Introduction. Harley-Davidson produces motorhomes, other recre-ational vehicles, and certain components for defense contracts. But by far the largest part of its production is devoted to mo-torcycles, from which it derives its fame. In 1990, motorcy-cles contributed 69% of sales (which were $865 million), and 96% of profits, which were $38.3 million. There are 5,000 employees [S3, p. 1097D].
Target Market. Harley-Davidson, which since 1954 has been the only manufacturer of motorcy-cles in the United States [G1, p. 8], specializes in large, heavy machines, 850 cc or larger [S3, p. 1097D]. Indeed, when the Japanese entered the American motorcy-cle market in 1959 with lightweight, inexpensive machines, they discov-ered that firms such as Harley and BMW and Triumph (Europe-an competitors) had been ignoring this segment in favor of heavier motorbikes. Such lightweight machines, thought the established firms, were merely toys [K2, p. 98].
Unfortunately for them, Japanese imports soon took over much of the U.S. market. Having established a foothold in lightweight bikes, they began to introduce heavier models. However, this did not happen overnight; Honda had been in the U.S. motorcycle market for ten years before it introduced a heavyweight bike to compete against Harley [K2, p. 128]. Before long Harley's formerly secure market was a shambles. Yamaha came into the U.S. market with bikes that were little more than copies of Harley models, and which even had similar mechanical features [G1, p. 9]. From enviable 90%-plus figures it had maintained in the 1960s and 1970s, Harley's market share slipped to only 23% by 1983 [W1, p. 26
By this time, Honda, another leading Japanese maker of cars and motorcycles, had taken 44.3% of the U.S. motorcy-cle market, almost twice the share held by Harley [C1, p. 50]. Harley appealed to the International Trade Commission, and President Reagan imposed a tariff on Japa-nese imports in 1983 [G1, p. 9; H2, p. 38]. In addition, the company changed its management style, adopting Japanese methods such as Just-In-Time inventory and employee involvement, as well as improved quality control [C1, p. 51; G1, pp. 10-11]. The results were impressive. Harley's market share moved up to almost 40% by 1988 [C1, p. 50]; to 46% by 1989 [H2, p. 38]; and to over 60% by 1990 [H1, p. 48]. Essentially, Harley's target market has al-ways been the knowledgeable biking enthusiast, for whom price or economy are not the critical buying motives. Unfortunately, this has become stereotyped into an image of icono-clastic ma-rauders who travel in gangs, but most Harley custom-ers are law-abiding. In fact, nearly a third of all Harley custom-ers are classified as "white-collar"--managerial or profes-sional types--and this is not new for the compa-ny [W1, p. 27].
Motorcyclists, however, are very dissimilar to other consum-er markets. These have be-come increasingly fragmented, and many formerly secure,...