Rebuilding the Brand

How Harley-Davidson Became King of the Road

Clyde Fessler

• Publisher: Allworth
• Year: 2013
• ISBN:
  9781621534228
• Topic: Negocios y empresa
• Subtopic: Industria del transporte

In the early 1980s, Harley-Davidson was on the verge of bankruptcy. In the general public's opinion, quality was substandard—of both motorcycles and riders. Harleys leaked oil and were often broken down. Riders were roughnecks, out to raise hell. The Harley-Davidson brand was tarnished. What s more, the charges were true.By the mid-1980s, Harley couldn't produce enough bikes to keep the public happy. Dealers were selling bikes off the showroom floor, struggling to assuage customers frustration. And today, Harley-Davidson is a model brand. Harley-Davidson isn't just a motorcycle company anymore. It is a community, a look, a source of self-expression, an all-American appeal for freedom—all expressed in one little logo.So, what happened? How did Harley manage to pull itself from the fire, brush itself off, and ride off into the sunset? The secret: branding. Histories will tell you how Harley-Davidson closed the quality gap between Hogs and the cheaper, faster, sleeker Japanese bikes; how Harley used Japanese manufacturing methods to increase its cash flow; how Harley clawed its way back from the brink of bankruptcy. All these aspects were important to Harley s rise from the ashes, no doubt, and as such are discussed in this book. But the true power of the big, beautiful, orange and black machine that is Harley-Davidson lies in its image, the Bar and Shield, the brand. Rebuilding the Brand: How Harley-Davidson Became King of the Road is the story of how a core group led a team of not only marketing folks but also employees, management, dealers, and vendors to rebuild the Harley-Davidson image. Told through the perspective of Clyde Fessler—who held several positions within Harley, from head of marketing services to VP of business development— Rebuilding the Brand provides dynamic branding information couched in an entertaining story. Fessler describes the methods used to create the iconic image Harley-Davidson enjoys today, methods that can be translated to nearly any industry, and explores the topics of brand experience, brand personality, brand extension, brand association, brand consistency, and brand welfare.Allworth Press, an imprint of Skyhorse Publishing, publishes a broad range of books on the visual and performing arts, with emphasis on the business of art. Our titles cover subjects such as graphic design, theater, branding, fine art, photography, interior design, writing, acting, film, how to start careers, business and legal forms, business practices, and more. While we don't aspire to publish a New York Times bestseller or a national bestseller, we are deeply committed to quality books that help creative professionals succeed and thrive. We often publish in areas overlooked by other publishers and welcome the author whose expertise can help our audience of readers.

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BRAND EXTENSION

Imagine: The storm has passed. The smell of rain evaporating off the asphalt fills your senses as you accelerate into the late afternoon. A red sun still rests on the edge of the horizon. Great purple clouds roll east, in a hurry to catch up to the stabs of lightning still visible, but tiny, in your mirrors. Mist from the road spills across your windshield as your wheels pelt your back with road wash.

You smile. You’re protected. You wear a Harley-Davidson jacket with the collar firmly tucked beneath your helmet. The water has nowhere to go but back to the ground from where it came.

And so the journey continues.

You purchased the leather jacket with the reflective piping and embroidered graphics just for times like these. It’s waterproof. It’s versatile. You like the snap-in vest you can wear under the jacket to keep you warm and the front and back vents that keep you cool.

It looks good, and you look good in it. But mostly, you bought it because it carries a brand name you trust.

What Is Brand Extension?

Brand extension—also called brand stretching or brand spin-off—uses a trusted brand name to sell more to a current base of customers. Brand extension significantly reduces the risks that come with introducing a new product line. It can also lure new customers to the brand with new products that would not ordinarily be associated with that brand. It is the single most effective marketing strategy for building sales at the least expense.

The Five Strategies

There are five and only five ways to grow a business:⁵

1. Buy market share.
2. Hunt new business.
3. Harvest your existing customer base.
4. Develop new products.
5. Merge with or acquire another company.

Brand extension harvests more sales from existing customers and lures (hunts) new customers.

A familiar brand comes with ready-made awareness and perceptions. It’s much easier to leverage the success and popularity of a known brand when launching a new product, especially if it is to the same target market. Consumers are more likely to trust a new product (or a line of products) that has a brand name they trust.

For instance, Procter & Gamble’s Ivory^® soap has been around since 1879. The bar that floats (it’s “99 and 44/100 percent pure”) has launched myriad brand extensions, including liquid hand soap, shampoo, body wash, dishwashing liquid, hand lotion, and a mild laundry product called Ivory Snow.

Ivory soap has come to be associated with purity and gentleness. That is its brand personality. Procter & Gamble recognized the opportunity to extend that personality to other products—dishwashing liquid that was gentle on hands, shampoo that was gentle enough for children—without the heavy advertising and promotion expense required to create whole new personalities for those same products.

A promotional claim like “Pishposh Dishwashing Liquid is gentle on your hands” would be received with skepticism. No one knows anything about the Pishposh brand. Not so with “Ivory Dishwashing Liquid is gentle on your hands.” Ivory is a trusted brand, and its brand personality is all about purity and gentleness.

Brand Extension at Nike

What do you know about Nike? They make shoes, right? At one time they made just athletic shoes, but now they make all kinds of shoes. Clothing, too.

How would you feel about a Nike energy drink? or Nike cologne or body wash? What about a Nike workout center? you can bet they’re all under consideration. Why? Because Nike is a trusted brand.

Nike became known the world over for making quality sports shoes. By extending its brand to include a variety of sport categories that all carry the Nike name, Nike is able to build upon its brand equity to increase sales.

There are many good reasons to extend your brand:

• Brand extensions reduce the costs and risks associated with introducing a new product. Your brand is already known and trusted. Use that. Present your new product to the same group of customers. Your customers will assume that your new product has the same level of quality as the parent brand. Customers will assign that credibility almost unconsciously.
• You save on promotion expense. Your target market is already aware of your brand name, so advertising heavily to create brand recognition and credibility is not necessary. Also, if you do advertise the new branded product, it adds to the interest in the parent brand and grows your customer base.
• Retailers give you a break. They are more likely to stock a new product with a known brand name on it. It’s less risky for them. You get more shelf space than unknown brands.
• Brand extensions reduce a company’s dependency on one product. If the parent brand’s sales decline, the brand extension can pick up the slack. An example in the extreme: while demand for OshKosh B’gosh^® bib overalls and farm outerwear began to decline in the 1980s, the company’s brand extension into kid’s clothing grew, and today, OshKosh B’gosh only makes clothes for kids.

It took time and money for Harley-Davidson to build brand trust. It took years to convert skeptical consumers, riders accustomed to oil leaks and poor performance, some afraid of the riders themselves. Extensive advertising and promotion campaigns positioned the brand as all-American, classic, adventuresome, and fun. The time and money were well spent; brand extension became integral to Harley’s growth.

Your Customers First

In the early 1980s, our research showed that among those riders who owned a Harley, a majority would only consider buying another Harley and never look at any other brand of motorcycle. Even when they leaked or broke down, our customers remained true to Harley. They were loyal customers. They are loyal customers still. And they are our best salespeople.

Still today, a vast majority (back in the 1980s, it was over 75 percent) of Harley-Davidson advertising, public relations, and promotion dollars are aimed squarely at current Harley customers. Not the Japanese riders. Not non-riders. Harley riders.

It is easier to harvest sales from your current field of customers than it is to hunt new ones. Selling to your customers provides you with a distinct competitive advantage, making it easier to sell more of your products and services—your brand extensions.

There are many ways to sell more to your existing customers. Some common terms used in the business world include:

• Suggestive selling
• Rotation farming
• Incentive selling
• Selling complete systems
• Selling accessories

In a fast-food restaurant, you order a sandwich, and the cashier asks if you want fries with your order. That’s called suggestive selling. Its purpose is to trigger an additional purchase. It’s the easiest way for any brand to build sales. The customer is already in a buying mood. His wallet is open. You simply suggest he spend a little more money to enhance the quality of his original purchase. When a Harley dealer sells a bike, the salesperson will often suggest the handlebar grips, foot pegs, or custom seat. If the rider uses Harley-Davidson financing, the salesperson can wrap the accessories right into the total purchase price (that way, the customer finances the accessories, too, rather than paying cash for them separately).

Rotation farming is used for the customer who comes back on a regular basis, like someone going for a haircut or to the dentist. Many Harley dealers reach out to customers and schedule routine maintenance appointments—oil changes, brake adjustments, safety checks—each spring before riding season begins. Riders appreciate the reminder, and dealers earn extra revenue while further cementing relationships with their best customers, current Harley owners.

Incentive selling works on many levels. Free gifts, premiums, and discounts can all be used to build sales from your existing customer base. “Buy one, get one free!” always draws a crowd to fast-food restaurants and department store sales. Every time a rider buys a new Harley-Davidson motorcycle, he or she receives a free one-year membership in the Harley Owners Group. A dealer might even throw in a free jacket with the purchase of a new bike.

This is the age of convenience. People want easy turnkey operations. Savvy companies recognize that selling complete systems is a great way to grow more business. Harley dealers sell not just a piece of iron but a whole set of accompanying products and services, including beginner, skilled, and group riding instruction; motor accessories to customize your bike; motor clothing to suit your riding lifestyle; financing services; delivery arrangements; and maintenance and repair programs.

Selling accessories is especially effective when your brand has a loyal following. Many dealers mix and match products in their showrooms to show how different parts work together—the boots and hat that go with the jacket, the speaker lids that work best with the Boom!™ audio system, or the special Harley-Davidson motor oil that makes that V-twin hum. The customer is happy to receive this valuable advice; he learns what makes the item he just bought work better or look better. The dealers are happy because they have maximized their sales at better profit margins.

Marketing Strategy

At a brainstorming meeting not long after the buyout, we began developing a long-term plan that we believed would put Harley-Davidson on the track to success. We outlined Harley’s core competencies and created a plan for increasing sales in other areas that we believed held the greatest opportunities.

We saw opportunities to build our business through non-motorcycle products. Clothing topped that list. We included Harley credit and Harley insurance and even had our eyes set on a Harley museum sometime down the road. Other future opportunities that we explored included cafés and diners, hotels, rider education, service centers, and collectibles, even theme parks.

Harley-Davidson Motor Accessories

The ability to extend a brand depends on how strongly your customers feel about the parent brand, the brand’s quality, and its value.

In the early 1980s, people didn’t feel real good about the Harley brand. The brand’s image was as tarnished as an old V-twin carburetor. But slowly, ever so slowly, that changed. Quality began to improve dramatically. Harley reduced defects and scrap by reworking the bikes on the assembly line. The workers established quality parameters, kept track of their successes or failures, and introduced improvements right on the factory floor. No morning calisthenics or company songs, but very Japanese-like nonetheless.

Once the quality improved, it was really our customers who told us that we needed to extend the brand. They were already buying aftermarket accessories—such as luggage racks, customized seats, and windshields—from manufacturers who simply used Harley bike dimensions to build the add-ons and decorative trimmings. Whole industries dealing in Harley accessories had sprung up. Everybody was making money from selling Harley-Davidson motorcycle accessories—everybody except Harley-Davidson. So we sought the advice of our dealer advisory council to better analyze what we had to do.

Motor Accessories

In 1982, Harley-Davidson had a Motor Accessories catalog that was just 28 pages. Today, it’s over 850. Motor Accessories makes up a significant portion of overall company revenue and profit.

We sent out product managers and engineers to bike rallies and observed all the choppers—bikes that had been modified by riders to reflect their individual tastes. We saw all this stuff that guys were buying for their Harleys, stuff that was not made by Harley-Davidson. We said, “Hey, we can make that. And those, we can make those, too. And that and that …”

Harley riders were mostly guys—back then, about 90 percent or more—and guys needed somewhere to ride on a Saturday afternoon while their wives were out shopping. We needed to give them a reason to cruise on over to their local Harley dealer.

We decided to focus on accessories, the accessories that guys could buy for their bikes for around $20—the chrome mirror, the license plate bracket, and the chrome covers—giving them a reason to go to their dealer on a Saturday.

Accessories had to be sim...