AProject Report

ON

“Harley Davidson”

SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF THE

DEGREE OF BACHELOR OF BUSINESS ADMINISTRATION

UNDER THE GUIDANCE OF

Dr. Amit GuptaProject Co-ordinator

SUBMITTED BY:

VIPULBatch BBA

Enrollment No

HARLEY-DAVIDSON

The Brand

ACKNOWLEDGEMENT

I gratefully acknowledge and thank my Principles Of Marketing Teacher Mrs. Riya Sharma for her support and help, The classroom teachings provided by her were extremely beneficial and guided me on how to work on my project. I am also thankful to my parents for providing me with the resources and encouraging me. I am thankful to everyone who’s helped me complete the project. Last but not the least I am thankful to the almighty for giving me this wonderful opportunity.

Vipul

CONTENTS

Harley-Davidson Motor Company (NYSE: HOG, formerly HDI) is an American manufacturer of motorcycles based in Milwaukee, Wisconsin. The company sells heavyweight (over 750 cc) motorcycles designed for cruising on the highway. Harley-Davidson motorcycles (popularly known as "Harleys") have a distinctive design and exhaust note. They are especially noted for the tradition of heavy customization that gave rise to the chopper-style of motorcycle.

Harley-Davidson attracts a loyal brand community, with licensing of the Harley-Davidson logo accounting for almost 5% of the company's net revenue ($41 million in 2004). Harley-Davidson supplies many American police forces with their motorcycle fleets.

HD Mission Statement says:

“We fulfill dreams through the experiences of motorcycling, by

providing to motorcyclists and to the general public an expanding line

of motorcycles, branded products and services in selected market

segments”

MISSION analysis

COMPONENTS YES / NO

CUSTOMERS YES

PRODUCTS & SERVICES YES

MARKETS YES

CONCERN FOR SURVIVAL YES

TECHNOLOGY NO

PHILOSOPHY YES

SELF CONCEPT YES

CONCERN FOR PUBLIC IMAGE YES

CONCERN FOR EMPLOYEES NO

MISSION STATEMENT EVALUATION MATRIX

Harley Davidson – The company -- The Brand

Harley Davidson has been in business since 1903. According to the website, “four young men experimented with internal combustion in a tiny wooden shed. Not only does the shed not burn, but the motorcycle they build goes on to serve for over 100,000 miles” (Harley Davidson, n.d., 1). In 1901, William S. Harley draws a blueprint of a motor to fit a bicycle. Later, he is joined by Arthur Davidson and they build the first Harley Davidson motorcycle.

Harley Davidson has excess demand for its products. Its products include motorcycles, accessories, and apparel. It is the only U.S. born motorcycle manufacture. Its website provides the internet user, or motorcycle enthusiast, with interesting, useful, and visual information on its products and services. Harley Davidson’s market niche is a wealthy or above average income individual. Many of their buyers are older adults who like to ride for relaxation.

Harley Davidson uses customer surveys and motorcycle rallies to conduct their marketing research. This research has influenced Harley to start to manufacture motorcycles for women. Women riding motorcycles has increase 10% since 1987. On their website, Harley has a separate web page for women riders. On this page, topics include why women ride, learning to ride, women riders making headlines, and the history of female riders

Harley Davidson appeals to consumers through brand identity. “The value of brands in today’s environment is phenomenal. Brands have the power of instant sales, they convey a message of confidence, quality and reliability to their target market” . Everybody recognizes the bar and shield symbol of a Harley Davidson. Owning a Harley Davidson motorcycle signals American pride, and depending on what type of motorcycle the individual has it could also signal wealth. Harley Davidson’s target market can be subdivided into smaller niches. These niches include the motorcycle itself, fashion, charity runs, the Harley Davidson Owners Group (also known as H.O.G.), and social events.

Harley Davidson has chosen the strategic direction of targeting a younger market. With the introduction of the V-Rod motorcycle, Harley Davidson is trying to capture the performance cruiser marketplace. “To target the

younger market with the new product line, the company has adopted the following marketing objectives: to expand its current market (market expansion), diversify its product line (product diversification), and modify its marketing mix to target a younger demographic” (Thompson, 2006). Currently, Harley Davidson’s marketing mix consist of riders in the age group of 35 – 44. Harley Davidson is trying to gain a new mix of motorcycle riders. They are aiming for younger riders with the introduction of the V-Rod. If they obtain this new marketing mix, they will control the American motorcycle industry.

Other marketing strategies Harley Davidson uses is that it is cheaper on gas. Their slogan is “Live to Ride.” Also, they create an image by telling consumers that while riding one of their bikes it relieves a lot of stress. Since Harley has a huge recognizable brand image, this gives the Harley motorcycle a favorable resell value. Many motorcyclist treat their Harley’s as investments. After all, Harley cannot build the motorcycles fast enough to keep up with demand. Harley also uses their website as a marketing strategy. The website provides a means of communicating with all of the riders and soon to be riders. It is a way to stay connected to Harley and the Harley mystique.

The most important aspect of understanding the functionality of the marketing plan is the feedback involved from the consumer. “To comprehend why or why not a certain aspect of the marketing mix is working, consumers of the product must be allowed to give their input” (Thompson, 2006, 5). Continual and efficient uptake of data from the customer, whether through surveys or questionnaires or any other technique is critical in order to see whether the marketing plan implemented is working accordingly as planned.

Rev of brandHarley-Davidson has been able to build a community of enthusiasts around its brand that includes members from very diverse groups, and with almost no advertising. How does the king of heavyweight motorcycling keep its fans so loyal? It gives them a reason to "belong."

In the pantheon of powerful American brands, most, like Coca-Cola, Tide, McDonald's, Levi's and Nike, have reached icon status through long-term, high-visibility campaigns marked by a consistent trumpeting of a simple message. Theirs is a story of deep pockets and relentless promotion.

Occasionally, however, a brand emerges without the panoply of wall-to-wall advertising and in-your-face marketing. Instead, recognition comes from a quiet, behind-the-scenes effort to sell a product more directly on its merits, in its own time and in its own way. And the brand's idiosyncratic path to success becomes a rich field for marketing gurus and academics to mine, offering lessons not only for other offbeat efforts but also for those seeking to better the odds of mainstream campaigns.

Perhaps no product exemplifies this non-traditional route to brand excellence more than America's freewheeling symbol of the road, the Harley-Davidson motorcycle. Twice at the brink of bankruptcy since the 1960's, the Harley-Davidson Motor Company and its parent, Harley-Davidson Inc., have undergone a stunning metamorphosis in the past decade, fueling a level of demand that is the goal of corporate chieftains everywhere.

The change has not only enhanced Harley's standing in the highly competitive and lucrative market for big motorcycles, where it had been pummeled for years by waves of aggressive Japanese imports, but it has also extended the brand's reach to previously untapped businesses as far afield from two-wheel behemoths as fashion and food. Having largely reinvented itself, as both a company and a brand, the Milwaukee-based motorcycle maker is now reaping the benefits of a hip, with-it image even as it prepares to celebrate its 95th birthday next year.

With its feet firmly planted in both the present and the past, Harley offers traditional -- many say retro -- styles and the best, most-refined 1940's technology around. That approach -- marked by ample bulk (some models weigh almost 800 pounds, about twice that of otherwise comparable BMW machines), twin cylinders and a throaty growl -- has been derided by high-tech motorcycling enthusiasts as an inefficient relic of a bygone era. But to Harley's customers, the motorcycles are lovingly crafted works of art. And many genuine artists agree. In a recent exhibit of global design held at London's Victoria and

Albert Museum, the object chosen to represent America's design sense was a Harley-Davidson.

How Harley came back from death's door to reach this enviable state is a story of marketing and brand enhancement that can apply as much to tools and furniture as to motorcycles. In large part, the revival stems from a hard-eyed comparison of the competition's strengths (in particular, the ability to quickly turn out new products studded with high-tech innovations) with its own (a unique tradition and a powerful mystique).

The company's conclusion, said Clyde Fessler, vice president for business development, "was to turn left when they turn right. 'Let's be the alternative and do the things they can't do.' And that became our strategy in everything we did and still do."

That meant hitching a clearly defined marketing plan to the goal of capitalizing on the company's special place in American pop culture, including its retro look. By finding new ways to reach out to three core constituencies -- customers, employees and dealers -- Harley managers fanned a lingering loyalty for their products into a revived passion, one powerful enough to prove contagious to many thousands of new buyers. Along the way, the company reversed a painful decline in quality that caused some of its old customers to cross the street to the foreign competition. .And it softened its outlaw image just enough to entice a new generation of clean-cut buyers to join a club that had long been synonymous with the Hell's Angels -- yet without taking away the frisson of excitement that came from being a member.

Indeed, membership now doesn't even require a driver's license. Shoppers dropped $100 million last year on Harley-Davidson Motorclothes and an unknown amount on hamburgers and other fare at the Harley-Davidson Cafe in midtown Manhattan. Even kids can join, with toys for the boys and leather-clad Harley Barbie dolls for the girls.

The company accomplished all this by spending very little on advertising -- in fact, by running no ads at all last year. This year, it plans to spend a minuscule $1 million on advertising out of a total marketing budget of just $20 million.

Harley's return has almost been too successful for its own good.

Sales have grown at a compound annual rate of 16.2 percent since 1987, with profits up even more, soaring at a comparable rate of 29.2 percent. Last year, the company reported net income of $166 million on sales of $1.53 billion. To get to those numbers, it moved a lot of metal, posting worldwide sales of 118,000 big bikes -- those with engines of 650 cubic centimeters or more -- up from 55,000 in 1989. This year, the company plans to sell 130,000.

But that will not be enough to satisfy demand. The appetite for Harley motorcycles is now so strong that it can take a year or two to get one, even if a customer is willing to pay the thousands of extra dollars that some dealers are tacking onto the usual list price of $15,000 or more.

To catch up, the company has committed $200 million to expand production capacity to 200,000 units by 2003, its centennial year. In the meantime, the inability to meet demand is decidedly a mixed blessing.

On the plus side, Harley enjoys some of the production economies that have made direct computer sellers like Dell and Gateway 2000 such spectacular successes. Every motorcycle that Harley makes has already been sold; in effect, the company is now building to order. That means no steep inventory costs for the big bikes relating to storage, financing and other expenses. (The company is reducing inventory costs for spare parts and accessories in another way: through a sophisticated intranet system that connects its nearly 1,000 dealers worldwide to a central customer data base..)

The downside to not keeping up with demand, of course, is the loss of business to the competition. Just how much of a loss is not clear. Harley's share of the heavyweight motorcycle market in the United States was 48.2 percent in 1996, virtually unchanged from the 48.5 percent share it held in 1991, according to R.L. Polk & Company, a market research firm based in Detroit. Harley managed to hold its own during that period even as the overall big-bike market in the United States nearly doubled, to 166,000 units. But some Harley dealers say they could easily sell twice as many bikes as they now get.

Whatever the actual number of lost sales, Harley's gap between supply and demand represents an opportunity for Japanese and other importers to exploit, giving them that much more of a perch from which to build their own brand loyalty.

Why the shortfall? Harley executives say they have been reluctant to expand too fast for fear of compromising their renewed commitment to quality. But there is a "Depression mentality" at work as well, said Christopher Hart, a management consultant in Boston who has worked with the company. Having gone to the edge of bankruptcy twice before, Harley's top brass are in no hurry to tempt the fates again.

The bottom line, then, is rich in irony: the senior managers of one of the most recognized symbols of American excess -- the chrome-laden, ultraheavy Harley is known affectionately as "the hog," after all -- turn out to be conservative keepers of the flame.

And therein lies still another lesson for managers in other industries who wouldn't know a Harley from a Ducati: fashions change. If the hog fell out of favor before, it might fall out of favor again. But by guaranteeing quality, rather than pushing for every last sale, the company can count on a core group of customers to remain loyal. And by extending the brand's good name in different directions, Harley is finding new customers who don't necessarily want to own a motorcycle at all. In both ways, Harley's managers are tapping into a more stable revenue stream that should help to keep the company afloat during whatever bad times lie ahead.

The Lifestyle Hook

What kept Harley going in its darkest days, and what is driving it now in high gear, is the plain fact that the motorcycle it makes is not just a product but rather the centerpiece of a lifestyle -- even for its managers.

The Harley management team, in fact, has a visceral connection to the brand and to its customers that is difficult to match in most corporate boardrooms. The senior executives own the motorcycles and ride with their customers. Indeed, they are customers,

journeying to Harley rallies and taking their places on the same waiting lists to get new bikes.

"We are committed to motorcycling," Richard F. Teerlink, Harley's chairman and former chief executive, said in a recent interview. "It's not hardware; it is a lifestyle, an emotional attachment. That's what we have to keep marketing to."

As an American icon, Harley has come to symbolize freedom, rugged individualism, excitement and a sense of "bad boy rebellion."

"Harley reflects many things Americans dream about," said Benson P. Shapiro, a consultant and a marketing professor at the Harvard Business School. "They're a little bit naughty, a little bit nice, which is a very attractive brand image to have."

Significantly, Harley benefited from its unsought association with outlaw bikers and films like "The Wild Ones" and "Easy Rider." Harley riders like the awe the bikes inspire at stoplights or when groups ride into small towns. Many Harley owners and employees (at least of the old school) feel such a bond to their bikes that they have a weakness for tattoos of the company's logo.

Rather than quietly observe this strange cultural phenomenon, Harley executives publicly boast about it. In the 1996 annual report, Mr. Teerlink wrote: "Most people can't understand what would drive someone to profess his or her loyalty for our brand by tattooing our logo onto his or her body -- or heart. My fellow employees and I understand completely. We also understand very clearly that this indescribable passion is a big part of what has driven and will continue to drive our growth."

Harley has marketed this emotion across a broad consumer population, from blue-collar craftsmen and bearded, beer-bellied "motorheads" to a growing legion of chief executives, investment bankers and high-profile entertainers, including Arnold Schwarzenegger, Jay Leno and Billy Joel. The profile of the typical Harley owner has steadily gone up during the past decade, in both age and household income (from 32 to 44 years and from $30,000 to $72,000), as more white-collar baby boomers have bought the bikes to fulfill a lifelong dream. How many boomers are holding the handlebars? One rough measure: 31 percent of all Harley owners are college grads.

Yet while catering to this new upscale market, Harley has managed to avoid alienating its traditional customer base, the hard-core Harley lovers, whom Mr. Teerlink referred to as "the enthusiasts." "It's an honor to be a status symbol," he said, "but status symbols go away. We want to be part of your life."

To keep that role, Harley-Davidson has become adept at fostering "customer intimacy" -- and even extending the concept to dealers and employees. Harley's 5,500 employees, for example, vie with each other to attend rallies and other company-sponsored events during the year. Being a Harley employee at a rally is a "badge of honor," said Joanne M. Bischmann, the company's marketing vice president.

Indeed, it would be difficult, said Mr. Hart, the Boston-based consultant, to find a management team that stays as close to its customer base. "I don't know of any company, and I've worked with all sorts of companies," he said, "where the senior executive team goes out to the Four Corners and spends over a week riding with a group of customers to an event celebrating the product."

And Harleys, without question, are celebrated products, functional works of art to their owners, much like a Rolex watch, a Bang & Olufsen stereo, a Wurlitzer jukebox.

George Conrades, the chief executive of BBN, a software company in Cambridge, Mass., owns six motorcycles, three of them Harleys. "They are Barbie dolls for grownups," he said, explaining the propensity of many Harley owners to spend thousands of dollars adding customized parts and accessories to their machines.

Mr. Conrades, a former senior vice president for marketing at I.B.M., chatted rationally about Harley-Davidson's marketing challenges -- including the need to take more advantage of the customization craze, which the company has largely ceded to third-party vendors. But his eyes lit up -- and emotion took over -- when he mentioned a new Harley model. "Have you seen that Heritage Springer?" he asked. "You don't know whether to ride it or put it in your living room. It's just gorgeous."

That kind of passion explains how Harley has been able to cross so many socioeconomic boundaries. Its owners are buying much more than a mode of transportation. What bonds them to the bikes -- and ultimately to each other, at rallies and other events -- is a mutual appreciation of the look, feel and sound of the machines.

The Japanese competitors, such as Honda, Kawasaki, Suzuki and Yamaha, along with German giants like BMW, have taken straight aim at the heavyweight or so-called cruiser market, which accounts for about 45 percent of total motorcycle sales in the United States. And while they have captured a bit more than half of that market -- producing high-quality machines that look and sound something like Harleys, while costing less -- they have been unable to match the Harley mystique, at least so the Harley camp says.

"The people buying the other bikes are new to the cruiser market and don't know any better," said Mark O'Neil, the marketing manager at Cycle-Craft, a 38-year-old Harley-

Davidson dealership in Everett, Mass. "But to those who already own a Harley, they just laugh and say, 'Good try, bad result.' Harley's heritage evolved over a long time. You can't just come in and say, 'We have that, too.' "

The Bumps In The Road

But for many years, from the 60's to the early 80's, it was far from clear that Harley's heritage would continue to be a living one. Time and again, the company seemed to be heading into a wall.

By the mid-1960's, Harley was the last of more than 200 American motorcycle makers to survive. But poor family management, a decline in quality and the sudden onslaught of Japanese motorcycles were all pushing it to the brink of bankruptcy. A rescue came in 1969, when the American Machine and Foundry Company purchased Harley for $21 million.

But A.M.F. saved Harley only to run it back into the ground. To its credit, A.M.F. started by pouring millions into the company. By 1973, Harley was turning out 37,000 motorcycles a year and pulling in $122 million in sales. A.M.F. forced the company into overproduction, however, further compromising quality. Harleys, which already had a reputation for leaky engines and creaky temperaments, were now almost untouchable.

In the mid-70's, A.M.F. went too far when it replaced the Harley name with its own. Apparently unaware of the magnitude of that marketing blunder, which sent sales plummeting, A.M.F. soon began looking to unload the troubled company. In 1981, Vaughn Beals, Harley's chief executive at the time, pulled together a dozen other company officers who found outside financing and became the new owners.

Saddled with $70 million in debt from the buyout amid a terrible recession and a continued push by Japanese competitors, Harley-Davidson was a company on life support for several years. It lost more than $50 million in 1981 and 1982 and by 1983 was facing bankruptcy again.

In desperation, management publicly railed against the Japanese for allegedly "dumping" their bikes on the American market below cost in a bid to capture a bigger slice of the business. Harley squawked loud enough to persuade President Ronald Reagan to impose a stiff tariff on the Japanese imports, gaining the American company some breathing room. Ironically, at the same time, Harley executives were touring Japan and bringing back such vaunted production methods as just-in-time inventory control and quality circles.

Mr. Beals later acknowledged to The New York Times that after years of blaming the Japanese, Harley finally admitted that its troubles were internal. "We realized the problem was us, not them," he said.

With a complete make-over of its manufacturing processes focused on quality, Harley commenced its rebirth. Desperately needing cash to finance the revival, the company went public in 1986 and quickly became a darling on Wall Street.

Mr. Beals and Mr. Teerlink were clear with investors from the outset that the company's main asset was its brand, which had managed somehow to survive all the corporate miscues. The company certainly was in need of a jump-start in the marketplace, they conceded. But, they quickly added, once it got moving again, Harley knew where it wanted to go.

A road map had already been drawn by Mr. Fessler, now the company's vice president for business development. Mr. Fessler joined Harley in 1977 as the advertising and sales promotion manager and became part of the marketing strategy team in the early 1980's, with a mandate to put a new face on the company's tarnished image.

He recently recalled a four-day strategy meeting he held back then with Harley's new ad agency, Car-michael Lynch of Minneapolis.

"On a big piece of paper, we drew up a list of comparisons between the Japanese bikes and ourselves," he said. "We put down all the strengths and all the weaknesses. The Japanese were global, into long-term strategic planning, did a lot of advertising and had great diversity in their global markets. They could take a concept from idea to product in 18 to 24 months.

"As for Harley, we had heritage, tradition, mystique. How were we going to compete against these giants? We looked at where they had been the previous five years and were able to project where they were going in the next five -- new engines, new frames, new suspensions, very high-tech. So we decided to be the alternative."

Out of that decision came a number of key concepts that determined Harley's fate:

Back To The Future: Harley made a clear choice to stay with its traditional styling, a classic 1940's and 50's design that aficionados believe motorcycles were meant to have. In Willie G. Davidson, the grandson of one of the founders, the company had a vital link to its design heritage. Dressed in black leather and beret, Mr. Davidson, now the 64-year-old head of the design department, took to the road and met with Harley customers,

listening to their comments. Voicing disdain for the slick Japanese machines, they expressed nostalgia for old Harley models and the outlaw touches that had turned Harleys into "choppers." Willie G. designed new lines like the Softtail to mimic the beauty and elegance of 40's classics like the Hydra Glide.

"We experimented with radical designs inside," Mr. Fessler said. "But every time we did that, we found out the customers didn't want it and we had to fall back."

Build A Community: In 1983, at the urging of Mr. Beals, Mr. Fessler set out to create a company-sponsored club for Harley riders. The Harley Owners Group, or H.O.G., was started as an organization that would sponsor rallies, offer special

promotions and keep Harley owners in close contact with the company and each other. For as long as anyone could remember, Harleys had been called hogs, but the connotation was a negative one, of outlaw bikers like Hell's Angels. "My thought was to turn a negative into a positive," Mr. Fessler said. For many Americans, the sight and sound of an entourage of Harleys roaring into town meant a nasty motorcycle gang had arrived. So Mr. Fessler pushed hard to get H.O.G. associated with the Muscular Dystrophy Foundation. Under the club's banner, groups would ride for charity. Slowly, the perception began to change. Today, H.O.G. members

constitute the fourth-largest contributing group to the Jerry Lewis Telethon each September.

Give Them A Reason To Belong: At the first H.O.G. rally in 1984 in California, 28 people showed up. Today, H.O.G. has 365,000 members in 940 chapters throughout the world. The organization sponsors hundreds of rallies around the country each year, including massive gatherings in Daytona Beach, Fla., and Sturgis, S.D. With the Fly and Ride program, H.O.G. members who are on vacation or traveling on business can call ahead and rent Harleys through local chapters. And every five years, the company and H.O.G. sponsor anniversary reunions in Milwaukee. More than 100,000 riders are scheduled to converge next year to mark the company's 95th birthday. Already, there are no hotel rooms available for that weekend within 100 miles of Milwaukee.

Extend The Brand: Mr. Fessler realized that legions of Harley riders in black leather jackets and black T-shirts also hurt the company's image. Unfortunately, that is what the company sold them. So in 1986, he launched Harley-Davidson Motorclothes, which offered shirts with collars, denim blue jeans, baby clothes and bright-colored fashion items for women.

At the same time, Harley began to license its popular shield-and-bars logo for hundreds of products, from train sets to Christmas ornaments to the special edition Barbie. In Europe, L'Oreal licensed the name for a line of cologne. Mr. Fessler insisted that the merchandise had to be durable and high quality. The logo was licensed to a Zippo lighter, for example, rather than a Bic disposable.

Each decision to go upscale in ancillary products led to another. Realizing that most of its dealers were ill-equipped to sell fashion items, Harley began to require them to remodel their stores (at their own expense) to showcase the merchandise. Despite grumbling from a few of the 600 domestic dealers, the clothes operation has become a big success, helping to boost sales of Harley parts and accessories, which now account for $210 million a year in revenues.

Meanwhile, the Harley-licensed restaurant in Manhattan, modeled after the Hard Rock Cafe, will soon be joined by another, in Las Vegas. And Harley-Davidson stores selling clothes and other paraphernalia have become familiar tenants in malls around the

country.

Mr. Fessler acknowledged some bad decisions -- like licensing the Harley name to a line of cigarettes -- and the company's licensing department now has strict operating guidelines. The idea is to give people access to the Harley experience, whether they own a bike or not. "We always ask, 'Does it somehow lead back to the motorcycle?' " said Ms. Bischmann, the marketing vice president.

She added that Harley toys, built by the likes of Mattel and Kenner, are an excellent way to extend the passion for Harleys to a younger audience, and with an aging customer base, this is a key marketing challenge. "What better way is there to get a 3-year-old to feel the Harley motorcycle experience?" Ms. Bischmann asked.

Critics suggest that Harley is "selling out" and diluting its brand by putting its logo on so many products. But Harvard's Professor Shapiro disagreed. "As long as they don't get distracted from their core business, this helps build the mystique," he said. "If you don't continually change and extend the brand, you die. If you change too much, you also die. But I don't believe Harley has come close to burning out."

Extend The Enterprise: Even through its bleakest period, Harley has maintained close ties to its dealers. Of the 600 domestic dealers, most have been with Harley for decades; many dealerships have been in the same family's hands for three generations, with one family tracing its ownership back to 1914. The company holds quarterly meetings with an elected 10-member dealer advisory council. In July, every senior Harley manager is expected to attend the annual dealer meeting, where new models are previewed and problems get aired. Six years ago, the company opened Harley-Davidson University, where dealers can take three-day courses in such topics as "How to Manage Your Business" or "How to Create a Succession Plan."

Harley, said Mr. Hart, the consultant, is cognizant of the fact that it was the dealers who came to the rescue as the company went through its rebirth during the mid-1980's. During the first years following the management buyout, "the quality of the bikes was terrible and Harley counted on the dealers to fix them," Mr. Hart said. "They went through the war together and the dealers didn't charge the company back for any of this."

Of course, the dealers make more money from service and the sales of parts and accessories than from sales of the motorcycles, so few are complaining. The relationships are long, deep and symbiotic. Harley understands that the dealer is the customer's conduit to the company. Indeed, for many Harley owners, the local dealership is a second home, a

gathering place. "I can set my watch by certain people coming in every day," said Mr. O'Neil of Cycle-Craft.

Add Value: Like Mercedes and Porsche, a Harley holds its value to an astonishing degree, and the company has taken advantage of that fact. In the late 1980's, Mr. Fessler created a marketing campaign called Ride Free, designed to move owners up to bigger, more expensive motorcycles. The company promised owners who bought new Harley Sportsters, the entry-level bike which sold at the time for $3,395, that they could trade them in a year later for a bigger Harley and get the full $3,395 credited toward the price of the new bike.

There is also a huge aftermarket for Harley parts and customizing kits, which Harley shares with legions of independent third-party "chop shops." Personalizing a Harley by innovative paint jobs, scads of new chrome and pricey saddlebags has become its own time-honored Harley tradition. In fact, industry watchers agree with Mr. Conrades that Harley could get a big boost in sales by focusing on this market more than it does.

Not surprisingly, as production shortfalls over the past six or seven years have led to waits of up to two years for new bikes, the value of used Harleys has skyrocketed and owners can often sell their machines for more than they originally paid.

Sometimes they don't have to wait very long at all to make a profit. John Atwood, owner of Cycle-Craft, recalled the day, some four years ago, when he sold a new Harley Road King to a customer who then walked out the door and resold it to someone else in the parking lot for $2,000 more. "He didn't even have the decency to leave my lot," Mr. Atwood said. "I felt like I had a big 'stupid' sticker on my forehead."

Looking Ahead

Harley is quite sensitive to the production shortfall. A new plant, scheduled to open next year, should ease the wait considerably. In the meantime, management watches nervously as some dealers take advantage of the situation by adding $5,000 or more to the suggested retail prices, inevitably turning some would-be customers off for good. Dealers like Mr. Atwood, who have held the line on prices, believe Harley will solve the backlog by 1999. "When Harley gets the bugs worked out with expanded production, things will explode," he said.

Company executives agree that the backlog is far too long. "Our mystique has never been about being hard to get," Ms. Bischmann said. "We don't want the waits; our dealers don't want the waits. This is just an obstacle we have to overcome."

Customers like Mr. Conrades worry that in a society of instant gratification, the supply shortfall "gives people a reason to go elsewhere and explore the other options."

That is Harley's worry, too, of course. The big fear is that significant numbers of motorcycle enthusiasts will opt for the Japanese competition, form their own groups, gain

their own cachet and, perhaps, even become accepted by hard-core Harley riders. To prevent this, consultants say, Harley must drive its brand deeper and deeper into the culture, yet without cheapening its image.

Mr. Teerlink agrees, but he says customers will be patient as long as Harley makes it clear that the wait is because "we want to guarantee the same level of quality."

Beyond that, Harley can always count on the staying power of its brand, and on customers like Mr. Conrades. "If I had only one bike," he will tell you, making a vow that sounds unshakeable, "it would be a Harley."

Leveraging The Brand

How powerful is the Harley-David-son brand? The tangible evidence is compelling:

In 1996, Harley spent not a single penny on advertising. It didn't have to. Madison Avenue thinks the company's bikes are so cool that it puts them in ads for countless other products, giving Harley millions of dollars' worth of free exposure. While companies paid $1 million for each 30-second spot during the 1997 Super Bowl, 100 Harleys were on the field as part of the half-time show, again at no cost to the company. Harley's marketing vice president, Joanne M. Bischmann, reports that she is constantly barraged by requests from celebrities to serve as the company's official pitchman. Since Harley has no national television advertising and only a small print campaign , Ms. Bischmann politely declines all requests.

With or without paid advertising, Harley motorcycles -- there are four basic categories, with about 20 different models -- are in such demand that dealers consistently report waiting lists of a year or longer. Even the wife of Harley's chairman, Richard F. Teerlink, had to order a new bike nearly a year in advance to get it in time for his birthday.

The company now regularly reports record sales and earnings each year -- $1.53 billion and $166 million, respectively, in 1996. Harley has quadrupled production in the past decade, to about 130,000 this year, but still can't keep up with all the orders.

Nearly out of business in 1985 because of its own mistakes and stiff Japanese competition, Harley now has such cachet that its name adorns everything from a popular Manhattan restaurant to L'Oreal cologne to a limited-edition

Barbie doll.

Harley-Davidson Motorclothes -- mixing black leather jackets with French-cut women's underwear and fashions for tots -- is now a $100 million-a-year business. To sell the merchandise, most of Harley's 1,000 dealers around the world have transformed their greasy showrooms into airy boutiques.

Competitors are so intent on grabbing market share in the lucrative heavyweight class that they sometimes try to copy Harley's styling and even its sound. Accordingly, Harley has filed papers with the U.S. Patent and Trademark Office to protect its tailpipe rumble.

Harley employees, like those in every great marketing company, take personal responsibility for maintaining the luster of the brand. That was so much the case at Harley that the company shut down its branding department in 1995. "We didn't need it," Ms. Bischmann said. "We're all brand managers." Harley employees model in the

company's Motorclothes catalogue, attend rallies and act as tour guides at the manufacturing plants. Last year, more than 60,000 visitors toured the biggest plant, in York, Pa., where the bikes are assembled.

All this has fueled shareholder value: $100 invested in Harley stock in 1986, when the then-beleaguered company went public, was worth $3,488 a decade later.

Quality As A Survival Tool

"Buy a Harley, buy the best --ride a mile and walk the rest!"

In the 1970's, when Harley-Davidson was owned by the American Machine and Foundry Company, the reputation of its motorcycles sank so low that sarcastic ditties about the legendary bikes made the rounds of the riding community. Under A.M.F., Harley-Davidson ramped up production sharply at the expense of quality. It almost drove the company to ruin.

During that decade, Japanese motorcycles, known for their reliability and lower prices, took over the heavyweight market and left the leaky and temperamental Harleys in their dust, a relic of biker glory past.

Even Harley's cachet would not have been enough to save the day if 13 Harley executives had not bought the motorcycle maker from A.M.F. in 1981 and turned the company around on quality.

"Quality became our method of survival," said Ken Sutton, vice president and general manager of Harley's engine plant in Milwaukee.

Indeed, quality has driven the Harley turnaround story more than any other factor. By re-engineering its production process, redesigning its engines and instituting a raft of Japanese-style manufacturing and

quality-control methods, Harley coupled its survivor's mentality with an aggressive revitalization of its brand.

After the 1981 buyout, Harley instituted a policy of building bikes strictly on advance orders from dealers, rather than anticipated market demand. Every motorcycle has a dealer invoice number on it before it leaves the

factory. This policy, followed later with such tremendous success in the personal computer market, allowed Harley to do away with vast stocks of parts awaiting assembly by adopting the Japanese just-in-time methodology. A continuous flow of quality parts into Harley's factories not only reduces money tied up in inventory but drives quality throughout the manufacturing process.

Harley employees take 80 hours of courses each year in such subjects as statistical process control, learning techniques to enhance quality and productivity. Harley has also instituted self-directed work teams throughout the company, from line workers to senior management. And a continuous open dialogue with management is not only encouraged but rewarded.

Harley-Davidson AD

EXTERNAL ANALYSIS

PESTLE

Harley-Davidson is one of the most admired and recognized

companies in the world today.

Academy of Motorcycling for those interested in learning to ride

a motorcycle.

“Riders-Edge” the motorcycling academy of Harley-Davidson

introduced more than 1000 aspiring motorcyclists to the sport in

2000.

Average purchaser of a U.S Harley-Davidson motorcycle is a

married male in his mid-forties

Average purchasers of a U.S Harley-Davidson have a household

income of $78,600.

Over two thirds of the sales of Harley-Davidson motorcycles are

to buyers with at least one year of education beyond high school.

30% of the Harley-Davidson buyers have college degrees.

Only about 9% of Harley-Davidson U.S retail motorcycles are to

women.

Confidence in economy is directly proportional to the purchasing

of consumer items.

Repeat business is strong as about 42% of motorcycle

purchasers have owned a Harley-Davidson previously.

U.S Government and People are considering Harley-Davidson as

an American icon.

Opportunities in emerging economies [India, China] but

uncertain operating situations.

A new assembly facility opens in Manaus, Brazil, the first

operations outside of the U.S, reduces taxes, make them more

affordable to a larger group of Brazilian customers.

Harley-Davidson is one of the main manufacturer and user of V-

ENGINE configuration.

Harley-Davidson’s have a wide variety of products according to

Standard, Performance, Touring & custom.

Harley-Davidson is facing some legal problems in Asian

countries, in India there is 60% tariff and various other taxes will

cause the price of the bike to double.

Noise pollution and some emission standards of Harley-Davidson

bike is not up to the level of some countries across the globe.

SWOT ANALYSISSTRENGTHS

Net income of 2003 was $760mn, its more than 30% as

compared to the previous year 2002.

The standard and performance segments of Harley Davidson

make up 70% of the European heavy weight motorcycle market

Harley-Davidson operates in two segments: Harley-Davidson

motorcycles & related products and HDFS (Harley-Davidson

Financial Services).

Harley-Davidson is the only major American heavyweight

motorcycle manufacturer.

Strong brand name.

The HOG (Harley Owners Group), which have a 7,50,000

members world wide is the industry’s largest company

sponsored motorcycle enthusiast organization.

Buell Riders Adventure Group (BRAG) was also formed recent

Customization of the bikes, this is Harley-Davidson’s major

revenue maker.

Harley-Davidson have a good marketing division and its divided

as dealer promotions, customer events, magazine and direct-

mail advertising, and public relations.

WEAKNESS

High price

Harley-Davidson has problems in gaining more market share in

some European countries (That’s one of the main markets for

Heavyweight motorcycles outside U.S).

They didn’t yet start its sales in India, one of the biggest

markets.

Required production is not met, analyzing the future of

Heavyweight motorcycle market

OPPORTUNITIES

The European demand for Harley Davidson is the highest in the

international market and represents the single largest

motorcycle market in the world.

Women and younger riders are increasing becoming interested

in bikes

The international heavy weight market is growing and is now

larger than the U. S. heavyweight market

Market share increasing in Europe and Asia for the last two years

Increasing demand in US markets for bikes

Customers value quality parts

THREAT

Harleys ongoing capacity restraints caused a shortage supply

and a loss in domestic market share in recent years

Harleys average buying age is 42 years old and increasing

The European Union’s motorcycles noise standards are more

stringent than those of Environmental Protection Agencies in the

U.S and increased environmental stand

Some competitors of Harley Davidson have larger financial and

marketing resources and they are more diversified

Environmental protection laws

Buell division needs to continue to produce a quality motorcycle

under Harley’s brand name.

STRATEGY RECOMMENDATION & IMPLEMENTATION:

MARKET PENETRATION

Get some more market share from the existing market, like U.S,

U.K, and Japan etc through more marketing techniques like

advertising. Harley-Davidson has a good brand name so it’s easy

for them to eat up the competitor market share if they can

provide some more customer benefit.

Competition is high in this segment mostly in U.S so market

penetration can be a good choice for the company.

Expand the HOG (Harley Owners Group) to Asian countries, if the

company can provide the customer satisfaction that they are

providing to the U.S customers to the Asian customers they can

increase the sales.

PRODUCT DEVELOPMENT

Younger generation and female are now coming to this segment

so expand the motor cycle segments to younger generation and

females.

In Europe they can increase or expand the Buell’s market share

by introducing new motorcycles.

MARKET DEVELOPMENT

Harley-Davidson can bring in their vehicle to Asian countries like

India and China, because these countries have a high population

and the market potential is also high.

The cost to bring in the old vehicles (old product) to India is so

much difficult because there are so much environmental laws are

there which won’t allow that type of vehicles to come to India,

and its difficult that taxes and levis are high in India so starting

new plant in India can solve this problem. Negotiations with the

Government can solve these problems.

DIVERSIFICATION

Bring in new vehicles to new markets like India and China is a

good choice, but it’s too costly.

Bringing new types of recreational vehicles is a best choice.

RECOMMENDATION

Expand European and Asian market.

Increase the sales of Buell sport bike and Harley-Davidson to

younger customers and females.

Horizontal diversification: acquires or develops new products that

could appeal to its current customer groups even though those

new products may be technologically unrelated to the existing

product lines.

Concentric diversification: Bring in new recreational vehicles.

SUMMARY Harley-Davidson is the largest market share holder of motorcycles over 750cc in the United States. Growth potential appears very good especially in the overseas market. Gaining a larger market share in these area may require a further increase in production and distribution capacities.plan for expansion now and continue to grow as a company.

COMPANY DESCRIPTION In Milwaukee, William Harley, 21, and Arthur Davidson, 20, began experiments on taking the work out of bicycling. They were soon joined by Arthur’s brothers, Walter and William. Many changes were made to the engine design before its builders were satisfied. After the new looped from was finalized, they were ready to begin production. In 1903 they produced three motorcycles. Harley-Davidson erected its first building the current Juneau avenue site in 1906 and incorporated in 1907. In 1907 Harley-Davidson produced 150 motorcycles.

SITUATION ANALYSIS The motorcycle market over 750cc has been increasing over the last five years. The Harley-Davidson 1996 model year production line, sold though a world wide network of more than 1,000 dealers, includes 20 cruiser, factory custom and touring motorcycles, as well as police motorcycles. Harley-Davidson benefits form having one of the world’s most recognized and respected brand names and our motorcycle model names are among the best known in the industry: The Competition and Market share This chart shows the competition and market share for 1995 in the United States:

Current Market Situation Overall Net sales for 1995 of $1.4 billion were $191.6 million, or 16.5%, higher than net sales for 1994. Net income and earnings per share from continuing operations were $111.1 million and $1.48, for 1995 as compared with $96.2 million and $1.26, for 1994. Net income and earnings per share from discontinued operations were $1.4 million and $.02, for 1995 as compared with $8.0 million and $.11, for 1994, which included a $4.6 million, or $.06 per-share, one-time tax benefit related to the legal reorganization of Holiday Rambler. On January 22, 1996, the Company announced its strategic decision to discontinue the operations of the Transportation Vehicles segment in order to concentrate its financial and human resources on its core motorcycle business. The Company does not

anticipate a loss on the discontinuance of the Transportation Vehicles segment. The results of the Transportation Vehicles segment have been reported separately as discontinued operations for each year presented. On November 14, 1995, the Company acquired substantially all of the common stock and common stock equivalents of Eaglemark Financial Services, Inc. that it did not already own. The purchase price was approximately $45 million, which was paid from internally generated funds and short-term borrowings. The Company has included the results of operations of the Financial Services segment ($3.6 million) in its statement of operations for the year ended December 31, 1995 as though it had been acquired at the beginning of the year and deducted the preacquisition earnings as part of non-operating expense. The Company increased its quarterly dividend in September from $.04 per share to $.05 per share which resulted in a total year pay out of $.18 per share. Units Shipped and Net Sales The Motorcycles and Related Products (Motorcycles) segment's net sales increased 16.5% over 1994 due primarily to a 9,293 unit (9.7%) increase in motorcycle shipments, as well as a 14.0% increase in its Parts and Accessories business. The increase in motorcycle shipments is the result of ongoing implementation of the Company's manufacturing strategy and efforts to satisfy demand. The manufacturing strategy is designed to increase capacity, adjust to changes in the market place and further improve product quality while reducing costs. Sales of Buell motorcycles (which are distributed through select Harley-Davidson dealers) increased to $14 million in 1995 as compared to $6 million in 1994. The Company began 1995 at a scheduled motorcycle production rate of 395 units per day. As the implementation of the manufacturing strategy continued, the rate increased to 470 units per day by the end of the year. The Company exceeded its production goal of 100,000 units in 1995 and anticipates 1996 production will reach at least 115,000 units. The Company is currently reviewing alternative sites for the construction of a new manufacturing facility to enable it to achieve its long-term goal of doubling motorcycle production by 2003. Year-end data indicates that the domestic (United States) motorcycle market continued to grow throughout 1995. Compared to 1994, industry registrations of domestic heavyweight (engine displacements in excess of 751cc) motorcycles were up 11.3%. The Company ended 1995 with a domestic market share of 55.8% compared to 56.1% in 1994. This decrease is a reflection of the Company's constrained production capacity in a growing heavyweight motorcycle market. Demand for the Company's motorcycles continues to exceed supply with nearly all of the Company's independent domestic dealers reporting retail orders on all of their remaining

1996 model year motorcycle allocations (production through June, 1996). Export revenues totaled $394.8 million during 1995, an increase of approximately $63.6 million (19.2%) over 1994. The Company has exported approximately 30% of its motorcycle unit shipments since 1990 and expects to maintain approximately the same percentage during 1996.

The Company distributes approximately one-half of its exported units through its wholly owned subsidiaries in Germany, Japan and the United Kingdom, which allows the Company flexibility in responding to changing economic conditions in a variety of foreign markets. While definitive market share information (engine displacements in excess of 751cc) is not available in many foreign countries, the Company believes it holds an approximate 11% market share in the European markets in which it competes and a 22% market share in the Pacific Rim. During 1995, the Parts and Accessories business generated $292.3 million in revenues, an increase of 14.0% over 1994. The rate of increase is lower than experienced in recent years, however, management believes the 1995 increase is more indicative of the long-term growth potential of the Parts and Accessories business. The Motorclothes business, which accounted for approximately $100 million of Parts and Accessories sales in 1995, is expected to remain stable in 1996, while the Motor Parts and Motor Accessories businesses are expected to increase. The Parts and Accessories business is expected to grow at an annual rate similar to the annual growth rate in motorcycle shipments. The Company is developing an improved system to better monitor domestic dealer inventories and retail traffic. In addition, the Company initiated several promotional programs in the fourth quarter of 1995 to increase dealer floor traffic and plans to continue this promotional strategy in 1996. To further strengthen its ability to process and fill orders for the Parts and Accessories business, the Company plans to construct a new distribution center (at an approximate cost of $17 million). Construction is scheduled to begin in the second quarter of 1996, and the facility should be fully operational by the first quarter of 1997. Gross Profit Gross profit increased $53.1 million, or 14.8%, in 1995 as compared with 1994 primarily due to an increase in volume. The gross profit margin was 30.5% in 1995 as compared with 30.9% in 1994. The gross profit margin was negatively affected by the overtime incurred to produce additional motorcycle units and make up for production time lost because production employees were involved in numerous strategic planning sessions during 1995. Internal & External Analysis Strengths ¨ Customer Loyalty and Following ¨ Very High Product Demand ¨ Profitable Product Line and Market Mix ¨ Highest Market Share

for Motorcycles over 750cc in the United States ¨ Union Contract That is beneficial to both the Firm and the Employees ¨ Significant opportunities in the growing worldwide motorcycle market ¨ A proven management team that’s committed to build a beneficial relationship with all of the stakeholders for the long term ¨ Increased capacity with the construction of new plant and distribution center Weaknesses ¨ Inefficiency due to Large Production Level ¨ More Demand than Supply ¨ Lower Than expected Sales in Motor Clothes ¨ Lingering biker image

MARKETING PLAN OBJECTIVES Harley-Davidson, Inc. is an action-oriented, international company-a leader in its commitment to continuously improve the quality of mutually beneficial relationships with stakeholders (customers, dealers, employees, suppliers, investors, governments and society). Harley-Davidson believes the key to success is to balance stakeholders' interests through the empowerment of all employees to focus on value-added activities. This value added mentality helps us to improve our product quality. It important to us to offer the highest quality product possible. In addition to quality we have also been focusing on service. Many of our dealers are continuing to make major investments in the future growth of their businesses-such as converting their dealerships into world-class retail sales establishments through our Designer Store program, building larger dealerships, expanding their existing service areas or opening alternate 'satellite stores in high traffic areas. Both we and our dealers are investing in training and education, to better serve the motorcycling community. We will also be focusing more strongly than ever before on new product development. With worldwide motorcycle market growth expected to continue, we're dedicated to maintaining leadership in our traditional motorcycle segments and gaining further penetration into the performance market through our joint venture with Buell. We want to ensure that while our competitors are busy copying our past work, we're re-defining the market with exciting new products. Our new Product Development Center, expected to be completed by year-end '96 in Milwaukee, should give our staff the room and tools they need to maintain our market leadership. Organization Goals ¨ By the year 2003, we will produce 200,000 motorcycles annually ¨ Complete the production of our Product Development Center in Milwaukee by the end of 1996 ¨ Meet the demand by expanding our existing distribution and manufacturing capacity, and where necessary, adding new production and retail distribution points ¨ Grow Parts and Accessories sales volume, as a percent of total revenue, for both new

and used vehicle customers ¨ Drive financial results to the levels achieved by acknowledged high performing companies

TARGET MARKETS THE HARLEY OWNERS GROUP The Harley Owners Group, or H.O.G., is the world's largest factory-sponsored motorcycle organization, with more than 300,000 members and 900 local chapters located around the globe. Besides the H.O.G. pin and patch, membership card and H.O.G. atlas, members get treated to benefits that are as helpful as the suspension under a Softail seat. There's Hog Tales magazine to keep you up on club events. If you're off to certain far flung spots, our Fly & Ride program can get you aboard a rental Harley. The owners of Harley-Davidson motorcycles are among the most diverse group of consumers in any industry. They range from blue collar factory workers to Doctors and Layers. Recently our target market has shifted more toward the upper end of the buyer market, but we will never forget where we came from. Harleys are not just for men. Over the last decade women have become a significant purchaser of motorcycles, especially Harley-Davidsons.

MARKETING STRATEGY The Americas Our top priority in the United States is to grow primarily through our existing dealers. Plans for 1996 include analysis of dealer five-year plans and local market variables to establish priorities for implementation of dealership improvements and additions. We'll also begin to bring more consistency to our dealer network by helping dealers improve their businesses based on a best practice model that incorporates local market data and customer input with characteristics of our most successful dealerships. Our second priority is to grow through new dealers on an as-needed basis, while adding new satellite outlets where necessary to increase customer convenience and satisfaction. These outlets, typically located in high traffic areas, are smaller, dealer-owned motorcycle service facilities or stores carrying mostly MotorClothes, Genuine Motor Accessories and Genuine Motor Parts. Although still in the developmental stages, we're allocating more resources to future growth of South and Central America, Mexico and the Caribbean. In 1995, new dealerships opened in the major market cities of Bogota, Colombia and Lima, Peru. We are currently considering new markets in which to open additional dealerships in 1996 and beyond. Europe Although our European presence goes back over 80 years, we consider this to be a market that is ripe with

new opportunities. Our emphasis in 1995 was simply to focus on the basics by establishing Harley-Davidson Europe headquarters in the United Kingdom and creating an in-country management team dedicated to improving the bond between Harley-Davidson and our distributors, dealers and customers there. The start-up of a European Distribution Center in Rotterdam has consolidated our motorcycle and P&A distribution under one roof, allowing us to improve service levels and develop a stronger competitive advantage in the marketplace. To further bolster Harley-Davidson's brand image, we've opened two flagship stores in major markets-North London and Central Paris-and are currently studying the feasibility of opening similar stores in other markets. Going forward, our short-term focus will remain on improving customer satisfaction through gradual expansion of our dealer network, conversion of more existing dealerships into Designer Stores, improved management information systems, better product availability and consistent pricing, enhanced technical service training, expansion of Harley Owners Group activities and development of new markets. Asia/Pacific This evolving market is one we're watching very closely. The infrastructure and strategies that we've put in place will provide a solid foundation for continued success as the heavyweight motorcycle market grows and develops here. Findings of an intensive market study, the early stages of which were completed in 1995, show that short-term growth opportunities will come from existing markets in this region-led by Japan and Australia-with long-term growth coming from developing new markets. Like Europe, we'll also be focused intensely on the basics to ensure consistency among our dealer network, but with special emphasis on increasing technical service competencies. We'll also work to enhance customer relationship-building activities through Harley Owners Group and cohesive direct marketing and brand image-building initiatives.

MARKETING MIX The sportster, First introduced in 1957, the Sportster is Harley-Davidson in its purest form. It is an uncompromising exercise in getting power to pavement. As it turns forty, the Sportster certainly isn't experiencing a mid-life crisis. It just keeps getting better. The Softtail The Softails offer a retro look, inspired by the classic hardtail frame, brought up-to-date with the reliability of modern technology. These bikes move you ahead by moving you back in time. Dyna There is a place where the past and future mingle, taking on each other's qualities until they become a new incarnation of the here and now. This is the land of the Dyna Glides - with a smooth ride dictated by computer-aided engineering and a look inspired by classic Harley-Davidson styling. Touring Harley-Davidson

touring motorcycles offer a lot more than meets the eye. Like small town coffee shops and historic landmarks. Distant rallies and forgotten highways. Campgrounds, sunsets, burger joints and national parks. Even thunderstorms. And now it's all available with electronic sequential port fuel injection on most models. Racing In his first year of superbike racing, Chris Carr won rookie-of-the-year honors and finished twelfth in overall points, while still winning dirt-track races. This year, he is committed full- time to road racing and his poll position at Laguna Seca proved it. This year, he is joined on the VR 1000 racing team by Thomas Wilson, fresh from tremendous success in the 600 and 750 Supersport classes. On the dirt track, Scott Parker, coming off his record sixth AMA Grand National Championship, continues to dominate aboard his XR 750. Other Segments Eaglemark Eaglemark began in 1993 as an independent company with Harley-Davidson holding a minority stake. Following Eaglemark's success in achieving our initial goals, Harley-Davidson acquired essentially full ownership in November of 1995 to fully benefit from future growth and value creation. Eaglemark was established to better meet the financial needs of Harley dealers and owners, while producing attractive returns. We use the name Harley Credit and Insurance, rather than Eaglemark, to build on the loyalty customers have for the Harley-Davidson brand. Consistent with the brand's image, our services aim to provide real value to customers through one-stop shopping, fast personal service, competitive terms and a thorough knowledge of the products we finance and insure. Parts and Accessories As successful as our P&A business has been over the last several years, we took some major steps in 1995-including repositioning our replacement parts and mechanical accessories lines-to re-energize our approach and maintain our market leadership. To address dealer and customer dissatisfaction with backorders on popular items, we're establishing closer ties with our suppliers, to ensure they have adequate capacity to handle demand. And the new P&A distribution center, when it comes on stream, will help speed the flow of parts to dealers. Ninety percent of our MotorClothes revenue comes from the domestic market, which has become a very tough environment for apparel sales. And we've found that our international markets have very specific needs for fit, styling and pricing that our current broad-based line doesn't adequately support. From these challenges come opportunities. In 1996, we're creating a global, unified MotorClothes product line, developed by a centralized styling department. This group will develop overall concepts, then work with regional MotorClothes managers to produce market-specific products. We're also increasing our promotional efforts toward the non-riding public, to attract them into our dealerships. Buell

Although still a start-up operation- approximately 1,400 Buell units were shipped in 1995-the Buell team is continuing to explore and evaluate new opportunities in the sport/performance market. While traditional sportbikes utilize complex technology with the sole purpose of increasing speed, Buell's mission is to develop and employ innovative technology to enhance the ride and give Buell owners a motorcycling experience that no other brand can provide. Buell expanded its 1996 model year product line by adding two new models, the S1 Lightning and S2 Touring, to support its flagship S2 Thunderbolt. Buell also added more than 100 new dealers in 1995 (Buells are distributed only through select U.S. Harley-Davidson dealerships), bringing the year-end total to approximately 150. In 1996, the Buell team will complete its study of the European sport/performance market, which is four times larger than its U.S. counterpart, to prepare for a possible future launch there. Promotion The majority of our advertising comes from bike rallies and special events that are held that are held across the United States. Rallies draw between 5,000 and 200,000 people. The majority of the attendants are Harley owners. Harley Davidson as an organization does very little mainstream advertising.

REFERENCE

I have taken help from the following sites :

1. www.researchandmarkets.com

2. www.e-referate.ro

3. www.harley-davidson.com

4. www.financialexpress.com