Marketing Initiative Gains Momentum

The talk about launching an industry-financed advertising
campaign to encourage more people to take up boating has been around for more than 20 years. But the talk has equated to little action.
The idea is gaining momentum, however, because many in the boating industry have been spurred on by the success of the recreational vehicle industry’s Go RVing manufacturer-financed advertising campaign.
The taxpayer-financed Recreational Boating and Fishing Foundation’s (RBFF) advertising campaign also has had a positive impact on the boating market, which has led many to believe that a bigger-budget ad campaign focused exclusively on boating — instead of fishing and boating — is what is needed to get the industry back on the path toward growth.
Coordinated effort
In fact, there could be gatherings of industry executives this fall, which some hope could lead to some coordinated, industry-wide effort to promote the boating lifestyle and bring new people into boating.
If the meetings occur, it is possible that most of the attention would be focused on how to collect the money to pay for the ad campaign, since support for some sort of ad campaign appears to be widespread.
In the RV industry, the Recreation Vehicle Industry Association (RVIA), which represents RV manufacturers and their suppliers, collects money for the Go RVing national advertising campaign in the form of a surcharge on every unit the manufacturers build.
The possibility of the boating industry following the RV industry’s lead got a boost late last year when Brunswick Corp. reversed its stance and agreed to support such an effort.
However, Genmar Holdings Inc., the No. 1 producer when the fiberglass and aluminum boat categories are combined, opposes such a program, according to Irwin Jacobs, chairman.
“I wouldn’t waste my time or money on it,” Jacobs said during an interview with Boating Industry. “We [the boating industry] have too many problems that are fundamental.”
But Transamerica Distribution Finance Senior Vice President Richard Strickler, who hopes to spearhead the meetings this fall, believes something should be done. He wrote the following to several industry executives this summer: “The boating industry has experienced a loss in its [recreational products industry] market share over the past several years. Unit shipments have fallen off at a steady rate, with fewer and fewer new boats being shipped and sold at retail. The marine industry’s piece of the [leisure time products industry] pie continues to shrink, while those of the RV and other competitive industries continue to grow.”
Transamerica, a major source of boat dealer inventory finance, assembled a dealer council about 10 years ago, and Strickler wrote that during its most recent meeting, “The council members’ biggest concern was this continual loss of market share. The question all of us in the marine industry now face is: What can we do to stop the bleeding?”
Strickler told Boating Industry that he was working during the summer with National Marine Manufacturers Association President Thom Dammrich, Marine Retailers Association of America (MRAA) President Phil Keeter, boat builders, dealers, state and national organizations and buying groups to schedule a brainstorming session to formulate a course of action.
“I’ve talked to most major OEMs, dealers, trade organizations, and everyone seems to be willing to do something,” Strickler said. “I’m not sure we need an [RV industry-type] ad campaign, but we need to get people talking.”
Strickler asked that interested persons in the industry share their thoughts with him before September 1 to help develop an agenda for the gathering. Strickler also interviewed “outreach facilitators” who will come from outside the boating industry, but would help direct the discussion during the meeting tentatively scheduled for the fall.
Although there is a significant amount of support for an ad campaign similar to the RV industry’s, Dammrich said he is worried it could end up being a waste of money.
And even the most ardent supporters of the Go RVing campaign within that industry say it is impossible to quantify how much the national advertising has contributed to the RV industry’s strong performance since the terrorist attacks on September 11, 2001. The desire to spend leisure time closer to home and with loved ones, along with demographic trends have all conspired in the RV industry’s favor, according to people involved in that business.
But the Go RVing ad campaign, which is funded by RV manufacturers paying $44 to $66 per unit they build, has helped, they believe, and data gathered by the RVIA demonstrates that industry’s resilience despite the economic uncertainties of the last several months.
Because it is assumed such surcharges are passed on to the consumer anyway, much of the discussion now taking place is over who should collect the revenue to pay for a boating industry ad campaign? If, for example, the boat builders don’t want to add a surcharge that is collected by the NMMA on to their wholesale prices, then maybe the dealers or engine manufacturers would agree to do so, according to some in the industry.
Heading in different directions
A review of association data reveals the different directions in which the RV and boating industries are heading.
The RV industry’s all-time record number of factory-to-dealer deliveries occurred in 1978 when the industry was young and new RVs faced less competition from used RVs than is the case now. But the RV industry’s second-best year in terms of wholesale deliveries occurred in 1999, when 321,200 units in all categories were shipped to dealers, according to the RVIA.
After sharp declines during 2000 and 2001, the RV industry rebounded 21 percent in 2002, versus 2001, to 311,000 units shipped.
Although Dr. Richard Curtin of the University of Michigan’s Consumer Research Center is forecasting a 2-percent decline in new RV unit shipments this year, that would still make 2003 the third-best year for the RV industry, in terms of unit volume, since 1978.
RVs also have become bigger, more luxurious and tailored to specific needs of certain market segments. This has been reflected in higher retail prices that consumers are willing to pay. As a result, the RV industry set an all-time record of nearly $11.0 billion in retail sales during 2002, according to the RVIA.
Meanwhile, since 1980, the peak sales years for new boats, in terms of unit volume, were 1987 and 1988, when 724,700 and 725,400 units were sold, respectively, the NMMA reports.
The 1987 and 1988 totals do not include personal watercraft (PWCs), which the NMMA did not begin to track until 1991, or kayaks, which the NMMA did not begin to include until 2001.
But in 2001 and 2002, total boat sales, excluding kayaks, jet boats and PWCs, totaled 438,100 and 420,300 units, respectively.
During the first half of this year, there were indications that retail sales of inboard, sterndrive and outboard engine-powered boats would be down again this year, in terms of unit volume, although sales revenue apparently will increase again this year, according to the NMMA.
An image problem?
Dammrich, the NMMA president, agrees that, “we need to do something to promote boating and the boating lifestyle,” but he is not convinced that an industry-financed ad campaign will achieve the growth objective.
“The RV industry identified their problem and then developed a program to address it,” Dammrich said. Early in the 1990s, the RV industry concluded, according to Dammrich, it had an image problem: That the public viewed RVing as an activity for older people. Consequently, the RV industry felt a need to change its image or else it would miss the opportunity to bring millions of Baby Boom Generation members into “the RV lifestyle” as they were about to enter their prime RV-buying years.
The result was the RV industry’s $15-million-a-year national advertising campaign, which has the “Pursue Your Passions” theme intended to attract younger buyers.
However, Dammrich said, “Boating is not perceived as an activity for old people. Some people say boating isn’t growing because we provide bad service. Some say it’s not growing because there are not enough marinas. I think we’ll find it’s a very complex issue that will require more than a simple solution.”
The notion that demographic trends now favor RVing more than boating is “feasible,” Dammrich added.
But Larry Russo, principal of Russo Marine, Medford, Mass., and a member of the RBFF board, does not agree with the demographics argument.
“I’m 54 years old and some Boomers [born in 1964] are now 39,” Russo said. “Boating makes sense to me as a grandfather, as a family man.”
The RBFF’s smaller Water Works Wonders/Take Me Fishing ad campaign has “had an immeasurably [positive] impact on boating,” Russo believes. “It’s brought attention to my dealership based upon those messages.”
Current efforts working?
The NMMA’s Discover Boating promotions efforts “are OK, but it hasn’t had much impact,” according to Russo. “Our industry is stuck marketing to existing boaters; we’re not out there at non-marine venues. Discover Boating tags along at boat shows, they need to be at airports, at state fairs.”
Meanwhile, the non-profit RBFF, which also includes Dammrich and Yamaha Marine Group President Phil Dyskow on its board, was provided $36 million under the Sportfishing and Boating Safety Act of 1998 to increase participation in recreational fishing and boating.
The funding for the RBFF needs to be re-authorized this year and although “anything can happen as the legislation winds its way through Congress, right now, things look pretty good,” said Bruce Matthews, president and CEO of the RBFF.
The RBFF’s funding this year was $10 million, the largest of the first five years of its existence. That compares with $18 million a year for the Go RVing campaign, through the end of 2005, of which around $13 million will be spent per year on actual broadcast and network TV, print, Internet and direct response ads.
The legislation working its way through Congress this summer would provide the RBFF with about a $10 million-a-year annual budget, Matthews said. About $3.3 million will be spent this year on direct media buys, and a total of around $6.5 million will be spent on public relations and advertising, he added.
The RBFF was founded five years ago for the same reason that many boating industry executives believe there is a need for an industry-funded national ad campaign, because “after years of steady growth, recreational boating and fishing participation rates have not kept up with the nation’s population growth and recent economic prosperity — with some states experiencing actual declines in participation,” according to the RBFF’s Web site, www.rbff.org.
A federal excise tax on sport fishing equipment, including rods, reels, creels, lures, flies and artificial baits, is the source of funding for the RBFF.
The Go RVing and RBFF ad campaigns rely on the same ad agency for creative work, The Richards Group of Dallas, Matthews added.
Brunswick on board
Meanwhile, Brunswick Boat Group President Dustan McCoy revealed during the MRAA Annual Meeting last November that Brunswick, manufacturer of Sea Ray, Bayliner and several other boat brands, would support an industry-financed ad campaign.
“I’ve been here [Brunswick] only two years, and we were a part of the problem,” McCoy said, referring to former Brunswick Chairman Peter Larson’s opposition to such a program. “But because it’s worked so well for the RV industry, without commenting on a specific plan, my judgment is we all ought to work together to do something.”
Although Brunswick has nearly $4 billion in annual sales revenue, McCoy does not believe the company is big enough to fund a national ad campaign on its own that would be large enough to be effective.
Instead, Brunswick is focusing on improving product quality and technology, offering dealer inventory financing, dealer management systems, electronics and parts and accessories distribution.
McCoy said the NMMA and MRAA should lead the development of some sort of cooperative effort and that Brunswick would support it, as long as it is supported by the companies that produce at least 75 percent of new boats built each year.
During the first quarter of this year, Brunswick accounted for 11 percent of all aluminum and fiberglass boats 14 feet and longer that were sold retail in the 42 states that account for 93 percent of the U.S. boating market, according to Statistical Surveys Inc., an independent market research firm.
Retailers join in
The largest boat dealership company, MarineMax Inc., also does not believe it is large enough to fund an effective national ad campaign on its own. Consequently, MarineMax executives said they also would support a cooperative, industrywide effort, as would West Marine Inc., the largest aftermarket accessories retailer.
“We certainly support an industry initiative to draw more people into boating,” said Mike McLamb, chief financial officer of MarineMax, the operator of 62 boat dealership locations which had $540 million in sales revenue during its fiscal year 2002, which ended last September 30.
“The manufacturers will need to organize it,” McLamb continued. “If the dealers need to pay, we’ll accept that as long as it’s reasonable.
“The RV industry [program] is a pretty decent model,” McLamb added. “The RBFF is a good thing, but we need to band together.”
At West Marine, operator of 334 stores in 38 states, chief operating officer Rich Everett said, “We have a fragmented industry which does not cooperate or help each other to promote boating. That’s not healthy for the industry, whether you’re a small independent, a vendor, a boat manufacturer or us.
“We are working with several national organizations to combine efforts and together show the world the ‘enjoyment’ factor boating has to offer.
West Marine has its own national advertising campaign that includes cable TV, print, direct response and an internet component. Everett declined to reveal West Marine’s ad budget and he added, “Our best advertising remains word-of-mouth.”
Additionally, KeyBank USA, a major source of loans to consumers buying boats, is “more than willing” to finance a surcharge the industry might agree to levy in order to raise funds for an industrywide campaign to promote the boating lifestyle, said John Relyea, vice president and director of e-business for KeyBank, a unit of Cleveland-based banking and financial services firm KeyCorp.
But Genmar, the No. 1 boat builder, accounting for 19 percent of all aluminum and fiberglass boats longer than 14 feet retailed in the 42 states during the first quarter, is employing other tactics to grow boating, Jacobs said. He has invested in the Wal-Mart FLW bass tournament series and sponsors retail boat shows at Cabela’s sporting goods superstores locations in an effort in introduce more non-boaters to the sport.
Jacobs also began jawboning other boat builders this summer to push the start of the model year back to September 1, so consumers buying boats during winter season retail shows won’t need to worry about it being already one model year old when they first put it in the water the following spring or summer.
“Irwin likes to do his own program, he’s never idle,” said Russo, the Boston area dealer. “But there’s something about growing boating that can only happen with full participation by boat manufacturers.”
If the boat builders will not agree to a surcharge, then Russo believes it would make sense for the engine manufacturers to collect it, because there are fewer engine suppliers than boat dealers.
Keeter, the MRAA president, agrees, “Our Plan B would be a surcharge on engines. Plan C or D would be for the dealers to collect it. But for 5,000 to 6,000 dealers to collect it, that would be tough for us [the MRAA] to pull off.”
However, Brunswick’s McCoy, whose sister company, Mercury Marine, is the leading outboard engine supplier, would not support a surcharge on engines. A surcharge on engines “would single out one segment of the industry,” he said.