Pre-reading:

What values do you associate with the Harley Davidson brand?

List at least three points
1 …………………………………………………………………………..
2 …………………………………………………………………………..
3 …………………………………………………………………………..

Now read the text and take note of what the brand represents. Are they the same as you noted?

Part 1
The dangers of brand extension: the case of Harley Davidson

1) Harley Davidson, the American motorcycle manufacturer has a loyal brand following not
only in the U.S. but also in many countries across the globe. The motorcycle’s distinctive design and
exhaust sound has given rise to many loyal brand communities that are active in clubs and take part
in Harley-Davidson events. Such is the power of the cult iconic brand that just licensing of the
Harley-Davidson logo amounts to approximately 5% of the company’s net revenues. In 2007, an
Interbrand report suggested that the brand name ‘Harley-Davidson’ had a market value of $7.72
billion, which was 131 times more than the book value of $59 million.

2) In 1983, the Harley Owners Group (HOG) was formed to take advantage of the support the
brand had gained amongst Harley Davidson bikers so as to encourage a long-term relationship with
its customers. The aim was to promote a lifestyle along with the product. By 2010, HOG became one
of the largest owners groups in the world. Globally, it had about 1.4 million members who owned
about 40 bike models. Harley Davidson bikes came to be called “Hogs” and in 2006, even its ticker
symbol ‘HDI’ was changed to ‘HOG’ on the New York Stock Exchange. However, the company’s
attempt to trademark the name failed as it became a common term for heavyweight motorcycles.

3) In the 1990s, it seemed that almost everyone wanted custom Harley Davidson bikes. The
name Harley Davidson had become the symbol of a generation and it acquired cult status. A Harley
Davidson bike meant toughness, masculinity, freedom, a rebellious spirit and raw power even
though it did not come with the latest technology or high speed. Throughout this period. the
company’s stock prices soared. Harley Davidson bike owners frequently had logo or bike tattoos
done, indicating literally how closely they identify with the brand. Clearly, owners of H-D bikes did
not just buy a product, they bought a whole set of shared values, a lifestyle, a heritage.

4) Realizing the fascination that the brand had, the company made a decision to exploit it by
introducing a range of accessories to match the bike. They opened a chain of retail shops which sold
Harley Davidson branded merchandise like T-shirts, jackets, caps, gloves, helmets and so on.

5) While motorbike apparel probably matched the Harley Davidson cult heritage brand, the
company soon began to lose focus. It continued to stretch the brand by introducing products like
wine coolers, aftershave and perfumes, ties and even children's clothes. This didn't go down well
with the company's loyal fans. The identity of the brand had become confused, its core value of
rebellious, free-spirited adventure had been eroded. Customers didn't want perfumes and
conventional fashion items, they wanted the iconic bikes together with accessories that
complimented the brand. After strong criticism from their loyal customers, the company realized the
necessity of reshaping the brand's identity. Harley Davidson had learnt a branding lesson the tough
way, understanding that more products did not necessarily mean more revenue.
Part 2
How the company preserves its brand identity

6) While Harley Davidson products might be automotive in nature, the brand isn’t interested in
just selling motorbikes. Harley can’t compete with the quality and prices of the other bikes available
on the market, which generally have more advanced mechanics and lower price tags. That’s why the
director of communications in the 90s decided to transform the brand into one centred around
emotion. Harley Davidson brand ambassadors don’t just buy bikes – they believe they’re purchasing
passion, freedom, power, individualism, and courage. The roar of the Harley helps customers to truly
come to life on the road, as they share their experiences with other members of a large, global
family. Unlike other manufacturers, Harley Davidson teaches us the value of using the emotions that
are associated with the brand.

7) One of the key things that kept the Harley Davidson brand going in its darkest days is the
fact that the motorcycles they make are more than just a product – they’re the centrepiece of an
entire lifestyle. This is epitomised by the Harley Owners Group, a community that brings Harley
lovers together to help them share what they love most about their bikes. Through H.O.G, Harley
has been able to sponsor bike rallies, offer free promotions to its fan base, and even deliver on
drives for charity.

8) People who buy from the Harley Davidson brand know that they’re becoming a part of
something bigger, and that’s important for any company who isn’t relying exclusively on price to
differentiate them through their marketing mix. In the past, Harley Davidson struggled to stay ahead
in the market because they lost focus on what mattered most to their customers. The Harley
Davidson brand extension is a perfect example of when a desire for profits outweighed what was
right for their customers.

Comprehension questions

1 What was the purpose of the Harley Owners Group?

2 Why aren’t Harley Davidson owners necessarily interested in speed?

3 To what extent was it a mistake to extend the brand?