Many years ago I first heard the expression: Fast-Good-Cheap/Pick Two. This expression applies to many real-life situations. The saying suggests it’s almost impossible to lead any market in all three categories. For concrete producers, it suggests you have to choose two of the following: great service, great product, low price.
However, a few weeks ago I read an article written by a man who disagrees with this concept. The author has spent many years in ready-mix sales, working in large and small markets. His opinion is that in a market with several producers, producers can be the market leader in only one category. For instance, if one of your competitors is vertically integrated selling both cement and ready-mixed concrete in your area, it is going to be hard to beat them on price.
How accurate is the gentleman’s assertion that you can only lead the market in one category?
I look forward to your feedback about being the market leader in more than one category.
My sales experience, I worked for producers who were price leaders. These companies put their emphasis on quality concrete and consistent on-time service. The contractors who bought concrete from my first employer, told me they knew what time it was based on seeing our mixers arrive at the jobsite. That was high praise coming from people who had been used to getting cheaper concrete 2 hours later than the promised time.
In addition, we received high marks on the quality of our concrete mixes. The finishers remarked that our concrete was easy to spread around and bull-float. The commercial customers were happy that our concrete passed on-site testing and easily passed 28 day compressive strength testing. The only complaint customers had was the higher pricing.
My response was that if the contractor waited 60 minutes for the concrete to arrive, he was paying 4-6 people $15 per hour to sit around waiting for the truck to arrive. The meant $60-$90 was wasted for idle labor versus paying us $50 for concrete that would have arrived at the scheduled time. Eventually, most contractors would realize that we were saving them money.
But at the end of the day, isn’t the real sign of a market leader is returning a profit to the owner. It is the decision of the top managers to determine which category is the primary focus. As you lower price in order to increase market share, your profit will probably decrease. The sales manager and general manager should use revenue per hour to evaluate which jobs to bid on and at what price to quote. Round trip time of 60 minutes or less to load, travel, pour out, and return to the plant is a good opportunity to maximize profit, even at a lower selling price. Yards per hour is another good yardstick to help determine the profitability of the operation.
Of course, the general manager will set the goals and priorities for concrete operation. So I look forward to hearing back from those of you who were able to change their market standing and sharing with the group the general operating guidelines and procedures that made it possible.