chapter  8
30 Pages

The New Reality

The last two chapters encouraged the CDD analyst to deconstruct a complex set of market

and competitive circumstances into their constituent parts: the market and the target’s

ability to compete. We then looked at factors impacting on market attractiveness and the

factors that determine a company’s ability to compete. A company’s ability, we said, was far

more important than market attractiveness. Ability to compete was defined as the ability to

provide customers with more value than the competition. This is classical marketing theory

that maintains that competition is not between what companies produce, but what they

add in terms of extras – the packaging, services, advertising, customer advice, financing,

delivery arrangements, warehousing and other things that people value – and it is the word

‘value’ that is the clue to customer satisfaction. The way it defines value is:

VALUE¼BENEFITSCOST

If a target understands customers and what they want, it will understand benefits and will

provide those benefits in one of two ways: it will either create additional benefits or reduce

the cost of existing benefits. Whichever way it chooses to compete, providing it does this

better than the competition it will have a superior competitive position. This is fine and

logical, what is in all the text books and what all your clients will have been taught in

accountancy school. But does it still apply? It is easy to get carried away with all the ‘delight

the customer’ stuff that seems to be floating around these days, but given how demanding

customers have become and how vicious and fast moving markets now are, is it not time for

a new, cynical, harder-edged marketing textbook, a sort of Philip Kotler written by Quentin

Tarantino?1