Issue link: https://read.dmtmag.com/i/719034
6 • September 6, 2016 • Powersports Business NEWS www.PowersportsBusiness.com growth is going to come more actively from market share versus passively from gains over declines in the overall market." If you take a look at KTM's market share since 2009 on a line graph, it's obvious that up is where KTM expects to go. BRANDING IS KEY The focus of Ready to Race 1.0 and its subse- quent 2.0 version has been on branding. Brand is extremely important to KTM, and it doesn't take long for Burleson or managing director John Hinz to repeat, "Brand is the business. Business is the brand." "We're investing in our brands to really make that connection to our dealers and our final consumers," Hinz reported. "The market- place is changing; retail is changing; consumer preferences are changing, and consumers are definitely aligning themselves with what they feel themselves and what that brand stands for." On top of the KTM off-road and moto- cross lines, KTM also added street bikes in 2009, integrating them into the Ready to Race mindset. Then in 2013, Pierer Industrie AG, a company owned by KTM CEO Stefan Pierer, acquired Husqvarna, and the brand now falls under the KTM umbrella. KTM North America also houses the North American arm of WP Performance Systems, a producer of suspen- sion parts that is 74.9 percent owned by Pierer Industrie AG. "We've got this amazing opportunity in our group with the KTM brand, the Husqvarna brand, the WP brand, to make these connec- tions with different types of people within the motorcycling community," Hinz said. One example of the success KTM has seen with its branding is in the Red Bull KTM gear that represents KTM's racing efforts and is exclusive to the North American market. "If you went to a Supercross race three years ago, before the collection was out, you'd see kind of a myriad of KTM shirts and different things. Now, with the success of [Dungey's team manager Roger De Coster's] team with Ryan Dungey winning back-to-back cham- pionships, you see that Red Bull KTM stuff, plus the Troy Lee Designs collection that we have. You're seeing people wear that stuff, and what they're telling you is, 'I want to associate myself with that brand,'" Burleson said. "That affiliation that they're making physically, that, 'I want to wear that brand and be proud of that brand,' — it's just a great thing to see, actually. It's super exciting to see people excited to wear our brand." In fact, KTM's PG&A overall has seen an increase over the past six years that has mim- icked unit sales growth. "PG&A as a component, it's a huge business driver. There's good profit margins in it for the dealer, but it's also a good company and brand driver, so when someone puts that logo on their chest, and they make that decision to buy the helmet, the jersey, the T-shirt, the hat and really represent the brand, then we know we've made a strong connection to them," Hinz said. DEALERS SEE IMPROVEMENT As KTM has grown its market share and sales, dealers have seen improvement overall, as well. "That same growth didn't just come on our end, but it came in units per dealer, and the growth rate of dollars per outlet, per dealership, actually is more accelerated than that with the addition of our PG&A business, so not only are we trying to grow, but we're trying to grow our portion of the business inside of a dealership. That's really critical for us," Burleson said. KTM currently has 463 dealers in North America — a comfortable number, the execu- tives said. Because of contraction for various reasons — buyouts, retirements, etc. — 40-50 dealers are added yearly to keep a static dealer count in the high 400s, but KTM isn't looking to add a mass number of dealers any time soon. "On the dealer network side, if there is growth, it's going to be very strategic, so we're taking a very close look at the dealer network. We're not adding dealers broadly at all," Hinz explained. "We're taking a very strategic look at the market, where the markets are growing, where they're shrinking, who the dealers are that are performing well and really looking to support the dealers that are engaged with our business and want to grow with us. If there's an area where there's a need for a dealer, then we'll have to take a strategic look at that point." KTM's goal instead is to work with the high- est quality dealers in the industry and grow KTM sales in each store. "We recognize that, depending on the brand, there are some brackets of units per dealer, and we want to be on the high end. We want to be able to have a really good, pro- ductive relationship with the best dealers out there," Burleson said. Hinz added, "It's working with the best deal- ers out there that understand our brands, know our brands, want to support our brands, want to support the customer that purchases the brands, so it's important for us to have that con- nection with our dealers and make sure we're selecting the right dealers that will represent the brands at their best." PASSION DRIVES KTM Driving the growth at KTM is not only a solid Ready to Race plan, but also the passion and dedication of the employees. The white board in Burleson's office reads "Passion + Success = Fun." He pointed out that KTM's employees feel fortunate to work in an industry that they're truly passionate about, but that doesn't mean they don't work hard. Instead, KTM employees drive to improve the bikes and all of the products every day. "We're here because we love motorcycles. We love racing. We love the sport. We love everything that kind of surrounds motor- cycles," said Burleson, who has spent his entire professional career with KTM. "There's an energy and a passion around here that really takes focus on the fact that we're in the motor- cycle business. I think we all take it very seri- ously that we all have that opportunity to work for a motorcycle company and an amazing group of motorcycle companies and brands." Burleson and Hinz are not exceptions to the rule. When Burleson rolled in on a spring Mon- day, the first thing he talked about was how his motorcycle didn't trigger the stoplight near the office. The day before, he said, he was riding with his sons off-road during the day before heading out for a night street ride with his wife. The same Sunday, Hinz was at a local track, rid- ing his bike. "We're very much focused on trying to drive success and trying to do it in a way that's based on the purity of being a motorcycle company," Burleson said. Hinz explained that even in Austria, where the motorcycles are produced, the nearly 400 employees of the factory all ride, as it's a com- pany mandate. "You can't work in R&D unless you ride motorcycles, and you're passionate about it. That's what drives the motorcycles to be bet- ter because the guys that are working on them and developing them, they're out on the week- ends and doing the testing, and they want to fix the flaws; they want to see the motorcycle get better for themselves and in the end, the final consumer," he said. "But that same pas- sion lives throughout the entire organization. Everywhere you go, in each of the departments, whether it's customer service, sales, marketing, the entire company has that drive to be better and always improve." That push to improvement is evident in the way the company celebrated factory rider Ryan See KTM, Page 7 KTM CONTINUED FROM COVER KTM North America is headquartered in Murrieta, California. Ryan Dungey's AMA Supercross bike sits in KTM North America headquarters, as employees in the room behind it work to improve it for the next racing season. KTM North America has a sample showroom within its Murrieta, California, headquarters to show visiting dealers what their displays could look like. After Pierer Industrie AG, a company owned by KTM CEO Stefan Pierer, acquired Husqvarna in 2013, the brand was added to the KTM campus. In just four months, staff from 95 percent of the Husqvarna dealer network had been to the dealer training center to learn more about the bikes.