Demand vs. model mix: striking a delicate balance

Publish Date: 
Mar 24, 2014
By Mike Vaughan

One company I worked with concluded that they could sell 4,000 units worldwide the first year. Maybe they could have, but they hadn’t built enough time into their plan to set up the number of dealers that might be required to sell 4,000 units in the United States, let alone overseas.

As far as I could tell, they’d based their entire distribution plan on the soaring demand for a similar product and conversations with that brand’s dealers who, at the time, were being overwhelmed with orders they couldn’t fill.

One company said they could sell 4,000 units worldwide the first year, but they hadn't built enough time to set up the number of dealers that might be required to sell 4,000 units in the United States, let alone overseas.

What the company failed to realize was not only the incredible strength of the competitive brand, but the fact that a single customer might call three, four or even five dealers looking for the motorcycle he or she wanted, thereby inflating demand. Sure, demand was high, but probably inflated by a factor of two or three. The other misunderstanding was that their potential customers would accept a similar motorcycle as a substitute.

I noted all these factors, and several more. Whether they got communicated to the company who developed the plan, I don’t know; I had been engaged by a third party and didn’t have direct contact. In any case, the product launched amid great fanfare, and promptly went bust -- not necessarily due to ignoring my great wisdom. (They had other problems as well.)

Starting or reviving a motorcycle brand is a big job. It requires big money, good business instincts, perseverance, knowledge, good long-range planning, and possibly most important, commitment. My hat’s off to those who’ve made it, like KTM, Victory and especially Triumph. To those still struggling, hang in there, and good luck.

Editor’s Note: Mike Vaughan has been in the powersports industry for more than 40 years. Among other roles, he was CEO of Triumph North America and director of marketing at Kawasaki.