New Kids on the Block

By Harley Rolfe

They call economics the dismal science. Boring as the subject may be, it guides sellersin effectively diagnosing and treating soft income and low occupancy. One of the incipientconditions of the self-storage industry is commodity competition. Simple economics setsforth the rules we need to deal with it. When all facilities are seen by prospects as thesame and there are too many units around, trouble is brewing. Raw commodity competition isno fun. Your choices vis-à-vis price competition are to do something dangerous, such astalk some sense into you rivals, live with it, or do what others in a competitive businessdo--employ the marketing process.

Keep Your Eye on the Ball

We must find a way to be unique enough to impel prospects to consider our offering asspecial. Marketers call that "differentiation." Keep your eye on that ball. Theprospect must reduce his choices to one in order to act. He will choose location or priceas his basis unless we help him to go in a different (our) direction.

If we are really good, we can create some killer features that are so unique andappealing that we are the only choice--a monopoly. Monopolies have picked up a bad name,so marketers often talk about "unique selling positions," or"exclusive" this or that, but they're all the same thing. Monopolies are notillegal; however, abuse of the economic power generated by one is. We know thedifference and want to compete fair and square. When I say compete I mean win--wrestcontrol of your pricing and policies away from your rivals.

Right Question?

You often hear that marketing asks the supplier to put himself in the position of thetenant. So, the operator says to himself, "What does a person shopping for aself-storage unit want?" Wrong question. Try this one: "What is a person who islooking for a self-storage unit trying to get done?" The first question leads to thecharacteristics of a unit (size, location, cleanliness etc.). The second questionidentifies the interest in the first place.

The tenant is moving to a new home. He has too much stuff for his basement, he's got anassignment in Greece, and he needs to store most of his household goods, etc. This is awhole or "global" understanding of the situation and puts you in the rightplace. Concentration on the first question will cause the operator to remain a commodity.Attention to the second question gets to the real concerns or goals of the prospect. Itleads the operator to involve himself in provisions beyond the walls of a unit and intothe tenant's mind. Some storage operators may rebel, saying that such things are not hisprovince and are a lot more trouble. He confines his attention to his units. If so, he hasdecided that remaining a commodity is OK.

Differentiation: The Only Way To Go

You--along with everyone else in the business world--have only one way to achievecompetitive marketplace independence: differentiation. It should be something unique andpromotable. If it's good, others will copy it. If not, you'll drop it. Thus, the processis dynamic and never-ending as marketers strive to use one or more of the followingdifferentiation choices:

Innovation. The offering has physical features that are unique anddesirable. Such things as climate control or coded gate-entry/security systems are acouple of examples. Location might be one, if it is singular. An advantage of these isthat they are capital intensive, which poses a barrier to easy duplication.

Packaging. Self-storage has immense opportunity for the packaging formof differentiation. The activities the prospect is generally confronted with in usingstorage are often grubby, and usually allied with other elements. That has all the makingsfor packages. If we can add convenience to the offering mix, we earn a premium for beingunique.

One of the hardest ideas to accept is that, in most cases, self-storage is merely acomponent. It is no different than being the supplier of flour for a bakery. Without theother components (sugar, baking powder, etc.) the flour by itself has little value. Thisis true of most commodities. However, assembled with the other needed components andconverted into what the user really wants, we have an excellent chance of being veryvaluable. That's synergy--where the sum is greater than the parts. The total value of the"cake" is much more than the cost of the physical components and labor. Not onlyis the buyer attracted to an approach that gives him a complete answer to his problem, heis also willing to pay a big premium for being relieved of an onerous task."Convenience" is a separate characteristic of an offering that is bothdistinguishing and claims its own reward.

Consider a house move. Selling boxes or offering truck-rental services isn't enough.They may be included, but the package must look to the prospect like a better way, onethat eases his chore. The operator should make the critical decisions. He should point outor include the best transportation options and packing materials, and set up acomputerized property record-keeping system. The latter will help him know where tenantpossessions are (which boxes, located where in the storage facility) and would even behelpful in the case of property loss. Have labor assistance on tap. Use off-peakconcessions from movers. You have contacts he doesn't have. You are in a strong positionto help. After all, usually, he's never done this before. In addition to distinguishingyour facility from those of your peers, you can also look forward to a value addition fortaking more responsibility. Making suggestions is not enough; you need to take a load offthe prospect.

Positioning is the other main option. That's the difference between a Timex and aRolex. Both keep time, but are perceived as distinctively different. Applied toself-storage, that means a differential offering that answers the question, "How arethe needs of a person moving into a $80,000 house different than those of one moving intoa $500,000 residence?" Pursuing the rest of the marketing aspect, where does adifferential attitude kick in and what media is relevant to the either? Let's say there isa predictable difference between the expectations of a buyer of a $350,000 home andsomeone moving into a $100,000 track house. You compose an offering that recognizes thosedifferences, then determine the most effective way of reaching those prospects

Many of you may feel that putting up a good facility, staffing it with responsiblepeople, keeping it clean and pricing it fairly should do the job, but when entercompetition enters, things change. Don't tell me that marketing is a lot more trouble.That I know. Tell me how to get yourself out the cycle of price competition another way. Acommodity is the way to go until the arrival of competition trips it up. Then you areconfronted by the futility of unrestrained price competition. Differentiation is the wayout.

Missed some previous issues? Check the Web at www.hardnosed.com.

Harley Rolfe is a semi-retired marketing specialist whose career includesexecutive-level marketing positions with General Electric and AT&T. He also ownedlodging and office facilities for more than 20 years. Mr. Rolfe holds a bachelor's degreein economics from Wabash College and a master's degree in business administration from theUniversity of Indiana. He can be reached at his home in Nampa, Idaho, at (208) 463-9039.Further information can also be found in Mr. Harley's book, Hard-Nosed Marketing forSelf-Storage.