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

The strategic pathway

Marketsensingandlearningstrategy

Strategicmarketchoicesandtargets

Customervaluestrategyand positioning

Strategicrelationshipsandnetworks

Strategic thinking andthinking strategically

Strategictransformationand strategyimplementation

P&G (again)

Our Purpose We will provide branded products and

services of superior quality and value that improve the lives of the world’s consumers.

As a result, consumers will reward us with leadership sales, profit and value creation, allowing our people, our shareholders, and the communities in which we live and work to prosper.

Not incidentally Wall Street hates it

Agenda

Customer value strategy and positioning value propositions market mission and values competitive differentiation and positioning marketing assets

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.

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)

Value proposition definitions 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)

Value proposition definitions

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)

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

Customer value strategy and positioning

Customervalue strategy and

positioning

Market missionand values

Competitivedifferentiation

Competitivepositioning

Marketingassets

Mission and market strategy

Mission

Objectives

Market strategy

Marketing programmes

Starts the process ofstrategizing and planning

Results fromstrategizing

Results fromplanning

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?

Competitive differentiation and positioning

Competitive differentiation Strategic positions

variety-based needs-based access-based

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

Value propositions

Example of value proposition types 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

BT VALUE PROPOSITION DEVELOPMENT

Source: Frow, P. and Payne, A. (2008) The Value Proposition Concept:

Evolution, Development and Application in Marketing

BT Value Proposition Development Process

DECONSTRUCTING A VALUE PROPOSITION

Source: Payne, A. and Frow, P. (2011) “De-constructing the Value Proposition of a Service Innovation Exemplar ”. In: Patterson, A. and Oakes, S (eds) Proceedings of the Academy of Marketing Conference 2011: Marketing Field Forever, Academy of Marketing, Liverpool Available at: https://marketing.conference-services.net/programme.asp?conferenceID=2342&action=prog_list&session=15833 [Accessed 13 October 2011].

Shouldice Hospital Hernia Centre

renowned globally for its innovation and sole specialization in repair of external abdominal hernias

benefits from scale and standardization - surgeons each perform up to 700 operations a year - 99% success rate

Do not have a formal explicit statement of their value proposition

Lanning and Michaels (1988), propose a structure for representing a value proposition through a formal statement of: the target customers; the key benefits offered; the price relative to the competition; and a concise summary of the value proposition.

Target customers :• Otherwise healthy males with external inguinal hernia

willing to travel to Ontario Canada to receive ‘gold standard ’ hernia repair

Key benefits offered: highly skilled and specialized surgeons performing just

one form of operation fast speed of surgery high success rate exceptionally low complications and recurrence fast recovery and return to normal duties low likelihood of infection anxiety and tension reduction club - like atmosphere and group therapy – more like a

resort hotel than a hospital Aftercare, check ups for life and long-term relationships

Price relative to competition:• Low, highly competitive price - typically about

half comparable costs for hernia surgery and recovery

Summary of value proposition:• Highly successful hernia surgery using a

proven technique – “The Shouldice Method” - undertaken in a comfortable and supportive environment, with fast recovery and little likelihood of future problems