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Customer Value, Positioning and Differentiation

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Munir Bokhari

on 16 September 2014

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Transcript of Customer Value, Positioning and Differentiation

Why do brand names like Kodak, Disney or Coca-Cola create customer value and provide a basis for product line positioning and differentiation?

Understanding the Problem
Why do brand names like Kodak, Disney or Coca-Cola create customer value and provide a basis for product line positioning and differentiation?
CVP consists of the sum total of benefits which a vendor promises that a customer will receive in return for the customer's associated payment
From the people who brought you that "Kodak Moment", a well known brand and first movers who helped develop the first digital camera - So what happened???
Corporate Social Responsibility (CSR)
Used to describe the way that a business takes into account the financial, environmental and social impacts of decisions and actions it is involved in
Customer Value
The key to success in today’s business world is customer value
(Crafting Customer Value: The Art and Science)
Product Positioning
Creating a unique space in the mind of the prospective customer.
Customer Value
Customer value: A consumer's assessment of the overall capacity of a product to satisfy their needs
(Oxford Dictionary of Business and Management)
Product Line Positioning
Positioning: A marketing strategy that will position a company's products and services against those of its competitors in the minds of consumers
(Oxford Dictionary of Business and Management)
A concept that originally applied to the main differences and unique benefits of a given product over another competing product that made it more attractive to a target market
(Oxford Dictionary of Marketing)

Customer Value
Companies must create value for their customers or face the consequences of declining customer loyalty, deteriorating market share, decaying profits, and the associated chaos that ensues
This concept is more than a business fad; it’s the very essence of doing business
Customer value
To be successful, companies have to:
Provide quality products and services at fair prices
Create the impression of value
Exciting customers about their products and services
Become a company that understands its customers (perhaps better than they understand themselves)
There is a battle out there for mind share.
There is an explosion of information and products, and an increasing number of ways for companies to communicate to prospective customers about a product.
The following is necessary to win the battle for mind share:
Carefully positioning products to reach the prospects
Make prospects recognize that their needs are being addressed with better products than the competition
Choosing and understanding the target market

Step 1: Identify relevant set of competitive products
Step 2: Identify the set of determinant attributes
Step 3: Collect information about perceptions on the determinant attributes.
Step 4: Determine product’s current location (positioning).
Step 5: Determine customers’ most preferred combination of determinant attributes.
Step 6: Examine the fit between preferences of market segments and current position.
Step 7: The positioning statement.
Disney's CVP
The essence of Disney's value proposition is the memories that couples, families, and friends can create.
Focus their messaging on the emotional benefits, like togetherness and once-in-a-lifetime memories, that they help create.
Key Components to Building Customer Value Proposition
Consistency and discipline in the message
Internal organizational culture affects the external organizational image
Conventional wisdom may serve as a guide, however what works for one company will not necessarily work for another
Ignored the marketplace - stopped listening and adapting to consumer needs and wants
Ignored technology advances and felt it could release new technology when it was ready, not the consumer
What went wrong?
Necessary for Long Term Sustainability
Mostly voluntary concept, however increasing pressure on organizations to contribute positively to society or at least reduce their negative impact
Protection of the environment as being enforced internationally
Value Creation a Driver for Growth
Coca-Cola made value creation drive growth
14% annual revenue growth circa 1970-1980
1981, CEO Roberto Goizueta decided to focus his entire organization on giving value creation priority
This transformed the company and within two decades, doubled its market share to 50% and tripled its return on equity to 60%
Customer value creation and maintenance is the key to success
Proper product positioning creates unique niche in the market
Differentiation is one of the winning strategies for victorious positioning
Success examples:
Coca-Cola: Value creation, the driver for growth
Disney: building the customer value proposition based on emotional benefits
Lessons learned from the case of Kodak - helpful for the era of innovation
Establish a clear direction toward customer value via relevant goals and strategies
Pay close attention to customers’ needs and expectations
Develop a unique value proposition, which is a collection of product, service, and price
Manage the business’s critical resources, namely processes, people, and information systems
Customer value
Brand Value
There are several approaches to differentiation:
Different design
Brand image
Number of features
New technology
A differentiation strategy may mean differentiating along two or more of
these dimensions.

Creating something that is perceived industry wide as being unique.
Successful strategy of differentiation usually requires the following:
Exclusivity of the product offerings
Strong marketing skills
Product innovation
Applied R&D.
Customer support
Differentiation is a defence strategy:
It protects a firm from competitive rivalry by creating brand loyalty
It lowers the price elasticity of demand
Uniqueness creates barriers to entry and reduces potential substitutes
Differentiation also mitigates buyer power since buyers will subsequently have fewer alternatives
To be successful, businesses must realize the vital benefits of customer value, positioning and differentiation.
Kodak is fortunate social media didn't exist when turning a deaf ear to the consumer...why?
Upon realising their initial error, they took on competitors like Fuji for film share as opposed to competing with Apple, Intel, Nokia, and Motorola whose technology made film photography obsolete
As of September 2013 shifted its focus toward imaging solutions and services for businesses
Listen to customers, pay attention to the market, understand price pressure and how it could squeeze profit margins
Full transcript