When a company decides to expand into new international markets, it faces several choices and marketing strategies. The choice of which market to enter depends on factors like the country’s infrastructure, political risk, market access and potential, shipping considerations, foreign exchange rates, service requirements, timing, product compatibility, and factor costs. For Type A companies, the initial task is finding an appropriate country.
With its rapid growth in emerging economies, India has been identified as a promising market for Harley Davidson. The motorcycle manufacturer, based in Milwaukee, sees India as the second-largest global motorcycle market and the twelfth largest economy worldwide. With a GDP of $3.528 trillion (2009) and significant investments in new highway construction, India presents an excellent opportunity for leisure motorcycle riding, which perfectly aligns with the company’s objective.
Harley-Davidson intends to import its motorcycles, accessories, and riding gear for the purpose of evaluating its approach to the new market in India. The company is seeking local dealers and partners who share their passion and dedication to establishing customer relationships and expanding the Harley-Davidson brand in the long term. With sales spanning 70 countries, Harley-Davidson is a global leader in cruising and touring motorcycles. Furthermore, they have a strong marketing division that employs various strategies including dealer promotions, customer events, magazines, direct-mail campaigns, advertising efforts, and public relations activities. Additionally, the company takes pride in its large worldwide membership base of 750,000 through the Harley Owners Group (HOG).
Weakness: The high price of costly bikes in this category and the fact that required production is not being met are weaknesses that need to be addressed when analyzing the future of the Heavyweight motorcycle market. Additionally, the average buying age for Harley-Davidson motorcycles is currently 42 years old and increasing.
Factors affecting attractiveness include the rapid development of India’s economy and physical infrastructure. It is also important to establish dealer financing relationships to ensure that dealers can offer the full selection, experience, and support that Harley-Davidson customers expect. Furthermore, there is a growing interest in bikes among women and younger riders.
Factors affecting risks should also be considered.
Small, inexpensive bikes are commonly used for basic transportation. However, these motorcycles lack prescribed emission norms for engines larger than 500cc, resulting in noise pollution and environmental concerns. Additionally, imported motorcycles face high tariffs of up to 60 percent and a tax rate of 30 percent. The automobile market in India is primarily dominated by Japanese and Indian manufacturers such as Hero Honda, Honda, Suzuki, Kinetic, LML India, Royal Enfield, TVS Motor, Yamaha, and Bajaj Auto. Furthermore, there is a market for super bikes with engine capacities around 1,000cc, which are priced between Rs9 lakh and Rs12 lakh.
Harley Davidson, a Type B company, has been operating in UAE since 1989 at two locations, Abu Dhabi and Dubai. It is considered the leading dealership in the Middle East. The evaluation of the company’s decision to identify UAE as a global market for Harley Davidson is justified and appropriate. This is due to UAE’s liberal environment towards foreign cooperation, investment, and modernization. Additionally, there is a free trade zone for manufacturing and distribution, where all goods for re-export or transshipment enjoy a 100% duty exemption. These factors contribute to the attractiveness of UAE as a market for Harley Davidson.
The country has been recognized by the International Monetary Fund as a high income developing economy, with its GDP per capita currently standing at $38,283 based on PPP. This places it 14th globally and 3rd in the Middle East. Various factors including the lack of transparency in financial data from both public sector and private companies contribute to the risks faced by the country, making risk analysis challenging. Despite having a diversified economy, it heavily relies on Abu Dhabi’s oil revenues and is vulnerable to fluctuations in oil prices as well as regional geopolitical volatility. However, one of its strengths lies in its comprehensive range of motorcycles, spare parts, accessories, and premium Harley-Davidson clothing available at its Abu Dhabi store.
Harley-Davidson experienced a rise in the percentage of motorcycles shipped internationally in 2008, increasing from 27% in 2007 to 32%. However, the company is confronted with several obstacles such as higher fuel consumption and lack of competitiveness compared to Honda and Yamaha. These challenges are seen in pricing, financial position, global expansion, and market share. Nevertheless, their triumph in the UAE can be attributed to their performance and product quality within the target country, along with the professionalism exhibited by their workforce and management. Additionally, Harley-Davidson has effectively grown its fan community in the UAE and recently inaugurated a new boutique at Dubai Mall.
Harley Davidson has unveiled their 2010 product line-up, consisting of nine new motorcycle models, marking the biggest product introduction in the company’s history. For Type B Company, it is recommended to take advantage of the affluent population and their passion for luxury and recreation in Dubai and Abu Dhabi by implementing proper advertising, promotions such as Bike expo, and a well-executed marketing mix. It is also important to consider the domestic political and economic stability for potential investors. Additionally, the extensive road network connecting major cities and towns provides further opportunities. As a conclusion/recommendation for Type A company:
To determine potential locations, company representatives should attend trade shows and missions, conduct market assessments, find distributors or agents, locate potential end users, and gather valuable information about competitor technology, pricing, market penetration, and technological advancements. A strategic move for brand promotion would be to select an Indian brand ambassador who is a well-known film actor with international recognition. This would add a local iconic image to the company’s product and facilitate acceptance. Another area of focus should be market penetration by expanding the Harley Owners Group (HOG) to Asian countries. Additionally, the company should prioritize customer satisfaction among Asian customers, similar to their approach with U.S. customers. For product development, it is recommended to introduce motorcycle segments targeted at the younger generation and females. Furthermore, the company should venture into developing new environmentally friendly hybrid bikes at a low cost (INR 4 – 14 lakh), targeting developing countries. It is crucial to establish a cooperative relationship with the government by starting a new plant in India and engaging in negotiations regarding emission norms, duties, and concessions. Finally, a Memorandum of Understanding (MoU) between Harley-Davidson and Indian banks can be signed to provide easy financing options, such as Equated Monthly Installments (EMI), for motorcycle enthusiasts who wish to purchase Harley-Davidson products.
