The Business Book

(Joyce) #1


individually and collectively? The
starting point is to fully explore the
world in which the customer lives.
What are the basic motives that
drive buying decisions? What value
does the customer place on price,
quality, and design? Among all
the social, cultural, financial,
and technological forces in the
environment, which ones
particularly affect the customer?
A marketer wants to know the
practical details of the customer’s
daily life. How does that person live
on a day-to-day basis? Does he or
she have tasks that could be made
easier? What other kinds of problems
could the company potentially
solve? The goal of all this research,
according to influential management
thinker Peter Drucker, “is to make
selling unnecessary.”

Beating the recession
In 1973, Drucker advised business
leaders to “know and understand
the customer so well the product or
service fits him and sells itself.” At
that time, the corporate world was in
turmoil as recession took hold across

all of the major economies of the
West, bringing to an end the upward
growth that had, with the exception
of a few slow years, persisted since
the end of World War II. Everyone in
business was thinking about how
to survive the lean times ahead.
Recession struck in the very
same year that Drucker published
the work that would later be hailed
as a masterpiece, Management:
Tasks, Responsibilities and
Practices (1973), in which he

advised that a business centered
on the customer was the only sure
way to realize growth. “There is
only one valid definition of business
purpose,” he wrote, and that is “to
create a customer.” By this he
meant that a customer’s willingness
to pay for goods or services is the
catalyst that propels businesses to
turn raw materials and resources
into products for sale. Without the
customer’s desire or need, there is
no impetus for commercial activity;
and conversely, without commerce,
nothing can be produced to meet
the customer’s demand.
Drucker suggested that when
customers buy something, they
are not thinking about the product
or service itself, but about the
usefulness of it to themselves.
For them, value lies in the problem-
solving ability of the purchase.
Although Drucker’s idea is
now at the core of most modern
marketing theory and practice,
at the time it was a counter to the
prevailing management approach
of the 1970s, which advocated the
maximization of shareholder value. ❯❯

See also: Stand out in the market 28–31 ■ Focus on the future market 244–49 ■ Make your customers love you 266–69 ■
Forecasting 278–79 ■ Marketing mix 280–83 ■ Maximize customer benefits 288–89


Peter Drucker One of the most quoted experts in
management and marketing, Peter
Drucker was exposed to big ideas
during his childhood years in
Vienna, Austria. Born in 1909,
his father was an economist and
lawyer, and his mother was one of
the first women in Austria to study
medicine. The couple regularly
held salons in their home and the
young Drucker was encouraged to
sit in on these discussion evenings,
which were regularly attended by
prominent professionals.
Armed with a degree in Law
from Hamburg University, and
with a budding journalistic career

unfolding, he moved to England
as the Nazis rose to power,
before settling in Los Angeles,
where he became a professor of
politics, and later a professor
of management. Drucker wrote
39 books on the subjects of
economics, leadership, and
management. He died in 2005.

Key works

1946 The Concept of the
1954 The Practice of
1973 Management

Being customer driven ...
is about building a deep
awareness of how the
customer uses your product.
Ranjay Gulati
Harvard business professor
Free download pdf