Summary: The Market Makers

Review and Analysis of Spluber's Book

BusinessNews Publishing

• Publisher: Must Read Summaries
• Year: 2016
• eBook ISBN: 9782511018460
• Topic: Business
• Subtopic: Marketing
• Index: Business

The must-read summary of Daniel F. Spulber's book: `The Market Makers: How Leading Companies Create and Win Markets`.

This complete summary of the ideas from Daniel F. Spulber's book `The Market Makers` highlights an important question: `How do leading companies create markets for themselves?` In his book, the author explains that market makers create and manage consumer markets for goods and services. They operate the market mechanisms of exchange, and create added value by providing confidence, convenience, market structure and transactional services. This summary will force you to rethink your fundamental beliefs about your business and re-evaluate the way you operate to become a market maker.

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To learn more, read `The Market Makers` and discover the key to introducing innovative transactions and delivering superior performance.

Summary of The Market Makers (Daniel F. Spulber)

1.
THE VALUE OF WINNING MARKETS

Main Idea

Winning a consumer market is important enough to be the sole corporate objective.

Any company that creates and wins a sizable mass consumer market maximizes its long-term value, thereby creating the greatest possible amount of incremental shareholder value, but these are flow-on effects from winning the market.

The key to winning a market is to excel at building market bridges that connect customers and suppliers. The company that best achieves this creates and operates the market.

Supporting Ideas

Market makers are the innovative companies that lead their industry by out performing all competitors. For a market maker, the marketplace is not a force beyond their control to which they must continually react, but an exchange between suppliers and customers which they can exploit to generate profits.

Winning a market simply means a single company has significant control over market-making activities. It goes beyond simply achieving the greatest market share or generating the greatest profits to the issue of control of the market. Companies with a dominant market share are more innovative, more efficient and attract more customers, thereby maximizing profits, revenues and market value.

The advantages of winning a market are:

1. Increased customer recognition and brand awareness creates additional sales, as many consumers are so busy they chose simply to buy from whoever is the market leader for many product types.
2. Recruiting new high-quality employees is easier for the market leader than for other companies.
3. Market value is increased and the cost of raising capital is decreased.
4. Distributor and supplier relationships are strengthened as a result of the market leadership position.
5. The market leader can set standards for the market which all competitors will be forced to follow.
6. Employee morale is boosted by success in the marketplace.

To succeed in winning a market, a company must push outwards one or more of its four operational business boundaries:

1. Scale is the size or production capacity of the company. Increases in production capacity lead to economies of scale (lowering of per unit production costs) and a reduction in risk that any single customer can influence the market.
2. Scope is the variety of products produced or sold. Companies which have won markets typically offer greater product variety than their competitors. Economies of scope means the company can produce two or more products at a lower cost than if the products were produced by separate companies.
3. Span is the number of production, distribution and marketing activities undertaken by the company. Historically, companies sought to achieve economies of span by expanding into all related activities. Improved information technology in recent times has, however, reversed this trend and companies today decide which activities they wish to provide and which to outsource.
4. Speed is the rate at which technological innovation can be developed and implemented. Economies of speed exist when increased investment reduces the duration of new product development programs. Market leading companies are also ideally placed to evaluate whether the development costs of new products will provide significant competitive advantages in the marketplace.

Key Thoughts

“In the real world of business, perfect strategies are not called for. What counts is not performance in absolute terms but performance relative to competitors.”

– Keniche Ohmae

“Once a superior rate of increase is established, a virtuous cycle begins: with increased volume, relative to competitor’s volume, comes decreased costs. With decreased costs comes increased profitability and financial strength. More cash is available internally and from external sources to fund growth. This cash is then reinvested in the business in ways that will yield further increases of market share and a replay of the winning cycle.”

– James Abegglen...

Table of contents

• Title page
• Book Presentation
• Summary of The Market Makers (Daniel F. Spulber)
• About the Summary Publisher
• Copyright