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New Kids on the Block

Harley Rolfe Comments
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New Kids on the Block

By Harley Rolfe

They call economics the dismal science. Boring as the subject may be, it guides sellers in effectively diagnosing and treating soft income and low occupancy. One of the incipient conditions of the self-storage industry is commodity competition. Simple economics sets forth the rules we need to deal with it. When all facilities are seen by prospects as the same and there are too many units around, trouble is brewing. Raw commodity competition is no fun. Your choices vis-à-vis price competition are to do something dangerous, such as talk some sense into you rivals, live with it, or do what others in a competitive business do--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 as special. Marketers call that "differentiation." Keep your eye on that ball. The prospect must reduce his choices to one in order to act. He will choose location or price as 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 and appealing 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 not illegal; however, abuse of the economic power generated by one is. We know the difference and want to compete fair and square. When I say compete I mean win--wrest control 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 the tenant. So, the operator says to himself, "What does a person shopping for a self-storage unit want?" Wrong question. Try this one: "What is a person who is looking for a self-storage unit trying to get done?" The first question leads to the characteristics of a unit (size, location, cleanliness etc.). The second question identifies 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 an assignment in Greece, and he needs to store most of his household goods, etc. This is a whole or "global" understanding of the situation and puts you in the right place. 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. It leads the operator to involve himself in provisions beyond the walls of a unit and into the tenant's mind. Some storage operators may rebel, saying that such things are not his province and are a lot more trouble. He confines his attention to his units. If so, he has decided 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 achieve competitive marketplace independence: differentiation. It should be something unique and promotable. If it's good, others will copy it. If not, you'll drop it. Thus, the process is dynamic and never-ending as marketers strive to use one or more of the following differentiation choices:

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

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

One of the hardest ideas to accept is that, in most cases, self-storage is merely a component. It is no different than being the supplier of flour for a bakery. Without the other components (sugar, baking powder, etc.) the flour by itself has little value. This is true of most commodities. However, assembled with the other needed components and converted into what the user really wants, we have an excellent chance of being very valuable. 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 only is the buyer attracted to an approach that gives him a complete answer to his problem, he is also willing to pay a big premium for being relieved of an onerous task. "Convenience" is a separate characteristic of an offering that is both distinguishing 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, one that eases his chore. The operator should make the critical decisions. He should point out or include the best transportation options and packing materials, and set up a computerized property record-keeping system. The latter will help him know where tenant possessions are (which boxes, located where in the storage facility) and would even be helpful in the case of property loss. Have labor assistance on tap. Use off-peak concessions from movers. You have contacts he doesn't have. You are in a strong position to help. After all, usually, he's never done this before. In addition to distinguishing your facility from those of your peers, you can also look forward to a value addition for taking more responsibility. Making suggestions is not enough; you need to take a load off the prospect.

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

Many of you may feel that putting up a good facility, staffing it with responsible people, keeping it clean and pricing it fairly should do the job, but when enter competition 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. A commodity is the way to go until the arrival of competition trips it up. Then you are confronted by the futility of unrestrained price competition. Differentiation is the way out.

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Harley Rolfe is a semi-retired marketing specialist whose career includes executive-level marketing positions with General Electric and AT&T. He also owned lodging and office facilities for more than 20 years. Mr. Rolfe holds a bachelor's degree in economics from Wabash College and a master's degree in business administration from the University 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 for Self-Storage.

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