Victory Motorcycles Marketing Audit

1
Victory MotorcyclesMarketing Audit

• Sean Moran, Tony Nowak,
• Drew Van Norman, Ed Wilbert

2
Presentation Overview

• The New American Motorcycle
• Current Market Situation
• Marketing Program
• SWOT Analysis
• Marketing Objectives
• Marketing Strategy
• Conclusions

3
The New American Motorcycle

• Target Market
• Heavyweight Cruiser/Touring Cruiser
• Above 600 pounds, V-Twin, American Made
• Polaris inception of Victory came in 1998
• Polaris is a 1.5B company, manufacturing ATVs,
  Snowmobiles, Watercraft and Utility Vehicles.
• Main Plant and Offices in Roseau, MN
• Victory Engines Manufactured in Osceola, WI
• Victory Assembly in Spirit Lake, IA

4
Why Did Polaris Decide to Enter The Motorcycle
Market?

• Motorcycles embody several factors, which Polaris
  considers in looking for growth opportunities
• Strong market The U.S. cruiser market has more
  than doubled in the past five years.
• Motorcycles fit their existing engineering,
  manufacturing, distribution and marketing
  processes.
• They supplement ATVs as another year-round
  product to offset the seasonal sales of
  snowmobiles and PWC.
• Motorcycles appeal to customers who already have
  a strong affinity for the Polaris brand.

5
Current Market Situation

• Demographic Profile Harley-Davidson Customers
  (1997-2001)
• 1997 1998 1999 2000 2001
• GENDER
• Male 93 93 91 91 91
• Female 7 7 9 9 9
• MEDIAN AGE
• Years 44.6 44.4 44.6 45.6 45.6
• MEDIAN INCOME (000's)
• Household 74.1 73.6 73.8 77.7 78.3
• 2001 PURCHASERS
• 41 Owned Harley-Davidson motorcycle
  previously
• 31 Coming off of competitive motorcycle
• 28 New to motorcycling or haven't owned a
  motorcycle for at least the past 5
  years
• Sourceinvestor.harley-davidson.com

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Current Market Situation
http//media.corporate-ir.net/media_files/nys/pii/
presentations/orlando2/index.htm
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Current Market Situation

• Currently on the American Motorcycle Market are
  the following
• key players with their new (2003) models
• - American IronHorse Motorcycle Co. - American
  Side Road Motorcycles.
• - Aprilla - Big Dog Motorcycles.
• - Big Mikes Choppers (BMC). - BMW of America.
• - Big Red Machines. - Boar Motorcycles.
• - BSA Motorcycles - Buell Motorcycles.
• - Bultaco - Burgels Bike Works, Inc.
• - California Motorcycles. - Confederate.
• - Cushman Motorcycles. - Desperado Motorcycles.
• - Ducati. - Excelsior-Henderson.
• - Grizzly Motorcycles. - Indian Motorcycles.
• - Harley-Davidson Motorcycles. - Honda
  Motorcycles.
• - Kawasaki Motorcycles. - KTM Motorcycles.
• - Maico. - Monarch Motorcycles.
• - Moto Guzzi. - Norton Motorcycles (Viper).
• - Peerless. - Rude American Motorcycles.
• - Suzuki Motorcycles. - Titan Motorcycles.
• - Triumph Motorcycles. - Victory (Polaris)
  Motorcycle.

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Current Market Situation

• Major competitors for Polaris in the cruiser
  class are
• Harley-Davidson Indian
• While all the demographics are right in this
  market, it still takes time and resolve to start
  and build a successful business from the ground
  up. We have been in the motorcycle business for
  only three years. During that time, we have been
  concentrating on building the Victory brand,
  designing and building better-quality motorcycles
  and expanding the product line. Going forward, we
  now have a foundation upon which to build a
  successful business.
• Polaris statement.

9
Market Program

• Focus on heavy weight cruiser demographics
• Build alliances with existing Polaris ownership
• Pursue e-commerce technologies
• Develop image relationships
• Value added price incentives

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SWOT Analysis

• Strengths
• Sport and adventure vehicle enthusiast
• America made heavy weight motorcycles
• 5 years experience as a motorcycle manufacturer
• Parent company (Polaris) has 40 years experience
  as a sport and adventure vehicle manufacturer
• Parent company is a 1.5 B dollar operation born,
  nourished and prospering in Minnesota

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SWOT Analysis

• Weaknesses
• 5 year reputation compared to Harley Davidsons
  100 years
• Product line is similar to products offered by
  Harley Davidson and Indian.
• Limited motorcycle distribution
• Technical issues within the first three years.
• Parent company regarded as a recreation or toy
  manufacturer

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SWOT Analysis

• Opportunities
• E-commerce development added benefit of on-line
  initiatives for order, shipping, and accessorize
• Dealer alliances with Polaris products
• Asian cruiser market
• Export to the international market
• Sportster (light weight) cruiser

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SWOT Analysis

• Threats
• Price and dependability of Asian cruisers
• Harley and/or Indian price reduction
• Indian may introduce a custom heavy weight
• Harley distribution
• Harley and Indian and legendary names

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Victory Marketing Objectives

• Provide an additional platform for company growth
• Number 1 in snowmobiles
• Number 2 in ATVs
• Position on high quality and high performance
• Follow a deliberate expansion path into
  motorcycle market
• In 4 of 5 segments of the Premium Cruiser and
  Touring Cruiser markets
• Sportbikes
• Off-road bikes
• Become a major player in the motorcycle market

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Marketing Mix

• Product
• Cruisers Touring
• Garments
• Accessories
• Price
• Place
• Promotion

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Marketing Mix (Product/Price)
Sources http//www.harley-davidson.com/PR/MOT/200
3 http//www.indianmotorcycle.com/ma
chines/chief/index.cfm
http//www.victory-usa.com/specs.asp?contentID03V
ICVEGAS
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Marketing Mix (Product)

• Garments
• Jackets
• Vests
• Pants and chaps
• Helmets
• Footwear
• Gloves
• Raingear
• Sportswear
• Goggle and eyewear
• Caps and headwear
• Gifts and novelties

• Accessories
• Billet/Chrome
• Handle Bars
• Seats Brackets
• Bags and Racks
• Windshields
• Performance
• Oil and Maintenance

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Marketing Mix (Place/Dealers)

• 281 Dealers in the United States
• 50 of all heavyweight cruiser sales take place
  in the top 28 markets (NY, LA Chicago, Boston,
  Philadelphia, Minneapolis, San Francisco, etc.)
• Polaris is concentrating its dealers in these
  areas.

Source http//media.corporate-ir.net/media_files/
nys/pii/presentations/orlando2/index.htm
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Marketing Mix (Promotion)

• Upgrading dealers (27.8 M investment)
• Victory Custom Order Program
• Get more bike
• Big savings
• Hundreds of possibilities
• Partnerships
• Victory Riders Group
• Affiliation with Arlin and Corey Ness

Sources http//media.corporate-ir.net/media_files
/nys/pii/presentations/orlando2/index.htm
http//www.victory-usa.com/product.asp?cont
entID03VICVEGAS
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Conclusions

• Future of Victory shows promise
• Strong Financial Backing
• Growing Market Sector
• Well Developed Strategy
• Possible improvements
• Introduce new entry level bike
• Have marketing work closer with advertising

21
Questions