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Harley Davidson Inc: Brand Management

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Harley-Davidson Inc. is an American manufacturer of heavyweight motorcycles founded in 1903. In general, Harley adopts the premium pricing strategy in its marketing mix, meaning their prices are higher than other rivals’ prices. Despite these high prices and the downturn in the economy, their profits and market share started falling gradually. Therefore the organization needs to be concerned when pricing a product, taking into account both internal and external factors, and need to adjust its pricing strategies according to market conditions.

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This assignment consists of three sections. It analyses how changes in the pricing environment have affected HD & consumer psychology in pricing and recommendations for moving the business forward.

Analyze how changes in pricing environment have affected Harley Davidson Inc.

Pricing is a key element of the marketing mix which generates income and all others are cost generators. Therefore, company should take all external and internal factors when pricing a product and they should change prices according to the market conditions and other circumstances.

Shortcomings in the economy influence the organization’s profits and revenue. In 2008, because of the global economic downturn, Harley Davidson declared a reduction in demand for their bikes. During this season of downturn individuals were hesitant to spend money on luxury items such as Harley. Along these lines, the Company has survived the various subsidiary and ownership arrangements. Going for an acquisition or merger during a downturn period is very risky task. Subsequently, the organization must utilize market and economic environment analysis to make such a decision.

The competitive environment is constantly changing it cause to decline Haley’s sales and market share. New competitors entering to market pose a serious threat and the fierce competition from Japan and other motor companies has had a profound effect on Harley. Because price of competitors became a more reasonable for customers than Harley’s price. Here, Royal Enfield overtook Harley and captured its market share. As a results Harley Davidson’s sales and stock price dwindled day by day.

Analyze How Harley-Davidson used consumer psychology to price its motorcycle

Customers usually compare the value obtained after using the product or service and end up paying more. Therefore, Harley tries to show the real value that customers get after using this product through this premium price.

Harley Davidson bikes were long associated with the subcultures of bikes, bike clubs and illegal bike clubs. Furthermore, Harley-Davidson has organized a group of HD D owners to establish long-term consumer relationships between HD owners and the company. Here, once a customer buys a Harley, that customer is a member of the Harley family for life. Consequently, to justify this premium price, Harley Davidson seeks to make the customer feel superior through exclusive club ownerships, products, and well customized services. Thus, unlike other manufacturers of motorcycles, HD sells more bikes-related emotions than bikes, helping customers remain connected and keep investing in the brand. A good example of this is the customization introduced by CVO (Customs Vehicle Operations). Harley. Offering customers the chance to customize the bike to their preference can be linked to their price and consumers are more willing to design.

Thus, Harley-Davidson has portrayed their bikes as a lifestyle with freedom, passion, individualism, power and mystery in the minds of consumers. Finally, it is very clear that they have reached premium prices, creating a premium image in mind using consumer psychology.

Recommended how the company should respond to this situation with the price of motorcycles

• Price Skimming

Harley-Davidson’s sales and market share are constantly declining due to external environmental influences. Especially when looking at the competitors, there is a huge price difference between Harley bikes. This led to lower sales and less competition. Therefore, it is recommended to make some changes to the pricing strategy. Harley-Davidson currently uses a premium pricing strategy, which means it has a higher price range than competitors. Instead of premium prices, it is recommended to follow the price reduction strategy. It involves bringing a product to the market at a higher price and then gradually lowering the price to attract a larger customer base. As a result, Harley-Davidson Inc. will be able to increase its sales and market share.

• Create a sense of exclusivity

The exclusivity of luxury brand marketing lies in the fact that it maintains consumer desire through scarcity and rarity. Since Harley uses premium pricing, therefore it is recommended to explain how it differs from other competitors. For example, Japanese manufacturers usually use plastic to construct parts and Harley steel. Thus, Harley developed a strategy of value instead of price. Furthermore, Harley uses CVO (Custom vehicle operations) that other competitors do not. Therefore, Harley should highlight their uniqueness and justify this premium brand image through strong marketing campaigns.

• Global digital marketing plan

Harley-Davidson is in one of the top markets in the world and its motorcycles are distributed by independent showrooms and dealerships. But its sales were not competitive with other major markets. Therefore, it is realized that, traditional advertising (showrooms) are no longer effective and it is recommended to use digital marketing as the way to go. Here they can focus more on CVO customers and allow digital marketing campaigns such as e-commerce websites to create high dollar premium quality customizations for the factory custom market.

Conclusion

Harley-Davidson worldwide sales was fallen due to the competitiveness of Japanese and other motorcycle companies and economic crisis and their impact on the pricing environment. Since the competitors of Harley’s give reasonable price for their products,

It is recommend for Harley to follow price skimming strategy instead of premium price. Because pricing strategy of the company should always suitable with its marketing conditions.  

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