In fact, the company is known to retain high resale values meaning that some owners continue sticking with the brand for this exact reason. The answer you get will be the same for both questions.
Essentially, Harley Davidson has positioned itself in a certain way within the market. As such, the company believes that they should charge certain prices if only to continue maintaining its image. Without even looking into the issues of reliability and performance, you can understand that Harley Davidson knows its target market pretty well. As such, they have been successful in the business because they have managed to position themselves in the right place at the right price to capture the ideal client.
Another answer to the why are Harleys so expensive question revolves around the price strategy the company has adopted. In fact, at some point in time, potential buyers sign up to join a waiting list trying to buy a Harley. That said, most of the target buyers are those who are looking to get what they perceive as proper American Iron. The pricing strategy adopted by Harley has enabled them to get such customers to churn out money for a bike from the brand. With a Harley, you also get to pay a bit extra to be able to enjoy the intangibles that come with owning such a bike.
This means that once you roll around in your bike, you will create an instant image and bragging rights that other riders might not have — unless they also own a Harley of course. The image that Harley-Davidson has created is so strong that most riders who drool over the product have always wanted to own one all their lives. They have to recoup this money by charging more. The brand is just one part of the cost though, and no amount of money can build a strong following for a bad product.
This concept gets to the next point of quality. Harley bikes are known for being top quality. This reputation has stuck with them and helped build the brand. Another part of the quality is that Harley Davidson motorcycles are made in the United States. To a lot of people, this means that it is a better product.
Also, buying a bike built in the United States can help people feel good because they are providing jobs to other Americans. People also buy Harleys because they have a reputation for being dependable. This may be true or not true, but you do see a lot of old Harleys still going. This might just be because they are taken care of though. They become loyal to the brand and quality of it.
These high standards mean that the bike coming off the line will be a solid piece of machinery. This knowledge also leads to high resell values, which encourage people to buy Harleys because they know they are a decent investment. Harley Davidson can be compared to Rolex and why they cost so much. Both companies have done the same thing in their areas. That is they have positioned themselves in the market to a point that they can charge more.
If they started charging less, it would hurt there reputation. That is because people think they are getting better quality because they are paying more and lowering the price would make them think that the quality has dropped.
Harley has to maintain their image and they know their customers well. They have been successful in the business because they have managed to position themselves in the right place at the right price to capture the ideal client. This positioning has allowed them to charge more than there competitors for equal bikes spec-wise.
The positioning also ties into there pricing strategy. They have built the brand so people see buying a Harley Davidson as buying real American Iron. They have also created scarcity to the buyers by having them sign up for the waitlist. These things have helped Harley to be able to price there motorcycles higher and still sale them. Like we have mentioned, when you own a Harley you become a part of the family and it becomes a part of you.
Harley supporters see owning one as making them cooler or better. This means they will pay more for the bike to feel good about themselves. Also, people that have drooled over Harleys when they were growing up will finally buy one when they can to get the image.
Some people even feel that they gain respect by riding a Harley. The reason SpaceX is able to perform vertical integration is because they use highly specialised parts in low quantities. This means that the manufacturers of these parts would need a very high-profit margin just to make it worth doing business.
For industries, like motorcycle manufacturing, there is an abundance of manufacturers, suppliers and contractors. This makes the market for suppliers very competitive and it would rarely benefit a company to vertically integrate its supply chain.
In the s and s, Harley-Davidson had a huge problem with the quality in their supply chain. It was concluded that they needed to reduce the number of suppliers and implement strict quality requirements in order to sustain competitiveness and not just to improve performance for immediate gains.
This is, of course, good in the long term but it does however reduce profitability in the short and medium terms. The only way to keep profits at a healthy margin is to increase the price of the final product. Any project manager and most likely operation managers as well would tell you that cost can be directly correlated with time, quality and quantity. Labour refers to the factory workers as well as administrators, designers and basically anyone who is employed by the company apart from the CEO.
Just to quickly clarify; a CEO is technically also an employee, just like a factory worker. This is widely thought to be because the US is considered to be a developed nation. But in reality, it has less to do with how developed a country is and more to do with how the supply meets demand for labour in that particular industry.
This means that if someone is willing to do the same job for less because of a scarcity of work in that industry, labour cost will be less. The exact same goes for when someone is not willing to do a job for the offered amount because they can be paid more elsewhere, the labour cost increases.
These are the principles that a free market runs on. In a country like the US, the industries are developed enough to have a sufficient demand for increase in wages.
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