Ducati HBR case analysis

1. DUCATI HBR Case
Analysis

2. Motorcycle industry: Products
Cruisers
Sport bikes
Off Road Segment
Touring Segment
• Comprise of off • Motorcycles for • More focus on • Focus on
road and dual longer rides and styling over speed, acceleratio
purpose bike greater comfort comfort and n over comfort
• Japanese were • Major players: speed. • Hyper
the largest BMW, Harley • Major Players: sport, Super-
manufacturers Davidson & Harley sport, Naked, Spo
Honda Davidson, BMW & rt touring
Japanese
companies

3. Motorcycle industry: Customers
Knee down
• Racing aficionados, sought extreme performance and functionality
Easy riders
• Associated the motorcycle with a particular lifecycle
Weekend riders & Highway lovers
• Interested in more balanced and versatile bike
Undecided bikers
• Preferred a more balanced and versatile bike
• New customer base for Hardley and Ducati
Women • 8% sale of Ducati’s Monster’s motorcycle

4. Motorcycle industry: Technology And
R&D
2-5% of revenue to be invested in R&D
Integration between technical and marketing
team to understand customers
Optimizing engine performance
Reducing weight
Lower fuel consumption and toxic emission
Racing competitions: develop technical solutions and test materials

5. Motorcycle industry: Manufacturing
• Heavy investment on automation of
production line
• Outsourcing of input
• Greater flexibility
• Adopted Japanese production techniques
• Optimize production level and improve quality

6. Motorcycle industry: Distribution
Major Markets
• US
• Europe
• Japan
Agents
• Wholesale: build and manage the network of retail dealers in a
geographic area
• Independent, Partly owned & Totally owned
• Retailers
• Multi-franchise & Single-franchise

7. Harley
Davidson
Triumph Competitors Honda
BMW
Harley
Honda BMW Triumph
Davidson
• >650 cc • 5.4 mn bikes • Network of • 30,000 bikes
• Strong • Started the 160 retailers • Virtually
American “superbike” • Pioneer in unbreakable
focus boom technical bikes
• “lifestyle” • 23 models of innovations • Applied
company >500cc • 60% Japanese
revenues production
from principles
automobiles

8. Threat of
Substitutes
Low threat from
Cars, as consumer likely to have one
in addition. Low threat from other
types of motorcycles, as for
different markets.
Competition Bargaining Power
Bargaining Power
Oligopoly, with Harley Davidson as of Buyers
of Suppliers main threat (48.1% of US market share), Power is high due to branding and loyal
Power may be low within the particularly in terms of brand. customer base, so Harley buyers
market, due to Harley’s Other competitors are unlikely to switch, as costs are too high.
dominance. Triumph, Yamaha, Honda New entrants unable to touch Harley’s
High power with regard to new (on price/technology) licensees, as they are locked in dealer
entrants, due to high switching & BMW networks
costs
Threat from
New Entrants
Dominance and strength of Harley brand
suggests high entry barriers, so low threat
from new entrants. No dominating brand
in Europe means here threat from
new entrants higher in Europe
Porter’s Five Forces (1979), (1980), and (1985)
Porter’s Five Force Analysis
in analysing the cruiser market
Figure 1.

9. Ducati
• Contributed to 43% of total revenues from
Hyper-Sport motorcycles
Super-Sport • Had been most popular Ducati on road
• Recently introduced segment of
Sport-Touring motorcycles
Naked • Monster – the most popular Ducati now
• MH 900 Evolution
Limited editions • 996R

10. SWOT Analysis
Oppurtunities
Other segments in the
market
Strengths Weakness
R&D
Technical superiority SWOT Marketing
Reliance on suppliers
L-Twin engine
Reached peak of
Brand loyalty turnaround
Threats
Strong competitors like
Harley Davidson

11. Ducati : Presence and involvement
Ducati
Events Owners Museum Advertising Racing
Club

12. Ducati: Distribution Strategy
Sales and Re-organization
Chain of
marketing of network of
“Ducati Stores”
subsidiaries dealers

13. DUCATI: The Turn around program
Fredrico Minoli’s 2 goals Equaling Harley
Double digit growth
Davidson’s profit level
Ducati had 3 things to be highlighted Good Top notch A strong
product engineers Brand
Objective :- To increase market share from 4% to 10%
Management’s Perspective :- Right strategy was to develop a global brand that could not
only appeal to extreme riders but also to a broader spectrum of customers

14. Should Ducati Expand or Not ?
EXPAND Don’t Expand
• Expansion of • Risk reduction
Segments • Better focus on
Pros • Increase in market existing
share Pros customers
• Sustain current
brand name
• Heavy Capital
Investment • Losing the chance
of possible
Cons • Time consuming
• Unpredictable
economic
Cons expansion
conditions

15. Don’t Expand
Reasons
Ducati may loose focus and hence brand loyalty
 Ducati should minimize risk by
not entering the cruiser
segment
R&D efforts may not payoff for new
interpretation of Cruiser bike  It should focus on brand
loyalty for existing segments.
 Enhance it’s own style of
Harley Davidson’s own style of strategy and
it’s brand loyalty will make it hard to strategy in existing segment just
penetrate cruiser market like Harley does in cruiser.
Unexpected downturn and unreasonable amount
of time may lead to failur.