Building Value through Marketing

A Step-by-Step Guide

Philip Sugai

• Publisher: Routledge
• Year: 2020
• ISBN:
  9781000178845
• Edition: 1
• Topic: Business
• Subtopic: Marketing
• Index: Business

Building Value through Marketing provides a hands-on guide to understanding and building compelling marketing plans that create value, not only in profit terms but also for customers and stakeholders.

Working step-by-step through strategy development, this book empowers those responsible for creating or managing new products or services to have the right mindset, understand the most important marketing tools that they can use and apply these to create unprecedented levels of value. Founded on the principle of Service Dominant Logic, the book is organized into three key sections: "The Value Mindset, " "The 12 Building Blocks of Value, " and "Value-Focused Marketing in Action, " which walk through the process of value-focused product and service development. The strategies and tools put forward have been tested successfully across multiple industries and countries and are grounded in academic theory, emphasized by real-life case studies throughout. Readers will gain the ability to align their marketing scholarship and practices with the current definition of why a business exists and the role that marketing plays within these business practices.

This is essential reading for those studying Marketing Planning and Strategy at Advanced Undergraduate, Postgraduate and MBA levels. Its uniquely applied approach also makes it an excellent guide for marketing practitioners and institutions offering professional qualifications.

SECTION III CREATING VALUE-FOCUSED MARKETING STRATEGY

18 OVERVIEW OF SECTION III

An overview of the 12 steps you'll take to create value

Welcome to Section III! This is the “step-by-step” part of the book, where all of our previous discussions of value now turn into the reality of you and your company actually creating value. By the end of this section, you’ll have a comprehensive marketing strategy, value proposition and implementation plans that will guide you through the launch, monitor, analyze and revise process of never-ending improvement. The following chapters will help guide you through this entire process from beginning to end.

The step-by-step process we’ll be following is broken up into four phases, Problem Definition, Knowledge Creation, Strategy Creation and Value Creation.

Problem definition phase

These five steps will help you to clearly define why you and your organization do the things that you do and the capabilities that you possess to accomplish such great things. Building on this foundation, you’ll then clearly define your LRTC, proving that they exist as well as the PWS you will aim to solve.

• Step 1: Define Core Values
• Step 2: Confirm the “Why”
• Step 3: Brainstorm the LRTC Candidates
• Step 4: Brainstorm the PWS Candidates
• Step 5: Define the LRTC and PWS

Knowledge creation phase

These three steps will enable you to build deep expertise in the most important areas that relate to your LRTC and the PWS. Rather than wasting time on a pointless, brute force situation analyses, here in the Knowledge Creation Phase you’ll elegantly create expertise and insights through M.E.C.E. Question Trees and Value System Maps. You’ll then use these to define Scarce and Abundant Resources comprehensively.

• Step 6: Build and Answer your M.E.C.E. Question Tree
• Step 7: Build the Value System Map and Define Key Drivers
• Step 8: Identify Scarce and Abundant Resources

Strategy creation phase

These next three steps will look forward to building your vision of the future, help you explore possible options to get there and ultimately choose what you believe is the best marketing strategy and value proposition do so.

• Step 9: Set S.M.A.R.T. Objectives
• Step 10: Brainstorm Strategic Elements
• Step 11: Create Marketing Strategy and Value Proposition

Value creation phase

Finally, you’ll engage the OODA Loop process, cycling through infinite rounds of Launch, Monitor, Analyze and Revise (LMAR) to constantly test your ideas and consistently increase the value that you and your organization create for all five value actors.

• Step 12: Launch, Monitor, Analyze and Revise

To get started, it’s now time to agree to The Nine Rules, which are absolutely vital for you to successfully create a value-driven marketing strategy and not get caught in one of the many traps waiting to derail your value creation efforts.

19 THE NINE RULES

Introducing the nine rules

Before we begin the actual process of creating marketing strategy, we first need to agree on some rules that need to be followed to ensure that you reach the right destination, and don’t get distracted or become misguided in your efforts.

Rule #1: don't jump

Marketing strategy emerges after walking through an elegant and streamlined process. However, many people prefer to jump to conclusions rather than follow this process. The best example I’ve found to date to help you to avoid this natural tendency to jump to a conclusion rather than conducting a proper analysis of the situation and options comes from the adult parable, The Phantom Tollbooth, by Norton Juster (2011).¹

In one part of the story, the main character and his friends see a beautiful island shimmering across the water as they drive by. They each jump to a conclusion about how beautiful being on this island must be and soon after doing so are immediately transported across the water to that seemingly beautiful island.

The only trouble is that once they arrive, the island doesn’t look as beautiful as what they imagined from a distance. In fact, it’s a downright miserable place, with everyone who had mistakenly jumped there looking longingly across the water back to the place from which they had originally come. Try as they might to fly back across the water as easily as they had come, they find it is impossible to jump away from The Island of Conclusions as they had done to jump to it. The only way for them to get home is to swim through icy cold waters, something that they ultimately do, but after doing so make a vow to never again jump to conclusions.

My favorite quote comes from the main character Milo, after his painfully difficult swim back from the Island of Conclusions.

From now on I’m going to have a very good reason before I make up my mind about anything. You can lose too much time jumping to conclusions.

— Norton Juster, The Phantom Tollbooth, p. 166¹

Why do human beings like to jump to conclusions?

After jumping to so many of my own, and then as a consultant and professor watching others do exactly the same thing, I spent years looking for a scientific answer that made sense. Actually, there is hard scientific research that proves that we are genetically programmed to respond this way.

As Nobel laureate Daniel Kahneman proved in his many groundbreaking studies of human behavior (c.f. Kahneman, Thinking, Fast & Slow),² human beings have “two brains” or two different cognitive systems that help us navigate through our complex world. System 1 is the quick to respond, quick to take action default system that we typically rely on in the course of our day-to-day activities. By employing System 1, we can:

1. Save valuable time: have you ever been walking along a road and jumped back in fright from a large snake resting on the road only to discover a few split-seconds later that this was not a snake at all, but a piece of rope? That is System 1 in action, and its logic is that it is better to be embarrassed and alive, than to be bitten by a pit viper and dead.
2. Save valuable energy: Thinking hard about something causes our brains to expend glucose, which is a scarce resource that must be replenished. Our bodies’ energy efficient approach to thinking would prefer us to think only in highly necessary situations. Therefore, by relying on System 1, our jumps allow us to save valuable natural resources as well.

System 2 on the other hand is the slow, steady process that requires our full and careful attention. If you’ve ever labored to solve a complex math problem or calculate the fastest set of train connections between two cities, you’ve engaged System 2.

Maria Konnikova has proposed a more colorful way to help distinguish between System 1 and System 2 patterns of thinking. In her 2013 book Mastermind: How to think like Sherlock Holmes she called System 1 “System Watson” and System 2 “System Holmes.”³ System Watson quickly jumps to incomplete or incorrect conclusions, while System Holmes plods carefully forward until arriving at the correct and often-overlooked correct conclusion.

Translating systems 1 and 2 into the business world

Jumping saves time: from our snake example earlier, it is clear that throughout human history, fast decision-making capabilities kept us alive. Our ancestors who were slow and methodical when thinking about every snake they met soon died out. Along these same lines, there is an inborn distaste by executives across all levels of any organization to use time inefficiently. Frederick Taylor’s initial attempts to save time and energy proved that unstructured ways of moving were inefficient and could be greatly improved. Today, such thinking has evolved from the manufacturing line and lean production to the boardroom and executive meetings where “time is money” and organizational efficiency mandates that we move and decide as quickly as possible.

This fallacy is propagated by the false believe of many executives in something called “First Mover Advantage.” But as Tellis and Golder have clearly proven in their detailed research efforts on the actual results of moving first (outlined in their book, Will & Vision: How Latecomers Come to Dominate Markets⁴), moving first does not mean moving best. Instead, the many businesses that truly moved first were simply eliminated from our memories (another outcome of System 1 thinking), and the followers who truly solved the customers’ problem most effectively being remembered as the ones that actually moved first (but who really hadn’t).

I know this is hard to believe, especially if this is the first time anyone has explained this idea to you. The cause of this confusion is because the media has widely embraced the idea that moving first leads to the best results. For example, Trout and Ries’s must-read Positioning: The Battle For Your Mind,⁵ that we discussed previously, seems to argue for moving first. Their research and real-life efforts have proven that the brand that successfully captures a position in the mind of the consumer first is difficult, if not impossible, to oust from that position.

More recently, Malcolm Gladwell’s best seller Blink touts our human ability to jump to conclusions as a benefit and not as a risk or failure.⁶ But Gladwell actually concludes that those people who have built a strong level of category expertise can and should trust their intuition; whereas those who have not yet become experts should not be easily swayed by intuition.

Putting these seemingly different views of first mover advantage together with Tellis and Golder’s research, we actually find a very compelling and important story for marketers, which may also explain the pure genius of leaders like Akio Morita of Sony and Steve Jobs of Apple.

If, and this is a very strong conditional if, you truly have category expertise into your customers, your category, your company and how these all work together within the larger ecosystem, then it is OK to jump. Once you have reached this level of mastery and insight, you will see things before everyone else and anticipate trends like Akio Morita did with the Walkman, or pull together existing stand-alone products into a tour-de-force like Steve Jobs did with the iPod, iTunes and the Mac.

As we’ve already discussed in Chapter 4, this “implicit guidance and control” is the key to speeding up your progression through the OODA Loop process. At first, you’ll need to take time to expend System 2 resources to carefully decide among various options. But as you build expertise at the level of Steve Jobs or Akio Morita, your need to do so diminishes and you can move more effectively through tacit decision-making.

If on the other hand you do not yet feel like you’ve achieved this level of category expertise and insight just yet, then it is neither a good idea to jump, to blindly move first, nor to speed past important decision points within your OODA Loops.

This book outlines the process for helping you to gain such expertise, so that you can increasingly count on your intuition to guide you beyond where any textbook could go and where your OODA Loop cycles become far faster than any of your competitors.

Jumping saves energy: While glucose is the energy source of the human body, money is the main energy source of modern firms. Consumer behavior and underlying realities of modern markets are by definition incredibly complex. The effort to collect the appropriate and important information from the noise of the unimportant takes focu...