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art & science of creating value by designing & managing successful exchanges


dual value creation

process by which companies create value for customers & build strong customer relationships in order to capture value from customers in return


ways offering can deliver value to customers



ways offering can deliver value to company

revenue but also CLV, user base


product orientation

-try to increase market share and lower price, build distribution network and increase profits
-often devolves into competing on 2 dimensions (price & quality


sales orientation

make people want stuff
Ex. use of clever ads, jingles


demand orientation

desires of customers should guide firm actions (find out what people want 1st, then make it)

-made possible w/ good research/data analytics
-BUT, stifles innovation, customers don't know what they want, all companies making the same thing & same price stifles competition


competitor orientation

looking outward to competitors, using game theory and mgmt strategy

- takes eye off customer


customer centricity

AKA market orientation, value marketing
- aligning ENTIRE co development and delivery of offering w/ *current and future* needs of select group of customers in order to max their LT financial value to firm

understand AND anticipate needs; focus marketing on more valuable members
-understand, attract, and keep most valuable customers


customer centricity as an outside-in strategy

start w/ customer: their current & future needs, any pain points they have w/ current offering standards


how is customer centricity different from demand orientation?

it also looks @ FUTURE needs of a select group of target customers (usually the most loyal customers)


what customer centricity IS NOT

having CRM -- data does not automatically mean insights; you have to have insights AND understand needs to be customer centric


strategic analysis

use 5 C's: customer, company, collaborators, competitors, context

-used to define target market


5C's: company

development of distinctive and hard to imitate resources
SWOT analysis (SW = internal factors) (OT = external factors)

- resources of strategic biz unit managing offering enables fulfillment of customer needs


5C's: customer

customer needs, key decision and value drivers, segmentation, CLV, targeting

-needs co aims to fulfill using offering (B2B or B2C)
- has influence on defining other 4 C's, changing this would change all the rest


5C's: collaborators


leveraging strengths to reach common goals & create value for target customers


5C's: competitors

all those aiming to fulfill same customer need (don't ignore substitutes!)

market space, positioning

positioning = how firm's offerings are perceived relative to competitor's offerings


5C's: context

market potential, market attractiveness
P = political and legal
E = economic
S = social
T = technological



3V model
-optimal value proposition - intersection of company, collaborator, and customer value; value delivery is *balanced* across 3 entities

- has to deliver value superior to competition



4P's / marketing mix - defining attributes of actual offering that'll create market value (tools to deliver OVP)
product, price, promotion, place


marketing plan steps

1. situational analysis = 5C's
2. strategic options/objectives = STP (segment, target, position)
3. Implementation & Eval = 4P's, metrics, forecasts and budgets



4P's: product

offering: product, service, platform
- key functional characteristics & perhaps includes brand


4P's: price

how we communicate and extract value; price charged for benefits received


4P's: promotion

how to communicate value to customers
- incentives (monetary or nonmonetary to enhance offering value) and communication to current and potential customers


4P's: place

how we deliver offering; distribution
- channels thru which it's delivered to customer


focus on the customer

customers want the *benefit*
not all customers are equal; focus on most valuable


why rethink product-centric approach?

-technology: product lifecycles are way shorter, you can't enjoy innovation for as long
-global competition; increasingly borderless environments means more markets but also more competition
-customer power: customers can find cheaper options immediately


value proposition

- defines value the offering aims to create for relevant market participants
- co's expectation of value it'll create; an ideal representation of benefits customer will receive from offering


value relationships

creating and capturing value b/w co, customer, collaborators

(3 value relationships on co. side, 3 on competitive side)


top-down approach to biz model

- start with customer analysis (ID need to be satisfied) or co resource analysis (to ID core competencies/strategic assets that could create competitive advantage)
- ID target market and create OVP


bottom-up approach to biz model

- start with product development (deliberate R&D process, incorporating new advancements in tech)
- ID target customers and unmet needs


when to update a biz model

when one of the 5C's changes, or when value proposition for relevant entities is no longer optimal



- goal = ultimate criterion for success; ID focus and benchmarks
- strategy = 5C's; ID target market and value proposition
- tactics = 4P's
- implementation = define infrastructure, business processes and implementation schedule to outline logistics of strategy and tactics
- control = evaluating progress and analyzing change


setting goals

- focus: monetary or strategic (not mutually exclusive)
- benchmarks: quantitative (relative or absolute) or temporal
- market objectives: more specific goals outlining changes in behavior of 5C's that'll enable ultimate co goal attainment

temporal goals, aka setting a timeline, is a key strategic decision bc strategy adopted to implement goals is often contingent on time horizon


defining implementation

- biz infrastructure = functional/divisional teams, organizational structure
- biz processes = managing flow of info, goods, services, and $$; market planning, resource mgmt, mktg mix mgmt
- schedule = optimal timing and sequence to perform individual tasks to optimize effectiveness and cost-efficiency



- performance evaluation of outcomes of actions w/r/t goals set; ID any gaps and modify accordingly
- environmental analysis = make sure action plan is optimal w/r/t operating environment (look for new opportunities or potential threats)


when to update market plan

- performance gaps (caused by inaccurate info or assumptions, logic flaws, implementation errors)
- change in target market (5 C's)


creating company value

process of capturing value derived from market exchange in which co creates value for customers and collaborators

-strategic (functional and psychological)


managing profit by incr. sales rev

-best for LT profitability
-incr sales volume: managing customer adoption (market growth = customers new to category, or stealing market share) and customer usage (market penetration = focus on current customers)
-optimize price: consider customer price elasticity bc that affects sales volume change; "price" also includes monetary incentives, prices throughout retail channel


managing profit by decr costs

- decr COGS, R&D, mktg, cost of capital
- achieve economies of scale (lower per-unit cost bc of greater manufacturing and sales volume), move up the learning curve (becoming more productive), achieve economies of scope (synergies among different offerings in portfolio)