Hunley, Inc.: Casting for Growth – Case Solution

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Hunley, Inc.: Casting for Growth Case Answers

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Hunley’s Challenges and Success

Hunley was able to introduce fiberglass rods to the fly-fishing market using high-technology materials in the manufacturing process. C.W. Hunley Jr. became president of the company in 1981, looking to expand and grow the company by developing state-of-the-art fly-fishing rods from new composites of graphite that would be lighter in weight and more resistant compared to fiberglass.

C.W. was able to implement a communications program that increased awareness and strengthened its position as a leading brand for expert freshwater fly fishermen.

C.W. was concerned that Hunley was being appraised for its actual value by consumers despite using the most advanced materials and careful craftsmanship. This perception was caused by maintaining lower prices that were seen as mid-tier products in the eyes of the consumer.

Hunley finds it challenging to evaluate and measure its advertising efforts. Their inability to measure these ads had been a constant problem for the company and raised the question of whether to continue print advertising or look for different options for advertising.

Market Analysis and Competitive Advantage

H C.W. Hunley was a deeply experienced fisherman who was able to create a competitive advantage by understanding the needs of the fly fishermen. Hunley, Inc. provided iconic rods using the most advanced materials, manufacturing lighter rods than its competitors. Hunley created a reputation for selling high-quality Rods, but that perception has decreased lately, potentially due to not understanding the motivations and needs of fly fishermen anymore.

Rod, reels, and poles and components were a saturated market where Hunley, Inc. competed against over 25 companies for a 2.5 billion business. Hunley had a 1% market share with sales of 26 million in 2018. With 6.5 million fly fishermen and 15 million fishermen (anglers) willing to buy new rods every year, Hunley, Inc. had options to grow. The company operates in different segments: avids, occasional, and competitive.

Its major customers are high-income and older individuals. Hunley, Inc. should prioritize the competitive and avid market for two reasons. First, the competitive segment has a big influence on the other segments regarding what equipment to use, given that fishermen look up to what professionals choose, and they would likely want to buy the same.

The same principle goes for the avid sellers in specialty stores who are knowledgeable about selecting the right equipment and are trusted by consumers. Second, for Hunley, Inc. to jump into mass merchandise retailers and use a low-price strategy against its competitors is not a great idea given that usage of the best materials for manufacturing its product is not price efficient and will be difficult to compete. Plus, it would be challenging to focus on a narrow market segment.

The best approach would be a geographical distribution focus using retirement communities and lakes and streams as filter criteria, where fly fishing is a common activity, and high-income consumers can easily access the product.

Grand Bassara introduction analysis

In the ideal case of introducing the Grand Bassara (GB) with no cannibalization and still holding last year’s sales for the Klamath River fly-rod, the company would only need to sell 7000 units of the GB in addition to its 91,000 units sold in the previous year. The GB will be sold at a wholesale price of $400 dollars to meet its 10% increase in sales, reaching $27,279,000 million in 2018.

Using a $400 price for wholesale will increase the gross profit percentage for Hunley from 53% to 65%, giving extra room to cover advertising expenses that would be needed after introducing the GB. At first view, this option looks promising, but I consider cannibalization will happen after introducing the new fly-rod GB.

I estimated a 30% decrease in sales on the Klamath in the next year after the introduction of GB. After considering the cannibalization factor in the calculations, Hunley would have to sell 63,700 Klamath units + 25,000 Grand Bassara for a total of 88700 units to achieve its desired goal. This is a considerably smaller number of units compared to the 2018 original forecast.

If marketing plans work as expected and consumers do not react to the higher price, this option is the most viable plan of action given that the company does not have to fight other companies for extra market share but instead focuses on the perception of the product with its current clients.

The original problem faced by Hunley was…