Term Paper on "Philosophy of the Entrepreneur"

Term Paper 6 pages (2167 words) Sources: 1+

[EXCERPT] . . . .

Philosophy of the entrepreneur: Jim Hindman and Jiffy Lube, Inc.

From its humble beginnings in 1979 as an association of seven service centers put together by Jim Hindman. By 1986, Hindman had turned this seven-store operation into a 350-store franchise chain (Brown 1989). Today, Jiffy Lube today has more than 2,200 service centers in the United States and Canada and services more than 29 million cars a year (About Us 2005). The company was responsible for pioneering the fast oil change industry in 1979 by establishing the first drive-through service bay and providing customers with faster professional automotive services for their vehicles. This paper provides a biographical sketch of the company's founder, Jim Hindman, and an overview of Jiffy Lube. An analysis of the company's target market, its primary competition and locations, some typical promotional initiatives, and the composition of its management team. Finally, a summary of the research is provided in the conclusion.

Review and Discussion

Jim Hindman Biography.

According to one of his biographers, the decline of full-service gas stations in the 1970s resulted in many motorists being left without their traditional sources for oil changes: "Jiffy Lube began under Jim Hindman in 1979 as an association of seven fast-lube centers in the western United States" (Jiffy Lube Int'l. Inc. 2005). Another biographer records that in the late 1970s, Hindman was already an entrepreneur while working as the football coach at Western Maryland College. According to one student who later became a highly successful franchisee: "Hindman was a tough guy. He mentored and nurtured and kicked our butts. After a couple of years, he said, 'We have a real team here. Let's look for the right deal to make the most of it.' What they found was a mom-and-pop, seven-store, auto-service chain called Jiffy Lube. By 1981 there were about 100 Jiffy Lube stores nationwide, most owned by franchisees" (Golden Harvest: plan well to cash out big - American Oil Change Corp. founder Stephen Spinelli 1997). It should be noted that this student, Stephen Spinelli, founded his own firm, American Oil Change Corp., a franchisee of Jiffy Lube based in western Massachusetts; after just 9 years, Spinelli had 47 stores and enjoyed $31 million in annual sales (Golden Harvest 1997).

After he sold Jiffy Lube in 1989, Hindman turned his talents back to the work he loved when he started: working with young people. He became the founder, chairman of the board and chief executive officer of Youth Services International, a private service agency that provides services for more than 3,000 juveniles from 35 states; the agency also operates residential and community-based educational programs for adjudicated and at-risk youth in Florida, Iowa, Maryland, Michigan, Minnesota, Missouri, South Dakota, Tennessee, Texas and Virginia. "Always interested in higher education, Jim turned Western Maryland College's football program around and led the team to four winning seasons" (Avatech Solutions 2005). Hindman has also subsequently served his community in a various capacities at a number of hospitals and he founded and managed a successful consulting practice as well. Finally, since his sale of Jiffy Lube, Hindman has also served on numerous boards and has received awards of recognition including the Entrepreneur of the Year Award in 1987 by the International Franchise Association (Avatech Solutions 2005).

Jiffy Lube Overview.

Jiffy Lube's headquarters are in Houston, Texas, and Jiffy Lube International is a wholly owned subsidiary of Shell Oil Company (NYSE:RD) (About Us 2005). In 1986, Hindman decided to move beyond the limitations of his 350-store model and to make Jiffy Lube a nationally recognized name with the full intention of making his enterprise the number one automotive services company in the country: "We set out to go national," he said, and stated "We had to be the market leader" (4). The company had based its approach to franchising on McDonald's, and Brown points out that Hindman recognized an important point that may elude some entrepreneurs: "The advantages of being number one in a market are numerous, profitable, and self-perpetuating," and include the following:

You get the best locations. Since you got there first, you get to pick the best spots. Whoever follows you, by definition, is doomed to the second-best location.

You set the ground rules. People have certain expectations of the fast-food industry, for example, because of the way McDonald's has done things; competitors have to improve on what McDonald's has created, or explain why they're different.

You get better deals. Developers would rather have the number-one player in their strip center, shopping mall, or industrial park, so they tend to give the leader better terms. Banks want to be associated with your success -- if for no other reason than to keep your business. Suddenly, you find you're getting mortgages for half a point less.

You don't have to compete on price -- as much. You can charge a bit more when you're number one. People are willing to pay a premium to companies that are clearly better at what they do. How do they know you're better? Well, you're number one, aren't you? (Brown 1989:5-6)

Target Market. Although Jiffy Lube's services appeal to almost any busy motorist who lacks the time, tools and talent to perform routine vehicular maintenance, women in particular are a favorite target market for the company. For example, the Jiffy Lube Web site features a special "Women's Channel"; this site states: "Jiffy Lube understands that you have a busy life and that you probably don't want to spend a lot of time worrying about your car. That's why we created the women's channel - to give you quick, credible advice on the topics that you care most about" (1). The three hot topics featured on the Web site during this visit were:

Expectant mothers;

Use your senses [to detect engine trouble]; and Tips for trips - what you should do before hitting the road (Women's Channel 2005).

The Web site recommended that women check back in the near future for these upcoming topics:

Prolong the life of your car;

Keep you and your passengers safe on the road; and Make the most out of your driving experience (Women's Channel 2005).

Other marketing initiatives are discussed further below.

Primary Competition. Jiffy Lube has identified a niche enterprise and has exploited it ever since based on an established formula of providing various automotive services at set prices in a "one-stop-shopping" approach. According to the company's Web site, each of their technicians receives exhaustive classroom, video and hands-on training in every service offered by Jiffy Lube. "This training covers both the technical and safety aspects of each service and is supported with a battery of written and hands-on performance exams administered by our Jiffy Lube technical experts" (About Us 2005:4). The company also requires their technicians to maintain a detailed technical knowledge of several vehicle systems in the basic lubrication and fluids services but in other core maintenance services and key diagnostics as well. In addition, each Jiffy Lube store uses standardized quality inspection techniques that require additional staff training and certification. This approach has enabled the company to gain market share from traditional competitors such as service stations that only provide such services as a sideline with potentially exorbitant prices, or from a traditional mechanic's shop where prices are nebulous (but always high) and the service may be very slow.

According to Baucus, Baucus and Human (1993), "Critical services vary across industries and franchisees must identify the critical services that create and maintain trademark value in their particular industry. Franchisors do not need to offer all services and should not try to duplicate the package of services offered by rivals" (91). The company's Web site reports that 70% of Jiffy Lube's service centers are franchises, and the remainder are company owned and operated (About Us 2005).

Locations.

Today, Jiffy Lube has more than 2,200 service centers across the United States and Canada (About Us 2005).

Promotional Initiatives.

The most successful Jiffy Lube operators have clearly embraced the fundamentals of market segmentation to help them understand who their customers are and how they can best meet their needs. According to Paisner (1999), the CEO of the Jiffy Lube franchise for the Boston market propelled his franchise into the top 5% nationally out of all the franchises in the Jiffy Lube chain. "Once he joined our board [for a car wash franchisor]," Paisner reports, "we learned that he'd achieved this remarkable growth because of a deep commitment to target marketing" (85). This commitment to target marketing is reflected in the company's Web site that proudly proclaims what many consumer advocates are fearing the most: "What's more, we keep a comprehensive database of all our customers, so no matter which location you visit, we'll know what you need. And our database of manufacturers' recommendations guarantees you'll get just the right service for your car" (About Us 3). The company's promotional initiatives are also based on their target market research.

For the summer of 2005, Jiffy Lube, in conjunction with motor oil brands… READ MORE

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