The Simple Cost

Sometimes company leaders equate doing the simple thing with keeping things simple. They are not the same. Sometimes doing the “simple thing” creates unintended consequences.

As it relates to boat models and corporate decision making, let’s go back to a simpler time.

In 1965: 

When automotive companies had only a few car models, they would endeavor to improve each model each year. For instance, the ’56’ Chevy Bel Air had changed radically by 1965, but it was always the Chevy Bel Air. The same model logic held true for about every car company.

Now, new models with new names come out every year.

In the past, the distinction of having a market-specific model helped the manufacturer establish a successful relationship between the model and the customer, which contributed to the overall company success.

In other words, the success of the each branded model reinforced the popularity of the manufacturer and the success of the manufacturer reinforced the overall product line. Each success fed the other.

In today’s world of boat manufacturing, the success of the brand seems to be managed by a bevy of totally new models on an annual basis, leaving the older models to dangle unsupported. It’s not pretty.

Car companies discontinue the sales of an old product but boat companies keep them in the line. Yet, keeping old, slow selling models is a costly mistake.

(It’s not a wise plan to have a product line that has more losers than winners. How can that be good for your image and/or brand identity?)

Of course the “simple thing” has always been to keep the old models in the product line. It, however, adds to the complexity of your marketing image and that adds cost.

Here’s an example of keeping things simple as opposed to doing the simple thing.

Before Steve Jobs came back to Apple the company had grown its model line to an almost unbelievable selection of computers. Steve realized that the only way out of the losses was to reinvent the product line and eliminate the slow selling models. Before his death, Apple had made things simple again with a product line that was manageable and completely understandable by the general public. Gone were the multiple configurations that bewildered the first time buyer. iMac was the “hit” that started Apple on the road to consumer understanding and reinforced the brand as the simple, and highly profitable, computer company.

In contrast, the common refrain emanating from corporate boardrooms in the boating industry rationalizes that the “cost” of carrying the lesser selling models is negligible since the molds are in good shape and the parts are in inventory.

It’s a nice theory, but the true cost is the “hit” your company’s image is taking because of some poor selling models.

Your image is what establishes your brand. The cost of tarnishing that image can eventually destroy your brand and severely diminish your potential profits.

And that’s about as simple as it gets.