Market Segmentation [the TOC way]

The market is segmented according to problems and needs of certain groups of clients. The more ‘painful’ the problem and stronger the need, the higher is clients’ perception of the value of the offer that removes the problem and meets the need.

The job of Marketing is to raise the perception of the value by the market at lest to the level of the supplier’s perception of the value.

Mafia Offer (also Value Offer/Unrefusable Offer)

An exceptionally attractive offer to the market that satisfies the following criteria:

  • It is based on significant improvements in company’s logistical performance;
  • It brings exceptional value to the customers by addressing major problems that the customers are experiencing with their suppliers;
  • These are the problems that the company can easily address;
  • It is directed towards a specific segment of the market;
  • The Market Segment should be large enough for the company to grow;
  • It should be difficult for the competitors to quickly copy. This will give the company a window of time of enjoying the newly created competitive edge.


Source: Oded Cohen and Jelena Fedurko, Theory of Constraints Fundamentals, 2012