100 YEARS OF HOG HEAVEN
Harley-Davidson Legend Rolls On
By: Joe Zibell, The Business Times
August 1, 2002
Last night while watching a baseball game, I was pondering how to begin this story when it hit me. "It" being a commercial for diet soda of all things.
On a dusty highway somewhere in that fabled part of the country that is all about open spaces and burned-out gas stations every 100 miles, Peter Fonda was riding one of the most famous Harleys of all. It was a scene from the cult classic "Easy Rider," spiced up with a little modern film doctoring. Instead of Jack Nicholson riding alongside him, Fonda was joined by an a typical compadre.
Instead of a leather jacket and boots, the rider was wearing a shirt and tie, dress slacks and wingtips. With the wind blowing back what hair the gentleman had left, the commercial faded into reality.. this adventurous rider was really on a commuter train, half-dreaming with eyes closed, wearing headphones, and singing Steppenwolf's "Born to be Wild" aloud to the the consternation of his fellow passengers. Of course he was drinking the soda, which somehow tied into the motorcycle ride (don't ask me how).
Anyway, the scene made me think of the different answers I got when asking aficionados what is it about Harley Davidson that makes the company what it is. The responses were somewhat inconclusive: "It's difficult to put into words." "You'd have to get on a bike, take a ride on the highway and experience it for yourself." Fair enough. But having a deadline to work with, I didn't have the time to jump on a Fat Boy or Heritage and ride off into the sunset.. Regardless, I got a good sense of the enduring legacy of Harley-Davidson that makes it one of the great passions in this country.
I was also reminded that Harley riders are a more diverse group than ever, and the way that the company has positioned itself for success is a great lesson in marketing and business acumen.
100 Years and Counting
Recently there has been an influx of media coverage on the accomplishments of Harley-Davidson - an upcoming 100 year anniversary will do that for you. In addition, they've gotten attention for the fact that their engines haven't been left to idle. In fact, their profits continue to climb each year (a run that goes back to the late 1980s), as the company stays above the fray of the economic downturn of the past two years.
One of the reasons for this is that Harley-Davidson has created its own culture, its own mythology. And with that comes a devoted following akin to how one would follow NASCAR or a favorite football team. There's plenty of hats, t-shirts, bumper stickers and apparel to choose from. In fact, the merchandising aspect of the business alone brings in more than $1 billion a year. So how did this happen? How did we go from the "Hell's Angels" image of years ago, to the diverse mix of riders and fans of today?
"It's hard to explain," admitted Dominic Maturo, general manager of Bridgeport Harley-Davidson/Buell, which has sold Harleys for over 25 years. "Back in the early 1970s, it started as a culture of people wanting to be different. It was a way to meet people. People would want to talk about their experiences. It was a chance to tell stories and swap lies about the road.
"Malcom Forbes (in the mid-1980s) started a trend that was embraced by movie stars and other famous people. In other words, it became more acceptable to a portion of the population when people saw Jay Leno and Dan Marino riding Harleys."
With Forbes' well-publicized journeys as the catalyst, an entire new demographic opened up, and is still growing. As a result, the stereotypical image of bikers raisin' hell has been modified, and the suit-and-tie crowd have decided they were born to ride as well.
By no means has the traditional hardcore biker been supplanted by the corporate employee. In fact, those interviewed for the article all felt that although there is certainly a more diverse clientele in terms of background, income and lifestyle, the essence of the customers they're serving hasn't changed drastically.
However, numbers that have been cited recently by George Will and Forbes are revealing. Here are a couple of figures to consider: the average age of a Harley customer is 46 (up from 38 a decade ago); the average salary of a customer is $78,000; the cost of a bike can range from around $15,000 to around $22,000.
"We've seen an increase of up to nine percent in the group of customers that make between $100-$150,000 a year," says Maturo. "You're seeing people who now have their kids out of the house, and they're finding that they want to live out their own life and dreams, and this is a way to do it."
Even with this increase, dealerships are still extremely loyal to the customers who have been with them forever. "We're watching the clientele, and the upper earners are gaining ground," said Bob Paolella, who owns Brothers' HarleyDavidson in Branford with his wife Michele. "But it is still mainly a blue-collar customer base. These are the loyalists, the people who are always there for us. And we'll always be there for them."
Smooth Riding Over Bumpy Roads
Fortune magazine reported that during the first half of this year, net profits at the company rose 27 percent, to $264 million, on an 18 percent gain in revenues to $1.9 billion. This followed a year in which Harley-Davidson was tabbed as Forbes "Company of the Year," riding on a 15 percent jump in sales and 26 percent increase in earnings.
Josh Blau of Bridgeport Harley-Davidson, one the of the youngest dealership owners in the country at 28, shed light on how the company seems impervious to the financial hardship that plagues the rest of corporate America. "They have been a very smart company," said Blau, whose father Bill started the dealership in 1975, and retired in 2000. "The demand was kept high, customer satisfaction was valued above all else and product quality improved." In fact, the waiting list for a HarleyDavidson, which can last months, is just one more piece of the legend.
Fran McCormack, general manager of Gengras HarleyDavidson/Buell in Hartford said, "They've done an excellent job marketing their product. They are the envy of many companies in that respect, and because of the loyalty they have built up."
Paolella has owned a Harley dealership for over 25 years, and he was at a loss for why the company has fared so well in tough economic times. "No one can put their finger on it precisely," he said. "We've been doing this for over two decades and we've been through times when the economy has been slow. But the oddity is that every time, the economy has dipped, we've flourished."
Without question, the fact that Harley-Davidson is about more than just riding motorcycles has a lot to do with the fact that they haven't been dragged down into the muck with other companies. As Maturo described it, "There is such a freedom one feels from riding. I get out of work at the end of the day, jump on I-95, and leave my troubles on the road behind me."
But there is also the business approach that has been sharpened over the years. "The company operates a lot more 'lean and mean' than other companies," said McCormack. "If you walk in to the corporate headquarters in Milwaukee, the people there are living and breathing the culture. They're likely to be wearing casual, even motorcycle, attire. You don't see a stuffy CEO wearing a $2,000 suit. They truly believe in what they're doing, and you don't find that in many companies. We've been an affiliate of Harley-Davidson for one year, and, I can honestly say that it's fun coming to work."
And we can't forget H.O.G., which stands for Harley Owners Group. These are more than just your typical sports fans - it is a dedicated bunch of riders that live the culture and esthetic that the company has fostered.
Chris Loynd of Influential Communications, and a recent Harley-Davidson customer, quickly caught on to the idea that it was mor e than just "riding a bike." "I went to a H.O.G. meeting recently, and it was the most eclectic group of people I've ever seen in one place at one time. And the only common bond that brought these people together was the enthusiasm for their bikes, and the experiences they could share."
You Gotta Wear Shades
The future for Harley-Davidson is as bright as the chrome that will greet you if you happen to stop in at a dealership. Naysayers have suggested that because the average age of a rider just keeps on climbing, there is cause for concern that Harley is losing the younger demographic to Japanese competitors. Locally, the reaction to this dilemma is mixed.
"We've seen an increase in woman riders, especially, but also in young riders," said Blau citing an increasing customer base. He admitted that because of his age he c an relate well to the tastes of a younger audience.
"It's not a big concern," said McCormack. "The Buell line is geared toward a younger person, and within the past year, Harley-Davidson introduced the V-Rod which is futuristic and also intended for a younger rider. We're on-track to address the age issue, especially with the technology that will be developed over the next 3-5 years."
Paolella showed more concern, but admitted that it's being addressed. "We're watching this one closely," he said. "It's a concern, but new products, like the V-Rod, are bringing a whole new customer in the front door. In fact, we're seeing other Harley riders buying it too, either as a secondary vehicle or as their main bike."
In addition to addressing the future, forgive the company if its feeling giddy about their centennial anniversary. For a product that represents freedom and individuality, you can expect a raucous celebration of food, music and bikes. Dubbed The Open Road Tour, its next stop is Baltimore (August 16-18), and will hit cities around the world, through next summer.
Harley-Davidson is not about selling a bike; it offers a mystical experience only riders seem to know "Being on your bike, out on the road ... it's like meditation," said Loynd.