Take-home question (hand in 10/2). 1. Using 5 forces, analyze a segment of the motorcycle Industry. 2. What is Ducati’s generic strategy? Chart it. Then back it up (a. why differentiation or cost & b. why broad or focus) with some reasoning. 1.5 pages
Motorcycle Industry: The cruiser segment
Harley Davidson dominates this sector followed by well-known companies such as Yamaha and Honda.
Bargaining Power of Suppliers (High): The parts and components needed have to be of high quality, increasing the costs associated with switching manufacturers. Differentiation is very important in this industry making high quality parts an important component.
Bargaining Power of Buyers (High): Customer satisfaction and pricing is important in the cruiser segment. The low switching costs allow customers to purchase the motorcycle that best fits their needs. In this segment, differentiation is important to attract customers.
Threat of Substitutes (Low): A car is a common substitute but people that own a cruiser, usually own a car as well. Motorcycles are usually seen as leisure products instead of the primary source of transportation. Other substitutes such as dirt bikes don’t match up to the lifestyle associated to owning a cruiser.
Threat of New Entrants (Low): The barriers to enter this market are high given that it’s a segment dominated by big companies such as Harley Davidson. The existing firms in this industry have built a strong brand loyalty that makes it hard for potential new entrants to enter the market and be successful.
Rivalry (High): The cruiser segment has many rivals that have tried imitating the dominant firms. Differentiation and brand loyalty are important to provide a good product to customers. A person trying to purchase a cruiser will most likely choose the model that appeals the most to them.
Ducati: Focused Differentiation Strategy