CASE STUDY: By the late 1990‘s Mount Pleasant Cemeteries Group had enjoyed more than a century of success. Managed under a traditional not-‐for-‐profit model, its products and services were well respected in its Toronto market, and its name was virtually synonymous with the cemetery business.
Mount Pleasant Cemeteries Group (MPCG) had its first cemetery right in the heart of Toronto and through the years had acquired additional sites throughout the city. But by 1998, the company began to encounter difficulties. Matters came to a head in one of those defining moments that people later point to as a turning point: SCI and Arbor, two very large burial services headquartered in the U.S., decided to enter the Canadian market with aggressive strategies.
The new entrants each had value driven approaches. Each bought properties and built cemeteries for customer segments that had unique cultural requirements such as geographical preferences, directional facings, and landscaping. Furthermore, the sales staffs in the two companies were remunerated based on commission rather than straight salary. This approach rewarded staff for selling products and services that may not have been offered or identified under the MPCG selling model.
MPCG often felt itself hampered in a highly regulated industry. To compound the matter, after the entry of SCI and Arbor, fierce competition ensued, driving down prices and profit margins. To compete, MPCG set about building value for their company, taking steps that would maximize the company‘s potential value. MPCG began, in effect, to balance the need to generate an appropriate return to stakeholders with the needs of other key constituents œ their customers and employees.
Defining customer needs
Step one was to talk to customers. What did they want and need? What were their preferences? What would they need in the immediate future? What would they need in a decade, or half a century down the road? For the first time, MPCG was seeking to convince prospective clients to share information about what they valued. Long before any cemetery designs were in place or capital was committed to any structures, MPCG was now listening to the marketplace.
Based on the needs of the marketplace, and with new Chapel Reception Centers and advanced cemetery designs, MPCG‘s goal became to create — the most customer attentive cemeteries in the market.“ For the first time, for example, customers were provided with the choice of pre-‐paid burial that could be financed over a period of time.
Mount Pleasant Cemeteries Group was able to manage its properties for value by creating a selling process driven by the needs of specific customer segments. Furthermore, MPCG was able to make iterative adjustments to its products and properties prior to committing excessive amounts of capital in hopes of matching the ”right‘ customer with the ”right‘ product and service. For clients, a customized approach meant they could select where, how, and at what price they would be buried.
“Value drivers such as location within a cemetery, natural beauty, and cultural traditions were never considered part of the pricing equation. “
Shifts in the pricing approach
To accommodate the needs of their customers, MPCG further undertook to redesign their pricing methodology. Traditionally, MPCG charged a single price, regardless of burial site attributes having special value for some customer segments. Value drivers such as location within a cemetery, natural beauty, and cultural traditions were never considered part of the pricing equation. In their new pricing approach, management now placed appropriate value on these variables. And for the first time, MPCG developed competitive data in order to compare selling prices across the market and, where appropriate, to bring MPCG pricing in line with that of competing firms.
A key decision for MPCG was whether to Establish itself as a price leader or as a price follower in their marketplace. If MPCG chose to be a price leader, management felt their competitors would look to them for pricing guidance and would follow appropriately (a pattern of the past). Newer cemeteries in the MPCG portfolio lacked history, however, and a price follow-ship pattern seemed called for. In the end, the general and least risky approach was to leverage the MPCG brand by pricing less than or equal to the competition.
While many companies are tempted to lower prices in the face of strong competition, MPCG defined its value proposition to the customer and priced their product offering appropriately to meet their customers‘ needs. The net result was a custom designed pricing strategy based on customer segments rather than a traditional, price leader strategy.