Value Based Marketing

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Value Based Marketing

• Prof.M.J.Xavier

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The value decade is upon us. If you cant sell a
top-quality product at the worlds lowest price,
you are going to be out of the game. Jack
Welch CEO General Electric
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Definition
Dictionary definition Value means relative worth
or importance Values are also the abstract
concepts of what is right, worthwhile or
desirable. Value based Marketing is the
satisfaction of customer requirements at the
lowest total cost of acquisition, ownership, and
use. Managements values impact how an
organisation creates value and ,ultimately, its
success.
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ACID TEST
Customer
Which one will he selct?
Value
Value
Company
Competitors
Resources, Skills and Competencies
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BETTER VALUE FOR MONEY
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You Die
Value Offered by Competitor
Value that you offer
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You Survive
Value Offered by Competitor
Value that you offer
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You Grow
Value Offered by Competitor
Value that you offer
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THE VALUE EQUATION
CUSTOMER VALUE TOTAL BENEFITS - TOTAL COSTS
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Building Cost into Profits
Profit
Profit
Profit
Cost
Cost
Cost
Building cost In
Anorexic Cost Reduction
Price out of lineUnrealised revenuesCost
Escalation
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Vision of customers needs
Competitors target offering
Key competitive lever
Customer Loyalty
Competitive intensity
Investment scope focus
Lowering Price
Similar Generic
All customers, same offering
Low / decreasing
Head to head
Volume Focus
Generic cost, capacity
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Volume decline
Push for Volume
Poor customer service
Drive for customers
Loss of focus
Increasingly fragmented customer base
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Building Value into Profits
Profit
Profit
Cost
Cost
Building good cost in
Taking bad cost out
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Competitors target offering
Competitive intensity
Investment scope focus
Customer Loyalty
Key competitive lever
Vision of customers needs
Targeted service quality
Differentiated
Increasing partnerships reinforced
Selected customers adapted offerings
Creating value by increasing benefits in win-win
solution
Different segmented and quantified
Value Focus
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Increased volume with key customers
Push for customer service
Improved customer satisfaction
Select key customers and market where value can
be delivered
Deliver superior value
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Key Sources of Profitability

• Grow Revenues
• Enhance Total Value to Customer that can be
  captured in increased revenues

• Reduce Bad Costs
• Eliminate Costs that dont add Customer Value
• Gain Operational Efficiencies

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CUSTOMER VALUE
Emotional/ Self-Expressive Benefits
Cost of Disposing Product
Cost of Maintaining and Repairing Product
Service Benefits
Cost Associated with Using the Product
Total Customer Benefits
Performance Benefits
Cost of acquiring and Inventorying the Product
Total Customer Costs
Brand/Company Benefits
PURCHASE PRICE
Channel margin Firm Profit Firm Cost
Product Benefits
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THE NEW VALUE CHAIN
VALUE DISCOVERY
VALUE DESIGN
VALUE RETENTION
VALUE
VALUE DELIVERY
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Actors in Value Creation
RD
FINANCE MANAGEMENT
IT MIS
MARKETING
Engineering
CUSTOMERS
HUMAN RESOURCES MANAGEMENT
Production/Quality
SUPPLIES MANAGEMENT
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The Role of the CEO
Orchestra Conductor Make Music by synchronizing
and harmonizing the tunes played by each one of
the team members.
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Value Positioning

• Product leadership through innovation (3M,
  Johnson Johnson)
• Operational Excellence through process
  efficiency( Dell Computers, Wal-Mart)
• Customer intimacy through relationship building(
  Nordstrom, Amazon)

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Value Based Positioning
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Value Positioning Template

• Sentence 1 core value Proposition
• For (target customer)
• Who (statement of the need or opportunity)
• the (product name) is a (product category)
• that (statement of customer value)
• Sentence 2 Points of Differentiation
• Unlike (primary competitive alternative)
• our product (statement of primary
  differentiation)

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Can you Name The Airline With Low Fares On Every
Seat Of Every Flight Everywhere It Flies
Wed Like To Match Their New Fares, But Wed Have
To Raise Ours.
SOUTHWEST AIRLINES
SOUTHWEST AIRLINES
? Very,low ticket prices ? Limited passenger
service ? No means, no seat assignments, no
baggage transfers, no connections with other
airlines ? Short-haul point-to-point routes
between midsize cities and secondary
airports
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Value Proposition
It is a verbal statement that matches up the
firms distinctive competencies with the needs
and preferences of a carefully chosen set of
customers Astra/Merck Customized healthcare
solutions to deliver optimal patient care ATT
The right choice Dell Computer Custom,
computers sold direct to customers FedEX When it
absolutely, positively has to get there
overnight General Electric We bring good things
to life VISA Its everywhere you want to
be Wal-Mart The customer is boss... Everyday low
prices...Made in America
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Sales Manager
Key Account Manager
Customer Business Development Manager
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High
Customer focus (Purpose)
Low
Low
High
Customer Support Process
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Conquest Marketing vs Retention Marketing