Richard A. D'Aveni, Professor of Strategic Management

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How Harley Fell Into the Commoditization Trap

A tale that holds lessons for brands everywhere.

In January Harley-Davidson announced higher-than-expected losses of $218.7 million for the final quarter of 2009. The motorcycle legend also announced that it anticipated sales of between 201,000 and 212,000 in 2010. Compare that with sales of 349,000 in 2006, and you get an idea of the ills that have beset the company.

Now, you might presume that Harley, with its premium-priced, iconic product, could not, definitely not, be affected by the phenomenon called commoditization, where a product becomes indistinguishable from its competitors. You would be wrong. The long straight highway has had a few hidden potholes, and in those potholes commoditization has lurked in the guise of both cheaper Japanese competitors like Honda ( HMC - news - people ) and sexy upstarts at the top end like Big Dog.

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