How Do You Sell a Million Mowers?
A BACKGROUND AND A BEGINNING
On Saturday, September 20, 1952, a short advertisement appeared for the first time in the classified columns of the Sydney Morning Herald:
FOR SALE, Victa 18 inch rotary mower, 1 h.p. Petrol Engine.
Cuts to fence and any height grass, weeds etc.
Safe for 10 year olds.
£39.16.0 plus tax. UF3093.
For a cash outlay of 23/9, Victa Mowers a brand new family manufacturing concern with a brand new type of mower (and an all up capital of £629), had opened its door for business.
And business was brisk. A keen demand soon developed for the machine that, for the first time in Australia, combined a petrol engine with a rotary-bladed mower (until then electrically driven).
Continued classified advertising, backed by larger advertisements in Sydney metropolitan and suburban newspapers, produced a total of 358 sales over the next nine months to June 30, 1953.
With a little money now in the bank, and spurred on by a set of deafened neighbours, the company moved from its backyard garage-workshop in the Sydney suburb of Concord into the rear of a nearby factory and continued its efforts to cope with the increasing demand for its mower. Within a few months these premises were outgrown and the company moved again, this time to a new showroom-factory in Parramatta Road, Concord.
By this stage, the demand for its mower was far in excess of production and was causing serious embarrassment. Although it could turn out sufficient mower parts to cope with demand, it could not buy enough engines. At that time all mower manufacturers used the same engine, an English unit assembled in Australia from imported parts. As the engine supplier was unable to keep up with the demand of the expanding mower industry, the output of all manufacturers suffered badly.
In the end, Victa was forced to quote up to twelve weeks delivery delay and, at the same time, double its sales staff to six in order to cope with the mounting tide of prospective customers.
Congestion at the new showroom became so bad on Saturday mornings that highway traffic outside was continually disrupted. (Each customer had to bring his own car to take delivery of his long-awaited mower.) Police warnings on the traffic hazard did little to ease the problem, although the local constable delivering the last complaint did stop long enough to place a £5 deposit on two mowers - one for himself and one for his sister in Darwin.
In addition to its showroom sales staff, at weekend the company used a number of mower demonstrators to call on prospects who had sent in coupons from newspaper advertisements. Each demonstrator, a mower factory hand during the week, was given a list of ten prospects on Saturday morning, and by nightfall, was counted on to return with at least nine orders and deposits. Eight orders was a matter of shame-faced concern, and ten orders excited nobody. The record was set by one demonstrator with twelve orders out of ten. He not only sold a mower to his tenth consecutive prospect but also to the prospect's two neighbours found peering through the fence during the mower demonstration.
Even though it was severely hindered by production difficulties, Victa ended its second trading year with sales of 990 mowers, up 150% over the previous year, and a turnover of £45,000.
A Look At The Market
During 1954 the company found that before its own entry into the field, the market for petrol mowers (then all non-rotary cylinder types) had been expanding for some time. Although in 1949-50 petrol mowers held 5% of the total market, this percentage had doubled to 10% within the next three years. In the following year alone (1953-54) the market had more than doubled again (from 7,993 to 16,997).
Victa looked for reasons and discovered:
Victa therefore concluded that, because of the low price of the petrol mower and the extremely low saturation figure, the petrol mower market was moving from the very restricted, high-income buyer group to the large middle and lower middle-income groups. If this reasoning was correct, a motor-power boom was just starting. This was confirmed the following season: sales nearly trebled in 12 months.
If over the next few year motor-mower saturation could be pushed to 25% or 30% (a conservative estimate) there was a market in Australia for more than 1 million power mowers.
Even though a mower boom might be under way, it was going to be difficult for Victa to move with it. The company was still a very small manufacturing-retailer operating out of a single suburban shop with a handful of employees. It had a current working capital of £1,254, a bank overdraft of £1,312 and no prospect of raising any substantial amount of money.
Even further, it had by now lost its competitive edge to other manufacturers who had followed it into the market with similar machines (the petrol rotary principle could not be patented).
On examination, it found that its competition had taken a massive 93% of the recent market increase for motor-mowers. It also found that after nearly two years in business, it had gained no more than 0.7% of the total current mower market.
Notwithstanding the difficulties involved, Victa decided to risk everything in a gamble plans to capture as much of the coming boom as it could. The marketing plans adopted by it to implement this decision, and the steps taken to put the plans into operation, form the basis of this marketing report. It covers a specific period of five years from 1954-55 to 1958-59, during which time Victa transformed itself from a small run-of-the-mill business, little different from thousands of similarly-sized concerns, into one of Australia's national leaders in the domestic appliance field.
This report also shows how the company financed its whole marketing operation on its original working capital of £1,254. (The bank overdraft of £1,312 was repaid at the beginning of the first year.) During the five-year period the company used no outside capital, bank overdraft or borrowed money of any kind to build its business.
In 1965 Victa had an estimated 50% share of the Australian power lawnmower market, strongly held against intense competition. (Its nearest rival held an estimate 9% of the market.)
From the staff of its marketing plan to 1965 the company has sold 860,000 mowers for a total turnover exceeding L37 million and will, on present estimates, make its millionth mower during the 1966-67 season. One out of every two mowers used in Australia in 1965 has been made by Victa.
Policy, Plans and Problems
Having determined to go after the coming mower market, Victa decided upon the following marketing policies:
The company adopted a three-point marketing plan designed to operate over the following five years (1955-59).
The company would design and make its own engine with at least twice the power of the existing engine used by the rest of the trade.
By doing this it would achieve two objects. As the most important single factor of any motor-mower is its cutting power, the company was expected to gain a most valuable market advantage with a doubly powerful engine. It hoped to be the first manufacturer to get volume production, unhampered by inadequate engine supplies.
Problems. Although the idea of designing such a new engine sounded fine, the company had no qualified technical or engineering staff and no money to engage any. To be of any practical use, the new engine had to be made at a highly competitive price.
The company had already learned that its mower was a most abused appliance
and when it went wrong Victa was expected to fix it. In consequence, batteries
of carefree customers spent their weekend chopping away happily at every
nonmoving obstacle in sight. An unofficial record of sorts was established
by a supremely confident customer who felled a 30 ft. high blue-gun in 15
minute flat by angling the blades of his mower into the base of the tree.
Victa soon realized that the sale of one of its mowers merely set the stage for a hand-holding customer relationship that would continue through blade replacements, carburetor malfunction, throttle failures, burnout of engines, and baseplate fractures to the final disintegration of the tortured machine in the hands of a wide-eyed and completely disbelieving customer.
In the light of its experience, the company consider it vital for all its dealers to provide service and to carry spare parts.
Problems. The discount of 15.5% offered by the company on its mower was less than half the gross profit margin normally expected by domestic appliance and mower dealers. As most retailers believed that it took a 25% margin merely to cover selling and general overheads, it was expected to be difficult to get them to handle an unknown brand of mower on a margin below what they believed to be break-even.
In addition, the fact that service had to be provided by the retailer was a radical and unpopular departure from the established trade practice at that time. Service had always been provided by the manufacturer. The fact that a retailer had to set up his own workshop with at least one engine mechanic, or alternatively, to subcontract out the work to an engineering workshop, was unpalatable, even on a product with a sane margin.
As a further problem, Victa was forced, because of shortage of money, to limit its credit terms to dealers. Instead of the usual 30-day terms from the end of the month, the company intended to grant a 7-day term from the date of delivery of the goods, with non-delivery of further goods on nonpayment of an account by the eighth day. Further, there would be no discount for cash and no quantity discount. In fact, each dealer had to take a minimum of four mowers, or multiple of four, at a time. One of Victa's directors had invented a special four-mower iron crate to overcome the difficulty of transporting mowers; the size of a dealers minimum order, therefore, was determined not by demand but by the capacity of the crate.
The company planned a publicity and advertising campaign on a progressive national basis to get volume demand for its product and recognition of its brand name.
Problems: In the beginning Victa was not able to spend as much as it would like on paid advertising. In fact a quick check disclosed that in the last year the company had spent only a total of £563 on advertising and promotion combined. In the coming year it could not afford more than £2,000. (It turned out to be £2,269.)
This meant that for some time it would have to rely mainly on unpaid publicity. The fact that its product had as much glamour as a stomach pump made the task of firing the imagination of ten million people a matter of some difficulty.
THE FIVE TURBULENT YEARS
The First Stage 1954-55 - 1955-56
As a matter of urgency, a design group was formed from existing staff, and a start was made on the design of the new mower engine. Working under pressure and around the clock, including camp stretchers each night in the back of the workshop, the group spent the following six months trying to produce a working prototype engine.
The group eventually had an engine built and working by February, 1955. With field testing and costing starting to check out satisfactorily (rather to everybody's surprise), the company took the next step in its marketing plans. In March, 1955 it appointed its first sales manager, augmented its retail sales staff to eight - increasing to twenty-six on weekends - and appointed its first dealers.
By April, 1955 it was ready to offer its new engine to the public and by June, eight weeks later, it was producing sufficient to swing its whole mower production completely away from the old engine.
The company had now successfully achieved its first aim: it had a rugged, reliable, low-cost engine that doubled the cutting power of its mower and set it apart from all competing mowers. At the same time, it had solved its production difficulties. It was ready to move into volume production.
By June 1955, a group of 32 dealers, 7 suburban, 25 country, had been selected. Of the many N.S.W. and interstate applications received by the company from its advertisements for dealers, most had come to nothing. In some cases applicants were turned down by Victa either because the company did not believe that they would or could honour their promises to provide service, or because an agent had already been appointed in the locality. In other cases the applicants, usually established domestic appliance or hardware retailers withdrew without ceremony as soon a they were told of the ludicrous profit margin, the restricted credit terms and the need to provide customers with full service facilities.
Over the following twelve months, however, the company did build up a dealer network and by the end of the second year of its marketing plan, it had put together a total of 483 dealers across the Commonwealth. In line with, its overall marketing policy, it had no hesitation in moving outside traditional mower retail outlets to appoint agents. Provided the agent was financially sound, was enthusiastic and was able to give service, or arrange for it to be done under subcontract, a dealership was usually granted.
As a result the company probably had the strangest assessment of appliance dealers ever assembled. Apart from more orthodox dealers, Victa had, and in most eases still has: A rainwater tank maker in Heywood, Victoria. A travel agent in Ingham, Queensland. A picture theater proprietor in Garfield, Victoria who scrapped his front foyer chocolate counter and substituted a Victa mower display. A wholesale grocer in Maryborough, Queensland. A chrome-plater in Dubbo, N.S.W. Two news agents, one in Jannali, N..S.W. and the other in Beacon Hill, N.S.W. who set up a Victa display on the café floor next to the cash register and cold canvassed at weekends. A boat builder in Welshpool, Victoria. A racecourse starting - gate maker in Bendigo, Victoria. A barber in Yarrum, Victoria with a full mower display in the saloon, and a captive audience in the chair. Another barber in Derrinallum, Victoria. A florist in Upper Fern Tree Gully, Victoria. An ice works in Echuca, Victoria. A self-service store in Yea, Victoria. An electric linesman in Yulebar, Queensland. A produce store in Moman, N.S.W. A sewing machine retailer in Hampton, Victoria. A mushroom wholesaler and retailer in Camperdown, Victoria. A joinery works in Wallington, Victoria. A grocer and general store in Ingleburn, N.S.W. run by an ex-railway detective and his family. Two undertakers, one in Pyramid Hill, Victoria and another in Deloraine, Tasmania.
To support its growing network of dealers, Victa increased its advertising expenditure from £2,269 (1954-55) to £10,834 (1955-56). Out of this amount, it subsidized 50% of the cost of dealer advertising the first mower company ever to do this, supplied dealers with an increasing quantity of point-of-safe material (leaflets, envelope stuffers, stereos, mats, posters, mower handle cards, window transfers, streamers, illuminated signs), and mounted a small press campaign in each state.
At the same time the company used every opportunity to capture as much free publicity as possible for its product.
In the meantime the company's overall sales and turnover had risen spectacularly. Starting with 990 sales in the year prior to the introduction of its new five year marketing plan, it sold 5,048 mowers in the first 12 months (1954-55) and 35,577 in the second year (1955-56).
Annual turnover rose from £45,000 to £203,000 (1954-55) and then to an unprecedented £1,377,000 (1955-56).
The Second Stage 1956-57 - 1957-58
Although the company was inundated with applications for dealerships from established retailers throughout the trade, a most peculiar situation had arisen in each capital city.
As late as the middle of 1957, three years after the start of Victa's marketing plan, no dealer of any description had been appointed in the city areas of Sydney, Melbourne, Brisbane, Adelaide or Perth. Although city retailer were prepared to accept the low margin and seven-day credit terms, they would not provide service and therefore were not granted dealerships.
The extent of Victa's insistence on service as the backbone of its business was illustrated in the case of a Sydney firm which placed an order for 2,000 mowers with the company on condition that it was granted a dealership without having to provide service to its customers. The order was returned unfilled and the dealership withheld.
Victa's continued refusal to give ground to city retailers later led to the opening of the company's own retail outlet in George Street, Sydney. In all other cities, its mowers could be bought only from a ring of suburban retailers.
The deadlock soon broke however. During the latter part of 1957 and early 1958 dealership were granted to a number of major department and chain stores in each capital city. In every case the store involved agreed to provide full after-sales service. The company, for its part, withdrew completely from the retail field and concentrated on the expansion of its national dealer network. By June 1958 it had increased its number of dealers from 483 to 905 (up to 87%).
In the meantime it had been busy in other directions. Realising that its competitors had gradually overcome their engine difficulties and were out to match its machine and its volume production, the company brought out a completely new mower. As well as completely different and advanced styling, the new unit incorporated simultaneous four-wheel height adjustment, automatic recoil starter, automatically governed engine throttle, a new type of silencing muffler and a folding handle.
The introduction of the folding handle was, from Victa's point of view, probably the most important of all its new improvements. For the first time the company had a product that was truly portable. Previously the upright handle of the mower had caused many handling and transport problems, partly overcome by the four-mower iron traveling crate. Now that the handle folded down over the body of the mower, the whole machine could be placed in a compact cardboard carton, as could its accompanying accessories, instruction book, spanners, fuel tin and pouring funnel. With the boxing of its mower, Victa cut the handling and storage charges of its dealers, and enabled them to deliver to the boot of the customer's car a completely unmarked machine in a factory-sealed carton.
At the same time, Victa solved its own mower transport problems. With a large number of dealers being appointed around the Commonwealth, from Brisbane to Perth to Darwin, the efficient transport of a mower was a matter of prime concern. Fixed-handled mower not only damaged easily in transit but were also much more costly and cumbersome to shift. The coming of the mower carton put an end to such difficulties simply and without fuss.
Although its new product allowed it to stay well ahead of any competition, Victa moved quickly to strengthen its marketing structure. It opened interstate offices and warehouses in Melbourne and Brisbane (offices in Adelaide and Perth came later in 1958), appointed a branch manager, increased its total N.S.W. and interstate sales staff (now dealer representatives, not retail salesmen) to seventeen, augmented its Head Office senior executive sales and advertising staff, set up dealer service and sales schools in each state and doubled the size of its factory (now moved from Concord to the Sydney suburb of Silverwater) to cope with substantially increased demand.
During the whole of this two-year period Victa promoted and publicised its product and itself at every turn:
In addition to its promotional activities Victa was able, for the first time, to advertise its mower on a large scale. Breaking entirely new ground for a mower manufacturer, it took full page and double page advertisements in metropolitan dailies and Sunday newspapers throughout the mower season, repeated full page colour advertisements in women's magazines (Women's Weekly, Woman's Day), full page advertisements in Reader's Digest and complete newspaper supplements. Early in 1957, for example, Victa paid out £7,000 in one day to produce two 8-page Victa advertising supplement simultaneously in the Sydney Sun and Daily Mirror.
Over the two years under review Victa spent a total of £201,651 on advertising and promotion compared with a total of £13,103 for the previous two years. A breakdown of expenses showed that 54% of Victa's advertising appropriation was spent on press and magazines, 23% on dealer material and advertising subsidy, 10% on radio, 4% on theater advertising and 9% on billboards, promotion, and television - then in its infancy. Notwithstanding the large weight of advertising, Victa was able to keep the cost of £1.10.0 mower or a respectable 3-7% of turnover.
Mower sales during the second stage of Victa's marketing plan showed a substantial increase over sales made in the previous two-year period. Sales rose from 35.577 to 59,974 (in 1956-57), and then to an all-time high of 66,742 (in 1957-58) representing an annual turnover of £2,859,315.
The Final Stage 1958-59
Although Victa was now in the forefront of the field, it was facing fierce competition from more than thirty other rotary mower manufacturers in a market that had already reached a saturation of 27%.
Before entering its 1958-59 season, therefore, the company decided to review the whole market situation. A group of research experts and professional psychologists carried out a complete program of motivation, economic and market research covering consumer, dealer, product, price, margin, advertising, competition and potential.
From this research Victa found:
In line with its research findings, Victa adapted its plans to meet the changing needs of the market. It decided:
With its new plans determined, the company moved initially to organize its own large-scale service facilities. In each capital city it set up a complete repair and overhaul workshop with trained engineering staff under a well-experienced service manager. It supplemented each workshop with a roving fleet of radio-controlled service vans, fully equipped to handle all but major repairs on the spot.
At the same time Victa increased its sales staff to twenty-one and went out to appoint more dealers. Helped considerably by its new dealer margin, although still the lowest in the trade, and its changed service policy, it had no trouble expanding its dealer network from the existing 905 to 2,369 within twelve months and to 3,589 shortly after that. A subsequent dealer survey showed that Victa had 100% representation in the trade.
As the new mower season started, Victa increased its advertising budget substantially and mounted its new campaign. For week after week throughout the season Victa took single, double and even triple full page advertisements in daily and Sunday papers in a massive saturation campaign that dwarfed the advertising effort of all domestic appliance manufacturers before it.
In addition to press advertising, the company advertised extensively on television, using semi-institutional commercials designed to build a long-term brand image for its product. The institutional nature of the campaign was sufficiently important to warrant extending it through the winter months after the close of the mower season, though nobody yet has been induced to buy a mower in winter.
The extent of the company's combined press and television coverage was put into perspective in due course by an advertising survey made of the whole mower industry. The survey showed that Victa alone accounted for no less than 60% of the industry's total press and advertising expenditure, while all the other 30 manufacturers accounted for the remaining 40%.
Although the major part of the company's advertising allocation was given over to press and television, this still allowed a very substantial amount of money for advertising in other media, radio, theater, billboards, for a vast amount of point-of-sale material and for subsidized dealer advertising on a large scale.
As part of its new institutional approach to publicity and promotion, the company set up a community mowing section and offered its services free of charge to charitable, church and other similar bodies with large grounds and not enough money to keep them in order. Within a short time the company had more work than it could cope with. Its new department cleaned up the grounds of kindergardens, orphanages, baby health centres, schools, churches, rectories, convents, cemeteries, playgrounds, old age homes, hospitals, nursing homes and even an dogs' home (R.S.P.C.A., Moore Park, Sydney). Over the following 12 months the company completed more than 300 jobs and had as many more again ahead of it.
On many occasions the company extended its community service efforts to handle a particularly large job.
Victa gained a great deal of public goodwill and national publicity, including press, television, theater newsreel and radio coverage from its community service activities and from other charitable projects carried on at the same time.
Example. Shortly after the company moved its factory from Silverwater to its present 14 acres site at Bankstown it organised one of Australia's largest dog shows on the lawns of its new factory.
The show attracted more than 4,000 people over 1,500 entries. A total of seventeen judging rings were used simultaneously by judges flown in by Victa from all over the Commonwealth. The show was supported by a variety of side-attraction including a full vintage car rally (each car arriving in procession with a different breed of dog aboard) and received wide television and press coverage. At the end of the day the company was able to present a cheque for the total proceeds of £750 to the Guide Dogs for the Blind Association, for which the affair had been arranged.
As a separate form of publicity, repeated news stories on the company and its directors were circulated and were given a great deal of space in news papers and magazines.
Under the sheer weight of mounting publicity Victa became a familiar topic of everyday conversation. The story of its underdog days and its current successes - especially financial - captured and held the imagination of the man-in-the-street.
The combined effect of such publicity and of Victa's new advertising and other marketing activities caused dramatic upsurge in demand for its product. Individual dealers were reporting turnovers in excess of £200,000 and saturation in certain areas became absurd.
Example. Out of a total of 3,925 households in one Queensland provincial city it was found that no less than 2,661 used a Victa mower - a saturation of 61% for one brand of mower alone.
By the end of the 1958-59 season the company's total sales had risen from 66,762 to 142,909, representing a turnover to the company of £386,468.
A REVIEW OF ACHIEVEMENTS
Victa had now reached the end of its five-year marketing plan.
Its day of empty pocket and impossible dream were over. It had used the most unorthodox and blatantly improbable of marketing plans to win a market for itself. Notwithstanding its ridiculous trade margins, its tightfisted credit terms, its blind insistence on service, its unbelievable entourage of oddball dealers and its almost total lack of money, it had revolutionized an industry and changed the mowing habits of nation.
In five years it had emerged as the giant of the industry and as a leading company on the national business scene.
Thanks to Bruce for permission to reproduce his history of Victas.
