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1

Marketing Strategy

Assignment 2

• Critically evaluate Piercy’s interpretation of

value creation within a strategic marketing

context as presented in his book ‘Market-Led

Strategic Change’

• You are required to illustrate your report with

relevant examples using a company you are

familiar with

Customer value

strategy and

positioning: What

have you got to offer,

and how does it

makes you different

to the rest?

2

Chapter 8…

This chapter underlines the importance

of developing & communicating a

statement of the value we offer to a

customer

Pages 309 - 339

The Value Process…

Frederick Webster…page 8

Defining value

Developing or creating value

Delivering value to customers

Make up the process of ‘going to market’

The Strategic Pathway

Customer

Focus and

Market

Sensing Market

Choices

Value

Proposition

Key

Relationships The Process

of Going To

Market Page 8

3

The Value Proposition in Market Strategy

Value Proposition

Market Mission

Marketing Assets and Brands

Competitive Differentiation

Competitive Position

Explained

overleaf


• Market and segment choices make no sense unless we can deliver superior value to the chosen market targets

• Value proposition issues

–Market mission - what do we want to be and stand for in this market?

–Competitive differentiation - how do we build a difference in the customer’s eyes?


• Value proposition issues...

–Competitive position - how do we build a sustainable/profitable position based on superior customer value?

–Marketing assets and brands - What competitive advantage do we have in intangible assets?

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What Is Value For Our Customers?

• Value is defined by customers

• Drivers of value change over time and vary

between customers

• An important contribution of superior

market sensing is tracking these changes

• Smart market choices reflect these realities

• We need to understand the sources of

superior customer value to exploit

Sources of Superior Customer Value

Superior

Customer

Value

Capabilities,

Skills and

Resources

Commitment

and Service

Organizational

Processes

Innovation

and Change

Explained Overleaf

Sources of Superior Customer Value

• Capabilities skills & resources

• What we are good at doing

• Organizational processes

• Service delivery, how the customer wants

• Commitment & service capabilities

• People – customer dealing with company

• Innovation & change processes

• Ability to get better – ‘delight’ customers

5

What Is Value For Our Customers?

• Customer perception is reality – Post Office

• Different customers buy different value

• Portable clockwork radio – South Africa

• Things change - value “migrates”

• Movement towards ‘slow fashion’

• One-to-one marketing may be the only way to

deliver value superiority in the future

• Levi-Strauss

Market Mission & Values

• Appreciate...

• What the company stands for...?

• What corporate values do they

demonstrate...?

• The customer may not wish to deal with

you because of your reputation and

behaviour

Market Mission & Values

• Hence...

• The strategic analysis most demanded

by companies is:

Mission Analysis

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Mission Analysis

• A logical sequence is

– start with basic purposes (mission)

– determine specific goals (objectives)

– decide what to do to achieve them

(strategy)

– decide how we are going to do it

(marketing programmes)

Mission and Market Strategy

Mission

Objectives

Market Strategy

Marketing Programmes

Starts the process of

strategizing and planning

Results from

strategizing

Results from

planning

The Requirements

• Mission must reflect our core

competencies

• It must be closely tied to critical success

factors in the market

• It should tell employees, managers,

suppliers, partners what is required of

them to deliver our promise of value to

the customer

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The Reality

• Mission - top management ego massaging

• Ignores customer value in favour of

management aspirations

• Many managers see it as a waste of time

• If all you want is bland, non-operational

motherhood statements - use the Instant

Mission Kit – seen on page 318

Piercy’s 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:

Piercy’s view...

Will not change a single

thing in the business!

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Does Mission Analysis Ever Do Any Good?

• When it challenges our business/market

definition

• When it helps us decide what is our core

business

• When it shows us where the real competition

is going to come from

• When it guides our new market choices

• When it helps us clarify what the business is

about and how it has to change - e.g., IBM

A Model of Mission – page 321

Broad

Narrow

Broad

Narrow

Internal External

Internal External

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?

Can We Make Mission Work?

• Structure the content of a mission

statement

• Evaluate the consistency of the

components with each other and revise as

needed

• Test the mission statement with

employees, managers, suppliers, & even

customers

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Competitive Differentiation & Positioning

• How do we differentiate against the rest

• What are our core capabilities

• Do these produce differentiating

capabilities

• This tells us how strong we can be in this

market - do we have a competitive

advantage?

Competitive Differentiation & Positioning

“If you don’t have a competitive

advantage, don’t compete.”

Jack Welch

when CEO, General Electric

Competitive Differentiation

• Porter’s (1985) classic model suggests

– there are only two sources of competitive advantage

low cost

differentiation

– you can be broad or narrow in scope

– so, there are only three generic strategies

• cost/price leadership

• differentiation

• focus

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Porter’s Generic Strategies – page 329

Mont Blanc

Hotel pens

Sources of Competitive Advantage

Competitive

Scope

Low Cost Differentiation

Broad

Narrow

Cost/Price

Leadership

Strategy

BIC pens

Differentiation

Strategy

Parker

Focus Strategy

Examples are

provided

for you

Kotler (2006)…

• Differentiation by:

• Product

• Service

• Personnel

• Channel

• Image

Important Questions to Consider

• What differences can we establish or exploit

between ourselves and the others in this market?

• In what ways do these represent superior value

to some or all of our target customers?

• Can we sustain this differentiation and defend it

against imitation?

• Are we a product specialist or a customer

specialist?

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Core Capabilities/Competences

• Common characteristics of successful companies is approach to core competences Prahalad and Hamel (1990)

• They understand, exploit, invest to create, and sustain core competences:

– Sony - capacity to miniaturize

– 3M - competence with sticky tape

– Black & Decker - expertise with small electric motors

– Canon – skills in optics

Differentiating Capabilities

• Look at core competences and ask

– does it create customer value?

– will competitors find it hard to copy?

– how long will it last?

– who is primary beneficiary (all customers or just some)

– is there a threat of competition from substitutes?

– is it really superior to the competition, or are we kidding ourselves?


• Opportunities to differentiate exist everywhere

• In marketing terms sources of differentiation

may be

– the product itself

– services

– marketing intangibles

Examples next slide

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Sources of Competitive Differentiation

Product

- Quality

- Price

- Performance

- Design

- Features

- Packaging

Services

- Availability

- Pre-sales advice

- Finance

- Delivery

- Maintenance

- After-sales

service

Marketing

Intangibles

- Brand identity

- Brand image

- Reputation

- Corporate image

- Recommendations

- Value perceptions

- Buying experience


• What sources of differentiation will create customer value and produce sustainable competitive advantage

• Tracy and Wiersema’s (1995) “value disciplines”

– market leaders achieve highest value in customers’ eyes through

• operational excellence

• product leadership

• customer intimacy


• The danger is being a “stuck in the

middle” firm not committed to a

specific value discipline or strategic

pathway

• “The leaders should choose a value

discipline and ruthlessly specialize in

it”

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Marketing Assets and Brands

• Marketing assets are revenue and income-generating intangibles – history, reputation, expertise, brands

– differentiating capabilities

– customer relationships

– channel power

– market information

– company reputation

– Brands – most widely recognised market asset

Starting point for

listing our marketing

assets

Brands and Branding

• Why branding is strategy, not just fluff

– brands add value in the customer’s eyes

– brands can transform the competitive structure of markets

– brands may be major assets or liabilities

– brands have become a major point of strategic focus

– brand extension strategies may open up new markets (sometimes)

– major brands have high valuations

The Future of the Brand

• In an era of value-based competition, we have to be wary of “blind faith branding” and ask if the brand creates superior customer value

• Position of traditional brands is also threatened by

– growth of strong retailer brands

– vulnerability to copying/counterfeiting

– impact of retailer category management

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Do We have A Value Proposition?

• A wide range of factors may play a role

in building a value proposition

“the unique offering we make to the

customer”

Do We have A Value Proposition?

• A wide range of factors may play a role in

building a value proposition

• The issues are

– do we know what the value proposition to a

particular set of our customers is

– can we write it down

– does it make us better than the competition to that

customer?

Key Learning Points - The Value Proposition

We need to truly understand what value

means to our customers and how it is

changing - this is the real test of market

sensing capabilities

Market and segment choices must make

sense in having a superior value offering to

the chosen customers

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Key Learning Points -The Value Proposition

Market mission may be a way of clarifying

how the business has to operate to deliver

superior customer value by identifying and

agreeing

organizational philosophy

organizational key values

product-market domain

critical success factors


Competitive advantage may be based on low cost and differentiation, so a market can be evaluated in terms of companies pursuing cost/price leadership strategy, differentiation strategy, or focus strategy

Achieving competitive advantage relies on understanding our core competences - the things that make us different to the rest


Differentiating capabilities are the core

competences that make us different to the

competition in the value we offer to

customers

One category of differentiating

capabilities is marketing assets, and one

type of marketing asset is the brand

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Brands can play a number of key strategic functions, but brand extension possibilities are often exaggerated and brand strategies are vulnerable to several modern marketplace trends

We need to be able to articulate the company’s value proposition to customers in the chosen markets and segments

• Critically evaluate Piercy’s interpretation of

value creation within a strategic marketing

context as presented in his book ‘Market-Led

Strategic Change’

• You are required to illustrate your report with

relevant examples using a company you are

familiar with

Again – a good grade?

Address the question

A variety of academic sources

Good Harvard Style

Well compiled Bibliography

A good match with references and

the Bibliography

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