Plan B

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What are the three things that matter most when you're selling into a tough market? Position, position, position

Ron Clark is worried. The economy has been humming along for five years now, and he knows a recession is coming. Maybe not tomorrow, maybe not next week. But soon. And then what is he going to do?

Clark is president of Sundance Spas, a Chino, Calif., company that is one of the leaders in the outdoor-whirlpool market, and if ever there were a luxury item -- one that's an infinitely postponable purchase when bad times come -- this is it. And that's why Clark is worried. What's he going to do when the economy comes tumbling down?

The irony is that it was the last recession that caused Sundance to bubble to the top. It went from being just another run-of-the-mill spa maker -- in California it seems, if you don't make movies, you make spas -- into a company with sales of $38 million, up 1,400% since 1982. Pretax margins are about 8%, and the company has ranked on the Inc. 500 list of the country's fastest-growing small private companies for three years running.

The story begins in the late '70s, when Clark was just another young man who had taken over his father's business, a boats and plastics company. Clark Manufacturing became a job shop that specialized in catching the latest marketing wave. When vans became hot, it made custom conversion kits. When people discovered three-wheel motorcycles, Clark made one-of-a-kind motorcycle bodies, and when hot tubs became the rage, there was Clark Manufacturing, making housings for the air filters and motors.

From there it was just a short swim into making the spas themselves. But since Clark didn't have much money, he decided to make smaller, portable spas, the kind that come preassembled. Instead of spending $20,000 for a whirlpool that required you to dig a huge hole in the ground, you could buy one of Clark's spas for as little as $4,000.

Even though his units were smaller and less costly, Clark positioned them exactly as the big boys did. His ads featured sweet young things falling out of their bathing suits. The ladies were invariably blondes, with champagne glasses in their hands and come-hither looks in their eyes. In short, the pitch was hedonistic. A Sundance Spa was something no single man worth his gold chains and Porsche could live without.

That was fine and business was good, until the recession of 1982 hit. Suddenly all the Porsches were returned to their leasing agents, and swinging bachelors went the way of lava lamps, mood rings, and pet rocks.

"It was terrible," Clark recalls. "Traffic into the showrooms really fell off.'

And the few people who did show up were different. Gone were the male shoppers aged 25 to 49 with their shirts open to the navel. In their place were couples. And sometimes -- gulp! -- couples with kids.

"These people told us that they weren't going to go on vacation, it cost too much money," Clark remembers. "Instead, they were thinking about fixing up their houses, and looking for ways to entertain at home. We kept hearing that over and over again.'

When enough people tell you the same thing, eventually the light bulb goes on. Clark had discovered a new market! (Well, actually, it had discovered him.) And these new customers were describing what he had to do to survive. Clark started taking notes about what this new species of consumer was saying. "We listened, and then we played it back to them," Clark says. "We told them all the ways our spa could fit in with having a good time while staying at home and saving money.'

Now it was not quite that simple.

First off, the ads had to change. Exit barely clad nymphets. Enter mom, dad, and the kids frolicking in the backyard spa. And where those ads ran changed as well. They had always been in the sports section -- the first place a guy looks, right? From now on they'd be found among the home-improvement stories. After all, a spa was no longer a luxury but something you could add to your house -- like a deck or barbeque pit -- that would make staying at home more fun.

But it was more than advertising that had to change. The product itself had to change, and so did the attitude of the people who sold it.

Sundance's spas had always been small -- just perfect for two people who wanted to share a drink in the moonlight. Now, they would become large enough for the whole family. Seating, which had never mattered much, became more comfortable, and maintenance was made simpler. Macho guys might not mind crawling underneath the spa to change a water filter, but a busy mother of two would. Everything needed to operate and maintain the spa was put within easy reach.

And cosmetic touches became important. Before, the spa buyers were guys, and these guys liked everything to be in shades of dark blue or brown. But the new customers -- particularly the women -- wanted to match the rest of the house's decor. So Clark began offering "designer" colors -- sequoia and marble became big sellers. Tile was added to the trim, and the cabinets were covered with a variety of imported wood veneers.

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