Interview: Three marketing students analyzed the Beach County surf market
by Felix Scholz
In anticipation of the surfing World Cup, marketing students from Santa Beach College decided to conduct a study of the surfboard market. They recently published the results in a relevant professional journal. The Santa Beach Tribune met the initiators of the study, Sophie Petty, Karl Ruttiger and Daniel Barnes, as well as the supporting professor Monica Albertson, for an interview to discuss the idea and the results of the study.
Mr Barnes, how did you come up with the idea to conduct this study?
Daniel Barnes: The three of us are avid surfers and we were really blown away when the community announced that it was applying to host surfing competitions. Then we noticed that despite the busy surfing market in Beach County, there is practically no reliable information about the surfboard market in the area. So, we contacted Prof. Albertson and presented her our proposal – she was thrilled and agreed immediately.
We only have a summary of your study. Ms Petty, could you please explain the results of the study more accurately?
Sophie Petty: Of course! We proceeded very systematically, so I will present the results in this order. First, the market: the prices of the boards are roughly around 600 euros. The demand for surfboards was 640 boards per company in winter and 700 in summer. We would also forecast these numbers for the Santa Beach market. For next year, 35% growth is expected in both seasons; in the year after, growth weakens to about 18%. Sales between April and September were generally higher than in the winter season.
Now, more precisely to the market participants: along with their own sales, there is (especially for small suppliers) also the possibility to cooperate with large retail chains. These wholesalers buy products in larger quantities and sell them under a different brand name, usually at a reduced price, on neighboring islands. In the past, prices were around 320 euros, and approximately 100 surfboards per year were sold to a wholesaler, who takes over sales and marketing completely.
Wow, those are a lot of interesting facts. Would you like to add something, Mr Ruttiger?
Karl Ruttiger: Yes, but not much. Sophie forgot to mention two more discoveries about consumer purchasing behaviour. First, although surfboard buyers research and compare online, they only buy their boards from online retailers in the region, because they usually know the manufacturers personally. Second, the location within the region doesn't affect purchasing behaviour at all — it doesn't matter how far the production site is from the beach.
Are there any hints you would like to give potential market entrants?
Daniel Barnes: Yes, there are. We have heard many times that consumers want more choice — both in the number of surfboard producers and in the individual design options for the boards. If you find an intelligent way to differentiate yourself from the competition, you have good chances of establishing yourself in Beach County.
Many thanks for your honest opinion, Mr Barnes. And thank you all for your time and the conversation.
To give participants a general idea of the model's sensitivity, the following benchmarks assume that only one company changes this factor while the competition makes no changes.
Technology development
The benchmark is 3 employees for this division. As a result, the technology index increases by 10% in the first half-year. A team of more than 5 people does not significantly increase development speed. A 5% technological advantage over the market translates into roughly 5% growth in sales.
Website development
On average, companies spend about €45,000 per half-year on website development. With a budget of €70,000 or more, customers become overwhelmed by the extra functions. Here, 3% sales growth was achieved with a lead of 5%.
Variant index
The higher a company's variant index, the more it can individualize each surfboard to the customer's wishes. 60% of the variant index depends on the company's own investments and 40% on the supplier's index.
Customer service
On average, companies employ 3 staff members in customer service. One customer service employee can generally advise about 200 clients per half-year. The fewer customers per advisor, the better the advice.
Price
The average market price of a surfboard is €600. A price reduction of 5% would lead to sales growth of 14%. A price increase would lead to a decline in sales of 12%.
Terms of payment
The market benchmark is immediate payment. With a payment term of 6 weeks, an 8.5% increase in sales can be expected.
Advertising
The average advertising budget is €45,000. A reduction to €40,000 leads to a decline in sales of about 3%. An increase to €50,000 leads to a sales increase of about 3%.
Our Surfer Special covers the upcoming surfing competition, so we wanted to give our readers some background information about surfboard manufacturing. We met with Jordan Cleary, the shaper at SurfTight, a surfboard manufacturer in Laketown, who took us into his workshop and showed us the entire production process from the "blank" to the finished board.
Surfboards can be made in one of three ways: from balsa wood, using the sandwich method, or from polyurethane. We describe only the last method, as SurfTight specialises in it.
Jordan starts the manufacturing process with a polyurethane "blank", the core of the board, made of polystyrene foam with a stringer (a wooden rail) inserted in the middle. Several stringers are possible depending on the length of the board and the intended riding style. Liquid polyurethane is poured into a mould under high pressure and heat, forming a dense, white foam. After half an hour the blank is removed from the mould to harden further. Once cooled, it is cut down the middle, one to three stringers are inserted, and the two halves are glued back together.
The outline of the future surfboard is traced onto the blank using a template that covers only one half of the board and is then mirrored onto the other side, guaranteeing perfect symmetry. A jigsaw cuts along the outline, and a planer and sandpaper round off the edges until an even curve runs from nose to tail. The board is then smoothed with fine sandpaper, the fin and leash attachment points are marked, and a fine layer of colour is applied with an airbrush. Logos on ultra-thin parchment paper are placed on the board, followed by one to three layers of glass-fibre cloth per side, soaked in epoxy or polyester resin.
Once the resin has hardened, the plugs for the FCS (fin control system) are set and the leash attachment is inserted. The fins and leash are then fitted. Some boards are finished with a clear lacquer coat, though most are simply polished to give them their typical smooth surface.