This Focused Performance Weblog is a "business management blog" containing links and commentary related primarily to organizational effectiveness with a "Theory of Constraints" perspective. TOC is noted for its applications in Project Management and Multi-Project Management (Critical Chain) and Operations Management (Drum-Buffer-Rope), as well as in Marketing, Strategic Planning and Change Management (TOC Thinking Processes). If you are on an archive page, current postings are found here.
Sunday, September 15, 2002
• The Theory of Constraints approach to attracting customers has long advocated avoidance of price wars and instead focused on maximizing the perceived value of the offering that surrounds it. While we sell products and services, our customers buy solutions to problems. Maximize the solution value for a market segment, and unit price becomes less of an issue.
A column on Business Week Online, The Dilemma of Declining Prices suggests that not only will prices be under pressure from the usual circumstances, but the potential for a deflationary economy will exacerbate the need for creative value propositions -- "...corporate profits dissipate as consumers hold off on major purchases, knowing that they'll get a cheaper price by waiting just a few more weeks or months. Companies desperately maneuver to conserve cash by laying off workers and delaying investments. "The fact of falling prices injures entrepreneurs," John Maynard Keynes wrote 70 years ago in Social Consequences of Changes in the Value of Money. "Consequently, the fear of falling prices causes them to protect themselves by curtailing their operations." posted by Frank - Permanent Link -
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