CONVENIENCE: MUCH TOUGHER THAN IT LOOKS

by Donald V. Potter

“What you want, when you want it” paraphrases the slogan of a fast food establishment. In the hierarchy of needs that drive the buying decision, product features and reliability constitute “what you want.” “When you want it” equals convenience. This third stage in the buying hierarchy is decisive in about 25% of purchases (and is significantly more important than price).

Solving the Problem Quickly

Convenience is best described as short order time. It is the time between a customer’s discovery that he has a need and the meeting of that need.

Suppliers offer convenience by shortening the order cycle time in one of three ways.

  • Helping customers choose their supplier. A company’s goal is to make people aware of its product/service and to clarify differences between itself and competing suppliers – in other words, to accelerate and direct the customer’s choice of solution. Sales calls, information from distribution channels, promotions, advertising and product literature all serve this end.
  • Making the product or service more readily available. Once the customer has made his choice, a company wants to get the product into use for the customer faster and less expensively. Alternatives here include lower cost methods of ordering (e.g., 800 numbers), faster deliveries, more frequent deliveries, sales in different quantities (e.g., single-serve vs. bulk packaging) and easier installation (e.g., user-friendly) and use (e.g., compatibility with other components).
  • Lowering the payment hurdle. A customer who is ready to commit may hesitate, thinking, “When and how can I pay for this purchase?” To ease customers over this final hurdle, suppliers may offer leasing, installment purchase programs, on-the-spot financing, company accounts, or supplier-specific credit cards.

Each of these approaches to improving convenience has a different appeal to the separate groups of customers. Retail customers may prefer the financing option, while wholesalers prefer improvements in availability and end users like help in making choices. Nor is that the extent of the challenge.

Getting the Reward for Reliability

Key to convenience is access to the right channels. For products, that might mean shelf space in good outlets; for services, that might mean the endorsement of a supplier (such as a travel agent’s recommendation of a hotel).

Channel convenience derives from reliability. Channels want to carry products and services that consistently please their end-use customers. Reliability enables a supplier to get that shelf space-and the shelf space in turn reinforces the customer’s perception of reliability. Buyers reason, in effect, that any product that is so well-represented and endorsed by the channels must be good. Suppliers who invest in reliability, then, also gain in convenience.

Managing Convenience In Hostility

“Service levels get better not worse.”

In hostility, management must do more with less. Most customers, in hostile markets, see much better service levels, especially in convenience, despite the fact that suppliers have less revenue per unit to provide that service.

Service levels improve because falling prices compress margins and force each supplier to choose its target customers with more care. Many suppliers concentrate their resources – though limited – on fewer customers and can then deliver better convenience in the face of lower margins. This forces all suppliers to focus their resources more narrowly.

Changing Channels

“Channel importance changes as well.”

As markets mature, and especially as they become hostile, channels often evolve in their distribution power. Winning companies must often be flexible and willing to change channels. Two examples illustrate the point:

  • Copiers were once sold by direct sales forces, who educated and reassured customers about the technology. Now that the product is familiar, far more copiers are sold through office supply outlet than through direct sales.
  • Makers of roofing shingles once distributed largely through dealers and contractors. Then, about ten years ago, a new retail channel appeared: outlets like Home Depot sold a variety of building materials at high volumes and low prices. Some wholesale customers began to buy directly from these retail outlets. Shingle manufacturers then had to incorporate retail outlets in their distribution strategy.

Closing Thought

Companies can think of channels both as customers and as suppliers. Channels are customers because they buy product. They are also suppliers because their services provide the company with market access. When a channel is no longer the best supplier of market penetration, winning companies develop new channel relationships.

(Note: This Perspective was written in the context of the economy in 1992. While some of the companies may have changed their policies or indeed no longer exist, the patterns they exhibit still hold today.)

Recommended Reading
For a greater overall perspective on this subject, we recommend the following related items:

Analyses:

Symptoms and Implications: Symptoms developing in the market that would suggest the need for this analysis.

THE SOURCES FOR STRATEGYSTREET.COM: For over 30 years we observed the evolution of more than 100 industries, many hostile.  We put their facts into frameworks applicable to all industries and found patterns.  Strategystreet.com describes the inductive results of these thousands of observations and their patterns.