Need-Fulfillment? Or Need-Creation?
What business are you in? When products are a part of your offerings, there are two ways to go to market. You can source the request from your customer and be in the need-fulfillment business; or you can create solutions, generate ideas, develop visions and plans and create the need.
When you are in the need-fulfillment business, your customer will tell you what they want and when they want it. If you’re lucky, they may also even tell you how much they want to pay for it. They can also do this with three, four, six or 12 of your competitors on the same project. Need-fulfillment is very much a commodity business and when buyers are procuring commodities price is king. Unfortunately, low price is a zero sum game. The race to the bottom is filled with the skeletons of folks who won the job but lost their business.
The trap of need-fulfillment is that on occasion you win some of these jobs. It gives you a sense that you have a spot in this market. If you’re going to compete on price, you better be the best at that game. Not one of the best—the best. That is very, very hard to do because it requires scale and size. Wal-Mart did not become the price bully overnight.
Low prices also mean increased risk and increased stress. To take out some margin, something else has to come out as well and that is usually security. When you are bare bones on price, you don’t have room to prevent and solve the ultimate problems that arise on most orders. You also may become a person you don’t want to become who puts profit before people and principles.
When you are in the need-creation business, you create demand for yourself, for your company and for the advice and solutions you provide. You write the story and you create the specifications and you suggest the order quantity, the promotion period and yes, even the budget. You make something happen where nothing existed before. It is a highly rewarding feeling.