The Global Marketplace With Harley-Davidson: Market Entry Strategies

in India

Group - 4

Arpita Banerjee Preeti Sharma Priya Pawar Deepika Nalwale Pratik M. Vaibhav Datey Sagar Gore Prateek R.

Global competition is intensifying and few U.S. industries are now safe from foreign competition.

To compete, many U.S. companies are

continuously improving their products, expanding into foreign markets and becoming Global Firms.

Global firms face several major problems:

Variable exchange rates, Unstable governments, Protectionist tariffs and trade barriers, Corruption.

Looking at the Global

Marketing Environment

Deciding Which Markets

to Enter

Deciding How to Enter

the Market

Deciding on the Global

Marketing Program

Deciding on the Global

Marketing Organization

Deciding Whether to

Go International

The International Trade System

The World Trade Organization and GATT

Regional Free Trade Zones

Country’s Industrial Structure

Subsistence Economies

Raw Material Exporting

Economies

Industrializing Economies

Industrial Economies

Income Distribution

Government Bureaucracy

Attitudes Toward International

Buying

Monetary Regulations

Political Stability

How Customers

Think About and Use

Products

Business Norms and Behavior

Cultural Traditions,

Preferences, and

Behaviors

Reasons companies might consider International expansion: Global competitors attacking the domestic market, Foreign markets might offer higher profit

opportunities, Domestic markets might be shrinking, Need an enlarged customer base to achieve

economies of scale, Reduce dependency on any one market, Customers might be expanding abroad.

Most companies do not act until some situation or event thrusts them into the international market.

Marketer’s Checklist for Identifying Market

2. Geographic Characteristics.

3. Economic Factors.

4. Technological Factors.

5. Sociocultural Factors.

6. National Goals and Plans.

1. Demographic Characteristics.

Potential

Direct Investment

Joint Venturing

Exporting

Am

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isk, C

on

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an

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rofit P

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Greater

Lesser

Straight

Extension

Communication

Adaptation

Product

Adaptation

Dual

Adaptation

Pro

mo

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n

Don’t Change Product

Adapt Product

Product

Don’t Change

Promotion

Adapt Promotion

Product Invention

Develop New Product

5 International Product and Promotion Strategies

Seller

Channels Between Nations

Channels Within Nations

Final User or Buyer

Export Department

International Division

Global Organization

Deg

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In

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Mark

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Acti

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Motorcycle is the major contributor to the automobile sector of the India.

There are wide growth opportunities in future due to increase in

disposable income.

Advanced technology, low maintenance cost, and ability to perform well on Indian roads are the major growth drivers for the industry.

Overall economic development is another reason for the increase in the demand for motorcycles in India.

There are variety of motorcycle brands available in India.

Major players operating in India are HONDA, SUZUKI, KAWASAKI, YAMAHA,DAELIM,LML, HERO, KI NETIC,TVS, BAJAJ etc. who have adopted different market entry strategies to enter in India.

The factors which influence consumer buying decision : 1. Product quality 2. Performance & design 3. after sales services 4. Brand image 5. Cost • Major demand among Indian consumers is for 100cc (light

weight) bikes. Current scenario suggests that demand for higher engine

capacity bike is increasing in India. The current players in market are making suitable changes to meet the demand.

Harley-Davidson often abbreviated H-D or Harley is an American motorcycle manufacturer. Founded in Milwaukee, Wisconsin, during the first decade of the 20th century, it was one of two major American motorcycle manufacturers to survive the Great Depression. The company sells heavyweight(over 750 cc) motorcycles designed for cruising on the highway. Harley-Davidson motorcycles (popularly known as "Harleys") have a distinctive design and exhaust note. They are especially noted for the tradition of heavy customization that gave rise to the chopper-style of motorcycle

Masculine

Free spirited

Rugged

Macho

Strong

Adventurous

Harley Davidson attributes can be grouped according to kind of Purpose it is used for-:

Touring Bikes -Big Twin engines and large-diameter telescopic

forks

Sports bikes -For the Sportster Evolution engines used since the mid 1980s,there have been two engine sizes XL1100, XL1200

Dyna-Models utilize the big-twin engine (F), small-diameter telescopic forks

Revolution - Models utilize the Revolution engine (VR), and the

street versionsare designated Street Custom (SC) Softail - Models utilize the big-twin engine (F) and the Softail

chassis (ST)

Considering growth opportunities for high engine capacity bikes, HD was eager to enter Indian market since 2005.

Due to higher import duties and stringent emission norms, H-D is struggling to enter in Indian market.

In addition, there is a trade dispute between India and US government related to the ban imposed on Indian mangoes.

A part from this, there were no emission guidelines for motorcycle with engine capacity above 500cc.

In India H-D is targeting the youth with higher disposable income.

In April 2007, a deal was struck between US and India which mutually benefitted both countries.

According to the emission guidelines India has agreed to apply Euro-3 norms for large bikes.

Most of the foreign motorcycle companies entered in India either through technical collaboration and joint venture.

Suzuki and Honda adopted licensing and established subsidiaries in India.

Royal Enfield from England entered into Indian market by establishing an assembly unit.

They import parts from England and assemble them in India as duties payable on parts is less compared to completely built units.

The German large bike manufacturer, BMW entered into India through joint venture with Hero group in 1997.

But it failed in India due to high price. Despite reducing price by more than 50%, sales of BMW bikes did not increase and so it had to terminate its venture in India.

Vice President of H-D,Timothy K Hoelter has announced that whenever they enter Indian market it will be through the sourcing route.

The Feasible Market entry strategy for HD in India is through import of CKD and then assemble in India.

Import CBUs as price does not matter for niche customer. Thus Dealership is one of the best entry strategy for HD.

Own Subsidiary is not a viable option for the following reasons Large Capex, Sales Volume very low/niche, Import of Technical Expertise, Time consuming for ROI.

Product Modification, After sales services and Accessories availability should be the main things to concern.

As it is a symbol of Rugged Individualism, Independence, Logos, HOGs and their Ride For Fun should be focussed and thus the market segmentation should be done according to that.

CompetitionOligopoly, with Harley Davidson as

main threat (48.1% of US market share),

particularly in terms of brand.

Other competitors are

Triumph, Yamaha, Honda

(on price/technology)

& BMW

Bargaining Power

of BuyersPower is high due to branding and loyal

customer base, so Harley buyers

unlikely to switch, as costs are too high.

New entrants unable to touch Harley’s

licensees, as they are locked in dealer

networks

Bargaining Power

of SuppliersPower may be low within the

market, due to Harley’s

dominance.

High power with regard to new

entrants, due to high switching

costs

Threat of

SubstitutesLow threat from

Cars, as consumer likely to have one

in addition. Low threat from other

types of motorcycles, as for

different markets.

Threat from

New EntrantsDominance and strength of Harley brand

suggests high entry barriers, so low threat

from new entrants. No dominating brand

in Europe means here threat from

new entrants higher in Europe

Porter’s Five Forces (1979), (1980), and (1985)

in analysing the cruiser market

Figure 1.

Strengths

Technical Excellence

Efficient Value Chain ensure quality

Strong Brand

Location Advantages

Effective management

Strategic Alliances

Weaknesses

Narrow Target Audience

Polarized sales

Low economies of scale

Sparse Dealer Network

Limited Growth since yr. 2000

Opportunities

Fast growing segment

Customers of Japanese motorcycles

have low brand loyalty

Reduction in international trade

barriers

Threats

Low price of competitors

Competitors enjoy lower costs

Competitors have high economies

of scale and low cost of capital

•http://bikes.pricedekho.com

•Total 16 Harley Davidson Bikes available in India online.

•Harley Davidson Bikes are available in Indian markets starting at Rs.5,50,000.

•The lowest price model is Harley Davidson Superlow Xl883l.

•Most popular Ducati Bike is Harley Davidson Fxdc Super Glide priced at Rs. 11,50,000.

•Harley-Davidson executives have already met with Indian vendors and dealers in early talks about establishing a dealer network, and word has it the new bike will debut at the 2014 New Delhi Motorcycle Show.