Category: University of Mumbai BMS Notes

Collaboration brings:

Providing Value: Working towards the same goal inspires in the team members with a strong sense of purpose. The team sees value in working together as the common goal gives them a meaningful reason to work together, along with receiving mutual benefits for the company as well as the team.

Brainstorming: Collaboration allows team members to come together on a common platform and work towards the achievement of a common goal by thinking, brainstorming, and offering various perspectives to provide solutions.

Equal Partaking: Collaboration provides every team member with equal opportunities to participate and communicate their ideas.

Horizontal Integration

The merger of two or more firms, which are engaged in the same line of business and their activity level is also same; then this is known as Horizontal Integration. The product may include complementary product, by-product or any other related product, competitive product or entering into the product’s repairs, services, and maintenance section.

Horizontal Integration reduces competition between firms in the market, as if the producers of the product get combined they can create a monopoly. However, it can also create an oligopoly if there are still some independent manufacturers in the market.

It is a tactic used by most of the companies to expand its size and achieve economies of scale due to increased production level. This will help the company to approach new customers and market. Moreover, the company can also diversify its products and services.

Vertical Integration

Vertical Integration is between two firms that are carrying on business for the same product but at different levels of the production process. The firm opts to continue the business, on the same product line as it was done before integration. It is an expansion strategy used to gain control over the entire industry.

Forward Integration:  If the company acquires control over distributors, then it is downstream or forward integration.

Backward Integration: When the company acquires control over its supplier, then it is upstream or backward integration.

Managing collaborator relations

Share the company’s mission over and over again. Everyone needs a reason to show up each day a cause to be part of, and a broader objective to work towards.

Defining your company’s mission is the first step towards bringing people together under one common goal and working together towards making it happen.

Communicate your expectation for collaboration.

Similarly, if your team doesn’t know that you want them to work together, you can’t expect them to do so. From the start, set your expectation for collaboration as a minimum standard. Even better, it should be part of your onboarding process so that potential recruits know you prioritize teamwork.

Promote a community working environment.

A sense of community is crucial for collaborative working environments. 54% of employees state that a strong sense of community led them to stay at a company longer than was in their own interests.

When people feel that their opinion matters, they are more likely to apply themselves more. Conversely, when people know their opinion doesn’t count for anything, they feel redundant and team-playing disintegrates.

Encourage Creativity.

A collaborative team is an innovative one. Likewise, creating the space for creativity will help foster collaboration. It’s a virtuous circle.

Brainstorming sessions can be a great way of opening up your team to creative thinking. An environment in which they can put forward and challenge ideas will help employees feel like they have a stake in the company’s mission.

Collaborators are any third parties that work directly with your company to support or assist in the development or execution of a strategy. Some common examples of collaborators include vendors, warehousers, and consultants.

Types:

Partners

Partners are any individuals with a formal interest in the success of a company. While all collaborators can be thought of as partners, this group specifically refers to business partners with a legal agreement in place.

Agencies

Agencies act as intermediaries and facilitators, connecting companies with other peoples and companies with skills they may need. An employment agency may provide a company with administrative staff, whereas a marketing agency could handle all of a company’s promotional needs.

Distributors

Distributors are responsible for a company’s supply chain. Not only do they maintain relationships with suppliers and vendors, they also house and facilitate the shipment of the company’s product.

Suppliers

Suppliers contribute not only the materials to make a company’s product, but as manufacturers are considered a supplier, they may create the product itself.

In defining your company’s collaborators, you also need to assess them for capability and commitment. A collaborator being unable to offer the support you need can have a serious impact on your operations, so it’s best to determine a collaborator’s capacity beforehand.

Collaboration as Business process

• An integrated business process which consists of relevant business processes across participating organisations.
• A set of mutually synchronized actions of peering and autonomous enterprises in order to conjointly provide an output for an external customer.
• An integrated business process which consists of relevant business processes across participating organizations.

Utilize the power of consumers

Collaborative marketing is more than collaborating with other organizations. Modern technology gives us better outreach to capture the voice of your target audience. This continues to develop as the use of social media and wide-reaching digital reviews expand.

Fulfill campaign goals

Use collaborations to strategically mask your weaknesses or promotional shortcomings. Broaden your outreach with collaborative marketing that syncs with your organization. Relatable organizations will have similar goals, marketing campaigns and target audiences. Create mutually beneficial marketing promotions with these companies to fulfill the needs of your team.

When you bring this idea to modern collaborative marketing, you’ll need systems in place to enable this creative collaboration. The marketing technology stack your team is using should be configured to make this process as smooth as possible.

It’s essential to have the basic collaborative tools in place. The most important solution for marketing collaboration is digital asset management (DAM). This used by modern organizations for optimal brand management and asset storage. With DAM, you can easily collaborate on projects with externals through features like collection links and portals.

Align with like-minded businesses

Increase your brand awareness with collaboration. Work with other brands to promote similar products, which increases the outreach and strength of the advertisement. The marketing powers of numerous brands come together to bolster your business and minimize budget spending.

Here’s a real life example of this in action. Two different reputable Hollywood companies produce a movie. Though they are competitors, they solidify the quality of the film by collaborating. The brands build off each other this way, masking weaknesses and developing strengths in the eyes of consumers.

Plan the entire collaboration process

A strong collaboration is preceded by a systematic planning of the entire collaboration process. Begin by researching companies that have similar goals, marketing, brand and products. Especially online, marketing collaborations are more effective with higher amounts of collaborative companies. The next step is meeting with the collaborators and setting guidelines and agreements with each of them.

After the partnerships are formed, ensure all agreements are in place before launching the marketing advertisements. Finally, re-evaluate your campaign to ensure you’re constantly getting the most value from it. Ensure the companies you partnered with don’t change their goals or branding values without your knowledge.

Adapt to evolving organizational needs

Your collaborative marketing campaigns thrive when internal audits of collaborative relationships are routine. The needs of your organization are dynamic and the digital landscape changes constantly. In order to stay relevant and keep the collaborative marketing campaigns prosperous, regularly reassess both your organization’s needs and changes to the relationships with externals. Ensuring the relationship is still viable and beneficial to your organization will garner success.

Advantages of Collaboration

Better Division of Labor

One of the advantages of collaborative efforts in the workplace is the way that the work is divided. When more than one person is involved in accomplishing a certain task, particularly when it is a large project, it helps for everyone to have a small portion of the responsibility to ensure things get done versus loading one or two people with too much work to accomplish the task.

Greater Creative Input

When you have different people collaborating on a project, then you get a greater sense of creative input. You are able to tap into the creative combination of several employees in one group. The collection of different ideas, approaches to the project and brainstorms can spur innovative results that can in turn raise the visibility and quality of the products or services offered by your company.

Increased Employee Morale

Having employees collaborate also has a positive effect on their morale. As employees work together to accomplish goals, they can celebrate their successes both individually and as a group, and this can cause them to have a more positive view of their jobs and team members. In turn, this can also build trust among co-workers as each member contributes to the team’s accomplishments.

Drawbacks of Collaboration

Lack of Trust Among Team Members

To work effectively, employees on a team need to trust each other. Forbes notes that trust can quickly erode if a single team member doesn’t pull their weight. Because the work is collaborative, an employee who misses deadlines or doesn’t complete their assigned work can negatively impact the work of the entire team. This can lead to frustration and lack of trust within the other employees, reducing the effectiveness of their work and creating tension in the workplace.

Conflicts in Working Styles

When you group different people together to collaborate on one project or set of responsibilities, there may be a conflict in the working styles of the individuals within the group. This is one of the negative aspects of collaboration because it can hold up progress on accomplishing the job at hand, while team members instead muddle through conflicts caused by the different ways team members approach the work.

Too Many Faux Leaders

When you have a collaborative group, you may sometimes end up with too many people trying to lead the group, and not enough members that are willing to take a backseat and just do what it takes to get the job done. This ill will can then bleed over into other areas of the work environment, causing more tension among the rest of the staff, including those that may not even be involved in the collaborative effort.

Profit Strategy is the strategy in which, the only target of the company is to maintain profitability by hook or a crook. It is a type of corporate-level stability strategy, where the profit generation takes place in a forced strategic way by the management of the company. And the management of the company, in order to achieve profits, tries to slash costs, cut additional investments, try to increase the efficiency or productivity level, raise the selling price or can adopt any intense steps in this direction.

Profit Strategy continues to use the old technology, at the time of technological change. And under this strategy, the management does not replace the old or obsolete technology with new technology in any case. Moreover, even if the replacement is inevitable, then the partial acquisition of technology takes place. Thus, this Strategy focuses on capitalizing as much as possible, out of the current situation.

Strategic financial management means not only managing a company’s finances but managing them with the intention to succeed that is, to attain the company’s long-term goals and objectives and maximize shareholder value over time.

Strategic financial management is about creating profit for the business and ensuring an acceptable return on investment (ROI). Financial management is accomplished through business financial plans, setting up financial controls, and financial decision-making.

Before a company can manage itself strategically, it first needs to define its objectives precisely, identify and quantify its available and potential resources, and devise a specific plan to use its finances and other capital resources toward achieving its goals.

Strategic management also involves understanding and properly controlling, allocating, and obtaining a company’s assets and liabilities, including monitoring operational financing items like expenditures, revenues, accounts receivable and payable, cash flow, and profitability.

Strategic financial management encompasses furthermore involves continuous evaluating, planning, and adjusting to keep the company focused and on track toward long-term goals. When a company is managing strategically, it deals with short-term issues on an ad hoc basis in ways that do not derail its long-term vision.

Increasing sales and revenues are related but different goals, and each needs its own strategy. Although the tactics for each may be different, they should complement each other. Understanding how sales and revenue are related and how to increase both helps you market efficiently and optimize your profits.

Sales vs. Revenues

The words “sales,” “revenue” and “income” have different meanings, and become confusing if used as synonyms. “Sales” refers to the number of units of your product you sell, “revenues” refers to the total amount money your sales generates, and “income” refers to your profit from those sales. Keep these in mind as you plan sales strategies to strike the right balance for your business’s needs. Don’t be surprised to hear “sales” and “revenues” used as synonyms, which is a common occurrence in business.

Increase Your Marketing

An obvious way to increase sales is to boost your marketing. Quantity doesn’t necessarily mean quality, so careful planning, test-marketing and monitoring your results maximizes your sales. Conduct marketplace research to learn which messages speak to your target audience.

Run ads and promotions in limited locations and check the results before spending your entire budget. Incorporate some way to monitor marketing communications, such as using coupons, electronic codes or website traffic statistics.

Review Your Pricing Strategies

If your product or service is price sensitive, pay special attention to your pricing strategies. Find out what your competition is charging and raise or lower your prices based on your goals. Lowering your prices can increase revenues to make up for lower margins.

Raising your prices can create a higher perceived value in the minds of consumers and increase your margins. Raising your prices can also increase your revenues without increasing sales.

Expand Your Distribution Channels

Changing where you sell your product can significantly boost your sales and revenues without requiring any changes to your marketing or pricing. Perform a careful study of the effects of using online selling, direct mail, wholesalers, retailers, distributors and outside sales reps to project how each method can affect your sales volumes, profit margins and total profits. In some cases, new distribution channels require marketing support.

Diversify Your Offerings

If you’re a mature company, it might be time to add new products and services to create exponential growth. If you feel you’ve saturated the marketplace, determine the products your target customers buy that you’re not selling and that you think you can make and market profitably. You might need to replace old products with new ones. This might result in a decrease in sales, but higher revenues if the replacement product has a higher price.

Develop Relationships and Cross Promotions

The more people you can get to promote your product or service, the more sales and revenues you’ll have. Look for businesses that don’t compete with you but which have the same target customer and develop cross promotions. For example, if you sell sports apparels, sponsor golf and tennis instructors and youth league coaches to wear and promote your line. Partner with charities to get them to promote you to their supporters. Use social media programs to build a following generated by satisfied customers.

Optimizing price

Price optimization is the practice of deciding upon the most effective pricing for a product or service. Reliant on crystal clear data, great pricing optimization enables companies to offer their products at the price points that are most likely to be picked up on by customers.

Optimal price points will deliver the best possible profits for the company, and may also be designed to achieve additional goals such as assisting in improving the company’s market share or enabling expansion into previously unexplored markets.

• Starting prices: The starting price of a product or service is of course fundamental to its success, so pricing optimization is key here. Pricing optimization software will analyze data to reveal the best possible starting prices, taking a wide range of internal and external factors into account.
• Discounts: Many companies opt to push their products out to larger audiences, or tempt back past customers, with the offer of discounts. Well-managed pricing optimization software can also be used in these instances, to ascertain the optimal price points.

The Benefits of Price Optimization

Pricing optimization brings a multitude of benefits, which are evident throughout the sales process. Take a look at some of the main advantages of pricing optimization strategies.

• Maximize Sales and Profits: The best possible price points allow companies to achieve their true potential, particularly when it comes to maximizing sales and profits. Customers are more likely to pick up on products and services when they’re priced optimally, and companies soon reap the benefits.
• React faster to market changes: Pricing software makes it possible for companies to react quickly to changes in the market, outsmarting their competitors by offering goods and services at the best possible prices for any given circumstances.
• See fast ROI improvements: With pricing optimization software, it’s easy to see how things are improving. ROI can be closely monitored, with all changes available to view in real-time. This data-driven approach enables teams to respond to fluctuations in demand quickly, maintaining the best possible ROI for the company.
• Gather insights into customer behavior: The more data a company has, the better it can understand its customers. And with this understanding comes immeasurable opportunities. Data allows companies to offer products they know their customers will love at prices they’re sure customers will respond favorably to.

Lowering costs

Cost cutting refers to measures implemented by a company to reduce its expenses and improve profitability. Cost cutting measures are typically implemented during times of financial distress for a company or during economic downturns. They can also be enacted if a company’s management expects profitability issues in the future, where cost cutting can then become part of the business strategy.

Cost reduction is the process used by companies to reduce their costs and increase their profits. Depending on a company’s services or products, the strategies can vary. Every decision in the product development process affects cost: design is typically considered to account for 70 – 80% of the final cost of a project such as an engineering project or the construction of a building.

Companies typically launch a new product without focusing too much on cost. Cost becomes more important when competition increases and price becomes a differentiator in the market.

The importance of cost reduction in relation to other strategic business goals is often debated.

Cost reduction strategies

• Supplier consolidation: see examples in the aerospace manufacturing industry
• Component consolidation
• Low-cost country sourcing
• Request for quotations (RFQ)
• Supplier cost breakdown analysis
• Function cost analysis / Value analysis / Value engineering
• Design for manufacture / Design for assembly
• Reverse costing
• Cost driver analysis
• Activity-based costing (ABC), which assigns a cost of each activity undertaken in the production and delivery of each product and service according to the actual consumption by each activity including a share of overheads. Peter Turney in a 1989 article examines the role of ABC in the achievement of manufacturing excellence and the product cost information needed by managers working towards this goal.
• Product benchmarking
• Competitor benchmarking
• Design to cost
• Design workshops with suppliers
• Half cost strategies: ambitious strategies which aim to reduce the costs of specific production processes or value adding stages to 1/N of the previous cost.

Value creation is the primary aim of any business entity. Creating value for customers helps sell products and services, while creating value for shareholders, in the form of increases in stock price, insures the future availability of investment capital to fund operations. From a financial perspective, value is said to be created when a business earns revenue (or a return on capital) that exceeds expenses (or the cost of capital). But some analysts insist on a broader definition of “value creation” that can be considered separate from traditional financial measures. “Traditional methods of assessing organizational performance are no longer adequate in today’s economy,” according to ValueBasedManagement.net. “Stock price is less and less determined by earnings or asset base. Value creation in today’s companies is increasingly represented in the intangible drivers like innovation, people, ideas, and brand.”

When broadly defined, value creation is increasingly being recognized as a better management goal than strict financial measures of performance, many of which tend to place cost-cutting that produces short-term results ahead of investments that enhance long-term competitiveness and growth. As a result, some experts recommend making value creation the first priority for all employees and all company decisions. “If you put value creation first in the right way, your managers will know where and how to grow; they will deploy capital better than your competitors; and they will develop more talent than your competition,” Ken Favaro explained in Marakon Commentary. “This will give you an enormous advantage in building your company’s ability to achieve profitable and long-lasting growth.”

The first step in achieving an organization-wide focus on value creation is understanding the sources and drivers of value creation within the industry, company, and marketplace. Understanding what creates value will help managers focus capital and talent on the most profitable opportunities for growth. “If customers value consistent quality and timely delivery, then the skills, systems, and processes that produce and deliver quality products and services are highly valuable to the organization,” Robert S. Kaplan and David P. Norton wrote in their book Strategy Maps: Converting Intangible Assets into Tangible Outcomes. “If customers value innovation and high performance, then the skills, systems, and processes that create new products and services with superior functionality take on high value. Consistent alignment of actions and capabilities with the customer value proposition is the core of strategy execution.”

Steps:

Create A Company Succession Plan

Most companies do not have a formal company succession plan. Company succession planning differs from personal or family succession planning, as it focuses on forming the next generation team of key managers and employees in a company.

Don’t Forget Qualitative Factors

Quantitative factors such as changes in revenues, gross and net margins, operating cost, etc. are easy to identify and therefore easy for owners to focus their attention on. However, companies with above-average valuations excel in both quantitative and qualitative factors. Don’t overlook areas like:

• Planning
• Leadership
• Sales management
• Marketing management
• People management
• Operations management
• Financial management
• Legal management

Take a Retirement Account Perspective

Company value creation is an ongoing process, which includes:

• Creating or expand recurring revenue streams,
• Increasing expected future revenue growth rate,
• Increasing returns on existing assets,
• Discontinuing poor performing activities,
• Reducing non-cash excess working capital,
• Creating or expand barriers to entry,
• Reducing company specific risk

A value growth professional can help you think about your business as an investor as well as an owner.

Protect Existing Value

For most companies, 75% of company value is in its intangibles. Some of those intangibles are trade secrets, intellectual property, proprietary methods and/or software, customer relationships, etc. Business owners should identify key value drivers, then takes steps to protect those key value drivers, which will protect company value.

Most business owners limit their actions to protect company value to obtaining hazard insurance, worker’s compensation insurance, and liability insurance. There are other ways to protect company value, including:

• Obtaining patent protect
• Requiring employees sign intellectual property assignment agreements
• Requiring employees sign non-disclosure and non-compete agreements
• Executing buy-sell agreements will all company owners
• Acquiring life insurance to support buy-sell agreements
• Purchasing business interruption insurance
• Monitoring and taking actions to limit the loss of brand reputation

Create Customer Value

The traditional notion of customer value, where benefits minus cost equal customer value, may seem simple but can be much more complicated in practice. Customer benefits and cost can be both direct and indirect, as can be customer value. Moreover, the right set of customer benefits can create barriers to entry and/or competitive advantages.

Many business owners argue that customer value is created by providing consumers with the lowest price, highest quality, and best service. Unfortunately, those three factors are often at odds with one another. Instead, consider adopting a customer-centric approach, taking into account factors like:

• The value drivers of your customers and would-be customers
• What customers feel about your product or service offering/delivery
• The cultural landscape of your target customers
• Your customers’ value proposition determinants
• How you can create a value-added experience for your customers
• When to create value through a collaboration with customers
• Measurements of customer value creation include increasing customer acquisition, satisfaction, retention, and add-on selling. Additionally, companies that can enhance their customer’s perception of the value of their products or services are likely to enjoy higher margins.

Plan Ahead

Business owners who don’t plan often find that they spend most of their time putting out fires. Planning allows company owners and managers an opportunity to set proactive goals and objectives for the intermediate future, as well as identify solutions for key business issues. A great starting point for long-term planning is to conduct analyses around issues like:

Why your company is relevant to existing and future customers

• Current market trends in your industry
• Why customers buy from you or don’t
• Current competitors and their competitive advantages
• Your company’s competitive advantages and weaknesses
• How you can build or reinforce barriers to competitors
• Existing bench strength to ensure your company has the right talent to achieved desired results

Monetary, functional and psychological value

Value in marketing, also known as customer-perceived value, is the difference between a prospective customer’s evaluation of the benefits and costs of one product when compared with others. Value may also be expressed as a straightforward relationship between perceived benefits and perceived costs: Value = Benefits – Cost.

The basic underlying concept of value in marketing is human needs. The basic human needs may include food, shelter, belonging, love, and self expression. Both culture and individual personality shape human needs in what is known as wants. When wants are backed by buying power, they become demands.

With a consumers’ wants and resources (financial ability), they demand products and services with benefits that add up to the most value and satisfaction.

The four types of value include: functional value, monetary value, social value, and psychological value. The sources of value are not equally important to all consumers. How important a value is, depends on the consumer and the purchase. Values should always be defined through the “eyes” of the consumer.

Functional Value: This type of value is what an offer does, it’s the solution an offer provides to the customer.

Monetary Value: This is where the function of the price paid is relative to an offerings perceived worth. This value invites a trade-off between other values and monetary costs.

Social Value: The extent to which owning a product or engaging in a service allows the consumer to connect with others.

Psychological Value: The extent to which a product allows consumers to express themselves or feel better.

Providing useful products and services for your customers can encourage sales, improve customer loyalty and grow your brand’s reputation. Regardless of your position within customer service, marketing, web design or more, there are many strategies you can employ to enhance customer value at your organization.

Creating value for customers means providing useful products and services that customers consider worthy of their time, energy and money. For customers to find value in a product or service, its perceived benefits need to outweigh its cost. Creating value means maximizing benefits within an acceptable price point.

Benefits and cost are the two key components of customer value. Benefits can include aspects like quality, popularity, accessibility, convenience and longevity. Increasing your benefits without increasing your cost can raise the value of your product or service for your customers.

Step 1:  Understand what drives value for your customers

Talk to them, survey them, and watch their actions and reactions. In short, capture data to understand what is important to your customers and what opportunities you have to help them.

After figuring this out, you need to separate the value-generating activities from the wasteful ones. There are 7 types of waste in Lean and they are categorized as necessary and pure. The former support the value adding activities while the latter can only damage your process.

Understanding and identifying the value that your company brings to your customers will help you keep great connections with them. This way, you will be also able to boost the profits that your business generates.

Step 2:  Understand your value proposition

The value customers receive is equal to the benefits of a product or service minus its costs.  What value does your product or service create for them? What does it cost them–in terms of price plus any ancillary costs of ownership or usage (e.g., how much of their time do they have to devote to buying or using your product or service?)

Step 3: Identify the customers and segments where are you can create more value relative to competitors

Different customers will have varying perceptions of your value relative to your competitors, based on geographic proximity, for example, or a product attribute that one segment may find particularly attractive.

Step 4:  Create a win-win price

Set a price that makes it clear that customers are receiving value but also maximizes your “take.” Satisfied customers that perceive a lot of value in your offering are usually willing to pay more, while unsatisfied customers will leave, even at a low price. Using “cost-plus” pricing (i.e., pricing at some fixed multiple of product costs) often results in giving away margin unnecessarily to some customers while losing incremental profits from others.

Step 5:  Focus investments on your most valuable customers

Disproportionately allocate your sales force, marketing dollars, and R&D investments toward the customers and segments that you can best serve and will provide the greatest value in return. Also, allocate your growth capital toward new products and solutions that serve your best customers or can attract more customers that are similar to your best customers.

The Quality option

Often the price and quality of a product align, certainly in the mind of the consumer, as the high price is often associated with high quality. But positioning a product based on its high quality or ‘luxury’ is different from positioning based on price. Often these brands do not communicate their price point, but instead high quality or prestige is the focal point of communication, to create a desire so customers want the product regardless of the price.

Note that luxury does not always mean better quality, but customers still believe it is better because of the reputation of the brand due to their long-term brand positioning strategies. For example, a $500,000 Rolls Royce car, the epitome of luxury, is likely to have a lower build quality than a $50,000 Hyundai.

Value option

Creation in marketing means that the company and client are happy with the value created from the product or service purchase. Also, anything that offers benefit is value, and different firms are the sources of different value.

The following is his list of how the marketer creates value:

• The marketer chooses prices that will create value in exchange.
• The marketer chooses the product features and services that will deliver value.
• The marketer chooses channels of distribution that create accessibility and convenience value.
• The marketer chooses messages that describe the value their offerings create.

The Pioneer

Market pioneering and competitive positioning strategy are fundamentally related. Positioning is a crucial strategic decision for pioneers or brands that compete with them because pioneers often dominate competition, sometimes for decades. Successful strategy design requires an understanding of how and why pioneers influence competition so greatly for so long.

A Narrow Product focus

Associating your brand/product with a specific use.

Conventional models of product positioning strategies center on catching the eye of consumers. While there is a wide range of options for brands to consider in product positioning, most can be broken down into one of three categories.

Differentiation: Sometimes, the uniqueness of a product can’t be duplicated, making it ideal for a differentiation strategy. An excellent example of a product easily differentiated is Barilla’s Pronto pasta. While the pasta aisle is competitive, Pronto offers a unique selling point in that it requires no draining. As such, this is the primary focal point that the brand highlights on its packaging to gain consumer attention.

Comparative: Comparative positioning strategies work by placing products right next to other brands to highlight their competitive edge. A typical example of this occurs when stores place a white label value brand next to a more expensive name brand product. Often, the label includes a “compare to X brand” statement to show the consumers that the products are similar, but the value brand offers a better price.

Segmentation: Sometimes, helping a product stand out requires focusing on multiple audiences with different needs, but with the same product. Consider a simple product like Bayer aspirin. The brand offers bottles of its tablets in the pharmacy aisle at the grocery store, but they also provide smaller, on-the-go packs for purchase at the convenience store. Through this, they target consumers buying bottles of medication for their households for use in the future, as well as travelers or individuals dealing with an immediate ache or pain they want to take care of right away.

Strategic positioning is focused on how an organization sets itself apart from the competition and delivers a benefit to target customers.

Strategic positioning is concerned with the way in which a business as a whole distinguishes itself in a valuable way from its competitors and delivers value to specific customer segments

Successful startups initially focus on how they plan to position themselves in the market. Strategic positioning refers to how powerful the brand is in the customers’ minds, what the company’s message is, and how the organization sees itself in the market.

Selling a great product or service isn’t enough to ensure a company’s success. Many times, inferior companies sell more products/services due to the way they have positioned themselves.

Startups have to create a unique positioning strategy that influences the customers’ minds to choose the organization’s product or service which can solve a problem.

Positioning influences the pricing, marketing, and sales strategy. To be successful, the strategy needs to make sense to different target groups of customers.

Unsuccessful positioning strategies focus on proving a company is better than the competition, rather than different.

The organization needs to tell a story about their unique brand and find the most effective ways to share that information with others. It’s important to maintain consistency and not deviate from the original story, as that is what initially gained customer loyalty in the first place.

Good positioning allows consumers to know why the organization’s product/service is preferable to the competition. In a growing market where consumer needs change every day, it’s essential to find a way to stand out.

Creating a branding and marketing strategy by utilizing the best messaging channels are part of employing this positioning strategy.

For example, a cosmetic company may buy a slot to run ads on television, employ a social media marketing strategy, and run ads in women’s magazines to convey a positioning message.

Researching and using the correct channels to market a product/service is the primary way to maintain a competitive edge and remind customers of who the organization is.

As a startup evolves and becomes more mainstream, it will have to reevaluate its positioning message. Staying in tune with the competition, customers, and the market will help an organization rework an outdated strategy.

While it’s helpful to reassess an older strategy to maintain a competitive edge, it’s important to maintain the same underlying theme regardless of evolving markets or circumstances.

Reworking an entire brand is akin to starting over once a business has already established itself as legitimate. It’s best to tweak and add on to a positioning strategy to remain competitive, rather than revamp the entire message.

There is a reason why customers put their trust in the organization in the first place. Don’t lose that trust by abandoning the original strategic positioning message completely.

Ensuring Brand Awareness Through Strategic Positioning

Without regularly reminding customers of who the business is and what they do, it’s impossible to find new clients and maintain the current ones.

Utilizing a positioning message as a tool to remind customers why they need to act is one of the more consistent requirements of running a business. With the right message and the marketing strategies to convey it, businesses can build brand awareness over time.

Loyal customers tend to recommend a known brand to friends and family. Before long, an organization’s brand is not just built through marketing efforts, but through word-of-mouth.

However, continuing to remind customers of the organization’s value is essential to maintain this brand awareness. This is particularly true in an evolving market with a growing list of competitors.

Strategic positioning therefore reflects the choices that you make with respect to two things:

1) The kind of value that your products and services will offer to target consumers (the products’ “Value Proposition”), and

2) How that value will be created differently from other companies (which is characterized through your business’s “Value Chain”).

Strategic positioning makes choices about how a business will “deliberately” protect core profits from industry forces and retain a profitable position in the market.  Based on our discussions about business strategy, there are only three ways to do that:

• By offering differentiated value, that is, through products and services that are both unique and valuable to target consumers (a “Differentiation Strategy”).
• By lowering prices well below competing alternatives (a “Price Leadership” strategy).
• Striking an effective combination of both differentiation and low prices.

Notice that we say “Lower prices” and not “Lower costs” since they are, obviously, different things.

While costs are the result of choices that a company makes in its Value Chain, price on the other hand is a “Decision” that comes out of a positioning strategy and is usually established based on the relative price of a set of competing solutions.

The challenge for executives when it comes to a business’s strategic positioning is in continually finding a “Profitable” but “Defensible” position in a marketplace, either through a differentiated offer, lower prices or a combination of both, where the company can maximize returns to shareholders for every dollar they invested in that business.

As a result of the dynamics and complexity of markets and competition, this market position (which classic strategists call a “Competitive Advantage”) becomes a bit of a moving target (a fast-moving one in some industries), making strategic positioning more like a “Process” to continually adjust the perception of your business’s products and services in the minds of your target customers.

The process to find and defend a profitable market position can be described in four different steps:

Market segmentation: Find effective ways to classify customers and slice the market into groups that share common characteristics that make them approachable through the same value networks.

Choose target markets: Based on your segmentation of the market and your value proposition research, select the segments that you are going to target within those markets.

Craft your market positioning strategy: Make decisions about how you will position your products with the selected target consumers, which can be done through product features and benefits, pricing, sales, distribution and promotion efforts.

Monitor and adjust: Once your strategy has been deployed, measure the traction you get with your target consumers and the performance of your marketing efforts, validating previous assumptions and adjusting your market positioning preferences accordingly as new information becomes available.

As the battle for customer loyalty intensifies, brands are the source of distinction that attracts attention, define offerings, build loyalty, and deliver an organization’s unique value proposition. In the age of the customer, developing a differentiated brand is a purposeful process where insight, intuition, and inspiration combine to help transform brands from ordinary to extraordinary.

Simply stated, a brand positioning strategy conveys how customers, prospects, and other important stakeholders perceive a company and its products/services. This relates to launching a new brand as well as repositioning an existing brand. Positioning brands in their chosen markets and categories, with the goal of becoming indispensable in customer’s lives, is often seen as a path from awareness to loyalty.

In marketing, a customer value proposition (CVP) consists of the sum total of benefits which a vendor promises a customer will receive in return for the customer’s associated payment (or other value-transfer).

Customer Value Management was started by Ray Kordupleski in the 1980s and discussed in his book, Mastering Customer Value Management. A customer value proposition is a business or marketing statement that describes why a customer should buy a product or use a service. It is specifically targeted towards potential customers rather than other constituent groups such as employees, partners or suppliers. Similar to the unique selling proposition, it is a clearly defined statement that is designed to convince customers that one particular product or service will add more value or better solve a problem than others in its competitive set.

Whether pursuing a rebranding strategy or seeking to position a new product launch, this strategic statement should be developed by combining “outside-in” and “inside-out” perspectives. The dual approach of outside-in and inside-out ensures the resulting strategy is compelling, differentiated, credible, and taps into a profound and contemporary need of the category within which the business operates.

Mark De Leon’s value proposition will provide convincing reasons why a customer should buy a product, and also differentiate your product from competitors. Gaining a customer’s attention and approval will help build sales faster and more profitably, as well as work to increase market share. Understanding customer needs is important because it helps promote the product. A brand is the perception of a product, service or company that is designed to stay in the minds of targeted consumers. Customers often use “Mental shortcuts” to make purchase decisions, meaning that they rely on brand familiarity to make faster decisions.

An Inside-Out Approach to Positioning

The inside-out approach is a corporate strategy that relies on the core competencies of the organization to drive change, product development, and innovation as opposed to external influences such as market, competition, and consumer preferences. The inner strengths and capabilities guide the belief that the company will produce a sustainable advantage.

Inside-out means to develop from the brand’s perspective and with insights generated around the brand, their business, and competitors. The approach facilitates an enthusiastic, brand-driven culture within the organization.

The assertion by inside-out strategists is that getting buy-in from employees leads to a more authentic and inherent process of communicating outward and the company achieves greater efficiencies and adapts more quickly to changing circumstances.

Although inside-out companies claim they do not ask customers for their opinions, successful companies (and their CEO’s) have a keen awareness of their customers, allowing them to combine their inside-out strategy with a deep understanding of their customers’ needs, challenges and lifestyles. With its power to get millions of people to stand in line for hours in the bitter cold just to buy a phone, Apple is an example of an inside-out mindset.

The Benefits ladder

The Benefits Ladder may be simple but it’s still a very effective tool for summarising how the basic product-level benefits and features of a brand ladder up to and align with the emotional benefits. By starting with the product and working your way up you can begin to piece all the different parts together, ensuring that they align and most importantly match the values from the customer’s point of view:

• Product: The product or service being sold
• Product features: The quality, details or function
• Product benefits: The implicit or explicit claims of superiority
• Customer benefit: The product benefit’s reward. How does it make the customer feel? What does it enable them to do?
• Emotional benefit: The emotional feeling that binds the brand and target audience via shared values and beliefs

The Outside-In Approach

The belief that customer value creation is the key to success guides the outside-in approach which aims to prototype and develop iteratively with the help of consumers. Perspective sometimes referred to as ‘voice of the customer’ is often obtained through market research. However, other more direct activities, such as social listening, can also provide this valuable strategic insight and represent the voice of the customer.

With an outside-in mindset (as opposed to inside-out) the key word is ‘need,’ not ‘product,’ and building value around the customer, and the customer’s wants and needs. Companies are immersed in the minds of their customers, looking for ways to increase demand. Often, the requirements they define haven’t been identified yet by the customers themselves. A sustainable growth strategy begins with understanding the difference between what you offer and what people need, which don’t always turn out to be the same.

Typically, an outside-in organization asks itself:

• Where are the available growth markets for our business?
• How can we tap into an opportunity that is available?
• What are the trends and how should we address them?
• How can we better serve the needs of the market?

It’s about discovering a brand’s authentic and unique motivations that make it connect with people in a way that competitors can’t. This provides what differentiates a brand and, most importantly, why consumers will relate to it. Over a decade later, Dove’s immensely successful brand campaign, Real Beauty, is still widely acclaimed by marketing and brand strategy consulting experts. Since 2004, the brand has been empowering women to feel confident in their skin, regardless of their age, shape, or color.

Defining why you exist independently from your product and how your reason for being is relevant for audiences both internal and external starts inside-out and is then complemented outside-in. Recently, brands began shifting from talking about themselves, their products and services (inside-out) to facilitating customer needs beyond their offerings (outside-in).

The combination of the outside-in and inside-out perspectives leads to competitive advantage. Whether inside-out or outside-in, having deep insights about the customer experience are crucial for innovation. Organizations who know their customers are better positioned to meet their needs. This leads to more satisfied customers and lowers costs to meet those needs.

The Elements of Value

What customers value in a product or service can often be hard to define as both emotional (e.g. wellness or nostalgia) and functional (e.g. reducing cost or making money) benefits are sometimes given equal importance by the customer.

Business infrastructure

A business infrastructure plan creates a road map that is used to start and run a company. This road map consists of a three part plan: daily operations, processes, and employees. Each component of the business infrastructure should be created and analyzed independently of the others. The plan should act as a stand-alone resource for the way the business is to grow and progress well into the future.

Provides:

• A solid foundation.
• A replicable platform.
• A model and a formula that makes each time you do something easier than the time before.
• Consistency in your delivery of customer value.
• Economies of scale.

Collaborator Networks

A collaborative network is a network consisting of a variety of entities (e.g. organizations and people) that are largely autonomous, geographically distributed, and heterogeneous in terms of their operating environment, culture, social capital and goals, but that collaborate to better achieve common or compatible goals, and whose interactions are supported by computer networks. The discipline of collaborative networks focuses on the structure, behavior, and evolving dynamics of networks of autonomous entities that collaborate to better achieve common or compatible goals. There are several manifestations of collaborative networks, e.g.:

• Virtual enterprise (VE).
• Virtual Organization (VO).
• Dynamic Virtual Organization.
• Extended Enterprise.
• VO Breeding environment (VBE).
• Professional virtual community (PVC).
• Business Ecosystem.
• Virtual manufacturing network

Human capital

Human capital is a concept used by human resource professionals to designate personal attributes considered useful in the production process. It encompasses employee knowledge, skills, know-how, good health, and education, to name a few. Companies can invest in human capital, for example, through education and training, enabling improved levels of quality and production.

The term human capital refers to the economic value of a worker’s experience and skills. Human capital includes assets like education, training, intelligence, skills, health, and other things employers value such as loyalty and punctuality. As such, it is an intangible asset or quality that isn’t (and can’t be) listed on a company’s balance sheet. Human capital is perceived to increase productivity and thus profitability. The more investment a company makes in its employees, the chances of its productivity and success becomes higher.

Intellectual property

Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. There are many types of intellectual property, and some countries recognize more than others. The most well-known types are copyrights, patents, trademarks, and trade secrets. The modern concept of intellectual property developed in England in the 17th and 18th centuries. The term “intellectual property” began to be used in the 19th century, though it was not until the late 20th century that intellectual property became commonplace in the majority of the world’s legal systems.

The main purpose of intellectual property law is to encourage the creation of a wide variety of intellectual goods. To achieve this, the law gives people and businesses property rights to the information and intellectual goods they create, usually for a limited period of time. This gives economic incentive for their creation, because it allows people to benefit from the information and intellectual goods they create, and allows them to protect their ideas and prevent copying. These economic incentives are expected to stimulate innovation and contribute to the technological progress of countries, which depends on the extent of protection granted to innovators.

The intangible nature of intellectual property presents difficulties when compared with traditional property like land or goods. Unlike traditional property, intellectual property is “Indivisible“, since an unlimited number of people can “Consume” an intellectual good without it being depleted. Additionally, investments in intellectual goods suffer from problems of appropriation: a landowner can surround their land with a robust fence and hire armed guards to protect it, but a producer of information or literature can usually do very little to stop their first buyer from replicating it and selling it at a lower price. Balancing rights so that they are strong enough to encourage the creation of intellectual goods but not so strong that they prevent the goods’ wide use is the primary focus of modern intellectual property law.

Strong Brands

A brand is strong when it condenses the peak performances of a company and makes them tangible over a long period of time, and credibly presents its uniqueness at all brand touchpoints. For instance, BMW conveys “Joy (of Driving)” in every interaction whether in the car itself, on the web site, or in the company’s own BMW museum.

Strong brands have clear brand core values, an unequivocal positioning, and a long-term brand strategy. Consistent brand management with the help of brand rules ensures that the brand strategy is consistently applied in operative business. This helps to prevent a brand from overstepping its credibility limits.

A brand strategy always has a content component and a style component that both have to be implemented so that the brand can always be clearly recognized by its brand messages and its brand style. In short: Strong brands give consumers a clear image of the brand and what it stands for.

Strong brands are therefore desirable and highly attractive. This has diverse positive effects on corporate success:

• The customer’s price sensitivity is substantially lower, so the brand strength is reflected in profitability and profit margin.
• They attract the right employees and ensure that the company has an excellent position in the crucial fight for the best talent.
• They are beacons for all relevant decisions. In ever more complex market environments, they provide logical orientation.

Benefit:

• Better customer recognition
• Higher customer loyalty
• More word of mouth
• Higher employee motivation
• Higher advertising effectiveness
• Higher applicant quality
• Lower price sensitivity

Established Customer base

The customer base is the group of customers who repeatedly purchase the goods or services of a business. These customers are a main source of revenue for a company. The customer base may be considered the business’s target market, where customer behaviors are well understood through market research or past experience. Relying on a customer base can make growth and innovation difficult.

Companies with a customer base consisting mainly of large companies may increase their customer base by pursuing small and mid-size companies.

As companies grow their customer base, and gain experience satisfying them, their customers grow accustomed to that business accomplishing a certain task for them. The company or product’s brand name may even correlate with the task the customer uses it for. Xerox, Kleenex, and Band-Aid are some extreme cases of brand-names being used as the generic name of the product itself. In fact, as long as customers are continually satisfied with their purchases, the act of going to that company’s brand to accomplish a specific task becomes habitual.

Repeat buyers and users are also useful for further reasons, as they are the source of “word of mouth” advertising. Studies have shown that customer satisfaction with a brand leads to more purchases, from both the same and new customers. A satisfied customer expresses their enjoyment in the product, or even shows a friend the product and has them try it out, and a dissatisfied customer may speak against a product or not mention it at all. Of course, the core consumer is the main spreader of the company’s brand name, and the more they use and like what they consume, the more those that surround them will gain interest and then potentially become customers themselves.

Synergistic offerings

The term synergistic is derived from synergy, which refers to the benefit that results from the merger of two agents who want to achieve something that neither of them would be able to achieve on their own. The term is mostly used in mergers and acquisitions (M&A), where two companies merge to form one company that can generate more revenues or streamline the two companies’ operations and save on costs.

Marketing synergy

Marketing synergy refers to the marketing benefits that two parties in an M&A transaction may enjoy when promoting their products and services. These synergies include information campaigns, marketing tools, research and development, as well as marketing personnel.

Revenue synergy

When two companies merge, they often become synergistic by virtue of generating more revenues than the two independent companies could produce on their own. The merged company may gain access to more products and services to sell through an extensive distribution network.

Access to Scarce resources and Capital

The resources that we value time, money, labour, Tools, Land, and Raw materials exist in limited supply. There are simply never enough resources to meet all our needs and desires. This condition is known as scarcity.

Scarcity refers to a basic economics problem the gap between limited resources and theoretically limitless wants. This situation requires people to make decisions about how to allocate resources efficiently, in order to satisfy basic needs and as many additional wants as possible. Any resource that has a non-zero cost to consume is scarce to some degree, but what matters in practice is relative scarcity. Scarcity is also referred to as “paucity.”

Natural resources can fall outside the realm of scarcity for two reasons. Anything available in practically infinity supply that can be consumed at zero cost or trade-off of other goods is not scarce. Alternatively, if consumers are indifferent to a resource and do not have any desire to consume it, or are unaware of it or its potential use entirely, then it is not scarce even if the total amount in existence is clearly limited. However, even resources take for granted as infinitely abundant, and which are free in dollar terms, can become scarce in some sense.

Take air, for example. From an individual’s perspective, breathing is completely free. Yet there are a number of costs associated with the activity. It requires breathable air, which has become increasingly difficult to take for granted since the Industrial Revolution. In a number of cities today, poor air quality has been associated with high rates of disease and death. In order to avoid these costly affairs and assure that citizens can breathe safely, governments or utilities must invest in methods of power generation that do not create harmful emissions. These may be more expensive than dirtier methods, but even if they are not, they require massive capital expenditures. These costs fall on the citizens in one way or another. Breathing freely, in other words, is not free.