(06-17-2014, 07:55 AM)jtmellon Wrote: where you aim is where the arrow lands
Well said Joe! I agree.
I think its a very good idea to determine which segment of the market your company would like to fit. And there's no set rule on that. It's a matter of what you're most comfortable going after. Then build your company from the ground up to match your market segment. I believe there's an advantage that comes from finding a niche and trying to stay relatively close to that business model.
Using the example above, McDonalds builds their entire customer experience to fit a price point with food quality that matches. You don't expect to get a fine sirloin steak at McDonald's They have beef, but it ain't sirloin. And heir McCafee is NOT the same quality coffee you'd expect to find at a "real" espresso bar. But their model works for McDonalds - no one could ever argue that. Their entire business is built around their model - and that makes tremendous sense for them!
There's a price point for Kia. There's a price point for Ford. There's a price point for Acura. And there's a price point for Aston Martin. Each of those companies does well at their price point. Each company has their own rationale. They build their product for their intended market and they price accordingly.
There is room at the bottom (Kia pricing) if you can create enough volume. It takes a LOT of low profit sales to cover costs and make a profit. On the other side, if you're at the high end (Aston Martin pricing), you only need a few jobs to fill your pockets. And in fact you will only be able to do a few jobs, because these customers rightly expect all the extra perks. If you head more toward the middle you might look at (Ford pricing). If you want to look at the upper middle you might compare (Acura pricing).
The middle is a large segment with the greatest number of "quality" customers. But you will have to work against the highest number of competitors because this is where carpet cleaning companies normally target their marketing efforts. This is the largest segment of the market. The middle market segment also crosses over into the upper end of the low-priced market and into the lower end of the high-priced market. So it's a popular place for your competitors. It's a crowded room. It can also be harder to differentiate your company from the competition in such a crowded room.
It all comes down to finding a business mode that fits your company. Frankly I think it is best to lock into and work to build your company to fit the segment you're most comfortable with. A Kia dealer could never sell a Kia at an Aston Martin price. Likewise an Aston Martin dealer can't pass off a Kia to their customers and try get them to think it's an Aston Martin. Just as an Acura customer is expecting an Acura experience, and is prepared to pay accordingly. Each company has a product, a customer experience, and particular pricing that matches their overall game plane.
Find what works for you - and run with it. Crossing over between different segments of the market will only serve to confuse and alienate your customers. Find your niche. Determine what what works and what your comfortable with and build your company to support that model.
For example at Excellent Supply we primarily focus on "commercial carpet cleaning supplies". We even have a tagline OCCD... we have Obsessive Commercial Carpet Cleaning Disorder. Other supply companies target the entire gamut of carpet cleaning products, some even dip into janitorial, etc. But we try to stick to a specific niche that fits our overall game plan. Granted, it's a smaller segment. But it's where we want our business to be positioned, and it works for us.
In my old carpet cleaning business too - I specifically focused on "commercial" carpet cleaning. When customers would ask me if I could clean their house I kindly turned them down. I explained that our systems are designed for commercial carpet - that's why we're the best at it. They understood. Why would I pass up their residential business? Simply because it didn't fit my business model - it would've muddied the water. Just as McDonalds isn't going to cook up a sirloin for you - even if you brought it to them from the butcher. It's not what they do. And even if they agreed to do it for you, they couldn't do it well.
The logic of finding your niche can be seen in many different spectrums of the business world: Nordstroms, compared to Wal-Mart; Apple, compared to Asus; Hyatt, compared to Holiday Inn, compared to Super 8; etc. Each company has identified their target market and they try to stay pretty close to their mark. Find what fits your your style, build your business accordingly, and run with it
