CaseStudy11.pdf – Grade A Homework

C H A P T E R 5 | D E S I G N O F G O O D S A N D S E R V I C E S

CASE STUDIES De Mar’s Product Strategy

De Mar, a plumbing, heating, and air-conditioning company

located in Fresno, California, has a simple but powerful prod-

uct strategy: Solve the customer’s problem no matter what, solve the problem when the customer needs it solved, and make sure the customer feels good when you leave . De Mar offers guaranteed, same-day service for customers requiring it. The company pro-

vides 24-hour-a-day, 7-day-a-week service at no extra charge for

customers whose air conditioning dies on a hot summer Sunday

or whose toilet overflows at 2:30 A.M. As assistant service coor-

dinator Janie Walter puts it: “We will be there to fix your A/C on

the fourth of July, and it’s not a penny extra. When our competi-

tors won’t get out of bed, we’ll be there!”

De Mar guarantees the price of a job to the penny before the

work begins. Whereas most competitors guarantee their work for

30 days, De Mar guarantees all parts and labor for one year. The

company assesses no travel charge because “it’s not fair to charge

customers for driving out.” Owner Larry Harmon says: “We are

in an industry that doesn’t have the best reputation. If we start

making money our main goal, we are in trouble. So I stress cus-

tomer satisfaction; money is the by-product.”

De Mar uses selective hiring, ongoing training and education,

performance measures, and compensation that incorporate cus-

tomer satisfaction, strong teamwork, peer pressure, empower-

ment, and aggressive promotion to implement its strategy. Says

credit manager Anne Semrick: “The person who wants a nine-to-

five job needs to go somewhere else.”

De Mar is a premium pricer. Yet customers respond because

De Mar delivers value—that is, benefits for costs. In 8 years,

annual sales increased from about $200,000 to more than

$3.3 million.

Discussion Questions

1. What is De Mar’s product? Identify the tangible parts of thisproduct and its service components.

2. How should other areas of De Mar (marketing, finance, per-sonnel) support its product strategy?

3. Even though De Mar’s product is primarily a service product,how should each of the 10 strategic OM decisions in the text be

managed to ensure that the product is successful?

Source: Reprinted with the permission of The Free Press, from On Great Service: A Framework for Action by Leonard L. Berry.

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