De Mar, a plumbing, heating, and air-conditioning companylocated in Fresno, California, has a simple but powerful product strategy: Solve the customer’s problem no matter what, solvethe problem when the customer needs it solved, and make sure thecustomer feels good when you leave . De Mar offers guaranteed,same-day service for customers requiring it. The company provides 24-hour-a-day, 7-day-a-week service at no extra charge forcustomers whose air conditioning dies on a hot summer Sundayor whose toilet overflows at 2:30 A.M. As assistant service coordinator Janie Walter puts it: “We will be there to fix your A/C onthe fourth of July, and it’s not a penny extra. When our competitors won’t get out of bed, we’ll be there!”De Mar guarantees the price of a job to the penny before thework begins. Whereas most competitors guarantee their work for30 days, De Mar guarantees all parts and labor for one year. Thecompany assesses no travel charge because “it’s not fair to chargecustomers for driving out.” Owner Larry Harmon says: “We arein an industry that doesn’t have the best reputation. If we startmaking money our main goal, we are in trouble. So I stress customer satisfaction; money is the by-product.”De Mar uses selective hiring, ongoing training and education,performance measures, and compensation that incorporate customer satisfaction, strong teamwork, peer pressure, empowerment, and aggressive promotion to implement its strategy. Sayscredit manager Anne Semrick: “The person who wants a nine-tofive job needs to go somewhere else.”De Mar is a premium pricer. Yet customers respond becauseDe 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 Questions1. 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, personnel) 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 bemanaged to ensure that the product is successful?
Customary Pricing
There are various types of pricing strategies followed in the market. They are psychological pricing, odd pricing, free onboard pricing, customary pricing, prestige pricing, dual pricing, ruling pricing, negotiated pricing, mark up pricing, etc. each one can be explained as follows:
Multiple Unit Pricing
“Multiple-unit pricing is a practice where a company offers consumers a lower than unit price if a specified number of units are purchased.”
De Mar, a plumbing, heating, and air-conditioning company
located in Fresno, California, has a simple but powerful product 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 provides 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 coordinator 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 competitors 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 customer satisfaction; money is the by-product.”
De Mar uses selective hiring, ongoing training and education,
performance measures, and compensation that incorporate customer satisfaction, strong teamwork, peer pressure, empowerment, and aggressive promotion to implement its strategy. Says
credit manager Anne Semrick: “The person who wants a nine-tofive 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 this
product and its service components.
2. How should other areas of De Mar (marketing, finance, personnel) 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?
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