Downfall: An Overview of British Motorcycle Industry

Introduction

The British motorcycle industry has evolved through the decades to prove its heritage in success. They started as bicycle manufacturers fitting small and inexpensive engines into bikes. Who would have thought that these bikes would later in the 21st century contribute over 5 billion Pounds to their economy? Yes, the British bike industry contributes to over 370 Million Pounds of exports and over 5 billion Pounds to the Total sale for the economy and continues to grow.

Machines in the UK continued to improve and evolve. The mid-to-late 1930s saw some of the most innovative designs in motorcycling, and some of the best machines come from the post-Depression period. But they were also more expensive. The role of the motorcycle as inexpensive public transportation devolved through the 30s: it became more of a hobbyist or competition machine. The use in police and armed forces also grew as it was a cost-effective means of transportation for police and armed forces personnel also affected the overall demand for motorcycles positively.

The Second World War again brought closure to many factories. A lot of firms went on to make products for the war effort, some simply closed. Only a handful continued to make motorcycles, mostly to supply the British Army. Export sales dwindled as shipping was strangled by U boat raids. German bombing raids in Coventry and London spelled disaster for some companies: they never recovered from the loss of plants and equipment. Others simply never returned to make motorcycles. (Deakins, 2005)

Impact on the Stakeholder’s

An organization’s stakeholders are the parties or the people who are affected by the company’s decision-making and therefore profitability. They can be used to represent the business’s overall outlook in various areas of its operations. Stakeholders in the market can have different interests and preferences which often creates a conflict of interests. The stakeholders of the company i.e. the customers, investors (shareholders), employees, suppliers, and the manufacturers hold a high stake in the British bike industry. The industry’s future and the revenues completely depend upon these investors and the stakeholders.

The stakeholders of the British motorbike industry also highly depend on the working and the profitability of the industry. For the consumers, if the industry doesn’t perform well the customers would no more be interested in their products. The companies have to take care of the customer’s needs concerning the manufacturing of the motorcycles, to satisfy its customers worldwide and especially within the United Kingdom. (Gibson, 2008)

The investors whereas may suffer a loss or enjoy high profits based on the performance of the industry. If the industry performs well, it can attract more and more customers and can thus generate more revenues and hence grow, whereas if it does not, it might lose its supporters.

Often employees are not thought of as a stakeholder, which is wrong, because employees of industry are a valuable asset. If the industry performs well and ethically, there would be a greater supply of employment in the labor pool. People will be more than willing to work for the industry and become a part of it.

Lastly, the suppliers of the industry, i.e. the ones that supply the spare parts and raw materials also keep an eye on the industry’s working and profitability. The working of the motorbike industry thus also influences its relationship with its suppliers.

The wide list of its partners in manufacturing includes Arai Helmet, Dunlop Tyres, Dream Machine Race Paint, Wolf, Silkolene, Brembo, Hardinge Bridgeport, and many others. These companies have had quite successful relations with this industry and provide parts for the motorcycle manufacturing industry. (Daft, 1994)

Competitors

Currently, the largest names in the British motorcycle industry include Triumph, Norton, AJS, CCM, Matchless, Megelli, and Rickman. The British industry was the one to introduce these vehicles and Triumphs were a pride of the British market selling domestically and exporting mainly to America. Yet since the 60’s the British motorcycle industry has faced a great threat from the Japanese motorcycle industry. Mainly due to the fancy and many attractive motorbikes not like the British ones which have only become a symbol of the old fashioned motorbikes. The rise of the British industry was due to the new idea of a chopper.

Triumph was the first to come up with the idea of a heavy and classy motorcycle and had since been very successful in marketing these motorcycles until the Japanese came up with better looking lighter weighted motorbikes which also gave a better mileage and saved money. These motorcycles were also preferred over the British motorcycles because of the better parts and engineering put into the motorcycles, thus giving better options to the customer. Also, the Japanese bikes were exciting for the customers because the Japanese manufactured the motorcycles for the race tracks which attracted the already hyped-up customers. (Bresnan, 2010)

The Japanese created a whole new image of a motorcycle. They came up with the idea that only speed is the secret to automobile customers. Therefore they started manufacturing cheap automobiles at a cheap and unmatchable rate. They introduced the most devious engines at a price so low, that the British industries could not match up to them and thus lost a huge customer base from America and Asia. Now motorcycles are not only for family use but they’re now fun, and more and more teenagers and young adult customers want to become a part of the motorbike culture. Therefore these Japanese vehicles have become one of the most demanded motorbikes in the world.

In the current decade, motorcycling has enjoyed great sales. Returning the Chopper culture to the continents of South and North America and Europe, triumph motorcycles has proved to become one of the biggest and most successful motorcycle manufacturers of all time catering to a huge consumer base and supplying all sorts of motorbikes i.e. choppers and sports bikes that gained heavy success throughout the world.

Yet, the British motorcycle manufacturers face a great threat from Japanese companies, such as Suzuki, Yamaha, Honda, and Kawasaki, and the Chinese industry that is coming up with better and cheaper models day by day. The British industry has somewhat maintained to sustain its sales yet, the Japanese have a larger consumer base all around the world. The 70’s was the time when the British motorcycles also lost their Asian consumer base to the Japanese. The Indian sub-continent on a whole switched to Honda and other high mileage and cheaper vehicles that the Japanese and the Chinese markets had to offer. The Japanese market not only caters to the basic consumers but also the motorcycle races that take place all around the world. In such a scenario the British industry must be vigilant and must come up with new and better ideas to keep up in the market. These companies may even need to cater to lower class markets by manufacturing cheaper products that can be sold for up to 2000 USD. In this matter, the Chinese market is gaining more and more popularity as the days pass. (Kardes, 2001)

Porter’s Five Forces Analysis

The Threat of Entry of New Rivals

• Threat from the Chinese and the Japanese markets.
• Chinese and the Japanese have better technologies and machinery which can easily defeat the British vehicles.
• The Chinese threaten dominance over the customers of the British industry.

The intensity of competitive rivalry

• The greatest competitive rival is the Japanese industry.
• Japanese continues to grow rapidly and take up on new markets.
• Has a satisfied customer base.
• Customers trust the Japanese technology and appreciate it as well.

The threat of Substitution

• Bikes are supposed to be cheap.
• British bikes are expensive and thus can be left out for cheaper cars as people may prefer cheaper 4-wheelers to expensive 2-wheelers.
• British must launch cheaper and inexpensive products to cater to these markets in the time of a recession.

The Bargaining power of customers

• The bargaining power of the customers is high.
• There are a lot more motorcycle manufacturers around the world.
• The Indian and the Japanese bikes can be easily made available in the British dominant markets.
• Therefore the British ought to keep good relations with their customers and manufacture according to their wants.

The Bargaining power of Suppliers

• The bargaining power of the suppliers is low
• The Japanese and Chinese suppliers have lot less prices and the British can switch at any time
• The British do not switch because of the Brand image that they’ve created by using high-quality spare parts from top-notch companies
• Also if the British switch to the Japanese or the Chinese suppliers, they might lose some customers who only purchase the motorcycles for their brand image.

Steeple Analysis

Social Changes Analysis

• The increasing old age population in the united kingdom poses threat to the sales of the industry.
• Whereas at the same time the increase in the single’s population and with the heavy divorce rates, the sales will increase at a good rate as people may switch from cars to motorcycles.
• Should spend on CSR activities to gain social respect.

Technological Changes Analysis

• Technology is supposed to reduce the costs of a company. The British machines fulfill this purpose, but not up to the level of the Japanese machines.
• This is the reason that British vehicles are more expensive than Japanese ones.
• This is the only place where the British industry lags behind
• Therefore the British should concentrate on spending more on their research

Environmental Changes Analysis

• European Union has launched new regulations regarding disposal of factory waste, therefore the British should be careful of these new laws.
• Also, British companies should be more environmentally friendly and should manufacture vehicles that emit lesser smoke and such harmful gases.
• They can even launch Hybrid motorcycles similar to hybrid cars to become more responsible and environment friendly

Economic Analysis

• The United Kingdom’s economy is on an upturn whereas the economy of its largest customer base abroad, i.e. America is currently facing a credit crunch.
• The secret to keeping up its exports is the same, i.e. to launch cheaper products for lower-class customers.

Political Analysis

• Politically the British industry has been facing no help or hindrance
• This is best because political involvement is a total risk and can prove to be dangerous or profitable for British companies.

Legal Analysis

• Legally there are no obligations on using a motorcycle or on the way of using a motorcycle.
• And so far the British companies have not faced any problems.

Educational Analysis

• The British industry also lags in education regarding the machinery of the motorcycle manufacturers.
• Therefore it should either hire employees from japan or china or train its employees and then improve their technology.

Segmenting Customers

It is highly essential to segment a company’s customer base because it is very necessary to find out the different sects of the population that use their product. It is then easier to market the product and advertise differently to the different sects of the customers, and even the potential customers.

Age

• Age is dividing a company’s customers into segments based on age. Such as Children, teenagers, middle age, and old age.
• The customers of the British choppers are more middle aged than youngsters and teenagers. This is because of its image as an expensive and classical motorcycle.
• The teenagers mostly prefer the sports class bikes because these have a modern look and the teenagers can relate themselves to being fast and sporty.
• The British motorcycles already target the age groups that prove to be the potential customers of the British motorcycles. The industry only needs to advertise more to improve its customer base.

Social Class/Wealth

• It involves dividing the customer base according to social classes. As far as the social class is concerned, the British motorcycles only cater to the upper class. This is because these are expensive two-riders. Someone belonging to a lower class would prefer going for a four-rider i.e. a car.
• This problem can be solved if the British industry launches more inexpensive motorcycles as the Chinese industry does. Cheaper motorcycles can be sold to the very lower classes of both Britain and abroad.

Gender

• Dividing the market based on gender.
• The British motorcycle industry is male-dominated.
• With a negligible amount of female customers, the British motorcycle continues to keep its image as so. This is mainly because of the motorcycle long created image of a made-for-men vehicle.
• This is someplace, that the British motorcycle industry can have an edge over other countries, by launching a motorcycle that is made for the use of women and only targets the women by advertising for them.
• This way the British industry will continue to target more than half of Britain’s population that was previously ignored and might even double its current sales.
• A female-based motorcycle can be ergonomically designed for comfort and ease of usage for a female customer. This can not only be an innovative step but can also revolutionize the motorcycle industry for what it is known. (Keller & Kotler, 2006)

Brand Awareness/ preconceptions

• The motorcycle industry worldwide has had been always advertised as a man-product. There is a huge female consumer base that can be targeted and can be proven a lot more profitable.
• The British motorcycle companies can launch a motorcycle that would be launched for the sole purpose of marketing and selling to female customers.
• This can be a very essential idea to improve the British industry’s revenues and therefore prove an upturn to the graphs of the industry.

Cautions/Re-education

• The British motorcycle industry continues to maintain its image of a heavy and strong motorcycle through previous decades.
• This image has been very profitable for the industry and thus the companies should only advertise to continue their reputation and therefore not advertise to change or alter their image in the minds of the customers.
• This means that no re-education about the product is required and there is currently nothing to caution the consumers about. Therefore people can still think of the British motorbikes as they’d thought of them decades earlier.

Old/New Customers

• The British motorcycle industry has been growing but at a very slow rate. Therefore it has been able to retain all its old customers yet is very weak at growing.
• These companies can still increase their consumer base if they start to target the Asian markets. This is because their markets new/old are the American and the European markets.
• The Asian markets have high potential revenues and can prove to be a gold mine for the British motorcycle industry.
• These new customers are a good source of revenue and income for the industry.

The Marketing Mix

The 7ps of Marketing formula is used to assess the business and its activities to ensure that the business is performing all its functions well and is fulfilling the demands of its customers profitably. This formula includes four conventional Ps, that are, product, price, place, and promotion along with three new Ps which are process, physical evidence, and promotion. (Lipsey & Chrystal, 2003)

People

• This is one of the most essential p’s of the marketing mix. The organization cannot function without people and therefore it is best to think of people as the stakeholders of the organization, whether they be customers or employees of the organization.
• The British bikes mainly target the American and the European markets for their bikes. Their consumer base majorly includes men and has continued to create their image as a strong and ruthless bike for the strong and ruthless people.
• These companies target the elite and the upper classes of the population as their prices and their advertisements target them. The growth of their consumer base is very slow and steady, which needs to be fastened as other markets such as the Japanese market are growing at a higher rate.
• If the British want to capture these markets they come up with better and demographically oriented advertisements.

Physical evidence

• Physical evidence is the impact that is created in the minds and hearts of people when they look or hear of the product. It is very essential to create the physical evidence of the product and therefore create an everlasting image of the product among the customers and the potential customers of the product.
• The physical evidence of the British bikes is very high. These bikes speak for themselves when they are out on the roads. There is a lot of subliminal advertising going on.
• People love these bikes and the consumers are highly satisfied and create more awareness by word of mouth. The customers let other people know of their bikes and then other people are anxious to buy one themselves.
• This sort of thing mostly happens among teenagers and young middle-aged people. (Sloman, 2001)

Price

• The price is the monetary value of the product. It is always compared to the satisfaction that a person derives from the product. If the satisfaction derived from the product is higher than the price it is a delight. If it is lower than the price then it is dissatisfaction whereas if the satisfaction level of the consumer is equal to the price of the product then it is satisfactory.
• The British Motorcycles have always been a trademark of an expensive and heavy motorcycle and that is how they’ve still maintained their image. These bikes averagely range at about $8000, thus catering to an upper class and higher-level market. The more expensive ones can even cost up to 40k or 50k USD.
• It is also considered if the British motorcycles launch a bike that costs up to 1500 to 2000 USD so that it can cater to the lower-income groups worldwide. So that it can both sell domestically and also export to the lower-income groups.

Place

• The place is the demographics of the place where the product is being sold and has a bigger consumer base. It is highly essential to know where the company sells the most, the least and where it does not currently sell and then, therefore, solve all the issues that limit the sales of the company.
• The British motorcycles are mostly used in America, Europe, and very lightly in Asia. The Asians mostly prefer Japanese and Chinese-made bikes.
• The British industry needs to advertise and increase their exports within the Asian markets, therefore improving their sales to a whole new level.
• Asia is the largest continent in the world having the world’s largest population. It is quite difficult to cater to countries such as Japan and China, as they highly prefer using their products yet the British motorcycle companies have a better chance at penetrating the Indian sub-continent, i.e. India, Pakistan, Bangladesh, Sri-lanka and Kashmir. If the British motorcycles get into these countries, these companies have a high chance of doubling their revenues per annum.

Promotion

• Promotion is the advertising of the ATL and the BTL activities that are carried out by the organization. This includes all, print media, visual advertising, word of mouth, and the showroom. Below the line are activities that are carried out by the organization.
• The British companies have since the beginning been advertising their bikes as the ones that can be used on both thick and thin, roads or grass. These bikes can be used everywhere. The British industry has always proven to be strong and ruthless, yet has always made advertisements for men, for example, the ones where women stare at the triumph riding men. (Branson, 2010)
• These companies must also make advertisements for women because they might be losing on a great women-based consumer base that has yet to be catered to.
• They do not have to change their image and taglines. These can still be strong and ruthless when females ride them.

Product

• This is also one of the most essential parts of the marketing mix. The product contains all the qualities that the product has, the ones that it lacks, and the differences b/w the competitor’s products.
• The British motorcycle industry has so far been successful at providing consumers with what they need out of a motorcycle. These people don’t only feel proud but feel free as the image of a Triumph has been created among its customers.
• The quality of the product has proven itself over time to be of A1 class. And this is not only the case with the new bikes coming in but also the vintage bikes that have been around there for decades.
• The likelihood to buy these products has been great. People want to buy British bikes because of their old image of a reliable and great bike. Yet the customer satisfaction level after buying these bikes is also very high as people stay satisfied with the bikes that they purchase.

Process

• The process is through which the product is manufactured. This includes if the processes are ethical or not, and the raw materials used for the manufacturing are ethical or not.
• The British bike industry is highly interdependent, i.e. the bikes are manufactured in alliance with other companies. These companies that manufacture the spare parts are also known worldwide for their products and are highly famous and used throughout.
• Every bike manufacturing company such as Triumph and Norton continues to work with other such companies to manufacture some of the best bikes in the world. (Bamford, 2003)

Conclusion

The British Motorcycle manufacturing industry had begun to start as a very successful industry and evolved to serve many through world wars I and II. Yet faced a great downfall during the great depression and afterward when the Japanese motorcycles came into fashion. These were cheaper, lighter, had lower maintenance costs, and were more modern and fashionable in looks. The British industry faced a continuous downfall until the late 60’s when the triumph motorcycles came up with a great boom.

In 2008, the statistics showed that Triumph has a huge customer base in around 30 countries making operating profits of up to 14.57 Pounds per annum making sales of about 48,929 bikes. It is believed that in recent years the market for motorcycles in different regions has declined due to the general downward trend in the economy or recession.

Many large motorcycles manufacturers such as Yamaha, Suzuki, and Harley have been hit hard by the economic conditions of times. It is believed that their profit margins have shrunk and sales plunged. This has created problems for these companies to undertake strategic management processes to predict the future of this market.

A surge in sales has seen Triumph Motorcycles overtake one of its Japanese rivals to become the UK’s fourth-largest manufacturer of big bikes. The Hinckley marque said sales had risen by 26%, to 7,450, in 2009, despite a 10% slump in the national market. The market share climbed strongly from 9.2% to 13%. Triumph also capitalized on the fact that since Pound Sterling was strong than Yen, the overall effect to the consumers was expensive UK bikes than Japanese bikes. The triumph seems to be very good at listening to what customers want from their bikes and then producing it. They are a lot better made and designed than they were and are the envy of the world in a lot of ways. Martin Traynor, managing director of Leicestershire Chamber of Commerce, said: This demonstrates the strength of manufacturing in Leicestershire.

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