Three bundles of strategic marketing: (3 principles)
The essence of marketing can be summarized in three marketing bundles or marketing principles that are as follows:
- The Principle of Customer Value
- The Principle of Competitive Advantage
- The Principle of Customers’ Needs
The principle of customer value:
As we all know that the value for customer in marketing is greater than the value created by competitors. Customer’s value gets increased by improving the products, providing service benefits, and reducing the prices.
Companies using competitive pricing policy must have a strategic cost advantage in order to create sustainability. Innovation with creativity can lead to product improvements and service that matter to customers.
The principle of competitive advantage:
The principle of competitive advantage is a total offer that attracts more customers. For instance, if a company have a product that is equivalent in quality but have a higher price will not attract the customers. However, if that particular product is offered at the lower prices, the price advantage will attract more customers.
The principle of customers’ needs:
The third marketing principle focuses on creating customer value. All the established companies are successful in marketing because they have understood the principle and are successful in applying it.
For instance, IBM was successful because it focused more on customer needs than any other competitive advantage. A clear focus is needed to mobilize the effort that is accomplished only on concentrating resources and how to deliver a product.
What is the customer value mapping?
Customer value mapping determines your company’s marketing position. It shows a graphical representation of your market having price on one axis and customer value on the other axis.
Let us consider the practical example of a customer value map:
The above graph shows about the car industry that shows the fair value line for different brands.
To keep the example simple, we have listed four car brands.
Hyundai is at the lowest price which is the low value end, then Ford is at the medium price, which has a medium value, then BMW is at the high price and high value end. At the top most position, we have placed Rolls Royce with the highest price and highest value.
Now if we talk about BMW, it costs more than Ford, but many people will buy it as it has more customer value. But at the same time, the economics will obstruct the people to buy such an expensive car.
If we talk about Rolls Royce, very few of the population will afford to buy such an expensive car. Many people will struggle and come to a decision to buy a BMW, which costs the quarter of the price.
On the graph plotted above, you can see a big space between BMW and Rolls Royce that represents a potential opportunity.
Drawing a customer value map:
Drawing a customer value map gives a clear idea of where the competitor are lining up and where may be the position to place your product. It is basically a difference between price and customer value.
If we talk about the two extremes,
What’s the lower price than a Hyundai Car?
There is not much difference in the lower price as Hyundai offers everything that a basic car offers, where the labour costs are very low and modern manufacturing equipment can be used to create a cost advantage.
What’s the higher price than a Rolls Royce?
Well, here there is a chance to go really over the top.
The Bugatti Veyron costs over 1 million dollars for a car and the selected customers can show the world that they can afford such an extravagant purchase.
Moving from cars to your business:
Just as you see the customer value map of the cars, the same logic is applied to your business as well.
Pick one of your markets or niches and map your business competitors. You may also point an average price point to see the crossovers.
The customer value map represents a potential opportunity to go above or below the map with:
- A high value, high price offering or
- A low value, low price offering.
The basic idea is to give more choice to the customers so that they do not struggle and make any random selection.
The correct move on the customer value map:
The correct move depends on:
#1 What customers want?
It is best to research and find out whether the customers want to pay more and get more or pay less and get less.
#2 Capabilities to deliver market promises:
One cannot sell the products at lower price if the costs are high and maintain good profitability. Similarly, you cannot sell the products at the higher price if you cannot justify the price you are charging for.
Wrapping up
In this article we have learned about the effective marketing strategy and customer value mapping. In the next article you will be learning about why apple has the best marketing strategy that makes it successful.
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