The Delivery of Customer Value: the of Maison Bouygues - Case Study Example

Running Head: MAISON BOUYGUES: A CASE ANALYSIS Maison Bouygues: A Case Analysis in APA Style by Both the managerial and societal definitions of marketing stress one of the primary goals of business organizations-the delivery of customer value. Value in marketing can be defined by both qualitative and quantitative measures. On the qualitative aspect, "value is the perceived gain composed of individual's emotional, mental and physical condition plus various social, economic, cultural and environmental factors" (Value Based Marketing 2007). On the quantitative side, "value is the actual gain measured in terms of financial numbers, percentages, and dollars (Value Based Marketing 2007)." The case of Maison Bouygues (MB) highlights each business organization's function of choosing the value which should be delivered to the customers and actually providing that identified value to them. It is irrefutable that amidst the effort of companies to deliver the value which they have chosen to impart, there have been discrepancies with these two. The tactical aspect of marketing often does not fully embody what has been strategically formulated. In line with this, this paper looks at the value creation within MB, identifying the value that it chooses and how it provides this value to its clientele. At the end, this paper will give further recommendations on how value creation can be enhanced through the alignment of strategic and tactical marketing. Choosing the Value As with any business organization, MB's strategic aspect of marketing is comprised of its segmentation, targeting, and positioning. The company's identification of the value that it wants to provide is rationally through identifying its customers and their specific needs and wants and specifically pinpointing what image the company wants to build in the mind of its customers. The market for MB's products and services is divided into five segments namely, Wealthy Savers, Wealthy Spenders, Autonomous Independents, New Anxious, and New Responsible. Among these client groups, the New Anxious represents approximately 25% of the company's customers. This segment, having the least income (average is FF12, 700), demands the most value for their hard-earned money for their first homes. It should also be noted that MB has a relatively high presence in this group indicated by the 138 MB presence index reported. The Wealthy Savers comes next with approximately 24% of MB's clientele. Directly opposed to the New Anxious, this group generates high income which averages FF18, 100 and have owned their previous homes. MB also has a high presence in this segment relative to the industry (MB presence index is 123). Autonomous Independents represents 19% of the MB's total market. Having an average income of $16, 500, this group occupies high social level and desires to own their home after renting for some time. Relative to its competitors, MB has a relatively low presence in this market indicated by MB's presence index which is reported at 53. Wealthy Spenders and New Responsible both share approximately 16% of MB's entire market. Wealthy Spenders have the highest average income at FF19, 700. However, MB's presence in this sector is only limited compared to the whole industry. New Responsible group has a low average income of FF14, 400 who demands more value and quality from MB's products because they would want to leave their house to their children. The company has a very high presence in this segment (MB's presence index is 123). The conducted market segmentation above clearly distinguishes the targeting strategy employed by MB. Furthermore, looking at the history of the company shows how it has alters and augments the particularly markets that it intended to serve: "Initially MB focused on building small, basic homes for middle and lower-income households. During the mid-1980s, the company shifted its focus to the higher end of the single family market." This shift in targeting strategy explains the diversity of the markets currently targeted by MB as discussed in the previous section. MB's targeting strategy can be best described as market specialization because it primarily targets the high-end single family market by modifying and changing the specification of its product offerings in order to suit the preferences of this market. It should be noted that MB does not specialize in providing a single product but offers "eight home models with unique exterior design in a narrow price range." The positioning of MB is directly indicated by its value proposition. Looking at the company's values and marketing mix, MB positions itself as a home provider which capitalizes on its creativity and technical innovation to build high quality and durable homes which can be modified and altered in order to suit the specific needs and preferences of the each customer at a moderate price. Providing the Value In the second phase of the value-delivery sequence, MB now provides the value that it has identified to deliver. This aspect is indicated by the company's choice of specific product features, prices, and distribution (Kotler 2002). As stated above, MB offers eight home models which have exterior design which can be modified in order to suit the individual preference and needs of the family. It should be noted that the architectural structure of these houses vary from place to place in order to mirror varying geographical preferences. In order to ensure the quality of its product offerings, MB focuses on its core competence of designing and marketing homes while it subcontracts all the aspects of construction. The company also has an in-house quality control department for the selection of builders and inspection of homes under construction. Compared to the other home builders in the market, MB charges a relatively higher price which ranges from FF360, 000 to FF650, 000. It should be noted that this price range enhances the image of MB in the high end market. The sales of the company's products are generated by the company's sales agents who are motivated through the use of monetary and non-monetary rewards. From the identification of potential customers and signing of contracts, sales agents play a huge role. There have been problems in the company's distribution as sales agents are not able to establish relationship with previous buyers. The sales agents have also been becoming less efficient in selling the company's products evidenced by the decline in MB's prospect yields. Analysis and Recommendation The market leadership of MB in the single home market somehow suggests the operational and marketing efficiency of the business organization under consideration. However, the discrepancies between the value that it wants provides and the value that it is actually providing. In its segmentation, it should be noted that even though MB purposes to target the high-end single-family home market, it is the lowest income generators which patronizes the company's products and the company has the highest presence in. This can imply that MB is not yet able to change the positioning that it previously holds in the industry when it primarily caters to the lower and middle income families. The company also has also established a relatively strong foothold in Wealthy Savers and New Responsible which further stresses the need for the company to ensure the quality of the homes that they provide. However, MB fails to capture much of the Wealthy Spenders and Anxious responsible which signals the company's inefficiency in providing the needs of these two sectors. MB's pricing also appears to be inconsistent with the image that it wants to instill in the mind of its customers. It should be noted that the direct mails and brochures sent out to potential homeowners' highlights the desire of MB to help customer purchase the home that they think they cannot afford which communicates the company's commitment of providing houses at lower prices. However, it should be noted that MB prices less competitively than its other competitors. The company's price range is narrow and is non-negotiable. Looking at the cost structure of MB, it becomes apparent that the home provider has been generating huge margins from its sales indicating that it deliberately charges high markup in order to bid up price. Its small home size which accounts 55% of its unit sales generates 38% of its gross margin while medium and large ones reports gross margins of 36% and 31%, respectively. From these computations, it can also be seen that MB seems to lure potential buyers into buying larger homes through lowering prices by charging lower markups. This should not be the case in the high-end market as high prices often enhance the image and the perceived value of a product. The absence of repeat transaction in MB as well as the lower of referral rate from friends or associates who bought an MB unit both indicates the dissatisfaction of the customers. This is even highlighted by the fact that 28% of MB's buyers are dissatisfied with the business organization's after sales service. Overall, MB's brand image has also significantly declined. With all these problems within the company's strategic and tactical marketing, this paper recommends that MB revamps its marketing mix in order to eliminate the discrepancies between the intended value and delivered value. First, the company should strive to modify its targeting strategy by identifying the most profitable segment in the single family market that it can serve. It should be noted that even though it purposes to serve the high end market, it is highly positioned in within the lower strata. Since the different segments catered to by MB has different needs and wants, it will also be more appropriate if the company creates different product line which takes into account these differences/ Also, MB should revise its unique selling proposition. Instead of stressing the provision of high quality homes at an affordable rate, it should look at position itself in providing the value needed by the customer namely, quality of builder, maximum warranties, and competent salesperson. It should be noted that focusing on price does not add to the value delivered by MB as its market is not price sensitive. Lastly, the company should strengthen its position and deliver more customer value by complementing its tangible products with excellent services. MB's sales agents should be thoroughly trained in order for them to enhance their competencies and better manage their dealings with clients. The agents should strive to get the potential clients to the second meeting. The company should also make its agents realize that a sale does not end when the deal is closed. They should still offer excellent after sales support in order to generate repeat transactions. References Kotler, P. (2002). Marketing Management, Prentice Hall: New Jersey Value Based Marketing. (2007). Wikipedia, the Free Encyclopedia. Retrieved 04 May 2007, from http://en.wikipedia.org/wiki/Value_(marketing) Read More