Presentation is loading. Please wait.

Presentation is loading. Please wait.

Value-based marketing strategy Lecture 3. New marketing meets old marketing : New marketing wins.

Similar presentations


Presentation on theme: "Value-based marketing strategy Lecture 3. New marketing meets old marketing : New marketing wins."— Presentation transcript:

1 Value-based marketing strategy Lecture 3

2 New marketing meets old marketing : New marketing wins

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

4 Agenda Old marketing has not kept up with new markets and new priorities Products, brands and innovation Price and value Distribution channels and value chains Marketing communications The new marketing challenge Marketing is strategy

5 Old marketing has not kept up… Old marketing is about marketing programmes –structured/planned around traditional model –operations/tactical New marketing is concerned with the underlying process of going to market and strategic choices

6 Marketing strategy and marketing programmes (the marketing mix) Marketing strategy Marketing programme Customer marketplace * Product policies * Pricing policies * Place/distribution * Promotion/marketing communications The value offering Marketing tools

7 Products, brands and innovation Conventional views of product policy –defining the product itself –choosing the product mix –creating a branding policy –developing and launching new products –managing product deletions Much emphasis on brands to compete

8 Products, brands and innovation So whats wrong with that? –it produces incremental, marginal changes in product offerings which impress no-one –the real challenge is building creative, innovative companies –marketing processes must drive creative and powerful innovations that re-shape markets

9 Price and value Conventional views of pricing policy –price-based positioning in the market –price levels and relativities –price discounts –pricing to different markets –price seen as a calculation based on cost and competition –usually the role of junior executives

10 Price and value So whats wrong with that? –the price/profit relationship –dangers of seeing price as a quick-fix –ignoring real price sensitivity –underestimating importance of price visibility and architecture –misses price-based strategic vulnerability –fails to link price to customer value

11 Distribution channels and value chains Conventional views of distribution policy (place): –managing the channel and intermediaries – recruiting distributors, motivating and controlling them –direct marketing approaches as an alternative to intermediaries

12 Distribution channels and value chains So whats wrong with that? –underestimates Internet impact on business models and digitization of products and channels –ignores massive power of distributors, e.g. supermarkets in consumer goods –neglects new types of direct marketing strategy –focus needs to be on value chain between buyer and seller, not traditional vertical marketing channel

13 Marketing communications Conventional view of marcoms –deciding role of each form of communication, setting objectives, managing process, integrating communications activities –distinguishes between: advertising/promotion, sales and account management, public relations

14 Marketing communications – advertising/promotion Conventional view of advertising/promotion –advertising in mass media and more specialised vehicles like direct mail, exhibitions –sales promotion more short-term, e.g., coupons, price cuts, special offers

15 Marketing communications – advertising/promotion So whats wrong with that? –mass markets are an illusion and mass media no longer exist –audiences are fragmented by digital/wireless communications –big ideas replaced by small ideas for specialised consumer communities –online communities resistant to commercial messages, e.g., on social networks –traditional advertising agencies are struggling to keep up

16 Marketing communications – sales and account management Conventional views of sales and account management –Selling is face-to-face representation plus supporting materials for presentation, display –Sales management focused on recruitment, selection, motivation, reward and organization of salesforce –account management is service provision, e.g. call centres

17 Marketing communications – sales and account management So whats wrong with that? –strategic customer management is replacing traditional sales approaches –major customers demand dedicated account teams and partnership – strategic account management –the focus has shifted from adversarial transactions to cooperative relationships –dominant customers always get their own way

18 Marketing communications – public relations Conventional view of PR: –creation and maintenance of corporate image relevant to different audiences –publicity, e.g. press releases, sports/arts sponsorship –house style, e.g. logos

19 Marketing communications – public relations So whats wrong with that? –PR looks at trivia while corporate reputation has become a major strategic issue –sustaining and managing risk to corporate reputation is a critical management concern –corporate reputation management poses a major cross-functional challnege largely ignored by conventional PR

20 The new marketing challenge Confronting revolution in markets Identifying renewal opportunities Developing new ways of doing business/new business models or reinvention

21 Market revolution drives renewal and reinvention Disruptive pressures on existing business models Value-creating opportunities for new business models REVOLUTION Radical market and customer change/trends RENEWAL Coping/ adaptation mechanisms REINVENTION Designing new ways of doing business

22 Marketing is strategy the fate of marketing hinges on elevating the role of marketing executives from promotions- focused tacticians to customer- focused leaders of transformational initiatives that are strategic, cross-functional and bottom-line oriented Nirmalya Kumar, 2004

23 Value-based marketing strategy

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

25 Agenda Value as the driver of business and marketing strategy Transactional marketing and selling Brand marketing Relationship marketing Value-driven strategy The search for customer value

26 Value as the driver of business and marketing strategy Compare the search for customer loyalty with the escalating sophistication of customers Suggests several phases in how we think and thought about the way we go to market

27 Value-based marketing Customer loyalty Customer sophistication High Low High Low Value-based marketing Relationship marketing Brand marketing Transactional marketing and selling

28 Value-based marketing Customer loyalty Customer sophistication High Low High Low Value-based marketing Relationship marketing Brand marketing Transactional marketing and selling

29 Transactional marketing and selling Focuses on immediate revenue and profit – the deal, the sale, the contract Often the dominant thinking in sales management in particular Reinforced by paying people volume-based commission/bonus BUT – maybe all some customers want from us is efficiently- managed transactions

30 Value-based marketing Customer loyalty Customer sophistication High Low High Low Value-based marketing Relationship marketing Brand marketing Transactional marketing and selling

31 Brand marketing Branding is central to conventional marketing thinking – brand the product/service, company, person, country, etc. Brands bring important benefits to customers (reduced search time) and companies (brand equity or value)

32 Brand marketing Branding can transform markets Cool brands often win BUT – brands do not make you unbeatable –Coca-Cola –Levi-Strauss –Marlboro

33 Coca-cola Most valuable brand in world 1999 had 50% market share of world soft drinks market Problem – world fell out of love with carbonated soft drinks Tried to keep up with fragmenting soft drinks market Introduced bottled water, flavoured water, juice-based drinks, flavoured iced tea and coffee drinks and energy drinks Use local brands Products not always branded with Coca-cola name

34 UK customers assume bottled water from natural sources ie springs Coca- Cola purified water from tap water in London Origin came to light when a complaint was made to the British Food Standards Agency over Coke's use of the word "pure" in its Dasani marketing - implies that tap water is 'impure'. Like Nestle, McDonald's and Cadbury Schweppes, Coke makes a gratifying target for journalists, in that all those companies trade heavily on their brand. Source: Guardian March 4, 2004 Dazani

35 Brand marketing Issues that go wrong with branding –blind branding –private brand competition –brands which are liabilities –counterfeit brands –wrong brand trajectory, e.g., Stella Artois wife beater

36 Brand marketing Strategic brand management is the priority not creativity Does the brand create customer value and how?

37 Value-based marketing Customer loyalty Customer sophistication High Low High Low Value-based marketing Relationship marketing Brand marketing Transactional marketing and selling

38 Relationship marketing What did relationship marketing do for us? Customer relationship management (CRM) systems BUT – what matters is the type of relationship customers want

39 How B2B purchasers look at supplier relationships Impact of supplier on cost structure and competitiveness Market risk/lack of choice High Low High Low CRITICAL partner to create competitive advantage LEVERAGE manage for financial impact RECURRING consolidate, simplify, manage by exception SHOW- STOPPERS manage to reduce risk

40 Relationships with strategic customers SellerBuyer SellerBuyer SellerBuyer Major account selling The seller devotes specialized resources to dealing with an important major account, e.g., an account team, specialized salespeople, but the relationship is transactional Strategic account investment The seller dedicates resources to the buyer organization and plans around the individual customers needs, e.g., may locate specialist personnel at or near the buyers locations Strategic account partnership The buyer and seller collaborate, plan jointly, and both invest resources and share risks cross- boundary links extend beyond purchasing and sales to include management and technology.

41 Relationship marketing Customer relationship provides the basis for market segmentation Contrast the relationship the customer wants (long-term vs short-term) with the closeness wanted in the supplier relationship (close vs distant)

42 Segmenting markets by customer relationship requirements Type of relationship customer wants with supplier Closeness wanted by customer in supplier relationship Close relationship Distant relationship Long-term Short-term/ transactional Relationship seekers Relationship exploiters Loyal buyers Arms length transactional customers

43 Value-based marketing Customer loyalty Customer sophistication High Low High Low Value-based marketing Relationship marketing Brand marketing Transactional marketing and selling

44 Value-driven strategy Value has become the central focus of strategy (because there is no choice) The key issue is now value innovation (in the customers terms) But value does not have a single meaning –e.g., operational excellence vs. customer intimacy vs. product leadership (Treacy and Wiersema, 1995)

45 Treacy and Wiersema- Value Disciplines Operational Excellence –Providing customers with reliable products or services at competitive prices and delivered with minimal difficulty or inconvenience Customer intimacy –Segmenting and targeting markets precisely and then tailoring offerings to match exactly the demands of those niches –Companies combine detailed customer knowledge with operational flexibility – can respond quickly to almost any need and creates customer loyalty Product Leadership –Offering leading-edge products and services that enhance the customers use or application of the product –Make rivals goods obsolete Source: Treacy, M. and Wiersema, F., 1993, Customer Intimacy and Other Value Disciplines Harvard Business Review January- February

46 The search for customer value The danger of making assumptions –we know what our customers want –bung in some customer service –just make it cheaper –or, perhaps, take customer value seriously?

47 The search for customer value Value as rational cost/benefit analysis Value migration –value migrates from one attribute feature to another –different people buy different value Customer value is complex, multi-dimensional, unstable and idiosyncratic, but it is what matters


Download ppt "Value-based marketing strategy Lecture 3. New marketing meets old marketing : New marketing wins."

Similar presentations


Ads by Google