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The TOC approach to marketing is based on what Dr. Goldratt terms the “Mafia Offer” or “Irrefusable Offer” – an offer too good to refuse.

Strong competitive advantage is vital for any organisation to be successful. To secure this advantage, the organisation MUST satisfy its markets to a greater extent than the competition.

While this is a well known fact, too many organisations do not go far enough to secure this competitive advantage, implementing strategies which are easily and quickly imitated by the competition.

Strategies are often formulated based on the supplier's perception of value - conditioned by investment in the product: design, production, distribution, marketing etc - which assumes that there is one fair price: cost + reasonable margin. Rarely do organisations base their strategic decisions on the  customer's perception of value conditioned by the benefits expected from acquiring the product. Given that different customers have different needs and thus different perceptions of value, strategies can be designed which allow for effective market segmentation and product price variability.

To boost profitability, organisations should therefore focus their attention on two actions:
 

 
  1. Increase the customer's perception of value
  2. Do it in a way that the competitors cannot quickly imitate.
The key to effective marketing is the realization that there is no such thing as product profit or product cost: prices are determined by the customer perception of value which is conditioned by the benefits expected from acquiring the product/service.

For customers, the solution to a problem is a benefit. Therefore by knowing the problems customers face, and finding breakthrough solutions to these problems, organisations can increase customer perception of value and formulate an "Irrefusable Offer". Constructing and perfecting the "Irrefusable Offer" requires strong industry knowledge coupled with rigorous use of the Thinking Process Tools.

 
 
  Developed by Reason8

The TOC Centre of Australia

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