The Motorcycle Industry Is A Consolidated Industry Marketing Essay
|✅ Paper Type: Free Essay||✅ Subject: Marketing|
|✅ Wordcount: 4321 words||✅ Published: 1st Jan 2015|
Harley’s first segment is the motorcycle and related products business. It included designing, manufacturing, and selling primarily heavyweight touring and custom motorcycles and offering a broad range of related products that included motorcycle parts and accessories and riding apparel. The custom products charge a higher price because of its features, styling, and high resale value.
New competitors have entered the marketplace because demand for the motorcycles has exceeded production. The demand is prospected to grow in the future, and the switching cost is low.
Their customers are mainly male, middle age, married, and have some degree of education. Most buyers hold a motorcycle for recreational purposes rather than for transportation purpose. These buyers are mostly experienced motorcycle riders.
The international touring market is growing and is significantly larger than the U.S. touring market. Europe has the largest motorcycle, even larger than US. There is high potential in expanding business in Europe. However, the company holds a smaller market shares in the European market. Therefore, continuing to develop the European market should be a major issue for the company over the next few years. The following recommendations could be used in the European market.
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Not only should they target heavyweight motorcycles market, they can also target sport motorcycles market. The reason is that the European sport/performance market is four times larger than U.S., and is expecting to grow even more in the future. The company could distribute the Buell Motorcycle Company’s product to the European market in order to establish a sporty image and able to directly complete with other competitors.
Also, the company can build a motorcycle plant in the European by using strategy alliance or joint venture. Building the plant in the European can reduce the transportation cost and increase the company’s international experience. Strategy alliances is suitable in this case since the company can create value from transferring competencies or sharing resources between diversified businesses in order to realize economies of scope.
Harley’s motorcycles are priced slightly higher than competitors. In the U.S. market, since the customers are brand, quality, and style loyalty. Instead of focusing on the price leadership strategy, they should focus on differentiate strategy. Therefore, under the current financial availability, they should be able to generate certain funds to run the Product Development Center, which bring together employees and suppliers to design the fashion products. At the same time, the company should focus on product development and product proliferation strategy. They should concentrate on creating new products or improving existing products in order to attract existing and new customers.
The company should continue to build their enterprise. Since the industry does not have significant economies of scale, growth-via-acquisition strategy could be used. Harley-Davidson can merge or acquire weaker rival or smaller players. Taking over the weaker and smaller players will increase the entry barriers.
Competitive advantage is what sets an organization apart, that is, its distinct edge. That distinct edge comes from the organization’s core competencies, which might be in the form of organizational capabilities the organization does something that others cannot do or does it better than others can do it. For example, Dell has developed a competitive advantage based upon its ability to create a direct-selling channel that’s highly responsive to customers. Southwest Airlines has a competitive advantage because it is skilled in giving passengers what they want quick, convenient, and fun service. Or those core competencies that lead to competitive advantage also can come from organizational assets or resources the organization has something that its competitors do not have. For instance, Wal-Mart’s state-of-the-art information systems allows it to monitor and control inventories and supplier relations more efficiently than its competitors, which Wal-Mart has turned into a price advantage.
Strategy -A Strategy is a long term plan of action designed to achieve a particular goal as differential from tactics or immediate achieve a particular goal, as differential from tactics or immediate action with resources at hand.
Strategic Management-It is the process of specifying an organization’s objectives, developing policies & plans to achieve these objectives, and allocating resources so as to implement the plans. It involves development of mission and strategic vision. It is long run in the nature and provides the organization with a road map
Concept of Strategic Management:
Strategic Management in the context of the construction industry comprises the following seven areas:
Vision, mission and goals -The starting point for all organization endeavors; establishing a vision provides each members with a direction to follow in all business practices members with a direction to follow in all business practices.
Core competencies -The Business boundaries for an organization does best and where its strength resides organization do the best and where its strength resides.
Knowledge Resources -The Combination of human and technology resources that provide the backbone for completing organization projects.
3. What do I want to do after Graduation?
With today’s economy like it is, I have to find ways to stick out from my competitors. Therefore, with a business management degree, also known as a general management degree, I have a lot of different areas I can go into after school. For example, finance, human resources, information technology, marketing, operations management, and strategic management. With this degree I will be prepared to assume a wide range of managerial positions in the business field. But the big question is do I want to start looking for a job, stay in school and change my major or go on to graduate school? But first I have to ask myself what I want to do/ what of my life.
The questions I have to ask myself are?
Is there an industry that interests you?
For example: Financial services, technology, real-estate, or health care?
What type of company would I like to work for?
For example: Public or private, small or large, domestic or international
Then I need to develop a target list of firms that interest me?
For example: Identify and research the top 10 firms that interest me and also areas that they are located.
What type of job motivates me?
For example: Do I want to be an accountant, sales person, financial analyst or marketing research associate?
What are unique strengths about me?
For example: I need to develop a list of the skills I bring to a potential employer such as time management, communication skills, ability to multi-task, listening skills, ability to get things done.
Where do I want to live now an in the future?
The actual job search can be time-consuming and frustrating. However, there are steps I can take to insure I spend my time wisely and efficiently.
What do I need to know?
What industry is the target company in?
How large is the company?
Who are their competitors?
What type of products does the company produce/provide?
Who are the company’s customers / prospects?
Is the company an employer of choice?
What criteria does the company look for when hiring?
Are these companies located in your geographic preference?
Where do they have offices? (International)
What is their reputation in the market?
A company has competitive advantage whenever it can attract customers and defend against competitive forces better than its rivals. Companies want to develop competitive advantages that have some sustainability (although the typical term “sustainable competitive advantage” is usually only true dynamically, as a firm works to continue it). Successful competitive strategies usually involve building uniquely strong or distinctive competencies in one or several areas crucial to success and using them to maintain a competitive edge over rivals. Some examples of distinctive competencies are superior technology and/or product features, better manufacturing technology and skills, superior sales and distribution capabilities, and better customer service and convenience.
5. A niche strategy can be competitively attractive because
The focuser’s specialized competencies and capabilities in serving the target market niche give it strength in countering challenges from larger multi-segment competitors (who may not be easily able to put the capabilities in place to meet the specialized needs of the target market niche and at the same time satisfy the expectations of their mainstream customers). Also targeting the market niche acts as an entry barrier and gives it some measure of protection from other firms wanting to horn in on the niche. Rivalry in the niche may be weaker than in the broader market if there are relatively few players competing in the niche. Difficulties in matching the focuser’s competitive capabilities in serving buyers in the target market niche present a hurdle that the sellers of substitute products must overcome in order to be a factor in the niche.
Examples of Focus Strategies
eBay -Online auctions
Jiffy Lube International -Maintenance for motor vehicles
Bandag-Specialist in truck tire recapping
Porsche -Sports cars
What Makes a Niche Attractive for Focusing?
Big enough to be profitable and offers good growth potential
Not crucial to success of industry leaders
Costly or difficult for multi-segment competitors to meet specialized needs of niche members
Focuser has resources and capabilities to effectively serve an attractive niche
Few other rivals are specializing in same niche
Focuser can defend against challengers via superior ability to serve niche members
Risks of a Focus Strategy
Competitors find effective ways to match a focuser’s capabilities in serving niche
Niche buyers’ preferences shift towards product attributes desired by majority of buyers – niche becomes part of overall market
Segment becomes so attractive it becomes crowded with rivals, causing segment profits to be splintered
6. The car industry is an ongoing growing market where the environmental issues become more and more crucial due to the apparition of new legislations to preserve nature and avoid Global Warming. Therefore, in this case more precisely work with the niche market of electric vehicles. Actually, carmakers have to face the problem of excess capacity. They are producing more than they are selling. One of the reasons can be the decreasing demand due to the economical regression and also to the fact that cars last longer. Another reason is that they want to produce in large volumes in order to make the production cost decreased. So, they can be competitive on the market. Now, scale economies are a critical issue for car manufacturers.
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The concerns for the economy and global warming have forced the automobile industry to start developing alternatives for fuel vehicles. At first, the automakers showed a little interest into this concern and they did not want to look into the development of alternative energy sources at all because of the high cost and the many risks involved. Nevertheless, due to new legislations, automakers do not have the choice anymore. They have to come up with new technologies to make fuel-efficient cars or find alternative to normal fuel engines. At the end of the 20th century, car manufacturers came up with new technology to produce internal combustion engines with an electric motor and the development is ongoing.
In today’s society people are judged on the type of car they choose to drive. Of course, car manufacturers know about that fact and they target their potential customers to market their products. For example, anyone who drives a nice car is perceived by others as being wealthy and no one wants to be seen driving an unattractive car. Consumers also tend to feel better when they are driving a nice or a new car. Another feature of the socio cultural aspect for car is that auto makers have to keep in mind the growing environmental concerns and the need of fuel efficient vehicles. Many environmentalists are worried about the impact that the gasoline cars have on the environment and therefore search for alternatives.
The automotive market is characterized by a very low number of entrants. In order to compete in this market the newcomers must be able to achieve economies of scale by adopting a cost saving strategy. Therefore, the car manufacturers must mass-produce to be able to offer cars to the customer at a reasonable price. At the same time, it requires an extreme amount of capital not only to be able to manufacturer the product, but also to keep up with the research and development of new products.
8. There is a HUGE market for tablets. Many have said this is like a living room computer, as well, as an e-book reader. It would also be a great entertainment device, on airplanes (if we’re allowed to use them), on the bus, and around town. Also the iPad will be ideal for bringing to meetings without the intrusion, distraction, boot up or power cables of a laptop. In the future the laptop will be staying in the office. The people that will benefit from this product a lot are doctors and also nurses. I think when the iPad launches it will be a big competitive advantage to the company because of what they have done in the past. Honestly, the iPad, will give Apple more power in the company’s product line and also move the company forward toward being the spoke in the wheel that is the world of media and technology. Making something that fits between a smartphone and a laptop has been a goal for the consumer technology industry for more than a decade. The most recent attempt has been the Netbook. The iPad easily makes Netbooks seem boring and staid, and too close to the same old form factor, the computer. My prediction is that the iPad will really shake up the competitors and really hurt their netbook business in the long run. And, the competitors will really struggle this time to find a way to create tablets that are equally as unique and competitive with Apple. Sure, they will create similar designs, but Apple’s ability to deliver a complete eco system of hardware, software, apps and services tied to the iPad is their real advantage. And with iPads starting at $499, it will make it much easier for Apple to push a new mobile computing agenda that goes well beyond the interest of techies and will tap into the mobile computing interest of a large market of consumers.The iPad is taking a different tack: taking tasks that were too big for an iPhone and puts them on a device that isn’t pocket-sized, but is more convenient to carry around than a 13- or 15-inch laptop.
The iPad poses a real problem to competitors on a couple of fronts. The big one is the fact that Apple uses their own processor to power the iPad. No Intel tax in the bill of materials. I suspect that even with bill of material costs for screen and memory being an issue, Apple is still able to get margins of over 20% for the entry version at $499 because of this vertical integration of Apple internet protocol. On the other hand, any competitor doing a tablet will have the screen and memory component costs as well as the processor costs and at a competitive price of $499, they would have much smaller margins to work with.
Also, Apple is able to tap into its rich eco system of easy to use multi-touch interface and 140,000 apps that give it additional functionality from the start. At the very least, it puts them two years ahead of competitors who will try and create competitive products in this same category with similar app ecosystems.
The economy -rich peo young class
Apple has created a new market, everyone will soon try to follow.
2. A business has to understand the dynamics of its industries and markets in order to compete effectively in the marketplace. The forces that drive competition, is contending that the competitive environment is created by the interaction of five different forces acting on a business. In addition to rivalry among existing firms and the threat of new entrants into the market, there are also the forces of supplier power, the power of the buyers, and the threat of substitute products or services. The intensity of rivalry, which is the most obvious of the five forces in an industry, helps determine the extent to which the value created by an industry will be dissipated through head-to-head competition.
Another point is both potential and existing competitors influence average industry profitability. The threat of new entrants is usually based on the market entry barriers. They can take diverse forms and are used to prevent an influx of firms into an industry whenever profits, adjusted for the cost of capital, rise above zero. In contrast, entry barriers exist whenever it is difficult or not economically feasible for an outsider to replicate the incumbents’ position. The most common forms of entry barriers, except intrinsic physical or legal obstacles, are as follows:
Economies of scale: for example, benefits associated with bulk purchasing.
Cost of entry: for example, investment into technology.
Distribution channels: for example, ease of access for competitors.
Cost advantages not related to the size of the company: for example, contacts and expertise.
Government legislations: for example, introduction of new laws might weaken company’s competitive position.
Differentiation: for example, certain brand that cannot be copied.
The threat that substitute products pose to an industry’s profitability depends on the relative price-to-performance ratios of the different types of products or services to which customers can turn to satisfy the same basic need. The threat of substitution is also affected by switching costs – that is, the costs in areas such as retraining, retooling and redesigning that are incurred when a customer switches to a different type of product or service.
Buyer power is one of the two horizontal forces that influence the appropriation of the value created by an industry (refer to the diagram). The most important determinants of buyer power are the size and the concentration of customers. Other factors are the extent to which the buyers are informed and the concentration or differentiation of the competitors.
This force is relatively high where there a few, large players in the market, as it is the case with retailers and grocery stores;
Present where there is a large number of undifferentiated, small suppliers, such as small farming businesses supplying large grocery companies;
Low cost of switching between suppliers, such as from one fleet supplier of trucks to another.
Supplier power is a mirror image of the buyer power. As a result, the analysis of supplier power typically focuses first on the relative size and concentration of suppliers relative to industry participants and second on the degree of differentiation in the inputs supplied. The ability to charge customers different prices in line with differences in the value created for each of those buyers usually indicates that the market is characterized by high supplier power and at the same time by low buyer power. Bargaining power of suppliers exists in the following situations:
Where the switching costs are high (switching from one Internet provider to another);
High power of brands (McDonalds, Coca Cola)
Possibility of forward integration of suppliers (Brewers buying bars);
The nature of competition in an industry is strongly affected by suggested five forces. The stronger the power of buyers and suppliers, and the stronger the threats of entry and substitution, the more intense competition is likely to be within the industry. However, these five factors are not the only ones that determine how firms in an industry will compete – the structure of the industry itself may play an important role.
5 Forces analysis
The Porter’s Five Forces model is a simple tool that supports strategic understanding where power lies in a business situation. It also helps to understand both the strength of a firm’s current competitive position, and the strength of a position a company is looking to move into. Despite the fact that the Five Force framework focuses on business concerns rather than public policy, it also emphasizes extended competition for value rather than just competition among existing rivals, and the simpleness of its application inspired numerous companies as well as business schools to adopt its use.
With a clear understanding of where power lies, it will enable a company to take fair advantage of its strengths, improve weaknesses, and avoid taking wrong steps. Therefore, to apply this planning tool effectively, it is important to understand the situation and to look at each of the forces individually.
After identifying favourable and unfavourable forces for the company’s performance and industry’s attractiveness, it is important to analyse the situation and examine the impacts of the forces. One of the critical comments made of the Five Forces framework is its static nature, whereas the competitive environment is changing turbulently. By thinking through how each force affects a company, and by identifying the strength and direction of each force, it provides with an opportunity to identify the strength of the position and the ability to make a sustained profit in the industry. It is important for a corporation strategist’s goal to find a position in the industry where his or her company can best defend itself against these forces or can influence them in its favour, or is the goal to become part of the ongoing commerce with the intention to produce innovative ideas that will expand the size of the industry? Is it true that the environment poses a threat to the organisation, leading to the consideration of suppliers and buyers as threats that need to be tackled, or does it offer the ground for a constitutive industry player co-operation?
Limitations of Porter’s Five Force Model
Porter’s model is a strategic tool used to identify whether new products, services or businesses have the potential to be profitable. However it can also be very illuminating when used to understand the balance of power in other situations.
At the heart of industry are rivals and their competitive strategies linked to, for example, pricing or advertising; but, he contends, it is important to look beyond one’s immediate competitors as there are other determines of profitability. Specifically, there might be competition from substitutes products or services. These alternatives may be perceived as substitutes by buyers even though they are part of a different industry. An example would be plastic bottles, cans and glass bottle for packaging soft drinks. There may also be potential threat of new entrants, although some competitors will see this as an opportunity to strengthen their position in the market by ensuring, as far as they can, customer loyalty. Finally, it is important to appreciate that companies purchase from suppliers and sell to buyers. If they are powerful they are in a position to bargain profits away through reduced margins, by forcing either cost increases or price decreases. This relates to the strategic option of vertical integration, when the company acquires, or mergers with, a supplier or customer and thereby gains greater control over the chain of activities which leads from basic materials through to final consumption.
Examples of Golf Equipment
1. The threat of new entrants into the market is moderate, indicators point in mixed directions. Companies within the industry can be separated into two parts: golf and sporting goods. To take the largest golf company, for example, Callaway. For a company like Callaway to enter into this market would require significant amounts of investment. One could assume that other sporting goods companies could diversify into golf similar to Adidas and Nike, but there are no large manufactures that are not in the market already. Brand preferences are very important to consumers. Callaway lists brand preferences as one of the top five reasons why consumers buy their clubs, is because of technology, quality, customer service and price. Capital requirements are low the production of clubs are very labor intensive and very little animation is in the manufacturing process. Access to distribution channels are very important the quality of the club which is largely based on the material of the club are very expensive. To obtain carbon fiber and specific alloys that few manufactures make would be troubling for a small company to maintain and economies of scale in purchasing power would be most evident here.
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