Choose Your Market

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Which do you think is a better competitive situation to be in: a large metropolitan market or a single-point town?

It all boils down to what makes sense for you, your family and your long-range plan. It would take a few articles to address all the issues, but let me offer a few thought-starters.

Major metropolitan markets — New York, Los Angeles, Chicago, Dallas, Houston, Miami, on down to about the top 100 markets — offer four advantages: 1) sheer market size in terms of vehicle registrations and population, 2) enough people with sufficient disposable income to be solid prospects, 3) resources available to market your products, including media, marketing agencies and others with marketing clout, and 4) other dealerships that by their presence will help you create a fertile market for your products (so you're not alone trying to push powersports to the 95 percent of people who don't participate).

Of course, each of these opportunities presents a threat. Reaching such a large market will cost you more marketing dollars, not to mention basic land and facility expenses, utilities and payroll. Metro shoppers are more savvy, well-read and cutthroat, and it typically takes a sharper, more gorilla-marketing approach to create the required reach, frequency and impact. Finally, there's price competition, competition for the best people in each department and competition for ad space and position, and promotions. It's fierce.

Many dealers make comfortable livings in single-point towns — markets with only one dealer per manufacturer, or maybe just two or three dealers in total, each having several brands. In these cases: 1) you are one of the big guys in town (you sit on business councils, and are known throughout the community), 2) you tend to know your customers by name, 3) because your dealership is likely smaller with fewer employees, you influence what goes on in your store, you know your employees better, and you are more hands-on in each key area of the business. Your competition is limited or may even be nonexistent.

But there are strategic threats in small markets as well. Particularly in a down market, you may be trying to sell your products to folks who simply don't have the disposable income. And it's nice to know your customers until all they want to do is "talk to the boss." You've got no place to run, no place to hide.

Also, it is more difficult to delegate assignments to employees if you have your fork in all the pies (and you'll have less time to think).

With less competition, you can lose your edge, and slow your pace half a step. You may tend to do things as you've always done them because no one's out there pushing you to grow, take risks, discover the next great idea.

So when deciding between a small and large market, think about what's best for you, what path plays better to your strengths and how best to shore up your weaknesses. Do your homework, do a formal SWOT (strengths, weaknesses, opportunities, threats) analysis, and, above all, think strategically.

Clark Vitulli founded America's PowerSports, for which he served as chairman, president and CEO from 1998 to 2006. Send questions and comments to editors@dealernews.com.