K-line advertising

[winrose46]

In my case K-line got me back into model trains. I have post war trains 1952 - 1959 trains that I set up for 40 years. I did not buy any new stuff because I thought that the trains offered were cheap (flimsy) copies of what I had. In the 90's I looked at the market and declined to enter. Two years ago, I added the K-line Hudson and have been hooked on command control since. The quality of the products offered by Atlas (cabooses and refeers), K-line (die cast hoppers), MTH DCS and outstanding engines has gotten me up to running 14 trains with 16 engines. The K-Line hudson is even being converted to DCS Proto 2. For my kids and grand kids, I have given them the Polar Express and an MTH freight steamer starter sets so I am supporting both ends of the hobby. I am quite pleased with the direction the hobby is going and the effort being expended by MTH, Atlas and K-line. No I do not count rivets; however, I do like the increased amount of detail being offered.

[Jumijo]

My belief is that the toy train industry as a whole markets only to the audience that is already the hobby. It needs to market itself to the general public. Lionel, the most well-known name in toy trains, would do well to advertise in newspapers and main stream magazines and even tv. Why? Because there are still millions of people out there that had a Lionel train as a child and have nothing but fond memories of it. Those are the people train companies should be marketing to. Those people now have kids and grandkids to buy presents for. I bought my kids a couple of starter sets last Christmas based solely on my nostalgic memories of my youth. They are now 3 foot tall train nuts! Put the product out there in that fashion and people will lap it up! Nostalgia, a longing for the good old days, is and always will be in vogue in this country. The train companies would do well to capitalize on that in their advertsing, but not just in train magazines. If small time local businesses can afford to advertise on tv, so can the train companies. Spend some money to make some money. Think outside the hobby market to expand the hobby market. That's what needs to be done in the way of advertsing.

Jim

[Jumijo]

Here's what's laughable as far as scale enthusiasts go. Many demand that a loco or piece of rolling stock be hyper realistic, yet they find it perfectly acceptable to populate their layout with figures painted in high gloss paints, plastic structures with no paint, postwar accesories that scream "I am a toy", etc. If they have a layout at all. Yeah, some layouts are realistic, but not the majority, and not as many as one would think. I enjoy a scale loco just as much as the next guy, but is it worth all the vitrial if it isn't exact? Scale or no, they are still TOYS! And those toys, with their big $$ price tags, cost more than many people can afford. We should all count ourselves extremely lucky to be able to afford such luxuries.

Jim

[Phil1361]

Brian, I agree that the manufacturers are "patronizing one small segment of the O gauge market". Why do you think that is? First of a all 3 rail scale is not a small part of O Gauge it is a large part of O Gauge. That's why so many new scale products are coming out as compared to semi-scale O27 type equipment. Scale 3 rail sells-period! Plain and simple the manufacturers are catering to that segment of O Gaugers because that is what is upping their profit margins. Guys like you used to be in the majority as scale offerings in 3 rail O were slim to none. Now it is the complete opposite. After thinking about it, I now understand where you are coming from.

I was a kid who started out with 3 Lionel O27 train sets. Even as a young child I did not like the way certain trains looked next to one another. My two favorite piecese were my Alco FA and my Lionel milk car. These two looked good together to my young eye and looked like a real train. So when the scale stuff started coming out I easily got hooked. Down deep inside I always was a scale guy. Maybe things will turn around and in the future O27 will gain some of it's lost popularity or maybe it won't. One thing is for sure if more O27 type trains get sold the manufacturers wil start catering more to that market.


I don't think the problem is catalogs so much as it is the prices. Parents see the high MSRP prices of O Gauge and are turned off. If the parents really want their child to have trains as a hobby they will look into things and discover the discount mail order houses and the less expenisive O27 sized stuff offered by K-Line and Williams. What has to happen is kids have to ask for trains! Which most of the time they don't. I have a nefu who I bought a MTH starter set for, built him a layout with 8 switches, a milk car, a second locomotive and it just sits there collecting dust while he plays video games. I grew up in a middle class neighborhood. My friend up the block had a massive Lionel set with all the trimmings (locos,accessories,etc) so somehow he must have asked for trains from his parents and they found a way to afford them.

Trains are something that can get in your blood. I believe it is either in there or not. No amount of cultivating will get the desire for trains out unless it is there in the first place. I certainly feel there are some out there who may have this desire but without the proper marketing may never know about the hobby.

It can be done but people have to be interested in the hobby. I definitely agree the all the manufacturers preach to the choir. I also agree that some not all scale guys can be too picky. I want accurate models especially in the more obvious details but I am not one of those guys.

QUOTE: Final thought: I wouldn't put a whole load of stock on what the CEO's of the various companies say right now. Lionel is owned by Wellspring and Wellspring calls the financial shots. Calabreese is paid to put out a good word...

Brian you had a well written well-thought out reply until you wrote this. So you are telling me that Jerry Callabreese out right lied to some 200 OGR Forum members? Come on Brian. Remember the 60 million dollar figure represents overall sales which is good because a lot of trains got sold. It does not represent overall profit. I don't think the manufacturers are liars, they might round off a number but not out right lie. According to Tony Lash anyone who knows where to look can find out if that number is true. I don't know where to look so I can't verify as truth but I have no reason to doubt the man.

[Anonymous]

I really don't know what is going on with K-Line either. I ordered three switches directly from them about one year ago and I have yet to receive them. They sent me an e-mail that they would be shipped as soon as they received them from overseas. I need to replace three Lionel switches that don't work properly. My steam engine stops in the switches and the switches just hum while trying to change positions. The K-Line switches that on my layout don't give me any problems.

[brianel027]

Phil, I wasn't trying to infer that Calabreese wasn't being honest so I apologize you took it that way. Nor was I saying that the other company CEO's are liars. They simply want to put out the most encouraging picture as far as their own respective companies are doing. As you mentioned, we don't know the percentage of profit for Lionel's gross sales figure. Lionel certainly now has the lowest production costs they have had in decades. But they're also doing a lot of new product development and tooling. Clyde Coil keeps referring to new forthcoming developments and advances in TMCC, so who knows the money tied up in that. They also have other financial obligations and the on-going legal entanglements, which must be taking a toll on the bottom line.

Or K-Line for example... from the outside, things don't look real good from what one reads. Yet, the company is promising a new control system that will operate everyone else's systems. Who knows? I guess we'll see when it gets released. I think if the folks at K_line believed it was really hopeless, they'd say 'why bother.' So obviously they're giving it their best shot and putting out the best word along with it. There have been so many surprise legal developments for the train companies in recent years, so it is anyone’s guess as to what can and will happen next. But I would fully expect each train company to put out the best picture possible as to how they are doing, whether or not it actually pans out that way.

My only take on the statement that scale sells, is that the past two CEO's at Lionel have both said that the strongest area of sales improvement was in the starter set and traditional line of trains. I think John Brady said starter related sales were up something around 35-40%. One might think that if sales were really strong in this area, that more new products would be introduced in this market area. But you could also say that if sales are already good, why invest extra money when it isn't currently necessary? We also do not know who is purchasing these starter items: is it older hobbyists who are more budget constrained, or is it parents buying a first set for a son or daughter? Time will tell. Since the bulk of Lionel's advertising has been in train magazines instead of other family/child-aimed avenues, I'd be willing to lean towards the first suggestion.

I don't doubt for a moment that scale proportioned trains sell and that there is an audience for these products. But how big a percentage of the market are these items? Hard to say. MTH is dropping Locosounds completely from my understanding, so it must be that sales are not strong enough to justify offering it. Which illustrates the point, it gets made if it sells. Or maybe MTH doesn't want to bother with the added expense anymore... maybe they figure that Williams and Lionel have enough basic offerings.

But I also think there is an element of competitive spirit at play here along with trying to outdo the other company. Notice how when one company offers something new and different, everyone else does too for fear of being left behind (and losing sales to someone else). K-Line brought back the die cast cars after decades of not being made... now MTH and Lionel also offer them. K-Line came up with the "hidden" coupler button and now the others have it. Was it Lionel that brought out the new improved Milk Car first? Now Atlas and K-Line have their own too. I think most of us modelers would admit that though the competition has probably hurt overall sales of each individual company, the competition has also pushed the hobby forward in ways most of us could not have imagined 15 years ago. If there were no K-Line, Atlas, Williams or MTH, Lionel's sales figure would probably be higher. But we wouldn't have the product diversity either.

As with other types of consumer goods, the budget ones may sell more, but it is the upper level products that attract the attention. Although it's nice to see an occasional exception: the RMT Beep is a good example. The Beep appears to be doing very well, and now Lionel has offered their very decent budget priced Dockside Steamer and K-Line has introduced their Porter. They are different types of locos, but have a common appeal along with the quality Williams locos too, of being affordably priced.

Thanks for the well thought out response Phil. Too bad about your nephew too. Mine also likes his video games, but not at the expense of the trains. He wasn't as keen about trains until he saw we were going to do this together and that he would help... then he got real excited about it. He's into the hobby and I'm pretty proud of that.

[Anonymous]

Very interesting--and different--perspectives offered by both Phil and Brian. Which one is closer to being right?

Well, my guess is that Phil comes closest to describing what has happened in O gauge in recent years, and Brian comes closest to describing what the future holds, which, in my opinion, points to a significantly smaller and more consolidated O gauge industry and market. As I've said so often before, the hobbyists themselves are slowly but surely becoming their own worst enemies. They want more for less, and they want what is produced to meet their increasingly highly specific interests and needs. In the long term, that simply will not work because it will invariably make it more difficult for manufacturers to determine what to produce with any assurance of getting a decent return on investment. And what they do choose to produce will have to cost more simply because the market for any specific item, especially at the higher end, will be much smaller. There's really no getting around that. And, of course, those higher prices will almost certainly lead to a shrinking consumer base over time. As I see it, this segment of the hobby is slowly choking itself by its own hands. Perhaps I'm wrong about that, but I think we'll know for sure within the next five years or so when, if the world holds together long enough, wel'' be able to come back and revisit this topic.

As for statements from the various manufacturer reps: These guys will always try to paint the best possible picture from their respective positions. You really need to take anything they say with a VERY large grain of salt because they and their staff will invariably try to put the best possible face on even the most dire reality. It's just the nature of the beast, not just in the toy train industry, but in any industry that is trying to make a go of it in the face of intense competition. None of these guys are liars; they're just adept at spinning things to their best advantage. It's the nature of the beast!

[3railguy]

QUOTE: Trains are something that can get in your blood. I believe it is either in there or not. No amount of cultivating will get the desire for trains out unless it is there in the first place. I certainly feel there are some out there who may have this desire but without the proper marketing may never know about the hobby

You hit the nail on the head. Certain people are born with a train gene and that gene is the lifeblood and future of the hobby. Not all kids are sucked into computer games. HO and N scales are still popular with young people today. The selection of HO and N equipment today is huge compared to what it was in the 60's and 70's. Young people envy O gauge for its size but do not have the money or space for O gauge. 027 is affordable but their tastes are scale oriented so they model in HO and N. It's likely when they get older, having money and space, they will switch to O gauge. How many of us modeled in HO or N in our teens or early adult life? From what I've read, many of us did.

The train club near me has an HO scale layout upstairs and a hi rail O gauge layout in the basement. Many of the young members work on and run their equipment on the HO layout and have home layouts that are HO. But they get a lot of enjoyment taking turns running the hi rail layout. Some own an O gauge engine or set outside their HO empires to run on the hi rail layout. It is very likely these individuals will make the transition in the future.

The cost of O gauge has nothing to do with greed. It has to do with size and it is real world economics. Believe me, if they could make them cheaper, they would. K-Line tried and failed the way I see it after their price increase on already cataloged scale equipment. You can't take the cost of HO and double it to come up with a figure that O scale should be. it doesn't work. It's an exponential factor and not all that simple.

As far as I'm concerned, the O gauge hobby has a long road ahead of it but their will be some major changes in the thinking and the way O gauge trains are manufactured. Manufacturers who aren't willing to make these changes are not likely to survive or become very small one man operations.

I know one thing for sure. The compatibility and interchangeability issue with command control systems and sound does not sell the O gauge hobby. The new ranks manufactures would like to see join the hobby tend to be roadname loyalists, not brand loyalists. This is the reason NMRA standards are practically the rule in HO and N scales if you plan to manufacture and sell something. Sure you are entitled to a proprietary system but don't plan on huge sales if that's your way of thinking. You can defend your rights to proprietary technology as Lionel and MTH are doing all you want but it falls on deaf ears. People will just walk away and have nothing to do with you. Marklin, for example, uses proprietary technology and has a very small HO market in the US along with a very small selection of US equipment. Talk to any seasoned *** and most will scoff Marklin for their lack of compatibility. If Jerry C, Mike W, and Nick L were to get intimantely involved with HO and N scales including getting involved with the modelers, they would understand where I'm coming from. They may even give each other a group hug, drop the lawsuits, and go back to their drawing boards. Atlas, Lionel, K-Line, and MTH each have their own unique strengths and weaknesses. together, can they contribute to the growth of the hobby immensly. This does not suggest consolidation. Consolidation would make them lazy. As long as they stay in their own little worlds and defend them, they will see their sales shrink.

To sum up my thinking of the future of the O gauge hobby, manufacturers must standardize or die because brand loyalists will soon be a dying breed. Manufacturers do not control the market. They are controlled by the market. Owning a buisiness of my own, I know this for a fact and I've been cut off abruptly thinking otherwise..

[Rescuedtrains]

After reading through this long thread I have a few personal obsevations to add. Strictly my opinion.

The best growth years for O gauge in terms of number of people involved with the hobby was the 1950's.

The second best growth period for the hobby was the 1980's to 1990's. This time it was the baby boomers coming back to rediscover the hobby and make new purchases. Technically these were not new people being draw in.

Advertising is IMPORTANT even if you have nothing new to sell. You must keep your name in the consumer's mind.

Steve

[3railguy]

In the 1980's, nostalgia grew the O gauge hobby. Brand loyalisim was natural because there was really only Lionel and Marx in the 50's for everyone to remember as far as 3 rail O gauge is concerned.

In the 1990's a combination of desire for scale realism combined with nostalgia grew the hobby. This explains the outburst of scale equipment. This hobby became segregated into collectors who remember Lionel of the 50's and hirail operators who model in a realistic fasion without a lot of concern as to who manufactures their equipment. As long as it's the engine and road they are seeking. This type of modeler is tomorrows market in my opinion and many will migrate from HO and N scales as they are today. I'm seeing this first hand.. They will be mixing brands and won't be wearing Lionel or MTH T shirts. Interchangability will be the rule and you won't convince people otherwise.

You can't just plot a growth chart of the past, photocopy it into the future and say this is the future. It isn't that simple. If you could, everyone would be getting rich on stock investing and they aren't. They loose their #### investing this way. You need to plot the curves on a broad scale and study what drove and is driving them to see where they are headed and make your buisiness plans accordingly. The curves on a broad scale rarely go in the direction they did in the past. i don't think O gauge manufacturers and dealers are studying the curves as well as they should be.