"Direct Marketing Magazine Chairman Henry "Pete" Hoke Jr. doesn't do many feature stories these days. But when a story as interesting as this one comes along, he can't help but plug in his Powerbook.Harrison Hoge Industries, Inc., a small, family-owned business, uses mail order successfully to sell fishing lures, inflatable boats and hats to the tune of $6 million a year. But mail order is just a means to an end- retail distribution."
The Lure Of Mail Order
This small family-owned business uses mail order successfully to sell fishing lures, inflatable boats and hats. But mail order is just a means to an end-retail distribution.
By Henry "Pete" Hoke
Harrison Hoge Industries, Inc. is not yet a Fortune 500 company, although it ranks high on the chart of interesting small family businesses. With current annual sales of nearly $6 million, it's blazing new direct marketing trails. And growing at the rate of 20 percent a year. To look at their advertising for fishing lures, inflatable boats and now hats, you'd easily conclude that they're in the mail order business. But you'd not be quite right. Mail order is just a means to an end, a strategy to establish retail distribution.
Cecil Hoge Jr. (son of his grey eminence, Cecil Sr.) puts it this way, "Mail order advertising is planned to make a profit, to bring back more dollars than we spend. We get more than profitable orders by mail and phone. Our mail order ads in relevant magazines, newspapers and TV give us national prominence. The end game is to attract retailers to stock and sell our products. Thus, the majority of our base product is sold at retail. We play the role of wholesaler/importer."
The firm's founder, Cecil Hoge Sr., no longer heads the enterprise. His 50-year-old son does, Cecil Jr., who now partners with his 24-year-old brother John. There are cousins, aunts and uncles among some 50-odd employees. Plus Virginia, Cecil Jr.'s wife. On most days, you'll see Cecil Sr. at the shop "bending an oar" and working on his new love, a newsletter called "Electronic Marketing." All operate out of cramped quarters at 200 Wilson Street, Port Jefferson Station, NY 11776. Inflatable boats and white water rafts are propped up against office walls and decorate the order entry room where friends and family talk with people who are responding to ads in space and direct mail. A hat stand on one of the filing cases displays nearly a dozen hats, a brand new item which is making big waves.
Started With Calculators
Cecil Hoge Sr. and his recently deceased wife, Fritzie, started out selling pocket calculators back in the '50s. Once in Europe, they discovered an attractive French fishing lure. Cecil hates fishing, but the lure looked like a good mail order item. Now they're made in Italy, and sold through mail order space ads in nearly every sports and fishing book. They're imported in a steady stream, 1,000 to a package. In Port Jefferson, they are blister-packed onto a yellow card properly UPC coded for racking at retail.
Harrrison Hoge does $3 million a year now in lures, 95 percent of which are wholesaled under the Panther Martin trade mark to retailers such as K-Mart, WalMart, Bass Pro in Springfleld, Missouri, Cabella's in Sidney, Nebraska and venerable L.L. Bean in Maine. Mail order accounts for just 5 percent of total sales. More are sold in Norway than in the U.S. mail order channel. During a video interview with both Cecils, they emphasized that the mail order ads are profitably run to be seen by retailers as well as by fishermen. The more ads they see, the more merchants are intrigued about their potential for sale in their stores and/or catalogs. So lures are the base business, although fishing is in moderate decline while America cleans up and restocks its rivers, streams and oceans.
It's tough to sell a $1.99 lure one at a time, they say. Cost per order in space is a killer. So Cecil Jr. came up with the idea of selling 12 at a time, in a 12 pocket, reuseable plastic case. Calls them the Deadly Dozen. This worked. Costs per unit sold dove while response rates improved dramatically. Each box of 12 shipped is accompanied by a catalog of all 200 lures in inventory. Sales took off. Stores liked the higher sale. Mail order sales reached an average order of $28. With the catalog packed with the box of 12, retail customers began asking for other lures than were in the box, forcing retailers to stock more of the full line, a delightful discovery.
Sea Eagles Fly
Twenty-seven years ago, Cecil Sr. bought an inflatable boat business in Milwaukee, Wisconsin. He and Fritzie trimmed back all its products except an inflatable canoe which they talked Sears into selling for $99. Cecil's source was again French. But production problems led him to uncover a source in Italy 15 years ago. The firm (Adamoli in Carnago, Italy) is still tops in producing a quality PVC product. They not only make the plastic sheeting from which boat parts are crafted, they also put the inflatables together. A computer- controlled operation automatically prints and welds a complete inflatable boat in minutes rather than hours and days as of yor. The Hoge's brand them Sea Eagles.
The inflatables are a $1.6 million business and growing with a different channel strategy than that for lures. Here, 70 percent of sales are through the mail order channel, 20 percent are wholesaled to retailers and 10 percent are sold to waterparks for white water thrills. A goal is to expand retail sales to boat retailers and marinas.
Competition is ruthless. Zodiac, perhaps the best known name in inflatable boats, is a $300 million conglomerate listed on the French stock exchange. In addition to inflatables, they make and sell swimming pools, water-skis, military shelters and parachutes. Another company, Avon, is a $150 million tire company that sells inflatables.
Another is Achilles, a $5 billion producer of chemicals and fabrics which also makes inflatables. Yet another is Quicksilver Inflatables, part of Mercury Motors which in turn is part of Brunswick Corporation, which sells several billion dollars of recreational products of all kinds, related Cecil Jr. to a Long Island Direct Marketing Association meeting last fall.
Competing against these giants would be impossible, he says, without our mail order approach. They run small inquiry seeking ads and fulfill with a simple two-color brochure with a conversion rate of 2 percent and an average order of $575. The company also has a four-color, 16-page catalog showing the whole line. That mailing generates another 1.25 percent response with an average order of $440.
The young Hoge's are now playing with a new direct mail piece...a 16-page collection of adventure stories as told by happy customers. Printed on newsprint, the stories are interspersed with ads showing various models. It's too early to call it a winner, but first results from a mailing to inquiries looks good.
Cecil Jr's fertile imagination strives for new markets and models. One such as a round inflatable being used by Action Park in New Jersey, where some 12,000 to 15,000 people a day ride down a man-made Colorado River. Over 300 of these round Sea Eagles are used a day to provide summer time thrills. And as the rafts wear thin sliding down rocky slopes, they create a substantial replacement business. These inflatable tubes are also sold to entrepreneurs who rent inflatables to summer fun lovers thrill at riding down white waters of the Delaware, Farmington and Housatonic Rivers. The Sea Eagle Fun Raft sells for $429.
Brother John has come up with a Sea Eagle Jet Tow Cargo Carrier to latch onto the booming Jet Ski market. Sells for $189. John spent two weeks this summer jet skiing from Naples, Florida to Key West with just a compass on board which was not much help in fogs. The 150-mile journey was designed to garner a little press while demonstrating the value of towing camping gear behind a new Jet Ski.
The inflatables are sold at boat shows, trade shows and through a 16-page, four-color catalog displaying the complete line. Cecil designed some models to mount a three to 15 horsepower motor for lazy cruising. The GT-15 sells for $789 plus oars, air pump, GT bag for storage and transporting. Since 1968, Harrison Hoge Industries has sold more than 200,000 of these inflatables, many you'll see as dingies for large yachts.
Faced with mammoth competition from large manufacturers and their retail postion, mail order is king. If the Hoge's have their way, their advertising will get them into more retail locations. Meanwhile...
A letter, bound into the inflatables catalog, informs readers that if their purchase is $500 or more they'll receive free a P.O.P. (Personal Ozone Protection) hat. Cecil Jr. has just introduced a broad brim expeditionary type hat which can sell for as much as $36. The hat line answers the question about how to protect the face from glaring sun.
About four years ago, a stranger called Cecil. Said he'd bought some hats in Costa Rica and advertised them with a small ad in the Southwest Edition of The Wall Street Journal. His test ad made a small amount of money and the man wondered what he should do next. Cecil invited him to come out to 200 Wilson Street. He did and they made a deal.
The broad brim hat is a winner, and fast becoming a fashion item among the jet set and 40 somethings. The Hoge's have discovered that hat buyers are like beer drinkers. Five percent of customers buy 80 percent of the product. The Hoge's now sell nearly a dozen different models. He's even designed a model with ear muffs for winter. And dreaming up different versions nearly every month.
A year ago, Cecil Jr. received an inquiry from the American Museum of Natural History. They wanted to contract for a hat to commemorate their 125th year of scientific expeditions. Thus, the Expedition Hat was born which retails for $29 plus $4 for shipping and handling. The Museum has started selling the hat in the Museum's store and will put it in their annual catalog. Harrison Hoge will mail order the hat in space and direct mail. They've produced a colorful eight- page catalog, and pay the Museum a royalty on every hat sold. Have sold 6,000 in three months. Hat sales reached $500,000 in 1993, will reach $750,000 by the end of 1994. They've now sold more than 60,000 hats.
The years of promotion activity has generated an inquiry file of some 250,000 Sea Eagle inquirers, 35,000 SE buyers, 20,000 fishing lure buyers and 40,000 hat buyers. While direct mail sells most cost effectively, magazines, TV and newspapers deliver large audiences, but must produce orders cost effectively. The Hoge's look for media with a "hole in their rate", who will take ads at a low, low cost per thousand (CPM). Even The New York Times gets serious about offering cost effective mail order rates...like 80 cents CPM verses regular $2.50 CPM.
TV is a problem in providing cost effective CPMs. The family has tried 30s, 60s and 2-minute spots but quality of leads and convertibility is not good. Who places the space? Why the in-house agency which carries the age old name of Huber Hoge & Sons, where his grey eminance cut his mail order teeth after World War II. Cecil Jr. still remembers riding up the elevator at 699 Madison Avenue to the fourth and fifth floors to visit his Dad.
What's next? Well, line extensions for sure. Yes, coats may well be added if they can find the right designs that fit the waterfront scene. Cecil Jr. still finds time to be involved at his old Alma Mater, Dan's Paper, a full year round, free distribution tabloid for The Hamptons set on Long Island. He started out delivering newspapers to the door steps of the rich and famous...like Steven Speilberg and George Plimpton, to every disco, pub and barber shop. Circulation in the summer time reaches 78,000. An issue can carry 156 pages of advertising. During the summer, there's a 16-page, four-color section.
While the family business is all consuming, Cecil Jr. still keeps in touch with Dan's Paper. Just recently they've run a couple of articles he knocked out on his Macintosh PowerBook 185, the same one on which he composes the company's mail order ads. Son Cecil has yet to connect his PowerBook to the Online networks, where his Dad advertises his "Electronic Marketing Newsletter." It's proving somewhat successful in selling "mail order" subscriptions. Perhaps they'll be selling their lures, boats and hats one day if the young Hoge's get interested.
Henry "Pete" Hoke is Chairman of the Board of Direct Marketing magazine.
Copyright 1994 Direct Marketing Magazine. For subscription information and/or free sample copy, call 800/229-6700 or 516/746-6700. FAX: 516/294-8141.