Manufacturing Breakthrough Blog

Mafia Offers: Three Honest Answers

Friday June 24, 2016

Developing a Good Mafia Offer?

Dr. Lang [1] tells us that in order to develop a good Mafia Offer, there are three general questions that you must answer honestly:

  1. What are your capabilities? That is, what are they and what could they be, compared to your competition.  Your capabilities are how you deliver your product or service and include things like:
    1. How’s your lead time from the time you take the order until the order is delivered? Is your lead time better, worse or the same as your competitors?
    2. How’s your due date performance compared to your competitors?  Are you mostly always on time or are you sometimes late?
    3. How’s the delivered quality of your products compared to your competition? Is your customer delivery quality up near 100 % or are you much lower? Are you better or worse than your competitors?
    4. How’s your responsiveness to your customer’s needs? Do your customers ask for your help and do you respond quickly and effectively?

Your answers to these questions (and others) represent your capabilities and it is these capabilities that you will use to develop your Mafia Offer.  Think about it, if you aren’t able to differentiate your company from your competitions, then you can’t expect to generate significantly more sales.

  1. How do you and your competitors sell your products?  The second thing to look at to develop your Mafia Offer is how your industry sells their products. There are many questions that will fit your specific industry, but here are some examples that might apply to your company:
    1. Is it industry practice to use a price/quantity curve or is there another way you determine your selling price?
    2. Is your selling price the same as your competitors or are you higher or lower?
    3. How do you and your competitors typically charge for your products? Do you charge by the piece, by some lot size? By the project (which includes time and materials)? Or do you or your competitors charge a flat rate?
    4. Who pays for shipping costs of your products? Is it you or is it your customers? How do you compare with your competitors?
    5. Are you paid at the start, at the end, or are progress payments used?

The key is to understand how your industry interacts, in the selling and delivering of your products/services, to your typical prospects and customers.

  1. How are your customers impacted by your industry's typical capabilities and how your industry sells?  Since your customers are the only real judge of your Mafia Offer, you need to understand how good your current capabilities are compared to your competitors, how the companies in your target market view them compared to your competitions, and how your customers and prospects are affected by the way you sell them.

It is in these interactions and interfaces that could be causing negative effects for your customers and prospects.  By understanding these potential negative effects can lead you to uncover your core problem relative to doing business within your industry.

Look closely at these three general questions and answer them honestly as they apply to your industry and your company.

Next Time

In my next post, we’ll talk more about what constitutes a good 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] 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

 

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