Bloomberg Hyperdrive, a newsletter on the ideas that are reshaping the automotive industry, interviewed the CEO of Harley-Davidson, Jochen Zeitz. The subject of the interview was the spinning-off of Harley’s electric bike division – LiveWire.
Within a discussion on finances, stock prices and the rationale for the spinoff, the interview turned out to be a paean to the Harley-Davidson brand including Mr. Zeitz’ creation of a Harley-Davidson family of brands. Although not articulated as such, it is clear that the underpinning of the new two-division configuration has all the earmarks of a family of brands.
Mr. Zeitz, a Harley-Davison Board member, became CEO in May of 2020 right after the beginning of lock downs and closures due to Covid-19. Harley-Davidson’s previous CEO left due to shareholders threatening a proxy fight over Board of Director seats. Shareholders were concerned about the brand’s skidding sales. And, there was deep concern about the CEO’s strategy aimed at international markets and on selling smaller, less expensive bikes turning away from the core customer base who appreciate the big, heavy, more costly machines.
Upon taking the reins, Mr. Zeitz told analysts that this previous strategy of model expansion while chasing new customers and markets added manufacturing complexity and “diverted attention from Harley’s profitable models.”
Forward to today, two years into Mr. Zeitz’ tenure. Not only has Mr. Zeitz steadied the core business, but he has created a new brand embedded with the authority of Harley-Davidson.
As Mr. Zeitz said, LiveWire is an electric vehicle brand but unlike Rivian or Lucid, it already has in place the “… infrastructure, manufacturing, supply chain, all the know-how that Harley has built over such a long period of time without the baggage….” And, unlike Tesla which struggles with service, Mr. Zeitz points out that Harley service is easily available and high quality.
A family brand approach uses the parent brand’s provenance – Harley’s consistent, motivating, relevant, distinctive heritage. A powerful heritage helps generate credibility. A brand’s heritage provides customers with substantial authoritative information, giving credence to Harley’s message. Provenance provides authority across all platforms. LiveWire benefits from the Harley-Davidson lineage which everyone agrees is an iconic heritage.
Let’s not forget that the epitome of loyalty is having the brand tattooed on your body. This is something prevalent among Harley riders.
As the parent brand, Harley-Davidson indicates the origin, quality, leadership, trustworthiness and area of excellence of the Harley-Davidson brand family while the LiveWire and apparel/accessories items distinguish themselves based on their relevant differentiation of their individual brand promises.
Another important element of having a family of brands is being able to address a different market segment with a different customer. For Harley-Davidson, LiveWire satisfies the needs of customers who are interested in an electric bike but with a Harley experience and Harley service in a digital direct, digital dealer segment. Mr. Zeitz believes that LiveWire is going to attract the next generation of Harley riders. This is a long-term vision but Mr. Zeitz is behind long-term vision.
If you need support for this long-term vision, check out the October 30 issue of Wired. Wired tested a range of electric motorcycles and featured favorites in an article titled, Stun Guns. The Harley-Davidson LiveWire S2 Del Mar is one of those singled out. The LiveWire electric cycles are currently best for the urban rider with the idea of going longer haul. In fact, Wired points out that if you need an urban electric cycle, the Live Wire S2 Del Mar is the best choice. The rave review is paired with a photo and its basic price, $15,000. Most models go for $16,000+ with add-ons.
Mr. Zeitz understands that LiveWire will be referred to as “the Harley electric motorcycle” which is good (and as Wired does in its article). This is because customers and potential customers know LiveWire has Harley-Davidson “DNA” that will not only benefit LiveWire, but also benefit Harely-Davidson. And, thinking long-term, LiveWire will help the entire brand segue to an electric future.
As for all apparel and accessories, Mr. Zeitz states that whatever opportunities exist outside of the physical motorcycles, these opportunities must have Harley’s authenticity, aesthetic and appeal; the Harley-Davidson provenance, the core of the Harley-Davidson experience.
In today’s uncertain world, there are brands that are segueing to family branding. A great case is Purina. There is extraordinary comfort in knowing that a brand has authority and expertise in its market. Brand families will be more present in our times when we are looking for the security that a brand’s provenance provides. And, a brand family with an authoritative parent such as Harley-Davidson screams security, comfort and trust.