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Opinion

Controlling your product

Last month we looked at selling and some of the issues that involves. So, what happens next? Our widget’s fate is in the hands of the mystical charms of the sales people, we will need to control how sales are doing. In nearly every organisation this is the job of the sales manager, but the information that is gained has to be fed back into the marketing loop. Are the targets sensible? Are they merely sales targets or corporate targets? There is a difference that is critical to the long-term future of the product and the corporation as a whole. Are the targets so rigid that in the first six months they can make or break our widget? What happens next? Does our widget have a future and, if so, are we still in control of it? Let’s have a look at one of the simplest ways we have of checking, assessing and keeping control. One of the most important tools we have available for making sure that our widget has a long-term future and is not merely a ‘flash in the pan’.

 

Where are we?

Let’s take stock and find out where we are. Anyone who has been lost in the middle of nowhere knows that you can’t find where you want to go unless you know where you are in the first place. There are hundreds of different tools that marketing people employ. One of the most important that you can rely on is a simple graph known as a Product Life Cycle. This is a curve (see illustration) that represents sales dollars against time. It’s simple enough, but it can teach us a lot. Not just about where we are, but where we have been and, importantly, how we could improve in the future. This graphic allows us to check on several things: Have we recouped our initial outlay (1)? Are sales taking off and still climbing (2)? Are sales reaching maturity (3), and if so, can we keep them at this level? Are sales falling off (4) and if they are, what can we do about it?

Let’s assume that we are in the sales conference and have just unveiled a product that the sales people are enthusiastic about (crazy, I know, but just humour me), our widget, the price and its packaging.

 

The costs so far

Let’s look at the very first section, the bit that’s below the line. This represents negative sales or, simply put, our initial outlay. What has the widget cost us so far? Do we pile all the costs into this section or amortize some of them, say, tooling, licensing, patent protection and the like, over a number of years? This decision can have immediate effects on the money that’s needed to launch a product. Mostly, these initial costs will be coming directly from the marketing budget. There’s nothing wrong in that, but is it all marketing? How many boardroom battles have come about with this little argument? Marketing versus production, a titanic tussle! For this illustration it matters little, the big issue is that there’s a negative amount that needs to be recovered but how can we do that; a long-term project or a short-term hit? These issues affect the pricing policy and will have been a big factor in the marketing peoples’ decision about price. In general, products that have an innovative content, that take a lot of pre-production, will need higher prices to reflect these initial costs and the unique features and benefits of the widget.

 

Let’s get selling

Our widget is out in the shops and taking pride of place at our trade shows. We’re getting orders and the sales and marketing people are working together like the gears in a well-oiled machine; things are taking off. At this stage we move onto the second section of the curve (2). In marketing speak, our product is a ‘rising star’, selling well, on the up, making its mark and carving out a niche in the marketplace. How brilliant is that? We are recovering our costs, not all of course, but our widget is now contributing to our overall overhead recovery; things look great and we are confident. We can’t help selling the widget as word of mouth, testimonials and advertising are doing their jobs, what could go wrong? Is there an end to this upward curve? Well of course there is, we are feeding back the information to the sales manager making sure things continue, but let’s say that the writing is already on the wall.

 

Coming of age

In financial terms, we move into the most important part of the product life cycle – maturity. This stage of the life cycle is an extremely important one that needs careful management. More control, more feedback, more management. As the sales curve begins to flatten out we need to consider just how long this part of the life cycle will last. It’s easy to be caught up in the euphoria of having a great seller, but we need to look ahead. The day-to-day management is down to the sales manager; the future is the marketing people’s domain. This is where the widget becomes known, in marketing speak, as a ‘cash cow’. Why? Well, because we are milking it for all its worth! All of our set-up costs, the below the line expenses in part 1 of the curve have been recouped. Everything else is ambrosia. Apart from the costs of production, packaging and marketing maintenance, advertising and the like, this widget is just a money machine. Profit levels are increased as the inherited costs are shed. Everybody’s happy, all except the marketing people. They are already looking ahead, with knitted brows, to the final section of the curve.

 

Buy it or the dog gets it!

A car seller in the USA concocted one of the most infamous and successful advertising strategies. During his TV commercials he said, and I am paraphrasing here: “Either buy the car or the dog gets it.” In this final stage (4) of the curve we are getting worried. The widget is no longer performing; it’s hanging about in the departure lounge ready for its flight to retirement. In marketing speak it’s a ‘lazy dog’. There are two things that you can do here and both rely on pragmatism, although your brand manager may not see it that way. Firstly, you can shoot the dog and get rid of it, sometimes a hard thing to do, say goodbye to an old faithful friend, but if it’s a burden it may be the best option. The more interesting, and some would say more appropriate course of action, is to try and teach it new tricks, resurrect it, breath new life and fire into it. Maybe, by mixing a metaphor we can create a phoenix from the ashes of a lazy dog. Next time we’ll look at ways to do just that.

Meet the team at REC

On a weekend night in midsummer, you can hear the roar of racing-car engines throughout the rural town of Stafford Springs, Connecticut, home of the Stafford Speedway. In the morning, however, the village is a quiet place where families fish on small streams and sparkling lakes.

Stafford Springs is the current home of REC, a high-tech machine shop owned by Alan Gnann. This part of Connecticut has many hi-tech machining companies ‘in orbit’ around Pratt & Whitney, one of the aerospace companies of United Technologies, and REC’s building, on Middle River Road, was once home to an aerospace supplier.

Today, however, REC serves America’s rod-building industry.

Alan, currently chairman of the American Fly Fishing Trade Association, declines to identify his customers, but a display of REC-built rod tubes reveals the logos of such companies as Orvis, Redington, Thomas & Thomas, and other top brands.

More than 90 per cent of REC’s output goes to original-equipment manufacturers, or OEMs, and maintaining their anonymity is an unwritten, professional courtesy.

Alan learned the fly-rod business and its ethics long before he acquired REC, in 1996, when the company was a small component maker in Vermont. During his time as an officer in the US Navy during the late 1960s and early 1970s, Alan built his first fly rod. A whippy cane rod, it hangs among scores of more modern fly rods in REC’s hallways. (Alan encourages his employees to borrow any of the rods on display; on the day TTW visited the factory, four employees were out fishing.)

Soon after Alan built that first rod in 1973 he found himself becoming a part-time custom-rod builder. An engineer and corporate executive by day, by night he built more than 500 custom rods, many in the early days of Sage’s custom-builder programme.

As he climbed corporate ladders Alan moved from place to place, including the Pacific Northwest – the home of Lamiglas, G Loomis, Sage and Boeing – where carbon-fibre tube technology drifted from the aerospace industry to fishing rods and golf club shafts.

Alan eventually landed in Hartford, Connecticut, in charge of acquisitions for a major American corporation.

“It was a time when my colleagues were about 15 years older than me,” he said. “I was in my mid-40s and was able to take money I had saved to buy a company.

“I wanted to be in the fly fishing business… and I approached several companies.”

REC had been in business since 1968, and Alan bought his first chunk of the company in 1996; a year later, he owned it all. Then he bought Mildrum and Perfection, two other companies that manufactured rod components.

REC buys cork for rod grips and fighting butts from Portugal. Only three to four per cent of Portuguese cork goes to the fishing tackle industry, Alan says, with most of it going to the wine industry. Fishing-rod makers are not high on the priority lists of Portuguese suppliers… except for Alan Gnann.

Much of the REC building in Connecticut is a ‘clean room’ certified by federal health officials to process cork bottle stoppers for wine and spirits for the cork company Alan founded, called CorkTec.

He started a sister company, Cork West, in Kennewick, Washington. With California being the largest wine producing state in the country, Alan decided that rather than trying to compete with well-established bottle stopper suppliers there, he would serve Washington and Oregon – America’s number-two wine-producing region – and New York State, the number three.

In both the Pacific Northwest and New York, the number of vineyards is growing, and the amount of land devoted to growing grapes is increasing. In many ways the cork business is similar to Alan’s fishing components business. They are both growing.

REC’s sales have increased every year since Alan bought the business – even as the economy was tanking. Over the same period, America’s wine consumption grew, too.

Both the cork business and the component shop employ robotics as well as the human touch. On the cork side of the REC building, robotic machines count corks, brand them with the customer’s logo and treat them with a wax that seals the wine from air, and silicone so that a 105lb restaurant server can remove the cork.

Whether they are lower-grade corks for $10 bottles of wine or top-grade stoppers for $50 bottles, every batch is tested to ensure its seal and ease of uncorking.

Similarly, many of the machined rod components are made by robots that can work, unattended, through the night. Then they go through several human hands for finishing and assembling.

“What differentiates rods are their components,” says Alan, illustrating his point with a rod ad that pictures the reel seat and butt. Many of his employees have been with the company for several years, and their goal is to produce fine fishing instruments.

That they care, really care, about fishing is obvious everywhere in the plant. Linda Gnann, administrative manager of the company and Alan’s wife, is an accomplished fly angler. In the shop, one long-time employee is wearing a G Loomis T-shirt, while another has tacked trout posters over his workstation. Another has pinned up fishing posters. Even the salt and pepper shakers in the employees’ dining room are red-and-white bobber floats.

REC makes things that will go into the hands of passionate people. CorkTec’s stoppers are being sold to people who are passionate about making wine, for consumers who are passionate about drinking it. Alan says: “Our slogan in the cork business is ‘Preserving Your Passion’.”

Diversity differentiates the cork business from rod components. CorkTec offers nine grades of wine-bottle stoppers, but how many parts does REC make?

“I don’t know,” says Alan. “Thousands!”

“With the exception of fishing-rod blanks, REC is capable of supplying everything required to build and case fishing rods.

“We are dedicated to meet the needs of fishing-rod manufacturers, commercial custom fishing-rod builders, distributors, and dealers worldwide by providing creative solutions to the most demanding applications.”

Of the thousands of components in REC’s storeroom, the most famous are RECOIL guides, first introduced at the fly-tackle trade show in 1998. RECOIL guides are made from a special nickel titanium alloy with ‘shape memory’ that doesn’t require plating, cannot corrode in any environment, and returns or ‘recoils’ to its original shape after repeated deformations. It’s a metal with the characteristics of plastic.

Today, RECOIL guides are found on spinning and casting rods, as well as fly rods, made by many of America’s top rod companies.

American express

The July issue. Traditionally our most American-influenced issue, and with good reason. This month is host to the United States’ biggest sportfishing trade show: ICAST.

I, for one, am very excited about the show. I will be attending for the first time along with group editor Nick Marlow. While I may have met many of our American friends out at other shows this will be the first time I’ve sampled the buoyant and lively US sportfishing market at first hand.

I think it’s important that one of the biggest economies in the world has a fishing industry that represents the diversity of the country. The market’s range is vast, from huge, globally recognised names like Simms through to much smaller, family-run operations like fly tyers Wapsi (featured on page 46). All of these firms share one thing that, from my experience, is what sets US companies apart from others: passion for the sport.

I’m not saying other countries don’t care about fishing, of course they do. It’s our livelihood and our love in life. But in America all companies seem to share a camaraderie to protect and improve fishing for generations to come. See you stateside.

A new trend?

There appears to be an underlying movement (and I’m not sure when or how it started) to make fishing funky – along the lines of skateboarding or in-line skating.

Different terms are being bandied about to sum up what it is all about, but I guess the best is ‘urban fishing’. Basically it’s all about trying to get youngsters involved in the sport for a couple of hours a day, particularly on the inner-city rivers, canals and waterways.

They pretty much fish lures on short, stiff rods (not too dissimilar, I imagine, to the bass rods found in the US and Japan). There appears to be a little confusion as to what these kids might want to wear – trendy hoodies, baseball caps and trainers or a slightly more uniformed look akin to baseball tops. The probability is that they won’t want to be seen dead in the more conventional fishing gear that us seniors are more comfortable with.

Of course, it has great potential and it will be important for the more trendy of our consumer angling magazines to engage these ‘new’ anglers and offer some form of education and tuition on the dos and don’ts of fishing.

The last thing that we want to see is groups of kids buying into fishing, but then because they may have a lack of understanding as to why people fish or for the environment and fish welfare they leave a trail of havoc behind them.

This looks like a great opportunity and, given the poor start to the year that a number of companies are reporting, then I think it is one that we should take seriously.

 

ICAST and beyond

Just short of 9,000 people are set to head to Las Vegas in July as ICAST opens its doors again to the world. Looking at the history of the event there certainly has been a steady rise in the number of international attendees in recent years – getting on for 1,000 in 2009.

As the world appears to get smaller every day and travel (despite recent volcanic problems) gets easier I do believe that truly international shows are going to become increasingly important, no matter what industry you are in. Of course, as a business you have to justify any trade and for sure the American market is not the easiest one to crack. I think for us at Tackle Trade World it took three years before we started to make inroads into the country, but now we do very nicely out of it and work very closely with a number of American companies.

ICAST is not an easy show to do. Vegas is a long way for many. It’s also a very big show and the Las Vegas heat can be a killer. Having said all that, though, the organisers do a great job in making it as comfortable and as easy as possible.

One of the other things that can always be found at ICAST is that one product that really is different – its new-product showcase is by far and away the best in the industry, so you are always in with a fighting chance of getting one over on your competitor. And that’s always got to be worth a few dollars in the till.

Enjoy the show.

It's a small world

AS I write this, the UK has just formed a new government, the euro is in freefall as the European Union bails out the Greek economy, and an oil slick is hitting the shores of the US.

Meanwhile, the weather is unseasonably cold across most of Europe, and from what I am hearing in the US business is booming again. Right… where do I start?

I’m going to start with Fox International heading to the USA!

To most people in Europe, Fox is a household name. The brand is one of the best known across the Continent and the company is well known for producing quality product and protecting its intellectual property rights vigorously.

As you will no doubt have seen on page 3 (and more on 6 and 7) Fox is about to launch into the US in a big way.

While the company is playing its cards very close to its chest you can bet your bottom dollar that it has done all the research in the world – it’s just that sort of company!

The company will be unveiling its products at this year’s ICAST – which brings me conveniently to that topic!

For those of you who have never been to America’s largest fishing tackle trade show, let me sum it up for you – it’s massive, and full of product that sells in America!

But it has been said before, and it will most certainly be said again, that the world is becoming a smaller place. In the eight years I have worked on this publication I have seen fishing tackle evolve and styles cross entire continents. And right now I am witnessing a new phenomenon as lure fishing goes all ‘street’ – and that is something that really is global.

ICAST’s international attendance continues to grow as more and more people from around the world visit the show to see what’s new – and more importantly – to see what they can take back to their homelands.

Of course it goes without saying that TTW will once again be in attendance at the show and will be reporting back.

I look forward to seeing you in Las Vegas!