Fishing Equipment Business Plan

The market for the patented hook, trade-named the Supreme, is large and has wide appeal. Over $300 million (retail level) in fish hooks alone are purchased each year in the United States. The patented Supreme, by virtue of its unique look and user-friendly features, has immense potential in the hands of astute marketers of fishing gear. One of the most powerful marketing tools is a unique selling proposition (USP). A good example is the “Flo-Thru” teabag USP developed by Lipton, or Heinz’ “Slowest Catsup in the West.” Any time that a marketer has a product which is visually different and  has user-friendly, unique features, dramatic success can be achieved in capturing market share. In the same way that Lipton’s “Flo-Thru” USP catapulted Lipton to brand leader over Salada Tea, the Supreme could conceivably capture 10% of the hook market. This would translate into royalties for the patent holder of approximately $200,000 to $300,000 annually.

The do-it-yourself kit selling retail for $129.95 has a much narrower market appeal to primarily saltwater fisherman who are especially enthusiastic about catching a category of approximately 20 popular game fish. Nearly five million fishermen hunt these fish. Sales of 25,000 kits over the three year period of this plan is a reasonable estimate, and amounts to only one half of one percent of the number of big-game fishermen. Gross sales of kits could total $1.25 million, assuming manufacturer’s net price of $50 to distributors.

Some statistics drawn from the 1996 Fish and Wildlife Survey are recorded in the table below.

4.1 Market Segmentation

The full potential of the Supreme patented hook can only be reached by licensing it to an established fishing gear company with a professional marketing department and extensive distribution system. This full potential would take into consideration freshwater fishermen (the highest concentration of anglers), and saltwater fishermen. Until a license agreement has been reached with a marketing company, the prime focus must be on sales of the do-it-yourself kits. Because of Seacliff’s saltwater contacts, and the need to limit the initial size of barbs provided in the kits (four large-sized barbs), the market segmentation analysis will be concentrated on that portion of the 9.4 million saltwater fishermen who go after the 20 species of large game fish.

According to the 1996 National Survey of Fishing, Hunting, and Wildlife-Associated Recreation (see complete survey http://fa.r9.fws.gov/surveys/surveys.html), there are 35.2 million Americans, 16 years of age or over, who fish annually. Most of these are freshwater fishermen; only 9.4 million are saltwater fishermen. Between 1955-1996, the number of anglers increased at over twice the rate of the U.S. population growth. These saltwater fishermen spent over $8.1 billion, of which $1.1 billion was spent on fishing gear. Each fisherman fished an average of 11 days over nine trips, spending $492 per trip ($45/day). The ideal candidate to purchase one of the Seacliff kits is a passionate, enthusiastic fisherman who is very serious about the sport. He is likely to have a boat, alone or shared with others. He is likely to read magazines dedicated to the sport, like Saltwater Sportsman (circulation 150,000), Florida Sportsman (circulation 111,000), Marlin (circulation 40,000), Sport Fishing Magazine (150,000), etc. These fishermen go for the big fish and are willing to go out of their way to get to where those fish are. These anglers are 73% male. The densest age groups are 35-44 (27%), 25-34 (20%), 45-54 (20%), and 55-64 (10%). Income-wise, 64% of anglers earn more than $50,000 a year. Seacliff kits are ideally suited for saltwater anglers earning more than $50,000 per year who fish for Bass, Bluefish, and any one of the 20 species pictured and described in Appendix D. The 1996 survey gives exact statistics on the number of saltwater fishermen who search out these fish.

The chart and table below indicate the number of fishermen, engaged by fish type. Saltwater anglers have increased by six percent between 1991-1996. During the same period, freshwater fishing declined by four percent. For purposes of entering a growth percentage, we will assume that the number of saltwater fishermen will increase by about one percent annually.

**appendix were not available for this sample plan.

4.2 Target Market Segment Strategy

The target market strategy for the sale of the kits is to focus on the large, saltwater game fish anglers (Striped bass 1.4 million, bluefish 1.5 million, 18 others 4.9 million). Of the total 9.4 million saltwater fishermen, 7,180 are located in only eight coastal states (see following table).

4.2.1 Market Trends

Fishing is definitely growing in popularity. According to the 1996 Wildlife survey, the number of anglers has been increasing at over twice the rate of U.S. population growth (1955-1996). More than one out of every six Americans goes fishing every year. A total of $38 billion, according to the study, is being spent annually on fishing. Of this amount, 51% ($19.2 billion) is being spent on fishing equipment, and 28% ($5.3 billion) is being spent annually on fishing tackle (includes both freshwater and saltwater fishing tackle).

4.2.2 Market Growth

The 1996 survey, which is the source of most statistics on the fishing industry, reports that the number of saltwater fishermen increased six percent between 1991-1996. During the same period, freshwater fishermen declined four percent. However, expenditures on the sport increased at a much greater rate. Fishing expenditures increased 37%, and the number of days spent fishing increased 22% when compared with the 1991 survey.

4.2.3 Market Needs

Convenience, speed, improved performance, enjoyment are all aspects of the patented Supreme hook, which apply both in speaking about the hook to be licensed as well as to the do-it-yourself kit. See Chapter 3.1 (Product Description) for details of the benefits as well as graphic illustrations.

**No graphic illustrations were available for this sample plan.

4.3 Industry Analysis

The fishing gear industry used to be characterized by many small manufacturers. This was especially true of fishing lures, which were often made by individuals who started up in the industry working out of their garages. This situation has changed dramatically. According to an article in the New York Times (October 24, 1999), entitled “Fishing Gear Makers Are Now a Prize Catch,” like toy and hardware makers before them, small manufacturers of fishing gear are being acquired by aggressive competitors looking to build economies of scale. The labor-of-love specialty companies are quickly being bought up. Andy Rogerson, chief executive of Pradco Inc., which now owns eleven popular brands of fishing lures (mostly acquired in the last five years), claims the small guy can’t make it any longer. The big-box sports chains and major marts are driving distribution. These mass market retailers, as well as a small number of equally demanding cataloguers, sell 75% of fishing tackle.

There has been so much consolidation in the industry, it is hard to keep track of who belongs to whom, according to Lauren Walsh, managing editor of Fishing Tackle Retailer. Membership in the industry’s trade organization, the ASA, has declined from 600 members in 1995 to 450 members at present. This decline has been solely due to acquisition, as the number of products has remained level or even increased. Modernization has also hit the fishing gear industry as it has other industries. Large companies, like Pure Fishing, have invested millions in computerized inventory systems and warehouses; they are also tapping the previously-ignored international market.

4.3.1 Distribution Patterns

According to SBG’s exclusive fishing tackle survey conducted in 1992, 69% of tackle is bought through wholesalers, 27% direct from manufacturers, and four percent from other sources. In the eight years since the survey was completed, it is likely that mass merchants and dedicated cataloguers have been taking a greater share of the pie. This would mean that there has been more direct buying from manufacturers.

With cataloguers and mass merchants capturing 75% of sales of fishing gear, it is clear that the small manufacturer is at a disadvantage in respect to large suppliers. Wal-Mart, and other large, multi-line chains, will only purchase from suppliers who can offer a large menu. The trend is for these retailers to purchase directly from manufacturers at the wholesale price, since they do their own distribution. The mass merchants can then afford to discount the item 10-20% and still make a healthy return on investment.

4.3.2 Main Competitors

As mentioned in earlier chapters, there are easily 250 manufacturers of fishing tackle. Many of these are makers of lures and artificial bait. The Supreme primarily competes with the old, standard method of hooking bait, either live or dead, to a standard fish hook. The advantages of the Supreme over this old method are more easily understood by turning to section 3.1, which includes graphic displays comparing the Supreme stem hook system to the traditional methods. There exists no other product on the market that competes with, or provides the features of, the Supreme.

**All graphic illustrations have been removed from this sample plan.

4.3.3 Industry Participants

According to the membership rolls of the ASA, there are 450 companies that are somehow involved in some aspect of fishing. Many of these are boat manufacturers, and other manufacturers outside of the narrower field of fishing gear. Large retailers are also members.

Industry Participants – Retail
As of 1992 there were 20,696 retail outlets in the United States, of which 31% were fishing specialists, 47% were multiline, 12.2% were classed as department or mass merchants, and nine percent other retail. Mail lists are available from Database America (201-476-2300).

Industry Participants – Wholesale
Information on U.S. wholesalers such as names, addresses, phone numbers, gross sales, number of employees, and major product lines handled, is available from the Wholesalers and Distributors Directory, which is available at libraries. Chapter 46 lists Recreational and Sporting Goods Wholesalers. Pages 987-1010 list 50 wholesalers who specifically mention the word “fishing tackle.”

Industry Participants – Manufacturers
Ward’s Business Directory of U.S. Private and Public Companies, under NAIC code 339920 (Sporting and Athletic Goods Manufacturing) lists 75 names, beginning with Brunswick Corporation of Lake Forest, Illinois, with $4 billion in sales (Brunswick’s Zebco Corporation is a division specializing in fishing gear), and ending with Easton Sports of Van Nuys, California, with $40 million in sales. Much more up-to-date information can be obtained via ASA’s website:www.asafishing.org/membership/locator/index.cfm. Another excellent source is the Fishing Tackle Source Directory which lists at least 250 fishing tackle manufacturers under the saltwater category alone.