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An Update on Service Corp. International

Euphemistically named Service Corp. International (SCI) is actually a mega-presence in the world of funerals. We wrote about their strategy of ‘industry roll-up’ in MarketBusters (chapter 5) noting that the company had skillfully managed to take inefficiencies out of the business through a series of acquisitions of small, fragmented players. This in turn led Service Corp. to be able to gain scale when many competitors can’t. The strategy at the time was to emphasize product sales, such as high-priced caskets and other accoutrements to the funeral experience. But, as we predicted in the book, nothing lasts forever.The Web has made easy comparison shopping for funeral-related products possible, leading to customers’ becoming far more price-sensitive than they once were, even about such a delicate issue as saying goodbye to a loved one. Such behavior has now eroded SCI’s one-time advantage. New CEO Thomas Ryan (appointed in February 2005) has instead repositioned the company to, in effect, pursue a different MarketBusting strategy, one we call reconstructing customers’ consumption chains. He was recently described in Business Week (July 18, 2005 issue) as seeking to have his funeral directors ‘focus on customer needs’ as opposed to pushing products. So far, his new push into customer-centricity seems to be paying off: funeral revenues were reported to rise 4.7% in the first quarter of 2005.

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