Deliver unique value

Raymond’s company repairs car stereos in two days rather than the usual one to two month turnaround of car stereo manufacturers. Why is that valuable? Turns out that, in recent years, more and more of your car systems are integrated into the car stereo. For example, stereo controls are on the steering wheel making it impossible to go to your retail consumer electronics store and swap out with an off-the-shelf stereo. Plus hands-free phones, navigation systems, and environment controls all leverage the stereo speakers. So if your stereo must be ripped out for two months, that means no AC controls, no hands free cell phone usage, and no navigation for two months. For most people that’s unacceptable. Raymond’s business makes it possible for dealerships to minimize the disruption to the consumer’s life thereby earning the consumer’s loyalty.

Focus on relationships

There are thousands of car stereo and electronics repair services in the US yet less than a dozen focus strictly on car dealerships. Raymond chose to have deep relationships with 1200 dealerships rather than handling tens of thousands of low-cost transactions. By doing this, he focuses on excellent quality service and attentiveness to dealership needs. Raymond earns the dealership’s trust as he builds trust between the consumer and the dealership (fast, reliable service).

Price to value

Fixing car stereos might sound like a commodity business. And it is. Just Google “car stereo repair” and you’ll get 5M results. But Raymond knows that 2-day turnaround versus 30-60 days is worth a lot to the dealership and the consumer. Just how much? He develops a price by understand the price sensitivity of the end-consumer. He figures that integrated car stereos are standard in all cars priced over $30,000, a segment that’s not shopping for lowest price but rather demanding performance, reliability, and convenience. Then Raymond looks at the audio systems costs which can be as high as $3000 and he also looks at the car stereo manufacturers’ repair prices. The price ceiling is the cost of a new system and the floor is the manufacturers’ price. Somewhere in between is a fair price the dealer is happy to pay. Raymond avoids the common mistake of “cost-plus pricing” by basing prices on a deep understanding of the dealerships’ alternative options and the consumers’ needs. We could all learn from that approach.

Hi Sridhar,
That must have been a great plane conversation! Isn't it fun to step outside of high tech and see how entrepreneurship thrives all over this country?

Posted by: Elise | November 17, 2006 12:18 AM

Sridhar, This relates well to a class I just took as part of my MBA program using "Experience Co-creation". Peforming extensive market analysis and setting prices based on "googled" data is pointless when you are not in touch with a customer's needs. Raymond seems to have co-created the right experience for his clients based on what they really need -a two day turnaround. For this experience and service, his clients may even be willing to pay the ceiling price you speak of. What a wonderful story!

Posted by: Priya Tabaddor | November 28, 2006 9:53 AM