John Keilman has written a Wall Street Journal article this week that is titled "Harley Will Ride or Die With the Graybeards." Keilman reports that, "The Milwaukee-based company is selling less than half as many bikes as it did during its 2006 peak. Harley’s portion of the U.S. large motorcycle market recently dropped to its lowest level since the 1980s." He notes that the average age of the Harley customer has risen substantially in the past two decades. The company reports that the average age is 49. UBS analyst Robin Farley disagrees, arguing that it actually has reached the late 50s. Critics argue that the current CEO has focused on high-priced bikes for older customers, prioritizing profit margins over growth. In so doing, they say he has made it even harder to attract younger buyers.
The Harley story illustrates several important lessons in business strategy. First, the temptation for many executives at mature companies is to focus on high-margin products and opportunities to further increase margins at the expense of growing the customer base. This focus often leads to better earnings per share in the short run, satisfying investors. However, it creates a long-term challenge. Eventually, the focus on the highest-margin products can exacerbate the challenge of bringing new customers to the brand. In Harley's case, younger buyers find it increasingly difficult to afford the purchase of one of the company's bikes.
Second, mature companies with an aging customer base always have to balance the desire to attract younger buyers with the worry that such efforts might alienate their most loyal customers. Harley has to worry that attempts to build products and develop marketing campaigns aimed at millennials and Gen X customers might turn off the Baby Boomers and Gen X customers that comprise its most profitable pool of current customers.
Third, companies often think that the answer to attracting younger customers is simply about the products they offer and the price point at which they sell those products. While product and price matter a great deal, the brand image and the customer experience also prove to be very important. Too often, managers at these mature firms are out of touch with trends, and with the younger potential customers in general. They have been so laser-focused on their most loyal customers, and they are part of that demographic as well. They need to find a way to truly step into the shoes of those younger potential buyers, and they need to hire people from that demographic. Effective empathy-based user research is very important for firms in this predicament.
Finally, firms have to understand the broader social trends against which they are battling. In Harley's case, they need to understand that the current generation is not nearly as fascinated with the freedom of the open road as prior generations. As Jonathan Haidt documents in his book, The Anxious Generation, far fewer young people are rushing to get their motor vehicle license at age 16. He describes several reasons why young people are less eager to drive. This broader social trend is clearly affecting Harley. It needs to understand how the psychology of young people has changed, and how that will affect they way the firm should go to market.
My sense is that Harley-Davidson executives should reach out to companies that have proven adept at navigating some of these challenges and refreshing brands that have encountered aging customer bases. For example, the leadership team at LVMH has done a remarkable job of acquiring luxury brands that need a refresh, and then helping that brand attract a new generation of buyers.
1 comment:
As a Harley fan, it’s tough to see the company facing these challenges, but the article raises valid points. Harley-Davidson is at a crossroads—it’s clear the focus on high-margin bikes for older riders has alienated younger customers, who might see the brand as out of reach or outdated. While I respect the loyalty to core customers, there’s no denying the need to evolve.
Harley’s magic has always been about freedom and individuality, but the younger generation connects differently. Beyond lowering price points, Harley should tap into their lifestyle and values, like sustainability, urban mobility, or digital integration. Partnering with brands that understand youth culture, like LVMH, is a smart suggestion—imagine a Harley that blends heritage with modern style in a way that resonates across ages. If they don’t adapt, we risk losing an icon, and that would be a tragedy for the motorcycle world.
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