De Mar's Product Strategy

De Mar’s Product Strategy

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 over-flows 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!”

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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- to- five job needs to go somewhere else.” De Mar is a premium pricier. 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.

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Discussion Questions

What is De Mar product? Identify the tangible parts of this product and its service components

De Mar ‘s product is repairs and installations of plumbing & HVAC. This is the tangible part of their product offering; parts of repairs and installations and service of these components. Same day 24 hours 7 day service at no extra charge with a one year service guarantee puts them ahead of most competitors that only guarantee their service for 30 days. 

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

DeMar’s marketing department can leverage the company’s reputation and guarantee into a strong marketing campaign. The marketing team should do market comparisons of competitors and use that comparison in their marketing strategy, that 1 year guarantee far surpasses a 30 day guarantee and shows that the company has confidence in their product and service. 

De Mar’s selective hiring process and ongoing training and education, ensures performance measures and compensation that could ensure customer satisfaction. Another marketing strategy and incorporated the HR practice “The person who wants a nine-to-five job needs to go somewhere else.” Customers don’t mind paying more because De Mar delivers value added product and services evidenced by annual sales increase over 8 years from about $200,000 to more than $3.3 million

3. Even though De Mar’s product is primarily a service product, how should each of the 10 OM decision in the text be managed to ensure that the product is successful?

Quality – DeMar’s ultimate goal is customer satisfaction, solve the problem when the customer needs it solved, and make sure the customer feels good when the job is completed. Therefore, customers expect quality and DeMar’s reputation guarantees quality. The OM should ask customers to fill out a customer satisfaction survey about installation or repair. This will give the OM first hand knowledge of how customer perceived the service and the serviceperson.

Product – DeMar’s product is plumbing and heating and cooling. The installation is only as good as the product being installed and the product is only as good as the installer. Product and service go hand in hand. The OM should strive for a superior product that would live up to the 1 year guarantee and service excellence on the part of the service person.

Process – DeMar’s process can only be enhanced by cross training staff to maintain adequate staffing and stay on top of new technology to remain competitive in their market. Above all DelMar should carefully monitor its competitors to keep their prices at within reach of their target market. There are many process options available for heating cooling and plumbing. The OM has to be look at the physical product and the intangible services offered by the company to design the process. Technology is available to streamline the overall process of supply and demand as well as scheduling staff to meet the companies and customer needs and should be taken into consideration as expenses and capital commitments that will determine much of the firm’s basic cost structure of DeMar. 

Location – 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.

Layout – The plant has to include adequate secure parking for service vehicles and inventory. Parts and specialty tools should be easily checked out per job. In order for the smooth operations of the shop parts and tools must be clearly identifiable and neatly stored.

Human Resource. Human resources is important to any service operations. This is not a 9-5 job and the Human resources department has to hire staff capable of working various shifts. The staff hired must be personable, professional and skilled. Workshops and skills an assessment testing is must in the service industry

Supply Chain – Supply chain management is the bread and butter of the service industry. The OM has to take into consideration ordinary run of the mill maintenance jobs and their inventory needs as well as seasonal maintenance. In the summer customers may want to refresh or replenish their air conditioning system. Other jobs may require a complete overall. The OM’s job is to identify suppliers that are capable of expedite delivery of specialty parts parts needed

Inventory – DeMar ‘s OM has to forecast what would be needed. All of their services have a seasonal component. Heating is critical in winter vice versa with cooling. Therefore the OM should purchase inventory to satisfy seasonal requirements.

Scheduling – Scheduling at Demar is critical due to their on demand type product offering. Repair of Plumbing and heating/cooling is critical to the customer and therefore should be important that the company satisfy the customers need in a expedited manner. A ruptured water pipe or overflow situation if not handled promptly could result in increases customer distress. The company should schedule their low priority customers such as routine maintenance around critical repairs. Assistant service coordinator Janie Walter is quotes as saying “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!”

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Maintenance and timely service of the machines are the most important thing required to ensure they perm when needed. Due to their 24/7 service their maintenance of equipment must be up to standard to reduce downtime that could result in customer dissatisfaction. There is nothing worse than having to tell a customer that they need to come back later to complete the Job.