1. Customer value strategy and positioning: What have you got to offer, and how does it makes you different to the rest?
Lecture 7 1

2. A route-map for market-led strategic change
Part I
Customer value
imperatives
Part II
Developing a value-based
marketing strategy
Part III
Processes for managing
strategic transformation
The strategic pathway
Change strategy
Market sensing
and learning
strategy
The Customer
is always
right-handed
Strategic
gaps
Strategic
market choices
and targets
Strategic
thinking and
thinking
strategically
New marketing
meets
old marketing
Organization
and processes
for change
Customer value
strategy and
positioning
Implementation
process and
internal
marketing
Value-based
marketing
strategy
Strategic
relationships
and networks

3. The strategic pathway Strategic thinking and thinking strategically
Market
sensing
and
learning
strategy
Strategic
market
choices
targets
Customer
value
positioning
relationships
networks
Strategic thinking and
thinking strategically
transformation
and strategy
implementation

4. Agenda Customer value strategy and positioning customer value
market mission and values
competitive differentiation and positioning
marketing assets
value propositions

5. 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.
Source: Webster, F. E p14

6. Customer value strategy and positioning
Market mission
and values
Customer
value strategy and
positioning
Competitive
differentiation
Competitive
positioning
Marketing
assets

7. 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

8. Sources of superior customer value
Capabilities, skills and resources
Commitment
and service
capabilities
Superior
customer
value
Organizational
processes
Innovation and change
processes

9. 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

10. Market mission and values
Mission statements
Does it ever do any good?

11. Mission and market strategy
Starts the process of
strategizing and planning
Objectives
Results from
strategizing
Market strategy
Results from
planning
Marketing programmes

12. Nigel’s instant mission kit
Tick as
required
Mission statement components
We wannabe:
… 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

13. 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

14. A structured model of mission
External
Internal
Organizational
philosophy
What do we
want to be?
Product-
market domain
Where are we
going to operate?
Broad
Broad
Mission
statement
Narrow
Narrow
Organizational
key values
How do we want
our people to
behave?
Critical success
factors
What do we have
to be good at?
Internal
External

15. 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

16. Competitive differentiation and positioning
Porter’s generic strategies
Strategic positions
variety-based
needs-based
access-based

17. Porter’s generic strategies
Sources of competitive advantage
Low Cost
Differentiation
Cost/price
leadership
strategy
Differentiation
strategy
Broad
Competitive
scope
Narrow
Focus strategy

18. 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?

19. Marketing assets What are marketing assets?
differentiating capabilities
customer relationships
channel power
market information
corporate reputation
brands

20. Building the Value Proposition
Mission
Market definition
Market
segmentation
Market attractiveness
Differentiating
capabilities
Strategic positioning
Marketing
assets
Brands

21. Value proposition builder
Source: Barnes, C. et. al., 2009 Creating and Delivering your value proposition p 31

22. Source: Frow, P. and Payne, A. (2008) The Value Proposition Concept:
Evolution, Development and Application in Marketing

23. 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 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)

24. Source: Frow, P. and Payne, A. (2008) The Value Proposition Concept:
Key processes in Value Proposition Development
1. Core Proposition Development Function
The initial process is concerned with the detailed specification of the proposition to be developed. It involves
cross-functional collaboration and some or all of the constituent sub-processes. For example, a major new
product development may require several iterations of all three sub-processes, whereas a simple re-pricing is
unlikely to require any testing. The three sub-processes are:
(a) Define Proposition
(b) Business Case Evaluation
(c) Research-Led Testing
2. Develop Proposition
The next process encompasses the cross-functional activities involved in actually creating the deliverables of the
planned value proposition. It will vary in scope and content, depending on the proposition, but may include
developing or amending business processes, IT systems, training material, marketing material, product literature.
The process may be carried out in stages over a significant period of time. For example, a new product may have
deliverables that are not required for launch but are needed in time for the first anniversary of the policy.
3. Market Testing
This process involves offering the developed value proposition to a representative selection of target customers
in a controlled way, in order to test specific aspects of it. The process is applied where necessary, and is
generally more relevant in the in the context of a service-based proposition than in a product based proposition.
As with step 1(c), third party specialists are usually involved.
4. Launch Solution
This is the process of making the value proposition available to customers on a full-scale basis. Again, it covers a
range of activities, not all of which will be relevant in every instance. These include: training and licensing
distributors; producing and distributing literature; implementing IT systems; and equipping and managing
administrators.
5. Review Proposition
This review process is carried out once for each proposition at an agreed period of time after launch. All aspects
of proposition development are examined and performanceis compared to forecasts. Resultant learning acquired
from the insights and analyses generated is then fed back into management and decision-making processes to
inform future activity in the areas of Client Acquisition, Customer Segmentation and Proposition Development.
Source: Frow, P. and Payne, A. (2008) The Value Proposition Concept:
Evolution, Development and Application in Marketing

25. BT Value Proposition Development Process
Source: Frow, P. and Payne, A. (2008) The Value Proposition Concept:
Evolution, Development and Application in Marketing

26. Source: Frow, P. and Payne, A. (2008) The Value Proposition Concept:
Evolution, Development and Application in Marketing

27. Value propositions De we have a value proposition?
What type of value proposition do we have?
all benefits
favourable points of difference
resonating focus

28. 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

29. An illustrative retailer value proposition
Small
independent
stores
Regional
chain
National discounter
chain
Customer purchase 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
Poor
Excellent
Performance against customer criteria