson Road King
First, until last year, the entire Buell line–except for the now-defunct Blast–was limited to cast-off Sportster Evolution engines. Erik Buell’s division tweaked them as well as they could be tweaked, but the XB series of bikes has never–and can never, from a technical point of view–compete with 600cc sportbikes like the Yamaha R6. And I simply can’t believe that an old privateer racer like Erik Buell is satisfied with the performance of the products he’s been allowed to put out by his masters in Milwaukee.
And, to make matters worse, Buell doesn’t even have its own dealership network. Instead, Buells are relegated to the dark corner of Harley-Davidson dealerships, and the sales staffs often know little about the brand…and care even less. I’ve personally had sales people intentionally steer me away from Buells, to point me in the direction of a Softtail or Road King.
H-D needs to move beyond the cruiser world if it wants to compete in the future. And that means letting Buell have some more leeway to operate beyond the Harley-Davidson cruiser world.
Companies survive by making products the public wishes to purchase. They don’t survive on tradition. They don’t survive on selling lifestyles.They need to break into the younger markets by producing bikes that can compete with the Gixxers and Ninjas. That means giving Buell the go-ahead to dump the Thunderstorm engine in favor of water-cooled twins and V-4 or I-4 engines. Buell has some fascinating design ideas for sportbikes, but one of the reasons they’ve never been accepted is that, performance-wise, Buells suck compared to the Japanese brands. Buell needs a powerplant to mate with their technical innovations. The 1125 is a good start. Now, they need to make the next step.
They need to liberate Buell from the H-D dealership network, and open up dealerships where Buell enthusiasts work. It doesn’t matter how good the bikes are if their sales network doesn’t want to sell them. Making the customers force the dealer to sell them a Buell is silly, and it needs to stop.
Harley also has MV Agusta, the venerable maker of Italian sportbikes, including the F4 312RR, the most powerful production motorcycle in the world, as well as its parent company, Cagiva. Maybe figuring out how to get those Italian brands over here would be helpful as well.
Companies survive by making products the public wishes to purchase. They don’t survive on tradition. They don’t survive on selling lifestyles. The reason the MoCo’s customer base is aging and shrinking is because they aren’t making products the younger generation wants to buy.
But Harley owns the brands, and has the capability to make the bikes that will attract the younger generation of buyers. It only remains to be seen if Harley will continue to rest on the laurels of the brand’s prestige, or if it will become determined to compete in the new markets that the Japanese currently own.
Somebody at Buell’s marketing department must be so proud of his cleverness. Buell has gotten the defunct 2010 crushed Blast into the Motorcycle.com specs listing. They’ve replicated their Book of Buell dismissal of the blast there. “cause God knows that buying full-page ads in the mags, and putting up front on their web site wasn’t good enough. No, they’ve got to show off their cleverness to the world.
Because they’re extreme, maaaan!
Hm. Maybe for 2011 they should think about dumping their current boring product names, too. There’s tons of great potential names out there. The “Moody Loner” The “Social Misfit”. The “Outcast”. The potential’s unlimited.
And, yes, I’m still planning on riding an 1125r.
I‘ve spent some time going over the new 2010 Buell Motorcycles web site that was unveiled today. I can’t say as I like it much. And I don’t think much of the marketing effort they put into one of the main features on the new site, the co-called “Book of Buell“.
Something about the tone of the thing just puts me off. Now, don’t get me wrong. The Buell is a fine motorcycle, and Erik Buell really is a fine engineer and racer, who has contributed some fascinating ideas to motorcycle design. Many of Buell’s design concepts seem spot on. But the tone of the thing gets right up my nose.
SITTING IS NOT A SPORT
There is no World Champion of sitting. No governing body to ensure that when two people try to out sit each other, they do it by the rules. Because sitting is not a sport. Unfortunately, most people who buy sportbikes do just that. They hit the starter button, raise the kickstand, and sit their asses off…
Actually, most people raise the kickstand, and then hit the starter button, because they have modern bikes with a safety interlock that won’t let you start the bike with the kickstand down. If the bike isn’t in Neutral, at any rate.
…There’s nothing wrong with these people. They just bought the wrong bike. A sport bike is not designed to be sat on. it’s designed to be hung off. Moved around on. Constantly manipulated beneath the rider. A self-propelled platform upon which a sport takes place. Before you buy a Buell, take a moment to think about what you really want to do on it. If the answer involves sitting, you may want to consider something different. A porch swing, maybe, or one of those floating pool chairs.
Well. Aren’t we just a little too cool for the room? But hey, while we’re on the subject of whether or not we should consider a sportbike, maybe we should also take a moment to consider if the sportbike we want has an air-cooled V-twin engine that was pulled off of a Harley Sportster, and puts out 103 horsepower like the XB12R, or has a water-cooled, I-4 Engine that spits out 178 horses, and is smooth as silk, like a GSX-R1000. Even the 1125R is only putting out 145 horses.
So, let’s be honest. If you’re looking at a Buell, your prime consideration is probably something other than the raw power of the motorcycle, and the ability to push it past 135 MPH.
The BoB continues:
ERIK BUELL DIDN’T BECOME AN ENGINEER SO HE COULD MEET OTHER ENGINEERS
The truth is, he’s made a career our of alienating them. But this has never been his aim. It’s just what happens when someone discards accepted principles in search of a better way. Put gas in the frame, turn the swingarm into an oil tank, sling the exhaust under the engine, and develop a perimeter-mounted front brake…
…use an engine that was originally designed for a cruiser…
…and all of a sudden your invitation to the American Society of Mechanical Engineers annual golf tournament gets lost in the mail and that one guy from Poltech stops sending a Christmas card.
Because Erik is so extreme, maaaaaan! The Establishment shuns him!
Yes. Erik Buell’s ideas were so disfavored, and he was made such a figure of ridicule that all the other engineers felt awkward in his presence because of his shunning. And in his hideous shame, the country’s largest motorcycle manufacturer acquired his company, provided him with capital, manufacturing capability, and parts in order to build his crazy machines.
The next section is entitled, “A Buell Won’t Make You Any Friends”.
Many people buy sportbikes as a way to connect with other people who ride sportbikes. Equipped with their new sportbike, they gain instant admission to a fun, freewheeling group of like-minded riders…This will not happen to you if you purchase a Buell. No one will understand why you’ve done what you’ve done. In fact, they may even be disturbed by it…
And often, this includes the sales and service departments of the local Harley Davidson dealer where you purchase it.
Because we don’t engineer motorcycles for acceptance. We engineer them for performance. And we engineer them without mercy.
And frankly, because they have to engineer them without mercy, considering that they–the 1125 excepted–use an antiquated motor design that every other manufacturer discarded years ago in order to replace them with engines that deliver 60-70% more power.
Let’s be frank, here. The Buell Thunderstorm-powered bikes are excellent motorcycles, considering what they are. But all of the engineering in the world will never deliver the horsepower or anything like the top speed out of an air-cooled V-Twin based on the Harley Evolution motor that a modern I-4 engine of similar displacement will. That doesn’t mean it’s a bad motor, or that the Buell is a bad bike. It isn’t.
But let’s not pretend it’s a CBR100RR with a top-gear roll-on from 60-80MPH that’s half a second faster than the XB12R, with a similar gap in quarter mile times, with the Honda moving 15MPH+ faster at the marker.
Anyway, it goes on that way for a bit more. Then we get to the real kick in the teeth for some Buell customers: The elimination of the Buell Blast. You have to see the way they handle that to believe it.
They show a picture of a Blast crushed into a cube, and the text goes:
The Buell Blast was a cute little motorcycle. It just never made much of a sportbike…Hey, there’s no denying the Blast’s aforementioned cuteness. But there’s nothing cute about racing or riding a sportbike the way it was meant to be ridden. And while racing and sportbikes have always been important at Buell, they are now officially the only thing that matters. So the Blast will not be moving forward.
In other words, we never cared about this bike. We thought it was dumb, and we are happy to dump it. And if you are one of the stupid, poser suckers we sold one of these suck-machines to, then you got screwed. Enjoy your cute little thumper, loser. Because we’re all about being extreme now. And racing. And flipping off The Man. The Blast didn’t give off that moody loner vibe we’re cultivating. We not only don’t care what our competitors think, we don’t even care about what our former Blast customers think.
OK. It’s a given that they don’t care what I think, then. But I think, “Nice PR, Ass,” anyway.
Yes, Buell’s have been racing since the very beginning of the company. They’ve been very successful in Thunderbike. But when Buell really wanted to compete at the superbike level, they had to design a new bike from scratch, using an outsourced Rotax water-cooled motor.
The Firebolt is great in it’s available range, and in initial acceleration, and it will keep up with most sportbikes stoplight to stoplight. But at the end of the day, it can’t put out the top speed of almost anyone else’s liter sportbike. And we won’t even try to compare it to the ‘Busa or ZX-14.
Still, it’s a very good motorcycle, and personally, I like Buells a lot. Overall, I think Erik Buell outs out a very good product, with competitive street performance at anything less than “Go ahead and take my license and impound my bike, officer” speeds. And I really think Buell’s whole design philosphy has a lot going for it. And Buell does, in fact, put out an XB-RR race bike with 150 ponies. I bet if Harley gave him the green light to produce a bike with a modern I-4 powerplant, it’d be an absolute monster.
But the arrogant, too-cool-for-the-room, “I’m a rebel, man!” marketing really turns me off. And the way they wrote off the Blast like it was some worthless POS just has a total lack of class.