As the recession ebbs and boat owners return to higher usage patterns and buying prospects begin to think about testing the water, they will act and be different from those who came before the current economic malaise and credit freeze.
There is strong evidence that consumers will be more careful in spending, seek to reduce debt (or perhaps not add to it), look for a lower cost route to do what they valued in the past and tilt toward saving. In sum, they will be more cautious in allocating their treasure and time.
The continuum of change is reality, yet with each life-altering event thrown in consumers' paths, some form of push-back occurs. Typically, after a period of giving up the little extras to luxuries, or just believing there has been more prudence, a cycle to reward these sacrifices emerges. After the wrenching effects of the Sept. 11, 2001, terrorist attacks, this reaction manifested in a partial bounce-back of discretionary spending on boating (including megayachting) and other forms of recreation and travel.
At this stage, perhaps the gratification-cum-discretionary pendulum, as it often does, has swayed too far and time will help bring it back toward the prudent spending center. Many "get your life in order" journalists are piling on the view that conspicuous consumption is clearly déclassé and discreet utilization is the new thing. MSN Money's Liz Pulliam Weston recently wrote about how society would look back on 2005 asking, "What were we thinking?" Her Top 20 list of excesses included McMansions, cosmetic surgery charged to credit cards, option adjustable rate mortgages and everything linked to Las Vegas.
Major shifts are occurring in boating's core consumer groups, especially the boomers. Writing in the December 2008 McKinsey Quarterly, David Court reported, "In 2006, when we asked boomers how they would cut their overall expenditures by 20 percent, the respondents singled out clothing, personal care, home furnishings and travel for cuts, but said they were less likely to reduce spending on necessities like food, housing, and health. For companies in the [discretionary] sectors ... the task ahead is to target demographic segments with better growth prospects."
Ty Ragland, principal of Ragland Research LLC, the market research firm that did the extensive "Value Analysis" of boating in the mid-1990s, suggests it doesn't really matter if the current economic crisis is part of the normal cycle or a more permanent economic and social readjustment. "Even though the latter seems likely, crisis always presents opportunities," he says.
What Ragland is suggesting to clients has relevance to boating: "The definition of what is necessary or discretionary and related spending changes over time. For example, while microwave ovens were seen as a necessity by only one-third of consumers in 1996, just 10 years later that number had doubled to two-thirds. Now, it has declined back below 50 percent. What changed? The growth was due to a number of things, probably starting with declining prices, increased use and spread of known benefits and product improvements. The decline clearly represents a change in consumer priorities."
On a more basic level, "Growth in income competes with growth in wants; when income declines there have to be some give-ups," he says. "What exists is a balance of the necessary and discretionary in life, driven by resources and wants."
Discretion is not one-dimensional or interpreted the same by all, of course. Some discretionary activities or items fall into the "I can't live without it until I am forced to" camp; think bottled water, Starbucks and possibly health clubs. Yet when the value or return on investment becomes highly pressured by discretionary income choices, then the activity declines to "I can take it or leave it" or "I can make it last" modes.
So how does Ragland suggest presenting boating to consumers to encourage the feeling that they "can't live without" it? By directing attention to the activity's intangible (or experiential) aspects. He identifies four benefits - there are likely more - that can raise the perceived value of the experience:
Pleasure: This is provided to the owner/captain and guests. It occurs while boating and lingers long after as pleasant memories.
Control: By exercising power and mastery (skill) involved in boating. By managing one's feelings - getting away from the stress of economic crisis, etc.
Accomplishment: Gaining and using boating skills for the beginner; sharpening those skills (e.g., extending cruising range) for those with experience.
Community: This is the "family and friends" boating benefit that's a powerful justification to own. It underscores the first three benefits.
There are questions Ragland suggests marketers should be asking themselves and their customers to help prospects rationalize expenditures on boating - and a particular model or brand - as a "smart buying decision." These might include:
- Promoting ways to save money, individually or with other boaters. Is there an organized way for them to trade ideas about boating?
- A focus on thriftiness means people will be trading down. Most marketers will be able to gain from brands above them, but be vulnerable to losing to brands below them - what are the brands above and below?
- Define "living within my means." Trips closer to home, more time at the dock?
- People are less confident. What boating activities - an outing or rendezvous, instruction or "buddy system" - can reinforce their confidence?
- People are risk-averse. With proper instruction, boating is the opposite. How can skills be conveniently taught?
Considering these questions should help anyone selling a marine product or service to find ways to resonate with their target audiences, Ragland suggests. Benefits provided by boating haven't changed markedly through the years since the first value analysis studies were undertaken. But the world has clearly changed - and will do so continually - so that creative reviews of relationships with customers, vendors and business partners should be a regular exercise to find new paths to growth.
What value analysis taught boating
Consumer research studies of recreational boat owners and prospects in the mid-1990s focused on the school of "value analysis" and they helped marine marketers understand what needed to be done to improve the overall boating experience. Many of the readings became key features of the industry's "Grow Boating" marketing initiative, especially in the areas of overall customer treatment and satisfaction (e.g. certification), product reliability and warranty, and provision for qualified repairs and service.
Expect the basics: Boats should be easy to operate, safe, adequately powered and outfitted.
Value in return for loyalty: Boats should be reliable; if not, they should have adequate warranties and be easily fixed at reasonable cost.
Overcome irritating aspects of the boating experience: Waiting for repairs or needed parts, distant launching sites or long waits to launch, lack of versatility (e.g., can't fish and ski), difficult trade-ins or low valuations and not state-of-the-art (compared to cars).
Greg Proteau writes about trends and people in the boating and finance industries, and serves as executive director of Boating Writers International. He can be reached at email@example.com. Ty Ragland can be reached at firstname.lastname@example.org.
This article originally appeared in the March 2010 issue.