Bye-Bye, Mr. American Pie!
So, Harley-Davidson finally decides to exit India, or ‘re-write’ their India strategy under the recently announced “Rewire” programme. Leaving a couple of thousand salespersons without jobs and a few thousand customers with more reason to despair.
Some media reports say this is not a good sign when Mr. Modi wants fresh investment in India. I completely disagree with that. This has nothing to do with any national policy or ease of doing business. This is an outcome of faulty business strategy from day one with enough warnings through the innings that things were not going the right way.
Hence the reference to Don McLean’s classic ballad of 1971. Open to multiple interpretations over decades, finally, in 2015 McLean himself said, “Basically in American Pie, things are moving in the wrong direction…life is becoming less idyllic.” 1971 was also a significant year for the motorcycle industry in the US. Through the Honda CB750 that market saw the birth of what media called the Universal Japanese Motorcycle…reliable, frugal, affordable, and yet fun to run. That had shaken up the American motorcycle makers for sure and revolutionized the market.
Fifty years later, after an excruciating decade in the world’s largest two-wheeler market, HD decides to rethink India. The reported talks with Hero MotoCorp are possibly to maintain some semblance of being present here. Hero themselves have not been the best at such relationships given their handling of BMW and Buell in the past.
“Yet another American brand goes!”, remarked a friend of mine. Yet another American automobile brand, I corrected him. We have had Navistar, Polaris, and General Motors downing shutters. Ford has worked out a tenuous arrangement with Mahindra.
Many American brands have done well in India, for years. Many US organizations have grown in this market for decades. McDonald’s. P&G. HP. Dell. Nike. Levi’s. Microsoft. Google. Pepsi. Coke. Pillsbury. Cargill. Adobe. Oracle. Apple. And Zoom is the latest.
So, is there a pattern for this? I mean, do Indians love US brands when it comes to food, fashion, software, and phones but shun them when it comes to automobiles? Or is it the other way round…that only those US brands that have made themselves relevant to the Indian customer have survived and thrived? If it is the second, then it is a universal truth for any brand, from any country, and in any market.
What then could have happened to the US automobile brands then? Did they commit the same mistakes in India? Is there any pattern one can draw from their failures in one of the world’s most thriving automobile markets [leave aside 2019 and 2020]? I believe there are a few crucial underlying factors that explain this business behavior. And they are reasons for dragging HD into its current situation.
A sense of Entitlement
It all starts with a false sense of “ownership” of another market just because a brand has been doing well in a few. It is as if Indians have been waiting for the brand with bated breath and its entry will lead to large scale emancipation. So, there is this attitude of being more of a ‘missionary’ than being a new market entrant. The brand does not approach every new market as a new one with its own sensitivities but as a mere extension of its home market.
So, HD expected that if Indians can sport HD t-shirts and caps, they would queue up for the product once it is launched. Brand recall is confused with brand respect. Brand association is also confused with brand aspiration. General Motors learned it the hard way with the Chevrolet brand and so did Ford.
India was not really missing Harley-Davidson.
Harley-Davidson was missing the Indian market.
Legacy alone cannot last
What you bring to the Indian market will determine how long you will last. For that, you need to spend a lot of time understanding what will really work here rather than merely flaunting your “global” range. HD was relying on legacy and legacy alone. It got caught in the glamour and the hype built by the media without getting into the fundamentals of product and ownership cost. One HD India senior manager had once proudly told me that Harley owners look beyond mere ownership costs and cherish the experience of riding.
True, most global brands are built on emotional relationships, beyond rational benefits, but then the experience itself should be at a different level altogether! The user of an iPhone gets awed by the intuitive usability of the product that creates a unique ownership experience justifying a sticker price that is double of what competition can ask for.
What was great for yesterday need not be good enough for tomorrow.
Don’t get fooled by the numbers
The land of 1 billion people can end up being a market of only 2 million. That is the harsh reality of India. Numbers that look good in political speeches and “feel good” presentations will be totally elusive once you get down to the brass tacks. Unless you are selling combs or soap. Automakers typically get caught in these numbers, with the big ones sticking in the minds of board members in headquarters. What’s selling half a million vehicles in a growing middle class of 200 million, they think.
The parameters of measuring prosperity may be the same, but the indices are different. Add to that the taxation system and suddenly the potential market shrinks. If one is intent on increasing market penetration, then the core business strategy and product portfolio have to be completely different. And that cannot be HD at all.
The “luxury motoring” market in India is only in thousands and these rare customers are not necessarily brand loyal. They typically move to the ‘latest’ fads. An HD customer today will be a Triumph user tomorrow. If HD is intent on retaining that customer for long, then there has to be a compelling reason for the same.
Experience vis-à-vis Expectation
This is where HD lost out in the Indian market. On both fronts of the rational experience as well as the emotional one. The Indian buyer of a Harley is an “elite” and never forgets that. He/she is not like a HOG rider in the mid-west US whose demands and expectations are of a very different nature. In fact, the two customers are wired differently. The Indian customer needs to be pampered while the US one needs to belong to the clan.
The Indian customer, even if he/she is a riding enthusiast, will also show-off the bike while the US one is more concerned about riding out every day to work. The famed accountant who takes off his white shirt and dons the leather jacket to ride into the sunset once a month is good advertising imagery. That does not generate revenue.
More so, reliability and “value” are high on priority even for the occasional elite rider in India. Word of mouth broke the brand’s spine, with customers forums and groups overflowing with stories of despair and dejection. Inconsistent servicing standards, inflated billing, and an insensitive customer management system did the damage.
Both General Motors and Ford were let down by inconsistent and shoddy service standards in spite of good products.
McDonald’s created an entirely new menu to cater to Indian tastes and expectations. Their Happy Meal was suitably modified to delight Indian children. As a mass brand, they exceeded the expectations of the customer and also fuelled competition into upping their own standards.
Relevance brings respect
This is finally where the buck stops. The word “relevance” is easy to mouth but the toughest to live up to. It is a combination of all business factors rolled into one wrapped with the brand story.
Brands take years to build relevance, brick by brick, based on two important traits. The first is a genuine sense of respect for the new market the brand decides to enter. This is the first step…to approach with a level of humility without losing out on your own identity. The second is deep insights into the target segment or customer. These change with every market [even region in a large market like India] and the brand then needs to decide on which to focus on.
HD, drunk on provenance and legacy, thought the Indian customer would accept whatever it offered, in terms of product and service. Owners complained within themselves while keeping a brave face before the others. This is the most vulnerable situation as you have no brand advocates in the marketplace.
HD had a product portfolio that did not require a brick and mortar sales network right from the start. What they required was a mix of fixed and mobile brand centers to make the brand story come alive. And a very tight service network. Heavy investments by network partners not seeing break even anytime soon also spread the bad word.
The Chevrolet brand had an impressive product portfolio but did not bother to tell customers the brand story to allow them to build affinity and associations.
Ford built a good brand story but was always what I call a ‘one horse’ company, with a narrow portfolio and a single product doing well at a point of time, right from the days of the Ikon to the Ecosport now.
Navistar was a non-starter as its products were heavy seriously hampering fuel efficiency readings.
Polaris brought in a product category that was either too niche or too complex in its utility.
Each American brand made the same fundamental mistakes of taking the market for granted, running on the legacy, and falling seriously short on the ownership experience it offered its customer.
As a brand, it is always good to ask yourself that if you die, will your customers miss you! Be true to your heart and if the answer is “yes” then you are on a strong foundation. If the answer is the other way, then better to exit that category or market rather than pumping more good money behind bad money. That is when you ‘rewire’!
