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Wednesday, March 14, 2012

AR Market Saturation

Here is my article that appeared over at AmmoLand last week.....


Ho-hum. Yet another AR rifle is being introduced to the market place.... Seems like we are getting to the point where this is happening all the time, aren't we?

Just the other day, in fact, yet another firearms manufacturer teased us all on Twitter when they announced that they were in the R&D room working on their new AR style rifle that they were planing to bring market. The conceptual picture that they released showed that it was going to be just another plain-Jane, run-of-the mill AR... only with their company logo on the side and perhaps a somewhat unique stock. Excuse me if I am not too terribly enthused.

Yes, it seems like everyone wants their piece of the AR market, and for good reason. According to the NSSF's most recent statistics, this is one of the fastest growing market segments in the industry. People that are buying these rifles are passionate gun owners (99% of buyers are not making their first gun purchase) who are buying these rifles to use on a regular basis (firing an average number of 1,056 rounds per year through their rifle). 60% of AR owners surveyed also own more than one AR style rifle. 80% bought their rifle new, and 30% have purchased their rifle since 2009. Wow! Yes, these numbers (and all of the figures in the NSSF survey) are enough to make any CEO stand up and take notice. And they have.

The problem is that we have come to the point where this particular market segment is now officially saturated. Now you wont hear any complaints from me. I love shooting ARs and as a consumer I love the fact that I have countless options from which to choose built by dozens and dozens of manufacturers. The problem is where manufacturers are concerned. Those looking to get into the game and bolster sales are faced with the very daunting challenge of how to strategically enter the market segment. The way I see it, there are several key things to remember.

1. The days of just throwing a mil-spec carbine out there with your company logo on it are long gone. There are too many quality ARs available out there which can be had at affordable prices, and there are too many companies who have already staked their claim to being the big-dogs of the AR game. Simply put... This approach just wont work. Yes, you need to be able to produce a quality rifle, but just because you can produce a quality rifle does not mean that you will be able to move the product. You will get lost in the mix, and will probably end up turning out a massive amount of rifles only to find that the only ones interested in buying them are the most diehard fans of your brand. Those sales are few and far between, and most companies who do not already have an AR in the game are not going to be able to sell one on name recognition alone. With the one possible exception that comes to my mind being Glock.

2. You must differentiate your product in a significant way in order to set it apart from the others and create demand. There are many ways to do this, but companies need to take a hard look at what they do best and what they have become known for in the industry. For example, If you have a long hunting heritage, then perhaps you should focus your initial AR offerings on rifles that have been built from the ground up to be marketed specifically to hunters. If you are a big player in the shooting competitions, then perhaps you should put together a tricked out turn-key AR that is specifically aimed at the 3-gun shooting crowd.

3. Go for the high-end buyer. Plain-Jane ARs might be what everyone buys off the shelf as their first AR, but as more and more people get into the game and buy their second and third ARs they are going to be looking to upgrade. Put together a high-end, no nonsense dream machine and you will make a big splash in the AR game. Once your reputation is earned in this niche area with your flagship rifle you can then expand your line of ARs with ease. This is also a much less crowded arena and it wont be as easy to get lost in the mix.

4. Be the lost cost leader. I have mentioned several times in the past that we are starting to see a push towards entry level ARs with budget price points. There are already a few on the market, but its only a handful. These are quality guns with MSRPs in the $700 – $800 range and a real world retail price in the $500 – $700 range. Many of these models are lacking standard AR features that can run up manufacturing costs. Features like the dust cover, forward assist, shell deflector, chrome lined barrel, carry handle/rear sight/front sight, and they often have light contour barrels. This niche is still rather small. If a manufacturer can produce a quality rifle that runs reliably, and be able to sell it at a budget price... Well, there is no doubt that they will be able to move product.

So there you have it. Its definitely not too late for manufacturers to get into the AR game, but in today's environment it must be done more strategically. When you reach market saturation like we have with ARs, manufacturers really have to focus on setting themselves apart in some significant way in order to create consumer demand.

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