Nation's Business:
"Slaying The Giant - Without Cash"

September 1994

Five years ago, business was going well for J.B. Dollar Stretcher Magazine, the direct-mail advertising publication that Robert and Joan Minchak started in Richfield, Ohio, in 1985. They had assembled a good sales team, and, says Bob Minchak, "The fear of failure and struggle for survival had been replaced by hope for continually increasing solid growth in sales and profits."

That's when a major publicly held corporation decided to go head to head with the Minchaks with a competing publication. In its initial assault, the corporation sent letters to the Minchaks' customers, urging them to switch to the new magazine, which was printed on high-quality glossy paper, with full color available, compared with J.B. Dollar Stretcher, which was printed on newsprint, with only one color in addition to black on selected pages.

The competitor also launched a radio blitz to increase customer awareness of its new magazine.

Several of the Minchak's larger advertisers quickly defected. "It seemed as if nuclear bombs were exploding all around us and a few on top of us," Bob recalls.

The competitor didn't stop with trying to erode the Minchak's customer base. It also tried to steal away the smaller company's salespeople, luring them with the security, stability, money, and management positions that only a large company could offer.

To survive, Bob says, the Minchaks decided to "slay the giant." That's exactly what they did, and they did it without spending any extra cash. Their strategy was two-fold: create goodwill among customers, and provide superior service. In specific steps, the Minchaks:

• Upgraded their product but competed on price at the same time. They added a four-color section but used a lower-grade paper that resulted in a substantial cost saving for their customers. "This move placed us on a closer-to-equal footing and resulted in a price war of sorts, in which we were better-positioned to defend," Bob says. "Since our costs were lower, our product was acceptable to our mutual customers."
  
  The Minchaks also began producing bright-looking covers that showcased advertisers and outshined the covers of the competing magazine.
   

• Beefed up their service. They concentrated on their ability to produce ad proofs and deliver them to customers in two days, compared with the week that their competitor needed for a turnaround. "We communicated with our customers and listened to what they wanted so we could better serve them," Joan says.
   

• Involved their staff in devising strategies to overcome the giant. This resulted not only in solutions but also in team building. "We analyzed what we felt our competitor's most probable next moves would be, and we would figure out several combinations of plans with which to counterattack," Bob says.
  
  "We couldn't buy the market, but we could manipulate and change it to make it harder and more expensive for our competitor to buy," he adds.
   

• Waged a better radio campaign. The competitors ran 30- to 60-second spots throughout the day on several local radio stations.
  
  The Minchaks chose what they call "surgical precision," airing numerous 10-second spots on 10 stations on morning and afternoon drive times during the periods when their magazine would arrive in area homes.
  
  The spots featured three J.B. Dollar Stretcher advertisers at no charge to them. "This helped us close sales and promote goodwill," Joan says. "It also created better name recognition and credibility by association."
   

• Persuaded the sales staff to stay. By maintaining a close relationship with their sales representatives before the giant intervened and by already compensating them well, the Minchaks found it easier to dissuade employees from joining the other camp.
  
  To keep Dave Volpe, a key salesman, Bob says, "I convinced him that his opportunities in the long run were much greater in my organization than they would be in a large corporation." Today Volpe is vice president of sales for the firm.

How did the Minchaks do all this without having to come up with all kinds of cash? Because they were already paying the largest commissions in the market, they did not have to increase pay for sales staff.

Changing the magazine cover to feature a customer each issue resulted in no extra cost. The four-color section not only paid for itself but also became a new profit center. The radio campaign was done on trade.

"Fine-tuning our operation to run more efficiently even saved us money," Bob reports. "The additional communication with our customers cemented close working relations. It also taught us that if we are not talking to our customers, we can be sure our competitors are."

The giant was gone within a year. "We accomplished complete and total victory," Bob says.

Under siege, J.B. Dollar Stretcher Magazine (named for Joan and Bob) became a better company with a better product and a substantially better bottom line. Sales in 1989, when the battle began, totaled $838,682. The following year, they were $1,280,892 ? more than a 50 percent increase. This year, the company expects revenue of $4.5 million and has 24 employees and 40 independent sales representatives.

And, says Bob, "We are now a much more competitive predator. We have become the dominant direct-mail advertising medium in northeast Ohio, selling more and a wider variety of ads than everyone else in the market."

Not only that, say the Minchaks, one of the giant's subsidiaries has become "a very good customer."