Customer value strategy and positioning: What have you got to offer, and how does it makes you different to the rest? Lecture 7.

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