“…the most important questions about a business are those that try to penetrate the real world of the consumer, the world in which the manufacturer and his products barely exist.”
Up to this point, Drucker has been concerned with “how the business is doing.” Now he shows how to understand what a business should become. This chapter is a high-level summary of the critical aspects of market analysis. First, he explains customer realities that companies often overlook, forget, or do not realize. One example is that customers do not really buy a product or a service, they buy the satisfaction or prestige that they associate with it. Another reality is that what a company believes to be irrational customer behavior is precisely what it needs to understand.
Second, Drucker expands market analysis beyond customers and markets to non-customers and non-markets. He shows the importance of understanding why non-customers buy elsewhere, how they use their discretionary time and income, and how they see reality.
This is a phenomenal chapter that should be read and then read again.
(Managing for Results, chapter 6)