Firstly, I didn't understand the name: why H'ness? Shumi on this excellent video puts it in context. The CB350 H'ness is going up against Royal Enfield in it's home market: India. So we have Royal vs Highness - geddit? :0)
Secondly: what's the problem with the motorcycle market as a whole? Back in the olden days when I was a lad - lots of young guys & gals wanted the freedom of a bike - your own exciting & affordable motorised transport. Nowadays most younglings don't want a bike and seem to go straight to cars.
Also, in motorcycles, the name of the game is: bigger, more powerful, more expensive. Each time there is a revision to a model: take Triumph (Tiger, Bonneville) or Honda (Africa Twin) as examples - we have the manufacturers raising the game. Great if you are of a certain age / experience, not so good if you are young and/or cash strapped.
The problem is that if people don't join the motorcycling fraternity at a younger age, they are less likely to join as they get older. Look at Harley-Davidson at the moment with their plummeting market share (watch this brilliant explanation by FortNine).
Now look to India at what Royal Enfield & Honda are doing. Great looking, affordable, fun machines. If manufacturers offered these models in the West (including the UK) I confidently predict they would be snapped up. Somehow (& sadly) I can't see it happening. The manufacturers must think: why devalue the brands? They would rather sell a diminishing few at top dollar, than loads at a slim margin... That said, I do hope the CB350 H'ness will be made available in the UK, and a new generation of bikers could be welcomed to our ranks!