A Tale of Two Dealers

Picture this… in a major recession two dealers in a prime boating market independently pondered how to deal with it when the bottom started to fall out of the economy. Dealer A said, “A recession is hitting me hard. Business is getting to be really bad. So I had better pull back almost all of my advertising and promotion and cut other expenses wherever I can.” He did just that and sure enough, his prophecy was spot on… business was really bad.

However, Dealer B in the same market thought, “We are being hit by a big recession, so I need to cut the expenses I can without hurting business and sending customers the wrong signal. And I really need to continue promoting but spend my ad dollars wisely to get the most bang for the buck and keep as much business as I can until it turns around.” And sure enough, he kept as much business as possible…much of it business that used to go to Dealer A who pulled in his horns too far.

As an industry, how have we dealt with this recession so far? It appears partly by following Dealer A’s strategy and cutting the Grow Boating/Discover Boating programs. Huh?? If ever programs like this were needed, it has been since this recession started. I just received a recent MRAA bulletin that made the following announcement regarding these programs:

“MRAA welcomed the news the Grow Boating Board of Directors had been reconvened and was taking action to re-launch the program. MRAA was disappointed with the news that full funding was not being restored to Grow Boating immediately. With only 15% of the engine assessment going to fund the ongoing Discover Boating Internet marketing and public relations efforts not much can change in the media marketing effort.”

Only 15% to fund Discover Boating? Huh? It sure looks like the “Dealer A Syndrome.”

So here we are, struggling to come out of a major recession, the worst downturn since the Great Depression, and this is all the industry can do?

On top of that, we have the big oil spill in the Gulf that is putting a big hit on dealers in Louisiana, Alabama and Mississippi… and soon to some dealers in Florida. And beyond Florida, who knows where that oil might end up. Ed Lofgren, owner of 3A Marine, Hingham, MA and Chairman of the MRAA, expressed his concerns about the oil spill when he e-mailed me this comment, “The economic impact of the Gulf Oil Spill could potentially ruin the Gulf economy and perhaps even throw the national economy into another tailspin or at least extend the recession we are trying to recover from.” He added, “And what happens to the East Coast recreational marine industry if the oil from this spill gets into the Gulf Stream? One model projects oil debris landing in Maine.”

To combat this recession and the catastrophic oil spill, I think the boating industry needs to get on the stick and promote the Grow Boating/Discover Boating programs with gusto – not with a scaled-down, lackluster effort. What else can the industry do? It can help dealers to survive this current season so we can have healthy retailers when the recession finally climbs out of the abyss. How? Boat builders, who have also been struggling for survival, need to find ways to help dealers with boat inventory. Offering a few boats on consignment and/or floorplan help in some manner would be a great start. And certainly introducing 2011 models in the fall like some builders are doing can also be a big help to dealers.

This industry should not follow the pattern of “Dealer A” in the example above. Let’s be like “Dealer B” and kick start this business with more well planned promotion and additional help for dealers.

About Ben H. Sherwood

Ben H. Sherwood is a marine industry veteran and a marketing consultant who operates Sherwood Marine Marketing in Pleasant Prairie, Wis. For more info, click About on the main menu.

4 thoughts on “A Tale of Two Dealers

  1. Ben — Good thoughts! The real challenge in a prolonged recession is to figure what is fat and what is muscle when you start cutting. The financially sound dealer can emphasize his promotion budget to achieve much greater market share. Unfortunately, some dealers have reached the point where they can’t pay for any but absolutely and immediately necessary costs.

    Finding ways to swap high cost advertising for low cost promotion is another challenge of the times. Doing this successfully keeps the dealer in the winner category as far as his customers are concerned. If he can hold on, he gains some market share due to the loss of his competitors.

  2. Hey Ben–

    I am going to take issue with you. I think the Grow Boating approach has clearly been the Dealer B approach!! We continued promoting, and spending our dollars wisely to get the most bang for the buck.

    For the past eighteen months 85% of the GB assessments were re-directed to manufacturers, most of whom spent that and much more to help dealers sell boats during the depths of the recession. The balance of the dollars were deployed effectively online promoting the boating lifestyle.

    With 8% of the dollars, we achieved > 25% of the results in terms of visits to http://www.discoverboating.com, prospects generated, “Get Started in Boating” DVDs requested and sent, and PR impressions. No, we are not on TV at the moment, but we continue to aggressively promote the boating lifestyle and participation in boating through our public relations efforts and online marketing efforts and social media.

    We just recently launched a Facebook game, Making Waves. Check it out at http://apps.facebook.com/making-waves/ and send it to all your friends to. Since the launch in the past two weeks, the game has generated:
    • 30 million impressions from the online media buy
    • More than 10,000 minutes of consumer engagement with the game
    • 4,085 Sweepstakes leads!
    • 1730 DVD requests (32 percent of prospects are asking for DVDs!)
    • 1846 Discover Boating newsletter requests (34 percent of all prospects).

    We continue to have an aggressive effort to promote boating participatioin and the boating lifestyle. And, we are working a new strategy and plan to expand these efforts further as full funding returns in January.

  3. Thom:
    I Knew you would respond to this article. So now I have to take issue with the issue you took with me. (You had to know I would.) What I hear from dealers is that they feel boat builders pretty much took over the Grow Boating Board and then redirected 85% of the G.B. monies to the manufacturers. Then, I am told, after complaints from MRAA members, the Board (Boat builders?), decided to just not collect the 85% to shut the dealers up. How is that working out for you?

    A lot of dealers are pretty upset over the way this has been handled. To quote one well known dealer, “When the hell will this industry learn that we are all in this together? If I ran my dealership like this, I would be out of business before too long.” He added, “It is part of what’s wrong with boat sales, and our Industry being in the doldrums. We just can’t seem to get together and work together as an industry, and it is just plain stupid.”

    As I understand it, the Grow Boating is an Industry program set up to be run by an “all industry” Grow Boating Board. But is it??

  4. I find myself in agreement with Ben and Thom. The results the Discover Boating campaign achieved before and after the re-direction are nothing short of amazing. Arguments can be made pro and con weather the marketing reduction was a wise move. What should be crystal clear and supported by all is we need to move this program forward quickly and as effectively as we have in the past. If we as an industry don’t promote boating who will?

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