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Become a Strategic Marketing Partner: Learn More
If you’ve ever wondered what a robust marketing plan looks like, you have come to the right place.
In this tutorial, we are going to review a well-known public company, Harley Davidson (NYSE: HOG). Harley Davidson serves as an excellent case study because they have a rich history and they have proven to be a wonderful company with a great track record. They have had their ups and downs over their 100+ year history, but they stay focused on who they are and more important, staying close to their customers.
This tutorial is from a graduate level course on marketing management from real case studies. The purpose here is simply to give you some structure for developing your own strategic marketing plan.
The purpose of this full strategic marketing plan example is to provide a structure to your marketing strategy. This marketing strategy will provide an outline for you to do your analysis of the business environment, the current marketing strategy, an outline of the future strategy and customer segments to be targeted, as well as sales forecasts and how the budget will be spent. Lastly, a discussion of the metrics to be measured will ensure your plan is meeting its objectives on time.
While the dates of the case study are from many years ago, the foundation, the structure and the layout is what is important.
Regardless of the objective for your marketing plan, you will get the most traction from this tutorial by paying careful attention to these three important items:
Let’s get started. And if you need any assistance along the way, Your Strategic Marketing Partner is happy to help!
Table of Contents
Markets and Customers
Financials and Forecasts
Harley-Davidson was founded in 1903, and has since been a dominating manufacturer of motorcycles with a specialization in the super heavyweight category. But in the 1960's innovative Japanese companies entered the market and began to eat into Harley's market share, causing the American manufacturer to search for external financing and reinvent themselves in the early 80's. By raising public funds in 1986, changing the culture, producing a better quality product and narrowing the focus of the marketing strategy, Harley took a new productive course, lifting themselves up from a 4% market share of total motorcycles sold to 14% in just four years and taking a leading position owning 62.3% of the super heavyweight category over Honda, Yamaha and Kawasaki. But recent economic shifts have deteriorated the demand, forcing an updated approach to how Harley-Davidson strategizes their marketing.
The purpose of this report is to provide structure to the marketing strategy for the coming year and to provide allocation for the marketing budget. This report will provide an analysis of the business environment, the current marketing strategy, a detailed outline of the future strategy and customer segments to be targeted, as well as sales forecasts and how the budget will be spent. Lastly, a discussion of the metrics to be measured will ensure our plan is meeting its objectives on time.
Harley-Davidson will kick off another year to achieve big sales growth. After a strong rise in market share for the last four years, even during a difficult economic time for manufacturers and against the best motorcycle manufacturers Japan has to offer, Harley-Davidson is continuing to show dominant qualities in the super heavyweight category. Improved manufacturing procedures, new employee programs, dealer improvements, international growth, enhanced sales training, and competitive retail pricing have contributed to a 20% increase in net sales revenue from the first of Harley's three business segments, Motorcycles and related products, in 1990. An overall Net Profit Margin of 4.35%, representing an impressive 45% improvement over the previous year was achieved.
The Harley-Davidson priorities for the coming year will be to drive deeper into ownership of the category and increase sales over last year. Simultaneously, the organization will maintain the current marketing and operations plans for the other two business segments, Transportation vehicles and Defense and other businesses. We will focus on increasing motorcycle sales with targeted and aggressive local marketing campaigns and further develop the brand position in the minds of our target market to gain new customers and increase sales from existing customers. Moving forward, we will engage more community involvement with our improved dealer network and further develop international sales efforts.
Investigating the environment tells us that Japanese companies using innovative manufacturing strategies have dominated motorcycle sales. Honda's large advertising budget has helped them lead the market with a current 29% share. This is compared to Harley-Davidson's 14%, representing a rise in market share of 2.5 times in just 4 years. The remaining Japanese manufacturers, Yamaha, Kawasaki and Suzuki have middle ground market share positions ranging from 28% to 14%. Difficult economic conditions and stringent bank lending procedures leaves Harley-Davidson as the sole U.S. motorcycle manufacturer, while Honda closed 30% of their dealerships. Additionally, increasing legislation on motorcycle riders and insurance reports say death rates are higher with riders, contributing to the contraction of the industry.
Harley-Davidson offers a mature product in an uncertain industry, proving to be at least one barrier for new entrants. Industry sales have sunk over 60% in four years, while Honda possesses a huge advertising budget of $75 million selling their wide product line. Honda boasted $1.1 billion in sales in 1985, yet still leading the industry, realized just 21% of this amount in sales five short years later at $230 million. Tariffs and the rising value of the Yen helped boost Harley-Davidson's sales.
Organizationally, after many volatile years of sloppy manufacturing procedures and an internal approach to customer satisfaction, Harley-Davidson changed directions. After going public and purchasing a complimentary recreational vehicle company, pieces began falling into place. Implementing manufacturing procedures largely innovated by the Japanese market leaders, a re-invention in human resource strategies and a culture shift in their approach to engaging customers, Harley-Davidson revamped their product line and improved income from operations from 12.5% in 1989 to 14.8% in 1990. Combined with a clear market position of owning the super heavyweight motorcycle niche and better listening to their customer base, market share in the super heavyweight category grew to 62% forcing the development of a new plant to meet production needs.
In the marketing department, just as critical as owning a position in the market, not competing in other categories is equally as important. A suite of updated, category-specific products at a range of low to premium price points is central to Harley-Davidson's strategy. The current promotion mix is centered around a pull strategy driving customers to the dealer network of 600 locations, and range from local and national social events, to TV and print advertising, public relations, as well as internally produced direct marketing collateral such as the product catalog. Sustainability principles encompass responsible procedures by reducing the footprint and getting more out of a reduced inventory indicative of Harley's Materials As Needed (MAN) procedures.
A SWOT analysis suggests that Harley-Davidson's strength (See Harley Davidson’s SWOT analysis, example) includes an attractive customer base in that they are a loyal base of riders, who virtually center their lives around their HOG's, a solid American brand and a strong dealer network. A weakness is a deteriorating market of motorcycle buyers causing an uncertain landscape for internal strategic planning. A market opportunity exists for further international development as revenues have grown over 400% in the last four years. But Harley must be careful because an increasing intensity of competition from existing competitors may erode margins, posing a great threat.
|Table 1 SWOT Analysis for Harley-Davidson|
|An attractive customer base in that they are a loyal base of ridersAn American brand rich with historyA network of 600 Dealers||A deteriorating market of motorcycle buyers causing an uncertain landscape for internal strategic planning|
|International markets as revenues have grown 400% in four years||Increasing competition from existing competitors|
Two markets will serve as the framework for the new marketing plan; 1.) Market penetration through existing customers, and 2.) Market development through acquiring new customers. One of Harley-Davidson's greatest strengths is their existing customer base, which will serve as a springboard for the strategic plan. This group will be central to the local and national event planning for building social and community engagement.
For acquiring new customers, the typical less-than-affluent male consumer ages 18-24 helped build the Harley customer base, and will continue to be addressed in the customer targeting strategies. But this pool of potential customers has declined in numbers by approximately 17%. While still needing more research, two segments present themselves for acquiring new customers: 1.) A profile has emerged of being a professional, conservative business person with a hobby-like psychographic in their 40's and 50's, and 2.) While still a small market at 6% of total sales, the number of female customers has doubled, providing a market opportunity to build solutions for women riders.
Lastly, International growth presents a market to serve existing customers through added product sales, and to acquire new buyers. With almost a third of Harley's sales coming from overseas in 1990, Japanese and Western European markets present opportunities that are deserving of increased marketing communications and more market research.
The Harley-Davidson marketing strategy will be planned by benefit, psychographic and geodemographic segmentation. For example, benefit segmentation will include communicating to existing owners the value of being part of an exclusive club of Harley riders in Charlottesville, NC, or to the chapter nearest them.
Alternatively, a benefit of saving money can be a strong motivator for a young cost conscious male, eager to act to save on transportation costs with an XLH Sportster 883 at just $4,395 vs a much higher cost auto, bringing the new rider into the Harley-Davidson community and additional future sales pipeline. Living the Harley lifestyle and carrying the HOG attitude will be central to psychographic segmentation efforts. As an example, higher priced products such as the FLSTF Fat Boy at $11,245 can be advertised to professionals looking to gain the benefit of a fun, adventurous weekend-ride letting off steam from the busy workweek.
|Table 2 Benefit and Psychographic segmentation|
|18-24 year old men, less than affluent|
|Qualities of makers, believers and survivors|
|Youthful and carries an attitude|
|Wants to be seen and heard when making an entrance|
|Professional men in their 40's and 50's|
|Qualities of innovators, achievers and experiencers|
|Not price sensitive|
|Takes pride in freedom, and the American way|
|Upper mid younger w/ kids, and Upper middle age w/o kids|
|Because this is an emerging groups, more research is necessary which will be defined in Q1 using the Circular Feedback as outlined in the marketing mix.|
Geodemographic segmentation methods will be utilized based on households near the dealer networks. To gain new customers, using the Nielsen PRIZM, census.gov and the United States Postal Service we will develop marketing campaigns based on measurable, meaningful and marketable households in neighborhoods surrounding addresses and similar household demographics of existing buyers nearby dealers.
Positioning of the Harley-Davidson products delivered to the segmented customer profile as outlined thus far will continue to focus on the leadership position in the super heavyweight category. With an historic hard-core image which has helped Harley-Davidson become a leader, alternatively, this could turn off customers. The vice president of marketing reports a challenge in creating advertising collateral (Peter 2012) which will be addressed by talking with customers as a result of the qualitative market research plan:
"... we had such a hard-core image out there that it was turning off a lot of people, even though people basically approved ... We had to find a way to balance our image more, without turning it into "white bread" and making it bland."
Based on each market segment, the positioning message will vary. For example, when communicating to the young less affluent buyer, a harder message will be delivered, such as "You can lead the way with an attitude", while a softer positioning message to the older professional will be "It's your time to freely chart a new road, Harley style".
The marketing goals and objectives are clear: get more potential buyers to the dealers and increase sales. Our objective is to do $654.9 million in motorcycle and related sales, a 10% increase in sales revenue over last year's sales of $595.3 million. We will do this by selling 68,703 units, which is 10% more motorcycles sold than the previous year. A 10% increase in sales is achievable as last year's sales increases were 20% over the previous year. We will do this by increasing our domestic sales and increasing our export units.
Our actionable goals are to a) increase the number of people who go to our dealers, b) improve the sales relationship process with heavy emphasis on the prospecting and presenting phases of the sales cycle at the dealer level, and c) work with our Western European and Japanese dealers to ramp up marketing impressions, leading to more sales. To further our sustainability principles all messaging will adhere to the highest possible advertising ethics standards. Combined with open and transparent communication between leadership, while the messaging and positioning will be clear and always portray the trustworthy brand that Harley strives to achieve.
The cruising features, the fashion statement and the comfortable ride across multiple product lines, offered at a competitive price gives Harley a competitive advantage. And since they are the only U.S. manufacturer, Harley has a distinct domestic advantage over foreign competitors.
An assortment of media will be used as part of the promotion mix, focused on pull strategies to send customers to dealers. The budget will be "The Task Approach" strategy. For example, based on existing customer demographics we will start by selecting professionals with higher than average household incomes within a 5 mile radius of their nearest dealer. The potential customer counts are easily measured, and if the count is not a meaningful quantity we can make the radius larger or decrease the household income to reach our marketable outcome. To find new customers each month, a marketable outcome could be targeting 5,000 households per dealer with a virtual blanket of assorted collateral such as door hangers, post card mailings, public relations and newspaper advertising focused on desired neighborhoods in order to engage 100 new prospects per month to visit a dealer trained in sales, to locate 10 new Harleys customers per month. Across 600 stores, this strategy could be part of the mix to generate sales of 72,000 units per year, surpassing our target goal of 68,704 units. Based on this, if our budget is $1,000 per month, per dealer we can adjust the number of advertising impressions to this pre-determined household count, and tie it back to the actual results gained.
|Table 3 Highlights of Integrated Marketing Communications|
|Advertising||Communicate to existing customers to participate in the local and national eventsTarget new customers with "local to dealers" advertising programsIntegrate direct response advertising techniques, asking for "action" in union with direct marketing|
|Promotions||Offer HOG club engagement to encourage social gatheringsOffer Free rides for new customersTest special incentives to see what gets the most inquiries, such as a discount, special financing, service related specials or premium offers such as branded keychains or upgraded handlebars|
|Public relations||Nationwide campaigns directed at trade journals and mass media announcementsCreate a series of public relations campaigns for each dealer location to execute each monthTopics ranging from grand opening, new opening, special offers, event day, heartfelt and special interest stories and community events|
|Personal Selling||Ramp up sales staff to work with educating dealers on products and sales skillsTeach prospecting, presentation and sales closing skills to all dealersGive incentives to best performing dealers as it relates to most new prospects, most presentations given, and best sales per month|
|Direct marketing||Teach the dealers how to get the catalog in the hands of customers and teach them how to be great ambassadors, referring new customersUse direct mail and telemarketing targeting existing customersEngage with customers deeper using more relationship marketing|
Harley-Davidson sells with the use of 600 retail intermediaries called dealers, with locations in U.S., Eastern Europe and Japan. Retail locations will be well maintained and represent the atmosphere and colors of the brand, in union with all advertising collateral, supported by a current catalog.
We have a competitive price list for the catalog of motorcycles. An easy point of entry at the lowest priced bike at $4,395 makes owning a Harley a reality for low to moderate income markets that fall within our new buyers strategy and our 18-24 year old price sensitive market. The premium Tour Glide and Electra Glide at $13,895 makes a luxury ride for bigger spenders. By watching the competition and responding appropriately with promotions or special limited time offers we will remain competitive, and win more customers.
Our Circular Feedback program will provide necessary information to help make wise decisions. This is a low cost market research plan focused on qualitative interviews with recent customers, at the dealer level. Two simple questions will serve as the foundation of the interview-style conversations: 1.) What do you like the best about your Harley?, and 2.) What would you change about your Harley? The information from these two questions and the discussions that happen as a result can help drive the direction of staying at the cutting-edge of customer desires. Additionally, the goal will be to qualitatively measure consumer value systems and thereby acquire necessary benefit segmentation information to help keep the marketing strategy on track with the demands of the market. A document will be provided to dealers so they can conduct research with customers within 90 days of their purchase. Leading with benefit segmentation, the list of benefits that will be gained from the Circular Feedback questions will also serve as points for the integrated marketing communications and advertising copy.
In the development of the marketing mix and in the use of the marketing collateral, every attempt will be used to implement reusable, earth-friendly materials. Especially for items that could cause any marketing waste, such as in the use of door hangers, flyers or direct mail. Also, we will strive to reduce costs at every step in an effort to be wise stewards of marketing spend.
A 10% increase in motorcycle sales is realistic in today's economic landscape, especially after a 20% increase the year prior. With aggressive marketing and grassroots campaigns at the dealer level, hitting the forecasted sales figures are achievable. We have proposed a budget coming from the S,G and A accounts which will be a designated account called Marketing Spend of $8,200,000. Breaking it down, we will be allocating $1,000 per dealer location per month for $7,200,000 for the year (600 locations x $12,000 per year). The additional $1,000,000 will be used for national campaigns and the development of marketing collateral to be used both at the headquarters and at the dealer level.
|Table 4 Sales forecast|
|Total sales units||Total sales revenue||Monthly units average||Monthly sales revenue average|
|1991 sales forecast||68,704||$654.8M||5,725||$54.9M|
The Marketing Director (MD) will be responsible for executing and managing the tactics of the marketing plan. Using a weekly to do list and a monthly calendar with each tactic clearly listed, the MD will manage the vendors and the dealer locations to ensure each item is completed according to the calendar. We will review last year's sales trends for the biggest months, and notify the warehouse of a possible increase in demand in inventory at least 60 days prior.
Combined with the budget which also lists the results of the campaigns, metrics of the marketing program will be carefully monitored and tracked each week using the Marketing Metrics Report (MMR), measuring dollars spent with each campaign per month, units sold and sales revenue. On a monthly basis, return on advertising investment will be measured in order to stay on track for our annual targets.
Even though the market is filled with uncertainty, Harley-Davidson has a faithful customer base with an eager network of dealers across all major markets, including Eastern Europe and Japan. These two components with an aggressive local market-based style of marketing can not only meet last year's sales but can exceed them. Over the last four years, an improved Harley-Davidson plush with cutting-edge manufacturing methods and an empowered staff have proven to deliver the products to not only lead the super heavyweight category, but own the niche in the minds of the target market. The marketing department is confident that these components will result in selling an additional 10% more motorcycles and gaining an additional $59.5 million in sales, and thereby once again improve upon the 14% market share of motorcycle sales, and increase the 62.3% ownership of the super heavyweight category.
Peter, J. P., & Donnelly, J. H. (2012) . Wal-Mart. In A. A. Thompson (11th ed.) , Marketing Management: Knowledge and Skills (pp: 465-503) New York, NY: McGraw- Hill.
Wood, M. B., (2014) . The Marketing Plan Handbook (5th ed.) . Upper saddle River, NJ : Pearson Education, Inc.