When
it is Time to Make a Change
Deciding
to Make a Change in the Product Lines You Carry
In
baseball there is a tradition that occurs when the pitcher is
having a difficult time. The first part of the tradition happens
when the catcher asks for time out and goes to the mound to attempt
to help the pitcher collect his thoughts and focus.
The
game continues, but if the catcher's efforts do not succeed, then
the bench coach will be the next to ask for time out. The bench coach
will usually jog out to the mound and make an effort similar to the
catcher's.
Again
the game continues. If both of these efforts fail, you will then hear
the manager of the team holler for a time out as he slowly climbs
out of the dugout. As he makes a slow walk to the mound, he will look
toward the bullpen where the reserve pitchers are. He will use one
hand to tap on the other arm. If he is tapping on the left forearm,
this means he wants the left handed pitcher to come into the game
and pitch. And the change is then made.
Running
a power equipment shop and selecting the lines of equipment that you
sell and service is much like the task of the manager. You have to
make a decision as to whether a certain product line is doing its
job and bringing in sufficient profit to your shop. There may be a
line that becomes available to you because another shop has decided
to drop it, or worse yet, because the other shop is closing. And there
has been that occasion when a new line comes into the market place.
Twenty
years ago, deciding what product lines to carry was fairly easy. Most
of the brands stayed in one or two price ranges, as well as the fact
that you saw little, if any of their products in a chain store such
as a Home Depot, Lowes or Menards.
Selecting
product lines then was also easier because there were fewer manufacturers
and most definitely there was not all the selection of products. If
you stocked walk behind lawn mowers, riding mowers, chain saws, and
edgers, from two or three manufacturers, you had a fairly complete
shop.
Perhaps
one of the biggest decisions was if you would provide service to product
lines that were sold in the mass merchants. Today, those lines who
have reserved themselves exclusively for the independents are the
definite minority. And with the stick equipment, perhaps the only
option that has not been added is that of making it into a toothbrush.
How are we now to decide when it is time for a change or addition?
To
decide to add or drop a product line, we would suggest this exercise
to help you to see if a change is in order. The first step is to list
all of the competitors in your trade area. This should include any
businesses that you have seen equipment from being brought into your
shop, even if the other business is 50 miles away. For the exercise,
let's give each of them a number to make it easier to refer to the
competition in the three charts we are about to create.
With
the first chart, let's use some paper that is easy to see through
and create a large "L" with the line going from left to
right being our point of reference with regard to the number of products
carried by any competitor. The line going from bottom to top is our
point of reference for the number of lines a competitor carries.
Within
this "L" chart, draw a circle to represent your impression
of where each of the competitors are in your market place. Some circles
will be larger than others, while some will look more like an oval
than a circle. And within the circle put the number of the shop it
represents. It is OK for circles to overlap or even have a circle
that is completely encompassed by another. The purpose of the exercise
is to see where your customers see your competition with regard to
the product offering and availability.
Now,
on another piece of paper let's create a second "L" chart
with the left to right line representing the hours each of the competitors
is open and the bottom to top line representing the level of customer
service they provide on their sales floor. Again, create the circles/ovals
to represent each of your competitors and number accordingly.
And
for one last piece of paper with a graph, let's have the left to right
line represent the depth of inventory and the bottom to top line representing
the quality of service in their repair center. And for one last time,
create the circles/ovals to represent each of the competitors.
The
idea of the easy to see through paper now comes into play as we overlay
the three sheets with each other so that each of the three "L"
charts line up with each other. Instead of seeing a variety of miscellaneous
shapes you are likely to see groups of circles. In looking at the
marketplace represented by the whole of the area with the "L"
chart, most of your competitors are meeting a small part of the marketplace
needs.
Notice
that through each of the three exercises we did not ask you to include
your business. Part of the reason for this is that most of us have
a difficult time providing an impartial view of our business. The
rest of the reason is that this exercise is to help us determine if
we should add a new product line by seeing what is missing in the
marketplace; not to see what we are doing.
The
lesson learned by many of our counterparts around the country is that
too often we decide to "fight" the competition by going
head to head with them. Unfortunately, when we decide to go head to
head, the competition becomes obvious to the customer as we use price,
both in products and service, as our weapons. Of course, all the combatants
lose profit and sometimes the customer loses because the best business
is driven out of business by a price war.
Look
again at our "L" chart. This time however, don't look at
the circles, but look at the open space between the circles. Many
businesses that we have suggested use this exercise find there is
a lot of space between circles. And now is the time to look at your
business. Would the circles drawn for your business be filling those
voids? Or would your circles overlap with some of those already drawn?
If
your circles are overlapping with others, perhaps you are already
engaged in that battle with the competition. Instead, a slight shift
in your business, by adding or dropping a product line, would allow
you to occupy a space all to yourself. And as the old saying goes,
"If you are unique, you have no competition".
So,
your business has been out there for years, making the "pitch"
to customers for their business. Is it time for you to be the manager
to walk out of the dugout and make a change? Play ball!