Sunday, April 18, 2010

Why Brands Fail: Harley-Davidson and Buell

Harley-Davidson is an iconic brand in America. The brand represents something of the Wild West spirit - proud, independent, free-spirited. Harley-Davidson’s core products traditionally have been large motorcycles for touring on highways. In the past many buyers were younger consumers. However, in recent years, the core target has become older and is now middle-aged. Harley-Davidson was concerned that as the core market became older and moved into the silver generation, these consumers would stop purchasing Harley-Davidson motorcycles because of safety concerns. So, in order to introduce new, younger consumers to the Harley-Davidson brand, Harley-Davidson bought several motorcycle brands that were targeted at younger consumers and offered these brands as part of their brand portfolio. The largest of these new brands was Buell Motorcycles, in which Harley-Davidson invested in the late 1990s.

From the beginning, the Buell brand was fundamentally different from Harley-Davidson. Buell was targeted at riders who wanted a high-performance, while Harley-Davidson was targeted at riders who wanted a comfortable ride. Buell was for city riding, but Harley-Davidson was for highway riding. Buell’s design philosophy was to innovate, on the other hand Harley-Davidson’s design philosophy has been to keep classic styling and to re-use engineering ideas.
Harley-Davidson took a chance that it could integrate such a different brand into its brand portfolio. However, Harley-Davidson did not succeed. In late 2009, Harley-Davidson stopped production of the Buell brand, and ceased marketing the brand. Looking at the story from the viewpoint of brand-knowledge creation, the promise for success and reasons for the failure become apparent.
The NeCSI brand-knowledge creation process has four stages; Needs, Concept, Strategy, and Implementation. There are five factors that contribute to successful brand-knowledge creation in each stage: vision, context, activists, assets, and media (the ViCAAM model). The vision and knowledge activist were strong points for the Buell brand. However, ultimately the mis-match with the Harley-Davidson brand on context and assets caused the Buell brand to fail as part of the Harley-Davidson brand portfolio.
The main expectation for success was based on the knowledge activist – Erik Buell, the founder of Buell Motorcycles. Erik Buell had many qualities to successfully play the role of knowledge activist. He was a competitive motorcycle racer, a trained engineer, and also a former employee at Harley-Davidson. So, he clearly had the qualities to understand the needs of the motorcycle rider, the technology of the motorcycle, and also the corporate organization.
The knowledge vision was developed by Erik Buell based on his experience as a motorcycle racer. The vision was “find more performance for the rider”. This vision is powerful because it includes a tacit dimension, which is rider experience, and also a more explicit dimension, which is measurable performance.
Based on the strength of the knowledge vision and knowledge activist, Buell was able to develop a valuable concept for the brand. The concept was to develop a motorcycle “from the rider down”, which was based on “engineering through innovation.” Buell developed many ground-breaking innovations in their motorcycles in the areas of braking, suspension, and frame building. These are examples of valuable brand-knowledge assets.
So, the development of the Buell brand-knowledge was strong through the first two stages of the process. However, the brand-knowledge creation became less successful in the second two stages of the NeCSI brand-knowledge creation process: strategy and implementation. In these latter two stages, transferring knowledge with other groups becomes more important. Due to the mismatch on knowledge assets and context with the Harley-Davidson brand, the Buell brand ran into difficulties.
Buell did create knowledge assets that were valuable for consumers and consistent with the brand concept, such the brake system. However, Buell failed to create a valuable knowledge asset in engine technology. Buell used Harley-Davidson engines. However, because of the difference in riding conditions, Harley-Davidson engines did not meet the needs of Buell riders. Many Buell riders found that the Harley-Davidson engines, which were designed for the highway, became uncomfortably hot in a motorcycle that is being ridden primarily in the city. However, Harley-Davidson did not have the technology to create an appropriate engine for Buell. Eventually, Buell began to use engines from a different manufacturer. This is a failure at the strategy stage, where the product development and marketing functions could not successfully transfer knowledge.
Moving into the final stage of the brand-knowledge creation process, implementation, the mis-match on context contributed to the failure of the Buell brand. Buell motorcycles were sold in Harley-Davidson dealerships. However, many potential and actual Buell consumers felt that the dealerships did not understand their needs and could not well explain the Buell brand and product. In the opinion of Buell consumers, many Harley-Davidson dealerships were more interested in selling additional products or services to Harley-Davidson owners than selling Buell motorcycles.
Looking at this case from the perspective of marketing strategy, Harley-Davidson’s decision to expand its brand portfolio by adding the Buell brand seems appropriate. The Buell brand seemed to offer a way to introduce a new generation of consumers to Harley-Davidson using the current distribution network. And, in fact, initially Harley-Davidson had success with the Buell brand. However, when the case is viewed from the brand-knowledge creation perspective, it is clear that Harley-Davidson did not have the knowledge assets or context (culture) necessary to maintain or extend the success of Buell over time. Ultimately, when the Buell brand faltered, Harley-Davidson made the decision to cease marketing the brand.
In almost every product category, dozens or hundreds of new brands are launched every year, and most of these new brands fail. In order to improve your organization’s capability to launch new brands successfully, examine new brand launches that have failed. Identify the stage of the brand-knowledge creation process that was the weak link. This will lead you to realize which of the five factors needs to be strengthened.

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