In most industries all competitors are more or less equal – products and service are so equal that significant market share swings do not happen – at least not very often (A competitor with a significant competitive advantage must gain market share rapidly – at least until the other competitors have caught up.).
Since many industries are well established there is also relatively little market growth. The only way for a business to grow rapidly and at a significantly higher rate than its competitors is through some sort of decisive competitive advantage and therefore market share gains.
While a fantastic new product is always possible, in many industries these are unusual and if they are possible they take a long time to develop and many times they can also easily be emulated. Fortunately products are not everything your clients desire or need. Clients have business problems of their own and, if your offering can solve or significantly reduce your client’s key business problems, then it is possible to achieve a decisive competitive advantage.
A Mafia Offer must meet the following criteria to succeed:
The market must perceive that the value of the company’s products and services (the offering) are sufficiently high.
To be sufficiently high the perceived value of the company’s offering must be much higher than that of any competitor’s offering.
The actions taken to achieve the necessary advantage must be difficult for competitors to copy.
The targeted market(s) must be far larger than the company’s capacity.
This seems to be a very tall order – something almost impossible to achieve. However tools (logical cause-effect-cause analysis) exist to analyse markets in order to discover what a supplier could change to achieve an offering that fulfils the above four points. Generic Mafia Offer templates have been developed and implemented for some typical business issues as product availability, shorter reliable lead-times and others. These have to be adapted to specific environments.
Examples of possible Mafia Offers:
Product availability: Clients want a product when they need it - immediately. Distributors and clients often have to deal with unreliable supply because their own forecasts are poor, replenishment lead-times are (often) too long and suppliers are often not reliable enough. To secure supply, distributors and clients hold too much stock – their investment in materials and components is too high and from time to time they still cannot get what they need.
Would distributors and clients buy more from a company if products were always available when needed? If the supplier guarantees availability with a penalty and he lives by his promise wouldn’t clients prefer him to others? If penalties were high enough, would competitors dare to copy the offering?
New Product Development: Most businesses develop new products continuously – technologies advance. If a business achieves the capability to deliver more new developments in a shorter space of time to much more reliable due dates and without having to add additional resources (And the quality of the development work does not suffer!) - would such a company gain a significant advantage over its competitors? There are an increasing number of companies achieving such an advantage.
These are just two (unsubstantiated) examples that could lead to a significant competitive advantage. There are more and probably many others yet to be developed.
