An in-depth exclusive with Jim Lane, Part Two

Boating Industry: You mention in the announcement about your marketing campaign that you’ve helped dealers secure floorplan financing. Can you explain how you’ve been able to do that?

Jim Lane: Obviously, we don’t have a magic solution to provide floorplan to the industry. But our goal has been to provide the reduction of inventory, which I believe will encourage the existing people to stay in and encourage new people to come into the market to provide floorplanning. We also created this document for a dealer to present to his local bank so that the banker could feel comfortable that if he were financing products built by this company, it has the financial security to support the dealer.

We had plenty of people financing dealers. Over time, we’ll see other people get back into the business. We’ve been talking to some of those people. I feel encouraged by what I hear, but always it comes back to the amount of aged inventory in the field.

Boating Industry: What is the purpose of this campaign and how are you rolling it out? Are you looking to grow your dealer network?

Jim Lane: At one of our sales meetings in the winter, we started talking about what we could offer a dealer that perhaps our competitors couldn’t. Why would a dealer want to buy our product vs. someone else’s? We made a list of all the things that made us a good company. During this time period, there are going to be opportunities to secure dealers in many markets. We said: it’s not only good to have a list, but maybe we could also explain the benefit of each of those items. It would reinforce our current dealers’ thoughts about ourselves and encourage dealers with other companies that didn’t have the same feeling to call us perhaps. That’s already happening this year as dealers become concerned about the financial health of their boat builder partners.

Once we got started, we collaborated with our executive committee and marketing team and began to create this book. We mailed it out to our Chaparral dealers well in advance of the press release over a month ago. Then, a little bit later once we had adjusted it for them, we sent it to Robalo dealers. Once it was out, we started to get comments from dealers on how impressed they were. That’s how it got started. It was a work of all the collective employees of our company – sales, marketing and administration.

Boating Industry: Your new marketing campaign will focus in part on your commitment to new product development. Does the inventory glut among dealers that we’ve been hearing so much about and the difficulty many dealers are having with floorplan financing temper the positive impact new products can have, at least in the short term?

Jim Lane: It would be an easy decision for us to say, during this downturn, we’ll save the money on new product development until the market turns. But we try to operate the company from a future perspective, not a today perspective. We’re keeping the pedal on the metal. We’ll introduce five new models for 2010. Five to seven new models per year is our goal. That’s what creates excitement at the dealership. And it ultimately might encourage the customer to buy an older model because of the price differentiation. We would be foolish not to use our financial resources to develop new product.

Boating Industry: What gives you the confidence that your dealers will be able to finance the purchase of this new product?

Jim Lane: All dealers need to have new product. I know finance will be difficult. If I could tell [the floorplan financing providers] where inventory would be at the beginning of the new model year, they would agree to finance.

Right now, our field inventory is down by 50 percent, compared to May a year ago. Our goal by the end of the selling season is to have it down another 25 percent. We have budgeted for an inventory reduction program to accomplish that. It has been very expensive. It helped create the first loss the company has experienced since our existence. If I look at what we might be doing on a current basis, any loss is being heavily influenced by the assistance we’re giving to our dealers to move inventory.

Boating Industry: To what extent is your campaign intended to target consumers vs. the trade?

Jim Lane: The initial intent was for it to be a trade campaign. Our first step is to get this message out to our dealers. These are all things we’ve told them before. But sometimes it takes the right kind of marketing to get them to sit down and read it. We’re also targeting those interested in becoming dealers.

As this project has gotten underway, we’ve elected to put it on our retail Web site. We’re in the process of improving the positioning of it so it’s more prominent.

Boating Industry: Do you think things like Genmar’s filing for Chapter 11 impact consumer behavior? And to what extent is this campaign a reaction to Genmar’s bankruptcy?

Jim Lane: There’s general consumer confidence in what’s happening in the world today. And then there’s consumer confidence when they’re ready to buy a boat. We want to support them in the future. All of us have discussed whether we would buy a GM or a Chrysler, how comfortable are we doing business with such a company. That’s when we decided trying to expand the campaign into the consumer area might be preferable. While we put the book up on the Web site, we’re trying to find a better way to send the customer those messages.

At the dealer level, word of mouth is very strong. When a customer comes into our dealership now, one of the first things they tell that customer: you should buy a Chaparral and let me tell you why.

The Genmar bankruptcy is not public news like GM might be, but when you get down to the grassroots in the marine business, the Internet is a very, very strong piece. Ultimately, the Internet will make people more aware of what’s happening. If it doesn’t do a good job, dealers will. Dealers always want to have competitive information at their fingertips. Dealers read trade publications. I’m sure that info is being carried to consumers.

Boating Industry: You mention in the campaign that your product line can meet all the needs of today’s boating consumer. What percentage of your dealers carries Chaparral exclusively? And are you hoping to grow that percentage?

Jim Lane: It’s always the goal of every boat company to be exclusive. If you look at our product line, we feel like we can meet the needs of everyone that wants to buy a boat other than specialty products. When a dealer wants to carry that type of product, generally we’re very understanding. Our goal is to not have a dealer carrying a competing product. Thirty to 35 percent of our dealers carry our product alone from a competitive standpoint.

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