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Competition: A brief look

Discussion in 'Business Operations' started by Toroguy, May 11, 2002.

  1. Toroguy

    Toroguy LawnSite Bronze Member
    Posts: 1,075

    Intense rivalry is due to several factors. The lawn care industry has numerous equally balanced competitors. A "homogeneity" in a word. When the service is peceived as a commodity, choice by the buyer is based on price and service. Product differentiation however insulates an owner against competitive warfare because buyers have loyalties and preferences to particular sellers. A look in the Yellow pages or local newspapers will illustrate that differentiation is also becoming a commodity. Most full service owners offer similar/identical services.

    When an industry is dominated by one or a few companies, the leader or leaders can impose discipline through devices like price leadership. TruGreen Chemlawn has this strategic advantage in the applications side of the industry, and appear interested in the weekly maintenance side. Will a similar large firms price deterring strategy take over the weekly maintenance arena? A possible "super-merger" among sole proprietors and smaller firms could also create a massive enterprise to thwart a TGCL market domination.

    Some impacts on industry competition here at Lawnsite:


    -Creation of consistent pricing
    -Improvement of industry knowledge
    -Improves equipment/technical knowledge


    -Low cost learning by industry newcomers or followers
    -Cheapens the currency of industry techniques and methods
    -Lowers the experience curve, i.e. graduation from the School of Hard knocks
    -Imitation narrows perceived differentiation

    MATTHEW LawnSite Senior Member
    from NE OHIO
    Posts: 665

    All good points,but... the big boys exist to please the shareholder. New ventures will do that. The problem comes later when profits fail to drive stock prices upward. I'm afraid no matter how many maintenence accounts TGCL gets, the profit will always be a fraction of treating lawns. I think they should look into less time consuming ventures, like let's say, selling ice cream cones.:p
  3. SCL

    SCL LawnSite Senior Member
    Posts: 543

    To take this one step further in a personal annecdote, myself and another local LC were using a product and marketing well. My local nursery took on the product line to "help" us out, and next thing you know, every LC, mower, and handyman is selling it and the nursery is giving potential end users 3 or 4 of us to call for the jobs. Its gone from selling a quality service with unique design to having customers ask "what do YOU charge a square foot?"
  4. Toroguy

    Toroguy LawnSite Bronze Member
    Posts: 1,075

    Cost leadership requires aggressively efficient operations, focusing on pursuit of cost reductions from experience, tight cost and overhead control, avoidance of marginal accounts, and cost minimization in areas like advertising, service, lunatic spending, etc.

    Having a low cost approach yields the company above average returns in the industry despite the presence of strong competition. Its low cost position acts as a defense from rivals, because its lower costs mean that it can still earn a profit after its competitors have competed away their profits through rivalry.

    Time for a cone:cool:
  5. Toroguy

    Toroguy LawnSite Bronze Member
    Posts: 1,075

    It is not uncommon for the competition to comment on industry conditions. Such as changes in demand, pricing, cost increases and so on. Remember the company or representitive making the statements may be interpreting the conditions in a way to improve its own strategic position. It may prefer prices to fall making its competetitors prices appear high, even though competitiors may be better off holding prices at current levels.

    It can be interpreted the other way also:

    "The industry is going to fail if prices don't increase" Is a cry for help, translation: "XYZ company is going to fail if prices fall."

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