You think YOUR business is tough, try operating in an industry where all your customers are dead. The $11 billion funeral industry includes a figure of 1.9 million burial caskets alone. (1) Many of the caskets in the U.S. are produced by the Batesville Casket Company in Batesville, Indiana and York Group Inc. out of Houston, Texas. Analysts estimate that Batesville's market share is 45 per cent, with York a distant second with 15 per cent. With funeral homes typically marking up casket prices by 300% to 500%, its a major business. (2)
While many might think that the funeral industry is stable, or even boring, it is actually experiencing rapid change. Bob Putzier, general manager of Batesville Casket's Tinley Park distribution center, puts it simply, "A lot of people seem to think that the funeral industry is staid," he says, "but that's simply not the case. I've been in this business a long time, and things are constantly changing: The questions change. The demands change. Customers' needs change." (4) In addition to caskets, Batesville has branched out into burial urns, keepsake urns, momento chests, and more. The objective is to provide a "personalized funeral" for those who desire a different kind of funeral experience. Some additional products include:
Due to the nature of the service, it is imperative that custom caskets be delivered promptly. A casket rolls of the Batesville assembly line every 53 seconds, with virtually all of them delivered within 24 to 48 hours around the United States and overseas. Essential to this factor is the Fed-Ex-like hub-and-spoke distribution network that Batesville uses to deliver its caskets. From five manufacturing facilities, the caskets are moved to one of seven regional rapid deployment centers (RDC) around the country. From here, they are delivered to a network of 81 local customer service centers that are responsible for distribution to local funeral homes. No customer service center is farther than 10 hours from a RDC. (7) As a result, 98.5 per cent of all Batesville's caskets are delivered to funeral directors on time. With customized caskets making up an increasing amount of Batesville's orders, they get some unique requests. The firm offers over 700 different casket designs, in addition to customized materials and specialized embroidering. To speed delivery, customization takes place both in the manufacturing plants and the distribution centers. Each of the seven RDCs has a laser engraving machine to support custom-engraved casket lids. (8) The firm offers caskets with a Memorysafe Drawer that allows mourners to include keepsakes or other memorabilia to increase the personalization of the funeral service. The company also publishes a broad line of grief counseling brochures that it makes available through funeral homes to assist with the grieving process. Another innovative service is Batesville's Living Memorial Tree Planting Service. When families select a Batesville product, a tree seedling is planted at a national forest at no extra cost. In agreement with the United States Department of Agriculture Forest Service, the program has been responsible for planting more than 7 million trees and reforesting more than 14,500 acres in the past two decades. It is now the largest private reforestation project in the United States. (9) Batesville offers these services in a surprisingly "high touch/low tech" way. The firm uses very little computer technology or automation to assist in the manufacturing process. "If our operation were highly automated," comments Ken Camp, VP and General Manager of Batesville, "we could never satisfy the specific needs of our customers. And we also wouldn't be able to adjust quickly to changes in the market." The combination allows the flexibility necessary to meet constant changes in customer preferences. (10)
With a recent change in the law governing the purchase of caskets, firms such as Batesville face a renewed challenge from discount casket manufacturers and distributors. Caskets were usually purchased as part of the funeral package from the funeral director, often at prices 3 to 5 times the cost. Attempts by discount casket makers to enter the market were stymied by funeral homes' policies of adding "handling fees" to caskets purchased outside their operations. A study in 1996 by the Funeral Directors Association found that the average cost of a funeral in the United States, for a full service, cost about $4,622, with caskets representing anywhere from 40 - 50 per cent of the costs. (11) To protect grieving families from price gouging and to eliminate mandatory 'package deal' funerals, in 1994 the Federal Trade Commission (FTC) revised its 1984 Funeral Rule. Now funeral homes must provide customers with an itemized list of prices for all goods and services selected, and they must allow consumers to provide their own urns or caskets if they choose. The casket "handling fees" were outlawed. (12)
As a a result of this action, the increase
in discount casket distributors has been significant. You can purchase
a casket online at BuyCaskets.com,
with savings from 20 per cent to 80 per cent off normal retail prices.
(13) Or if you prefer, you can get a set of plans and build a casket
yourself from Rockler Woodworking.
(14) Additional discount casket providers include:
However, Batesville feels that it can meet the challenge as long as it continues to offer a combination of premium product and service to its funeral homes. By providing customized services, Batesville can insulate itself from the low-end providers. This strategy has proved successful so far, as Batesville enjoys a 40 per cent market share overall, with as much as 60 per cent of the high-end casket business. But can Batesville continue to offer new features to its caskets that effectively differentiate its product from the low-cost alternatives?
History of the funeral industry Misrepresentations Prohibited by the FTC Funeral Rule
"Funeral Industry Carves Niche In Cyberspace," November 3, 1999.
Lagnado, Lucette. "Phone
Eulogies, Videotapes Make Funerals Virtual Events," August 21, 1996.
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