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Harley Davidson Inc: Russia's Market

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Becoming an international company and operate all over the world, companies need to study the new market they aim to enter, and how they can position their products and brands within the new market. A clear and viable marketing strategy is one of the keys to any business success. In addition, marketing strategies become even more important when the economy is in recession. Russia is one of the most important markets for most of the world’s major automakers.

Kotler (2015) pointed out that a company’s marketing strategy determines the customers it serves and how it creates value for those customers. It consists of a corporate marketing mix and a set of marketing tools that the company uses to implement its marketing strategy. In a proper international context, the concept remains the same with some modifications.

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Harley Davidson is actually an American motorcycle manufacturer. Founded in Milwaukee, Wisconsin, the company, like Indians, is located between two dynamic American motorcycle manufacturers. The company has survived the terrible depression and has experienced improper management and quality competition with Japanese manufacturers. From 1977 to 2014, the only motorcycles sold publicly by the Harley-Davidson brand were heavy motorcycles weighing approximately 700 cm3, actually designed for the road. With growing international economy, Harley Davidson is looking for paths towards entering new markets; where it operates in many countries around the world.

According to Farhang (2001), the way some companies sell products and services from genuine domestic companies to international companies has been the subject of research for the past 30 years. In fact, expanding into overseas markets is not easy. This is especially true when there is no commonality with the domestic market. This is a process linked to many issues and issues. The reason behind the offshore company adventure is that you are doing this to get something that is not yours. Goods and services, employment, technology, skills and supplies imported by companies are not available locally or are more expensive.

Given the size and strength of Russia’s developing economy, and the massive trade with other countries (Europe or the United States and other countries), the report can really stimulate new ideas and help Harley Davidson to expand to Russia.

Russia’s macroeconomic environment

In 2015, the Russian economy fell into recession. There are several reasons for this, but the most important ones are: low oil prices and sanctions on Russian banks. As in other deflationary situations, this decline is characterized by high inflation and lower household spending. The crisis is affecting consumers, businesses and financial markets. However, in the past five years the situation has changed, and Russia is still contributing in the world’s economy as a strong player.

PESTEL analysis

Russia soon transitioned from communism to capitalism. It is important to remember when analyzing your environment. It is still considered a developing country, mainly due to rapid change. In addition to the following challenges, internationally capitalized countries also offer many new opportunities. Globally, Russia plays an important role in global social and political issues. Russia is a member of the World Health Organization (WHO), the United Nations (UN) and other organizations. This allows Russia to contribute to the development of the world in social, medical, political and economic terms. Russia is the largest country on earth. With a population of more than 140 million, this bridge is often considered a bridge between two continents (Europe and Asia). It also serves as the commercial center between these two worlds. As a result, the most successful international companies are operating in Russia (in all forms). Automakers are no exception. Many car manufacturers have production plants in Russia, this includes Kia, Hyundai, Skoda, Toyota and others.

Political factors

The Russian Federation is a semi-presidency chaired by the head of state and the prime minister is the head of the government. Russia is a superpower and one of the five permanent members of the UN Security Council. He is also a member of several influential and reputable international organizations and unions, including the World Trade Organization, the European Union Customs Union, and the Asia-Pacific Economic Area. Russia is the largest country in the world and plays a central role in world politics. Maintains bilateral relations with some powerful countries in the world. It must be mentioned that Russia and the United States are constantly competing to become the most powerful nations in the world. In general, questions of freedom of expression and civil rights are often the cornerstone of Russia’s democratic and political system. Of course, this does not help keep existing investors and sometimes cannot attract new investors. In addition to having the growth space to encourage him to invest in the country, investors must also have the impression of security and protection.

Economic factors

Russia is one of the world’s 15 largest economies in terms of nominal GDP. Its economy grew 2.3% in 2018, 1.7% above the International Monetary Fund (IMF), while the Ministry of Economy forecasts it 1.8% higher. The construction sector grew 5.3%, contributing significantly to overall growth. Russia’s foreign exchange reserves exceed $ 460 billion and can withstand the global economic crisis. The Russian economy is heavily dependent on oil and gas. It produces about 11 million barrels of oil per day. In fact, oil and gas make up 59% of Russia’s exports. Automobile production is Russia’s main industry, with around 600,000 people working directly and accounting for 0.7% of the country’s total workforce.

Social factors

Since 1990, when the political system changed, society has rapidly transitioned to democracy and related new lifestyles. But this rapid shift to capitalism has widened the gap between rich and poor. The result is a new type of wealthy man called oligarchs. Thanks to cooperation with government agencies, they are ultimately responsible for strategic projects. Although heavy industry (natural gas and oil) is still closely related to politics, the rise of a new generation of entrepreneurs is similar to the type of Western capitalism: independence, progress, and internationalization. All this has led to new trends and ideas about society. Generally speaking, from the perspective of consumers during a crisis, modern Russian society can be described as follows:

• Economic crisis leads to lower consumer confidence

• Consumers looking for better deals increase online shopping

• Healthy lifestyles are gaining in popularity

• Many people delay retirement or do not count

• A vehicle is considered a symbol of the end state, among other conditions.

Technological factors

Russia is one of the most technologically advanced countries in the world. He has an impressive history in the fields of science, information technology and space technology. In fact, ICT is one of the major engines of Russian economic development.

In 2017, the value of the Russian e-commerce industry was about $ 19 billion. The industry is growing fast and has high expectations for domestic and international retailers. When it comes to search engines, Yandex (local online search engine) is a leader with over 60% market share. Cash on delivery is still the preferred payment method, but online payments are becoming more popular every day.

Environmental factors

Russia is one of the most visited countries in the world. Rich cultural heritage, beautiful scenery, ancient cities, museums and 23 UNESCO World Heritage sites are some of the factors that attract millions of tourists to Russia each year.

However, Russia faces serious environmental problems. For example, landfills, water pollution, air pollution, deforestation, soil erosion, and nuclear waste are just a few examples. A recent study by the Moscow Institute of Higher Economy (HSE) found that 94% of Russians are concerned about the country’s environmental challenges.

Legal Factors

It is no surprise that parliamentarians have increased corruption as the government controls many industries and the media. Much of the country’s wealth is also held by government officials (and their friends). Legally speaking, citizens are powerless.

Russian citizens work equally well for Western workers every week: 8 hours a day and 40 hours a week. Overtime is complicated. Employees must submit and accept written requests before any other case. If not, do so at your own risk.

Foreign markets entry modes

At the strategic level, manufacturers have many options before entering the foreign market. Market entry decisions may be linked to exports, so they may be linked to a decision to find a distributor or establish a wholly owned distribution. However, entering the foreign market is a stubborn and detailed process. It affects all levels of the organization, no matter how much. As with other processes, there are several execution methods.

Exporting

Exporting is the easiest and least risky way, allowing goods and services produced in one country to be sold to another. There are two main ways to export: direct export, export, export, and export. The factory established its own export department and sold directly to overseas markets. Indirect exports are performed using different types of sales intermediaries, so the company does not have to set up its own sales service abroad.

Licensing

Licensing is a contractual agreement in which a company (licensor) supplies legally protected assets to another company (licensee) in exchange for royalties, license fees, or other forms of indemnity. This includes brand, company name, technical experience, etc. There are two main benefits to market entry approval.

Franchise

A franchise is a rapidly growing form of license in which the franchisee provides standard management products, systems, and services, and the franchise provides market insight, capital, and personal management involvement. The combination of these skills gives the parent company reasonable control while providing flexibility in managing the local market situation.

Joint venture

An organization in which multiple companies participate. The parties invest jointly and risk capital and equity. Because many governments ban foreigners from participating in domestic businesses, the only way for companies to benefit from a particular market may be through joint ventures. Through joint ventures, technology can be used faster and markets can be easier to enter. Joint ventures can also improve relationships with other organizations, such as local governments and unions. Government-related reasons are the main reasons for joint ventures at LDC (less-developed countries).

Joint ventures can be chosen in every situation, especially in Harley. Companies in mature economies can accelerate their entry into overseas markets by finding local partners in emerging economies such as Russia. These partners can assist with manufacturing and distribution in exporting countries. New opportunities for joint ventures to complement technology and other skills may be the reason for joint ventures. For example, joint ventures and partnerships allow Harley to share costs and risks, save time and money, gain resources, and transfer knowledge.

Target market

Demographic data based on age and gender. Harley targets men and people between the ages of 18 and 35. The street is also the first of all new platforms launched by Harley over its 13-year career and is expected to help increase market share in customer access services. Harley-Davidson has developed strategies to expand global reach and reach new population groups in the international market.

Harley’s target market on Russia will be men in the age of 18-38, form middle-class, with no referring to geographic data (as color or nationality, etc.).

Marketing Mix

Businesses make many proposals to bring better results to the business and gain more market share. Marketing incentives actually include four P’s which is products, locations, prices, and promotions. Other factors include vitality and events in Jupiter’s environment. Economic, technical, political, cultural. All of these inputs are the buyer’s decision, resulting in a different set of observable product purchase options, brand choices, and product choices, in addition to purchase time and money.

Product Strategy

Harley has to find his strengths and analyze the heavyweight weaknesses. Because they need to target the market and acquire customers to succeed in the market, they even need to properly identify and use the entire niche. Companies should seek to gain more market share for certain middle-class people through production, so that Harley becomes a famous and popular brand in all industries, including the middle class. Certain custom products and travel and street sports bikes can help companies increase their market share. The company can also bring bicycles of different colors to appeal to the younger generation and to stand out properly. Manufacturers can bring in many new models of bicycles to educate the market about new and unique things that will move your brain and mind. As Harley continues to evolve around its unique image, new styles can be introduced or developed to ensure that products are not only high-quality members of the team, but also attractive.

Price Strategy

Harley-Davidson needs to understand competitors quickly and understand the market. Now you have to try to offer a price to help the company get better value for its customers, have more influence in the market and compete enough to gain market share No. Companies outside the industry. This is why the company can produce more and more products and achieve economies of scale to lower prices. Therefore, we aim to bring more bikes to the market at lower prices. In other market sectors, therefore, this helps companies increase profits.

Place Strategy

Companies need to increase their distribution of bicycles to gain better market share. Efforts should be made to promote and develop appropriate distribution channels that will force customers to wait for the requested bicycle so that they can be explicitly attracted and assisted. The company aims to increase awareness of the value for the company and its products. In fact, Harley’s customers have to wait a long time to get the bikes they need, so the company has to work hard and take appropriate action on this issue where distribution and development of new sales bases can take-place.

Promotion Strategy

Harley-Davidson Motorcycle’s core technology and promotion tools are HOG’s actions. The company not only functions as a user relationship machine, but also as a vehicle for presenting and presenting new products. Harley should impress consumers. Within a year, as Harley’s experience evolves, the company must try to develop a brand licensing program in exchange for providing all profits to merchants and factories. The business plan can also stop contraband and priceless promotions from Harley Davidson. They should employ both old and new ads, using the TV and printed brochure and magazines, and they should employ the internet as many people start to use it on daily biases. They should also use the free driving exams to ensure their products safety and performance.

Conclusion

Harley is still looking to expand its business worldwide, no wonder of this, as the company is receiving success in America (at the local level) and success at the international level. Russia is a country with a strong economy and influencing the global economy, and is one of the strong markets in the field of car manufacturing. Harley can take advantage of the Russian market, but before that it must study the market well and implement a marketing strategy that ensures its survival in the forefront and the superiority of competitors and enhance its brand image. Good relationships and continuous improvement, and participation in customer management and appropriate marketing activities are more than just words in the Harley-Davidson management document. Instead of adopting all of these strategies and plans, the business attracted many customers, built brand loyalty and managed brand success. Companies need to improve in certain areas. Next, Harley needs to take certain steps to build capacity and close gaps that are negatively impacting its business. 

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