This item is posted both in the news and on the editiorial page as it seems to fit both categories. The RBBI comments are by Gary Polson 7 May 1997
"... evidence that our strategy to grow our active recreation business through expansion of our product families, effective marketing and acquisitions is working," said Peter N. Larson, chairman and chief executive officer.
"We remain focused on our strategy to build Brunswick's active recreation business," Larson said. "In addition to Igloo coolers and the Hoppe's line of hunting accessories acquired earlier this year, we recently announced an agrement to purchase the Mongoose brand of BMX mountain, cross and road bicycles for the independent distribution channel. In the first quarter, sales of fishing and camping equipment, bicycles and bowling equipment along with revenues from bowling center operations accounted for 32 percent of total sales, versus 26 percent a year ago, with marine product sales accounting for the balance."
"We will continue to emphasize aggressive marketing programs and innovative product introductions to increase sales in each of our business segments, and to acquire active recreation businesses to supplement internally-driven growth," Larson said. "As a result of these actions, our marine operations are expected to grow, but at a slower rate than our other business units.
Over time, marine segment sales are targeted to represent about half of total sales, compared with 68 percent in the first quarter and about 75 percent historically."
RBBI editorial comment - we interpret the above to read, "Rather than re-investing profits from our marine segment in capital equipment, marketing and R&D, we are going to "milk" our marine segment to acquire active recreation companies, resulting in growth and more stable stock prices. Engineering will focus on cost reduction of existing products in our effort to maximize profits for acquisitions. Stop new product development." Did somebody forget to tell him about Toyota entering the marine industry?
Conglomerates dominated by cyclic industries (like the boating industry) must choose:
Some general marketing areas we think the industry may have a shortfall in are segmentation of the end users, collecting data on used boat sales, and creating a model for the boat market. We hope to try to bring about some improvements in these areas.
Many companies in the industry just consider the "end user" a boater and try to lump them all together. When you look at the wide span of powerboats from small fishing boats, to ski boats, to pontoon boats, to large cruisers and high performance boats it is apparent that not all of the end users share the same personal characteristics or have the same needs. We think some work could be done in the area of segmenting the industry and getting better descriptions of the customers of the various segments. This could allow you to identify potential customers in your segments and communicate with them. Drive Companies and Boat Builders could get their inputs into new designs. Boat Dealers could sell them the products they really want.
Currently used boat sales data is not easily available. This data (size, type, and number of used boats being sold, seller (individual or dealer), purchaser information (dealer, new boater, experienced boater), etc.) needs to be collected. It will be very difficult to move onto the next step (Modeling the Boat Market) without the availability of used boat sales data. When new people come into boating what percentage of them buy a new vs. a used boat???? How does this ratio change as some of the industry driving forces change and as new boats begin to slash their prices when the market is tough??
A model of the industry that showed how the various groups interacted with one another and what the driving forces of the industry really are (low interest rates, consumer confidence, good weather, available water, good facilities, ??????) could be of great use to the industry. It could show how changes in one area would effect another. It might have to be done on a SEGMENT by SEGMENT basis. It could also show which areas of the country have the greatest potential for boating growth if only one variable was influenced. It should also show where the market is the easiest and the toughest today.
A good reference in this area is, "Recreation Economic Decisions: Comparing Benefits and Costs" by Richard G. Walsh at Colorado State University. This 600 plus page 1986 book published by Venture Publishing in State College PA shows many ways of calculating and comparing the costs of various leisure activities. It also includes quite a bit of data, but the data is now old. The calculations can be redone with today's data and some interesting insights can be gained.
How about some of the big companies in the industry subsidizing some "mom and pop" operations that help make boating more fun. Things like "boat in" hot dog stands at the lake, "boat in" movies, people to organize and manage on water activities such as boat rallies, people to train marinas in how to keep their places clean, provide "day care" facilities near the water, provide aerobic classes on a floating dock, teach swimming lessons, people to assist rangers in very busy times, teach ski lessons, floating pop stand, drive in theater for families to go to at night, provide religious services on or near the water, etc. Many of these operations cannot financially sustain themselves. With a little help from the big manufacturers they could make boating much more fun, which would result in many more boats being sold. One family might actually be able to provide several of the activities.