Customer value strategy and positioning: What have you got to offer, and how does it makes you different to the rest?
Lecture 7
A route-map for market-led strategic change
Value-basedmarketingstrategy
New marketing
meetsold
marketing
Strategicthinking and
thinkingstrategically
Customer valuestrategy andpositioning
The strategic pathway
Strategicmarket choices
and targets
Market sensingand learning
strategy
Strategicrelationshipsand networks
Change strategy
Strategicgaps
Organizationand processes
for change
Implementationprocess and
internalmarketing
Part ICustomer value
imperatives
Part IIDeveloping a value-based
marketing strategy
Part IIIProcesses for managingstrategic transformation
The Customeris always
right-handed
The strategic pathway
Marketsensingandlearningstrategy
Strategicmarketchoicesandtargets
Customervaluestrategyand positioning
Strategicrelationshipsandnetworks
Strategic thinking andthinking strategically
Strategictransformationand strategyimplementation
Agenda
• Customer value strategy and positioning– customer value– market mission and values– competitive differentiation and positioning– marketing assets– value propositions
Source: Webster, F. E. 1992 p14
Marketing is .. the management function responsible for making sure that every aspect of the business is focused on delivering superior value to customers in the competitive marketplace.
Customer value strategy and positioning
Customervalue strategy and
positioning
Market missionand values
Competitivedifferentiation
Competitivepositioning
Marketingassets
Customer value
• Sources of superior customer value– our capabilities, skills and resources– our organizational processes– our innovation and change processes– our commitment and service capabilities
Sources of superior customer value
Superiorcustomer
value
Capabilities, skills and resources
Commitmentand servicecapabilities
Organizationalprocesses
Innovation and changeprocesses
Customer value
• Customer perception is reality– different customers buy different kinds of value– things change - value migrates– individualization of value
• Selling value– salespeople as value merchants
Market mission and values
• Mission statements– Does it ever do any good?
Mission and market strategy
Mission
Objectives
Market strategy
Marketing programmes
Starts the process ofstrategizing and planning
Results fromstrategizing
Results fromplanning
Nigel’s instant mission kit
Mission statement componentsTick as
required
… a market leader… a total quality supplier… a socially responsible producer… a green/environmentally friendly firm… a caring employer… a safeguarder of shareholder interests… a global player… a provider of excellent service… dedicated to improving life on this planet… a good corporate citizen… a customer-oriented organization… a responsible partner with distributors… a builder of human dignity… with the imagination to think bigger… respectful of nature and living things
We wannabe:
Market mission and values
• Mission statements– Does it ever do any good?– how do we sort out a market mission?– structuring mission content– analysing mission statements
A structured model of mission
Broad
Narrow
Broad
Narrow
InternalExternal
Internal External
Missionstatement
Organizationalphilosophy
What do wewant to be?
Product-market domain
Where are wegoing to operate?
Organizationalkey values
How do we wantour people to
behave?
Critical successfactors
What do we haveto be good at?
Market mission and values
• Corporate values and customer value– the Kermitization of business– corporate social responsibility (CSR)– CSR destroys customer value– CSR parity strategies– CSR as a competitive tool– CSR creates customer value
Competitive differentiation and positioning
• Competitive differentiation• Porter’s generic strategies• Strategic positions
– variety-based– needs-based– access-based
Porter’s generic strategies
Sources of competitive advantage
Competitivescope
Low Cost Differentiation
Broad
Narrow
Cost/priceleadershipstrategy
Differentiationstrategy
Focus strategy
Competitive differentiation and positioning
• Core competences– Prahalad and Hamel: successful companies understand,
exploit, invest to create and sustain their core competences
• Differentiating capabilities– combine differentiation need with core competence
argument– what are we good at that creates superior customer
value?
Marketing assets
• What are marketing assets?– differentiating capabilities– customer relationships– channel power– market information– corporate reputation– brands
20
Building the Value Proposition
ValueProposition
Mission
Market definition
Marketsegmentation
Market attractiveness
Differentiatingcapabilities
Strategic positioning
Marketingassets
Brands
Value proposition builder
Source: Barnes, C. et. al., 2009 Creating and Delivering your value proposition p 31
Source: Frow, P. and Payne, A. (2008) The Value Proposition Concept: Evolution, Development and Application in Marketing
Value proposition definitions
• The role of marketing is.. to develop the firm’s overall value proposition (as a reflection of its distinctive competence, in terms reflecting customer needs and wants) and to articulate it to the marketplace and throughout the organisation. A major function of the statement of mission, distinctive competence, and overall value proposition is to make clear what the firm will not do, as well as what it will do as stated by corporate objectives and goals (Webster, F. E., 1992 p11)
• Describes the unique offering (companies) make to the customer, with all its hard and soft dimensions, and how (it) will differentiate itself from the rest in its target market segments (Piercy 2009 p 336)
• Implicit promise a company makes to customers to deliver a particular combination of values - price, quality, performance, selection, convenience, and so on (Treacy and Wiersema 1993; 1995 quoted in Frew and Payne, 2008)
• a clear, simple statement of the benefits, both tangible and intangible, that the company will provide, along with the approximate price it will charge each customer segment for those benefits (Lanning and Michaels, 1988)
• Includes all the key elements of the situation and the benefits that target customer is looking for in their purchase (Best, R. J. 2009 p 184)
• The articulation of the measureable value of the experience that an organisation or individual will get from an Offering, where Value = Benefits minus Cost. (Barnes et al 2009 p 28)
Source: Frow, P. and Payne, A. (2008) The Value Proposition Concept: Evolution, Development and Application in Marketing
BT Value Proposition Development Process
Source: Frow, P. and Payne, A. (2008) The Value Proposition Concept: Evolution, Development and Application in Marketing
Source: Frow, P. and Payne, A. (2008) The Value Proposition Concept: Evolution, Development and Application in Marketing
Value propositions
• De we have a value proposition?• What type of value proposition do we have?
– all benefits– favourable points of difference– resonating focus
Types of value proposition
All benefits value proposition
Favourable points of difference value proposition
Resonating focus value proposition
Approach: Lists all the benefits customers receive from the market offering
Identifies all favourable points of difference in the market offering, compared to alternatives
Focuses on the one or two points of difference whose improvement will deliver the greatest value to the customer
Responds to the customer's question:
Why should we buy your offering?
Why should we buy your offering instead of your competitors'?
What is the most important thing for us to know about your offering?
Risk/cost: We may assert benefits which do not really create customer value
We assume favourable differences create value for the customer
We need deeper knowledge of what drives value for the customer
An illustrative retailer value proposition
Poor Excellent
Performance against customer criteria
Low prices
Wide product selection
Rural location convenience
Reliability
Products are in stock
Product quality
City location convenience
Selection within categories
Personal assistance
Store appearance/atmosphere
Customer purchase criteriaNational discounter
chain
Smallindependent
storesRegional
chain