.. room and tools they need to maintain our market leadership. Organization Goals By the year 2003, we will produce 200,000 motorcycles annually Complete the production of our Product Development Center in Milwaukee by the end of 1996 Meet the demand by expanding our existing distribution and manufacturing capacity, and where necessary, adding new production and retail distribution points Grow Parts and Accessories sales volume, as a percent of total revenue, for both new and used vehicle customers Drive financial results to the levels achieved by acknowledged high performing companies TARGET MARKETS THE HARLEY OWNERS GROUP The Harley Owners Group, or H.O.G., is the world’s largest factory-sponsored motorcycle organization, with more than 300,000 members and 900 local chapters located around the globe. Besides the H.O.G. pin and patch, membership card and H.O.G.
atlas, members get treated to benefits that are as helpful as the suspension under a Softail seat. There’s Hog Tales magazine to keep you up on club events. If you’re off to certain far flung spots, our Fly & Ride program can get you aboard a rental Harley. The owners of Harley-Davidson motorcycles are among the most diverse group of consumers in any industry. They range from blue collar factory workers to Doctors and Layers. Recently our target market has shifted more toward the upper end of the buyer market, but we will never forget where we came from.
Harleys are not just for men. Over the last decade women have become a significant purchaser of motorcycles, especially Harley-Davidsons. MARKETING STRATEGY The Americas Our top priority in the United States is to grow primarily through our existing dealers. Plans for 1996 include analysis of dealer five-year plans and local market variables to establish priorities for implementation of dealership improvements and additions. We’ll also begin to bring more consistency to our dealer network by helping dealers improve their businesses based on a “best practice” model that incorporates local market data and customer input with characteristics of our most successful dealerships.
Our second priority is to grow through new dealers on an as-needed basis, while adding new “satellite” outlets where necessary to increase customer convenience and satisfaction. These outlets, typically located in high traffic areas, are smaller, dealer-owned motorcycle service facilities or stores carrying mostly MotorClothes, Genuine Motor Accessories and Genuine Motor Parts. Although still in the developmental stages, we’re allocating more resources to future growth of South and Central America, Mexico and the Caribbean. In 1995, new dealerships opened in the major market cities of Bogota, Colombia and Lima, Peru. We are currently considering new markets in which to open additional dealerships in 1996 and beyond. Europe Although our European presence goes back over 80 years, we consider this to be a market that is ripe with new opportunities.
Our emphasis in 1995 was simply to “focus on the basics” by establishing Harley-Davidson Europe headquarters in the United Kingdom and creating an in-country management team dedicated to improving the bond between Harley-Davidson and our distributors, dealers and customers there. The start-up of a European Distribution Center in Rotterdam has consolidated our motorcycle and P distribution under one roof, allowing us to improve service levels and develop a stronger competitive advantage in the marketplace. To further bolster Harley-Davidson’s brand image, we’ve opened two flagship stores in major markets-North London and Central Paris-and are currently studying the feasibility of opening similar stores in other markets. Going forward, our short-term focus will remain on improving customer satisfaction through gradual expansion of our dealer network, conversion of more existing dealerships into Designer Stores, improved management information systems, better product availability and consistent pricing, enhanced technical service training, expansion of Harley Owners Group activities and development of new markets. Asia/Pacific This evolving market is one we’re watching very closely.
The infrastructure and strategies that we’ve put in place will provide a solid foundation for continued success as the heavyweight motorcycle market grows and develops here. Findings of an intensive market study, the early stages of which were completed in 1995, show that short-term growth opportunities will come from existing markets in this region-led by Japan and Australia-with long-term growth coming from developing new markets. Like Europe, we’ll also be focused intensely on “the basics” to ensure consistency among our dealer network, but with special emphasis on increasing technical service competencies. We’ll also work to enhance customer relationship-building activities through Harley Owners Group and cohesive direct marketing and brand image-building initiatives. MARKETING MIX The sportster, First introduced in 1957, the Sportster is Harley-Davidson in its purest form. It is an uncompromising exercise in getting power to pavement.
As it turns forty, the Sportster certainly isn’t experiencing a mid-life crisis. It just keeps getting better. The Softtail The Softails offer a retro look, inspired by the classic hardtail frame, brought up-to-date with the reliability of modern technology. These bikes move you ahead by moving you back in time. Dyna There is a place where the past and future mingle, taking on each other’s qualities until they become a new incarnation of the here and now.
This is the land of the Dyna Glides – with a smooth ride dictated by computer-aided engineering and a look inspired by classic Harley-Davidson styling. Touring Harley-Davidson touring motorcycles offer a lot more than meets the eye. Like small town coffee shops and historic landmarks. Distant rallies and forgotten highways. Campgrounds, sunsets, burger joints and national parks. Even thunderstorms.
And now it’s all available with electronic sequential port fuel injection on most models. Racing In his first year of superbike racing, Chris Carr won rookie-of-the-year honors and finished twelfth in overall points, while still winning dirt-track races. This year, he is committed full- time to road racing and his poll position at Laguna Seca proved it. This year, he is joined on the VR 1000 racing team by Thomas Wilson, fresh from tremendous success in the 600 and 750 Supersport classes. On the dirt track, Scott Parker, coming off his record sixth AMA Grand National Championship, continues to dominate aboard his XR 750.
Other Segments Eaglemark Eaglemark began in 1993 as an independent company with Harley-Davidson holding a minority stake. Following Eaglemark’s success in achieving our initial goals, Harley-Davidson acquired essentially full ownership in November of 1995 to fully benefit from future growth and value creation. Eaglemark was established to better meet the financial needs of Harley dealers and owners, while producing attractive returns. We use the name Harley Credit and Insurance, rather than Eaglemark, to build on the loyalty customers have for the Harley-Davidson brand. Consistent with the brand’s image, our services aim to provide real value to customers through one-stop shopping, fast personal service, competitive terms and a thorough knowledge of the products we finance and insure. Parts and Accessories As successful as our P&A business has been over the last several years, we took some major steps in 1995-including repositioning our replacement parts and mechanical accessories lines-to re-energize our approach and maintain our market leadership. To address dealer and customer dissatisfaction with backorders on popular items, we’re establishing closer ties with our suppliers, to ensure they have adequate capacity to handle demand.
And the new P distribution center, when it comes on stream, will help speed the flow of parts to dealers. Ninety percent of our MotorClothes revenue comes from the domestic market, which has become a very tough environment for apparel sales. And we’ve found that our international markets have very specific needs for fit, styling and pricing that our current broad-based line doesn’t adequately support. From these challenges come opportunities. In 1996, we’re creating a global, unified MotorClothes product line, developed by a centralized styling department. This group will develop overall concepts, then work with regional MotorClothes managers to produce market-specific products.
We’re also increasing our promotional efforts toward the non-riding public, to attract them into our dealerships. Buell Although still a start-up operation- approximately 1,400 Buell units were shipped in 1995-the Buell team is continuing to explore and evaluate new opportunities in the sport/performance market. While traditional sportbikes utilize complex technology with the sole purpose of increasing speed, Buell’s mission is to develop and employ innovative technology to enhance “the ride” and give Buell owners a motorcycling experience that no other brand can provide. Buell expanded its 1996 model year product line by adding two new models, the S1 Lightning and S2 Touring, to support its flagship S2 Thunderbolt. Buell also added more than 100 new dealers in 1995 (Buells are distributed only through select U.S. Harley-Davidson dealerships), bringing the year-end total to approximately 150. In 1996, the Buell team will complete its study of the European sport/performance market, which is four times larger than its U.S.
counterpart, to prepare for a possible future launch there. Promotion The majority of our advertising comes from bike rallies and special events that are held that are held across the United States. Our Rallies draw between 5,000 and 200,000 people. The majority of the attendants are Harley owners. Harley Davidson as an organization does very little mainstream advertising.
BUDGETS CONTROL AND ACCOUNTABILITY Standards should be specified in terms of sales, and production. Costs should be identified and target cost levels specified to facilitate their control. Standards should be established in terms of consumers attitudes. Attitude standards, in terms of perceptions, and desires should be specified. Controls should be implemented and monitored by appropriate administrators.
The president, vice-president, administrators, and other individuals should be responsible for controlling the marketing mix implemented.