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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
Current and potential market
Company’s market orientation
Marketing sets objectives
and determines strategies
Objectives and marketing strategy
Functional units will have
input to devise 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
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 =
– Part 2 =
– Part 3 =
working
Top anxieties target faces
Anxiety relief you offer
Result target experiences
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
Template for Strong Value
Proposition/Positioning
– 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).
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
• http://www.youtube.com/watch?v=kN0SVB
CJqLs
• http://www.youtube.com/watch?v=x7qPAY
9JqE4
Four Actions Framework: Key to Value Curve
The key to discovering a
new value curve lies in
answering four basic
questions
Reduce
What factors should
be reduced well
below the industry
standard?
Eliminate
What factors that the
industry has taken for
granted should be
eliminated?
Create/Add
Creating
new markets:
a new value
curve
Raise
What factors should
be raised well above
the industry
standard?
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 arenas
Reduce
Fun and humor
Thrill and danger
Raise
Unique venues
Create
Theme
Refined environment
Multiple productions
Artistic music and dance
The Strategy Canvas
of Cirque du Soleil
Eliminate
high
Reduce
Raise
Create
Ringling Brothers
offering level
Cirque du Soleil
Smaller Regional Circus
low
Price
Multiple Show
Multiple
Thrills & Danger Theme
Arenas
Productions
Unique
Fun &
Artistic Music
Aisle
Refined Viewing
Venue
Humor
& Dance
Concessions
Environment
© Kim & Mauborgne 2006
Animal Shows
Star
Performers