The Business Book

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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

SUCCESSFUL SELLING

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

Corporation

1954 The Practice of

Management

1973 Management

Being customer driven ...

is about building a deep

awareness of how the

customer uses your product.

Ranjay Gulati

Harvard business professor