When it comes to iconic American brands, taking over the care and feeding of cycle maker Harley-Davidson probably ranks right below representing the Declaration of Independence (great plot, dynamite opening) and just above marketing the Statue of Liberty (nice lady, but she's French).
Independence, speed, American manufacturing, patriotism, “Easy Rider” rebellion and piratical style are all baked into the output of the 106-year-old Milwaukee-based manufacturer's products. That's the point of the devil-may-care tagline Harley's been using in recent print ads: “Screw it. Let's ride.”
But when the economy noses down, even a brand image as strong as Harley's can become something of a liability, locking it away from new customer segments. If that happens, how do you rev up sales without eroding the brand?
That's the situation that Harley faces today. It's a luxury brand, albeit a rugged, leathery one, and dependent on discretionary income — something customers have been finding hard to come up with in this recession. And the downturn has been showing up in sales for the last few quarters: U.S. sales dropped 9.4% in the first quarter of this year. Its overall market share of the global motorcycle market fell 3 percentage points in the last year, to 45.6% from 48.8% in 2007, according to investment firm Edward Jones.
Those figures aren't bleak compared to other vehicle categories. New-car sales in the U.S. are down more than 30% from last year; and U.S. cycle sales overall were down 30.5% year over year for the quarter, according to April figures from the Motorcycle Industry Council.
Still, Harley-Davidson faces a basic problem: It needs to find new riders. And since cycle fans are highly brand loyal, the easiest way to find new riders may be to create them. Or as Harley sees it, to get non-owners with an interest in the brand to raise their hands.
“It's a bit of a misnomer to say that Harley is doing something new to reach out,” says Mark-Hans Richer, who took over as CMO in 2007. “In many cases, the brand connections are already there. Our job, rather, is to take what's already there, well understood and well loved, and broaden it. The brand has elemental truths that connect very well with people's truths about themselves. We just have to allow people to discover those things.”
Harley actually started delving into new consumer segments last year, with a concerted attempt to increase appeal among riders under 35. Harley riders are baby boomers; they average out at more than 47 years old, up from 42 in 2004. And younger riders were in danger of tagging the classic chromed-out, big-engine Harley as their father's bike or, worse yet, their granddaddy's ride.
So Harley started doing some research into what under-35 riders were favoring in the company's product line, what values attracted them to Harley, and what might be turning off non-customers. The aim was to identify small changes in product, placement or pitch that could build sales in the lower age group.
The research found that adults under 35 were buying across all Harley's bike categories. But within those categories, Richer says, the bikes they favored shared some characteristics. They weren't as big as most Harleys, they had much less chrome than the cycles older riders chose, and in fact they had a classic cut-back “old school” look.
“We were already making these products, but we weren't seeing what was in front of us,” Richer says. “The bikes were out there, but customers couldn't find them because they were scattered through several different model families on the showroom floor. We needed to make it easier for these customers to discover these products they wanted.”
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So Harley developed a new product variety called “Dark Custom,” with a new logo surrounded by the traditional Harley iconography. The new category was intended to make it easier for younger customers browsing dealerships to go straight for the cycles they were likely to buy anyway.
The first new product in the Dark Custom line, already in development when this outreach effort began and rolled out in January 2009, is the Sportster Iron 883, with a stripped-down look that's purposely light on the chrome and heavy on the black steel and the attitude that goes with it.
For some of these young riders, price was also an obstacle. They weren't rejecting Harley-Davidson (the brand's Net Promoter score with under-35 males is exactly the same as that in older demographics, Richer points out), but many were deferring purchase because of a notion that Harley cycles ran more than $20,000.
“The non-Harley riders we talked to liked the brand's values, but they didn't ‘see' themselves on one yet,” Richer says. “For them it was more a distant dream, something that was going to happen 20 or 30 years from now when they had the money.”
Harley needed to fight this price obstacle but didn't want to tarnish the brand with a flat-out price message. Instead, ads for the Iron 883 put the new cycle's relatively low cost — about $8,000 — in terms that jibe with the rebel image: “About six bucks a day. Cheaper than your smokes, a six-pack, a lap dance, a bar tab, another tattoo, a parking ticket, a gas station burrito, bail, cheap sunglasses or more black T-shirts.”
Meanwhile, Harley has been sending Dark Custom experiential trailers to music festivals and pointing out the links between Harley ridership and other extreme lifestyle sports.
About a year after its inception, this relatively low-impact effort to reach younger buyers has been a success for Harley. While Richer isn't giving out firm statistics, he says the proportion of Harley sales to under-35 customers was up substantially in 2008, and that young adults went from being the brand's worst-performing customer segment in 2007 to its best the next year.
“It isn't just about blacked-out parts,” says Richer. “It's about translating the ethos of Harley-Davidson for this audience. Once we were able to show the relevance of the products that already existed, it lit up. Our average owner age last year went up one-tenth of 1% — the first time it's stayed flat in six years.”
With the Dark Custom youth strategy on its way to proving out, Harley has stepped up efforts to leverage other consumer segments that may benefit from some targeted marketing: namely, women riders and minorities, specifically Latinos. Harley has always had a Hispanic following, both domestically and overseas, where the brand represents American values as much as American production. And the company has for years been a sponsor of Latino touchpoints, including the Latin Billboard Music Awards and the Latin American Motorcycle Association, one of the largest Hispanic cycle groups in the U.S.
An especially passionate segment of that Latino fan base call themselves “Harlistas.” In some cases, they picked up the Harley dream before immigrating to America. In others, they're American-born but heard about their fathers' or their grandfathers' love of the brand and adopted it as their own.
“In Cuba, they've been keeping 50-year-old Harleys running with chicken wire, string and bubble gum,” says Richer, who rode a new Harley model 2,000 miles from Mexico City to Milwaukee last summer. (Travel tip: Loved the scenery, but watch out for dogs in the road.)
That emotional commitment to the brand couldn't go unharvested. So in April, Harley launched a page on its main Web site to collect those hero stories in photos and video, www.Harley-Davidson.com/Harlistas. The site has drawn about 56 user-generated submissions so far. Visitors can rate those entries.
“We let people go online and tell their stories, and we make them easy to discover,” Richer says. “Other Harlistas can connect, and people who aren't yet passionate about the brand can be inspired. It builds awareness and demand, but in the very authentic voice of our current customers in that demographic.
The company hopes to take its outreach to the next level by incorporating some of these tales of Harley corazón into an exclusive documentary film. Details like costs, scale and the ultimate use of such a production haven't yet been finalized. But Richer and his team are convinced that the Harlista narratives can be “scaled in a way that is very authentic, surprising and cool” for that customer segment.
FOR WOMEN, MENTORS
Harley is taking the same organic approach in its outreach to women, who have grown in the last 20 years from 4% of its customer base to 12% in 2008. Last month Harley sponsored women's rides in New York and Milwaukee to kick-start the third annual Women Riders Month, garnering coverage on “The Early Show” for its efforts. The company also took out a gatefold spread in the May Vanity Fair showing women celebrities such as Jewel and fitness coach Jillian Michaels posing on their sweet Harley rides.
The company won't be turning out factory-issue pink cycles any time soon, but it does recognize that women taking up motorcycling have some special needs. Some of these relate to product design, such as lighter cycles and lower handlebars; Harley is making it easier to provide those customizations through the Fit Shops it's rolling into selected dealerships (see story below).
But other marketing tactics are addressing the needs of women who may feel the desire to get on two wheels, but haven't grown up in the cycle culture that their male counterparts got to experience — and who may in fact feel alienated by all that testosterone. Selected Harley dealerships have started running weekend “Garage Parties,” women-only bike events that provide friendly spaces in which to learn more about rider basics, and about Harley.
A revamped women riders' page on the Harley site locates these dealer events and also collects female user stories. But where the Harlista content is about desire fulfilled, these stories focus on explaining why users want to ride and how they learned. The Web page also offers resources and tips on ways current women riders can guide others in a Harley “Share Our Spark” mentor program, complete with shareable links to Facebook and MySpace.
The company has also seen increases in the numbers of women enrolled in the “Rider's Edge” new rider courses offered by dealers and has committed to training 100,000 women to ride cycles — an effort that can be tracked at the Web site.
Dark Custom, the Harlista videos and “Share Our Spark” are all examples of ways Harley-Davidson can build new rider communities without tearing out the elements that the brand has come to represent, Richer says.
“Many people look at women or minorities or young adults as this brand new thing that requires changing their strategies — ripping everything out and replanting,” Richer says. “We don't need to do that. We just have to make it easier for those groups to discover our brand and its values.”