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In a
farming economy the tools of production were land, labor and money.
Then came the industrial revolution where money became king. Today,
however, it is talent that makes the difference. Not to say money
is not important, but money seems to be easier to find than talent.
For example, IBM shifted its business focus from hardware to total
business solutions, and it is the information services that now
produce the bulk of income and profit and this depends on competent
talent.
Starbucks
the coffee giant is shifting its focus from selling coffee by the
cup to other products and other channels of distribution and are
creating a "legal monopoly", and so can you, read on.
What
I am saying does not mean that you give up detailing cars, but simply
take the talent you have and change your business focus to meets
a changing environment. This can give you a Monopoly in your market.
A
Little Quiz
To start,
I want you to take a quiz. Check the appropriate boxes and then
continue reading on to find out what your answers mean.
Just
how innovative are you? .............YES or NO
1. Profits
from detailing-only are diminishing.
2. Competition is fierce
3. My services are different from the competitor's.
4. My competitors can copy any new service I offer.
5. I most likely don't spend enough time and money building my image.
6. I don't really understand how to leverage our name.
7. I see my competitors doing things I wish I had done.
8. I am more reactive than proactive.
9. Business isn't as much fun as it used to be.
10. I am spending too much time at the shop/on the job.
11. I seem to be running harder to stay in the same place.
12. I wish I knew how to build the #1 name in the market.
If you
answered "yes" to any of these questions, you most likely
should shift your focus to some variation of your business model,
keeping the strengths, and developing to new ones. That's where
the combination of management direction and talent come together
to make a difference and develop the monopoly.
In the
hierarchy of buzzwords, "core strengths" certainly places
in the top three. The problem with the focus on core strengths is
that you end up doing more of what you are currently doing. Of course,
"if you keep doing what you are doing, you'll keep getting
what you got."
But that's
OK. That's what will build your business brick-by-brick, create
a solid reputation and increase sales. Of course, your competition
is doing the same thing, with services just like yours, which makes
your task to be difficult and building a monopoly very difficult.
A
New Way of Thinking
We function
in an economy where our detail service lives in monopolistic competition
(sounds contradictory.) Essentially, this means you have the characteristics
of a market that is both monopolistic as well as competitive. Competitive
because there are a large number of detail shops and there is complete
freedom for anyone to start a detail business. Yet, it is a monopoly
because each shop does have some control over its market conditions,
such as its advertising message and services, and those who do these
well get most of the business.
On the
other hand, it is not pure competition because your services are
not exactly the same and pricing is not uniform. Likewise, it is
not a monopoly because there are many detailers (in the USA at least
14,000 true detail shops) whose services are similar.
Without
getting into Economics 101, I can tell you the supply-side of the
detail business is relatively uniform. That is, while one detailer
may be able to deliver a detail a bit cheaper than another, the
one firm could most likely catch up by simply lowering the prices
or adding equipment to make their operation more efficient.
In other
words, there is very little difference on the basis of what is charged
for this service.
Likewise,
on the demand side, there is very little perceived difference of
how the vehicle looks when the job is done. Most detailers are competent
and provide a shiny, clean vehicle. So, one might argue that detail
services are like a commodity, (lumber, grass seed or beans.) But
we all know that is not the case, all detail services are not the
same.
Which brings us back to "monopoly."
The fact
that all detail services are not the same, nor are they priced the
same, creates differentiation. And that differentiation creates
a "monopoly." It's easiest to see this at work in categories
that are nearly 100% undifferentiated. Cigarettes, for example,
have a loyalty factor (will definitely buy again) of about 80%.
The major brands of beer are likewise undifferentiated with very
high loyalty factors. So you can ask yourself, "If people can't
tell the products apart, why is there such a high loyalty factor?"
Because to the consumers, the products have become sufficiently
differentiated to essentially be monopolies, that is, excluding
other brands.
The ability
to differentiate your business and services from another is the
central issue of survival. Small things might help: a cleaner store,
uniformed employees, attractive stainless steel equipment, etc.
But that is what is called "core competencies."
Sure,
you can do better at what you do, but the focus should be on how
you build your monopoly in the market. Better equipment isn't going
to be the answer, but it might help a little. Nor is a cleaner shop
going to do the job, but will attract a few more customers.
Build a Monopoly
The goal
is to focus on building the monopoly; that is, significant differentiation
from the competition creating a business that really make us different.
But you must concentrate on being a monopoly so to differentiate
your business significantly from the others, in the mind of the
motorist, that you have more control over the demand curve. That
is, sell the same number of services at higher prices, or more services
at the current price.
Look
at the giant 3M, their body shop and detail products are always
priced higher in a competitive market. Yet they sell, why?
Because of 3M's recognition of its inherent monopoly power. Users
believe the 3M products are worth more money. Why? It is all about
3M creating differentiation and thereby, a monopoly.
Summary
So what
you have to do is evaluate your present position in a competitive
market and focus on those things that are your strengths and weaknesses
and begin to build on what you have "going for you" (your
strengths) and improving on your weaknesses. It will work because
there are really very few outstanding detailers and detail shops
in any market so it is relatively easy for you to make your shop
stand out from the rest if your goal is to build a monopoly in a
market.
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