Monopoly Rules: How To Find, Capture, and Control The Most Lucrative Markets in Any Business - Hardcover

Lele, Milind M.

 
9781400049721: Monopoly Rules: How To Find, Capture, and Control The Most Lucrative Markets in Any Business
Hardcover
ISBN 10: 1400049725 ISBN 13: 9781400049721
Verlag: Crown Pub, 2005

Inhaltsangabe

Designed to help business people break free of conventional thinking, a noted buisness consultant presents seventeen important rules designed to assist readers to achieve success in the competitive modern world, with advice on how to develop, build, market, and sell an innovative new product or service ahead of one's rivals in the field. 25,000 first printing.

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Über die Autorin bzw. den Autor

Milind M. Lele is the managing director of SLC Consultants, Inc., a strategy consulting firm based in Chicago, Illinois. He was adjunct professor of strategy and marketing at the University of Chicago’s Graduate School of Business for more than eighteen years and presently teaches in Chicago GSB’s executive education programs all over the world. He obtained his Ph.D. from Harvard University and has published widely, including articles in Harvard Business Review and Sloan Management Review and two books, The Customer Is Key and Creating Strategic Leverage.

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Chapter 1

No Trespassing, Honda’s Minivan Monopoly

In the fall of 2002, my wife, Blair, and I went shopping for a minivan. Our first stop was the local Honda dealership to take a look at the top-rated Odyssey. As we were checking out the floor model, a salesman walked over.

“Hi, folks!” he said. “My name is Arnie. Can I help you?”

“I have a problem with the trunk,” said Blair. “It looks awfully small. I often carry a lot of stuff, and I wouldn’t know where to pack it.”

Arnie smiled. “Let me show you the best feature of this van,” he said. He lifted the tailgate, pulled a lever, and yanked at a strap attached to the back of the third row of seats. In seconds, the seats collapsed and folded neatly into the trunk-well, creating a huge, carpeted cargo area.

“All you have to do is push down these backseats and you can carry almost anything your heart desires. Why, just the other day I used my Odyssey to bring home a coffee table and four chairs that were on sale at Sam’s Club.”

Blair and I were impressed. “How soon can we take one home?” I asked.

“I’ll be happy to put you on the list,” Arnie replied. “There’s a wait of about eight weeks right now.”

“You’re kidding!” I protested. “What about a used Odyssey?”

Arnie shook his head. “Don’t remember the last time I saw one. People don’t seem to sell their Odysseys.”

Blair and I didn’t relish the idea of an eight-week wait, so we thanked Arnie and drove across town to take a look at the other top-rated minivan, the Toyota Sienna.

At the Toyota dealership, a friendly saleslady named Donna showed us a shiny metallic grey Sienna. “What a beauty,” she exclaimed. “Check out the carpeting, the air conditioning for the rear passengers, the automatic cruise control. And if you don’t like this color, we have four others on the lot to choose from.”

Blair got into the driver’s seat and looked around. “Nice,” she said appreciatively. “But how big is the trunk? We’ve got three small children and a lot of gear to carry.”

“No problem. We’ve got one of the biggest trunks in this size van. Here, take a look.”

Peering in, my wife said, “Gee, that doesn’t look much bigger than the Odyssey that we just saw.”

Donna was quick with an answer. “If you ever want more space, just take out the backseat and the cargo room doubles. Here, let me show you.” She started tugging at various catches and levers.

“Wait a minute!” said Blair. “You mean the rear seats don’t fold flat?”

“No, no!” Donna replied. “All you do is take them out of the car and you’ve got a nice, big cargo area.”

Blair frowned. “But what do I do if I discover something I really like at Home Depot or a tag sale?” she asked. “I can’t just leave the back seats on the sidewalk!”

That settled it. We signed up for a Honda Odyssey with Arnie, even though it meant waiting for nearly three months. But the whole episode left me highly intrigued. Honda had evidently found something customers wanted. They couldn’t make Odysseys fast enough, and the minivans were so popular that many dealers were charging a thousand dollars or more above the list price. What was the matter with Toyota and the other car manufacturers? Why weren’t they making minivans with seats that folded flat?

A week after our Odyssey finally arrived I learned the secret of Honda’s uniqueness. When I shared the story of our car shopping experience with the participants in my marketing seminar, Bill Stowell, a product-engineering manager at a major automaker, raised his hand.

“Actually, it’s not very mysterious,” Bill said. “The problem is the dies that are used in making the floor pan of a minivan. They’re really expensive, and they’ve got to be ordered eighteen months in advance, sometimes more.”

“I understand,” I said. “But wouldn’t it be worth the money to make a product that more customers want?”

“Sure,” Bill replied. “But the cost of the dies is only the start. Changing over from one set of dies to a new set is even more expensive, since it means shutting down production for more than a week. That’s why car manufacturers hold off on major changes until they’re ready to introduce a new model.”

“And when does that happen?”

“About once every four years.”

Suddenly Honda’s advantage was very obvious: Honda had introduced the Odyssey’s fold-flat seats in 1999. As it happened, Ford, GM, and Chrysler were all poised to introduce new models in 2000. By 1999, their designs were frozen. Even if they had wanted to, they couldn’t make a fundamental change like adding fold-flat rear seats to the 2000 models. Given the traditional four-year product cycle, other manufacturers wouldn’t come out with fold-flat rear seats until 2004 at the earliest. (Which in fact they did: Nissan’s 2004 model Quest minivan had a fold-flat third row, while Ford went one better, introducing a 2004 minivan in which both sets of rear seats folded flat.) Until then, Honda would offer the only minivan with this highly desirable feature.

Honda had a monopoly! As a result, during the five-year period from 1999 to 2004, while controlling less than 10 percent of the U.S. minivan market, Honda would capture over one-third of the profits in this segment.

An Ownable Space for a Useful Period of Time

By monopoly I mean simply that a company or a busi- ness controls an ownable space for a useful period of time. Once again:

A monopoly is an ownable space for a useful period of time.

The company owns, exclusively controls, something—a group of customers, a product feature, or some other desirable attribute—long enough to make some money.

This view of monopoly as “an ownable space for a useful period of time” takes us right back to the original definition: “Monopoly” is derived from the Greek word monoplion: mono-, meaning “only,” and plein, meaning “to sell” or “seller.” Thus, “monopoly” simply means “the only seller (of some product or service)”—somewhere, for some time. Nothing more, nothing less.

For the monopoly to be meaningful, the space must be “ownable,” i.e., capable of being controlled and potentially profitable. It must have enough customers with needs that aren’t being met who are willing and able to spend money to satisfy their needs. Ideally, their numbers should be growing, ensuring a steady stream of demand. The only bar in a town full of teetotalers may be capable of being controlled, but it can’t be profitable and therefore isn’t worth owning. By contrast, a look-alike bar on Rush Street, a popular Chicago locale, doesn’t control any ownable space because it can’t keep the market to itself.

You must also own the space long enough to make high, monopoly-like profits. Your “useful period of time” when you are the only player in this space must be long enough to give you a reasonable chance of recovering your investments, and then some. The more you have to invest...

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Verlag
Crown Pub
Erscheinungsdatum
2005
Sprache
Englisch
ISBN 10 
1400049725
ISBN 13 
9781400049721
Einband
Gebundene Ausgabe
Anzahl der Seiten
223
Kontakt zum Hersteller
Nicht verfügbar
Verantwortliche Person
Nicht verfügbar

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