It?s One Thing for People to Buy Your Product or Service, but It?s Another for Them to Tattoo Your

William Harley and Arthur Davidson, both in their early twenties, built their first motorcycle in 1903. During their first year, the company's entire output was only 1 motorbike; however, by 1910, the company had sold 3,200. Movies such as Easy Rider made Harleys a cultural icon and soon the company attracted people who loved its bad-boy mystique, powerfulness, rumbling voice, distinctive roar, and toughness. It sounded like nothing else on the road, and even Elvis Presley and Steve McQueen longed to ride one.

The Harley-Davidson Motor Company has had its ups and downs, and at times, the downs seemed as if they would end in bankruptcy. In the sixties, Honda, Kawasaki, and Yamaha invaded the American market, and when sales at Harley-Davidson dropped drastically due to decreasing quality and increasing competition, the company began to look for buyers and was finally sold. However, the new owners of Harley Davidson knew little about how to restore profitability. The quality became so bad that dealers had to place cardboard under bikes in the showroom to absorb the oil leaking.

Daniel Gross, in Forbes Greatest Business Stories of all Times, recounts how in 1981, with the aid of Citibank, a team of former Harley-Davidson executives began negotiations to reacquire the company and rescue it from bankruptcy. Among these executives was William Davidson, the grandson of the founder Arthur Davidson. In a classic leveraged buyout, they pooled $1 million in equity and borrowed $80 million from a consortium of banks lead by Citibank.

Harley's rescue team of loyal executives knew that the Japanese motorbike manufacturers were far ahead in regard to quality management, and they made a bold decision to tour a nearby Honda plant. Paradoxically, the Japanese had learned Total Quality Management from the Americans, Edwards Deming and Joseph Juran. The new business concept outlined by these two pioneers was a new management approach that, interestingly enough, had been rejected by American manufacturers. As a result, they offered this approach to Japanese manufactures that were eager to learn and implement it. Therefore, soon after their tour of the Honda plant, the Harley Davidson Motor Company decided to put into practice this originally rejected approach.

After implementing just-in-time inventory (JIT) and employee involvement, costs at Harley had dropped significantly; this meant that the company only needed to sell 35,000 bikes instead of 53,000 in order to break even. Their lobbying at Washington also helped, and import tariffs were raised temporarily from 4 to 40 percent on Japanese bikes. This extra breathing space was something that the U.S. motorbike company desperately needed for its recovery.

The combination of visiting a Japanese motorbike manufacturing plant and lobbying in Washington for import tariffs was a daring move on behalf of Harley's executives in their attempt to bring back profitability and growth to the company. Another important strategic move was the company's unique marketing and branding campaigns. Studies showed that about 75 % of Harley customers made repeat purchases, and executives quickly recognized a pattern that refocused the company's overall strategy. Simply put, they needed to find a way to appeal to the extraordinary loyalty of customers, which they found in creating a community that valued the experience of riding a Harley more than the product itself.

The sponsorship of a "Harley Owners' Group" has been one of the most creative and innovative strategies that has helped create the experience of this product. Without realizing it, Harley executives had pioneered a new paradigm that would be increasingly embraced by other industries in their quest to increase profitability by converting their product into an experience. The company started to organize rallies to strengthen the relationship between its members, dealers, and employees, while also promoting the Harley experience to potential customers. The Harley Owners' Groups became immensely popular; it allowed motorcycle owners to feel as if they belonged to one big family. In 1987, there were 73,000 registered members, and Harley now boasts to have no less than 450,000 members.

In 1983, the company launched a marketing campaign called SuperRide, which authorized over 600 dealerships to invite people to test-drive Harleys. Over 40,000 potential new customers accepted the invitation, and from then on, many customers were not just buying a motorcycle when they bought a Harley; instead, they were buying "the Harley Experience."

Harley-Davidson offered its customers a free one-year membership to a local riding group, motorcycle publications, private receptions at motorcycle events, insurance, emergency roadside service, rental arrangements on vacation, and a host of other member benefits. Branding the experience, not just the product, has allowed the company to expand how it captures value, including a line of clothing, a parts and accessories business, and Harley-Davidson Visa card.

If you were to scan the list of companies that delivered the greatest returns on investment during the 1990s, you would discover Harley-Davidson. Only a few companies have been successful in inventing entirely new business models, or profoundly reinventing existing ones. Harley-Davidson went from supplying motorcycles to antisocial raiders to selling a lifestyle to the aging bad boy wannabes caught in their midlife crises. Traditionally, Harley-Davidson bike owners came from the working and middle classes, but as quality and prices of the bad-boy-bikes rose, and with energetic marketing, the company soon attracted a different class of buyers-currently one third of Harley buyers are professionals or managers, and 60% are college graduates. The new customer segments of Harley are the Rolex Riders or the Rich Urban Bikers. Hell's Angels do not run in the same group anymore. Now there are groups of accountants, lawyers and doctors. Women also account for a significant portion of the new riders, and there are women-only riders clubs spreading all over the globe.

The future looks bright for the U.S. motorbike company. According to The Economist, overall U.S. sales increased over 20% in 2000, and more than 650,000 new motorcycles were sold in the U.S. in the same year, up from 539,000 the year before. Bike buyers spent an estimated $5.45 billion on new bikes in 2000.

Stay alert and get it early. The new branding paradigm is to sell a lifestyle, a personality and it is also about appealing to emotions of your customers. Increasingly, it will be more and more about creating an experience around the product. Brand managers and executives will need a new set of lenses. The rules have changed as well as the opportunities to maximize profitability and create value in the process. Nonetheless, the majority of companies continue to follow traditional ad campaigns and they seem to ignore the fact that the media has fragmented into hundreds of cable channels, thousands of magazine titles and millions of Internet pages.

Consumers are no longer sitting ducks for commercials; they are looking for new experiences. Whether it is the bad-boy-aura of the Harley riding experience, the exquisite coffee experience in Starbucks cafés, or the active participation in Net communities, more and more companies will need to follow these early new branding pioneers. They will need to look into the dynamics of their relationships with customers and the nature of their interaction. They will need to ask themselves some serious "out-of-the-box" questions if they want to move with the shifting value that is the result of constantly changing market conditions.

Branding has changed and so have marketing and advertising campaigns. New variability, heterogeneity where there was once homogeneity, newly emerging stratifications of wealth, new preferences, and new life styles are all characteristics of the 21st century customer that are here to stay. We better get used to it, at lease until the next paradigm is discovered. Remember, the companies that are creating new wealth are not just getting better; they are becoming different-mind-bogglingly different!

Bibliography:
Barker, Joel. Paradigms. Harper Business, 1993.

Bedbury, Scott. A New Brand World: Eight Principles for Achieving Brand Leadership in the 21st Century, Viking Press, 2002.

Gross, Daniel: Forbes Greatest Business Stories of All Time, John Wiley & Sons, 1997.

Hamel, Gary. "Innovation Now," in Fast Company (http://www.fastcompany.com/online/65/innovation.html), December 2002

Kotter, John P., Leading Change, Harvard Business School Press, 1996, pp. 4 ? 14.

Teerlink, Rich, and Ozley, Lee: More Than a Motorcycle: The Leadership Journey at Harley-Davidson, Harvard Business School Press, 2000. Young, James Webb. Technique for Producing Ideas, McGraw-Hill, p. 14.

Josef Schinwald is consultant in Performance Measurement and professor in Business Strategy at the University of Belgrano, Buenos Aires, Argentina, and his didactic material must not be replicated without the given permission to do so. Copyright © 2003-2005 Business Design Innovation. Josef is also owner of ValueQuest, LLC, a e-commerce business, and you can visit his sites at My Motorcycle Leather http://www.my-motorcycle-leather.com and Stylish Wedding Favors http://www.stylish-wedding-favors.com.

In The News:


People Are Crazy... and Everyone Is A Racer

?And everyone is a racer. If you doubt that, you've... Read More

Motorcycle Suspension: - A Troubleshooting Guide

Trouble Shooting Suspension Problems.Adjustment locations: ForksRebound adjustment (if applicable) is... Read More

The Motorcycle Helmet You Want May Not Be As Safe As You Think!

Choosing the right Motorcycle helmet can make a difference?.?.literally between... Read More

Kawasaki Motorcycles - Independent in Thoughts and Actions

The story of Kawasaki Company goes back to 1924, at... Read More

Necessity of Motorcycle Parts

If you are one of the many people who consider... Read More

How Do You Make Your Harley Davidson Look And Feel Like An Extension Of Yourself!

How do you make your Harley Davidson look and feel... Read More

Fuel Cells Motorcycles, Trucks, Tanks, ATVs and Fire Hazards from Heat Exchanges

We have heard a whole lot of talk about fuel... Read More

Women and Motorcycles? You Bet!

To really understand the women and her ride, one needs... Read More

Do You Need a Part for Your Harley Davidson Motorcycle?

Need a Harley Davidson Part for your ride?Where do you... Read More

Suzuki Motorcycles - From Fine Loom Manufacturers to Major Motorcycle Company

Started in a small warehouse by Michio Suzuki back in... Read More

A Convenient Way to Slash Your Gas Bill

"With oil prices spiraling higher almost every day, people are... Read More

Avoiding Excessive or Uneven Front Tire Wear

All rubber tires wear down over time, whether they're on... Read More

Motorcycle Suspension Setup: Getting to Grips with a Black Art

Suspension Set-up: The basicsWhether you are a road rider or... Read More

Common Mistakes Motorcycle Buyers Make When Looking For a Motorcycle Loan

Whether interest rates are high or low or it's the... Read More

Auctions and Car Transport: Everything You Need To Know

Everyone has wanted to sell a car at some point... Read More

Motorcycle Helmets - Mind Your Head!

To most riders, motorcycle helmets do not fit into their... Read More

Honda Super Cub and 50cc Honda Cub - The Volkswagen Beetle of Motorcycles!

A very clever design: the Honda Super Cub was the... Read More

Kids Like to Ride Motorcycles Too

Roaring up on a motorcycle has a strong draw for... Read More

Welcome To The World Of ?Upside Down? Motorcycle Loans!

With the depreciation on motorcycles being so enormous after they... Read More

Liquid Cooled Minimotos (PocketBikes), How Fast Are They and Are They Affordable?

As the latest craze of Minimoto Madness continues in the... Read More

Online Shopping for Motorcycle Accessories

When shopping for a certain item and material, the way... Read More

The Buzz is All About Mini-Motorcycles

Pocket bikes are miniature motorcycles -- powered, for the most... Read More

Ride Hard - Hydrate Harder

This summer is showing all of the signs of being... Read More

Save Money on Used Motorcycle Parts

For every motorcycle enthusiast, it is indeed very taxing to... Read More

0 to 60 in 4.5 Seconds

Speeding is illegal, yet we sell racing motorcycles and cars... Read More