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)
 
Listen to NPR on consolidation within the funeral industry.  You will need Realplayer to listen.


It may seem odd, but the Batesville Casket Company, a division of Hillenbrand Industries Inc., has the same goal of most firms - growth.  But with a relatively stable number of deaths each year (roughly 2.2 million in the United States) how does a firm in the casket business seek expanding markets?  "We can't grow the market like other industries," says Joe Weigel, 45, Batesville's director of communications. "And because there's nothing we can do to increase market demand, it's all about serving our customers better." (3)

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:

  • The stainless steel "Millennium" casket 
  • A biodegradable urn for scatterings at sea, a rapidly growing trend following the recent funeral of John F. Kennedy, Jr. 
  • MemorySafe(TM) drawer for Batesville's steel casket models. This feature, already available and preferred on more than one-third of Batesville's hardwood caskets, allows family members and other loved ones to deposit notes and other sentiments. 
  • Alexis and Prescott hardwood casket models that offer new personalization options, including the MemoryFrame(TM) panel, which enables family members to display meaningful photographs in a casket's cap panel.  (5)
One of the greatest changes has been peoples' preferences for customized caskets.  In order to meet this demand, Batesville has had to radically change the way it manufactures and distributes caskets.  In addition to utilizing Just-in-Time (JIT) manufacturing processes, Batesville owns its entire supply chain, including stamping plants, casket assembly, and trucks to deliver the product.  This supports the tight integration necessary to provide such a high level of customer service.   With 1600 distinctive green and white trucks, Batesville operates one of the largest private truck fleets in the world. (6)

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:
 

WebCaskets.com
Direct Casket

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?

Batesville Casket Homepage

York Group

History of the funeral industry

Yahoo Casket List

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.
              

  1. Using Porter's Generic Strategies Framework from Chapter 6, locate Batesville Casket in the model.  Compare the location of the discount providers.  Support your choice by using the WSJI edition.


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  3. Should Batesville start offering its casket via the Internet directly to consumers?  Support your choice by utilizing the WSJI edition.

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  1. "Casket Stores Offer Bargains to Die For," Wall Street Journal, February 19, 1997, p.B+. 
  2. Ibid.
  3. Chadderdon, Lisa.  "The Customer is Always Dead," Fast Company, December, 1999, p. 314 - 326.
  4. Ibid.
  5. "New Products from Batesville Casket Respond to Consumer Trends," Business Wire, November 1, 1999.
  6. Chadderdon, op. cit.
  7. Ibid.
  8. Ibid.
  9. Batesville Casket Homepage, http://www.batesville.com, December 10, 1999.
  10. Chadderdon, op. cit.
  11. "Discount Funerals," San Antonio Express News, October 20, 1996, p H1.
  12. Dowling, Melissa.  "Casket catalog alive and kicking," Catalog Age, November, 1997, p. 18.
  13. "Affordable Casket Solutions: BuyCaskets.Com," Business Wire, June 30, 1999.
  14. "Do-It-Yourself Casket Supplies Now Available to Consumers for First Time," PR Newswire, August 24, 1998.