Are you willing to pay more (assuming you have the cash) for high quality (premium) parts and pieces that substantially boost performance and handling of a new motorcycle even if no one else notices the difference? If it makes the ride better, handling surer, acceleration quicker and increases durability but leaves no outward sign, is it worth it? How about a premium version of a more common model, again, very little outward difference?
Seth Godin brings up a distinction between luxury and premium goods and I thought it was worth exploring, particularly now when companies are struggling to find customers. Godin describes the difference this way:
Luxury goods are needlessly expensive. By needlessly, I mean that the price is not related to performance. The price is related to scarcity, brand and storytelling. Luxury goods are organized waste. They say, “I can afford to spend money without regard for intrinsic value.” …
Premium goods, on the other hand, are expensive variants of commodity goods. Pay more, get more.
What’s a luxury motorcycle? I think you know, you can probably name quite a few right off the top of your head, but are all high priced motorcycles “needlessly expensive,” to use Godin’s phrase? Some motorcycles are priced at $50,000, $75,000 or more but I would argue, some may very well be worth every penny, others, not so much.
Many custom chopper builders took the luxury route, famous builder, flashy design and often, not very functional as a motorcycle but very high priced. You buy the image and it’s on display even when parked. It’s the equivalent of designer clothing and it’s easily faked, just like a cheap “designer” watch. It also seems to fade fast in a tight economy as everyone starts looking for value. A particular builder can go out of business and over time fewer are familiar with the surrounding image and hype that attracted buyers to the brand in the first place and the bikes fall in value. Not good.
Low volume motorcycle companies of all types have to be careful, it’s easy start as a premium builder but drift into the luxury segment and lose focus, when real premium quality is a better bet. If a company builds a motorcycle with the intention of building something really special, … the best components, high quality construction, excellent design, … they have a great chance of capturing the knowledgeable buyer looking for that premium motorcycle that delivers on the promise. Even if the company eventually folds, the bikes continue to carry forward in the used market, staying in demand because enthusiasts recognize the quality. If demand and residual value are likely to remain high, a buyer sees the odds in his favor and might be more likely to take a chance on this new bike which, oddly enough, raises the chances of the company staying in business in the first place.
The major manufacturers are in a tough spot, they have to sell in high volume to stay in business which necessitates lower price points. How can they step up to really premium component and build quality without losing most of their customers? The majors are almost required to produce commodity motorcycles. Lots of critics complain about what is offered but fail to see the dilemma the big companies are in, especially when those same critics think the standard new bike is too expensive to begin with, let alone the high end performer.
This current business environment can be brutal on the luxury segment, but I think the real premium market has the opportunity to do well. Any company in the premium market must be very clear about who their customer is, what they are building and it must be made very clear in their marketing. A distinctive image may be part of the package, but buyers have to know it’s more than that. If their price is on the high side and their marketing is a little muddy, buyers will see just another image brand and the company will die.
Where do you stand? Assuming sufficient funds to make the choice, do you look for the premium bike that will stand the test of time even if very few will know what you’re riding, the luxury motorcycle that everyone will recognize, or the commodity motorcycle that performs well enough?