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Lessons From Peter Drucker

Learning To Discover Unexpected & Initially Unseen Markets: A Major Source of Growth Opportunities

Cohen
Posted: 07/18/2017

Editor's Note:

It's true: when a new venture succeeds, more often than not, it's because those committed to the venture's success realize they must understand how customers use their product or service, and discover customers who are buying their product they didn't even think of when the venture was started.

Equally important, chances are customers are using their product in ways not originally intended by the producer of the product. This can be a major source of new opportunities.

Why? Because it suggests unexpected and unseen markets that can be fully exploited.It also suggests new benefits that can be used as a selling tool.

There is a big difference between looking and seeing. William Cohen's article, hopefully, will make you more aware of another Drucker tactic for finding new growth opportunities. 

Marketing Vs. Selling

Peter F. Drucker, the founder of modern management, proved that marketing and selling are not the same. Drucker may have made as much as $10,000 an hour as a consultant, yet he did no traditional advertising of his services. He claimed that perfect marketing would do all the work.

Marketing is about having your products or services desired by the prospect. If you have such a product or service you have a much easier job in presenting the product to prospects and convincing them to buy it, both important steps in selling.

Impossible? 

For 70 years, The Hershey Company did no selling or advertising for its famous candy bar. According to an ad executive, it didn’t need to: “This was a brand that was an American staple, had been passed down for generations, and that people could remember enjoying as a kid.”[1] 

Hershey had a product that was desired and could get it to distributors—all marketing, not selling, functions. Selling was no longer required! Of course, it is necessary to get to that point. To do that, we still need first to focus on the customer and what the customer values and that’s true in both marketing and selling. 

Listening to the market

Years ago, Joe Cossman introduced the flexible garden hose with holes to the gardening market as an alternative to the water sprinkler. Practically everyone who owned a lawn or garden bought at least one. 

Cossman tracked all the wholesale orders of his product. A wise move. He found that farmer supply and feed stores were ordering his product in large quantities.

Since homeowners seemed to fall outside the regular customers of feed stores, he contacted the stores to inquire about the reason for the unexpected sales. 

He discovered that farmers used his garden hose as a less expensive way for lowering the temperature of chicken coops during the hot summer months. Cossman discovered a large, but unexpected, market. 

Drucker was not surprised; it was frequently the case. What did surprise him was when he discovered how frequently some marketers ignored or even intentionally avoided unexpected sales. 

He decided that the problem was that the suppliers frequently made assumptions about what certain prospects wanted that were incorrect. Yet it was always the customer who defined the product or service, not the supplier. 

Soldiers are wearing a product for automobile tires on their heads

DuPont introduced Kevlar in the early 1970s. Kevlar is a super-cloth with fibres five times the tensile strength of steel. The engineers thought it would make an excellent substitution for the steel reinforcement in heavy-duty tires. 

It did, in addition, when impregnated for rigidity to protect against blunt trauma, it could be used as the basic component in protective helmets.

Soon, the super-cloth intended for automobiles soon replaced the U.S. Army’s “steel pot” helmet worn throughout World War II. The Kevlar folks made even more money. 

But Drucker was shocked to discover that some marketers even discouraged sales when someone used a product other than how it was intended. Pharmacologist Alfred Einhorn became so distressed when dentists began using his anaesthetic drug, Novocain, that he travelled throughout Germany, trying to get them to stop, angrily insisting that his invention was intended for use by MDs, not dentists. 

R.H. Macy tried to stop appliance sales because at the time, those items were supposed to be priced significantly lower in a department store, where the emphasis was strictly on clothes.

They actually thought of ways to discourage customers to quit buying appliances. They tried to stop sales, even though it was in their own store. It ultimately proved to be a much larger market, which easily complimented clothes in a department store. 

Drucker warned that marketers introducing new products or services should begin with the assumption that their products or services might find new uses and markets that they never imagined.

If you want to make $10,000 an hour, ensure that it is what the customer wants. 

Consultants spend a lot of money doing research, analysis, and presentation on what and how they think about the customers operations. Drucker was in high demand by asking questions of the client to uncover what clients thought. 

Rather than claiming expertise, he said that he made his money not on his knowledge and experience in an industry, but on his ignorance. When the clients gave him their solutions based on what they certainly knew better than he did, he simply asked: “What are you going to do about it?” His expertise was based on asking his clients the right questions. 

As one wrote: “He knew how to ask the right questions so that through our knowledge and experience, we came up with right answers to solve our own problems. He was expensive and an unconventional consultant, but he was worth every penny.” 

Marketing indirectly

Drucker neither sold nor advertised his consulting. Instead, he found a way to attract customers to come to him. Drucker had a background in writing. He wrote articles and books about subjects that insterested his potential clients. 

He wrote about a consulting engagement with General Motors. It is said that his client did not even agree with Drucker’s recommendations. It didn’t matter, because his writings drew in other clients. He didn’t sell his services to build his practice. Clients went to him. 

You can do the same. It certainly fits Drucker’s principle, which asserts that marketing is primary over other business functions. Moreover, it almost automatically ensured that Drucker had a product that prospects desired and valued. If they didn’t, he would not have been published in either books or magazines. Moreover, every part of “the Drucker business” was involved in this marketing effort—from his books and articles in Harvard Business Review to tapes, videos, seminars, and workshops. 

Drucker eventually no longer even had to use his writing abilities to get clients. He booked clients without asking for them. I’m sure he received queries about doing consulting when he was in his nineties, although he had long since retired from active consulting. He had what his prospects wanted, and that is a lesson for us all.

 

[1] John Luciew, “Hollywood Gets Hershey's Marketing History Mostly Right In 'Mad Men' Finale,” accessed at http://www.pennlive.com/midstate/index.ssf/2013/06/hollywood_gets_hersheys_market.html, 7 May 2015.

 

*Adapted from the book Peter Drucker on Consulting: How to Apply Drucker’s Principles for Business Success by William A. Cohen (LID, 2016) and syndicated elsewhere.

Cohen
Posted: 07/18/2017