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 Question:
1. 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?