Value Proposition Lessons for Marketing Organizations

It is time to rewrite the marketing principles and rules. At the same time, it helps every Management and Marketing Managers to spend a few hours every month updating their knowledge and awareness of what is happening in the market, study the various success stories, understand the new trends and the market dynamics. One of the key factors that could be responsible for the failure of a brand and a business which has been successful in the past, could be related to the fact that both Management and Marketing managers have been busy chasing sales numbers and bottom line, without realizing that they need to continually invest into building value proposition to their customers and to innovate their product offering.

Study of various markets players including fashion, retail, logistics as well as electronics and automobiles etc over the last few decades can give us clue to understanding all about what makes a brand successful and the Organization a leader. Take the case of Fedex and DHL. They have excelled in providing one stop solution and speedy hassle free service to the clients. To achieve this they have invested heavily in infrastructure, technology as well as increased their foot print across the globe. Besides, they have also built core competency in their field of operations such as warehousing and distribution by acquiring other Organizations with the required niche expertise.

Take the case of Home Depot, Wal-Mart and IKEA etc. They have continually explored avenues to build their business on a certain niche model. Wal-Mart has chosen to build leadership by offering low prices and higher volumes. While keeping this basic value proposition, they continue to invest into technology, build business processes bringing more convenience to the customers as well as working with their vendors to explore avenues for reducing inventory as well as costs. Home Depot uses its database to understand their customer better and use the information to extend value to their customers as well as build relationship with the customer. It is not uncommon for customers living around the Home Depot area to receive a follow up call from the Sales representative checking out the Customer’s experience of their latest purchase and offer to help to install, exchange or go out of the way to understand the individual customer requirement. Such customization of service offering helps build strong customer loyalty.

Look at the camera market. Kodak and Cannon which were brand leaders in cameras as well as films are losing out to intense competition from Fuji and others who are continually improving their product and introducing new features and utilities all the time.

One of the most interesting case studies is that of the gasoline supply. When the world faced unprecedented increase in crude oil prices due to the Middle Eastern war, all companies found themselves forced to increase the price to the consumes. However one American company chose to charge ten cents per gallon lesser than the rest of the brands in the market and built a very loyal customer base. The message to the consumers was very clear that it was not looking for an opportunity to make money but the philosophy that it practiced was to care for the customer and to provide increased value to the customers.

Similarly a study of Airlines, Fast food chains like Mac Donalds, Pizzahut as well as banks gives us valuable lessons to understand how to strive to provide superior value in their chosen marketing mix in line with increasing customer expectations.

If you see the financials of such companies, you will see that they invest huge amounts into product innovation as well as in providing extra value service to their customers using technology as well as building business processes that enable superior service. The investments yield long term results. These companies are not focusing on current sales and numbers. Instead they are looking at building customer loyalty in the long run and their financial performance is getting stronger by the day.

From the above, we get to learn quite a few important points. First and foremost, it becomes evident that the Organization needs to imbibe a culture of striving to build superior value to its products and services. Secondly the Organizations have got to be focused on understanding what each type of customer wants or expects in terms of value. Then, they have got to strive to narrow their value focus and strive to improve the value proposition in chosen segment continually.

Striving to provide superior value proposition to the customers is not one time exercise. It is important to remember that the Customer expectations keep changing all the time necessitating the Organization to keep innovating at all times to keep ahead and exceed customer expectations and thereby retain product leadership in the market.


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