Category: University of Mumbai BMS Notes

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.

Targeting strategy is a strategy for selection of potential customers the company/ organization can sell its products/services to. Targeting is done to a specific target group as there are various segments in any market. Most firms do not select all the segments in a market to operate and choose one or few of the identified segments through targeting. As mentioned earlier, targeting is this process of selection made on the basis of attractiveness of the segment.

STP marketing strategy is an important way of doing business, where its stands for market segmentation, targeting and positioning. Targeting is the processes of identifying the important target market and target audience which a company wants to sell its products to. Any product or service would not be of utility of every person. And hence companies must be focused on whom they want to target. A good targeting strategy helps a company have focused sales growth, enhanced promotional strategy, build strong customer loyalty etc. Hence, targeting strategy is the backbone for any marketing firm.

Target Attractiveness

Sales Criterion: Using this method, the business allocates its resources to target markets based on historical sales patterns. This method is especially useful when used in conjunction with sales conversion rates. This method is used in retail. A disadvantage of the method is that it assumes past sales will remain constant and fails to account for incremental market potential.

Distance Criterion: Under this approach, the business attempts to define the primary geographic catchment area for the business by identifying people who live within a predetermined distance of the business. For a retailer or service-provider the distance might be around 5 km; for domestic tourist destination, the distance might be 300km. This method is used extensively in retailing.

Interest Survey Methods: This method is used to identify new business potential. Primary research, typically in the form of surveys, identifies people who have not purchased a product or service, but have positive attitudes and exhibit some interest in making a purchase in the short-term. Although this method overcomes some of the disadvantages of other methods, it is expensive even when syndicated research is used.

Chain ratio and indexing methods: This method is used in marketing of branded goods and retail. It involves ranking alternative market segments based on current indices. Widely used indices are the Category Index and Brand Index. The Category Index measures overall patterns within the product category while the Brand Index calculates a given brand’s performance within the category. By dividing the Category Index by the Brand Index, a measure of market potential can be obtained.

Target Compatibility

Consumer compatibility is the overall metric that measures the value consumers place on your brand. It shows how effective your consumer-brand relationship is. This is not a new concept; for years loyalty programs have helped measure consumer compatibility.

Brand Loyalty

As you most likely know, brand loyalty is essential to measure. While you probably already measure the loyalty of consumers to your brand through loyalty programs, you might not know that you can use brand loyalty for competitive intelligence as well.

Through location data, you can measure how loyal consumers are to your competitive set versus your own brand. Then, you can identify the least loyal competitor consumers or the most likely to switch loyalties and target them for competitive conquesting.

Brand Affinity

Finally, it’s important to consider the complete offline consumer journey in your consumer compatibility analysis. In addition to understanding how consumers are interacting with your own brand, it can be helpful to know where else your consumers shop and what their offline interests are.

If you see that your consumers are avid Dunkin’ fans and often visit the Dunkin’ near your brand location, you could develop an ad campaign with messaging that plays on that shared interest. Brand affinity can reveal opportunities for co-marketing like this that you might not have considered before.

Visit Frequency and Time of Visit

In addition to dwell time, you need to evaluate how frequently consumers are visiting your stores. Are they one-time shoppers or are they returning to your stores time and time again?

You can gain insights like these through location data, which reveals not only how often consumers visit your stores but also which times are most popular for visits. This information can inform marketing activations and promotions for your brand, especially when you pair it with demographic attributes of your consumers.

Once target segments are identified, the marketing manager selects a targeting strategy that will be the best fit for reaching them. Targeted marketing enables the marketing and sales teams to customize their message to the targeted groups of consumers in a focused manner. The targeting strategy is where the marketing mix comes together to create the right offer and marketing approach for each target segment.

One for all strategy

Any one size fits all marketing strategies will not be able to make sure that all of these people belonging to different demography are targeted. Hence, the ideal marketing campaigns are those which are tailored to target specific groups of people.

One size fits all makes sense as a lean startup option because you can funnel limited resources toward a specific product or service instead of spreading them too thin. By not offering customization, you only need to have one manufacturing line set up, and fewer variables to customize means fewer opportunities to mess up an order. This allows you to feel comfortable with the process before you expand your offerings.

In terms of services, following a one-size-fits-all approach can help you create stable, flat-rate pricing and develop a service routine. For example, if you offer manicures, it’s easier to perform the same process for the same price on all nails rather than giving a custom quote for people with long nails, short nails, missing fingers, etc.

Cons of One-Size-Fits-All Products and Services

You may not want to offer a one-size-fits-all product or service if each customer in your industry has widely different expectations. People do not want to pay for what they don’t need, and you run the risk of making customers feel overcharged if you only offer one type of service package or an overly customized product.

In addition, a lack of customization can leave you at a competitive disadvantage if other businesses in your niche have moved away from the one-size-fits-all option. You’ll end up leaving customers on the table who know they can get what they want from someone else.

A one-size-fits-all approach does not allow you to use the “Good, better, best” pricing strategy to upsell more robust products and services. Diversifying your products and services also opens you up to additional revenue streams.

Customizing Your Services or Products

Startups usually follow a one-size-fits-all approach on a temporary basis until the business has enough financial stability to offer customization. For example, you can produce a limited run of products in different colors to discover which ones resonate best with your audience before scaling up production. In terms of services, consider developing upgraded add-on services that are optional but recommended for a full experience. Creating “bronze,” “silver” and “gold” service packages can also allow customers to choose what best fits their needs.

If you’re stumped about how to proceed, do a little competitor research to see how they have organized their services or customized their products. Read public reviews to find out if their customers are happy with those options or wishing for something different.

One for each strategy

One-to-one marketing (also sometimes written as 1:1 marketing) is a strategy that relies on getting to know the individual choices made by a customer, and then tailoring marketing outreach to each customer differently based on those choices. It’s an approach that is not used to get the customer’s attention, but to keep their attention and their business.

Customization: the company doesn’t learn the preferences of each customer, but instead gives the individual customer the ability to customize the product to their own tastes. A good example of this strategy is a computer retailer that offers a basic platform of a laptop and then gives the customer the ability to tailor many of the laptop’s features (processor, memory storage, loaded programs) to their own tastes and needs. Many online news websites use the same strategy by allowing visitors to pick and choose the types of news stories (international, political, financial, etc.) they want shown most prominently on the site.

Personalization: the company learns the personal preferences and tastes of each consumer and customizes its marketing plan to them. Amazon.com is known for perhaps the most successful 1:1 personalization strategy, recommending products based on past purchases and interests.

Marketing Strategies

“Suggestions for You” Marketing: Online marketing companies like Amazon and Netflix have become masters at collecting, storing, and interpreting customers’ click history on their sites. They take that information and create a specialized marketing plan just for each customer, with recommendations on the next book to read or the next movie to watch.

The Personal Touch: Few things make a bigger impression on a consumer than personal attention and appreciation. The best coffee shop baristas know what Joe’s order is the minute he walks through the door, and that keeps him coming back. Investment bankers are expert 1:1 marketer. They get to know their clients’ personalities and investment preferences and priorities, as well as what level of risks they’re willing to take.

Preferred-Customer Marketing: Many retailers now offer a no-cost “Club membership” to consumers. Club membership gives the customer incentives in the form of lower prices or frequent-purchase rewards. In order to earn those incentives, the customer must check-in with their membership ID. This allows the company to track all items purchased during each visit. Once retailers know each customer’s shopping patterns and preferences that a particular club member buys a lot of cereal and prefers Cheerios, for example they can send out personalized coupon mailers to that member with savings on Cheerios and other preferred items.

While identifying your target groups, you must, first and foremost have a clear definition of what your product/service is and how you are planning to advertise it in the market. If its a product, understand its core value and why it makes a differentiation when compared to its competitors. If you are offering a service, identify how to touch-base with your audience groups and solve their pain points.

The people who you think is the most beneficial for your product/service Who are the decision makers for your product/service? Are you targeting VP’s, CMO’s, managers or individuals? Have a clear picture of who you want to reach out for your service.

How can you solve their pain-points Your product/service has to have an impact on these audience groups. Identify with a competitive analysis what issues these audiences might be facing and how you can provide a value proposition. 

Geographical locations Segment your audience groups based on their geographical locations. This helps you identify independent pain points and target a cost-effective solution to these groups.

Size of organization and industry and seniority levels of your ideal profile By identifying the ideal size of your target organization, you can make an informed decision that helps you reach out to the right person at the right time with a right value proposition.

What’s your differentiator All organizations, big or small look for something worthwhile partnering with you? This means, your differentiator should be strong, but not too overwhelming. By segmenting your audience groups according to their location, size and seniority levels of targets, you actually provide a stronger value proposition to these groups.

Factors To Help You Define Your Target Market

Determine what problem your company solves

People don’t buy products. They buy solutions to their problems. That’s why so many marketing professionals recommend highlighting the benefits of your product, not its features. Instead of emphasizing how good your product or service is, you should show your potential customers how you will make their lives (or their business profits) better.

Develop a profile of your most profitable current customers

Who are your current customers? Why do they buy from you?

Think about the characteristics and interests they have in common; which ones bring in the most business? Once you have a good idea of who buys your products now, you can expand upon it and figure out who else could benefit from what you’re offering.

Monitor and continuously learn from the competition

Check out who your competitors are targeting, and see if you can glean some insights from that.

Don’t go after the exact same market (the goal is to stand out, after all!), but see if what they are doing can give you some additional ideas about niche markets to target.

Analyze your product or service

We recommend making a list of features your product or service has and reframing them as benefits.

Who would be after these benefits? Whose problems are you really solving? Who really needs the solution or solutions your business offers?

Choose specific demographics to target

Demographics are used to identify population segments by specific characteristics, like:

• Age
• Location
• Gender
• Income level
• Education level
• Marital status
• Occupation
• Ethnic background, etc.

Using demographics can be a great starting point for small and large business alike. They can help you figure out who is likely to actually buy your product or service and can aid in putting together the building blocks of a great marketing plan.

Consider the Psycho-Graphics of your target market

Psychographics are some of the more personal characteristics of your target, including:

• Personality
• Attitudes
• Values
• Interests/hobbies
• Lifestyles
• Behavior

They will help you determine how your product fits into your target market’s lifestyle:

• How (and when) do they use your product?
• What features are the most appealing to them? Why?
• What types of media does your target turn for information and entertainment? Do they read newspapers, search for information online, attend particular events?

Considering these factors will allow you to build a more focused marketing plan that works with the specific behaviors, interests and lifestyle choices of your target market.

Evaluate your marketing investment over time

Sometimes we all need to take a step back and see if the market we have zeroed in on is actually the one that will bring us the ROI we are looking for.

Before you jump into creating Facebook ads and calling up trade shows, consider these questions:

• Are there enough people who fit my chosen criteria?
• Will my target audience see the need for my product or service?
• Can my target audience actually afford what I’m offering? How can I do anything to help them afford it (like offering payment plans)?
• Will I actually reach my target audience with my message? If it’s not as easy as launching a Facebook ad campaign, am I prepared to deal with the difficulties that arise?
• Do I really understand what drives my target audience to make decisions? What actually makes them press the “Buy” button?

1. Develop a true vision.

Vision is an abstract word that means different things to different people. Classically, a vision or vision statement is a snapshot into the future. It should include aspirations of what type of company you want to be, and, unlike a mission statement, articulates what success looks like in clear terms (customers, markets, volume, etc.).

2. Define Competitive advantage.

At the essence of strategy is identifying how a company can deliver unique value to its customers. In many sectors of the economy, companies are stuck in a sea of sameness. A well-thought-out business strategy should consider how a company can create space from competition in its service offering, pricing model, delivery system and more.

3. Define your targets.

One of the most significant barriers to growth is poor targeting. Absent of very specific targets, companies suffer from unclear messaging and thus misalignment between sales and marketing. Defining niches and specialties allows companies to focus resources (of course, some companies are generalists by design).

Clear target markets give a company the ability to create an integrated sales and marketing approach, where marketing enables sales productivity. Sales and marketing plans are executed more effectively when targets are tight.

4. Focus on systematic growth.

As one of our Vistage member clients says, “A thriving company is a growing company.” It is only through growth that companies can afford to invest in things like technology, the best people and new equipment. The strategic plan should identify in which segments a company will grow and in what proportion, so that the product mix yields a specific net margin result.

Only after coming to such conclusions could a company know how much it can afford in terms of capex, overhead expenses and so on.

5. Make fact-based decisions.

Strategy is a garbage in, garbage out exercise. Executives often complain about a lack of good data, but we consistently find information that is useful in the formation of strategy.

We once worked with a Vistage member who was trying to quantify the value of various segments served. By accessing the public records of a nearby port, we were able to quantify actual shipments of merchandise by potential customers.

6. Think long term.

In the face of constant change, planning horizons are shorter than they used to be. However, only thinking quarter to quarter is a trap that may rob companies of their ability to see around the bend. Best-in-class companies create processes designed to treat strategy as an annual cycle rather than a one-time, static event.

7. But, be nimble.

Companies can think long term and still be nimble. For example, a critical component of strategy is an external forces analysis. Companies should be evaluating long-term external forces, and adapting based on new information (meeting regularly-perhaps quarterly) to pivot.

Jeff Bezos of Amazon holds a strategy meeting every Tuesday to keep it front and center with his management team.

8. Be inclusive.

To be nimble, companies are including different people in their strategy than in the past. At a time when companies are hiring more millennial employees, there is greater transparency. While I am never one to advocate that companies open their books (as that is a personal decision for the entrepreneur), there is certainly movement toward more inclusion and transparency.

Deciding who to include in strategy formation is a critical selection. We recommend business owners include people they can trust and that can think strategically.

9. Invest time in pre-work.

If you want your managers to take strategy seriously, make them conduct research and prepare relevant information in advance of your strategy meetings.

10. Measure your results and execute excellently.

Every strategy should be actionable. Companies that are best-in-class:

• Have a strategic action plan that they track often (usually monthly).
• Promote common ownership of the plan across executives and departments.
• Utilize key performance indicators (KPIs) that are predictive and align directly with the strategic plan.
• Have cascading goals that reach every department and resonate with employees so they understand how their role contributes to the greater good.
• Set up their corporate calendar to promote productive meetings, and establish a performance management cycle that supports cascading goals and objectives to every employee.
• Rinse and repeat their strategy cycle every year.

Top-down business model generation

During Business Process Management trainings, people often ask me about the best modeling technique: How to model a process model? Where do I begin? Top-down or bottom-up process? Questions that many of you have asked yourselves when beginning to design a process model. In this blog I would like to take you along with me to the world of top-down or bottom-up modeling. Let me start by clarifying some frequently used terms. Then, I will share several personal experiences and my preferred method of working.

Before elaborating on the complete process model in terms of work processes and process steps, I want to mention a couple of items the process designer should pay close attention to.

First, the designer should always determine what the aim of the process is, and which customer the process will be targeting. We determine the modeling goal and ask ourselves: Why are we making this process model? And Who is the customer?

Second, determine the process scope. Where does the process start and end? The start is the input of the process and is often called the ‘start trigger’. The end of the process is the output, or the result, and is referred to as the ‘end trigger’.

Next, the designer should determine which enablers the process has. The enablers are the actors that works with and in the process. For example roles or systems.

Finally, should any preconditions applicable to the process be taken into account? Keep in mind legislation or internal guidelines. The process model should adhere to each of these preconditions or guides.

How to start modeling

After having looked into the items above, the process model can be further worked out. We can distinguishes two modeling methods to design a model. The first modeling method is top-down, where we work from work process to process steps. The second modeling method is bottom-up, where we work from the process steps “upwards” by clustering the step in work processes. Both methods are describing how to design a process model.

Top-down process modeling

The top down method is often used by process designers who need a total and broad overview of the process model. In complex organizations this method will reduce the complexity of the process. The top-down modeling method we first defining the work process (number 2 in de figure top-down method) of the process model after having modeled the start and end-trigger (number 1 in the figure top-down method). As soon as we have modeled the highest level of the model, we can begin modeling a level below that. Each of the work processes in the different process steps is being modeled according to the related declaration and data carriers (number 3 in the figure top-down method). The other work processes will be developed in a similar manner. Next, we will determine which process steps need to be developed into a work instruction level. Finally, each process step will be assigned its role and possible system. As you can tell with this type of modeling, we start from the top with the work process and slowly work our way downwards towards the bottom level. To design with the top-down method we make a stratification within the model. In this way the process designer is able to structure the process model.

Strategy

Top-down organizations don’t involve subordinates in planning. Instead, the owner generates the company vision, mission, strategic goals and plans and then communicates these to the ranks below. The front line translates goals into daily action to achieve the desired results. It’s important for owners to remember that a strategic course cannot be chosen properly without a grounding in the company’s accumulated experience; mining the first-hand knowledge of subordinates helps ensure wise goals and plans. This bottom-up context in making a budget plan, for instance, helps an owner incorporate practical information that could have been overlooked.

Justification

The top-down approach unifies a company behind one purpose, direction, command and standard, dictated from above and spread throughout the organization. This offers several advantages. It allows a business to reliably give customers the same experience or product. Standardized products and services can be rolled out on a grand scale and more cheaply than non-standardized goods, and standardization facilitates quality control. Unity of command, meanwhile, allows a company to avoid confusion in a crisis. With its clear lines of authority, the top-down approach encourages obedience.

Structure

The company’s organizational structure assembles employees into departments to facilitate work and resource sharing. Choices lead to organizational characteristics such as ordered or creative. Owners usually establish a formal structure when employee ranks have grown enough to demand organization. Based on a strong management hierarchy, the structure that best matches the top-down approach is the functional organizational structure. It segregates employees by function all the accountants and their tools work in one department, for instance. In the functional structure, departments each have a manager who is supervised, all the way up the ladder to the owner.

Pitfalls

By emphasizing management, the top-down approach de-emphasizes employees, who become passive. Without control, they have little room to show initiative or creativity. Because approvals must climb the chain of command, top-down businesses respond slowly to market challenges. In an unstable or dynamic environment, the top-down approach cannot stay apace with nimble rivals based on teams and employee empowerment.

Bottom-up business model generation

The bottom-up method is used by process designers that design a process model throughout their substantive knowledge. A process model can also be modeled according to the bottom-up method, by first defining each of the process steps in the model. Beginning with the start-trigger (number 1 in the figure bottom-up method), the designer will develop each of the process steps until the end-trigger is reached (number 2 in the figure bottom-up method). The process steps are further developed in a declaration and are saved on the relevant data carriers. Once each of the process steps between start and end-trigger have been completely developed we can begin introducing a structure within the model. We begin by grouping the process steps, which will further along again be grouped in a work process (number 3 in the figure bottom-up method). This modeling method is working from the bottom to upwards, starting with the grouping of the process steps and only then introducing a particular structure (grouping of the process steps into work processes at the highest level).

The term business model refers to a company’s plan for making a profit. It identifies the products or services the business plans to sell, its identified target market, and any anticipated expenses. Business models are important for both new and established businesses. They help new, developing companies attract investment, recruit talent, and motivate management and staff. Established businesses should regularly update their business plans or they’ll fail to anticipate trends and challenges ahead. Business plans help investors evaluate companies that interest them.

A business model describes how an organization creates, delivers, and captures value, in economic, social, cultural or other contexts. The process of business model construction and modification is also called business model innovation and forms a part of business strategy.

In theory and practice, the term business model is used for a broad range of informal and formal descriptions to represent core aspects of an organization or business, including purpose, business process, target customers, offerings, strategies, infrastructure, organizational structures, sourcing, trading practices, and operational processes and policies including culture.

A business model is a high-level plan for profitably operating a business in a specific marketplace. A primary component of the business model is the value proposition. This is a description of the goods or services that a company offers and why they are desirable to customers or clients, ideally stated in a way that differentiates the product or service from its competitors.

A new enterprise’s business model should also cover projected startup costs and financing sources, the target customer base for the business, marketing strategy, a review of the competition, and projections of revenues and expenses. The plan may also define opportunities in which the business can partner with other established companies. For example, the business model for an advertising business may identify benefits from an arrangement for referrals to and from a printing company.

Successful businesses have business models that allow them to fulfill client needs at a competitive price and a sustainable cost. Over time, many businesses revise their business models from time to time to reflect changing business environments and market demands.

When evaluating a company as a possible investment, the investor should find out exactly how it makes its money. This means looking through the company’s business model. Admittedly, the business model may not tell you everything about a company’s prospects. But the investor who understands the business model can make better sense of the financial data.

Strategic Market Planning

Strategic Market Planning is an ongoing process through which the company creates marketing strategies and plans its implementations in the target market. The process taken into account the current position of the company, helps in identifying the promotional opportunities & then evaluating these opportunities. Target market is identified through comprehensive research.

Marketing is a complicated process and mostly cannot be planned in short period of time. The strategic market planning takes into account long term and short-term view of the market and considers various parameters to plan according to the target market.

Strategic Market Planning Stages

The strategic market planning has three stages:

1. Segmentation of the market and customers
2. Profiling of the market segments
3. Development of the actual marketing strategy

The marketing mix refers to the set of actions, or tactics, that a company uses to promote its brand or product in the market. The 4Ps make up a typical marketing mix; Price, Product, Promotion and Place. However, nowadays, the marketing mix increasingly includes several other Ps like Packaging, Positioning, People and even Politics as vital mix elements.

Product

Product refers to anything that’s being sold; A physical product, service or experience.

No matter how you position yourself as a brand, your product or service is always going to be at the centre of your strategy and therefore it will influence every aspect of the marketing mix. When you think of your product, consider factors such as its quality, specific features, packaging and the problem that it will solve for your customers.

Service

A service business is one in which the perceived value of the offering to the buyer is determined largely by the services provided to him than the products offered. This includes the business of all intangible services delivered to the customer.

Some of the tangible services where both the goods and services are provided to the customer, like restaurants and supermarkets, also come under the purview of the services marketing.

‘A service is any activity or benefit that one party can offer to another, which is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product.’ :Kotler, Armstrong, Saunders and Wong

‘Services are economic activities that create value and provide benefits for customers at specific times and places as a result of bringing about a desired change in or on behalf of   the recipient of the service.’ :Christopher Lovelock

Brand

The term brand refers to a business and marketing concept that helps people identify a particular company, product, or individual. Brands are intangible, which means you can’t actually touch or see them. As such, they help shape people’s perceptions of companies, their products, or individuals. Brands commonly use identifying markers to help create brand identities within the marketplace. They provide enormous value to the company or individual, giving them a competitive edge over others in the same industry. As such, many entities seek legal protection for their brands by obtaining trademarks.

People often confuse logos, slogans, or other recognizable marks owned by companies with their brands. While these terms are often used interchangeably, they are distinct. The former are marketing tools that companies often use to promote and market their products and services. When used together, these tools create a brand identity. Successful marketing can help keep a company’s brand front and center in people’s minds. This can spell the difference between someone choosing your brand over your competitor’s.

A brand is considered to be one of the most valuable and important assets for a company. In fact, many companies are often referred to by their brand, which means they are often inseparable, becoming one and the same.4 Coca-Cola is a great example, where the popular soft drink became synonymous with the company itself. This means it carries a tremendous monetary value, affecting both the bottom line and, for public companies, shareholder value

Price

the habit of continually examining and reexamining the prices of the products and services you sell to make sure they’re still appropriate to the realities of the current market. Sometimes you need to lower your prices. At other times, it may be appropriate to raise your prices. Many companies have found that the profitability of certain products or services doesn’t justify the amount of effort and resources that go into producing them. By raising their prices, they may lose a percentage of their customers, but the remaining percentage generates a profit on every sale. Could this be appropriate for you?

Incentives

The words ‘loyalty’ and ‘incentive’ are often used interchangeably. However, an incentive program is not quite the same thing as a loyalty program.

A customer loyalty program is designed to reward existing users for their transactions and give them a compelling reason not to switch to competing brands.

On the other hand, consumer incentive programs focus on delivering sales growth when your customer achieves a target by rewarding them.

Such programs include gift cards and coupons, just like loyalty programs. Still, they may also offer more valuable rewards like merchandise or travel vouchers to further appeal to buyers and win their emotional attachment.

Communication

Marketing Communication can be defined as the methodologies and tactics adopted by the companies to convey the messages in a unique and creative manner to their existing and prospective customers about their offerings of products and services. The messaging communication is either direct or indirect in nature with an intention to persuade the customers to indulge in the purchase of the products and services.

The various channels and platforms of marketing communication include Google promotions, print advertisements, television commercials, social media marketing, PR exercises, blogging, content marketing, and participation in trade fairs and exhibitions amongst others.

Marketing communication is made of two terms marketing and communication. Before we learn about what marketing communication is, let us first learn about marketing and communication separately. Marketing consists of activities which a company takes to increase the sales of the products.

Distribution

Distribution (or place) is one of the four elements of the marketing mix. Distribution is the process of making a product or service available for the consumer or business user who needs it. This can be done directly by the producer or service provider or using indirect channels with distributors or intermediaries. The other three elements of the marketing mix are product, pricing, and promotion.

Decisions about distribution need to be taken in line with a company’s overall strategic vision and mission. Developing a coherent distribution plan is a central component of strategic planning. At the strategic level, there are three broad approaches to distribution, namely mass, selective and exclusive distribution. The number and type of intermediaries selected largely depend on the strategic approach. The overall distribution channel should add value to the consumer.

There are three approaches to Distribution:

Mass distribution (also known as an intensive distribution): When products are destined for a mass market, the marketer will seek out intermediaries that appeal to a broad market base. For example, snack foods and drinks are sold via a wide variety of outlets including supermarkets, convenience stores, vending machines, cafeterias and others. The choice of distribution outlet is skewed towards those that can deliver mass markets in a cost efficient manner.

Selective distribution: A manufacturer may choose to restrict the number of outlets handling a product. For example, a manufacturer of premium electrical goods may choose to deal with department stores and independent outlets that can provide added value service level required to support the product. Dr. Scholl orthopedic sandals, for example, only sell their product through pharmacies because this type of intermediary supports the desired therapeutic positioning of the product. Some of the prestige brands of cosmetics and skincare, such as Estee Lauder, Jurlique and Clinique, insist that sales staff are trained to use the product range. The manufacturer will only allow trained clinicians to sell their products.

Exclusive distribution: In an exclusive distribution approach, a manufacturer chooses to deal with one intermediary or one type of intermediary. The advantage of an exclusive approach is that the manufacturer retains greater control over the distribution process. In exclusive arrangements, the distributor is expected to work closely with the manufacturer and add value to the product through service level, after sales care or client support services. Another definition of exclusive arrangement is an agreement between a supplier and a retailer granting the retailer exclusive rights within a specific geographic area to carry the supplier’s product.

The Purpose of Strategic Planning

Strategic planning is designed to provide an organization, its divisions, departments or even individual players with a game plan or road map to achieve specific goals and objectives. Strategic planning identifies internal and external effects and opportunities to consider in the creation of strategies and tactics. From a marketing standpoint, strategic planning might help to identify new market opportunities as well as new competitive threats.

The Planning Process

A number of steps are involved in any strategic planning process, including a strategic marketing planning process. These steps include identifying the overall planning goal, selecting team participants and gathering data related to the internal and external environment.

They can include conducting a SWOT (strengths, weaknesses, opportunities and threats) analysis, developing specific objectives, creating strategies and tactics, and designing a measurement and reporting process. In many organizations, the overall strategic plan provides direction for the creation of sub-plans, including a strategic marketing plan.

A marketing plan includes:

• An introduction with in depth description of long term aims and objectives.

Introduce the business, brand and product with the objectives to be achieved in the long run

• Marketing summary

Sum the marketing strategies and overview into a summary.

• Market landscape

Describe the targeted market and industry

• SWOT Analysis

Explore your strengths, weaknesses, opportunities and threats and keep a record of analysis for future reference.

• Specific aims & objectives

Highlight specific and short term aims and objectives

• Brand policy & plan

Aims and objectives related to building brand identity and strategy

• Promotional plan

Aims and objectives for overall promotional campaigns

• Engagements, time limits and financial plans

Defined actions, deadlines to carry out actions to accomplish the objectives and the budget necessary for implementing the actions.

Goals, Objectives, Strategies and Tactics

The components of a strategic marketing plan include goals, objectives, strategies and tactics, according to Opportunity Marketing.com. Goals are broad and provide general direction in terms of what the marketing organization would like to achieve, for instance an increased market share.

Objectives are tied to goals and provide more specific, measurable outcomes; for example, increase market share in a specific geographic area for a specific product, by a certain amount or by a specific date. Strategies and tactics indicate how goals and objectives will be met.

Strategies are broad: for instance, implement a social media strategy. Tactics are more specific and indicate the individual tasks to achieve the strategies for instance, set up a Twitter account or establish a YouTube channel.

The Important Role of Measurement

It is not enough to strategize a plan must include some form of measurement and a process for monitoring and reviewing results. An overall strategic plan might outline broad objectives for marketing; the marketing plan would detail more specific objectives for the marketing department to monitor and report on.

The results achieved whether they fall short or exceed expectations provide input used to consider changes or adjustments in the plan. Ongoing measurement and reporting can help to ensure the strategic plan continues to achieve measurable results.

Using digital analytical tools, such as those that come free with most websites, help businesses track where potential customers are coming from and what they’re searching for. Administering and analyzing sales reports and customer surveys also help manager learn what they are doing right and wrong.

Marketing Strategy

Sometimes the terms are used interchangeably, but they actually mean two different things.

Marketing Strategy: Shaped by your business strategy, your marketing strategy should explain the problem and how you will overcome it. It’s the offering you deliver, how you will deliver it, and why your marketing efforts will help you achieve your company’s mission and strategic goals. Once you have your strategy, only then will you be able to develop an effective marketing plan.

Marketing Plan: Driven by your marketing strategy, your marketing plan is the execution. It’s the roadmap of marketing efforts that help you achieve your marketing goals. Your plan should include detailed campaigns of what you will do, where you will do it, what they will cost, how and when you will implement them, and how you will track success.

If you have your marketing strategy, are your plans working to meet those goals? If not, this may be the reason why you’re not seeing your desired results.

The difference between marketing strategy and marketing plan comes down to purpose and application.

Marketing strategy is driven by your business strategy: What do you want? Where you will play? How you will win? A marketing plan includes goal-driven activities and tactics to help you achieve the strategy.

Value-creation and value-delivery is the main task of marketing. Marketing in its entirety is a value “Creating and Value-Delivering Process. The whole bunch of tasks involved in marketing, serve the purpose of value delivery. They actually form a sequence leading to value delivery.

Marketing planning, buyer analysis, market segmentation and targeting are concerned with value selection. Product development, manufacturing, service planning, pricing, distribution and servicing, are concerned with value creation & value delivery. Personal selling, advertising, publicity and sales promotion are concerned with value communication. Activities like market research and market control assess the effectiveness of the value delivery process, the level of satisfaction the customer has actually received and how it compares with the firm’s intention as well as with other competing offers for the purpose of enhancing value.

Ingraining an ‘Organizational Capability’ for innovation in creation of value is indispensable while competing in global markets. The basic questions underlying value creation are: who, which segments to serve (or not serve); what product or service to globalise; how to serve them through appropriate supply chains, channels and market-based assets, or organisational capabilities; and finally where (which geographical markets) to serve. Once firms are clear on the value proposition, they may delve on any of the below suitable strategies in isolation of other strategies or a combination thereof. These strategies are generic and not prescriptive. They are, however, routinely observed and often implemented by resource-endowed firms. Taking the automobile industry as an example, Henry Ford’s focus on productivity led to a business model where the competitive advantage of lower costs and prices resulted in greater market share and, subsequently, even greater economies of scale.

But, these advantages dissipated over time as other manufacturers adopted assembly lines and like Alfred Sloan, the founder of General Motors, the automotive market competition from cost/price minimisation to differentiation and branding. It was no longer enough to have any car as long as it was a black Model T Ford. Customers could start with a Chevrolet, get an Oldsmobile as families grew and income increased, migrate further to a stylish Buick, and finally to a Cadillac when one foot was in the grave. This use of differentiation and branding allowed GM to capture higher prices and margins as customers moved through their lifecycle but collapsed decades later when in the name of efficiency and cost management GM used the same chassis (platform) across Chevy, Olds and Buicks. In effect their new business model failed to understand what made GM great in the first place. European companies such as BMW and Daimler-Benz, not having the same scale as the US market, relied on product performance and premium pricing. The Japanese, who were late entrants in the global market, focused on longevity (reliability and quality) to deliver value and eventually solutions such as service guarantees and extended warranties to enhance customer switching costs and loyalty. These business model innovations evolved over decades in the automotive market. But they now occur over but a few months in consumer electronics sectors such as the smartphone market. Failure to innovate to do things better is a free gate pass to exit.

In any marketing situation, one can discern four distinct steps in the value providing process:

• Value selection.
• Value creation/Value Delivery
• Value communication.
• Value enhancement.

Value Selection

It is obvious that selecting the value to be offered is the first step in the value delivering process. Everything else follows. Only after selecting the value to be offered, can the firm proceed with production, sales and promotion. What needs to be specifically understood here is that the firm finds out what constitutes value in the estimation of the customer and accepts it as the value to be offered. Value selection is thus not only the first step in the sequence but also the most crucial one.

Value Creation / Value Delivery

This constitutes the bulk of the marketing job. What the firm has promised to provide the customer has to be actually provided. The product offering must actually carry the benefits the firm has promised and it must be reached to the customer in the most satisfying manner. Value creation/value delivery signifies the successful execution of the firms promise. Most firms fumble here because they promise to provide all sorts of things, but they fail deliver; their products fail to carry the value they were supposed to carry. The entire firm with all the functions and activities is involved in this step. In creating and delivering the product with all the associated benefits, which the firm has decided to offer, there is a role for technology, design and engineering finance management and the organizational set-up

On Marketing Concept, in this article we outlined up on the idea of integrated management action. What is required in value creation and delivery is integrated management action with marketing taking center stage.

Value Communication

After selecting the value to be offered and deciding how the value has to be created /delivered, the firm tries to communicate the value to the customer. In this step, there are actually two components. The firm works out a value proposition and then communicates it to the customer.

Making a Value Proposition

In a marketing endeavor, what the firm offers to the customer is not a mere physical product; it offers a value proposition. The product offer consisting of the best possible benefits/value is put forward as a value proposition, explaining how the offer matches the customers requirement s and how it works out to be the best among all the competing offers.

Communicating the Value Proposition

The firm then, communicates the value proposition to the customer. It explains the uniqueness of its offer through a well-formulated marketing communication mix. The customers exercise of assessing the value of the offer actually starts from this stage.

Value Enhancement

The firm also continuously and proactively enhances the value. It collects feedback from the consumer about his level of satisfaction with the product and upgrades the value. It actually is a non-stop job for the firm to search for the customers satisfaction level and augment the offer. Competing products, including substitute products, keep attacking the value proposition of the firm.

Expectations of customers too keep changing. The firm has to search for the new expectations of the customers, locate product gaps/ benefits gaps and keep making new and better offers to the customer to stay ahead of the competition in value rankings.

Sales promotion gimmicks do not normally serve the purpose of sustained value addition. Sales promotion measures like consumer deals and trade deals result in just a temporary shift in the value-cost equation in favor of the consumer. When the deals are withdrawn, consumers turn away from the product.

What is needed is a sustained and ongoing effort, not short-lived big bangs. The effort must be lasting value addition, which normally accrues only though factors like enhancement of the functional utility/ convenience of the product.