The Marketing Strategy - Case Study Example

MARKETING STRATEGY ­__________________________________________________ Critically evaluating Piercys interpretation of value creation within a strategic marketing context Your name: Date : TABLE OF CONTENTS Introduction ………………………………………….. 3 ‘Value Creation’: Piercy’s interpretation…………….. 3 Analyzing ‘Value Creation’ strategy………………… 5 Value Identification………………………………….. 5 Innovation in Value developing and delivering……… 6 Canon: An example for Value Creation………………7 Conclusion…………………………………………… 8 References…………………………………………… 9 Bibliography………………………………………….10 Introduction In the prevailing fierce competitive marketing environment all the firms regardless of the local or multinational companies tend to focus on value creation marketing strategy in order to make their customers ultimately satisfied. Creating value strategy gives companies the means to perform its business the way customers need and to get an equitable return for their efforts in the marketplace. Piercy (2002) states that the basic key of ‘value creation’ is a customer focused marketing strategy based on offering value that firms are good at offering to those customers who want it (p.5). Throughout many years, corporate strategies focused their business efforts mainly on maximizing the profits by reducing the expenses through internal efficiency. But, very recently, the whole business strategy turned to focus on value creation focusing mainly on customer values. According to Kerin (2003) marketers believe that the possibilities for value creation are greater in the marketplace than in the traditional strategic forms (p. 388). Wikstrom (1994) emphasizes that value creation is a broad concept as the value can be created as a result of synergies and partnerships or through the creation of new knowledge. (p.123) ‘Value Creation’: Piercy’s interpretation Piercy (2002) interprets value creation as a most effective strategy and he addresses it as ‘the process of going to the market’ (p.7). The value creation strategy is mainly related to creating customer value as he is the centre of all marketing procedures and thus it comprises of three business processes: defining the customer value, developing it and delivering the same to the customers. The customer value can be defined through ongoing researches, analysis of core competencies and overall analysis of customer use systems. New product development, designing new distribution channel and developing price and product positioning can help firms develop the values. Services, customer training and information are some of the measures to be taken in order to deliver the values in value creation (Piercy, 2002, p- 7- 10). Piercy (2002) outlines value creation strategy as having many dimensions that need to be managed consistently. Each value includes analytical or technical, behavioural and organizational dimensions. Figure-1 details Piercy’s view of value creation strategic methodology. Fig- 1.1 (Source: Piercy- 2002- p. 7) The value creation strategic model is solely based on customers and hence it forms to be market-led. All the marketing processes including internal and external changes would be based on this strategic pathway. This strategy aims at maintaining new types of favourable relations with customers, employees, suppliers and all other stakeholders (Piercy, 2002- p.80). Analyzing ‘Value Creation’ strategy Value creation strategy occurs when there are outstanding changes in the overall processes of the business. Market research, product, design, price, positioning, distribution and all other marketing stages need be changed in order to create the value that gives worth to the firm and hence, value creation results in bringing greater impacts on overall marketing procedures. Value creation starts from understanding customers with their needs and wants. ‘Understanding customers only can help a business create value’ has been outlined by Piercy. He (2002) says that customer focus is not just about better customer service, but rather, understanding the customer with his emerging or ever-changing needs and attempting to anticipate and meet customer needs (p. 344). John (2003) argues that value creation activity of a business is based on understanding value-consumption activities of its customers. What values to be served and how it is to be delivered will define product concept because value creation executes the product concept (p.103- 104). Value Identification Value identification is the critical stage in value creation. It represents the elements of assessing customer value drivers and developing new solutions to offer incremental values to the marketplace concerned (Plaster- 2006, p.40). There are strategies that define how customer should be understood and evaluated in regard to their needs and how they would like to meet their needs. These tools will help firms identify, understand, assess and evaluate their customers. Same time, if the tools that firms use to identify customers’ needs are not so useful or the results are not accurate, the values either cannot be created or cannot be delivered effectively. When customers are ready to share their opinions, Piercy (2002) suggests that firms should be intimate keeping quiet, listening and learning (p. 353). Information Resources Management Association (2000) points out that bringing customer intimacy by focusing on satisfying individual customer needs through close relationship with and intimate knowledge of customers is a principal dimension of customers’ value creation (p.1049). Stakeholders, especially customers, perceive values in many areas that may not be readily visible or even identifiable and this would become quite difficult for any business in the initial stage of value creation. When dissatisfied customers do not respond or respond but positively, it won’t help firms identify the customers exactly. It can be observed when dissatisfied customers respond all other marketers except this firm, or they do not complain or even they buy less than what they actually need (Piercy- 2002, p. 355). Whether customers are satisfied or not needs to be discovered. Satisfied customers are loyal customers in the concept of value creation and loyal customers bring business success through repeat business, good words and word of mouth referrals. Innovation in Value developing and delivering Once value identified, it should be developed and delivered to the customer in the most appropriate way that they need. Innovation in product design, specification, branding and packaging can help business develop the values to be delivered to the customers. The value creation strategy can be successful only it approaches marketing with a number of different innovative strategies. Piercy (2002) suggests that if a business is having a radical product or service innovation that only it has to offer to customers, or the business is just cheaper than others in regard to innovation, it never gives loyalty, satisfaction and commitment from the customers (p. 345). According to Robert S. Kaplan (2004), innovation and risk taking are two major priorities for creating value (p. 291). The value to be developed and delivered depends on the size of the problem or customers’ need that can be addressed by the innovation (Verloop – 2004, p.91). The innovation should form part of value creation in order to provide customers what they need and how or when they need to be delivered. Canon: An example for Value Creation Canon Inc. is a world class digital imaging company that developed a distinct value creating strategy and thus achieved a great success of creating its own market against its counterpart Xerox. The growth Canon achieved in photocopying market from ¥4.2 billion in 1950 to ¥ 3,468 in 2004 had been mainly driven by value creating market-led strategy. Richard Lynch (2006) describes that Canon, throughout 1960s and 1970s, developed a technology that was totally different from Xerox’s technology and patents and it identified a small photocopier market niche which was purely served by Xerox (Richard Lynch, p. 500). While Xerox focused on large and high capability photocopying machines, Canon began to think of smaller and convenient personal copiers for personal use. The first step Canon did in its value creating strategic pathway is that it uncovered a hidden market for personal copiers which was untouched or ignored by Xerox. Canon was highly successful in defining and discovering emerging customers need for personal photocopiers. Canon not only discovered the value in regard to uncovering a hidden market segment, but also it made innovative changes throughout its whole business operations in competing with Xerox like product design, printer speed, pricing, positioning, distributing and after sales services. The Fig- 1.2 shows what innovative changes Canon brought forward so as to beat Xerox. Fig- 1.2 Source: (www.unitedbit.com) Canon has launched, as a part of its customer oriented program, a global customer relationship platform in order to offer online services as well as to get insights in to customers changing needs. Canon’s long term strategic planning to develop high-automated manufacturing plants and high-technology products that take years to develop and perform efficiently can be regarded to be parts of its innovative strategic perspectives and value creation marketing strategies (Canon- 2007). Conclusion This paper presents a critical analysis on Piercy’s views of value creation marketing strategy. The basic three dimensions of Piercy’s value creation strategy have been analyzed with the help of literature reviews and case example of Canon Inc. The effort has been given to outline various aspects of value creation in relations with customer value creation and innovative perspectives. References Information Resources Management Association (2000), Challenges of information technology management in the 21st century, Edition: 20, illustrated, Idea Group Inc (IGI) John (2003), Fundamentals of customer-focused management: competing through service, Greenwood Publishing Group Kaplan RS and Norton DP (2004), Strategy maps: converting intangible assets into tangible Outcomes, Illustrated Edition, Harvard Business Press Kerin RA, Hartley SW and Rudelius W (2003), Marketing: The Core, Edition: illustrated, McGraw Hill Professional Lynch r, (2006) Corporate Strategy -4th. Edition, FT Prentice Hall Piercy N (2002), Market-led strategic change: a guide to transforming the process of going to market, Edition: 3, illustrated, Butterworth-Heinemann Plaster G and Alderman JD (2006), Beyond six sigma: profitable growth through customer value Creation, Edition: illustrated, John Wiley and Sons Verloop J and Wissema JG (2004), Insight in innovation: managing innovation by understanding the laws of innovation, Edition: illustrated, Elsevier Wikstrom S and Normann R (1994), Knowledge and value: a new perspective on corporate Transformation, Edition: illustrated, Routledge Canon (2007) Canon Annual report 2007 Retrieved from http://www.canon.com/ir/annual/2007/report2007.pdf www.unitedbit.com (2009), Strategic Innovation, how Canon radically refined the customer base, Retrieved from http://www.unitedbit.com/strategic-innovation-how-canon-radically-refined-the-customer-base/ Bibliography Kracklauer AH and Mills DQ (2004), Collaborative customer relationship management: taking CRM to the next level, Edition: illustrated, Springer, (pages- 18 – 19) Kumar N (2004), Marketing as strategy: understanding the CEOs agenda for driving growth and innovation, Harvard Business Press, (Pages 61- 63) Lusch RF and Vargo SL (2006), The service-dominant logic of marketing: dialog, debate, and Directions, Edition: illustrated, M.E. 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