Sample Answer for Assess the importance to Harley-Davidson of product differentiation in this case. (10 marks)

Product differentiation is used by businesses to gain a competitive edge over their rivals. In highly competitive markets, where lots of firms produce similar products, firms will try to make their product unique in some way so that it stands out from the pack. This involves supplying goods and services that have different features or physical qualities. The differences in products may be real. This means that products might look different, have different technical specifications or have different capabilities or performance levels.

In this case, Harley-Davidson has differentiated its products by offering its customers a wide range of different products and a high level of customisation from the handle, the stand to the overall looks. This also includes the motorcycle accessories riders can wear. The company has also developed a specific culture for Harley-Davidson bikers through its Harley Owners Group (HOG). This owners-club holds regular meetings where Harley owners from different regions can get together and enjoy a lifestyle of passionate bikers. Rival brands may not offer their customers this opportunity.

The company repositioned itself at the premium end of the market to help the differentiation process. It resolved the technical issues, improved reliability and quality and focused on its strengths, such as providing customers with a wide range of exciting bike designs. Harley-Davidson decided to channel resources from marketing into improving the quality and reliability of its products. It is now enjoying growth and looking to enter more foreign and emerging markets. Most would agree that people who ride bikes see Harley-Davidson as something quite different from another manufacturer's bike. It is probably a very effectively differentiated product. This is very important and has contributed significantly to the company's revival.