Voices

THE GHOST OF BUSINESS PAST

By Mike Keller,
President, Keller RV and Marine

In the story by Charles Dickens, "A Christmas Carrol", the fictional character Ebenezer Scrooge is given a second chance to change his outlook on life by the ghost of Christmas future. This fictional trip through time allows Scrooge the luxury of seeing what the future looks like with his current approach to life. It also allows him to see what hazards will befall him if he does not radically change his strategy.

For companies like mine that have chosen to be in both the marine and RV industries, I think that we have been given that same advantage. We have walked down the seasonal recreational industry path before. The marine industry has matured at a faster rate than the RV industry. I believe the reason for this is the average age of the consumer in the marine industry is approximately 10 years lower than the average age of the RV consumer. Therefore the marine industry has been serving the long awaited "RV Baby Boomer" for nearly 10 years. You know this customer from all the demographic information you have read about them. They buy value, not price. They shop on convenience, not price. They buy into an overall marketing experience, not just a purchase. They expect professional and courteous treatment when purchasing or shopping. They are much better informed than the previous generation and will expect the retailer to be able to help them.

The above is far from a collectively exhaustive list of characteristics of Baby Boomer consumer behavior. However, I believe that they are the reason the marine dealer has lost ground to the marine "category killer". In geographic regions which my company serves, the Northeast and Mid-Atlantic, seven out of ten marine consumers buy their aftermarket accessories from some one other than a marine dealer. Marine distributors and dealers have implemented many programs to try to bring these customers back to their stores. These programs have met with only limited success. The reason is, the consumer has been trained that the dealer is not the place to buy accessories.

The reasons the dealer lost the accessory market to the category killer are many, but I will name just the ones I believe to be the most crucial. First was the dealer's belief that because in the past they could get full markup, "suggested list," the future would not have to be any different. As the number of accessory competitors increased, they did not research the retail price points of their competitors. The only time they realized they were not competitive was when a customer told them so. The problem with this kind of price research is that for every customer that tells the dealer his price is high, there are ten that just don't buy and never explain why. This lack of competitive pricing sent a message to the consumer that the marine dealer was out to rip them off. This obviously was not the case, however, never forget consumer perception is reality. Another downfall of the marine market accessory dealer was lack of functional pricing discounts. The vendors failed to look at the long-term ramifications of selling the category killers at extremely low prices. This allowed the category killers to grow at the expense of the dealer and left the accessory vendors with little or no chance to control the field price of their products. Therefore, in the marine market, the category killers set the retail, not the manufacturers. Store hours also played a part in losing accessory sales for marine dealers. For years many dealers were open from 8 to 5 on weekdays, 8 to noon on Saturday and closed on Sunday. Meanwhile their category killer competitors were open from 8 to 8 every day but Sunday. These same stores had catalogs and advertising circulars with 800 phone numbers and 24-hour, 7-day-a-week operators to take orders. Bottom line, the category killer was much easier to buy from than the dealer.

These category killers are not just in the marine industry. They are in every industry. Some examples of these in other industries are Toys -R- Us in the toy industry, Home Depot, in the building supply industry, and West Marine, in the marine industry. Some industries have many category killers and others have few or none. In my opinion, there are three things that determine the number of category killers in an industry. The first is the level of service that the consumer receives from the dealer. If the dealer has a great relationship with the consumer there will be no room for a category killer to enter the market and lure the customer away. However, what makes a great relationship between a consumer and a dealer is providing value. This means that the product the dealer is selling has to be worth the money he is asking. Never forget the consumer determines value, not the dealer. If the consumer perceives value, then the dealer has provided value. Another important point here is that sometimes there is little or no relationship between dealer effort and consumer perceived value. The dealer cannot confuse activity with accomplishment. Just because the dealer is working hard for the customer does not assure consumer satisfaction.

The second factor that will help to keep the category killers at bay is the dealer's ability to package accessories on the units at point of sale. In the marine industry when the factories began packaging boats, motors and trailers, the dealers perceived that the aftermarket was drying up for them. After all, they used to get paid for rigging the motors on the boats and preparing the boat trailers for the boat. When packaging began, they found that since there was little or no dealer prep required, they could deliver more units in the same amount of time. This made them focus more on selling units and less focused on selling accessories. The main reason was that the unit sales force knew that any add on accessory would take shop time and therefore slow down the delivery process. The category killer was extremely happy to take the time to sell the accessory and in most cases, let consumers install the product themselves.

Currently in the RV industry we are seeing the same trend with the factory installed awnings and air conditioners. The dealership sales force perceives the unit to already have all the bells and whistles the consumer could possibly need. However, the RV industry category killer has seen double digit growth in this same period by selling accessories for new units. This tells me that the consumer can obviously find more bells and whistles at the category killer than at the dealer. Companies like Carefree of Colorado have supported only the dealer, and continue to find more products to enhance the RV lifestyle and redefine "loaded" to the consumer. Some dealers still refuse to stock these products. These same dealers have seen their accessory sales decline and their profit on units go the same direction. This accessory myopia by the dealer is making the RV industry more attractive to the current category killer and to any future ones lying in wait.

The third factor that determines the number of category killers in an industry is the total size of the market. Obviously the larger the market the more attractive it becomes. The marine industry has four large category killers. The RV industry currently has only one of any consequence. The RV industry is larger than the marine industry and logic would tell you that the market is ready for at least two or three more.

The only way the RV dealer can hope to keep his current market share for accessories is to learn from the mistakes of other industries. He needs to take control of his destiny by providing value, professional and courteous treatment, shopping convenience, and a knowledgeable sales staff. Bottom line the RV dealer needs to sell the RV experience and lifestyle, not just an RV.

RVN