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Sabre Yachts: a case study

Herbert Sherman, Thomas C. Leach and Daniel J. Rowley

Introduction

Differentiated firms are those firms that compete in the marketplace by employing a strategy

that appeals to a market (or a market segment) with the message ‘‘we are not the cheapest,

but we are the best’’ or if not the best then certainly dissimilar from our competitors. The

purpose of a differentiated strategy is to build customer loyalty through an excellent image of

the organization and its products and services. This loyalty creates a wall between the

organization and its competitors (especially new entrants) and ensures that customers see

important product and service distinctions. They see greater profit per unit and therefore

have less need for high production capacity. (Porter, 1985)

Of course there are risks associated with a differentiation strategy. Organizations pursuing a

differentiation strategy may find that:

B Changes in market structure make product differentiation an unprofitable strategy. As

markets change from oligopolies to monopolies, and from imperfect competition to

perfect competition, product differentiation becomes an unprofitable strategy.

B Product differentiation is difficult to maintain, given the emergence of imitators. Innovative

products and services, unless protected by patents and copyrights, may be easily

duplicated by competitors and differentiated companies are constantly searching for new

ways to become different from their competitors.

B The cost difference between low-cost competitors and differentiated firms becomes too

large to sustain brand loyalty. When the price-gap becomes so large that customers

cannot justify paying premium prices, even for higher quality products, firms will be

forced to change their differentiation strategies.

B Technological changes that nullify or minimize past investment or learning. For firms

who differentiate their products or services through product innovation, or who use

technology as part of their distribution channel, new technologies and product

development can destroy technologically-driven competitive advantages (Pearce and

Robinson, 2005).

A focused strategy, on the other hand, concentrates on the particular needs of a market

segment, usually a segment that is atypical of the normal customer and has specialized

requirements and needs. An organization that follows this strategy may service isolated

regions, have unique service delivery systems, or modify their product to meet a specific

customer group. The rationale behind a focused strategy is relatively simple. The firm

knows that it does not have the capabilities of servicing the entire market and wants to

carve out a part of the market which best matches the firm’s skills and competencies.

This allows the firm to concentrate on the needs of that market segment and transforms

the firm into a market segment specialist (either low-cost provider or differentiator) (Porter,

1985).

DOI 10.1108/17515630810906765 VOL. 9 NO. 5 2008, pp. 249-271, Q Emerald Group Publishing Limited, ISSN 1751-5637 j BUSINESS STRATEGY SERIES j PAGE 249

Herbert Sherman is a

Professor at Long Island

University – Brooklyn

Campus, Brooklyn, New

York, USA. Thomas C.

Leach is an Associate

Professor at the University

of New England, Biddeford,

Maine, USA. Daniel J.

Rowley is a Professor at the

University of Northern

Colorado, Greeley,

Colorado, USA.

However, focused strategies are not without risk. Risks may include:

B The focused strategy is imitated.

B New entrants further segment the market. New entrants who do not want to compete will

look for narrower market segments to service.

B The target segment becomes structurally unattractive because demand has dwindled

and the market segment has disappeared.

B Broad competitors overwhelm the market by reducing the differences between the

segments and therein increase their competitive position (Pearce and Robinson, 2005).

Firms that practice a focused, differentiated strategy, are therefore operating at relatively

higher risk than other firms. They must pay particular attention to monitor both their

operations and external environment and therein be flexible enough to change their

marketing mix (and their competitive position) in order to sustain a good fit with their

environment (Sherman et al., 2006). The following case examines some of the strategic and

tactical options available to a focused, differentiated firm, Sabre Yachts, as it tries to react to

perceived changing market conditions.

Intended audience and learning objectives

This case was primarily developed for those academics and practitioners interested in

marketing and management strategy since the focus of the case requires the reader to

examine the strategic and tactical alternatives to the firm’s marketing mix given the

perceived recent changes in the boating industry.

The overall purpose of this case is to introduce the reader to the nuances associated with

managing the marketing mix of a focused differentiated firm with perceived changing

market conditions. The reader therefore obtains a ‘‘real-world’’ feel of the situation and

tacitly experiences some of the difficulties encountered when reformulating a firm’s

marketing mix.

The case requires that the audience be familiar with material relating to market-driven

business strategies (see chapters 1 and 2 in Cravens, 2000; chapters 1-3 in Walker et al.,

2003) as well as have a basic understanding of business strategy formulation, generic and

tactical business strategies (see chapters 6 and 7 in Pearce and Robinson, 2005; chapters 5

and 6 in David, 2005).

Some background information to the industry can be also gleaned from such websites as

http://boatbuilding.com/, http://www.rbbi.com/ (Recreational Boat Building Industry Home

Page), http://www.nmma.org/ (National Marine Manufacturers Association), and http://www.

boatbiz.com (which features the 2004 National Survey of Marine Dealers) as well as from the

Appendix of the case.

Secondly, it is also recommended that readers have some grounding in Porter’s (1985)

concepts of generic competitive strategy. The following websites (besides those in the

References) should be of interest and assistance:

B www.quickmba.com/strategy/generic.shtml – QuickMBA’s quick overview to Porter’s

Generic Strategies. Site provides a very good overview to strategic management.

B www.isc.hbs.edu/index.html – Harvard’s Institute for Strategy and Competitiveness (lead

by Michael Porter). Site includes many of Porter’s publish works as well as the works of

other leading scholars.

B www.mngt.waikato.ac.nz/depts/sml/journal/special/harfield.htm – Strategic Management

and Michael Porter: a postmodern reading. By Toby Harfield. A challenge to Porter’s

approach to strategy as well as an interview with Michael Porter.

B www.jbam.org/Articles/article3_14.htm – A Business Strategy Typology for the New

Economy: Reconceptualization and Synthesis. By John A. Parnell. Another challenge to

generic strategies – includes attempts to synthesize Porter’s and Miles and Snow’s work.

PAGE 250 jBUSINESS STRATEGY SERIESj VOL. 9 NO. 5 2008

Specific learning objectives for the reading audience are as follows:

B to obtain a basic understanding of the specialty sail boat and power boat industry;

B to understand the idiosyncrasies associated with a focused, differentiated market;

B to describe the current marketing mix of Sabre; and

B to develop recommendations on how to reconstitute that mix given the information in the

case concerning market changes and environmental uncertainty.

Background – the case method

Although most readers may have had some exposure to the case method, it behooves us to

briefly review the case method of analysis. The case method, the oldest method for business

instruction, is based upon inquiry into real-life situations and typically details a critical

decision facing organizations and its key members. In the traditional case method, the

reader assumes the role of a manager or consultant and therein analyzes and solves the

problems of an organization. The inherent problems in the case are complex enough to

require the reader to bring his or her past experiences, educational training and knowledge,

and logic to bear so as to provide a series of alternative solution strategies to the problem.

The case method therefore is also an excellent tool for training and instruction and may also

serve as an exceptional assessment instrument that can test the readers’ ability to transfer

what they have learned in training to a corporate setting since it addresses all of the six

cognitive skills described in Bloom’s (1956) learning taxonomy (see Table I).

The Case: Sabre Yachts[1]

‘‘Spring is usually the start of the busiest time of year for sales and inquires in the industry,’’ said

Bentley Collins, Marketing Manager of Sabre Yachts to Daniel Zilka, CEO and Chris Evans,

president andCOO. ‘‘Yet I’m concerned, since the phone isn’t ringing with its normal frequency.

I wonder if the current slow down is just a lull in sales activities or something more drastic.’’

It was April, 2001, and Bentley Collins, the Marketing Manager of Sabre Yachts, a luxury sail

and power boat builder from South Casco, Maine, was in his office reviewing some of the

normal spring-time marketing details. He was checking boat show schedules, updating

co-op advertising details for various dealers, and finishing arrangements for Sabre’s World

Cup Regatta and Rendezvous. These two events were gatherings of Sabre yacht owners,

where sailboat racing and social events took place at an East coast location. Early spring

was traditionally the beginning of the ‘‘boating fever’’ time. The noise level from his phone

and fax machine and the pace of activities from abutting offices had been frenetic for the

past seven spring seasons, but this year the phone wasn’t ringing with its normal seasonal

frequency and the nearby offices were uncharacteristically quiet. Dealers confirmed that

new boat inquiries and orders were off, as compared to that of recent years. Bentley was

concerned by the ‘‘deafening’’ silence. Bentley muttered out loud:

The boat building business can be profitable, but it can be risky. Risk generally comes as a

markets slows down and manufacturers are not prepared with a smaller scale plan. Market

information is critical for this reason. Power boat builders are generally more profitable because

volumes are higher. Sailboat builders tend to build fewer units and are therefore more susceptible

to risk. Sailboat builders tend to be less well funded.

Sabre Yachts’ product line

There are two broad categories of boats for Sabre: sailboats and powerboats.

Sailboats. Sabre Yachts began as an entrepreneurial venture of Roger Hewson who, in 1971,

designed and built what he believed to be the finest 28 foot sailing yacht using production

line methods and fiberglass materials. The company started with only seven employees and

completed hull number one for the 1971 Newport Boat Show, Newport, Rhode Island. Its

introduction was successful and Sabre ultimately sold 588 Sabre 28s over its 15 year

production run, a feat that led to the Sabre 28 being admitted to Cruising World magazine’s

Sailboat Hall of Fame. The 28 was followed by the Sabre 34 in 1976, the Sabre 30 in 1979, the

Sabre 38 in 1981, and the Sabre 32 and 36 in 1984. In 1986 the Sabre 42 was introduced,

VOL. 9 NO. 5 2008 jBUSINESS STRATEGY SERIESj PAGE 251

and later the Sabre 425. More recent Sabre sailing yachts were designed by Jim Taylor and

the Sabre Design Team and included the Sabre 386, Sabre 402, and the Sabre 452. Each of

these more recent boats had won either Sailmagazine’s ‘‘Top Ten Award’’ or the ‘‘Boat of the

Year Award’’ from Cruising Worldmagazine in their introductory year. The Sabre 386 retailed

for approximately $325,000, depending on options and equipment, and the larger Sabres

sold at higher prices.

All of the sailboats could be characterized as medium displacement, aft cockpit, traditionally

styled, performance cruising yachts. This meant that sailing yachts blended the comfort

desired for cruising, the capacity for blue water passage-making, but also be capable of

competitive racing and winning club regattas. The original Sabre 28 was evolved through

extensive tank testing at the Stevens Institute. More recently, computer aided design

techniques and performance prediction programs had enabled Sabre to take the Jim Taylor

hull, appendage and rig designs directly from the design board to the tooling stage of

production. The Sabre Design Team complemented the Taylor hull and rig designs with the

Table I Bloom’s Learning Taxonomy

Category Examples and keywords

Knowledge: Recall data or information Examples: Recite a policy; quote prices from memory to a customer; knows the safety rules Keywords: defines, describes, identifies, knows, labels, lists, matches, names, outlines, recalls, recognizes, reproduces, selects, states

Comprehension: Understand the meaning, translation, interpolation, and interpretation of instructions and problems. State a problem in one’s own words

Examples: Rewrites the principles of test writing; explain in one’s own words the steps for performing a complex task; translates an equation into a computer spreadsheet Keywords: comprehends, converts, defends, distinguishes, estimates, explains, extends, generalizes, gives Examples, infers, interprets, paraphrases, predicts, rewrites, summarizes, translates

Application: Use a concept in a new situation or unprompted use of an abstraction. Applies what was learned in the classroom to novel situations in the workplace

Examples: Use amanual to calculate an employee’s vacation time; apply laws of statistics to evaluate the reliability of a written test Keywords: applies, changes, computes, constructs, demonstrates, discovers, manipulates, modifies, operates, predicts, prepares, produces, relates, shows, solves, uses

Analysis: Separates material or concepts into component parts so that its organizational structure may be understood. Distinguishes between facts and inferences

Examples: Troubleshoot a piece of equipment by using logical deduction; recognize logical fallacies in reasoning; gathers information from a department and selects the required tasks for training Keywords: analyzes, breaks down, compares, contrasts, diagrams, deconstructs, differentiates, discriminates, distinguishes, identifies, illustrates, infers, outlines, relates, selects, separates

Synthesis: Builds a structure or pattern from diverse elements. Put parts together to form a whole, with emphasis on creating a new meaning or structure

Examples: Write a company operations or process manual; design a machine to perform a specific task; integrates training from several sources to solve a problem; revises and processes to improve the outcome Keywords: categorizes, combines, compiles, composes, creates, designs, devises, explains, generates, modifies, organizes, plans, rearranges, reconstructs, relates, reorganizes, revises, rewrites, summarizes, tells, writes

Evaluation: Make judgments about the value of ideas or materials Examples: Select the most effective solution; hire the most qualified candidate; explain and justify a new budget Keywords: appraises, compares, concludes, contrasts, criticizes, critiques, defends, describes, discriminates, evaluates, explains, interprets, justifies, relates, summarizes, supports

Source: www.nwlink.com (n.d.)

PAGE 252 jBUSINESS STRATEGY SERIESj VOL. 9 NO. 5 2008

details of deck and interior layouts. The interiors were finished in either American Cherry, with

Teak and Honduran Mahogany. The electrical, mechanical and plumbing systems were

designed to be durable and used only quality components in their construction. The more

recent sailing hulls used vacuum bagged Divinycell PVC closed cell foam core and

structural E glass to give one of the strongest, lightest and most durable laminate

combinations available. Suppliers were for both Sabre sail and power boats were selected

from the industry’s leaders noted for their high quality, including: Yanmar diesel engines, Hall

Spar, Sea Frost, Sub Zero, Lewmar, Westerbeke, Edson, Harken and Bennett.

Sabre’s sales were historically strongest in New England, where approximately 55 percent of

its sales occurred. The Mid-Atlantic, including the Chesapeake Bay, accounted for about 18

percent of sailboat sales. The southeast sold roughly 9 percent, The Great Lakes region 7

percent, with California, Gulf Coast and exports accounting for 3.6 percent each of Sabre’s

sailboat sales volume. There were no sales in the Pacific Northwest.

Powerboats. In 1989 Sabre sought to broaden its line to appeal to a broader market. It

introduced the first Sabreline motor yacht the 36 ‘‘Fast Trawler’’, a tri-cabin boat with the

spaciousness and comfort of the trawler design, aft cabin layouts. The yacht had

substantially better performance than traditional trawler hulls, which were mostly

displacement hulls rather than planning hulls. The 36 aft cabin design was followed by

the Sabreline 34, a fly bridge sedan in 1990. In 1994 the Sabreline 43 and 47 aft cabin motor

yachts were introduced. The 36 foot Sabreline Express Cruiser was introduced in the fall of

1996 based upon a redesigned ‘‘Fast Trawler’’ hull. Its success amongst dealers and owners

led to the Express replacing the ‘‘Fast Trawler’’. In the summer of 2000 the Sabreline 42 Fly

Bridge Sedan was introduced. The Sabreline 36 retailed for $400,000, depending upon

equipment. Larger models sold at higher prices.

The Sabreline motor yachts were all designed to be modern yachts with sea kindly hull

designs that would plane to achieve 20 knot or better cruising speeds, with top speeds

around 30 knots. At low engine speeds, Sabrelines were very fuel efficient. In rough

conditions the spray rails and chines (ridges that allow water to flow off the deck) kept the

deck and windshield dry. Mechanical and electrical systems were designed to be durable

and perform to the demanding requirements of experienced yachtsmen. The construction

methods incorporated state of the art composite materials and production systems for

strong durable hulls. Vacuum bagged closed cell PVC foam cored hulls and the use of

structural E glass in the laminate schedule, reduced weight and increased stiffness. As was

true for the sailing yachts, Sabre selected suppliers that were recognized for the quality of

their components and materials. All Sabreline motor yachts were built to the National Marine

Manufacturers (NMMA), American Boar and Yacht Council (ABYC) and United States Coast

Guard standards. Sabre typically sold 45-50 Sabrelines, the brand name for Sabre’s motor

yacht line, per year, or roughly 2 percent market share. It produced the 340 Fly Bridge Sedan,

360 Express MKII, 360 Sedan, 420 Fly Bridge Sedan and the Sabreline 430 and 470 Aft Cabin

Motor yacht. Sabreline motor yachts were luxurious, semi-custom boats with modified

deep-vee hulls. The hulls were designed to allow the boats to plane easily, with wide chines

and spray rails to give a comfortable and dry ride. Large opening widows allowed for a

spacious feeling and good interior visibility. The cabins had all wood interiors with the hulls

lined for heating and air conditioning systems. Cabin layouts varied with the size of the yacht,

but attention to details in terms of cabinetry and joinery were points of distinction and

important sales tools for Sabreline yachts. The head (bathroom) compartments weremolded

in white gelcoat, with Corian counter tops and spacious storage. The galleys were equipped

with under-counter refrigeration, convection microwave ovens, ceramic cook top stoves and

double stainless steel sinks. The galleys were well lit with halogen lighting and louvered

doors on the storage compartments. The exteriors were trimmed in teak wood, which gave a

beautiful accent to the boats’ lines.

Boat building had been a traditional industry in Maine dating back to the 1700s. Sabre’s

associates took pride in their craftsmanship and were true to the company’s motto, ‘‘Crafted in

the Maine Tradition’’. Most of the associates were cross trained and were capable of working in

all of the different phases of boat building. Almost one-third have been with Sabre for a decade

VOL. 9 NO. 5 2008 jBUSINESS STRATEGY SERIESj PAGE 253

and many have celebrated two decades with the company. Chris Evans, President and Chief

Operating Officer, and Daniel Zilkha, Chief Executive Officer, held quarterly meetings to inform

associates of market conditions and Sabre’s competitive position. Safety, quality and production

goals were discussed at these meetings along with the Sabre Gain Share program. The Gain

Share program rewarded associates for meeting quality and production goals. Warranty claims

were used as an offset to the Gain Share pool, further encouraging quality work.

Sabreline’s sales were distributed in a similar manner to Sabre’s: the boats had their greatest

following in New England and the Mid-Atlantic regions. Sabreline’s annual sales came from

the following regions: New England 31.5 percent, Mid-Atlantic 19.2 percent, Southeast 23.9

percent, Pacific Northwest 9.7 percent, California 7.2 percent, Great Lakes 4 percent, export

3.2 percent and Gulf Coast 1.4 percent.

Production and quality

The production of every Sabre was extensively monitored. Every hull in production was given

a ‘‘Boat Parent’’, an office staff Associate that followed that particular boat through

production, acting as the ‘‘eyes’’ of the dealer and or owner. Each boat had a 600 point

inspection during the six stages of the building process. Toward the end of production, each

boat had a 12 page report prepared by Sabre’s Head Inspector, along with full technical,

mechanical and electrical systems inspections. A final check, the Gold Inspection’’ was

performed by the ‘‘Boat Parent’’. It was an unstructured inspection that judged the overall

quality, feel and appearance of each boat. When the boats were received by the dealers, a

detailed commissioning was conducted using a detailed checklist to assure that all systems

met Sabre’s standard for quality. The commissioning report was then sent to Sabre. If clients

or dealers reported issues with a yacht, no matter how large or small, a Customer Quality

Report (CQR) was developed and circulated to all members of management and

engineering, as well as production associates related to the report.

Sabre had always enjoyed a reputation for building high quality boats. Sabre had from the

beginning worked on building strong relationships with its customers. It had organized the

Sabre Regattas and Sabreline Rendezvous, where Sabre owners got together for

recreational racing and social events. Although interest in the Rendezvous had waned in

recent years, the relationship with owners has remained very high. Sabre had always

listened to its customers and had excellent customer service. Resale prices for used Sabres

and Sabrelines had traditionally remained high, which helped with new boat sales, as

prospective buyers recognized that their purchases were a solid investments. Sabre’s home

port was in South Casco, Maine, which to some customers connected the company to the

boat building heritage of Maine.

Sabre’s finances were in good shape enabling it to bring new designs to market. Of course,

every new model necessitated significant tooling investments, and as a result, new model

introductions were critical events. New boat design, mold development (tooling) and

prototype building could take a year before the first boat of a new design was completed.

The marketplace

Customers. Sabre’s customers were well-to-do, those people that, ‘‘have made it’’,

according to Bentley. Sailboat owners tended to be executives and entrepreneurs, about 55

years of age and whose children had finished college. The motor yacht buyers were

younger, about 35-50 years old. Both sail and power customers were experienced boat

owners, and bought Sabres as steps up in their boating ownership. The numbers of people

that ‘‘have made it’’ and were able to afford new boats grew dramatically in the past 10

years. Bentley’s research indicated that the share of aggregate income of the 5th quintile

grew from 46.5 percent of national household income to 50.1 percent. This was a 7.74

percent increase. The Top 5 percent share of household income grew from 18.1 percent to

22.4 percent, a 23.76 percent increase (U.S. Census Bureau, 2002).

PAGE 254 jBUSINESS STRATEGY SERIESj VOL. 9 NO. 5 2008

Competition

Sailboats. According to Bentley, there were three large producers of sailboats in the 350 to

500 range in the United States, each with approximately 25 percent market share, selling

roughly 450 boats each per year: Catalina located in California, Hunter from Florida and

Beneteau/Jenneau a French company. These companies produced boats that were less

luxurious, and at lower prices, than Sabre. The major companies in the remaining 25 percent

share of the 350 to 500 range were: Sabre, Tartan/C&C, J-Boats, Pacific Seacraft and Island

Packet. Sabre had about 8 percent market share of this segment and produced an average

of 35 sailing boats per year. All Sabres were Jim Taylor and the Sabre Design Team

collaborations, and were semi-custom, medium displacement, aft cockpit sailboats: the

Sabre 386 (380700 length overall), the Sabre 402 (400200 length overall), the Sabre 426 (420600

length overall) and the Sabre 452 (450200 length overall). Tartan, from Grand River, Ohio, was

Sabre’s closest sailboat competitor and sold approximately 36 boats of the same size range,

and at roughly the same price levels. C&C was part of the Tartan organization and sold

performance boats with less emphasis on luxury. Tartan had begun selling boats through its

‘‘factory store’’. This meant that it was able to reduce its distribution costs and thereby lower

the retail price. Bentley wondered whether on not this would hurt its dealer network, as they

may feel threatened by ‘‘factory competition’’.

J-Boats were more performance oriented in their design and appeal, and sold 120 boats per

year of various sizes ranging from 220 to 460. Two J-Boat models, the J-42 and J-46, were

aimed at a performance cruiser and competed more directly with Sabre, selling 20 boats per

year. According to Bentley’s information, J Boats spent ten times the amount on advertising

and other brand building activities as did Sabre. Island Packet of Largo, Florida, sold 80

sailboats per year, in roughly the same price ranges as Sabres. Pacific Seacraft was located

in California and sold roughly 12 units per year, at a somewhat lower price point than Sabre.

Powerboats. Sabreline’s most direct competitors were: East Bay by Grand Banks of

Malaysia, Tiara of Holland, Michigan and Legacy Yachts by Freedom, previously an

innovative sailboat manufacturer, of Connecticut East Bay built several different models

including: open and hard top expresses, fly bridge sedans and trawler yachts. The Grand

Banks trawlers were considered by some as the quintessential trawler yachts because of

their classic styling and generous use of hand crafted teak wood interiors and exterior trim

details. Eastbay and Legacy’s express and sedan models were similar to Sabrelines and

both were referred to as being designed in the modern ‘‘Downeast’’ or traditional New

England style. Tiara produced its versatile ‘‘Open’’ series. ‘‘Fish’’ or ‘‘Cruise’’ were the

design concepts that Tiara believed distinguished its boats from others. It designed

professional grade features for both sport fishing and cruising in the Open series boats that

ranged from 29 to 52 feet in length. Legacy offered for sale sedans, flybridge and express

models in 34 to 40 feet in length. In 2000 it introduced a water-jet powered 34 Express.

Water-jet propulsion was a relatively new technology that was an alternative to conventional

shaft and prop systems. Annual sales levels for this market niche were: 40 Sabrelines, 120

East Bays, 400 Tiaras and 30 Legacies. Tiara had a larger manufacturing mass that yielded

production economies beyond those of Sabre and the others. East Bay by Grand Banks

manufactured its boats in Malaysia, which gave it significant cost advantages in labor,

particularly for larger boats. See the Appendix for more information on industry and market

conditions.

Sabre’s marketing plan

The Sabre marketing plan was multifaceted. It encompassed advertising, public relations,

dealer support, boats shows and Sabre web site. Sabre advertised with full page ads in

every edition ofCruisingWorld andMotorboating & Sailingmagazines supporting the sailing

and power boats, respectively. It also supported co-op advertising for any dealers’

publications, as long as the dealers’ brokerage business was not featured at the same time.

Any leads that came to Sabre were answered with a letter, product brochure and name of the

prospect’s regional dealer. Brochures and specifications sheets for all models were supplied

to dealers at no charge. Sabre made available to dealers post cards of new and existing

VOL. 9 NO. 5 2008 jBUSINESS STRATEGY SERIESj PAGE 255

models. Dealers were encouraged to use the postcards in their direct mailings to prospects

in their areas.

Sabre was always on the watch for public relations opportunities. It promoted the Sabre

World Cup Regatta and Rendezvous to its entire client database, which were held at various

locations on the East coast. Sabre published a newsletter, The Sabre Spirit, several times a

year and distributed the it to over 4,400 Sabre and Sabreline owners, friends and current

leads. Sabre maintained up to date national and regional press mailings, where new product

information and special announcements were made. Sabre was also a sponsoring member

of Boating Writers International (BWI), an organization of free lance writers, and sent

information to all BWI member writers.

Sabre’s dealers were located all around the country, but with more intensive market

coverage in New England and the mid-Atlantic areas. In the West and Great Lakes, a single

dealer may be the only representative for Sabre covering several states. The Sabre dealer

support program started with the requirement that all dealers offering either Sabres or

Sabrelines must have at least one boat of each in stock all of the time. Most dealers operated

on a 5-10 percent margin, after trade-in and other allowances. Sales incentives were given

dealer sales staff when they sold the largest boats of the lines. Priority Prospect Packages

were sent to clients that the dealer felt were able to make an immediate decision to purchase

a Sabre yacht. These packages gave additional details of the particular yacht of interest and

delivered by an expedited delivery service. Sabre offered the Dealer Floorplan Program,

through the G.E. Commercial Finance and Bank of America, to assist dealers finance their

Sabre inventory. Sabre reimbursed dealers for the cost of carrying inventory of Sabres at the

rate of New York Prime plus half a percent. Sabre reimbursed interest expense for up to three

months for boats ordered between August 1st and January 31st or until the date of retail

sales contract, whichever occurred first. For boats ordered between February 1 and July 31,

the interest reimbursement period was 6 months.

Boat shows were a very important part of the marketing effort. Prospective buyers were able

to look at various models, inspect all sorts of details of the boats, talk to Sabre

representatives and do the same with competitive boats. Sabre had a Participation Fee

Program that reimbursed dealers for some of the expense of moving their boat inventory to

selected shows. For local, pre-approved shows, Sabre reimbursed dealers percentage of

space charges based on the ‘‘foot print’’ of the boat. Sabre managed boat show displays for

all national and regional shows with the cost of set-up and space shared between Sabre and

participating dealers. For certain local shows, Sabre would loan its display materials. Sabre

organized formal dealer meetings and factory training for dealer sales staff. Finally, Sabre

maintained the Sabre web site (www.sabreyachts. com) that included all information

regarding Sabre yachts. On the site was a Dealer Locator Tool that informed the visitor where

local dealers were located and what boats they had in stock.

Bentley indicated that:

Marketing budgets are elastic and can be stretched to accommodate new business. My estimate

is that 15 percent of our annual budget is spent on brand building in areas where we are not well

known. Marketing priorities are boats shows and print advertising although dealer interest

reimbursement which is also budgeted by sales can be a large number as well.

Marketing challenges

Sabre, like most companies, had its challenges. A majority of sales came from the New

England and Mid-Atlantic regions with only sporadic success in other areas. Sabre had

always been a niche boat builder. But expensive luxury boats always sold at higher prices,

which limited sales potential and did not allow for the economies of scale enjoyed by the

larger companies. Fortunately, Sabre belonged to United Marine Manufacturers Association

(UMMA), a buyers group, which allowed Sabre to purchase supplies at prices comparable

to those paid by the major manufacturers.

In 1994 Sabre acquired North End Marine, Rockland, Maine, a builder of molds and

production fiberglass parts. It employed around 100 people and typically did work for major

PAGE 256 jBUSINESS STRATEGY SERIESj VOL. 9 NO. 5 2008

boat manufacturers, such as Hinckley, Grady White and Boston Whaler, and many small

projects for small companies or individuals attempting to start boat building companies. The

company’s name changed to North End Composites in 1995 and its activities had diversified

into industrial, commercial and architectural composite construction projects, while

continuing its marine mold and part production business for Sabre and other boat

builders. Although North End was highly regarded for quality work, the volume of business it

received was sporadic. The nature of the work was inconsistent and was more labor

intensive than boat building. North End’s financial performance was erratic and Chris Evans,

Sabre’s Chief Operating Officer, pondered whether the company should review its direction

and maybe consider some changes in business plan.

The meeting

In April of 2001, Bentley kept mulling over some issues facing Sabre that he believed had to

be addressed if Sabre was to maintain its past momentum of its sales volume and maintain

efficient operations. In front of him was additional information about the economy. The first

quarter of 2001 economic statistics were not good, with the United States Gross Domestic

Product (GDP) registered only a 1.9 percent growth rate. The previous four years’ GDP

growth rates were: 3.7 percent in 2000, 4.5 percent in 1999, 4.2 percent in 1998 and 4.5

percent in 1997. Interest rates over the past 12 months had gone up numerous times and the

significant stock market drop in 2000 gave Bentley cause for concern. Yacht sales were

traditionally cyclical, so Sabre’s performance seemed to depend on the economy. Sabre’s

sales were skewed to the East coast: New England, Mid-Atlantic and the southeast. Sabre

wasn’t as strong in other parts of the country, where economic differences fromNew England

could balance off a regional economic slump.

Daniel and Chris came into the room to have a brainstorming session with Bentley. Bentley

opened the meeting with the following questions: How could they continue to build the Sabre

brand that was currently perceived as a company that built quality, prestigious yachts, but

was not well known outside of New England and the Mid-Atlantic? How could Sabre expand

its geographical presence? Since Sabre’s product line was expensive and appealed to a

limited number of people, could they maintain quality and image and lower price some

what? Was there a way of reaching another segment of the boating population? Should there

be smaller Sabres or Sabrelines? If smaller boats were introduced, what channels should be

used in selling them? Was North End Composites on course and how it could be

incorporated in the overall strategy of Sabre? Or should it be sold?

Case analysis

Case summary

The case describes the dilemma that the MarketingManager Bentley Collins of Sabre Yachts

faces in developing a profitable marketing mix given the firm’s current product line,

competitors, industry and national economic trends. Sabre had always been a niche boat

builder. Their product line was divided into two distinct categories; sail boats and power

boats. Their sailboats were targeted toward boaters interested in the comfort desired for

cruising, the capacity for blue water passage-making, but also the capability of competitive

racing and winning club regattas while their power boats were designed to be modern

yachts with sea kindly hull designs that would plane to achieve 20 knot or better cruising

speeds, with top speeds around 30 knots. A majority of sales came from the New England

and Mid-Atlantic regions with only sporadic success in other areas. Bentley worried that

slower phone traffic in Spring of 2001 would be indicative of slower sales and wanted to

know what actions the firm should take to continue their regional growth as well as their push

to become a more nationally-based firm.

The following questions may be employed by the reader as guidelines for the case analysis.

Whether or not the reader employs the questions to analyze the case is usually a matter of

learning approach and reader readiness. Naumes and Naumes (1999), for example, thought

that if the questions were given to the reader with the case ‘‘[the reader] will tend to focus only

on the issues specifically raised by the questions . . . ’’. Lynn (1999), on the other hand, noted

VOL. 9 NO. 5 2008 jBUSINESS STRATEGY SERIESj PAGE 257

that the use of questions provided the reader with more concrete guidance in case

preparation and analysis; specifically directing them to consider the decision to be reached.

We have decided to employ case questions as a means of driving our analyses of the case.

Case questions

Describe the US boat market. What are its major markets and market segments?

This question requires that the readers do some reading and research, perhaps even

beyond the handout supplied in the case. The analysis should first begin with a reiteration of

the data presented in the Appendix (which is mostly descriptive in nature):

B That state registrations for recreational boats was up 0.4 percent from 1999 to 2000 and

that imports outsold exports 3:2 from 1998 to 2000.

B That there are external forces driving the industry (increased competition, higher

consumer demand for quality boats at lower prices, decreasing access to water fronts,

the tendency to live in year-round water-based communities, greater availability of

substitutes for recreational boating).

B That the U.S. boat market is segmented into two major portions; sailboat and powerboat.

The powerboat market was roughly ten times larger than the sailboat market.

B That the sailboat market is segmented by length of boat (00-110, 120-190, 200-290, 300-350,

360-400, 41-450, 460-590; 60 þ 0) while the powerboat industry, a much larger market, is

segmented by type of powerboat (outboard boats, inboard boats-runabouts, inboard

boats-cruisers, stern drive boats, canoes, personal water craft, and jet boats).

B The largest market segment in sailboats in 1999 is small boats (00-110) with the fastest

growing marketing segment being 460-590. The largest market segment in powerboats is

outboard boats, and the greatest revenue and highest unit cost is derived from inboard

boats-cruisers.

B In the inboard cruiser category, where Sabre competed, there were five general types of

boats: the motor yacht, sedan, express, trawler and sport fisherman.

B Revenues were increasing in the larger boat markets but decreasing in the smaller boat

markets (canoes, personal water craft, and jet boats).

At this point it should be noted that far more information is needed about the industry and

external research to the case may be needed. For example, the 2004 National Survey of

Marine Dealers published by the NMMA noted that new boats sell on a 2:1 ratio with used

boats, that nearly 50 percent of all boats sold are outboard boats, and that there is a near

split between new and repeat customers (www.nmma.org, n.d.).

By inputting the data in the table from Table I into either a spreadsheet or statistical database

the data can be presented in a more graphic form (see Figure 1).

Readers should note several nuances about the market segmentation of the sailboat market

given the above trend lines. For example, 120-190 foot sailboats historically made up the

largest market segment but have been surpassed by smaller boats (0-110) in 2000.

Further analysis and data manipulate using simple spreadsheets yields the following results

using Table AI; the average number of boats built per builder can be calculated by dividing

the total number of boats per year by the total number of builders (see Table II).

This data may also be shown graphically and include comparative data and the number of

builders per year (see Figure 2).

Note that the number of builders per year has nearly continuously increased while the

number of boats built per builder tends to be more cyclical in nature. The best year for the

industry was when the number of builders were low and the average number of boats per

builder was high; 1987. These data may indicate that the industry is becoming more mature

(competitive) since it may not, at times, be able to absorb all of the new builders thereby

PAGE 258 jBUSINESS STRATEGY SERIESj VOL. 9 NO. 5 2008

leading to certain years where builders possibly have higher inventory levels, greater price

competition, and lower profits.

By employing Table AII, the boating market, one can calculate the market changes from

1998-2000 (see Table III, Column 5).

By examining this chart the reader may note that the sailboat market segment is the fasting

growing market from 1998-2000 while the average cost per unit rose most quickly in the jet

boat segment. Ironically, the jet boat segment is also the market segment experiencing the

greatest decline in sales volume while unit cost actually slightly decreased in the canoe

market segment.

Describe Sabre’s distinctive competencies and generic strategy (Porter, 1985). How well

does the firm’s strategy match its distinctive competencies?

The purpose of this question is to ascertain whether the reader can discern from the case the

key elements underlying Sabre’s competitive strategy as well as identify that strategy.

The reader should first understand what distinctive competencies and generic strategies are

within a strategic context. First, firms must first build upon their basic resources to develop

Table II Average number of boats built per builder per year

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

159 111 110 77 87 95 97 112 130 111 125 131

Figure 1 Partial graphic depiction of Table AI: United States new sailboat production

1988-1999 with builders’ forecasts for 2000

Figure 2 Point chart of average number of boats built per builder per year and builder per

year

VOL. 9 NO. 5 2008 jBUSINESS STRATEGY SERIESj PAGE 259

efficient operations based on their central mission. Over time, this operation should result in

developed employee competences and operational competences where the firm begins to

realize efficiencies from operational practices that improve as a result of continual learning.

With strategic planning and direction, many of the basic competences should be converted

into distinctive core competencies (those operational skills that are superior to similar skills

of competitors) which can lead, then, to competitive advantages for the firm. Competencies

therefore refer to the underlying characteristics of a manager or a firm that lead to superior

performance. Competencies also refer to generic abilities and resources that develop over

time and represent highly developed capabilities of the firm. (Sherman et al., 2006)

Generic strategies refer to a firm’s pursuing a competitive advantage over its opposition by

selecting a specific method of competition and then choosing how much of the total market

Table III Changes in the boating market: 1998-2000

1998 b 1999 b 2000 Net change (%)

Outboard boats: Total units sold 213,700 230,200 241,600 13.06 Retail value $1,547,188,000 $1,988,928,000 $2,256,544,000 45.85 Average unit cost $7,240 $8,640 $9,340 29.01

Outboard motors: Total units sold 314,000 331,900 348,700 11.05 Retail value $2,155,610,000 $2,602,096,000 $2,901,881,400 34.62 Average unit cost $6,865 $7,840 $8,322 21.22

Boat trailers: Total units sold 174,000 168,000 167,000 24.02 Retail value $189,660,000 $190,008,000 $195,390,000 3.02 Average unit cost $1,090 $1,131 $1,170 7.34

Inboard boats-runabouts: Total units sold 10,900 12,100 13,200 21.10 Retail value $253,348,700 $308,429,000 $340,494,000 34.40 Average unit cost $23,243 $25,490 $25,795 10.98

Inboard boats-cruisers: Total units sold 6,700 7,000 8,000 19.40 Retail value $1,704,245,500 $1,799,420,000 $2,349,920,000 37.89 Average unit cost $254,365 $257,060 $293,740 15.48

Sterndrive boats: Total units sold 77,700 79,600 77,800 0.13 Retail value $1,746,696,000 $2,054,476,000 $2,228,192,000 27.57 Average unit cost $22,480 $25,810 $28,640 27.40

Canoes: Total units sold 107,800 121,000 111,800 3.71 Retail value $64,033,200 $67,034,000 $64,844,000 1.27 Average unit cost $594 $554 $580 22.36

Personal water craft: Total units sold 130,000 106,000 92,000 229.23 Retail value $868,530,000 $771,044,000 $720,176,000 217.08 Average unit cost $6,681 $7,274 $7,828 17.17

Jet boats: Total units sold 10,100 7,800 6,500 235.64 Retail value $124,644,100 $132,678,000 $118,820,000 24.67 Average unit cost $12,341 $17,010 $18,280 48.12

Sailboats a: Total units sold 18,200 21,200 27,800 52.75 Retail value N/A $589,360,000 N/A Average unit cost N/A $27,800 N/A

Notes: aSourced from 1999 Annual Sailing Business Review; b1998 and 1999 market estimates revised in 2000

PAGE 260 jBUSINESS STRATEGY SERIESj VOL. 9 NO. 5 2008

they wish to compete in (the breadth of their competition). Firms create a competitive

advantage by following one of two strategies: being the low cost provider; or by

differentiating themselves from their competitors through specialized products or marketing

campaigns; and then competing through either a broad or narrow focus. (Porter, 1985) This

results in four possible strategic choices for the firm as denoted in Table IV.

The distinctive competencies of the Sabre Yachts may be described as follows:

B Quality design. Yachts’ hulls underwent extensive tank testing at the Stevens Institute and

employed computer aided design techniques and performance prediction programs.

Motor yachts were all designed to achieve 20 knot or better cruising speeds, with top

speeds around 30 knots. Mechanical and electrical systems were designed to be durable

and perform to the demanding requirements of experienced boats-men.

B Quality workmanship and suppliers. The yachts’ electrical, mechanical and plumbing

systems were designed to be durable and used only quality components in their

construction. Motor yachts were built to the National Marine Manufacturers (NMMA),

American Boar and Yacht Council (ABYC) and United States Coast Guard standards,

using quality suppliers. Attention to details in terms of cabinetry and joinery were points of

distinction and important sales tools for Sabreline yachts.

B Quality production and control systems. The production of every Sabre was extensively

monitored. Every hull in production was given a ‘‘Boat Parent’’, an office staff Associate

that followed that particular boat through production, acting as the ‘‘eyes’’ of the dealer

and or owner. Each boat had a 600 point inspection during the six stages of the building

process. When the boats were received by the dealers, a detailed commissioning was

conducted using a detailed checklist to assure that all systems met Sabre’s standard for

quality. The commissioning report was then sent to Sabre. If clients or dealers reported

issues with a yacht, no matter how large or small, a Customer Quality Report (CQR) was

developed and circulated to all members of management and engineering, as well as

production associates related to the report.

B Quality values and employees. Sabre’s associates took pride in their craftsmanship and

were true to the company’s motto, ‘‘Crafted in the Maine Tradition’’. Most of the associates

were cross trained and were capable of working in all of the different phases of boat

building.

B Quality product performance. Yachts won ‘‘Top Ten Award’’ or the ‘‘Boat of the Year

Award’’ from Cruising World. Powerboats had substantially better performance than

traditional trawler hulls, which were mostly displacement hulls rather than planning hulls.

The reader should note that Sabre focused upon the larger size boat segments in both sail

and power boats (330 to 500 range), although they stayed out of the largest class category

(60 þ ). Also note that since Sabre was known for quality products that the firm employed a

differentiation strategy.

The reader could then conclude that Sabre’s distinctive competencies unmistakably lead to a

differentiated generic strategy and that the customer market they serve are the well-to-do;

those people that ‘‘have made it’’ and furthermore are growing in number. The reader might

note that these market segments of the sail and power boat market were quite small but parts

of these markets are rapidly growing (460-600 for sailboats; inboard cruisers for power boats).

Furthermore, Sabre was not only focused in terms of product line but that the firm also seems

to be focused in terms of the geographic region it serves (over 55 percent of yachts are sold

Table IV Porter’s approach to achieving competitive advantage

Focus Low-cost producer Differentiation

Broad market approach Broad market approach – low cost provider Broad market approach – differentiator Narrow market approach Narrow market approach – low cost provider Narrow market approach – differentiator

VOL. 9 NO. 5 2008 jBUSINESS STRATEGY SERIESj PAGE 261

in the New England region; about 75 percent overall in the Northeast). This combination of

limited product size and geographic region creates a smaller niche for the firm to compete

in. The real question they might ask themselves is whether or not this narrow a market niche,

or any generic strategy for that matter, was planned (intended) by the firm or merely

accidental (emergent) (Mintzberg, 1987).

Readers may also denote that this focus might accidentally be derived from Sabre’s ‘‘New

England tradition of building’’, a tradition that may not have market appeal west of the

Mississippi and south of the Mason-Dixon line. It should be pointed out that Sabre’s dealers

were located all around the country, but in the West and Great Lakes, a single dealer may be

the only representative for Sabre covering several states.

Describe the current marketing mix of Sabre. How well does this mix match the firm’s target

market?

The purpose of this question is to have the readers demonstrate their understanding of the

concept of the marketing mix and then employ that concept as an analytical tool for case

analysis.

The marketing mix as the may be defined as the ‘‘unique blend of product, distribution,

promotion, and pricing strategies designed to produce mutually satisfying exchanges with

the target market’’ (Lamb et al., 2003, p. 16). Sabre’s marketing strategy, as defined by the

4Ps of marketing (product, place, promotion, and price), includes the following:

B Product strategy. Provide high quality sailboats and powerboats in the 300-500 range.

Create a Sabre ‘‘brand name’’ which is founded upon their ‘‘New England tradition of

building.’’

B Distribution strategy. Single channel: Employ a ‘‘distributor system.’’ Require distributors

to carry entire product line while offering sales incentives and financial assistance.

B Promotion strategy. Multi-channel: Includes advertising, public relations, dealer support,

boats shows and the Sabre web site.

B Pricing strategy. No strategy per se. Tables AV and AVI in the case seem to indicate

comparably priced boats (by size).

Note that the target market for Sabre’s customers were well-to-do, those people that, ‘‘have

made it’’. Sailboat owners tended to be executives and entrepreneurs, about 55 years of age

and whose children had finished college. Themotor yacht buyers were younger, about 35-50

years old and was roughly ten times larger than the sailboat buyers. The question is whether

a promotional campaign that did not differentiate advertising media by age group was

appropriate given the life style and buying behavior differences between baby boomers and

Generation X-ers (Lamb et al., 2003) and whether Sabre was therefore reaching its larger

portion of their target market (power boating Generation X-ers).

It should also be noted that the five largest states with recreational boating registrations were

Michigan, California, Florida, Minnesota, and Texas; states that were in regions that

represented regions where Sabre had very low sales percentages as compared to their total

sales. The New England Region, their largest sales region, comprises states ranked 30, 31,

33, 35, 46, and 47th in recreational boating registrations and represents only 5.7 percent of

total registrations in the United States. Readers should expect that that distribution channels,

promotion, and even branding strategies may need to be realigned in order to capture larger

market share in these low sales regions.

Quantitatively analyze the firm’s pricing policy by doing a price competitor analysis yield the

following results (see Tables V and VI).

Note that for sailboats, Sabre is below the average industry price in the small 370-380 boats,

slightly above average in mid-sized 400-420 boats, and well above the average in the larger

440-460 larger sized boats. The reader can question this mixed pricing policy and wonder

whether Sabre was conscious of this competitive pricing strategy (or whether pricing was

more internally driven).

PAGE 262 jBUSINESS STRATEGY SERIESj VOL. 9 NO. 5 2008

In terms of power boats, one can observe a more consistent pricing pattern; that Sabreline

was always priced below the industry average. Again one can question this pricing strategy

since Sabre did not compete as a low-cost provider and therefore a lower price would not

seem to fit well with their marketing mix.

What recommendations would you make to Sabre in terms of altering their marketing mix,

given their early indications of slow sales?

For example, should Sabre expand its geographical presence? Should Sabre expand the

breadth of their product line (i.e. smaller Sabres or Sabrelines)? If smaller boats were

introduced, what distribution channels should be used in selling them?

This question goes to the heart of the case. The reader is asked to recognize a possible

market slowdown, and given these early signals, make suggestions that will shift Sabre’s

overall marketing strategy so as to service faster growing market segments.

A suggestion that is generic in nature is that since US exports of recreational boats has

increased over the last three years (1998-2000), that Sabre should start to export their

product overseas. This recommendation, however, could therefore apply to any company in

the industry at any time (i.e. product innovation and development, increased advertising,

reengineering, market research, etc. . . . ).

More specific recommendations may include broadening Sabre’s product line. For example,

we recommend building smaller sail boats since the largest market segment in sailboats in

1999 was small boats (00-110) yet also recommend expansion of the 460-590 sized sail boats

since this was the fastest growing market segment. In terms of power boats, since the

personal water craft and jet boats were decreasing in sales, these market segment should

be avoided. However, since revenues were increasing in the larger power boat markets, it is

suggested that promotional efforts be concentrated on this segment. In terms of geographic

expansion, one might recommend dealership expansion so as to ensure that Sabre has at

least one dealer per state. This would also include a suggestion that Sabre development a

coherent competitive pricing policy.

We believe that, as indicated in the case: ‘‘Power boat builders are generally more profitable

because volumes are higher. Sailboat builders tend to build fewer units and are therefore more

susceptible to risk.’’ This would therefore suggest reducing the firm’s risk in the sailboat market

given the perceived market slow down. Given that power boat sales in 1999 were ten times

those of sailboats, we would recommend a product mix where at most the firm would maintain

Table VI Selected competitor price comparison by size: power boats

Firm 34 0-38 0 40 0-45 0 47 0-52 0

Sabreline $ 296,600.00 $ 476,900.00 $ 962,100.00 East Bay by Grand Banks $ 413,100.00 $ 513,900.00 $ 832,500.00 Legacy $ 344,680.00 $ 486,128.00a $1,198,883.00 Tiara $ 258,300.00 Average price $ 328,170.00 $ 495,400.00 $ 997,827.67

Note: aAverage of 400 and 420

Table V Selected competitor price comparison by size: sail boats

Firm 37 0-38 0 40 0-42 0 44 0-46 0

Sabre $207,450.00 $293,900.00 $450,000.00 Tartan $200,790.00 $276,660.00 – Pacific Seacraft $200,700.00 $298,800.00 $375,300.00 Island Packet $228,950.00 $356,775.00 – J-Boats – $239,000.00 $415,700.00 Average price $209,472.50 $293,027.00 $413,666.67

VOL. 9 NO. 5 2008 jBUSINESS STRATEGY SERIESj PAGE 263

last year’s production of sailboats, perhaps focusing on the larger 460-590 boats and reducing

their smaller sailboat stock. Product line proliferation and growth should therefore occur in

powerboats, specifically inboard cruisers, which are experiencing the largest growth rate.

Promotional activities should be increased (additional boat shows, more magazine

advertisements) and specifically geared toward the younger (35-50) motor boater.

In terms of the distribution channel, we also propose that distributors should be expanded in

the five largest states with recreational boating registrations; Michigan, California, Florida,

Minnesota, and Texas. This includes setting prices for all boats to some extent above the

industry average. This pricing policy would affirm Sabre’s quality image, even though the

market may be experiencing a decline.

We feel that the slow down in the market may be an opportunity to reinvent the Sabre brand.

Although Sabre has a quality image, the image was only successful in the New England and

Mid-Atlantic region, a region that only had one state (New York) within the top ten states for

recreational boating registration. Secondly, we denote a schism between sailboat and

powerboat customers; as stated early an age/generational difference. We therefore suggest

either a reinvention of the Sabre brand (distancing itself from its New England roots) and/or

an invention of a new brand or brands that would better fit the differing segments of their

target markets and therein allow Sabre to produce smaller boats (especially power boats)

without marring the elite status of Sabre. We devised the following product line chart as a

possible example of this marketing tactic (see Table VII).

We suggest phasing in these new brands (i.e. develop a Sabre Supreme sailboat and the

Claymore powerboat) over time so as to give Sabre a chance to develop a promotional

strategy that could support product branding. We also suggest that marketing research be

conducted with the target population of each market segment to develop brand

characteristics that would match each segment’s life style. For example, research may

indicate that the Claymore and Dagger brands of boats should have multiple distribution

channels (i.e. dealers for these product lines as well as on-line purchasing) and far fewer

special features than larger powerboat counterparts.

In terms of a promotional strategy, we also suggest an intensive promotional effort in the top

five boating registration states (Michigan, California, Florida, Minnesota, and Texas) linked

with strong financial incentives so as to increase dealerships in those states. This also might

indicate the need to slightly lower prices in the very high end sail and power boats in these

states in order to not be perceived as the highest priced producer. Lastly, we suggest that a

positive side effect of developing multiple brands might be that dealers might only be

required to stock one boat in each boat brand (reducing in-house inventory) and would also

allow dealers more latitude in choosing which brands (size boats) they wish to carry.

In brief – what actually happened

Sales for Sabre and Sabreline declined in 2001 to a total of 65 boats and followed the

company’s traditional 40 percent sail and 60 percent power sales ratio (26 sail and 39

powerboats). From 2001 to 2004 sales increased by 23.5 percent to 85 boats annually and

followed the 40/60 ratio (34 sail and 51 powerboats). Sabre increased the number of boats

shows that it exhibited in by 10 percent. Changes were made in its dealer network with a few

new dealers added and a few replacements. Geographic coverage was essentially the

same. In addition, two new power boats were added. The 420 Express was introduced in

February 2003. Following its success the 380 Express was added to the line. The sailboat

offerings were expanded to include the Sabre 426 (420600) in the fall 2002.

Table VII Sabre brands by boat size

Type of boat 25 0-30 0 30 0-35 0 36 0-40 0 41 0- 47 0 48 0- 59 0

Sailboat Dirk Sabre Sabre Custom Sabre Deluxe Sabre Supreme Powerboat Dagger Claymore Sabreline XT Sabreline Pro Sabreline Extreme

PAGE 264 jBUSINESS STRATEGY SERIESj VOL. 9 NO. 5 2008

Changes were made at North End Composites. A new line of power yachts were introduced

with the Back Cove 290 in September 2003 and the Back Cove 260 in October 2004. The

thinking behind the Back Cove line was that it was a smaller boat than Sabrelines, lower prices

($158,000 and $115,000 base prices respectively), fewer options resulting in a production

boat (less costly to produce) rather than the semi-custom Sabrelines. Options were

essentially: color choices, engine sizes (315 hp or 240 hp Yanmar diesels for the BC 29 and

240 hp and 200 hp Yanmar diesel for the BC 26) and air conditioning. The name, Back Cove,

was not Sabre or Sabreline, and was significant because it didn’t ‘‘trade down’’ the Sabreline

name. Further, it would be possible to sell the company (North End Composites) or boat

line/brand to another company at some undetermined date, or keep the line. Another criteria

was that it would have separate dealers and increase the penetration of dealers in its markets.

There are a few Sabreline dealers that do sell Back Cove, but it is a small percentage of the

total. Back Cove dealers are in the following states: Connecticut, Maine, Massachusetts,

Rhode Island, New York, New Jersey, Virginia, North Carolina, South Carolina, Florida,

Maryland, Michigan, Washington/Oregon and one international dealer in the UK.

Comparison of actual versus recommended strategies – the road not taken

Sabre decided to ‘‘stick to the knitting’’ (Peters and Waterman, 1982) and not expand

geographically, as we suggested, into the largest state market segments. Instead, they took

a more conservative approach and expanded their product line which expanded the

breadth of their market into other boat market (size) segments (which we also suggested)

but not to the extent we indicated in Table VII. This may have indicated Sabre’s hesitancy to

take on larger competitors within these larger state market segments given the perceived

entrance barriers created by a limited distribution networks in those regions as well as their

‘‘New England’’ brand image.

Sabre did specifically develop two new power boats and one new sailboat, yet not in the

market segments we recommended above. (Power boats produced – 420/380; we

recommended 300 to 350. Sail boat produced 420; we recommended 460 to 590.) Again, Sabre

may have perceived resistance in these markets segments for the Sabre brand. Sabre,

however, as we recommended, they did introduce a separate brand and product line for

smaller power boats (though smaller than we recommended, 290 and 260) with less frills,

while concentrating their expansion efforts predominately in the powerboat market.

Note

1. Adopted from Leach et al. (2006). With permission of the authors.

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