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How Harley-Davidson builds a long-term customer relationship

Article · September 2015

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Arab Open University Student ID: 2130818

How Harley-Davidson builds a long-term customer relationship

Linda Qeblawi

Introduction
The marketing strategy involves defining which customers a company should
serve through segmentation and targeting as well as creating value for their customers
through differentiation and positioning to eventually deliver value and capture value
though building customer relationship, this process will be explained in the first two parts
of the TMA, the final part includes a brief explanation about the decision process buyers
go through before buying a motorcycle and how information sources influence the buying
decision process.

The Meaning of Customer relationship management

Customer relationship management is an expression that refers to tactics,
approaches and procedures that a business use to analyze and manage their interactions
with customers, in attempt to improve their relationships with their customers, helping in
customer retention and increasing sales growth. (Kumar, 2012)

They achieve that through satisfying their customers and providing them with
superior value. They employed specific programs that helped build customer
relationships such as sponsorship of the Harley’s group that includes events, publications,
and other means of making customer-to-customer interaction possible and easy.
Moreover, Harley-Davidson’s value proposition main focus is on the benefits that their
customer receives, they make sure that people when they buy a Harley they also receive
independence, adventure on the open road, freedom, expressing one’s self individuality
and experiencing life to its fullest. This is what people are buying when they buy a
Harley. Their strategy is also to focus on the right relationships with the right customers
to obtain customer equity which means loyalty and profitability. Harley generates profits
and revenues through some “Butterflies”, but their main focus is on their loyal, long-term
and profitable customers “True Friends”. (Rifkin, 1997)

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Arab Open University Student ID: 2130818

The 5 marketing management concepts are:

The Production concept: Looks at the philosophy of demand & supply in relation
to the customer’s needs & wants. It focuses on increasing the efficiency of the production
methods of products or services.

The Product concept: solely looks on the quality of the product. It focuses on
improving, changing and differentiating the products. The product is produced in smaller
quantity compared to the production concept.

The Seller concept: Believes basically that any product can be sold by selling
efforts to any person, it is a classic approach of appealing to basic needs.

The Marketing concept: relies basically on the relationship between consumer and
the company, matching the customer’s perception with their expectation to make them
delighted. It focuses on targeting the customer’s needs and wants during the production
stage, thus the costumer is more likely to buy the product.

The Societal concept: It looks at satisfying the customer’s needs and wants by
considering also their ethical obligation to protect, preserve and benefit society as a wider
objective. (Kotler, Armstrong, Tolba, Habib, 2011)

The Marketing concept describes Harley- Davidson marketing strategy best, as

their main focus is building customer satisfaction through delivering superior value they
have achieved customer equity and captured value in return through the first 4 steps of
their marketing process in building their relationship with their customers.

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Arab Open University Student ID: 2130818

Segmentation, targeting, differentiation and positioning

Segmentation assists on defining the population into smaller segments or group
by categorizing them according to certain types of criteria such as geographic location,
demographic factors, and psychographic characteristics, or behavioral activities.

Targeting is a sub model of segmentation; its main role is selecting a segment to

target by affecting the product and pricing in the marketing mix stage specified for the
targeted segment.

Positioning is placing a product or service differently from competitors within the

same targeted market by affecting the placement and promotions in the marketing mix
stage.

Differentiation deals with making changes in the product’s core or actual product
or the augmented product in order to differentiate it or make it stand out from the
competitor’s product within the same market. (McDonald, 2012)

Comparison between 3 different targeting strategies

First is Differentiated targeting strategies is to design different promotional
messages where each message addresses different benefits to different groups.

Second is Undifferentiated targeting strategies is to design and send the same or

only one promotional message to everyone or to the complete population.

Third is Concentrated targeting strategies is to design a promotional message that

addresses the benefits only to one specified group or segment.

In my opinion the differentiated targeting strategies is the best as it gives an

advantage of strong positioning for the product as well as having greater possibility of
financial success as well as increasing the economies of scale in marketing and
producing. (Rich, 2002)

Harley-Davidson targeted segments

Harley-Davidson believes and implements a concentrated targeting strategy by
focusing on and outreaching demographic segments such as young adults growth,
traditional men of the baby boomers generation, women, Hispanics and African-
Americans that all line up perfectly with population trends that will provide opportunities
in the long-term. (Kabiraj, Shanmugan, 2011)

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Arab Open University Student ID: 2130818

Motorcycle buyer decision process

A motorcycle buyer will have to go through a process of five stages in order to
decide which motorcycle to purchase:

The first stage is need recognition where the buyer realizes that he has a problem,
for instance the need to transport from one place to another but doesn’t have the budget to
purchase a car and has difficulties in taking public transportation and so here he decides
to get a motorcycle.

The second stage involves undertaking an information search, especially when

there isn’t any available satisfying motorcycle model or brand, the consumer starts to
search for more information from many different sources, information could be obtained
from a personal source such as a friend advice, or from a commercial advertisement, or
having a before experience or a public sources where reviews are available about certain
motorcycles on the internet.

The third stage is the Evaluation of Alternatives, supposing that the buyer has
narrowed his choice to 3 motorcycle brands, he then evaluates the main attributes he is
mostly interested in between those brands to decide which one to purchase eventually.

Fourth stage is the purchase decision; the buyer finally decides which motorcycle
brand to purchase.

Fifth stage is the postpurchase behavior, the buyer could be satisfied if the product
meets his expectation or dissatisfied if it doesn’t, however, almost every purchases could
cause cognitive dissonance, like losing the benefits of the other brands that he did not
purchase. (Kotler, Burton, Deans, Brown, Armstrong, 2012)

Harley-Davidson fans buying decision process

Harley-Davidson fans do not go through all five stages since they already are
familiar with the brand and believes it’s a satisfying one from a previous experience or as
an internal memory already present in their mind, thus they do not need to go through
stage two of information search so they are more likely to buy a Harley-Davidson
motorcycles right after they recognize they need one in the very first stage.

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Arab Open University Student ID: 2130818

Information Search Influences on buying decision

Personal source, this source is the most influential, marketers should seek in
highly satisfying their consumers as they will give information as a word of mouth to
friends and family. (Joghee, Dube, 2016)

Commercial source, is the largest and widest way to give information, marketers
should focus on advertisements that are attractive in order to have store their brand
information in a buyers memory and to retrieve it when needed.

Experiential source, is a very convincing source, a marketer can give the buyer
the opportunity to use the product to persuade him to buy when the experience is
satisfying.

Public source, most people tend to search for consumer rating information, a
marketer needs to look after and deal with this source just as importantly as the personal
source, as their consumer will rate and give reviews that will be available to the public to
read. (Schaefer, 2006)

Conclusion
The above flow summarizes the definition of customer management relationship and how
to build it by backing it up by Harley-Davidson as an example, explaining the 5
marketing concept and which one describes Harley-Davidson best. I have also explained
in summary the concept and differences of segmentation, targeting, differentiation and
positioning. The TMA also discussed the three targeting strategies and how they can
implemented as well as the 5 stage process that a buyer goes through in deciding which
motorcycle to purchase and finally how a marketer can influence the four information
sources that a consumer can receive in their buying decision process.

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 Arab Open University Student ID: 2130818

References:
1. Kabiraj, S. and Shanmugan, J., 2011. Development of a conceptual framework
for brand loyalty: A Euro-Mediterranean perspective. Journal of Brand
Management, 18(4-5), pp.285-299.

2. Kumar, V 2012, Customer Relationship Management: Concept, Strategy, and

Tools, Springer, UK.

3. Rifkin, Glenn 1997, How Harley Davidson Revs Its Brand . Viewed on April 19,
<http://www.strategy-business.com/article/12878?gko=ffaa3>

4. Kotler, Armstrong, Tolba, Habib, 2011, Principles of Marketing (Arab World

Editions), Pearson Education Limited, UK.

5. Joghee, S. and Dubey, A.R., IMPULSE BUYING BEHAVIOR: AN

EMPIRICAL STUDY ON INDIAN EXPATS IN UAE.

6. McDonald, Malcolm. Market Segmentation : How to Do It and How to Profit

from It. Somerset, NJ, USA: John Wiley & Sons, 2012. ProQuest ebrary. Web. 19
April 2015.

7. Rich, Michael K, ed. Business Marketing in the Decade Ahead : The Key
Challenges We Face. Bradford, GBR: Emerald Group Publishing Ltd, 2002.
ProQuest ebrary. Web. 25 April 2015.

8. Kotler, Burton, Deans, Brown, Armstrong, 2012, Marketing, Pearson Higher

Education, AU.

9. Schaefer, Anja, 2006, Introduction to Business, The Open University, UK

10. Joghee, S. and Dube, A.R., 2016. BRAND IMAGE & REFLECTIONS: AN
EMPIRICAL STUDY IN UAE WITH CAR BUYERS OF UAE
NATIONALS. International Journal of Economics, Commerce and
Management, 4(3), pp.401-414.

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