This Harley Davidson SWOT Analysis shows that Harley seems to be a motorcycle giant right now, but there are specific lingering threats.
Harley Davidson, or simply Harley, is a company known worldwide for its survival throughout the century. The motorcycle manufacturer was one of the two major ones of its kind that survived the Great Depression. Not only that, but it has gone through many other obstacles like competition, changes in ownership, and financial issues over time. Yet, it has emerged as one of the biggest motorcycle manufacturers in the entire world. To understand what makes Harley Davidson this giant of a company, we look at a Harley Davidson SWOT Analysis.
History
The company started in 1903 in Wisconsin, and currently, they manufacture in different locations apart from that too, like Pennsylvania, Brazil, and India. The company has its own merch based on its motorcycle line. They are heavily credited for a style of customization that led to the chopper motorcycle style.
The Harley Davidson motorcycles have also been used by the military, with the most significant usage being in the World Wars. In the First World War, the US purchased around 20,000 motorcycles from Harley. In the Second War, they provided more than 90,000 motorcycles to the allies and about 30,000 to the Soviet Union. Their motorcycles were also used during the Korean War.
The Great Depression of the 1930s was one of the hardest things that any company has had to deal with. Withstanding this period of turmoil was a showcase that your business was destined for great things. Despite the hurdles, Harley applied certain strategies which helped them keep up during the Depression and resume sales after it as well. They designed certain new vehicles and also developed industrial powerplants based on their motorcycle engines.
The history of Harley is not without its dark periods. They have gone through periods of bad reputation, low sales, and declined quality. They even came close to going bankrupt. However, they have always managed to restructure and emerge successfully from such periods.
What factors can be considered as Harley Davidson’s strengths?
Reputation and History
Harley Davidson has a rich history. It has been in operation for more than 100 years now and has had years of experience to improve its functionality. Today, it is one of the most iconic and recognizable brands in the motor industry. It has sustained itself through its many years with sheer determination and quality production.
Harley has maintained its place and reputation in the market for a long time now. People feel confident in buying its motorcycles, and it is a name that people trust. The brand sells its products in 100 countries around the globe, and everyone knows that these are quality products.
The fact that they have been able to sustain operations for so long is evidence of this too. Harley has made sure that they come on top quality-wise, and this has given a lot of weight to their name in the consumer base.
Harley is currently the top motorcycle manufacturer in the United States, and it has an enormous market share of more than 30%. A lot of this comes from things they have learned along the way and their improvements based on experience.
Digital Marketing
Digital marketing is an asset that, once mastered, can be excessively used to your benefit. The digital platform opens up a multitude of avenues that won’t otherwise be accessible to you. It makes marketing more straightforward, especially to specific target groups. You can reach new audiences and also engage with your customers.
This has been something that Harley has used to its benefit. They have a significant following on social media. They are using it to reach younger audiences who have different buying behaviors as compared to Harley’s usual middle-aged buyers. Social media is proving to be a big strength for Harley.
Diversification
Harley’s name is generally associated with motorcycles. But the brand has diversified itself and sells a wide variety of other things as well for buyers who might want to connect with the brand but are not looking for a motorcycle.
They sell a lot of merchandise and parts & accessories. And this is not just for show purposes; a good chunk of Harley’s total revenue is derived from these sales.
They are also focusing on the expansion of their product range by producing electric motorcycles and bicycles. These are both markets that have great potential. They are estimated to be worth billions of dollars right now, and this sum is only expected to increase in the future.
They are constantly trying to come up with newer models, especially ones that will attract younger customers who might not be interested in the older models. Historically, they have had a record of always being able to come up with new models and products to deal with incoming obstacles and crises.
Cashflow
Harley’s revenue proves to be a great strength for the company. They have enough money flowing in that they can turn it into alternative routes for revenue generation. One of the biggest ways they have done this is by the provision of services in financing the people who cannot afford a motorcycle with a single payment.
In the earlier half of 2020, Harley generated $394 million from this venture of theirs. Their new revenue streams have provided them with reasonably good returns on capital investment.
Brand Culture
Harley has developed itself into a club or a cult with its own unique culture. Many Harley Davidson clubs exist worldwide. They picked up the name hog from the ‘hog boys’ races and turned it into their own acronym of ‘Harley Owners Group.’ Although not officially trademarked, the word’ hog has come to be associated with Harley Davidson.
HOG was then properly established as a community marketing club in the 1980s for enthusiasts of the brand. They have more than a million club members who get many unique benefits like merchandise, group rides, discounts, and much more.
The Harley manufacturing sites also offer factory tours now. They also have a museum that is dedicated to exhibiting the history, culture, products, and corporate archives. Harley riders worldwide gather for the Harleyfest, an anniversary festival that happens every five years.
The owners have also been included in the Labor Hall of Fame, and the origins of the company have been presented on tv in a miniseries that was called Harley and the Davidsons. Things like this have solidified the culture surrounding the company and have turned it into a club for its fans.
Strong Dealership and Distribution
Harley has a very strong distribution as well as dealership network, both of which very efficiently tackle the markets. The dealers have developed teams that also sell the product and explain to the consumer how they can get the best experience out of a certain product.
It's small efforts like these that make a big impact on customer experience and retention in the long run.
What are some of the weaknesses that Harley Davidson is struggling with?
Reliance on one market
Harley is mainly relying on the American market for the most part right now, which can never be a good idea. If any business depends heavily on one market, there are always certain risks attached. Even though the revenue Harley is procuring in this market is enormous, any sudden changes in the market could damage the brand to a great extent.
To avoid any potential liabilities like this, it is always a good idea to expand to other markets and deepen operations in various parts of the world. This can provide a certain stability to a business.
Customer Base
Harley has tried its best to make use of social media to appeal to younger demographics, despite that its customer base still mainly consists of baby boomers. The buying trends have been rapidly changing within the younger generations. A lot of baby boomers bought motorcycles because they looked ‘cool.’ Millennials, if they buy, purchase motorcycles solely for practical purposes, and hence they look for cheaper yet viable options.
The average age of Harley riders keeps increasing every year. A portion of this can be attributed to the fact that maybe the efforts they are making to attract younger audiences do not actually align with the target demographic.
An example of this is Harley’s electric motorcycle, which was introduced at a retail price for which you could get an electric car rather than a bike. The design of the bike was also not something that would appeal to the changing preferences of younger generations.
In order to actually expand their customer base to new demographics, businesses need to put in adequate market research that determines the steps they can take for this purpose.
Narrow Supply Chain
Harley Davidson usually relies on a single source to supply a particular part for the entire manufacturing of the brand. This is a considerable weakness because if anything happens to disrupt the flow of this single supply chain, the whole company will have to face severe impacts.
To avoid situations like these, it is necessary that a brand expands its supply chain and does not rely on a single supplier for all of its functions. A single source can go through many unexpected changes that cause the supply to stop.
Lack of Diversification in a Strategic Manner
In a way, Harley has tried to diversify its operations. However, despite all the efforts, there still exist many similarities between the vehicles offered by the company, which can be a negative point for the consumers.
What are some opportunities for Harley Davidson?
Expansion of Target Demographic
Despite its previous techniques going a little wrong, Harley still has the potential to appeal to younger demographics. Once it masters the products that millennials will definitely buy, a lot of new opportunities will open up for the brand.
The new demographic can include not only younger people but also women. Previously, most of the marketing of motor vehicles centered around women, but now due to the influx of women riders, companies can start appealing to women riders too.
Direct Selling
Harley sells through other independent middlemen right now and relies heavily on their sales. The brand can open up its own direct dealerships, which will save a lot of costs and allow it to have more control over selling factors.
What are some threats Harley Davidson should be careful of?
Local Competition
Harley Davidson has to compete with a lot of local competition in American as well as foreign markets. Many of these local companies offer similar products for much lower prices, which sets them as a better option than Harley for many buyers.
A good example is Zero Motorcycles, a local Californian company that sells electric motorcycles at a price point that makes Haley’s prices look enormous.
Meeting Market Demand
Harley has maintained a place in the motorcycle industry for so long because it has always been able to cater to the market demand in some way. With the rising demand for electric motorcycles and changing consumer trends, they risk losing their place to other competitors if the company fails to come up.
Harley Davidson SWOT Analysis: Conclusion
Through this SWOT Analysis, we understand that Harley seems to be a motorcycle giant right now, but there are specific lingering threats. If the company fails to manage these concerns timely, it can lose the position that they hold.
Harley Davidson has stood the test of time so far. However, things in the consumer market are now rapidly changing. In order to see whether the company manages to meet the challenges it is facing currently, we have to give it a little bit of time. They definitely have the resources to do so; it all depends on whether they focus their expertise here or not.
If you ever need to understand a business from a strategic point of view, that is where a SWOT Analysis will help you immensely. It is a tool through which you ascertain a company’s strengths, weaknesses, opportunities, and threats and evaluate them to understand the company’s operations.
We have a SWOT Analysis template and many SWOT analysis examples that might be useful for anyone looking to conduct their own SWOT analysis. Looking through this detailed SWOT guide can also help you negotiate the task at hand.
Lastly, another handy little tool is the SWOT Table. Drawing up a table like this provides a quick yet meaningful look to any readers regarding the business.
