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 marketled strategic change
Part I
Customer value
imperatives
Part II
Developing a value-based
marketing strategy
The strategic pathway
Market sensing
and learning
strategy
The Customer
is always
right-handed
New
marketing
meets
old marketing
Value-based
marketing
strategy
Strategic
thinking and
thinking
strategically
Strategic
market choices
and targets
Customer value
strategy and
positioning
Strategic
relationships
and networks
Part III
Processes for managing
strategic transformation
Change strategy
Strategic
gaps
Organization
and processes
for change
Implementation
process and
internal
marketing
The strategic pathway
Strategic thinking and
thinking strategically
Market
sensing
and
learning
strategy
Strategic
market
choices
and
targets
Customer
value
Strategic
strategy
relationships
and
and
positioning
networks
Strategic
transformation
and strategy
implementation
Agenda
• Customer value strategy and positioning
– customer value
– market mission and values
– competitive differentiation and positioning
– marketing assets
– value propositions
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. 1992 p14
Customer value strategy
and positioning
Market mission
and values
Customer
Competitive
Competitive
value strategy and
differentiation
positioning
positioning
Marketing
assets
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
Capabilities, skills and resources
Commitment
and service
capabilities
Superior
customer
value
Innovation and change
processes
Organizational
processes
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
Starts the process of
strategizing and planning
Objectives
Market strategy
Marketing programmes
Results from
strategizing
Results from
planning
Nigel’s instant mission kit
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
Tick as
required
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
Internal
External
Organizational
philosophy
Productmarket domain
What do we
want to be?
Where are we
going to operate?
Broad
Broad
Mission
statement
Narrow
Narrow
Organizational
key values
Critical success
factors
How do we want
our people to
behave?
What do we have
to be good at?
Internal
External
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
Low Cost
Broad
Competitive
scope
Narrow
Differentiation
Cost/price
Differentiation
leadership
strategy
strategy
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
Building the Value
Proposition
Mission
Market definition
Brands
Marketing
assets
Value
Proposition
Market
segmentation
Market attractiveness
Strategic positioning
Differentiating
capabilities
20
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
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
Approach:
Lists all the
benefits customers
receive from the
market offering
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
Small
independent
stores
Customer purchase criteria
Regional
chain
National discounter
chain
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