Harley-Davidson: Evolution of Marketing Strategy

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Case Details:

Case Code : MKTA014
Case Length : 14 Pages
Period : 1997-2003
Pub Date : 2003
Teaching Note :Not Available
Organization : Harley-Davidson
Industry : Motorcycle Industry
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Background Note Contd...

To some it was a remembrance of their fellow soldiers who had perished for the freedom of Americans. From these bikers evolved the rough and tough breed of bikers with their leather jackets, tattoos, and long hair. H-D built up a distinctive brand image and dominated the US motorcycle industry for many decades.

In 1969, H-D was taken over by the American Machine and Foundry (AMF). During the 1970s, Japanese manufacturers flooded the market with high quality, low priced bikes. A reputation for shoddy products, combined with an onslaught of Japanese competitors, nearly destroyed H-D. Its market share fell from 77.5% (1973) to 23.3% (1983).5

In 1981, thirteen members of the H-D management team purchased the company from AMF in a leveraged buy-out6. But, within the first year, overall demand for motorcycles dropped dramatically.

H-D's market share dropped and a large inventory of unsold products piled up. H-D was aware it could no longer continue business at its current production level and operating cost. It cut costs drastically, asking more than 1,800 of the 4,000 employees to leave. In 1983, in a move to help the floundering US motorcycle industry, the US government, increased tariffs on Japanese motorcycles from 4.4% to 49.4%. Minutes away from bankruptcy, Richard Teerlink (who became President and CEO in 1988) convinced lenders to accept a restructuring plan. Using management principles adopted from the Japanese, new marketing strategies, and manufacturing techniques, H-D improved quality and began the long battle to regain its market share...

 Excerpts >>

5] "The Harley Davidson Story," Case Study, College of Business and Public Administration, University of Louisville, Website: http://cbpa.louisville.edu
6] A buyout using borrowed money; the target company's assets are usually security for the loan.


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