© Alexander Chernev Creating Market Value Professor Alexander Chernev Kellogg School of Management Northwestern University © Alexander Chernev

Creating Market Value: The Big Picture A company’s success is determined by its ability to create market value The way in which a company creates market value is defined by its business model The business model involves two key components: strategy and tactics © Alexander Chernev StrategyTactics Business Model Defining market value Designing market offerings

© Alexander Chernev Marketing Strategy Marketing strategy outlines the logic of the value- creation process Marketing strategy involves two key components: the target market and the value proposition © Alexander Chernev Target marketValue proposition Marketing Strategy Defines the environment in which the company’s offering aims to create value Defines the benefits and costs created by the offering for the relevant market entities

© Alexander Chernev The Target Market The target market is defined by five key factors © Alexander Chernev Target customers for whom the company will optimize its offerings Collaborators that work with the company to create customer value Competitors that aim to fulfill the same need of the same target customers The company in charge of the offering The relevant business, economic, technological, sociocultural, regulatory, and physical context The 5-C market analysis framework Company Competitors Collaborators Customers Context Target market Value proposition Marketing Strategy

© Alexander Chernev The Value Proposition The value proposition defines the benefits an offering aims to create for the company, its customers, and its collaborators © Alexander Chernev Collaborators Customers Company Value Target market Value proposition Marketing Strategy

© Alexander Chernev The Value Proposition The development of the value proposition begins with defining the value exchange depicting the relationships among the relevant market entities © Alexander Chernev Customer value Collaborator value Company value OVP The Optimal Value Proposition The 3-V principle 6-V framework Context Collaborators Customers Company Competitors Value Target market Value proposition Marketing Strategy

© Alexander Chernev Marketing Tactics Marketing tactics translate the value-based strategy into a set of actionable decisions that define the market offering © Alexander Chernev Marketing Tactics Product Service Brand CommunicationDistribution PriceIncentives Marketing tactics are defined by seven key elements Customer value Collaborator value Company value OVP

© Alexander Chernev Designing value Communicating value Delivering value Offering benefits Offering costs Marketing Tactics as a Process Marketing tactics can be viewed as a process of designing, communicating, and delivering value © Alexander Chernev Value ProductService Brand CommunicationDistribution IncentivesPrice

© Alexander Chernev Creating Market Value: Overview Marketing strategy outlines the logic of the value-creation process The target market defines the environment in which the company aims to create value ( 5-C framework ) The value proposition defines the benefits and costs for the company, its customers, and its collaborators ( 3-V principle ) The value proposition stems from an analysis of the value exchange, which outlines the value relationships in the target market ( 6-V framework ) © Alexander Chernev Company Competitors Collaborators Customers Context Customer value Collaborator value Company value OVP Target market Value proposition Marketing Strategy Context Collaborators Customers Company Competitors Value

© Alexander Chernev Creating Market Value: Overview Marketing tactics translate the strategy into a set of actionable decisions that define the market offering Marketing tactics involve seven factors : product, service, brand, price, incentives, communication, and distribution Marketing tactics can be viewed as a process of designing, communicating, and delivering value © Alexander Chernev Customer value Collaborator value Company value OVP Market offering Product Service Brand CommunicationDistribution PriceIncentives Value ProductService Brand CommunicationDistribution IncentivesPrice Communicating value Delivering value Designing value

© Alexander Chernev G-STIC Action-Planning Framework: The Big Picture Implementation InfrastructureProcessesSchedule Tactics Product Service Brand CommunicationDistribution PriceIncentives Strategy Target marketValue proposition Goal FocusBenchmarks Control PerformanceEnvironment Action Plan (G-STIC Framework) Business model The G-STIC framework outlines the key aspects of the action plan © Alexander Chernev

Marketing Plan as a Business Document G-STIC is the core of the marketing plan © Alexander Chernev Situation OverviewExecutive Summary Exhibits Control Tactics Implementation Goal Product Service Brand InfrastructureProcessesSchedule Action Plan (G-STIC Framework) Business model CommunicationDistribution PriceIncentives Strategy Target marketValue proposition FocusBenchmarks PerformanceEnvironment

© Alexander Chernev Creating Market Value: Business Model Workbook © Alexander Chernev Marketing Strategy Collaborator Value Competitors Customers Collaborators Customer Value Company Value Company Context Product Service Brand Price Incentives Communication Distribution Value Proposition Marketing Tactics © Alexander Chernev Target Market Market Offering

© Alexander Chernev Creating Market Value Professor Alexander Chernev Kellogg School of Management Northwestern University © Alexander Chernev