Gene Babon's Reviews > How Companies Win: Profiting from Demand-Driven Business Models No Matter What Business You're In

How Companies Win by Rick Kash
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Feb 26, 11

bookshelves: strategy
Read in January, 2011

Whoever satisfies demand the best profits the most. These companies will win in an over-supplied economy.

The core message here is that we have entered an era of oversupply which is characterized by lack of differentiation with price becoming the primary factor underlying purchasing decisions. The authors contend the following:
"In a world where supply is growing ever more efficient while demand is flattening or even contracting, understanding demand becomes the new imperative for how companies will compete and win."
A demand-driven company consistently takes a longer-term perspective than its competition. If you are not "asking your customer" you are falling behind. At best "asking your customer" might enable you to keep pace with your competition, but will never position you ahead of the curve. Intimate customer knowledge is one factor that will help your business gain competitive advantage.
"Finding those highest-profit customer clusters, growing them, and then hanging on to them for dear life may decide your company's future."
The authors offer a series of focused questions you can use to identify your highest-profit customers and the current, latent and emerging demand for your company's products and services. The authors also suggest adding a fifth P to the marketing mix. The traditional four P's of marketing are product, price, place and promotion. The fifth P is precision. The greater the precision in analyzing demand, the better the chances of developing profitable products and services in a demand-driven economy.

The authors present a demand-based framework for growing your business. Proprietary research seems to be at the center of creating an effective demand landscape. This analysis is necessary to help you understand who your customers are and what they want, both now and in the future. Case studies from McDonalds, Best Buy, Harrahs, Miller Brewing, Ball Park Franks, Allstate, Hewlett-Packard and Hershey's offer insights into implementing a demand-based strategy. Discussions on innovation, differentiation and pricing also help shine a light on this demand-driven approach.

Take-home message: Think of demand analysis as an "early opportunity system." Customer intimacy offers a gateway into future profits for your business. The change in mindset that needs to occur to transform your business into a demand-driven profit machine: change your relationship with your customers from selling to them to working with them.
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