The two commercials from the Super Bowl I remember, because they were good and funny, involved Hyundai and Doritos.
While the breeding industry might just feel like hurling a magic eight ball at somebodies crotch right about now, the idea that prompted this post involves Hyundai.
A recent article in The Economist discusses Hyundai's innovative marketing strategy, prompting its increase in market share. (ht...MR)
...its market share in America has increased from 2.1% in January 2008 to 3.7% in January 2009, and the company is now gaining market share more quickly than any other carmaker in America. Besides the Genesis, Hyundai is also benefiting from a novel scheme, launched in January, in which it offers to buy back cars from customers who lose their jobs within a year of their purchase. (The company essentially offers a smaller discount and then uses the money to buy an insurance policy.) This has proved so successful in stimulating sales that General Motors said on March 3rd that it was considering a similar scheme.
Perhaps studs could offer incentive packages such as this to prospective breeders.
Instead of the buy back, which they could do as well, offer the breeder a reduced rate in exchange for a share of the profit-determined ahead of time after projected expenses-at whatever sale the breeder states up front(or however the system works). If the horse is a breed to race prospect, the insurance cost would be higher. If the breeder is targeting the yearling sales, the insurance premium would be lower but the return could be higher.
Take a horse standing for $75,000. Offer a breeding session for $50k with the $75k paid, stands and nurses. Breeder is targeting the yearling sale. Stud farm buys an insurance policy on the $25k for $5k-10k(or whatever real numbers work) to pay out to the breeder if the horse doesn't meet an agreed upon price. If the horse sells for $150k, the stud cancels the insurance policy and gets an agreed percentage of profit from the breeder. If the horse doesn't make it, the stud exercises the insurance policy and pays the breeder the $25k.
Just don't pitch this to AIG.
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2 comments:
interesting angle. there's stuff like that out there, though, with the way the market is. Darby Dan offered free seasons to state breeders in exchange for being listed as a co-breeder to collect the state breeding awards down the road; many farm offer foal shares -- no stud fee up front, and the farm and the breeder splits the price of the sales yearling; payments against proceeds, where the breeder pays the stud fee only after the yearling or foal sells; and mare shares, where the breeder puts up the mare, the farm puts up the season, the the sales price of the mare sold in foal is split 50-50.
Thanks for the information.
One wonders what the effect on the market value of the stallions would be if the total bookings were disclosed.
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