If you follow the motorcycle industry at all you know that Harley-Davidson is really struggling to find its next customer. Last year Harley experienced double digit declines in sales for 3 out of 4 quarters and many people are wondering where the bottom is for this iconic American brand.
To compound the sales problems, they had to recall thousands of bikes due to safety issues (brakes and clutches). This of course led to a shortage of parts. The shortage of parts led to an inability to ship new bikes, and so on…. You know the saying, “When it rains it pours!” and the executive group at Harley seem to be experiencing a torrential downpour.
Not Really Innovation
Harley has known for years it needed to figure out how to appeal to a new customer base. The old school marketing techniques that were so successful in the past have fallen short and they are simply struggling to fill the gap between a new generation and one that is dying off. Recently Harley released a new electric bike called the LiveWire in an effort to reach out to a new demographic. The $30,000.00 price tag and the products inability to compete with current products on the market left people scratching their heads. What the hell are they doing? If you are trying to sell to Millennials and you are offering an “innovative” product, that product needs to be a dramatic improvement over existing offerings or you are just making things much worse.
A Big Ego
One of the issues I think Harley is experiencing has to do with an inflated ego. They have survived for years by offering products that in some ways were far inferior to other brands. Actually, they didn’t just survive, they thrived! The older portion of their customer base would defend Harley’s obvious shortcomings which enabled Harley to continue down a path of inferiority. To me one of the glaring shortcomings was always the brakes. When you produce one of the heaviest bikes on the market and you are still installing single and dual piston brakes, you obviously have become a little complacent. I wrote an article some time ago named 10 Things I hate About My Harley where I spoke about some of the obvious shortcomings of the product. Surprisingly, the response was better than anticipated. When we published the article my colleagues and I cringed a bit in fear of the backlash that we would endure. Surprisingly, many of the comments were positive. Many of the customers agreed that the products were indeed inferior, but they were willing to overlook those shortcomings for love of the brand.
The Millennial Purchase Decision
The Millennials that Harley needs to reach are not going to have that same endearment. Many industries that have survived for so long are significantly being affected by the perceptions of the new generations. Popular restaurant chains are losing sales because Millennials prefer to order food in. Breakfast cereal sales are dropping because Millennials like the convenience of eating a breakfast bar. Retail stores are quickly becoming a thing of the past as ecommerce establishments are now able to provide better service with less risk and much more convenience. The Millennial decision process is much more focused. They consider things like convenience, value, public perception, and control of the transaction process. The net they can cast when doing research on a potential purchase is vast and detailed. Public opinion and social perception are important considerations in their purchase decision process. Many Millennials are entering the workplace with years of college debt so the products they choose need to have a high public rating and present a certain value threshold in order to be appealing at all.
What is the Answer
Harley-Davidson is in a tough spot. The current core customer represents a lifestyle and set of values that the new customer doesn’t necessarily align with. The task of meeting a new customer without alienating your current core customer is daunting to say the least and the current moves are not helping improve existing or new relationships at all. Harley needs to consider that the new customers are budget minded, convenience oriented, and have a completely different set of values than the customers of the past. In order to bridge the gap between the old customer and the new, Harley-Davidson needs to take their existing products and pay close attention to the details. They need to improve on the obvious shortcomings and get back to producing a product that produces a high value for the cost. No more $30,000 bikes that come with inferior brakes and $5.00 hardware. If you want to survive you need to stop nickel and diming your customers for optimum profits.
For the new customer they need to look at producing products that are convenient, innovative, and meet the needs of the new generation. Produce products that are affordable, easy to maintain, and really easy to maneuver. Develop motorcycles that offer conveniences that are outside the scope of the traditional Harley customer. The Millennial customer is much more likely to be interested in tooling around town instead of spending hours on the open road. There is a marketing saying that states you are supposed to, “sell the sizzle not the steak”, but with the amount of research the new customer can do, you better be sure there is some quality meat in that steak. Harley needs to spend less money on high dollar marketing schemes and spend more time understanding the Millennial’s wants, values, and desires.