Harley davidson livewire commercial song

Strategic Business Proposal

For

For:

Harley Davidson

https://www.Harley-Davidson.com

Prepared On:

1/31/20

Prepared By:

Gary Bass

Emily Bresnan

Ed Kim

Yves Vanek

Instructor Name:

Annie Quaile

Stephanie Gordon

Strategic Business Proposal 2

Contents Introduction 3

Executive Summary 3

1. Organizational Challenges & Proposed Solution 4-6

Organizational Challenges 4

Proposed Solution 5-6

2. Environmental Scan 7-13

Internal Strengths & Weaknesses 7-8

Target Market 8-9

External Business Climate 9-11

Competitors 11-13

3. Strategy Implementation: Operations 14-17

Organizational Structure 14-16

Staffing Needs 16-17

Additional Operational Needs 17

Strategy Implementation: Marketing 18-21

Promotion Strategy 18-21

Strategy Implementation: Legal 22-25

Risks & Liabilities 22

Regulations 22-23

Contracts 23

Insurance 24

Intellectual Property 24-25

4. Strategy Implementation: Sales Projections 26-28

Unit Volume Explanation 26-27

Unit Price Explanation 27

Unit Cost Explanation 27-28

Strategy Implementation: Income Statement 29

5. Strategy Implementation: Project Timeline 30-33

Pre-Launch 30-31

Year 1 31-32

Years 2 & 3 32-33

References 34-46

Appendices 47-61

Strategic Business Proposal 3

Introduction

Executive Summary

To the Board of Directors,

Since 2014, Harley Davidson has been experiencing declining sales due to their aging demographic

losing interest in purchasing motorcycles. This not only is attributed by the stagnancy of its target

market, but has been amplified by the inability to acquire new consumers. To combat this recent

trend and ignite the interest of the millennials, we propose Harley Davidson to air a Super Bowl

commercial to promote LiveWire, their new electric motorcycle. Since 2008, over ninety-five million

viewers in the United States have tuned in to watch the Super Bowl every year (Gough, 2019).

Additionally, more than half of the millennials that tune into the game have been quoted as saying

they tune in primarily to “review all the commercials” (Malcolm, 2016). With the electric motorcycle

market expected to exceed $22 billion by 2024, Harley is in prime position to leverage its nearly

50% market share in the U.S. motorcycle industry to take charge of the electric motorcycle industry

as well (Investor, 2019 and Buhtani, 2018). Marketing around the commercial will include the use of

blimps, product placements in films, and social media campaigns to raise awareness among the

millennials about the LiveWire and the electric motorcycle market. To jumpstart this initiative, we

propose focusing on Northern California, specifically San Jose and San Francisco. California ranks

first (within the 50 States) in motorcycle registrations in the U.S. with 842,000 registrations

(Laporte, n.d.); across the U.S. metropolitan areas, San Jose has the highest market share of

electric vehicles at 21% (Slowik, 2019). Taking these factors into consideration, we tender the idea

of creating a commercial to air during the upcoming Super Bowl in an effort to target and acquire

the millennial demographic.

Strategic Business Proposal 4

1: Organizational Challenge & Solution

Organizational Challenges

Harley Davidson is a long-standing goliath in the motorcycle industry. However, in the last 5 years,

their performance has been subpar relative to the way theyʼve historically dominated the motorcycle

market. Since 2014, their stock has lost approximately half of its value while the Dow Jones Index

has nearly doubled during the same period (Marketwatch, 2019); the Dow Jones Index is a

representation of the general health of the U.S. economy and the market health (Hall, 2020). The

diminishing stock price is a direct reflection of their steady drop in sales; in 2014, Harley Davidson

sold 267,999 bikes worldwide, and that number dwindled to 228,051 by 2018 (Harley Davidson,

2019). The primary reason for this slump can be attributed to the fact that the main Harley

Davidson consumers are getting older every year and are reaching a point where theyʼre no longer

buying the products (Morgan, 2019). This leads to the need of acquiring another set of customers,

namely millennials, with an innovative product that appeals to their desires; within the millennial

demographic, weʼll focus primarily on men between the ages of 27 and 37. Another important factor

to note is the change in use of motorcycles; gone are the days of riding bikes for the sake of

cruising. Due to “traffic congestion, rising population, and the low prices of these vehicles compared

to conventional vehicles,” the new generation of consumers are in search of motorcycles to use as a

practical mode of transportation (Klein, 2019). Additionally, millennials are not only more eco-

conscious than other generations but are willing to pay more for sustainable goods (Curtin, 2018).

Thus, to ignite the interest of the millennials, we propose that Harley Davidson air a Super Bowl

commercial to promote LiveWire, their first electric motorcycle.

Strategic Business Proposal 5

Proposed Solution

To combat the declining sales, Harley Davidson will continue to shift their focus from their traditional

target demographic to the millennial generation thatʼs seeing a growing interest in motorcycles

(Ferris, 2019). In order to reach this demographic, we present an opportunity to utilize an already

existing event that garners the most attention from millennials relative to any other generation: The

Super Bowl (Malcolm, 2016). Thus, we propose airing a commercial during the Super Bowl to target

the millennial demographic among the countless others that will see the commercial.

Every year over 40% of households watch the Super Bowl (Smith, 2018), which equates to over a

hundred million people viewing it live, many of whom are “actually [gathering] to watch the ads”

(Osgood, 2018). In fact, 19 out of the 20 most watched TV shows of all time are Super Bowl

broadcasts (Rapaport, 2018). Over the years, the average cost of Super Bowl commercials has risen

to about $5 million for a 30-second commercial, but the benefits of effectively allocating those

seconds is well documented (Huddleston, 2019). Studies show that the effects of a Super Bowl

commercial persist well into the future, even through other events like the NCAAʼs “March Madness”

and the NBA/MLB games (Smith, 2018). The Advertising Benchmark Index (ABX) measures the

effectiveness of ads run across all mediums. Their measurements conveying the effectiveness of

Super Bowl ads show a steady increase every year since 2013, with it peaking at a score of 107 in

2019 (Wolfe, 2019); what this means is that the effectiveness of the ads during the Super Bowl is

increasing in popularity and effectiveness every year (Wolfe, 2019). Considering this information,

we have created a Super Bowl ad that will run as such:

The 30-second Super Bowl commercial begins with a guy in his late 20s waking up

to a text from a co-worker, minutes before he has to be in the office: “Did you forget

about the meeting?!”, it reads. He jumps out of bed, throws his clothes on, and runs

over to the one-car garage of his little townhouse in San Francisco. Inside the

garage is a Prius (or another compact car), and his bike on the side (suggesting its

smaller size can be fit into a one-car garage in addition to a car). He easily unplugs

the charger from the bike, opens the garage and fires off into the streets; before he

Strategic Business Proposal 6

departs, the camera will angle onto the bike consoleʼs screen, showing him quickly

change the mode of driving from “normal” to “sport” (in addition to showing the

battery life reading “fully charged”). Quick cuts show off the speed, maneuverability,

and aggression of the bike; during this journey he passes a gas station with a long

line of cars, drivers stuck in traffic yelling at each other “itʼs green!”, and women

keenly eyeing this silent assassin confidently weaving in and out of traffic. As he

arrives at his building, the doorman opens the door for him and he zooms in, yelling

back “Thanks Ernie!” to which Ernie smiles and puts up a hand. The elevator is

merely yards away; he skids inside just as the doors are closing, getting the

attention of the male and female co-workers alike and attracting envious looks both

toward him and the bike. The friend who texted him is in the elevator, and asks “I

just texted you, how did you get here so fast?” to which the driver shrugs and

responds, “There was no traffic.”

** Infographic can be found under Appendix 1

Strategic Business Proposal 7

2: Environmental Scan

Internal Strengths & Weaknesses

Harley Davidson is an internationally recognized brand with a fiercely loyal fanbase (Hodgson.

2018). In addition to manufacturing and selling its products, the company also operates the Harley

Owners Group, a fan club for Harley Davidson enthusiasts (Harley Davidson, n.d.). The Club was

founded in 1983, and as of today, it has more than a million active members (Harley Davidson,

2019). Historically, Harley Davidson has been able to capitalize on this strong brand and sell their

products at a premium price. The company can also look back at over a century of success and

developments; no competitor has as much experience as Harley Davidson in the motorcycle world.

Another strength of the company is the patents it owns. Harley Davidson has patented various parts

of their bikes over time, and even trademarked the sounds a Harley Davidson makes (Harley

Davidson, n.d.). This allows Harley Davidson to offer unique products that are unlike anything the

competition has to offer. Additionally, Harley Davidson has been able to build a dense network of

dealerships and garages, largely due to its long history of trustworthy reputation and success.

Consequently, this makes it very easy for existing and future customers to test drive, buy, or get

maintenance on Harleys all over the world. Currently, there are 691 Harley Davidson dealerships in

the United States alone (Harley Davidson, 2018). Another strength of the company is their technical

skills. In the industry, Harley Davidson bikes are known to be very reliable bikes, with the lowest

failure rate among its competitors, including BMW and Ducati (Getlowered, 2017).

While the company has excellent experience building bikes, their experience with electric vehicles is

still a learning process; the LiveWire that started to ship in 2019 is their first product that is

powered by electricity, and took over five years to fully develop since the release of its prototype in

2014 (Harley Davidson, n.d.). Another aspect is the association of Harley Davidson with biker gangs

such as the “Hellʼs Angels” (Edwards, 2018). This association leaves a negative impression with

Strategic Business Proposal 8

some customers and could prevent them from buying a Harley Davidson product because in the fear

of being associated with such gangs (Huber, 2017). The high quality of their products results in a

significant higher price compared to the competition which could make new customers consider less

expensive alternatives. Furthermore, while Harley-Davidson owns the largest share of the US

market, their international sales are weaker compared to the competition (Prikhodko, 2017).

Target Market

With the LiveWire, Harley Davidson will make an effort to tap into a market they havenʼt

traditionally had a stake in, “one that is young, affluent and urban, and eager to adopt a new

technology” (Carpenter, 2019). Their demographic consists of 70% men (30% women) between the

ages of 27-37 in the upper-middle class; their average income lies between $80 - $100k, compared

to the U.S. average household income of $60,000 (Data Census, 2017). They are predominantly

located in the United States (as opposed to internationally), residing mostly in states that are

participating in the Zero Emission Vehicle (ZEV) program such as California, New York, and New

Jersey (UCS USA, 2019). As millennials, theyʼre eco-friendly and motivated to purchase sustainable

products, even if they cost more; in fact, a study shows that over 70% of millennials have adopted

this purchasing pattern (Curtin, 2018). This tech-savvy generation is best targeted through social

media, but also remain the highest consumers of the Super Bowl largely to indulge in the debuting

ads (Malcolm, 2016). When in touch, the best way to sway their purchasing decision is to appeal to

their values, convenience, and practicality. One of the best characteristics about this demographic is

that while theyʼre hard to convince, they develop extremely strong emotional connections to the

products they buy, so once loyal, youʼll have their loyalty for a long time (Kreyenhagen, 2018).

** Infographic can be found under Appendix 2

To get a more precise view of this demographic, weʼve created a customer persona:

Strategic Business Proposal 9

Tanner is a 29-year-old male living just outside of San Francisco as a software

engineer. Before and during work, he frequents the local Starbucks for his caffeine

fix. In the evenings, heʼs either drinking IPAs with his friends or at home telling

Alexa to play the newest Twenty-One Pilots album. He yearns to travel and probe

the corners of the world and has put skydiving on the top of his bucket list. On chilly

days, one thing he never forgets is his Patagonia vest; he loves it not only because

itʼs comfy, but because of their stance on promoting an eco-friendly and sustainable

lifestyle. As someone whoʼs willing to pay extra for sustainable goods, Tanner has

been keeping an eye on the development of electric motorcycles and is looking

forward to using his Christmas bonus as a down payment on Harley Davidsonʼs

LiveWire.

** Infographic can be found under Appendix 2

External Business Climate

The current political situation causes a number of problems for the industry that needs to be

considered; however, theyʼre not entirely relevant to the making of a commercial. Due to tariffs,

certain parts required to assemble the bike are more expensive, but thatʼs not something most

potential consumers are concerned about because Harley Davidson is taking it out of their end;

effectively speaking, the bikes will cost the same for buyers (Coppola, 2018). Also, this fact isnʼt as

widely known or discussed at the moment and is unlikely to make a significant change in the

purchasing decisions; in terms of advertising the bike to showcase its features, there are little to no

political ramifications to consider.

The electric vehicle market is rapidly growing worldwide. By 2024 the global electric motorcycle

market alone is expected to exceed $22 billion (Buhtani, 2018). While there is a multitude of factors

contributing to this increase, much of it is attributed to the way our transportation needs are

changing; that, and the fact that buyers are now weighing their needs more than their wants in an

effort to be more practical and cost efficient. In a recent survey by Global Market Insights, they

Strategic Business Proposal 10

cited “traffic congestion, rising population, and low prices of these vehicles compared to

conventional vehicles” as the main factors for consumer preference for electric vehicles (Buhtani,

2018). Considering this, and the fact that The Japanese Big Four have already completed their

prototype of an electric motorcycle, itʼs certainly not too early to try and gain market control.

Additionally, it appears the LiveWire is the perfect product at the perfect time, offering the

millennials a vehicle that meets the needs both in terms of practicality and environmentally. The

Super Bowl is a great opportunity for Harley Davidson, one of the most recognizable motorcycle

brands in the world, to take charge of this movement.

Motorcyclists have long been pegged as crazy, reckless, and aggressive drivers. In fact, this image

is so strong that theyʼre often considered “the source of the majority of crashes that theyʼre

involved in” just from these biases (Grossman, 2019); the reality is, around 60% of accidents

involving both a motorcycle and a car is caused by the car (Grossman, 2019). Unfortunately, the

stigma extends far beyond their driving, as theyʼre perceived as “tough guys tattooed up with a

cigar in one hand and a beer in the other” (Brandt, 2017). The proposed Super Bowl commercial

makes it a point to have the rider be someone whom Harley Davidson had in mind when designing

the bike. Millennials riders are looking for a smaller, more cost-friendly automobile they can equip

on their way to work (Ferris, 2019). Additionally, more so than any other generation, millennial

consumers take a greater account of the potential environmental ramifications of the products they

use, and thatʼs especially true for products that are as pronounced as an automobile (Price, 2018).

Harley Davidson is arriving just in time with their electric bike, and thereʼs no company better

equipped to take on changing the landscape of the motorcycle industry and appealing to the new

demographic.

In the past decade, there have been significant improvements in batteries and charging

technologies allowing batteries to be smaller and lighter, while having a bigger charge capacity than

ever. According to Nissan, the capacity of lithium-ion batteries has almost tripled since 2010 while

staying the same size (Nissan, 2019). This trend helps electrical vehicles to compete with gas

powered vehicles by allowing further distances to be travelled without recharging. This is significant

to note because unlike conventional vehicles, the LiveWire gets better city mileage as opposed to

Strategic Business Proposal 11

highway. Another positive aspect is the decline in time to fully charge the battery, thanks to quick

charging technology. A Harley Davidson LiveWire can be fully charged within one hour using quick

charging technology, compared to over 10 hours using standard charging (Harley Davidson,

2019) .Considering our effort in branding this as a city bike, this technology adds another level of

convenience that millennials are keen to; you wonʼt have to spend time at gas stations, as noted in

the commercial. Furthermore, prices of lithium-ion batteries have been declining sharply over the

past few years. Since 2013 prices have dropped approximately 73% (Gibson, 2019). This trend

helps to bring manufacturing costs to a lower level to not only compete in the industry but gain

higher profit margins.

Competitors

Zero, BMW, and Lightning are all direct competitors of the Harley Davidson LiveWire in that they

manufacture electric motorcycles that directly compete with Harley Davidsonʼs LiveWire. Their

products are as follows: SR/F by Zero, C Evolution by BMW, and the Strike Carbon by Lightning. All

of these products target consumers in urban areas by way of eco-friendly products that offer ease of

transportation. They are also designed to have higher city mileage in comparison to its highway

ranges (Hinchliffe, 2019). The biggest competitor would be the Zero SR/F: their physical features

almost mirror that of the LiveWires, and their primary attributes focus on size, weight, and

maneuverability, to appeal to millennial consumers (Clemens, 2018). The standard base model of

the Harley Davidson LiveWire is priced at $29,799, compared to the $20,995 price point of the Zero

SR/F (Campbell, 2019).

BMWʼs C Evolution electric scooter would also be a direct competitor despite the fact that the bikes

donʼt look all that similar; both bikes are built to be lightweight, easily maneuverable and used

practically in urban areas, primarily as a mode of transportation (Wood, 2019). One of the main

differences between the BMW C Evolution and the Harley Davidson LiveWire is the range per

charge; the C Evolution has a range of 98.98 miles and the LiveWire has a reported range of 146

miles per charge (OʼKane, 2019). The C Evolution comes with a single price point of $13,995 which

is about 36% more expensive than BMWʼs cheapest scooter. Strike by Lightning is also an electric

Strategic Business Proposal 12

and lightweight motorcycle, but it stands out as the fastest one of them all. Its top speed maxes out

at 150 mph, easily eclipsing the capabilities of the LiveWire (110 mph) and C Evolution (75 mph)

(Shah, 2019). Though this bike has performance aspects, the focus of the Lightning strike is still a

way of faster transportation in urban environments with a battery range of 200 city miles and 150

highway miles per charge on the Lightning Strike Carbon edition with a reported charge time of only

35 minutes (Palmer, 2019).

** Competitive charts can be found under Appendix 3

Honda, Suzuki, Kawasaki, and Yamaha, commonly referred to as the “The Japanese Big Four,” are

the leading Japanese motorcycle manufacturers. They would be indirect competitors of Harley

Davidson in that they do not currently have any electric motorcycles on the market. However, they