It's One Thing for People to Buy Your Product or Service, but It's Another for Them to Tattoo Your

William Harley and Arthur Davidson, both in their earlynot just buying a motorcycle when they bought a
twenties, built their first motorcycle in 1903. DuringHarley; instead, they were buying "the Harley
their first year, the company's entire output was onlyExperience."
1 motorbike; however, by 1910, the company hadHarley-Davidson offered its customers a free
sold 3,200. Movies such as Easy Rider made Harleys aone-year membership to a local riding group,
cultural icon and soon the company attracted peoplemotorcycle publications, private receptions at
who loved its bad-boy mystique, powerfulness,motorcycle events, insurance, emergency roadside
rumbling voice, distinctive roar, and toughness. Itservice, rental arrangements on vacation, and a host
sounded like nothing else on the road, and even Elvisof other member benefits. Branding the experience,
Presley and Steve McQueen longed to ride one.not just the product, has allowed the company to
The Harley-Davidson Motor Company has had its upsexpand how it captures value, including a line of
and downs, and at times, the downs seemed as ifclothing, a parts and accessories business, and
they would end in bankruptcy. In the sixties, Honda,Harley-Davidson Visa card.
Kawasaki, and Yamaha invaded the AmericanIf you were to scan the list of companies that
market, and when sales at Harley-Davidson droppeddelivered the greatest returns on investment during
drastically due to decreasing quality and increasingthe 1990s, you would discover Harley-Davidson. Only
competition, the company began to look for buyersa few companies have been successful in inventing
and was finally sold. However, the new owners ofentirely new business models, or profoundly
Harley Davidson knew little about how to restorereinventing existing ones. Harley-Davidson went from
profitability. The quality became so bad that dealerssupplying motorcycles to antisocial raiders to selling a
had to place cardboard under bikes in the showroomlifestyle to the aging bad boy wannabes caught in
to absorb the oil leaking.their midlife crises. Traditionally, Harley-Davidson bike
Daniel Gross, in Forbes Greatest Business Stories ofowners came from the working and middle classes,
all Times, recounts how in 1981, with the aid ofbut as quality and prices of the bad-boy-bikes rose,
Citibank, a team of former Harley-Davidsonand with energetic marketing, the company soon
executives began negotiations to reacquire theattracted a different class of buyers--currently one
company and rescue it from bankruptcy. Amongthird of Harley buyers are professionals or managers,
these executives was William Davidson, the grandsonand 60% are college graduates. The new customer
of the founder Arthur Davidson. In a classicsegments of Harley are the Rolex Riders or the Rich
leveraged buyout, they pooled $1 million in equity andUrban Bikers. Hell's Angels do not run in the same
borrowed $80 million from a consortium of banks leadgroup anymore. Now there are groups of
by Citibank.accountants, lawyers and doctors. Women also
Harley's rescue team of loyal executives knew thataccount for a significant portion of the new riders,
the Japanese motorbike manufacturers were farand there are women-only riders clubs spreading all
ahead in regard to quality management, and theyover the globe.
made a bold decision to tour a nearby Honda plant.The future looks bright for the U.S. motorbike
Paradoxically, the Japanese had learned Total Qualitycompany. According to The Economist, overall U.S.
Management from the Americans, Edwards Demingsales increased over 20% in 2000, and more than
and Joseph Juran. The new business concept outlined650,000 new motorcycles were sold in the U.S. in the
by these two pioneers was a new managementsame year, up from 539,000 the year before. Bike
approach that, interestingly enough, had beenbuyers spent an estimated $5.45 billion on new bikes
rejected by American manufacturers. As a result,in 2000.
they offered this approach to JapaneseStay alert and get it early. The new branding
manufactures that were eager to learn andparadigm is to sell a lifestyle, a personality and it is
implement it. Therefore, soon after their tour of thealso about appealing to emotions of your customers.
Honda plant, the Harley Davidson Motor CompanyIncreasingly, it will be more and more about creating
decided to put into practice this originally rejectedan experience around the product. Brand managers
approach.and executives will need a new set of lenses. The
After implementing just-in-time inventory (JIT) andrules have changed as well as the opportunities to
employee involvement, costs at Harley had droppedmaximize profitability and create value in the process.
significantly; this meant that the company onlyNonetheless, the majority of companies continue to
needed to sell 35,000 bikes instead of 53,000 in orderfollow traditional ad campaigns and they seem to
to break even. Their lobbying at Washington alsoignore the fact that the media has fragmented into
helped, and import tariffs were raised temporarilyhundreds of cable channels, thousands of magazine
from 4 to 40 percent on Japanese bikes. This extratitles and millions of Internet pages.
breathing space was something that the U.S.Consumers are no longer sitting ducks for
motorbike company desperately needed for itscommercials; they are looking for new experiences.
recovery.Whether it is the bad-boy-aura of the Harley riding
The combination of visiting a Japanese motorbikeexperience, the exquisite coffee experience in
manufacturing plant and lobbying in Washington forStarbucks cafés, or the active participation in
import tariffs was a daring move on behalf ofNet communities, more and more companies will need
Harley's executives in their attempt to bring backto follow these early new branding pioneers. They will
profitability and growth to the company. Anotherneed to look into the dynamics of their relationships
important strategic move was the company's uniquewith customers and the nature of their interaction.
marketing and branding campaigns. Studies showedThey will need to ask themselves some serious
that about 75 % of Harley customers made repeat"out-of-the-box" questions if they want to move
purchases, and executives quickly recognized awith the shifting value that is the result of constantly
pattern that refocused the company's overallchanging market conditions.
strategy. Simply put, they needed to find a way toBranding has changed and so have marketing and
appeal to the extraordinary loyalty of customers,advertising campaigns. New variability, heterogeneity
which they found in creating a community thatwhere there was once homogeneity, newly emerging
valued the experience of riding a Harley more thanstratifications of wealth, new preferences, and new
the product itself.life styles are all characteristics of the 21st century
The sponsorship of a "Harley Owners' Group" hascustomer that are here to stay. We better get used
been one of the most creative and innovativeto it, at lease until the next paradigm is discovered.
strategies that has helped create the experience ofRemember, the companies that are creating new
this product. Without realizing it, Harley executiveswealth are not just getting better; they are
had pioneered a new paradigm that would bebecoming different--mind-bogglingly different!
increasingly embraced by other industries in theirBibliography:
quest to increase profitability by converting theirBarker, Joel. Paradigms. Harper Business, 1993.
product into an experience. The company started toBedbury, Scott. A New Brand World: Eight Principles
organize rallies to strengthen the relationship betweenfor Achieving Brand Leadership in the 21st Century,
its members, dealers, and employees, while alsoViking Press, 2002.
promoting the Harley experience to potentialGross, Daniel: Forbes Greatest Business Stories of All
customers. The Harley Owners' Groups becameTime, John Wiley & Sons, 1997.
immensely popular; it allowed motorcycle owners toHamel, Gary. "Innovation Now," in Fast Company
feel as if they belonged to one big family. In 1987,( December 2002
there were 73,000 registered members, and HarleyKotter, John P., Leading Change, Harvard Business
now boasts to have no less than 450,000 members.School Press, 1996, pp. 4 - 14.
In 1983, the company launched a marketing campaignTeerlink, Rich, and Ozley, Lee: More Than a
called SuperRide, which authorized over 600Motorcycle: The Leadership Journey at
dealerships to invite people to test-drive Harleys.Harley-Davidson, Harvard Business School Press, 2000.
Over 40,000 potential new customers accepted theYoung, James Webb. Technique for Producing Ideas,
invitation, and from then on, many customers wereMcGraw-Hill, p. 14.