Competing On Value

Competing On Value

by Stan Maklan, Simon Knox




There has been a fundamental change in the purchasing motivation and behavior of customers and the methods by which companies meet these new customer expectations. Companies are re-examining their fundamental assumptions about the way in which they define and deliver value to their customers.

Marketing and brand strategies successfully deployed in the 1980's and 1990's are no longer sufficient to ensure continued profitable growth, customer loyalty and competitive advantage. Today, global competition offers everyone a meaningful choice of equally competent suppliers. The sharp-end of creating customer value lies with the organization's ability to:

  • Customize products and services
  • Direct complex supply chains on behalf of customers
  • Provide pre-sales advice and post-sales service
  • Maximize customer convenience
  • Work effectively within alliances on behalf of customers.

The UOVP—Unique Organization Value Proposition™ —is an important new methodology providing a practical approach, which enables senior management to define and deliver customer value in a world where traditional products and brands often fail to do so.

The UOVP integrates an organization's value-adding processes into a powerful combination of reputation, performance, customer and product portfolio and a network of third-party relationships. Creating this differentiated combination, on the basis of delivering real value, enables an organization to:

  • Create profitable long-term customer relationships
  • Integrate and direct the organization towards customer value
  • Lead unbeatable alliances
  • breakthrough innovation.
"The authors vividly understand the key components of customer behavior today. Their voices are clear, powerful and compelling. The richness of their insights will add value for years to come."

—Larry Hochman, Director of People & Culture, Air Miles

"As companies focus more and more on their core competencies, the need for reliable strategic suppliers and partners is paramount. The UOVP principle embraces very elegantly today's approach to differentiation in the marketplace. Competing on Value is an enlightening and informative read, a must for all marketers."

—Matthew Wallis, General Manager Europe, Motorola Computer Group

Product Details

ISBN-13: 9780273631057
Publisher: Pearson Education
Publication date: 03/01/1998
Pages: 235
Product dimensions: 6.45(w) x 9.59(h) x 0.79(d)

Table of Contents

List of Figures.
List of Tables.
1. Brand marketing in translation.
Introduction. The brand is the business. Our icons have fallen. Summary. Further reading.

2. The value group.
Introduction. The value of brands. The value of information and risk. The augmented brand. The unique selling proposition. 4P's marketing. Brand management. Making money from brands. The link is severed. Components of customer value. Business integration. Summary. Further reading.

3. Bridging the value gap.
Introduction. UOVP - Unique Organization Value Proposition(tm). Components of the UOVP. The UOVP mix. UOVP and core processes. Summary. Further reading.

4. Marketing planning.
Introduction. Limitations of the traditional marketing planning process. Marketing planning that supports the UOVP. Implementation issues. Summary. Further reading.

5. Supply partnership.
Introduction. Traditional supply partnership. The changing nature of automotive supply partnership. Food retailing. A trend toward higher levels of supply partnership. Summary. Further reading.

6. Asset management.
Introduction. What do we mean by assets? The use of assets in brand building. Toward a systematic approach to asset management. Summary. Further reading.

7. Resource transformation.
Introduction. The traditional approach to resource transformation. The new approach - manage processes not functions. Differentiate resource transformation for branding purposes. Using the UOP to differentiate resource transformation. Summary. Further reading.

8. Customer development.
Introduction. The profit impact of customer retention. Principles of loyalty management. Managing customer development. Implementing customer development. Summary. Further reading.

9. Measuring the value gap.
Introduction: Are you in the right race? The diagnostic. Summary.

10. The rehabilitation of marketing.
Introduction. The traditional marketing function can be part of the problem. The business need for rehabilitation. Is the marketing department needed any more? The rehabilitated marketing capability. The mandate and responsibilities of the UOVP architect. The rehabilitated marketer. Summary.




Why did Andy Grove, CEO of a company that had maybe 50 important customers worldwide (Intel), decide to spend upwards of $150 million in television advertising for a product that few can buy directly? Why does a brand name that is synonymous with computing (IBM) find it so difficult to win favor with buyers in the personal computing market when it launched its Ambra product? And how did the first technology brand to become one of the world's top brands (Apple), an icon to marketers everywhere, fall to the point where its very survival is in question?

All these are examples from the world of technology, but that is where I have spent most of the last 25 years as a director or consultant to some of the industry's best known companies. For years this particular industry grew at staggering rates of up to 100 percent a year on the back of product-based strategies—new technologies for short periods providing a genuine unique selling proposition (USP) to their marketing focus. However, as the industry matures and product lifecycles fall to as little as 4 to 6 months, the reality of the marketing need has become clear—only having the right product is insufficient to provide a positioning and strategy which deliver sustainable, long-term competitive advantage.

Customer value, once thought to be delivered by a great product, perhaps with some acceptable support from a company whose basic brand values felt right, has moved on. No longer can product brand values succeed alone. Today, companies must recognize the need to shift from the concept of the consumer, to the understanding of the customer.

Yet so many organizations still plough millionsof dollars into advertising, even into what is considered "brand" advertising without realizing that this alone, however brilliant and targeted, cannot create or deliver customer value. Advertising has its place, of course, but IBM and Apple both used to spend significant sums of money and had two of the strongest and best recognized brands in the world.

Even strong brands can be vulnerable. As the authors observe in their text, although the principle of the USP was extremely powerful and exploited mercilessly by consumer marketeers such as P&G and Unilever, the augmented brand is no longer enough. Competition can now largely copy any brand innovation whether it be product or service function or even the associated emotional "hooks." Suddenly, what was "arguably the single most important component in modern marketing practice" is becoming less effective.

At Hewlett-Packard we succeeded in extending from a company which makes products for engineers to the second largest information technology provider in the world, and the world's largest printer company with a high degree of general awareness in our target marketplaces. We have good perceived core values and competencies and yet, like many companies today, our range of businesses and corporate structure means that we do not really leverage the huge potential of our brand across all our businesses. Further, competitors can, and do, attack our markets at the product level, sometimes with more success than we would like! This despite having one of the acknowledged best quality, process-based management systems in the world. The problem is that our competitors also have values, quality products and increasingly effective business processes.

My daily challenge, therefore, is how to create preference for our products and services and ensure delivery of the broader need for customer value. Over two-thirds of all customer defections occur because of an attitude of indifference on the part of an employee, not because of a product deficiency or competitor action. Customer loyalty is today's universal business imperative, however it is defined. My own model in Hewlett-Packard defines customer loyalty as coming from moments of truth delivering brand values through people. This critical relationship requires all the people in an organization to understand what the company core brand values are, what moments of truth they are personally involved in delivering and how they relate to the overall satisfaction and retention of customers. We are not talking just about complaints handling, customer service desks or product design. We are creating an organizational corporate planning system that will, and should, be developed to incorporate the brand management benefits which will accrue from a fully integrated customer feedback system.

However, you first have to arrive at exactly what your organization's core brand proposition should be, and determine how it will be delivered. This is where you will need UOVP—the Unique Organization Value Proposition™ toolset, which I believe will really help. The UOVP is the first attempt I have seen to address the next step from just image or product branding. It is based on the premise that the business processes governing all company operations have to be aligned in order to deliver customer value, and many of these processes were not even apparent in the days when the traditional marketing tools were being developed. This work will provide as much a foundation for management thinking over the next five years as USP did in its time and, more importantly, is more directly impactful on business management systems and processes.

At Hewlett-Packard we were extremely fortunate to have the core values and influence of Bill Hewlett and Dave Packard (the HP Way) which still pervade the organization today. Our success stems from a real commitment to providing customers with value based on excellent products and services, being delivered through a quality-based organization, utilizing internal and external relationships all driven by our core values-based reputation. However, customer value is more and more going to be delivered through the myriad business processes within organizations which, up until now, have never been considered, nor considered themselves, to be part of brand management

Companies need to create the imperative that forms the backbone of their corporate brand—the UOVP It can only be delivered through the alignment of the core processes within the organization and the understanding, motivation and commitment of all the employees to manage their contribution to the customer's moments of truth. It has to be on the board agenda in order to ensure the development of that hard-to-find, differentiated positioning from which comes happy customers, staff, shareholders, communities and, last but not least, profitable growth.

Ian Ryder
Director, Brand Management and Communications
Hewlett-Packard Company
October 1997

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