Value Based Marketing

P.Doyle “I argue that the purpose of marketing is to contribute to maximising shareholder value and that marketing strategies must be evaluated in terms of how much value they create for investors”

Yesterday… It was possible to talk about marketing that relies mostly on qualitative arguments (erratic arguments about the consumer being satisfied, the growing market share and a soaring company value).

Today … The question arises of how to provide value for customers and shareholders.

Marketing determines market needs and analyses environment Marketing sets objectives and determines strategies Marketing will assist functional units to determine their role in customer satisfaction In the cooperation of all units the best solution will be created The enterprise will evaluate if the needs were met and at what cost Marketing will get feedback and will undertake improvements Functional units will have input to devise strategies Current and potential market Company’s market orientation Objectives and marketing strategy The strategies of functional units: R&D; Supplies; Production; Logistics; IT; Personnel; Marketing; Sales; Service. Each unit has its role in customer satisfaction Offer: value to the customer Result of the offer: value to the firm Feedback to marketing process

Value Proposition: Key Marketing Concept

Value Proposition Definition (I) A clear statement of how company’s product or service: –Solves a customer problem –Delivers a benefit –Improves their situation

Value Proposition Definition (II) A business or marketing statement that summarizes why a consumer should buy a product or use a service. This statement should convince a potential consumer that one particular product or service will add more value or better solve a problem than other similar offerings.

Value Proposition Definition (III) A value proposition is the collection of reasons why a person or company benefits from buying something

Value? What is value? Something of relative worth and importance or desirable; a fair return for goods or services; estimated or appraised worth

Value Proposition 1. Define target audience 2. Understand target: - Issues / problems - Needs - Value 3. How do you help 4.Use their language 5.Craft your value proposition 6.Add additional distinction 7.Test it…Refine it

First WHO, Then What Value is in the eye of the beholder Start with your ideal target client The value proposition needs to speak to some one – your target Varies according to client, segment and timing

Understand Their Issues What are their most pressing issues or problems? What are their pain points? What is keeping them up at night?

What Does Your Target Value? To create a value proposition you need to know what customers value: –What do they value? –What language do they use describe value? –What are the 3 to 7 things they value above all else?

What Do They Value? The answer lies inside customers head. Ask them: –Why did they buy? –What did you say that persuade them? –What stories did you tell? –Why did they choose you over everyone else…or doing nothing?

How Do You Help? How does your business solve their problem? What are you promising do for them? (emotional gratification) - Brand Promise

Use Customers Language Translate your selling points (features) into a compelling message (benefits) Do not use industry language or “jargon” Clear always trumps clever

Creating Your Value Proposition Use a 3 part process: –Part 1 = Top anxieties target faces –Part 2 = Anxiety relief you offer –Part 3 = Result target experiences working with you

Test It & Refine It Take your draft and share it Ask or survey clients Test it…do your results improve when using it? T Tweak it and refine it…use it

–For ____________________(target customer/segment)… –…that need _________________(the problem we solve)… –Our Brand’s ____________________(the offering)… –…provides ____________________(quantified benefit)… –…unlike _______________________(next best alternative). –We do this by ____________________(how do we do it)… –…As demonstrated by ________________(proof points). Template for Strong Value Proposition/Positioning

Value Propositions: Key Concepts Points of Parity Points of Difference Points of Contention

Points of Parity (POP) POP are associations that are not necessarily unique to the brand but may in fact be shared with other brands. These types of associations come in two basic forms category and competitive. These are features and benefits offered by basically everyone.

Points of difference (POD) POD attributes or benefits consumers strongly associate with a brand, positively evaluate, and believe that they could not find to the same extent with a competitive brand. Strong, favorable, and unique brand associations that make up points of differences may be based on virtually any type of attribute or benefits. Examples are: –FedEx (guaranteed overnight delivery), –Nike (performance), –Lexus (quality)

Points of Contentions (POC) POC are elements about which the supplier and its customer disagree regarding how their performance or functionality compares with those of the next bets alternatives

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Four Actions Framework: Key to Value Curve Reduce What factors should be reduced well below the industry standard? Raise What factors should be raised well above the industry standard? The key to discovering a new value curve lies in answering four basic questions Creating new markets: a new value curve Creating new markets: a new value curve Eliminate What factors that the industry has taken for granted should be eliminated? Create/Add What factors that the industry has never offered should be created or added? Cirque du Soleil example

Eliminate-Reduce-Raise-Create Eliminate Star Performers Animal shows Aisle concession sales Multiple show arenasRaise Unique venues Reduce Fun and humor Thrill and dangerCreate Theme Refined environment Multiple productions Artistic music and dance

The Strategy Canvas of Cirque du Soleil high offering level low Price Fun & Humor Unique Venue Aisle Concessions Multiple Show Arenas Thrills & Danger Animal Shows Star Performers Theme Refined Viewing Environment Multiple Productions Artistic Music & Dance Cirque du Soleil Reduce Eliminate Raise Create © Kim & Mauborgne 2006 Ringling Brothers Smaller Regional Circus