1.15 Product Excellence
(Value proposition)
This part is about the value propositions within Piercy’s strategic pathway to be market-led, which started with market choices and ends with key relationships.
A. Building the value proposition
Marketing is a) marketing planning and decision making and b) a company wide market orientation. The value proposition is about building a product that is differentiated from other products with a company wide focus for unique value to the customer.
Piercy recognizes two different kinds of segmentation:
\- Explicit: by means of market research to understand behaviour and develop segmentation and positioning based on that knowledge.
\- Implicit: by ways of focus on a value proposition with targeting and segmentation being company wide issues.
The value proposition is made up of
\- Product and service attributes (functionality, quality, price, time)
\- Position (brand, intangible assets)
\- Customer segment (relationship)
Finding a value proposition:
1\. What is our mission?
A mission statement might include: philosophy, specifications of market domain, key values, and critical success factors. This should be the start of the company and possibly include the value proposition.
2\. Define your market and market segments (segmentation).
3\. Find an attractive market/segment. (Targeting)
4\. What are our (competitive) differentiating capabilities?
This can come from three sources:
\- Product or service itself
\- Added-value services
\- Marketing intangibilities
These normally come out of you core competencies and strategic position. E-commerce would be one for Amazon and the logistics involved are used to offer superior customer value. These have to be reviewed periodically as others might catch up.
5\. Strategicly position yourself
This can come from the value disciplines being operational excellence (Dell, FedEx, and MacDo), product leadership (Marks&Spencer, British Airways) and customer intimacy (IBM, Home Depot, and Four Seasons Hotels)
These are not mutually exclusive and it should be chosen based on whether competitors can easily imitate you and if your organisation’s capabilities match the activities needed.
6\. What are our marketing assets and brands?
Davidson (1997) coined the term asset-based marketing which talks about all core competencies being included.
“A core competency is the gold standard. It is a bundle of related skills, leading to a key consumer benefit, and completely unique.” — Davidson, 1997
These would include:
\- Customer relationships (loyalty and trust helps defend market share)
\- channel power (market share, shelf space, e.g. ice cream sometimes owning the one freezer in a shop)
\- Market information (understanding and faster response)
\- reputation and brand (includes more than just the visible but also invisible key assets and competencies like service level, low-cost operation, strong supply chain, strong R&D, … known as the branding iceberg)
The importance of the brand is seen when you look at what influences the customer:
\- own experience
\- Reference groups (famous sponsor)
\- Belief of brand effectiveness
\- Feelings about brand appearance
There are three other things to take into account:
\- Service positioning (customers look at: reliability, assurance, tangibles, empathy, and responsiveness)
\- Key relationships (customers, competitors, collaborators, co-workers)
\- Translate strategy into account which includes performance indicators (e.g. balanced scorecard)