Leaders of the Pack - Brief Article

Taking on Numero Uno is never easy, but going after a brand with the iconic status of Harley-Davidson is the stuff of which marketing nightmares are made. Just ask the folks at Belle Plaine, Minn.-based Excelsior-Henderson, who, despite a $30 million launching pad and a company name that dates back in motorcycle lore to the turn of the century, filed for bankruptcy protection last year and are currently awaiting the release of their new 2000 SuperX, due out in August.

For more recent entrants into the cruiser segment--such as upstarts BMW and Polaris, as well as Japanese stalwarts Honda, Yamaha and Kawasaki--the answer has been, to borrow a phrase, to pop one marketing wheelie after another. In terms of advertising alone, motorcycle manufacturers spent a combined $57.9 million last year, a 21.1% increase over 1998.

However, as industry analysts agree, would-be competitors will have to do more than burn advertising rubberto catch Harley a name virtually synonymous with cruisers. "For a lot of people, it's not that they want a motorcycle; its that they want a Harley," said Don J. Brown, president of DJB Associates, a motorcycle research group based in Irvine, Calif. The brand is that strong."

Those companies can take some comfort in knowing that they're going after a hot market, one that shows no signs of cooling off. Sales of motorcycles in the U.S. revved up again last year with 501,000 units shipping, up 24% over 1998--even as the cost of buying a motorcycle has risen steadily from $3,400 in 1984 to its current pricetag of $11,000. Cruisers continue to dominate the category with almost 60% market share, up from 53% in 1996. The reasons cruisers are so dominant are similar to those explaining the popularity of sport/utility vehicles: Aging baby boomers looking for a combination of lifestyle and practicality as opposed to old-fashioned luxury, are purchasing the bikes in droves.

If this demographic doesn't square with the classic image of the big-bike rider; consider the case of former high school teacher Katie Porter. Two years ago, when Porter was a new employee at a Yellowstone National Park restaurant, hordes of burly tattooed, leather-wearing Harley riders bound for the annual Sturgis, S.D., bike rally roared into the parking lot. At first she was a bit frightened. "But then I got to talking to them. Most of them were doctors and lawyers," she recalled. "I was probably safer there than I was with the regular tourists:'

Her instincts were on target, according to a recent survey from the Motorcycle Industry Council, an Irvine, Calif.-based trade group, which says the typical motorcycle rider today is a 38-year-old, married male, has attended college and earns $44,250 annually Moreover; the average rider is better off financially than ever before, with an increase in annual income of 30% since 1990.

So what are motorcycle manufacturers doing to take advantage of a buyer's market? With more marketing dollars as fuel, companies are traveling down some new roads: buying print ads in magazines as mainstream as Vanity Fair, cozying up to the cosmetic counter for cross promotions, sponsoring charity rides with the ubiquitous Baldwin brothers and backing slightly skewed country artists like Lyle Lovett.

But don't accuse motorcycle marketers of going from the Wild One to the Mild One. "No matter the demographic, motorcycling is all about passion," says Gary Schmidt, media relations and advertising manager for Ducati North America, Pompton Plains, N.J., the U.S-based division of Italian sport bike manufacturer Ducati. In other words, don't mess with the image even as you expand your market to include "squids" (young innercity bikers) and "RUBs" (rich, urban bikers). "It's a very delicate balances," said Schmidt." You've got to appeal to new customers who may never have owned a motorcycle or are coming back into the market. At the same time, you have to remain true to the real enthusiast."

Honda will break out new ads later this year when it introduces the newest version of its popular Gold Wing touring motorcycle. "That will get some heavy promotion because its such a popular mode, and we've got some very innovative [features] on there," said Mitchell. And Honda doesn't plan to rest on its laurels: The company is introducing nine new models this year as part of a three-year program to dominate the industry. Honda's plan, according to Mitchell, is to saturate the enthusiast press first and then move on to consumer magazines.

So, while Harley rides comfortably as the leader of the cruiser pack, it faces a strong challenge from the next tier of companies looking to strike such a balance. Honda, for instance, continues its push in enthusiast magazines, with occasional forays into less traditional fields, said Steve Mitchell, an account supervisor at Dailey & Associates, the West Hollywood, Calif., agency for American Honda Motor. "We've had a good tie-in with our ads for family off-road riding and smaller trail bikes as a way to attract families to our motorcycles," he said.

Another Japanese stalwart, Yamaha Motor USA, watched sales skyrocket 47% in 1999 over 1998, according to Diana Marshall, creative director at Marshall Advertising & Design, the Costa Mesa, Calif.-based agency for Yamaha. Despite its success, the company has had a tough time creating an image for itself, particularly in the cruiser market. "There's a very strong market for Japanese cruisers [in the U.S.], but Harley has created such a perception and image that in the past it's been difficult to build an identity," she said. That's changing, she maintains. "We've really started to address the long-time Yamaha rider, and that's paying off."

Marshall is referring to a series of TV and magazine spots using Yamaha bikers, a campaign that has given the company's dedicated riders something Harley riders take for granted: an identity. The spots, focusing on Yamaha's Road Star cruiser, show a diverse group of big burly bikers lipsyncing songs like Barry White's "Can't Get Enough of Your Love." The response? "All the bikers we've talked to have loved it and the company has received phone calls and emails about how much they loved the spot. It's like we hadn't really spoken to that group before," said Marshall.

Marshall said Yamaha had a big meeting in December to discuss a new branding campaign, but has yet to make any moves in that direction. "It's still in the preliminary stage," she said.

Kawasaki Motors USA has also been emphasizing its cruiser line of late, with retro-looking ads that may be the most overt in seeking the growing, but still elusive, market for female bikers. Late last year, Kawasaki had launched a "Women & Motorcycling" campaign, sending out postcard-sized direct mail pieces to a long list of female bikers. That female riders are an emerging force in motorcycling is no secret; how to market to them is another question. Said one industry insider, "No one wants to be seen as building a 'girl's bike:"

Yet build them they have, with nearly every manufacturer now offering a bike with a low seat height. That includes Yamaha's V Star Custom, which boasts a 25.6-inch seat height. Like Kawasaki, Yamaha depicts women on motorcycles in some of the magazine versions of its Road Star spots. "Everyone has talked about it, but I don't think anyone has come up with a coherent strategy for that market yet," said Gareth Smith, who heads up the Suzuki account for Colby Effler & Partners in Santa Monica, Calif.

No one doubts that the women's market is real, although it still accounts for only 8% of the total motorcycling population, according to the Motorcycle Industry Council, an industry trade group based in Irvine, Calif. Last year, according to the Council, nearly 10% of new motorcycle purchasers were women. Perhaps more importantly, more than one-third of all Motorcycle Safety Foundation graduates are women--a fact of which magazine publishers are well aware. One major publisher, Elhlert Publishing Group, will debut Woman Rider this summer, to be distributed at the Women & Motorcycling Conference in Athens, Ohio. The magazine will then be published during major motorcycling events such as the Sturgis rally in South Dakota and Biketoberfest in Daytona Beach, Fla.

And those bike rallies, once the scourge of the town fathers, are now as eagerly embraced as an accountants' convention. "Without a doubt ifs now considered a vital part of our economy," says Kevin Killian, vice president for special events at the Daytona Beach, Fla., Chamber of Commerce, which manages Daytona Beach Bike Week. The event currently draws between 400,000 to 500,000 attendees annually, and garners mainstream sponsors such as Chevy Trucks and Budweiser beer.

Few companies have targeted the mainstream more strongly than BMW of North America. BMW has run two 30-second spots nationally highlighting its touring motorcycles, working with its agency Merkley Newman Harty, New York. The sixth-ranked manufacturer has appeared in The Wall Street Journal and USA Today touting its leasing programs. In all the ads, the message is that BMW is selling an adventure lifestyle as well as a motorcycle. BMW represents a choice our riders make for adventure and one look at our odometers will tell you the story," said Kerri Martin, brand and event marketing manager for BMW Martin also said that the BMW had to create a new cruiser image for itself, because when most motorcycle riders think of cruisers, they think of Harley

Apparently a lot of cash is required to erase that thinking. Despite garnering just 2% of the domestic motorcycle market, BMW spent $5.1 million on advertising last year, $1 million more than market leader Harley In April, BMW began a new campaign with foldout inserts mapping and describing actual rides, running in magazines including Rider, Cycle World, Motorcyclist, Esquire, Forbes, Playboy National Geographic Adventure, Outside and Men's Journal. The full-size ads contain cryptic copy suggesting a '90s-style rebelliousness, as in: "I'm from Mars, She's from Venus. Now if you'll excuse us, we're off to explore Earth' The ads tie into BMW'S Web site, where riders can submit their own adventure rides as a contest entry.

The company is also doing its part to target women. Besides featuring women and couples in their advertising, BMW has sponsored a Ride For Life in conjunction with the Carol M. Baldwin Breast Cancer Research Fund that saw two of the acting Baldwin brothers leading the ride.

While BMW would like to create a modern image of a cruiser "lifestyle," other companies, including the recently revived Indian brand, are reminding consumers of the historical ties of the past. With new ads just breaking in the current issues of enthusiast magazines and USA Today, Indian Motorcycle, Gilroy, Calif., has roared back to life (see related story, page 32).

Meanwhile, newer players in the cruiser market are busy building brand recognition from the ground up. Snowmobile manufacturer Polaris Industries, for example, introduced its Victory cruiser in late 1997. While the company focused on enthusiast magazines in the first two years, it recently filmed its first commercial for Speedvision, said Gary Laskin, the marketing manager for the Victory brand. Dealers can also place the commercial locally, he said. The company has also recently begun advertising in USA Today and in non-motorcycle magazines such as North American Hunter. "The focus has been to build brand awareness," said Laskin.

Also pedaling into the motorcycle field is bicycle manufacturer Cannondale, which is slated to deliver its new line of cross-country motorcycles and sport bikes. Company officials say it will begin advertising in enthusiast books later in the year.

Given Harley's stranglehold on cruisers, it's not surprising to find companies looking to carve out a niche in other areas. One such company Ducati, is in a prime position. After getting back on financial track following a 1996 buyout and cash fill-up from Texas Pacific Group, Fort Worth, Texas, the Italian sport bike manufacturer expects to ship a record 40,000 bikes worldwide this year. At the same time, Ducati is beginning an aggressive advertising campaign in the U.S., with 30-second cable TV spots on Speedvision and Fox Sports. The spots are designed not only to draw in racing enthusiasts, but also to built brand awareness for the resurgent manufacturer, which positions itself on its race-track heritage and Italian design. The company is also beginning a new product tie-in with the high fashion MAC Cosmetics line (Lady Danger) and continuing its fashion relationship with DKNY.

To aid Ducati in its U.S. marketing, the company has hired Toolbox, New York, the agency that helped BMW mount an impressive retooling of its cycle fortunes. Ducati plays a high-end game. Though its bikes start at around $7,000, some are priced as high as $25,000. Ducati's global marketing budget is around $10 million, with $3 million of that earmarked for measured media. The bulk of the money goes for co-marketing or co-branding activities such as the DKNY relationship. The company recently hired a California agency, putting Ducati in play for TV, film and video placements.

Via the Italian home office, Ducati continues with its well received "Ducati People" print campaign: high-contrast black and white Ferdinando Scianna photographs of company employees--from race team members to factory workers--astride Ducati motorcycles. The minimalist design translates well across borders, Schmidt said.

Taking a page from General Motors' Saturn playbook, Ducati is also sponsoring its second World Ducati Weekend this month in Bologna, Italy. The event combines racing, entertainment and other ventures and attracts a crowd of Ducati enthusiasts. "These are the people that have been Ducati fans for years and for new Ducati customers who want to learn more about the company's history," said Schmidt.

All this activity is apparently enough to cause the undisputed king of cruisers to shift into a higher gear. In fact, if its latest ad campaign is any indication, Harley is no longer turning a deaf ear to its competitors. Its longtime ad agency, Minneapolis-based Carmichael Lynch, recently came out with a series of print ads intended to remind consumers of the unmatched Harley heritage. In this "Defending Our Turf" campaign, ads juxtapose beautifully lit photos of the classic bikes with such territory-marking headlines as: "Those who have no history are condemned to repeat ours."

"The world has seen exactly one unbroken line of motorcycles that stretches from 1903 to now," begins the copy in that ad. "It is the sole property of the Harley-Davidson Motor Co. We own it, and we use it the best way we know how: to build our new motorcycles." Other ads in the series focus more on the lure and authenticity of the motorcycle's features. In one, a Harley photographed in a church scene, the headline declares, "You commit 4 of the 7 deadly sins by just looking at it."

Yet Harley is doing more than defending its turf in cruiser land. It is also after a younger audience with its recently acquired Buell sport bikes. In recent months, Buell ads have become ubiquitous in racing enthusiast magazines, with the latest ads offering $15 in free fuel for test driving the bikes. It is spending more to attract those customers, said DJB's Brown, because it needs them. "Harley has an older rider and they need Buell to bring in the younger riders," he said.

Indeed, Buell's new Blast bike will receive the lion's share of the company's newest ad campaign, according to Joanne Bischmann, Harley's director of marketing. "The Buell Blast is going for a slightly different target audience, so we've got ads in pubs such as Details, Spin, Rolling Stone, Surfer, Snowboarder and ESPN, which is outside our core market," she said.

Harley is also looking to bring in new customers with its Rider's Edge program, which offers motorcycle riding programs in conjunction with the Motorcycle Safety Foundation. After a few pilot projects, Harley is rolling out the program to dealerships on a state-by-state basis. The program offers riding classes at Harley dealerships, which means all the participants will be very familiar with the Harleys and Buells when they graduate.

With its core market, though, Harley has been careful in its marketing partnerships. It continues to link up with Miller Lite for a racing campaign. A bit more novel was last year's five-year strategic alliance with Ford Motor, a series of technical and marketing ventures. As part of the deal, Ford becomes a sponsor of Harley's Superbike racing program. One result of the venture was an all-black Ford F-150 truck designed with Harley accoutrements, such as black leather interior, a Harley nameplate and a spun metal dash plate. The production run of the truck has already sold out for the year, according to Harley officials.

All of which may be good news for Harley, if not the entire category. But perhaps no more telling example of the rise in the fortunes of the motorcycle industry exists than the fact that Hollywood has noticed. Spotted at press time: Tom Cruise on a British Triumph cruiser, for the last 20 minutes in Mission: Impossible 2. Earlier, in May, Martin Landau's Silver Street Pictures acquired the rights to develop a sequel to the 1969 hippie ode to the open road, Easy Rider. Shooting will begin in the fall, despite the fact that the two principal characters, Captain America and his partner Billy (to say nothing of the '60s), are dead. Apparently, while the main characters and their ideals died, their motorcycles will cruise on, looking for new adventures.

Return of the Native: Indian Roars Back

Perhaps only a brand with Indian's heritage can mount a serious challenge to Harley-Davidson. Once the largest motorcycle manufacturer in the world, prior to World War I; Indian Motorcycle sputtered and died 47 years ago. But following a long legal battle for the highly regarded brand name, several companies merged together last year under the Indian banner in Gilroy, Calif.--just down the road from Hollister, where a 1947 party established the biker-as-outlaw image and inspired the Marlon Brando film The Wild One. And with such heavy hitters at the top a executive chairman Henry Schimberg, former president/CEO of Coca-Cola Enterprises, Cokes largest bottler, and a new $10 million ad campaign breaking this month from hip Toth Brand Imagin, N.Y., Indian's cruisers may well give Harley's a run for this money.

The Indian battle plan, said svp Walt Behnke, is to build awareness for the long-dormant brand, driving both new and established motorcycle rider to a revamped Web site and to dealers. "Our strong point is that a broad range of consumers, not just motorcycle enthusiasts, know the brand," Behnke said. "We plan to appeal to all those constituencies."

It is sounds like Indian is taking a page out of BMW's playbook, it should. Behnke previously shepherded BMW'S playbook, it should. Behnke previously shepherded BMW's motorcycles, redirecting the brand toward a broad consumer market. Indian identifies its market similary to BMW's: typically, males aged 35 to 64 with annual incomes in the $65,000 to $70,000 range. At the same time, women are becoming a more important audience, and Indian, like other manufacturers, is addressing them by placing its print ads in Woman Rider, a new quarterly publication. One such ad involves a close-up shot of the cruiser and the copy: "Growing up, all you wanted was a guy with a bike. Now all you want is the bike."

The ad campaign also includes 15- and 30-second co-op TV commercials and radio spots. The TV spots will primarily run on cable, with Speedvision being the primary channel. The spots are meant to focus squarely on the bike. Some of the copy includes the company's previous tag line, "The legend lives," but that will not be present on all the ads. Company officals say that, as they attempt to re-establish the brand, they will avoid using graphic representations of Native Americans or any art that would be seen as culturally insensitive.

The TV spots are designed and Shot by Toth Brand Imaging, which sealed the deal as Indian's agency earlier this year over a plate of tamales in Southern California. Toth is primarily known for its work with hip fashion and clothing brands such as Tommy Hilfiger, Nautica, Chaps, Wrangler, Swatch USA, Reebok and Coach. That may make Toth's road trip with Indian seem out of character, but nothing could be further from the truth, Behnke said. "Instead of inventing a brand's identify, Toth taps into the core values of a brand and then develops the means to express them," he said. Toth will expound on Indian's position as a venerable motorcycle brand and convey its status as an American myth, he added.

Speaking of American myths roaring back to life with Indian is Capt. America, a.k.a., filmmaker and noted bike enthusiast Peter Fonda, who appears in a two-page ad running in the June issue of Vnity Fair Indian has received other celebrity endorsements, notably a cover photo in February's Cigar Aficionado of actor Lawrence Fishburne seated on a new Indian Chief. That led a large number of African Americans into Indian dealers, which has in turn led to Indian becoming a sponsor for an African American motorcycle club. According to Behnke, the company is making appearances at various biking events offering free T-shirts to people who visit Indian's network of 190 dealers for test rides. The company will also make appearances at non-motorcycling events, such as the Newport Film Festival, he said.

Indian was founded 1901 and cruised along until it floundered in the mid-1940s following some poor management decisions. Today, Indian faces some stiff competition, with Harley Davidson maintaining a lock on the market. The now TV spots break just as Indian begins shipping the company's second model, the Scout, a retro-looking cruiser-style motorcycle based on Indian's most popular model originally introduced in the 1920s. Indian shipped about 2,500 units of its first new model, the Chief, another retro-looking cruiser that included Indian's tell-tale deep fender design. But the retro Indians aren't cheap, selling for about $24,000, and some in the industry have griped about the company's out-sourced engine. Still, as DJB's Brown noted, "The Indian is a powerful name. It's probably the most powerful name in the motorcycle world, aside from Harley-Davidson."

--Robert Francis

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