Value-Based Marketing

Chapter 18: Strategy is Focus - Page 18.4

Value-Based Marketing

Value-based marketing is another conceptual framework. Like the strategy pyramid described in the previous topic, it doesn't have to be in your business plan at all, but we add it here because some people find that the framework helps them develop their strategy. Obviously, this has to be a quick treatment. There are textbooks written about value-based marketing, and the business literature on this topic is rich and varied.

This framework begins with defining your business offering as a value proposition. The value proposition is benefit offered minus price charged, in relative terms. The definition encourages you to think in broad conceptual terms, with emphasis on the real benefit offered, rather than the specific tangible. For example, a national fast food chain probably offers the value of convenience and reliability, probably at a slight price premium (at least when compared to the weaker chains). A prestigious local restaurant, on the other hand, is offering a completely different set of benefits (luxury, elegance, prestige, for example) at a marked price premium. A graphic designer is probably selling benefits related to communication and advertising, not just drawings.

Once you have a value proposition defined, then look at your business — and your business plan — in terms of how well you:

communicate the business proposition; and
fulfill your promise.

For example, if a computer store's business proposition has to do with reliable service for small businesses, peace of mind, and long-term relationships, then it probably shouldn't be taking out full-page newspaper advertisements promising the lowest prices in town on brand-name hardware. It probably should communicate its proposition with sales literature that emphasizes how the computer store will become a strategic ally of its clients. It might also think twice about how it handles overdue bills from customers, who might really be holding out for more service or better support.

Using the strategy pyramid, the framework helps you integrate your tactics and planned programs into a logical whole plan. This next illustration shows how the store might lay out its value-based marketing framework pyramid.

Sample Value-Based Marketing Framework

The computer store strategy is to emphasize service and support for its customers.

[Home] [Buy this Book] [Links] [About the Author] [About this Site] [Site Map] [Contact]