EXECUTIVE SUMMARY Harley-Davidson is the largest market

share holder of motorcycles over 750cc in the United States.

After the expansion of our production and distribution
capacity, we will be in the position to meet the increasing
demand for our motorcycles and other products. Growth
potential appears very good especially in the overseas
market. Gaining a larger market share in these area may
require a further increase in production and distribution
capacities. We must plan for expansion now and continue to
grow as a company. COMPANY DESCRIPTION In Milwaukee,
William Harley, 21, and Arthur Davidson, 20, began
experiments on taking the work out of bicycling. They were
soon joined by Arthur’s brothers, Walter and William. Many
changes were made to the engine design before its builders
were satisfied. After the new looped from was finalized, they
were ready to begin production. In 1903 they produced three
motorcycles. Harley-Davidson erected its first building the
current Juneau avenue site in 1906 and incorporated in 1907.
In 1907 Harley-Davidson produced 150 motorcycles.
SITUATION ANALYSIS The motorcycle market over 750cc has
been increasing over the last five years. The Harley-Davidson
1996 model year production line, sold though a world wide
network of more than 1,000 dealers, includes 20 cruiser,
factory custom and touring motorcycles, as well as police
motorcycles. Harley-Davidson benefits form having one of
the world’s most recognized and respected brand names and
our motorcycle model names are among the best known in
the industry: The Competition and Market share This chart
shows the competition and market share for 1995 in the
United States: Current Market Situation Overall Net sales for
1995 of $1.4 billion were $191.6 million, or 16.5%, higher
than net sales for 1994. Net income and earnings per share
from continuing operations were $111.1 million and $1.48,
for 1995 as compared with $96.2 million and $1.26, for 1994.
Net income and earnings per share from discontinued
operations were $1.4 million and $.02, for 1995 as compared
with $8.0 million and $.11, for 1994, which included a $4.6
million, or $.06 per-share, one-time tax benefit related to the
legal reorganization of Holiday Rambler. On January 22, 1996,
the Company announced its strategic decision to discontinue
the operations of the Transportation Vehicles segment in
order to concentrate its financial and human resources on its
core motorcycle business. The Company does not anticipate
a loss on the discontinuance of the Transportation Vehicles
segment. The results of the Transportation Vehicles segment
have been reported separately as discontinued operations
for each year presented. On November 14, 1995, the
Company acquired substantially all of the common stock and
common stock equivalents of Eaglemark Financial Services,
Inc. that it did not already own. The purchase price was
approximately $45 million, which was paid from internally
generated funds and short-term borrowings. The Company
has included the results of operations of the Financial
Services segment ($3.6 million) in its statement of operations
for the year ended December 31, 1995 as though it had been
acquired at the beginning of the year and deducted the
preacquisition earnings as part of non-operating expense.
The Company increased its quarterly dividend in September
from $.04 per share to $.05 per share which resulted in a
total year pay out of $.18 per share. Units Shipped and Net
Sales The Motorcycles and Related Products (Motorcycles)
segment's net sales increased 16.5% over 1994 due primarily
to a 9,293 unit (9.7%) increase in motorcycle shipments, as
well as a 14.0% increase in its Parts and Accessories business.
The increase in motorcycle shipments is the result of ongoing
implementation of the Company's manufacturing strategy
and efforts to satisfy demand. The manufacturing strategy is
designed to increase capacity, adjust to changes in the
market place and further improve product quality while
reducing costs. Sales of Buell motorcycles (which are
distributed through select Harley-Davidson dealers)
increased to $14 million in 1995 as compared to $6 million in
1994. The Company began 1995 at a scheduled motorcycle
production rate of 395 units per day. As the implementation
of the manufacturing strategy continued, the rate increased
to 470 units per day by the end of the year. The Company
exceeded its production goal of 100,000 units in 1995 and
anticipates 1996 production will reach at least 115,000 units.
The Company is currently reviewing alternative sites for the
construction of a new manufacturing facility to enable it to
achieve its long-term goal of doubling motorcycle production
by 2003. Year-end data indicates that the domestic (United
States) motorcycle market continued to grow throughout
1995. Compared to 1994, industry registrations of domestic
heavyweight (engine displacements in excess of 751cc)
motorcycles were up 11.3% . The Company ended 1995 with
a domestic market share of 55.8% compared to 56.1% in
1994. This decrease is a reflection of the Company's
constrained production capacity in a growing heavyweight
motorcycle market. Demand for the Company's motorcycles
continues to exceed supply with nearly all of the Company's
independent domestic dealers reporting retail orders on all
of their remaining 1996 model year motorcycle allocations
(production through June, 1996). Export revenues totaled
$394.8 million during 1995, an increase of approximately
$63.6 million (19.2%) over 1994. The Company has exported
approximately 30% of its motorcycle unit shipments since
1990 and expects to maintain approximately the same
percentage during 1996. The Company distributes
approximately one-half of its exported units through its
wholly owned subsidiaries in Germany, Japan and the United
Kingdom, which allows the Company flexibility in responding
to changing economic conditions in a variety of foreign
markets. While definitive market share information (engine
displacements in excess of 751cc) is not available in many
foreign countries, the Company believes it holds an
approximate 11% market share in the European markets in
which it competes and a 22% market share in the Pacific Rim.
During 1995, the Parts and Accessories business generated
$292.3 million in revenues, an increase of 14.0% over 1994.
The rate of increase is lower than experienced in recent
years, however, management believes the 1995 increase is
more indicative of the long-term growth potential of the
Parts and Accessories business. The Motorclothes business,
which accounted for approximately $100 million of Parts and
Accessories sales in 1995, is expected to remain stable in
1996, while the Motor Parts and Motor Accessories
businesses are expected to increase. The Parts and
Accessories business is expected to grow at an annual rate
similar to the annual growth rate in motorcycle shipments.
The Company is developing an improved system to better
monitor domestic dealer inventories and retail traffic. In
addition, the Company initiated several promotional
programs in the fourth quarter of 1995 to increase dealer
floor traffic and plans to continue this promotional strategy
in 1996. To further strengthen its ability to process and fill
orders for the Parts and Accessories business, the Company
plans to construct a new distribution center (at an
approximate cost of $17 million). Construction is scheduled
to begin in the second quarter of 1996, and the facility should
be fully operational by the first quarter of 1997. Gross Profit
Gross profit increased $53.1 million, or 14.8%, in 1995 as
compared with 1994 primarily due to an increase in volume.
The gross profit margin was 30.5% in 1995 as compared with
30.9% in 1994. The gross profit margin was negatively
affected by the overtime incurred to produce additional
motorcycle units and make up for production time lost
because production employees were involved in numerous
strategic planning sessions during 1995. Internal & External
Analysis Strengths ¨ Customer Loyalty and Following ¨ Very
High Product Demand ¨ Profitable Product Line and Market
Mix ¨ Highest Market Share for Motorcycles over 750cc in the
United States ¨ Union Contract That is beneficial to both the
Firm and the Employees ¨ Significant opportunities in the
growing worldwide motorcycle market ¨ A proven
management team that’s committed to build a beneficial
relationship with all of the stakeholders for the long term ¨
Increased capacity with the construction of new plant and
distribution center Weaknesses ¨ Inefficiency due to Large
Production Level ¨ More Demand than Supply ¨ Lower Than
expected Sales in Motor Clothes ¨ Lingering biker image
MARKETING PLAN OBJECTIVES Harley-Davidson, Inc. is an
action-oriented, international company-a leader in its
commitment to continuously improve the quality of mutually
beneficial relationships with stakeholders (customers,
dealers, employees, suppliers, investors, governments and
society). Harley-Davidson believes the key to success is to
balance stakeholders' interests through the empowerment of
all employees to focus on value-added activities. This value
added mentality helps us to improve our product quality. It
important to us to offer the highest quality product possible.
In addition to quality we have also been focusing on service.
Many of our dealers are continuing to make major
investments in the future growth of their businesses-such as
converting their dealerships into world-class retail sales
establishments through our Designer Store program, building
larger dealerships, expanding their existing service areas or
opening alternate 'satellite stores in high traffic areas. Both
we and our dealers are investing in training and education, to
better serve the motorcycling community. We will also be
focusing more strongly than ever before on new product
development. With worldwide motorcycle market growth
expected to continue, we're dedicated to maintaining
leadership in our traditional motorcycle segments and
gaining further penetration into the performance market
through our joint venture with Buell. We want to ensure that
while our competitors are busy copying our past work, we're
re-defining the market with exciting new products. Our new
Product Development Center, expected to be completed by
year-end '96 in Milwaukee, should give our staff the room
and tools they need to maintain our market leadership.
Organization Goals ¨ By the year 2003, we will produce
200,000 motorcycles annually ¨ Complete the production of
our Product Development Center in Milwaukee by the end of
1996 ¨ Meet the demand by expanding our existing
distribution and manufacturing capacity, and where
necessary, adding new production and retail distribution
points ¨ Grow Parts and Accessories sales volume, as a
percent of total revenue, for both new and used vehicle
customers ¨ Drive financial results to the levels achieved by
acknowledged high performing companies TARGET MARKETS
THE HARLEY OWNERS GROUP The Harley Owners Group, or
H.O.G., is the world's largest factory-sponsored motorcycle
organization, with more than 300,000 members and 900 local
chapters located around the globe. Besides the H.O.G. pin
and patch, membership card and H.O.G. atlas, members get
treated to benefits that are as helpful as the suspension
under a Softail seat. There's Hog Tales magazine to keep you
up on club events. If you're off to certain far flung spots, our
Fly & Ride program can get you aboard a rental Harley. The
owners of Harley-Davidson motorcycles are among the most
diverse group of consumers in any industry. They range from
blue collar factory workers to Doctors and Layers. Recently
our target market has shifted more toward the upper end of
the buyer market, but we will never forget where we came
from. Harleys are not just for men. Over the last decade
women have become a significant purchaser of motorcycles,
especially Harley-Davidsons. MARKETING STRATEGY The
Americas Our top priority in the United States is to grow
primarily through our existing dealers. Plans for 1996 include
analysis of dealer five-year plans and local market variables
to establish priorities for implementation of dealership
improvements and additions. We'll also begin to bring more
consistency to our dealer network by helping dealers
improve their businesses based on a best practice model that
incorporates local market data and customer input with
characteristics of our most successful dealerships. Our
second priority is to grow through new dealers on an as-
needed basis, while adding new satellite outlets where
necessary to increase customer convenience and satisfaction.
These outlets, typically located in high traffic areas, are
smaller, dealer-owned motorcycle service facilities or stores
carrying mostly MotorClothes, Genuine Motor Accessories
and Genuine Motor Parts. Although still in the developmental
stages, we're allocating more resources to future growth of
South and Central America, Mexico and the Caribbean. In
1995, new dealerships opened in the major market cities of
Bogota, Colombia and Lima, Peru. We are currently
considering new markets in which to open additional
dealerships in 1996 and beyond. Europe Although our
European presence goes back over 80 years, we consider this
to be a market that is ripe with new opportunities. Our
emphasis in 1995 was simply to focus on the basics by
establishing Harley-Davidson Europe headquarters in the
United Kingdom and creating an in-country management
team dedicated to improving the bond between Harley-
Davidson and our distributors, dealers and customers there.
The start-up of a European Distribution Center in Rotterdam
has consolidated our motorcycle and P&A distribution under
one roof, allowing us to improve service levels and develop a
stronger competitive advantage in the marketplace. To
further bolster Harley-Davidson's brand image, we've opened
two flagship stores in major markets-North London and
Central Paris-and are currently studying the feasibility of
opening similar stores in other markets. Going forward, our
short-term focus will remain on improving customer
satisfaction through gradual expansion of our dealer
network, conversion of more existing dealerships into
Designer Stores, improved management information
systems, better product availability and consistent pricing,
enhanced technical service training, expansion of Harley
Owners Group activities and development of new markets.
Asia/Pacific This evolving market is one we're watching very
closely. The infrastructure and strategies that we've put in
place will provide a solid foundation for continued success as
the heavyweight motorcycle market grows and develops
here. Findings of an intensive market study, the early stages
of which were completed in 1995, show that short-term
growth opportunities will come from existing markets in this
region-led by Japan and Australia-with long-term growth
coming from developing new markets. Like Europe, we'll also
be focused intensely on the basics to ensure consistency
among our dealer network, but with special emphasis on
increasing technical service competencies. We'll also work to
enhance customer relationship-building activities through
Harley Owners Group and cohesive direct marketing and
brand image-building initiatives. MARKETING MIX The
sportster, First introduced in 1957, the Sportster is Harley-
Davidson in its purest form. It is an uncompromising exercise
in getting power to pavement. As it turns forty, the Sportster
certainly isn't experiencing a mid-life crisis. It just keeps
getting better. The Softtail The Softails offer a retro look,
inspired by the classic hardtail frame, brought up-to-date
with the reliability of modern technology. These bikes move
you ahead by moving you back in time. Dyna There is a place
where the past and future mingle, taking on each other's
qualities until they become a new incarnation of the here and
now. This is the land of the Dyna Glides - with a smooth ride
dictated by computer-aided engineering and a look inspired
by classic Harley-Davidson styling. Touring Harley-Davidson
touring motorcycles offer a lot more than meets the eye. Like
small town coffee shops and historic landmarks. Distant
rallies and forgotten highways. Campgrounds, sunsets,
burger joints and national parks. Even thunderstorms. And
now it's all available with electronic sequential port fuel
injection on most models. Racing In his first year of superbike
racing, Chris Carr won rookie-of-the-year honors and finished
twelfth in overall points, while still winning dirt-track races.
This year, he is committed full- time to road racing and his
poll position at Laguna Seca proved it. This year, he is joined
on the VR 1000 racing team by Thomas Wilson, fresh from
tremendous success in the 600 and 750 Supersport classes.
On the dirt track, Scott Parker, coming off his record sixth
AMA Grand National Championship, continues to dominate
aboard his XR 750. Other Segments Eaglemark Eaglemark
began in 1993 as an independent company with Harley-
Davidson holding a minority stake. Following Eaglemark's
success in achieving our initial goals, Harley-Davidson
acquired essentially full ownership in November of 1995 to
fully benefit from future growth and value creation.
Eaglemark was established to better meet the financial needs
of Harley dealers and owners, while producing attractive
returns. We use the name Harley Credit and Insurance,
rather than Eaglemark, to build on the loyalty customers
have for the Harley-Davidson brand. Consistent with the
brand's image, our services aim to provide real value to
customers through one-stop shopping, fast personal service,
competitive terms and a thorough knowledge of the products
we finance and insure. Parts and Accessories As successful as
our P&A business has been over the last several years, we
took some major steps in 1995-including repositioning our
replacement parts and mechanical accessories lines-to re-
energize our approach and maintain our market leadership.
To address dealer and customer dissatisfaction with
backorders on popular items, we're establishing closer ties
with our suppliers, to ensure they have adequate capacity to
handle demand. And the new P&A distribution center, when
it comes on stream, will help speed the flow of parts to
dealers. Ninety percent of our MotorClothes revenue comes
from the domestic market, which has become a very tough
environment for apparel sales. And we've found that our
international markets have very specific needs for fit, styling
and pricing that our current broad-based line doesn't
adequately support. From these challenges come
opportunities. In 1996, we're creating a global, unified
MotorClothes product line, developed by a centralized styling
department. This group will develop overall concepts, then
work with regional MotorClothes managers to produce
market-specific products. We're also increasing our
promotional efforts toward the non-riding public, to attract
them into our dealerships. Buell Although still a start-up
operation- approximately 1,400 Buell units were shipped in
1995-the Buell team is continuing to explore and evaluate
new opportunities in the sport/performance market. While
traditional sportbikes utilize complex technology with the
sole purpose of increasing speed, Buell's mission is to
develop and employ innovative technology to enhance the
ride and give Buell owners a motorcycling experience that no
other brand can provide. Buell expanded its 1996 model year
product line by adding two new models, the S1 Lightning and
S2 Touring, to support its flagship S2 Thunderbolt. Buell also
added more than 100 new dealers in 1995 (Buells are
distributed only through select U.S. Harley-Davidson
dealerships), bringing the year-end total to approximately
150. In 1996, the Buell team will complete its study of the
European sport/performance market, which is four times
larger than its U.S. counterpart, to prepare for a possible
future launch there. Promotion The majority of our
advertising comes from bike rallies and special events that
are held that are held across the United States. Our Rallies
draw between 5,000 and 200,000 people. The majority of the
attendants are Harley owners. Harley Davidson as an
organization does very little mainstream advertising.
BUDGETS CONTROL AND ACCOUNTABILITY Standards should
be specified in terms of sales, and production. Costs should
be identified and target cost levels specified to facilitate their
control. Standards should be established in terms of
consumer’s attitudes. Attitude standards, in terms of
perceptions, and desires should be specified. Controls should
be implemented and monitored by appropriate
administrators. The president, vice-president, administrators,
and other individuals should be responsible for controlling
the marketing mix implemented.

Bibliography

EXECUTIVE SUMMARY Harley-Davidson is the largest market

share holder of motorcycles over 750cc in the United States.
After the expansion of our production and distribution
capacity, we will be in the position to meet the increasing
demand for our motorcycles and other products. Growth
potential appears very good especially in the overseas
market. Gaining a larger market share in these area may
require a further increase in production and distribution
capacities. We must plan for expansion now and continue to
grow as a company. COMPANY DESCRIPTION In Milwaukee,
William Harley, 21, and Arthur Davidson, 20, began
experiments on taking the work out of bicycling. They were
soon joined by Arthur’s brothers, Walter and William. Many
changes were made to the engine design before its builders
were satisfied. After the new looped from was finalized, they
were ready to begin production. In 1903 they produced three
motorcycles. Harley-Davidson erected its first building the
current Juneau avenue site in 1906 and incorporated in 1907.
In 1907 Harley-Davidson produced 150 motorcycles.
SITUATION ANALYSIS The motorcycle market over 750cc has
been increasing over the last five years. The Harley-Davidson
1996 model year production line, sold though a world wide
network of more than 1,000 dealers, includes 20 cruiser,
factory custom and touring motorcycles, as well as police
motorcycles. Harley-Davidson benefits form having one of
the world’s most recognized and respected brand names and
our motorcycle model names are among the best known in
the industry: The Competition and Market share This chart
shows the competition and market share for 1995 in the
United States: Current Market Situation Overall Net sales for
1995 of $1.4 billion were $191.6 million, or 16.5%, higher
than net sales for 1994. Net income and earnings per share
from continuing operations were $111.1 million and $1.48,
for 1995 as compared with $96.2 million and $1.26, for 1994.
Net income and earnings per share from discontinued
operations were $1.4 million and $.02, for 1995 as compared
with $8.0 million and $.11, for 1994, which included a $4.6
million, or $.06 per-share, one-time tax benefit related to the
legal reorganization of Holiday Rambler. On January 22, 1996,
the Company announced its strategic decision to discontinue
the operations of the Transportation Vehicles segment in
order to concentrate its financial and human resources on its
core motorcycle business. The Company does not anticipate
a loss on the discontinuance of the Transportation Vehicles
segment. The results of the Transportation Vehicles segment
have been reported separately as discontinued operations
for each year presented. On November 14, 1995, the
Company acquired substantially all of the common stock and
common stock equivalents of Eaglemark Financial Services,
Inc. that it did not already own. The purchase price was
approximately $45 million, which was paid from internally
generated funds and short-term borrowings. The Company
has included the results of operations of the Financial
Services segment ($3.6 million) in its statement of operations
for the year ended December 31, 1995 as though it had been
acquired at the beginning of the year and deducted the
preacquisition earnings as part of non-operating expense.
The Company increased its quarterly dividend in September
from $.04 per share to $.05 per share which resulted in a
total year pay out of $.18 per share. Units Shipped and Net
Sales The Motorcycles and Related Products (Motorcycles)
segment's net sales increased 16.5% over 1994 due primarily
to a 9,293 unit (9.7%) increase in motorcycle shipments, as
well as a 14.0% increase in its Parts and Accessories business.
The increase in motorcycle shipments is the result of ongoing
implementation of the Company's manufacturing strategy
and efforts to satisfy demand. The manufacturing strategy is
designed to increase capacity, adjust to changes in the
market place and further improve product quality while
reducing costs. Sales of Buell motorcycles (which are
distributed through select Harley-Davidson dealers)
increased to $14 million in 1995 as compared to $6 million in
1994. The Company began 1995 at a scheduled motorcycle
production rate of 395 units per day. As the implementation
of the manufacturing strategy continued, the rate increased
to 470 units per day by the end of the year. The Company
exceeded its production goal of 100,000 units in 1995 and
anticipates 1996 production will reach at least 115,000 units.
The Company is currently reviewing alternative sites for the
construction of a new manufacturing facility to enable it to
achieve its long-term goal of doubling motorcycle production
by 2003. Year-end data indicates that the domestic (United
States) motorcycle market continued to grow throughout
1995. Compared to 1994, industry registrations of domestic
heavyweight (engine displacements in excess of 751cc)
motorcycles were up 11.3% . The Company ended 1995 with
a domestic market share of 55.8% compared to 56.1% in
1994. This decrease is a reflection of the Company's
constrained production capacity in a growing heavyweight
motorcycle market. Demand for the Company's motorcycles
continues to exceed supply with nearly all of the Company's
independent domestic dealers reporting retail orders on all
of their remaining 1996 model year motorcycle allocations
(production through June, 1996). Export revenues totaled
$394.8 million during 1995, an increase of approximately
$63.6 million (19.2%) over 1994. The Company has exported
approximately 30% of its motorcycle unit shipments since
1990 and expects to maintain approximately the same
percentage during 1996. The Company distributes
approximately one-half of its exported units through its
wholly owned subsidiaries in Germany, Japan and the United
Kingdom, which allows the Company flexibility in responding
to changing economic conditions in a variety of foreign
markets. While definitive market share information (engine
displacements in excess of 751cc) is not available in many
foreign countries, the Company believes it holds an
approximate 11% market share in the European markets in
which it competes and a 22% market share in the Pacific Rim.
During 1995, the Parts and Accessories business generated
$292.3 million in revenues, an increase of 14.0% over 1994.
The rate of increase is lower than experienced in recent
years, however, management believes the 1995 increase is
more indicative of the long-term growth potential of the
Parts and Accessories business. The Motorclothes business,
which accounted for approximately $100 million of Parts and
Accessories sales in 1995, is expected to remain stable in
1996, while the Motor Parts and Motor Accessories
businesses are expected to increase. The Parts and
Accessories business is expected to grow at an annual rate
similar to the annual growth rate in motorcycle shipments.
The Company is developing an improved system to better
monitor domestic dealer inventories and retail traffic. In
addition, the Company initiated several promotional
programs in the fourth quarter of 1995 to increase dealer
floor traffic and plans to continue this promotional strategy
in 1996. To further strengthen its ability to process and fill
orders for the Parts and Accessories business, the Company
plans to construct a new distribution center (at an
approximate cost of $17 million). Construction is scheduled
to begin in the second quarter of 1996, and the facility should
be fully operational by the first quarter of 1997. Gross Profit
Gross profit increased $53.1 million, or 14.8%, in 1995 as
compared with 1994 primarily due to an increase in volume.
The gross profit margin was 30.5% in 1995 as compared with
30.9% in 1994. The gross profit margin was negatively
affected by the overtime incurred to produce additional
motorcycle units and make up for production time lost
because production employees were involved in numerous
strategic planning sessions during 1995. Internal & External
Analysis Strengths ¨ Customer Loyalty and Following ¨ Very
High Product Demand ¨ Profitable Product Line and Market
Mix ¨ Highest Market Share for Motorcycles over 750cc in the
United States ¨ Union Contract That is beneficial to both the
Firm and the Employees ¨ Significant opportunities in the
growing worldwide motorcycle market ¨ A proven
management team that’s committed to build a beneficial
relationship with all of the stakeholders for the long term ¨
Increased capacity with the construction of new plant and
distribution center Weaknesses ¨ Inefficiency due to Large
Production Level ¨ More Demand than Supply ¨ Lower Than
expected Sales in Motor Clothes ¨ Lingering biker image
MARKETING PLAN OBJECTIVES Harley-Davidson, Inc. is an
action-oriented, international company-a leader in its
commitment to continuously improve the quality of mutually
beneficial relationships with stakeholders (customers,
dealers, employees, suppliers, investors, governments and
society). Harley-Davidson believes the key to success is to
balance stakeholders' interests through the empowerment of
all employees to focus on value-added activities. This value
added mentality helps us to improve our product quality. It
important to us to offer the highest quality product possible.
In addition to quality we have also been focusing on service.
Many of our dealers are continuing to make major
investments in the future growth of their businesses-such as
converting their dealerships into world-class retail sales
establishments through our Designer Store program, building
larger dealerships, expanding their existing service areas or
opening alternate 'satellite stores in high traffic areas. Both
we and our dealers are investing in training and education, to
better serve the motorcycling community. We will also be
focusing more strongly than ever before on new product
development. With worldwide motorcycle market growth
expected to continue, we're dedicated to maintaining
leadership in our traditional motorcycle segments and
gaining further penetration into the performance market
through our joint venture with Buell. We want to ensure that
while our competitors are busy copying our past work, we're
re-defining the market with exciting new products. Our new
Product Development Center, expected to be completed by
year-end '96 in Milwaukee, should give our staff the room
and tools they need to maintain our market leadership.
Organization Goals ¨ By the year 2003, we will produce
200,000 motorcycles annually ¨ Complete the production of
our Product Development Center in Milwaukee by the end of
1996 ¨ Meet the demand by expanding our existing
distribution and manufacturing capacity, and where
necessary, adding new production and retail distribution
points ¨ Grow Parts and Accessories sales volume, as a
percent of total revenue, for both new and used vehicle
customers ¨ Drive financial results to the levels achieved by
acknowledged high performing companies TARGET MARKETS
THE HARLEY OWNERS GROUP The Harley Owners Group, or
H.O.G., is the world's largest factory-sponsored motorcycle
organization, with more than 300,000 members and 900 local
chapters located around the globe. Besides the H.O.G. pin
and patch, membership card and H.O.G. atlas, members get
treated to benefits that are as helpful as the suspension
under a Softail seat. There's Hog Tales magazine to keep you
up on club events. If you're off to certain far flung spots, our
Fly & Ride program can get you aboard a rental Harley. The
owners of Harley-Davidson motorcycles are among the most
diverse group of consumers in any industry. They range from
blue collar factory workers to Doctors and Layers. Recently
our target market has shifted more toward the upper end of
the buyer market, but we will never forget where we came
from. Harleys are not just for men. Over the last decade
women have become a significant purchaser of motorcycles,
especially Harley-Davidsons. MARKETING STRATEGY The
Americas Our top priority in the United States is to grow
primarily through our existing dealers. Plans for 1996 include
analysis of dealer five-year plans and local market variables
to establish priorities for implementation of dealership
improvements and additions. We'll also begin to bring more
consistency to our dealer network by helping dealers
improve their businesses based on a best practice model that
incorporates local market data and customer input with
characteristics of our most successful dealerships. Our
second priority is to grow through new dealers on an as-
needed basis, while adding new satellite outlets where
necessary to increase customer convenience and satisfaction.
These outlets, typically located in high traffic areas, are
smaller, dealer-owned motorcycle service facilities or stores
carrying mostly MotorClothes, Genuine Motor Accessories
and Genuine Motor Parts. Although still in the developmental
stages, we're allocating more resources to future growth of
South and Central America, Mexico and the Caribbean. In
1995, new dealerships opened in the major market cities of
Bogota, Colombia and Lima, Peru. We are currently
considering new markets in which to open additional
dealerships in 1996 and beyond. Europe Although our
European presence goes back over 80 years, we consider this
to be a market that is ripe with new opportunities. Our
emphasis in 1995 was simply to focus on the basics by
establishing Harley-Davidson Europe headquarters in the
United Kingdom and creating an in-country management
team dedicated to improving the bond between Harley-
Davidson and our distributors, dealers and customers there.
The start-up of a European Distribution Center in Rotterdam
has consolidated our motorcycle and P&A distribution under
one roof, allowing us to improve service levels and develop a
stronger competitive advantage in the marketplace. To
further bolster Harley-Davidson's brand image, we've opened
two flagship stores in major markets-North London and
Central Paris-and are currently studying the feasibility of
opening similar stores in other markets. Going forward, our
short-term focus will remain on improving customer
satisfaction through gradual expansion of our dealer
network, conversion of more existing dealerships into
Designer Stores, improved management information
systems, better product availability and consistent pricing,
enhanced technical service training, expansion of Harley
Owners Group activities and development of new markets.
Asia/Pacific This evolving market is one we're watching very
closely. The infrastructure and strategies that we've put in
place will provide a solid foundation for continued success as
the heavyweight motorcycle market grows and develops
here. Findings of an intensive market study, the early stages
of which were completed in 1995, show that short-term
growth opportunities will come from existing markets in this
region-led by Japan and Australia-with long-term growth
coming from developing new markets. Like Europe, we'll also
be focused intensely on the basics to ensure consistency
among our dealer network, but with special emphasis on
increasing technical service competencies. We'll also work to
enhance customer relationship-building activities through
Harley Owners Group and cohesive direct marketing and
brand image-building initiatives. MARKETING MIX The
sportster, First introduced in 1957, the Sportster is Harley-
Davidson in its purest form. It is an uncompromising exercise
in getting power to pavement. As it turns forty, the Sportster
certainly isn't experiencing a mid-life crisis. It just keeps
getting better. The Softtail The Softails offer a retro look,
inspired by the classic hardtail frame, brought up-to-date
with the reliability of modern technology. These bikes move
you ahead by moving you back in time. Dyna There is a place
where the past and future mingle, taking on each other's
qualities until they become a new incarnation of the here and
now. This is the land of the Dyna Glides - with a smooth ride
dictated by computer-aided engineering and a look inspired
by classic Harley-Davidson styling. Touring Harley-Davidson
touring motorcycles offer a lot more than meets the eye. Like
small town coffee shops and historic landmarks. Distant
rallies and forgotten highways. Campgrounds, sunsets,
burger joints and national parks. Even thunderstorms. And
now