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Mafia Offers: Market Constraint and Decisive Competitive Edge

Mafia Offers: Market Constraint and Decisive Competitive Edge

By Bob Sproull

Introduction: What is a Mafia Offer?

A Mafia Offer probably sounds like something out of a gangster movie and not something that could seriously help you make more money in your business.  Dr. Goldratt first introduced the concept of a Mafia Offer in his book [1] It’s Not Luck, but he later defined it as “an offer too good to be refused”. Dr. Lisa Lang [2] defines a Mafia Offer as, “An offer so good that your customers can’t refuse it and your competition can’t or won’t offer the same.”

Do You Have a Market Constraint?

Dr. Lang tells us that the first question that must be answered is, “Do you have a Market Constraint?”  A market constraint simply means that you have more capacity than you do orders.  So if I asked you this same question, how would your company answer it? Dr. Lang also asks the question, “If I could show you how to increase your sales tomorrow by twenty percent, could you handle this increase while:

  • Being 100 percent on time, to your very first commitment;
  • Without going into a fire-fighting mode; and
  • Still maintain a competitive lead time?”

And finally, Dr. Lang tells us that if the only way you could handle the increase is to increase your lead times, work overtime, or maybe even miss due dates, then you have an internal operational constraint. In other words, you don’t have a market constraint.

On the other hand, if you can answer yes and you could take a twenty percent increase in sales and not have any negative effects, then you do have a market constraint or perhaps a sales process constraint. [2]

Do You Have a Decisive Competitive Edge?

So what should be your next step if your answer is: “yes, I have a market constraint”? You will need to consider the operational improvements required for a Mafia Offer, also referred to by Dr. Lang as the decisive competitive edge, operational advantage, or competitive advantage.

To help you create a Mafia Offer, Dr. Lang tells you to answer two very important questions

  •         “Why should customers buy from you?”
  •         “Why should customers choose you over the other suppliers?”[2]

So, before you read any further, take a few minutes now to answer these two questions.

The Answers

Dr. Lang tells us that most people answer the two questions above as follows:

  • Because we have outstanding quality and it’s better than the competition.
  • Because we have a great reputation in our industry.
  • Because we get good results for our customers.
  • Because we have very knowledgeable employees with very low turnover.
  • Because we’re very responsive to our customer’s needs.
  • Because we’re very innovative and we help our customers to ……
  • Because you can trust us.

Did you write some version of these same responses on your list or did you write different ones?

The key point here is that if you’re just saying the same thing as your competition, then you’re not really providing any compelling reasons why your customers should buy from you. The fact is, if you and your competitors are saying the same things, then why shouldn’t your customers just choose their suppliers based upon the lowest purchase price? The other key point here is that if you want customers and prospects to buy from you, then you must give them a compelling reason to do so!  In other words, you must have some kind of competitive edge that makes your product superior to your competitions.

Therefore, if you want your sales revenue to increase, you need to start by creating a good Mafia Offer because a good Mafia Offer delivered correctly is the solution to the market constraint. So the real question that must be answered is, how do we create a good Mafia Offer? [2]

Recommended Reading

I would encourage all of my readers to read Dr. Lang’s, Dr. Goldratt’s and finally, Gerald Kendall published a book entitled, Viable Vision – Transforming Total Sales into Net Profits [3]. 

Next Time

In my next post, we’ll look at how Dr. Lang recommends how to create a mafia offer.   As always, if you have any questions or comments about any of my posts, leave me a message and I will respond. 

Until next time.

Bob Sproull

 

References:

[1] It’s Not Luck, Eliyahu M. Goldratt, The North River Press, Great Barrington, MA 1994

[2] Theory Of Constraints Handbook, James F. Cox and John G. Schleier, Chapter 22: Mafia Offers: Dealing With a Market Constraint, Dr. Lisa Lang, The McGraw-Hill Companies, 2010

[3] Viable Vision – Transforming Total Sales into Net Profits, Gerald Kendall, 2005 self published

 

Bob Sproull

About the author

Bob Sproull has helped businesses across the manufacturing spectrum improve their operations for more than 40 years.

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