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How Companies Win: Profiting from Demand-Driven Business Models No Matter What Business You8217;re In Hardcover – October 12, 2010
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“Recommended reading for executives facing the need to grow revenues in a sluggish economy.... Kash and Calhoun provide executives with the ideas they need to answer the question, where do we go from here.” (—Mark McDonald, Gartner)
“A persuasive case that winning in today’s market requires an understanding that supply-driven business models of the past will not keep pace with fundamental changes in our global economy and its digitally enabled consumer.” (—Jack Welch, bestselling author of Winning)
“The rise of social networks has amplified the individual’s voice and this has sparked a revolution in demand. How Companies Win offers real-world solutions that you can implement right now to take advantage of these changes.” (—Sheryl Sandberg, COO, Facebook)
“With all of the options shoppers have today, it’s critically important to understand demand. It’s how you satisfy your customers better than your competitors. It’s the way companies will win.” (—Brian Cornell, President & CEO, Sam's Clubs)
“How Companies Win shows how to successfully manage in the future. Its fresh look at data and the case histories will stimulate the imagination of every business leader.” (—Mary Dillon, President & CEO, US Cellular)
“The authors’ discussion of Precision as the 5th P adds a powerful new tool for marketers. It aligns exactly with our strategy of precision marketing.” (—Joseph Tripodi, Chief Marketing and Commercial Officer, Coca-Cola Corporation)
“Calhoun and Kash have taken on the biggest business question of all: what it will take for companies to win in this new era of growing oversupply and heightened global competition. The conclusions they reach are eye-opening. ” (—Henry R. Kravis, Cofounder, Kohlberg Kravis Roberts)
“How Companies Win is a book about learning to understand demand. If you are relying on your customers to tell you what they want it’s too late.” (LeadershipNow.com)
From the Back Cover
For the past twenty years, the growth formula for business has been to increase revenues by expanding product offerings and streamlining supply. But with the recent global recession, the world economy has changed forever. Now the old tools—most notably supply-chain management—are no longer enough. In a new digital age characterized by over-supply and too many product types in almost every market, the new challenge is to locate and capture the elusive pools of high-profit demand.
Rick Kash and David Calhoun have the answer: a revolutionary, demand-driven model that has already proved successful for some of the world's most admired companies, including Best Buy, Anheuser-Busch, Hershey's, and Allstate. At the heart of this powerful new business model is an achievable vision for a new kind of winning company, one that uses sophisticated new tools and techniques to discover, characterize, and then serve these pools of high-profit demand—and in the process gain pricing power in that market. Kash and Calhoun show how to use everything from social networks to more revealing and effective consumer-research techniques and then introduce the demand chain, the logical new partner to your supply chain. The authors' principles, case histories, and insights will help your business run faster, cut costs, and become better able to deliver high-quality products and services, even in the tightest economic climate.
How Companies Win is a compelling call to action to engage every level within a company, small or large, local or global.
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Here is the key concept.
In a world where it is really easy to learn how to create anything, companies (you) have a huge amount of competition. Given that, supply is essentially infinite. When supply outstrips demand, price goes to crap.
But traditional marketing is about creating demand. Well, when supply outstrips demand, that is a loosing game.
Instead of trying to create demand, what if marketing looked into your customer base (or target market) to identify a sub-set of demand. A smaller set of customers who loved your product just the way it was - including the higher price? In that market, you would be the king. That is, if you can find "Demand-Pools" (markets where your product was the superior in the minds of that group of buyers) you could command higher price and/or more sales. Why? Because your product is already configured the way that group wants to buy.
The book looks at All-BEEF Hotdogs. It turns out that two groups love all-beef hotdogs. Mothers with teenage sons (also known as eating machines) and Hotdog lovers.
Mothers see beef as better than pork (healthier). So they will pay a premium.
People who love hotdogs BOIL them never GRILL them because grilling takes flavor away where as boiling retains the hotdog's flavor. Again, people who love hotdogs will pay a premium for better tasting hotdogs. And the all-beef franks fit that bill.
In both cases the marketer's job is NOT to stimulate demand, but to FIND these markets where people are willing to pay more for all-beef franks.
The hotdog manufacture can still complete in the Summer-Grilling market. That is, they can still lower price to complete on store shelves in the summer. But they can also re-package their product for fast microwaving (teenage boy market) and blog on Mommy blogs to get mothers to learn about the availability of the microwave version. In that market, they know that mothers are looking to solve this problem - "Help me feed my hungry son(s) something that I perceive to be healthy - and let it be fast to prepare."
The cost to wrap each beef-wiener for microwaving is minimal. And the Mommy-with-teenage-sons market is willing to pay a premium for an all-beef frank. AND ... pork hotdogs don't have the key attribute of perceived health. So the all-beef manufacture only needs to inform that market and take advantage of the existing (although latent) demand THEN be on the store shelve.
Stimulating demand is unnecessary. The Demand-Pool is the moms I described above. There is no need to stimulate demand. And the beef dogs, enjoy a protection from the pork dog market. In other words, in a Demand-Pool, you have the advantage BECAUSE your existing product has (or could have) a key attribute. A Demand-Pool is NOT a niche market. Think how huge a market moms with sons are? With an average of two kids per family there is a 66% chance that a family has one son. (not 50%. boys to girl break down 0:2, 1:1, 2:0 = 2/3 chance or 66%).
So a Demand-Pool can be a huge market. And a well protected market.
My only two complaints are that the book did not have MORE examples of Demand-Pools. And the second half is about implementing this strategy in a mega-corporation (think P&G). It seems like a plug to hire the author for consulting work. Still worth buying!
On the otherside, I wish some of the methods were better detailed. I'll start working at Nielsen in two weeks, and after reading this book I'm really excited about my job.