Businessmodel of Harley-Davidson

Customer Segments

Harley-Davidson sells its products and accessories broad consumer base across the world, through its network of independent dealerships. The Company divides its US retail customers into two principal categories:

• Core Customers, which the Company defines as Caucasian men over the age of 35; and
• Outreach Customers, which the Company defines as women – principally Caucasian and aged 35 and over, young adults aged between 18 and 34), African-American adults age 35 and over, and Latino adults aged 35 and over. While the US is Harley-Davidson’s principal market, the Company serves an international customer base through dealerships across a further our geographic regions: Canada, Latin America, Asia Pacific, and Europe, Middle East, and Africa. Outside the US, the Company’s definition of core and outreach customers varies depending on the profile of its customers in each market. In general, the Company defines it core customers outside the US as men over the age of 35 and its outreach customers outside the US as women and young adults.

Value Propositions

Harley-Davidson provides value to its customers in the following ways:

• Its industry reputation and standing, with the Company having established a reputation over many years as a manufacturer of high-quality, reliable motorcycles and related parts, and one of the largest motorcycle companies in the world;
• Its brand image and prestige, with the Company having one of the most recognised and widely respected brand name sin the motorcycle industry, with a certain level of prestige associated with its product offerings;
• Its international sales reach, with the Company serving an extensive consumer market through a network of 1,435 independent dealerships spanning the US, Canada, Asia Pacific, Latin America, and Europe, Middle East and Africa; and
• Its specialist personnel and industry expertise, with the Company employing expert engineering and design personnel in its core Motorcycle and Related Products segment, as well as a team of experienced industry executives. ### Channels

Harley-Davidson operates a website at www.harley-davidson.com, through which it provides information on it various bikes, accessories, parts, and dealer locations. The Company also operates an online store at www.harley-davidson.com/store/, where customers can browse and purchase Harley-Davidson accessories, parts, and merchandise, including apparel and homeware. Additionally, the Company operates an online customer portal, as well as an online financing channel at www.myhdfs.com, through which customers can access credit and insurance.

Harley-Davidson sells its bikes to consumers through its network of independent dealerships. The Company has a network of 1,435 independent dealerships across more than 95 countries worldwide, spread across five geographic regions: the US, Canada, Asia Pacific, Latin America, and Europe, Middle East and Africa. The Company sells products to dealerships on a wholesale basis, through a dedicated sales organisation.

Harley-Davidson operates its own manufacturing facilities across the US, Brazil, India, and Australia, delivering products to dealerships through its own distribution infrastructure and third party logistics service providers. Additionally, the Company

Customer Relationships

Harley-Davidson offers a range of parts, accessories, and merchandise to customers on a self-service basis through its online store, which enables customers to browse the Company’s catalogue, make purchases, and track orders without interacting with members of the Company’s sales and support staff. The Company also operates a self-service customer portal, through which customers can access certain tools and resources independently.

Harley-Davidson makes its motorcycle sales through its network of dealerships, where sales personnel are available to provide information and personal assistance to consumers regarding their various options. The Company maintains close relationships with its dealerships, providing ongoing support, resources, and guidance with a view to strengthening its ales network.

Harley-Davidson provides a range of online resources to its customers across its various websites and online channel. Customers are also able to contact the Company directly over the phone and online to receive personalised assistance. Additionally, customers can interact with the Company directly through its social media accounts, including with Twitter, Facebook, YouTube, and LinkedIn.

Key Activities

Harley-Davidson is a manufacturer and distributor of motorcycles and related parts and accessories. It aligns its operations into two reportable business segments: Motorcycles and Related Products, which designs, manufactures and sells Harley-Davidson branded motorcycles, as well as parts, accessories, and merchandise; and Financial Services, which provides retail financing and insurance, and insurance-related programs to Harley-Davidson dealers and their retail customers.

The Company markets and sells its products to retail customers through an international network of independent dealers, spanning the Americas, Asia Pacific, and Europe, Middle East and Africa. It operates its own manufacturing facilities across the US, India, Brazil, and Australia.

Key Partners

Harley-Davidson collaborates with a network of partner companies and organisations that support the Company’s manufacturing and distribution operations. These partners can be categorised broadly as:

• Supplier and Vendor Partners, comprising suppliers of raw materials, components, and equipment that is utilised in the manufacture of the Company’s motorcycles and related parts, as well as suppliers of services and technologies that are utilised more broadly across the Company’s operating segments;
• Dealership Partners, comprising the Company network of independent dealerships, which work closely with the Company to extend its sales operations across new and existing markets;
• Distribution and Channel Partners, comprising various logistics and distribution service providers that support and supplement the Company’s own in-house distribution of motorcycles, parts, accessories, and merchandise to dealerships and consumers; and
• Strategic and Alliance Partners, comprising a range of companies across multiple sectors with which the Company collaborates on joint marketing and branding projects and shares certain resources and tools. Harley-Davidson has a number of partnerships in place. This includes a deal with Best Western, which has served as the Company’s official lodging partner; a branding tie-up with UFC, under which the Company’s branding is displayed across multiple UFC channels; and a sponsorship partnership with Maryland International Raceway.

Key Resources

Harley-Davidson’s key resources are its intellectual properties and designs, its raw materials and supply chain, its network of manufacturing and distribution facilities, its network of independent dealerships, its IT and communications infrastructure, its partnerships, and its personnel.

Harley-Davidson manages a portfolio of patents, trade secrets, copyrights, trademarks and other intellectual property that is key to its operations. Searches of records published by the US Patent and Trademark Office identified a number of patent applications filed in Harley-Davidson’s name, including applications entitled ‘Variable ride height systems and methods’, ‘Ventilated motorcycle jacket’ and ‘Mounting interface for a removable motorcycle accessory’.

Harley-Davidson also owns a number of physical properties that are key to its operations, notably its network of seven manufacturing facilities across the US, India, Brazil, and Australia, as well as its corporate offices and product development centre.

Cost Structure

Harley-Davidson incurs costs in relation to the procurement of supplies and materials, the operation of its manufacturing and distribution infrastructure, the maintenance of its IT and communications infrastructure, the implementation of advertising and marketing campaigns, the management of its partnerships, and the retention of its personnel.

In 2015 Harley-Davidson recorded cost of goods sold of $3.36 billon. The Company also accrued total operating expenses of $1.08 billion, including selling, general, and administrative costs in the amount of $916.67 million and engineering costs totalling $160.30 million.

Revenue Streams

Harley-Davidson generates revenue primarily through the manufacture and sale of motorcycles and related parts, accessories, and merchandise. A portion of its revenue is also derive from the Company’s provision of various financial services, including credit and insurance services.

In 2015 Harley-Davidson generated annual revenue of $6.00 billion, down slightly on the $6.23 billion recorded by the Company the previous year. The Company’s Motorcycle and Related Products segment recorded revenue for the year of $5.31 billion, of which sales or motorcycles contributed 77.8% and sales of parts and accessories contributed 16.2%. The Company’s Financial Services segment generated revenue for the year of $686.66 million.