Recreational Boat Market: Malibu Vs. Mastercraft
Malibu’s strategic positioning has allowed them to deliver consistent performance while capitalizing on the growing market for boat sales. Their operations are currently divided into three brands: Malibu and Cobalt, which produce more than 30 world-class boats. Malibu, the heritage brand, accounts for 59%. Axis offers performance boats as well, but it focuses on the entry-level, low-price segment. 7% of the total revenue. Cobalt is a brand new to Malibu. It serves the outboard and sterndrive recreational boats. 3% of total company revenue.
Malibu is a market leader since 2010 in performance sports boats. Their market share for 2017 was 21. 6%. MasterCraft, their main competitor, has seen its shares drop and now only holds 21. 7% share of the market. Malibu has a strong marketing strategy that focuses on both inorganic and organic growth. The website, which is an award winner, helps them build a strong presence in the country. It allows customers to browse different boat configurations and then choose the best. They have gained an organic digital audience of over 2 million people through social media interactions since 2015. 7 million, making them the largest boat industry social media audience. Malibu also promotes grass-root marketing by sponsoring many specialized watersport events, individual and team athletes, aswell as collaborating with local dealers. Malibu’s Just Ride Tour, for example, allows Malibu personnel, VIP customers, and athletes to participate in local and national water events.
Second, Malibu strategically strengthens their brand by innovating and offering a wide range of products. To develop, test and produce their engines, they partner with a number of big engineering brands like GM Motors, McLaren Engineering, and Davinci. Malibu’s engineering department has more than 15 first degree engineers. It also has an R&D division where engineering and manufacturing work closely together to integrate products to provide quick, flexible responses to customers’ changing preferences. Malibu has been able to launch four new Malibu/Axis models every year and 30-40 additional features. This approach is being applied to Cobalt brand acquisition to quickly take over the market.
Third, Malibu focuses on increasing the productivity of dealers and growing dealer exclusivity because they sell most of their products through them. Malibu has a global distribution network that includes more than 350 dealers, many of whom are among the Top 100 Boating Industry dealers. Malibu also has been focusing their efforts on reviewing their geographical coverage in order to identify potential opportunities for expansion or improvement of their dealer network.
Malibu’s last goal is to aggressively grow through strategic acquisitions and international expansion. They went public in 2014, and in 2017 they acquired Cobalt. This subsequently brought their EBITDA margin up to 18. 7%. Malibu purchased Pursuit Boats assets to expand its product lines, including recreational fishing boats. Malibu is represented internationally by 59 dealers in 40 countries under the Malibu/Axis name and 27 in 24 countries under their Cobalt trademark. Overall, Malibu offers a viable marketing plan that has great potential to increase market share and growth. Malibu needs to be aware of the potential risks and difficulties that could arise from executing this plan.
First, recreational boat sales are highly volatile as people have more options for how they spend their time. However, consumers are increasingly interested in used boats. Unpredictable sales and high fixed costs of boat manufacturing could cause financial difficulties for the company. Malibu’s marketing strategy relies heavily on sponsorship athletes and events. Unfavorable events or incidents could have a negative impact on the brand’s image.
Second, Malibu heavily invests in R&D. Although this provides them with a competitive advantage on the market, innovation and category growth increase manufacturing costs and complexity. Entry-level customers with little knowledge of recreational boats may feel overwhelmed and challenged by all the hi-tech configurations they don’t understand.
Third, acquisitions can lead to growth, but they also require large cash investments and time, which could create limitations on businesses that are already investing a lot of money in innovation. Malibu’s international expansion is a complex task that requires a lot of managerial attention because of international legal, economic and political factors.
They should also pay close attention to intellectual property, counterfeit control and differences in exchange rate.