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Harley-Davidson, Inc. (NYSE:HOG) reported the third quarter 2019 financial results in a press release HERE.

Key indicators the motor company reported was revenue from motorcycle and related products fell 4.9% Y/Y to $1.07B in Q3.  Motorcycle shipments were down 5.8% to 45,387 and gross margin fell one point to 29.9% of sales.  The company stated it expects shipments of 38,500 to 43,500 motorcycles in Q4 and 212K to 217K for the full year.

In other interesting financial sound bites; Harley’s Q3 marketing spend was up over 30% with efforts on the LiveWire and LowRider S television spots running in major markets across the U.S.  International retail sales were up 2.7% driven by growth in both developed and emerging markets.  In addition, Harley-Davidson gained 2.2 percentage points of market share during the quarter within the Touring and Cruiser segments, which represents approximately 70% of the total 601cc plus industry.

In the attracting more people to riding and keeping riders riding space (i.e. the 2027 strategic imperative) — in Q3 the company gained deeper analysis and insights on why people engage, participate and disengage from riding.

Lets call it a “participation lifecycle!”

H-D Marketing and Brand Amplification

Harley-Davidson now has an acute focus on how to influence each customer at their buying decision points to build the total number of committed Harley-Davidson riders.  By 2027,  the company will expand to 4M total Harley-Davidson riders in the U.S., grow international business to 50% of annual HDMC revenue, launch 100 new high impact motorcycles and do so profitably and sustainably.  Lastly, Harley added Amplified Brand as a growth catalyst in the More Roads to Harley-Davidson’s growth plans.

For example Harley-Davidson refreshed their brand look at major events during Q3 including Sturgis, World Surf League and Spartan races and recently announced we will be the presenting sponsor at next summer’s hotly anticipated Hella Mega music experience tour featuring Green Day, Weezer and Fall Out Boy.  The Hella Mega Tour being promoted by Harley-Davidson is the co-headlining tour of rock bands Green Day, Fall Out Boy, and Weezer. The tour was announced on September 10, 2019 and includes dates from March to August 2020.

Navigating Section 301 Tariff Process

You can’t have a finance report these days and not talk about TARIFFS!  The dizzying series of trade and tariff events over the last few months has pushed the trade war front and center into Harley-Davidson.  How to navigate the Section 301 Tariff process, prepare for any impact etc., is a challenge in of itself.  For the full year 2019, Harley-Davidson now expect impacts of recent EU and China tariffs to be approximately $105 million. This is a $5 million increase from prior expectations and is driven by an increase in Section 301 tariffs, which continue to shift with the breeze as part of global trade negotiations.

It appears that some developed nations will slip towards recession, and governments and companies keep hoping the signs of economic weakness in China would push all the parties to a “deal” table faster.  Harley-Davidson looks to continue mitigating the impact of tariff increases through tariff classification, tariff engineering, first sale, and other methods.  Some of which may have an impact on U.S. manufacturing jobs.
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Q3’19 Press Release:  HERE
Investor Slides:  HERE
Transcript of Q3’19 Financial Call:  HERE
More Roads Plan:  HERE
Hella Mega Tour:  HERE
Section 301 Tariffs:  HERE
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Photos courtesy of Harley-Davidson
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Customize It And Stand Out

According to Reuters, Harley-Davidson Inc. has laid off 40 employees in Milwaukee at their general merchandise division.

It’s not a large number of employees, but most unfortunate if your career “rug” was just pulled out from underneath you as someone impacted by this reorganization.

Important to note is that Harley-Davidson’s second quarter earnings report, released July 23, 2019 reported general merchandise sales of $64.6 million, a 5.8% decline from 2018. The company saw a 4.2% decline in the first half of 2019 from 2018 in general merchandise.  It’s also no secret that Harley-Davidson continues to see a decline in motorcycles sales in the U.S. and abroad as it works to adapt to changing clientele.

In the Reuters report the motor company stated the general merchandise division re-org was to manage it’s business with “focus and discipline.”  That statement reads like a quote from the Six Disciplines playbook.  Was the division previously an over-committed reactionary one with no focus and discipline?  That euphemistic “focus and discipline” term seems to be more about flattering management because at the end of the day it’s a “reduction in force,” which is an old school straightforward term.

SAVE, SAVE, SAVE

And speaking of general merchandise — have you noticed the significant up-tick of emails from Harley-Davidson corporate or your local dealer?  I follow Harley-Davidson on multiple channels to stay current on their events and product announcements and always get a number of emails, but I’ve seen a dramatic drum-beat increase over the last couple of months.

It’s starting to have a feel of desperation to survive and meet sales quotas.  Here are a couple recent examples:

Motorclothes, Last Chance to Save Up to 50%…
Harley-Davidson VISA…Reap The Rewards…
End of Summer Sale…
Customize It and Stand Out…
Finance Interest Rate Specials…
Schedule a test ride today…
The 2020 Models are here…
Ride into Fall sale…
Performance Workshop this weekend…

Why is email solicitation so popular?  Because it’s a free alternative to tele-marketing and direct-mail campaigns.  The cost of sending an email is minimal compared to the cost of printing and mailing paper and the email “opportunity” goes directly to your inbox for review.

I predict we’ll see more and more sales email as the motor company works even harder to capture and retain our interest.

Photos courtesy of Harley-Davidson email blasts

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2018 Softail Lineup – Eight all-new models

When is “new,” “all-new,” “brand new,” “built from the ground up new,” “the newest,” “newer and refreshed,” advertising claims of an existing or previous Harley-Davidson really new?

Is there no objective basis by which to measure when a motorcycle is actually “new?”  What do you think?

It’s been reported that motorcycle enthusiasts are holding on to their old, reliable wheels for longer stretches of time, but Harley-Davidson wants to change that and has rolled-out the “brand new” 2018 #FreedomMachine models. Dealer launch video is HERE.

Send in the millennials and let’s make a deal!

Or in other words,  what the company is hopeful for after the ‘largest ever product development project’ was undertaken.

All-new Softail mono shock rear suspension

They may not look very different, but the 2018 changes to the engine, frame and suspension over shadow any “new” colors, new handle bar position or new seat thread design.  “All-new” is really what we’ve been promised to modernize these traditional bikes and it’s not a rehash of the old.

The quick read is that the Softail and Dyna product lines, as riders have known them previously, are gone.  The Dyna family is discontinued and the Dyna nameplates are now Softails!

Softail Big-Twin cruiser models

That’s the provocative and on the 2018 model revamp, all of the models that used to be in the Dyna’s lineup — the Fat Bob, Low Rider and Street Bob — rolled into the Softail lineup — Softail Slim, Heritage Classic, Deluxe, Fat Boy and Breakout — Harley completely redesigned the Softail chassis.  Not a minor cosmetic change, but a complete overhaul of the entire frame and suspension.  The new under-seat mono shock rear suspension aims to offer improved ride quality, traction, and control while the triangular swingarm maintains the classic lines of a hardtail frame.  The revamp also includes key accommodations for last years release of the Milwaukee-Eight, the first four-valve-per-cylinder heads engine packaged into the classic 45-degree V-twin.

From the styling department, all the new 2018 bikes have a much darker and aggressive paint scheme.  It’s largely a brooding “protester” feel with colors matched and with a “masked” or blacked out engine. There are smaller changes to individual models such a color-coded inner fairings, new wheels (including a 21” one for the Road Glide) and different exhaust finishes.  Oh and don’t forget that riders can now pair Bluetooth headsets with the stereo to remain wirelessly “connected” — on its top-of-the-line touring models.

I’ll address the hype right here: Your motorcycle and your smartphone are starting to have a lot in common, though only one can be used to take a selfie — at least for now.

115th Anniversary Eagle Badge

Lastly, the motor company announced the 115th Anniversary edition motorcycles.  There will be two limited-edition, serialized designs with 115th Anniversary Eagle and special anniversary paints available on nine different models in 2018 to celebrate the birthday.

But, what about that peculiar

In the social media and PR launch extravaganza for the 2018 line up earlier this week, Harley-Davidson quietly discontinued the V-Rod.

Discontinued V-Rod

The 2017 V-Rod Muscle and Night Rod Special are the final iterations of the VRSC (V-Twin Racing Street Custom) line.  You may recall this motorcycle had the Revolution engine that was co-developed with Porsche and based on the VR-1000 Superbike that Harley used in competitive drag racing.  It had a hydro formed tubular frame, a gas tank under the seat with round-topped airbox cover up front posing as a gas tank.

This was often referred to as the Harley for the non-Harley motorcycle rider and was a testimony that engineers and the brand were capable of doing something very different.  It was introduced in 2001 and discontinued 16-years later.

It would seem that Harley-Davidson is no longer “building products that fulfill customers dreams on the drag strip!

Photos courtesy of Harley-Davidson

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Harley-Davidson Press Release

In mid-August, Harley-Davidson rolled out a press release (on the Canadian news wire) to announce the launch of a global campaign that embraces “The Freedom of The Open Road.”

It’s part of a 10-year global strategy to build the next generation of Harley riders and the new brand platform is “All for Freedom, Freedom for All” which comes to life with videos containing user-generated and filmed content that shares moments of the open road by riders past and present.

The ambitious campaign goal is to increase Harley’s brand relevance and inspire those “sleeping license holders”  to experience the same freedom that all current Harley riders feel with the wind in the face and ultimately to purchase a motorcycle.

The Harley-Davidson marketing group is using the #FindYourFreedom hashtag to generate social media awareness.

It’s common knowledge that when using a hashtag, you are categorizing your post and is viewed as a valuable tool when marketing your brand.  The objective of course would be to find a hashtag that has never been used previously and one that would really set the campaign apart from all the other social media noise.  However, there is another large company with an equally large brand that is already using the #FindYourFreedom hashtag with an associated marketing campaign.

They spell it:  J E E P  — you know, the company with an adventurous lifestyle that requires an adventurous vehicle!

While you can’t legally own a hashtag, the marketing 101 manual suggests that you chose one that people will associate with your brand, by leveraging a distinctive phrase or word associated with your company and messaging that marketing execs would, at best, like to see go viral or, at worst, contribute to the marketing campaign in a very positive way.

Think about it.  Harley-Davidson just launched a multi-year campaign and is encouraging motorcycle fans to join the social media conversation of a larger Jeep fan base!

The marketing folks may have actually “muddied” the Harley-Davidson brand or made it vulnerable by this hashtag gone wrong.

Photos courtesy of Harley-Davidson and Jeep.

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This is interesting timing because April is Alcohol Responsibility Month and the partnership announcement stated nothing about responsible drinking and riding!

Sailor Jerry Spiced Rum

The multi-year marketing partnership was announced this month and the two companies will honor the father of American old school tattooing, Norman “Sailor Jerry” Collins and unveil a series of twenty-two customized Harley-Davidson motorcycles designed by high profile artists and visionaries from around the U.S.

If you are unfamiliar with Norman “Sailor Jerry” Collins story, after serving in the U.S. Navy during WWII, he dedicated his life honing the art of tattooing out of his shop on Hotel Street in Honolulu. His shop became the must-stop destination for sailors on their shore-leave.

In the 50’s and 60’s, Americans getting tattoos included the most aggressive elements of counterculture.  And it was a time of another level of commitment to inscribe your body with an image that permanently stated your beliefs, affiliation or anti-establishment attitude.  In the 70’s and early 80’s, getting aggressively tattooed and pierced became a mark of punk culture’s disdain for conformity and social mobility.  Today the range of things that people express with tattoos continues to widen.

Oregon Has 2nd Highest Alcohol-Impaired Driving Fatalities From 2014-2015

But, I’m intrigued about this motorcycle and spiced rum marketing partnership which has some historical IRONY.  First, as previously mentioned the two companies chose April to kick-off the marketing partnership which  officially celebrates Alcohol Responsibility Month.  On the surface, that seems a bit tone deaf considering the increasing number of automobile and motorcycle accidents/deaths related to impaired driving.  In addition, is the fact that Norman “Sailor Jerry” Collins was out riding his Harley-Davidson in 1973 when he had the heart attack that took his life (after collapsing in a cold sweat, he got back on his bike and rode home).  So, when Scott Beck, Harley-Davidson director of marketing stated: “We are struck by the natural ties Sailor Jerry has to the motorcycle culture” it raises some awkwardness in my view and wonder how the two companies ever got mixed up in all this in the first place.

But I’ll stop reflecting and focus on the announcement.

According to the Milwaukee Biz Times — the two companies said the partnership would “come to life in bars, restaurants, Harley-Davidson dealerships and joint celebrations around the country” and consumers should expect a number of shared events leading up to Harley’s 115th anniversary in 2018.  “Sailor Jerry Spiced Rum and Harley-Davidson are all about freedom of expression and customization, whether that is expressed by a Norman Collins tattoo or a bike,” said Scott Beck, Harley-Davidson director of marketing.

The first event will be the unveiling of 22 customized motorcycles at the Harley-Davidson Museum on May 2. Harley’s Forty-Eight, Iron 833 and Roadster models were used for the project.

The artists will incorporate the flash art style of “Sailor Jerry” into their motorcycle design.  And members of the Harley-Davison styling team will also work on the motorcycles to inspire their designs.  The custom motorcycles will be on display at events at liquor retailers, Sailor Jerry’s Fleet Week New York celebrations, the Harley-Davidson Museum and more. The motorcycles will also be available to win in a sweepstakes that starts May 15.

Clearly the reckless spirit of motorcycle riding and alcohol don’t mix.  However, the collaboration with Harley-Davidson and Sailor Jerry Spiced Rum does have a natural feel about it and I’ll be curious to see some of the artwork and craftsmanship that comes from the partnership.

Photos courtesy of Sailor Jerry Spiced Rum and Responsibility Org.

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2017 Indian Chieftain Elite

The marketing guru’s claim that Indian is authentic, was born with a dedication for pure performance and now are adding even more capability.

First a bit of history — the first Indian Motorcycle was sold to a retail customer back in 1902, but I’ll spare you a 100+ year recap of the motorcycle.  In modern day history, the Indian Motorcycle brand has been part of Polaris Industries since 2011, and began selling new motorcycles in 2014. The motorcycles are American made and built in Spirit Lake, Iowa.  The are distributed via 200 dealers across North America and nearly 450 dealers globally.  You might recall that the Victory Motorcycle brand, was recently shuttered by Polaris and ceased production.  To the dismay of many, many satisfied customers, it is now winding down operations after 15 years on the market leaving Indian as the only mass-produced American motorcycle brand other than Harley-Davidson.

2017 Indian Chieftain Limited

Jump ahead to April 2017 and we learn that Indian has announced expansion of its Chieftain model lineup with the addition of the Chieftain Limited and Chieftain Elite.  If you’re keeping track this brings the total number of 2017 Indian models to twelve.

It should be noted that the Chieftain was one of the first three bikes that Indian released in 2014, along with the Chief Classic and Chief Vintage.  Although model details differ, the bikes share a common platform — engine, transmission and chassis.

All three motorcycles come with Indian’s proprietary Thunder Stroke 111 V-Twin engine, cast aluminum frame with integrated airbox, air-adjustable single rear shock and many other shared mechanical features.  As it turns out, the Chieftain was the modern-looking of the three, showcasing a unique fork-mounted hard fairing which housed its gauges and electronics, while the Chief motorcycles came with accessory windscreens.

2017 Indian Chieftain Dash

The newly announced Chieftain Limited imitates some details from the custom bagger scene.  It has a skinny 19-inch front wheel replacing the 16-inch front. The “old-school” valanced front fender has been chopped to follow the design line of the wheel and exposes the mag wheel and oversized dual front brake rotors. There is a sleeker seat design, and the headlight bezel is painted, not chromed, to match the Thunder Black paint scheme.  The remaining elements of the Chieftain Limited match the Chieftain feature-for-feature, including the 7-inch touchscreen-operated Ride Command Infotainment/Navigation system and hard saddlebags.

For the well-heeled enthusiasts familiar with and looking at a Harley-Davidson CVO (Custom Vehicle Operations) motorcycle, you’ll appreciate the new Chieftain Elite. Let’s start with the 12-layer paint treatment which is built on a foundation of gold paint. Black accents are added with marble textures, and the bodywork is coated with layers of Fireglow Red Candy clear.  Yeah, it’s a looker with a stunning paintjob, thanks in part to that brilliant red candy color.  Some of you would drop a lot of money with a custom painter to achieve this look, but this one comes direct from the factory.  In addition, the Chieftain Elite gets billet floorboards, a flip windscreen, Pathfinder LED headlights and a 100-watt saddlebag audio system.

At first blush the Chieftain Elite is a factory custom that will hold its own against Harley-Davidson CVO’s.  As to price?  The new Chieftain Elite (starting at $31,499) and Chieftain Limited (starting at $24,499).  Both motorcycles are feature rich, available now and aggressively priced compared to Harley-Davidson.

With warmer weather and longer days on the way, the new Indian Chieftain’s might be the spark of inspiration you’ll need to explore a wide-open two-lane world.

Photos courtesy of Polaris/Indian Motorcycles.

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Does it matter?  You bet!

Pendleton, Oregon and the “wild west” stands for — freedom, independence, self-expression and the rebel spirit.

That could be a marketing campaign for Harley-Davidson and likely why the motor company will grace Oregon’s Pendleton Bike Week (July 19 – 23rd).

This is major news, especially in biker circles.  It’s a lot of work and a big deal in the consumer goods and services sector to obtain a title sponsor on any type of event, let alone when the backbone of American culture, the flagship of American brands elects to throw its considerable weight behind an event and partner with an up-and-coming independent motorcycle rally in the Northwest.

Big shout out and congrats to Eric Folkestad and the Pendleton team for securing the sponsorship!

You may recall that the Pendleton Bike Week (PBW) is not a local or national sponsored HOG event so, this is really the first-of-its-kind partnership with Harley-Davidson and will help legitimize this event for motorcycle enthusiasts.  What makes this even more interesting is the fact that the Pacific Northwest HOG Rally (July 20 – 23rd) held in Meridian/Boise, ID will occur on the same set of dates as PBW.  Pendleton and Meridian, ID are about 3 hours apart on I-84 and I would anticipate some riders are working on a plan to attend both.

PBW is in it’s third year and it’s estimated there will be upwards of 20,000 bikers over the four days visiting the area this year.  I attended the first event in 2015 (read about HERE) where there was about 6,000 attendees and last year’s attendance spiked to about 16,000 across the four days.

Harley-Davidson will have factory reps on hand to chat with and two factory demo trucks onsite so riders can experience the performance of the company’s new line of motorcycles, including the new Milwaukee-Eight engine.  Pendleton is at the base of the scenic Blue Mountains, which has become well-known as a hub for motorcycle touring eastern Oregon.

The city of Pendleton is an appealing venue and the rally is a nice ‘back to the basics’ ride in the “wild west.”  See you there.

Photo courtesy of PBW

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