To Win At Business, Compete On Value (Not Price)
"The purpose of a business is to create and keep a customer."
With these 12 these words, Peter F. Drucker introduced to the world what has become known as the marketing concept, that is, "find wants and fill them."
More specifically, Drucker made two profound statements: one about the corporate purpose, its essence and its goals; the other about the tasks necessary to achieve these purposes and goals.
Simply put, the first job of management is to design and develop products/services that fulfill customer needs.
Every organization must continuously identify what customers need, want, value, expect, and are willing to pay for.
The second job is to develop the appropriate organizational structures to deliver to the customer what the customer getting proposition promises; this is the only way to keep customers.
More than 60 years later, academics and businesspeople still rave about it, write about it, and tell the uninitiated how this marvelous concept can transform a sleepy organization into an energetic, market-focused entity.
Harvard's Ted Levitt and celebrated marketing guru Philip Kotler (among others) amplified and expanded Drucker's seminal work on strategic marketing as a discipline.
They showed us how to use Drucker's marketing concept to compete on value as opposed to price; how to differentiate offerings from rivals; how to defend against inevitable competitors; and how to gain market position from established competitors.
Truth be known, the relatively recent field of strategic marketing has rendered obsolete much of the subject matter in microeconomics (i.e., the theory of the firm).
Strategic marketing has taught us a more realistic way to understand how organizations allocate resources, continuously improve productivity, identify and exploit success, price for short-term and long-term profit, and practice successful innovation.
Economists know very little about the discipline of strategic marketing. They seem to prefer dealing with mathematical abstractions and what Drucker called "the poverty of economic theory."
Whereas strategic marketers must deal with the real world dynamics of consumption, competition, and innovation. The macroeconomy is, in most part, the sum total of how well individual organizations perform.
The science and practice of strategic marketing inevitably leads to more products, services, and experiences at irresistible prices. In short, the development and delivery of products and services to inspire consumers to buy and companies to invest in exciting things.
This article is the first in a series illustrating how to achieve success on the corporate battlefield using the strategic marketing strategies developed by Drucker, Levitt, Kotler, and others.
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