MRAA Shirt Sleeve Sessions at IMTEC97

MRAA Shirt Sleeve Sessions
at IMTEC 1997

The MRAA (Marine Retailers Association of America held the "Shirt Sleeve" sessions to report the status of several industry wide committees working on industry issues. I found them very interesting. Topics included: The Buying Process, The Delivery Process, Maintenance and Warranty, Education and Training, Manufacturer - Dealer Relations, and Pre-Owned Boats. I think it is great that those involved in the industry are working together on these important issues. About 170 people have been involved in the various committees. It is sad that it has taken this long to come about.

For those wishing copies of the reports or more information, the NMMA will supply it to its members. I will address a few of the areas I found most interesting.

Jeff Napier, NMMA president, explained how this had all came about. They had commissioned a study a 3 years ago, the Broh Study, that identified 7 or 8 areas customers had problems in doing business with the industry or were industry problems that needed addressed before the industry could expand. Now, a new study is doing a "value analysis" in this area. Message Factors is the company running the new study. They surveyed 50,000 U.S. families (part of a larger group of 200,00 families used by many survey groups) for basic demographic data and their boating experiences. They have just completed the value chain analysis. They received data 6 weeks ago.

The earlier Broh Study identified that:

  • Consumers want demo rides

  • Consumers want a solid price (ok to negotiate with accessories)

  • Consumers want repairs done within 48 hours.

  • What we are selling is fun, not product features.

  • Existing customers are our best source of new customers.

    The key findings from the current value analysis were:

  • Used boats are a big part of the market. Over 60% of those owning a boat in the survey purchased it used. A Brunswick study found the percentage to be 80%. Most of these used boat sales are driveway to driveway and dealers are not involved. There are many potential opportunities in this area.

  • There are really many different segments of boat owners. Depending on the type of boat, owner demographics vary.

  • Boat owners are a little older with higher incomes than previously thought.

  • Not a lot of time is spent boating. Typical families do 4 or 5 recreational activities. Boating is just one of them.

  • Boating is perceived by boaters as non-active recreation. Perhaps it might be more widely accepted if this perception were changed?

    The next group (survey) will be looking into barriers to getting into boating.

    Buying Process Task Force

    They defined the buying process as beginning when the "first glimmer in the eye" of a boat buyer begins and ending when a financial transaction takes place.

    The group took 3 paths:

    • Mechanics of Dealers and the Buying Process
    • Creative Process to Build the Dream (advertising and promotion)
    • Funding Committee (to determine how to fund the recommendations of this group and of the other committees as well).
    A topic that rapidly came up in the Dealer Area was "certification". Having dealers trained, tested, and certified as operating according to certain standards and procedures was a theme brought up by most of the task forces.

    The boating promotional group said they hoped to "develop a unified message and tools that deliver that message."

    RBBI comment - I think that promoting boating is a great idea. I'm not too sure it can be done with a "unified message." I tried to push the concept of promoting boating and the fun of boating at an earlier job within Brunswick and it didn't fly. The finding that boaters can be demographically "segmented" by identifying the type of boat they buy may force you to have more than one message.

    Funding Committee

    Very large sums of money would be required. The organization has about 3,500 members and 10,000 dealers. Just providing them with a plaque costs a lot of money.

    They discussed the 4 legs the funding program must have.

    • Be reasonable and equitable
    • Be sufficient to meet all the needs
    • Be easy to collect and account for
    • Be policeable
    They felt about $15 million would be needed. The suggestion was that each company be assessed 1/4 of 1% of their anticipated revenues (.0025%). With their 1600 members and an assumption of 70% compliance, the program could raise about $15 million the first year. The program would be ongoing and funds would continue to be collected in future years for continuing operations. The first invoices would go out January 1st and would be due quarterly. This gives companies a chance at a 1/4 of 1% price increase January 1st if they wish to use it to cover costs. Some compounding of the fees will occur as units move from manufacturer to dealer to consumer.

    Participation (paying the fee) would result in "certification" by the NMMA . Major industry publications would be asked to encourage readers to call a 1-800 NMMA number to determine if specific manufacturers were certified members of NMMA and MRAA.

    RBBI Comment after the meeting - A few very large firms bear the brunt of the costs, and probably obtain a large share of the benefits. It was specifically mentioned that, Brunswick, was not currently "buying in" to the idea. One quote was "if the big dog don't go nobody goes." At a time when everybody is trying to cut pennies (most Brunswick companies don't even have 1-800- HELP numbers for their customers) its going to be a tough sell. Estimating Brunswick's marine revenues at $2 billion, their share could be $5 million (1/3 of the $15million total). Perhaps it would be easier to get the large companies to "buy in" if the fees has a saturation level (I'm about to get statistical on you) of about two sigma. This means that if you listed all the fees in a row from smallest to largest, the first 97.7 % of them would be valid and the largest 2.3 % of them (about the largest 35 companies) would pay the same level as was paid by the 97.7 % company. Basically this creates a fee "cap" at the top end. The fixed percentage (.0025%) would be increased to generate the same total funding. This results in an actual larger percentage being paid by the smaller companies, but the large companies would still be substantially contributing to the funding.

    Note- my 35 company estimate is considering the "Brunswick Companies" and other similar units to be composed of individual companies. Brunswick may have several members of NMMA (Mercury Marine, U.S. Marine, Sea Ray, Boston Whaler, etc.). The largest 35 individual units would be the ones saturated under my suggestion.

    Large companies will very scared of not being listed on some "approved list." The program and its benefits need to be made attractive to them. Several larger companies are already "promoting boating" within their own programs. If they can do that effectively, there are few reasons for them to support similar programs elsewhere.

    NMMA is a very respected organization. They handle large sums of money involved with boat shows. It still would make me a little nervous to turning them loose with administering a program involving sums of this magnitude. Many similar organizations do not have the proper financial "watchdog" programs in effect until the "horse is already out of the barn." I would encourage the industry to make sure proper "watchdog" policies are in place before beginning the program.

    Delivery Process Task Force

    They suggested the creation of two sets of standards. One for manufacturers and one for dealers. This could be done by extending the current NMMA standards.

    It was mentioned that Canada has an owners manual that is one specific size and alphabetized. All the small different size pieces of paper in the U.S. are very cumbersome.

    Maintenance and Warranty Task Force

    We are talking about a continuum for growth. The "bar has been raised by the auto industry."

    They also suggested standards and certification. 41 people had volunteered to work in this group which was co-chaired by Roger Patterson, now with U.S. Marine.

    They tried to divide the issues into groups and then prioritize them as perceived by the customers.

    One goal was to pay warranty claims within 30 days.
    I later mentioned to Roger that Harley Davidson now pays warranty claims over the internet in a few days. They might want to make sure they catch up to the "bar" before they set a standard.

    Specific standards will be developed for "turn around time."

    They want to provide a "hassle free" period of ownership in which we provide everything.

    We need a Mr. Goodwrench philosophy.

    Ended with 4 overall plans:

    • Set Standards
    • Develop certifications for technicians
    • Establish "set criteria" for suppliers, manufacturers, and retailers
    • Promote those that are certified
    The group still wants to secure agreement on the major issues and then they will define some of the steps more precisely.

    No means of funding this specific program has been discussed. Funding is anticipated to come from the overall program (.0025 % of revenues).

    Break Time

    I spoke with several members of the Buying Process Committee and showed them copies of the Leisure Activity Selection "Funnel Chart" I produced several years ago. They were very interested in how it described the process of selecting boating as an activity and how it portrayed the "barriers" to boating.

    Education and Training Task Force

    This group is investigating how the certification and training programs desired by many of the other groups could be implemented.

    A certified dealer program administered from within the industry might prevent future external regulation by local state governments.

    All the various "certification" programs would be tied together into one overall certification. It might have different levels (like A, AA, AAA, etc) they have not gotten that far yet.

    Manufacturer / Dealer Customer Support Task Force

    This committee grew out of some findings of the other committees. At the present, manufacturers do not trust the dealers to sell and deliver a product that will deliver customer satisfaction.

    Dealers do not trust the manufacturers to support them.

    Consumers do not trust either one.

    The keywords seem to be TRUST and EXCELLENCE.

    The committee got embroiled in manufacturer dealer agreements and felt they do need written agreements and they need to be for longer periods of time that currently written for.

    These agreements should address:

    • Dealer certification
    • Quality, testing, and delivery
    • Adequate inventory
    • Prompt mandatory warranty repairs
    • Service Requirements
    • Service capacity to match sales capacity
    • Dealer CSI (customer satisfaction index) to Industry Standards
    • Product registration
    • Annual performance standards (business plan, forecasts) The Manufacturers Concerns:

    • Current dealer financial information
    • Support written agreements between mfg an dealers
    • Repurchase with limitations Dealer Concerns:

    • Warranty issues not included in shop rate
    • Sales and service training
    • Dealer Certification
    • Proper inventory level ability
    • Fair trade and supply terms
    • Assigned territory
    • Duration of the mfg and dealer agreements (needs to be longer)
    • Heirs of Principals Rights to Product Lines (pass the dealership on to your heirs and they can get product)
    • Product lines rights to buyer of dealership (can sell dealership and new owner can get product)
    • Termination policies
    • Inventory buy back including parts
    • Model year introduction dates
    • Arbitration of disputes
    • Business plans, forecasts
    • Plain language agreements
    • Industry CSI Standardization for both mfg and dealers
    • Ability to buy parts after the relationship is over

    Pre-Owned Boats Task Force

    60% (or more) of current boat sales are pre-owned boats

    Lots of economic opportunities, especially in newer well kept boats for remanufacturing them, providing warranties, having pre-owned boat shows, pre owned boat auctions, moving boats between dealers, etc.

    The term "pre-owned" adds value to them vs. "used". Some areas (Ohio, Virginia, Maine, and others) have sales taxes that apply to "pre-owned" boats sold by dealers and not to private transactions of used boats. Several areas have challenged that and either had it removed from the dealer or reduced and applied to both. This results in a much more level playing field.

    Overall Questions and Answers

    I asked why all the marketing information early that was suggesting family involvement, lower costs, and easier operation did not show any sport jet boats in its survey. It seems like this product seems to address several of the issues. They seemed at bit at a loss for why it had not been included.

    A Radical Viewpoint From the Audience

    An individual had asked to speak for about 15 minutes at the end of the program. At first I thought he was from "left field". He babbled for about 5 minutes and said how some think, "as soon as I fix all the others we will all be as good as me." Then he finally began to get to the point. He said the groups have done lots of good things but still haven't sold a boat. He suggests directing our focus on "sales now". "Keep the main thing the main thing."

    Why aren't we selling new boats? Not enough people are walking in our doors. We need more good prospects.

    • We all do the same things (all our marketing programs are the same)
    • Our marketing is directed against each other instead of against other forms of recreation
    • We do not have a source of new ideas
    Why can't we afford to pay somebody to read all the trade magazines, newsletters, go to all the shows and share the info with us. We need a full time marketing person. Who will pay for this person. Perhaps $100,000 a year plus another $200,000 for expenses for a total of $300,000. The other program was looking at perhaps $25 million. Brunswick has $300,000 in unused coop funds.

    If this person could make us just 10% more effective we could generate $50 million dollars in improved sales from our advertising.

    He hopes the unity meetings will continue. Sales will come from better marketing.

    When each boat is sold it makes a ripple in our industry. We'll sell enough to make a tidal wave!

    RBBI Comments: he started pretty weird (like I don't also) but he ended with some very good ideas. His presentation could use some work but the crowd seemed to accept him quite well.

    RBBI is trying to act as a resource for some of the ideas he was looking for. We post a lot of clips from the various magazines and journals that have application to the boating industry.

    It was really weird having a half day of presentations, then having a 15 minute off-the-wall speaker with a good totally different idea and then everybody goes home. It some how seemed appropriate for this industry. What am I supposed to think now??? Are we going to hire an industry marketing guru and flush all these certification, education, and boating promotion programs? I think it will probably all be forgotten by the time the groups meet again. I sat by a gentleman from Volvo that I had met throught the internet and did not realize it was him till he "popped up" for one of the presentations. I continued to meet many people at the show that I had first met throught the internet.

    RBBI Alternative Proposal

    Identify things to do on the water or at the waters edge that would make a boating day more enjoyable. Many of these activities probably could not pay for themselves (floating hot dog stand), so use an industry fund to subsidize them.

    Some examples are: "boat in" hamburger & hot dog place, a hair dresser salon on the water or at the waters edge, aerobics classes, day care center, theater, snow cone stand, cotton candy machine, boating rallys & treasure hunts, and a generic church. These activities could be provided 3 days a week (friday, saturday, and sunday) for 3 months a year (June, July, August). Normal costs and fees could be charged. Any remaining monies needed to support the site would come from the "fund." Most of the sites could use college student labor. Companies wishing to donate facilities, land, labor, and management oversight could count those donations as "in kind" toward their NMMA assessment.

    These sites would all bear a consistent appearance so they could be identified as being a part of the "boating is fun" program. Boaters and their entire families would have much more fun. Studies already show existing boaters are our best source of new customers. Imagine how many more boaters would be attracted by programs like this for a fraction of the costs the other program is promoting. We are talking about providing some activities on or near the water about 45 days a year. With an average budget of $100 a day in excess of revenues generated by a site, a typical site would cost $4,500 a year in operational costs. One million dollars (1/15 of the budget of the other program) could provide 200 of these sites (average of 4 per state) and still have $100,000 left over for administrative, training costs, and marketing costs.

    If you wanted to really low budget it, just put up a bunch of snowcone and cotton candy machines. They should come close to paying for themselves. You might even be able to lease them from some company that has a use for them the rest of the year.

    I would suggest food and drink items be in single units and sold for onsite consumption. We are supposed to be putting cold drinks and snacks in the hands of those that would not otherwise have them, not selling 24 can packs and competing with existing stores.

    Additionally, the college students are going to have a summer experience surrounded by boating and may one day become customers themselves. The other proposal just throws money at marketing and the boaters really get nothing in return. This proposal costs much less and the boaters get much more. The NMMA proposal certainly does good things. Many of those things need to be being done by the participants anyway. I've been through many certification processes and they all seem to end up as money generating ventures for some organization. How about doing something for our customers, the boaters?

    Later at the Fishing Show I encountered Fishbone Fred in the Fishing Show. This interesting gentleman sings some funny fishing songs and has a group of "safety songs" for kids that teach them "how to spot dangerous situations and where to turn for help." I thought he was very interesting. This is the "kind of thing" that could promote boating and boating safety. With a little added funding from the NMMA / MRAA he might be quite a missionary. I think operations like this could get a "lot of bang for our buck." His flyer says he is Fishbone Fred Enterprises located in Boca Raton FL. We have a photo of him taken from his brochure.

    Also, going back to the motto on the "stickers" card placed on the All Industry Breakfast tables, "Our goal is to make the two best days of a boat owner's life the day of purchase and each day of use thereafter.", seems to indicate that it would be better to invest in providing fun boating activities than than to just spend marketing dollars telling people boating is fun.

    Which proposal do you think would generate the most new boaters per dollar spent? Which would be most in line with the motto?

    1. NMMA - Certify dealers, manufacturers, technicians and advertise the fun of boating ($15 per year)
    2. Proposal from the crowd - hire an industry marketing guru to read the newsletters and publications and share the new marketing ideas with us. ($300,000 per year)
    3. RBBI proposal - subsidize fun activities on the water or at the waters edge to increase the fun of boating ($1 million per year - a substantial portion is "in kind" donations of land, facilities, labor, management oversight)

    Drop us a note (click on the mailbox) and we will post the results. If you have any additional comments, let us hear them too.

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