Heart Attack

Shoot for the heart of the watermelon.

That’s probably not a business strategy discussed during MBA coursework at Harvard. But it’s a phrase Steve Mason, product development manager for Tracker Marine Group, likes to use to describe his company’s philosophy when it comes to growth. And it aptly sums up a strategy that has made TMG, based in Springfield, Mo., one of the fastest growing boat manufacturers in the United States.

“The heart of the watermelon is the sweetest part of the watermelon to eat, it’s the most ripe,” Mason says. “So when we talk about shooting for the heart, we’re talking about the sweet spot of the marketplace, where most of the boats are going to be sold.”

TMG has had success doing just that. It is at, or near, the top in market share in many of the regions of the country where its boats are offered. However, the top spot still eludes Tracker in one very important market.

Because, for companies that build aluminum fishing boats, the heart of the watermelon is Minnesota. And the Tracker Marine Group is working hard to take a big bite.

Hometown boys
The Land of 10,000 Lakes holds the top ranking in aluminum boat registrations by a significant margin.

Of the top-10 states — ranked according to retail registration information provided by Statistical Surveys, Inc. — Minnesota has a 19.4-percent market share, while neighboring Wisconsin, ranked second, holds a 15.9-percent share.

Minnesota is also home to three of the five best-selling aluminum brands in the region — Lund, based in New York Mills; Crestliner, based in Little Falls and Alumacraft, based in St. Peter. Mason calls them the “hometown boys.”

As might be expected, those brands have a loyal customer base and a significant tradition in the state, which Mason says is Tracker’s biggest challenge when it comes to taking them on.

“Granddad had a Lund, and dad had a Lund and their uncle has a Lund, so it must be the thing to have,” he says. “We have a lot of talking to do to say, ‘Lund builds a great boat, they build a wonderful boat, but our boat is better.’”

It’s not as if Tracker is doing badly in the rest of the country. Registration data provided by Info-Link for Boating Industry’s 2004 Market Data Book shows Tracker Marine to be the U.S. market share leader, using 2003 results, for aluminum fishing boats from 16 feet through 25 feet plus.

But in the upper Midwest, more recent Info-Link numbers show Tracker to be second in market share in the group of states that includes Minnesota, Wisconsin, Michigan, Ohio, Illinois, Indiana and the Dakotas.

Lund was No. 1 in the region with a 27-percent share of the aluminum fishing boat market, from 15 feet through 24 feet, in 2004 and a 23-percent share of that market in 2005. Tracker Marine is second, with a 15-percent share each year.

And the company knows that for its aluminum fishing boat sales to fully realize their potential, it must remain active in the Minnesota market and capture more of the share there.

“I have a sign that says, ‘Fish where the fish are,’ and it’s a constant reminder,” says Maurice Bowen, TMG’s vice president of marketing & development. “The Minnesota aluminum market is the largest in the United States and we believed the people there would respond very favorably to the products that we offer. We’re having success with that.

“People haven’t been as familiar with our brand up there as in other parts of the country, but we’re finding that we are having a remarkable attraction to people up there.”

Although Tracker was only the fourth-best-selling brand in 1997 according to Statistical Surveys, registrations in 2004 show that the company now sits in second place and has come close to doubling its market share over that span.

“When you get into a market where you aren’t the dominant player, you can look at it two ways,” Bowen says. “It’s going to be very difficult for us, or there are a lot of people out there that may want to buy our boats.”

Price points
Bowen cites several reasons for the inroads Tracker has made in Minnesota. The most obvious is that the company is more focused on the area now than it has been in the past, and has taken more steps to get more product into that market than it has before.

But one of the very astute moves Tracker has made has been to offer a wider variety of economical fishing boats priced with the idea that their affordability would cast a wider net for consumers. That strategy has worked in the state, at least in the eyes of Minnesota’s two largest boat dealerships.

Link Recreational — which is based in Minong, Wis., but has five locations in Minnesota — began selling the Tracker brand last year. Owner and company president Bob Steinway says the price difference between his Tracker lines and comparable boats from other manufacturers is significant. He says Link is predicting strong growth this year with a large percentage of that attributable to the Tracker boats he sells.

Luke Kujawa, vice president of Crystal-Pierz Marine — the state’s largest dealership, which sells Lund and Crestliner at its 10 Minnesota locations — believes that Tracker has found a successful niche with the price points it has established for some of its boats.

“They’re at the price where Lund and Crestliner used to be,” says Kujawa. “Unless they have some competition on price points, the entry-level buyer is always going to be there.”

Bowen says Tracker knows that the three main reasons people buy its boats are the layout and configuration, price/value relationship, and styling, especially in runabouts.

“People buy not just for the price alone, it’s what they get for their money,” Bowen says.

Tracker also feels it has another advantage over its competitors when it comes to pricing. The company uses what it calls “No Haggle, No Hassle Pricing” similar to the system used in automobile sales at Saturn. Tracker has a no-negotiation, nationally published value price policy that remains consistent from one dealership to another, and says this allows it to set its retail prices significantly below other brands because competitors set prices with the expectation of negotiation while its prices are set at “after negotiation” levels.

The company has used that pricing method throughout its history and has had success with it, according to Bowen.

“I think people enjoy the straightforward process,” he says. “We have learned over the years that it’s a very favorable thing.”

Targeting the market
One of the reasons Steinway is so optimistic about the business Tracker will help generate this year for Link Recreational is that TMG has been partnering with his dealership to design boats with the kind of features that will be attractive to buyers in the Upper Midwest.

Steinway said Link has helped design four Tracker models his dealership will sell this year, including a 16-foot Pro Guide and a 17-foot Pro Guide.

“That’s why my sales are up,” he says. “I’m selling the hell out of 17-foot boats, where I was weak last year. Tracker is passionate about working with dealers. In my opinion, they are probably the most aggressive boat builder out there right now.”

Tracker’s Mason says smaller, high-sided boats like the Pro Guides are ideal for customers in Minnesota, who fish on colder water in colder weather and appreciate the safety that design provides, as well as the portability that allows the boats to be trailered from lake to lake.

“We’re after the Northern market, it’s more of a focal point than it has been in the past,” he says. “We dominate a lot of the markets that we are in, but that’s one market that we don’t. But we’re making huge inroads there, we’ve got the No. 1 selling 16-foot boat up there.”

A depth finder and trolling motor also come as standard equipment on all but two of the fishing boats Tracker manufactures, according to Mason. He cites the all-aluminum transoms that Tracker features, and says that using two pieces of metal to build the hull — unlike some competitors, who either have a rivet or have three-piece hulls with two sides and a bottom — gives his company an edge.

Of course, not everyone is as impressed as Mason with the fishing boats his company is selling in Minnesota. Kujawa believes customers who buy a Tracker aren’t getting the same quality they would in a comparable boat from Lund or Crestliner and that, while many entry-level buyers may be attracted initially, they won’t be back.

“I don’t think they’re going to be getting a lot of the second- and third-time buyers,” Kujawa says.

Attention pays
But Bowen believes feedback from the customer is exactly what sets Tracker apart. The company uses a Voice of the Customer system to generate response from thousands of buyers, and also takes advantage of customer satisfaction index numbers such as J.D. Power surveys.

“It’s the same thing everyone else has access to,” Bowen says. “Anybody can listen, we just do a better job. We took the view that we really were interested in the best way of listening. We focus on listening to the customers and our dealers too. We listen to our dealers on an ongoing basis.”

With Brunswick’s purchase of Lund, Crestliner and Lowe two years ago, some dealers were understandably worried about how their sales might be impacted. Many assumed that Tracker would be able to improve its position in relation to those brands, were the sale to cause any instability.

However, given the fact that Tracker’s market share remained unchanged in the key 15 to 24 foot segment from 2004 to 2005, according to Info-Link, that appears not to have happened, at least yet — for whatever reason.

Only time will tell how that battle ultimately plays out. But Tracker has come to Minnesota to stay and is ready for the fight. The boys from the Show-Me State have come to take on the hometown boys and everyone knows what’s at stake.

As Mason says, “Most of us are just old country boys and the heart of the watermelon is the best tasting part.”