First off, this entry has nothing to do with digital marketing, just a note on marketing in general. About 20 years ago I had the opportunity to work for a company by the name of Hillerich & Bradsby (H&B) out of Louisville, Kentucky. H&B is a family owned business that has roots tracing back to the late 1800s. One the company’s core product offerings is the baseball bat brand Louisville Slugger. In 1989 when I worked with H & B baseball products they were experiencing a real down turn in the bat business. Young players were realizing a number of other sporting opportunities and as a result registration growth in the sport had begun to stabilize and decline. As a leading supplier to this market, H&B was faced with the challenge of increasing their market share and growing their sales in a period of declining demand. Enter the marketing guys.
When people get tired of a product or a customer base declines a common strategy is to get the consumer to upgrade. Give them a reason to buy a new bat. The first place H & B turned was to their research and development team to give them a competitive edge. They had their engineers scope out a space age material used by NASA in space shuttle fuselage that would help them make high performance bats. Using CU31 alloy, a new bread of high-end bat was created and branded the Louisville Slugger Tournament Pro Series (TPS). The new bat was made from an ultralight weight alloy that supposedly gave the batter a new level of hitting power. No one else had this technology so H&B could charge a premium for their product. They introduce one of the first +$100.00 bat products supporting it with a massive marketing initiative targeted at building brand awareness for TPS.
Speed a head to 2008, the average softball bat is now selling for between $250 and $400 dollars. Those who can’t afford the price tag are buying used bats on eBay. Twenty years ago retailers laughed when I told them they should be selling +$100 softball bats. The market didn’t understand the value proposition. Today, thanks to a genius marketing strategy, players now feel they need them. What the hell happened?
As volume dropped H & B realized they had to bring the average cost per item up in order to grow bat sales. They saw an opportunity to bring the bat up market by introduce new technology and changing customer perception. They also knew how serious some of the recreational players were about their game and felt that these players would pay a lot more money for a product that would make the ball go further. How much more was the only unknown variable. Over the past twenty years H & B has continually innovated and marketed to this target audience while steadily edging the average cost of the product upwards constantly testing the consumer’s price threshold.
Today most players expects to pay $300 for a bat in order to get the edge they need. But here’s the interesting thing, the ball diamonds haven’t gotten any bigger and the last time I attended a softball game(about 2 weeks ago) I don’t remember seeing any home run records set by people using the +$300 bat. Just another proof point for the power of good marketing. If done with great insight marketing can completely change perception. Pretty demand amazing how H & B managed to convince their customers that an aluminum bat is actually worth 300% more in 2008 than it was in 1989.