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

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

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

2 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

3 The strategic pathway Market sensing and learning strategy Strategic market choices and targets Customer value strategy and positioning Strategic relationships and networks Strategic thinking and thinking strategically Strategic 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 Source: Webster, F. E 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.

6 Customer value strategy and positioning Customer value strategy and positioning Market mission and values 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 Superior customer value Capabilities, skills and resources Commitment and service capabilities 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 Mission Objectives Market strategy Marketing programmes Starts the process of strategizing and planning Results from strategizing Results from planning

12 Nigels instant mission kit Mission statement components Tick 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:

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

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 Competitive differentiation Porters generic strategies Strategic positions –variety-based –needs-based –access-based

17 Porters generic strategies Sources of competitive advantage Competitive scope Low CostDifferentiation Broad Narrow Cost/price leadership strategy Differentiation strategy 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 20 Building the Value Proposition 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 firms 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: 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 PoorExcellent 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 criteria National discounter chain Small independent stores Regional chain


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