Marketing as Value Creation

In today's fast-paced and highly competitive business environment, the traditional view of marketing as merely a tool for promoting products and services has evolved into a more broader and holistic approach.

In his book "Marketing Management" Alexander Chernev's insightful perspective describes marketing as a value creation discipline for customers, the company, and its collaborators.

This approach underscores the importance of integrating marketing strategies across all facets of a company involving all staff, and transcending the confines of just the marketing departments.

This article discusses how value is created for customers, the company itself, and its collaborators, including suppliers, contractors, and more, emphasising the pivotal role of marketing as a value creation engine.

Marketing is about the whole business working in alignment within the company and in tune with customers, suppliers and others.

Value Creation for Customers

At the heart of any successful marketing strategy lies the creation of value for customers.

This encompasses understanding and meeting their needs, wants, and preferences in a manner that exceeds their expectations.

Value creation for customers involves offering high-quality products and services, ensuring a seamless customer experience, and building strong, enduring relationships.

It also entails personalised communication and engagement strategies that resonate with the target audience, thereby fostering loyalty and driving long-term customer retention.

• Product Innovation and Quality: Developing products and services that not only meet but exceed customer expectations, thereby offering unique value propositions.Companies continuously improve and innovate their product offerings to provide superior value. This could involve using sustainable materials, incorporating cutting-edge technology, or offering unique features that set their products apart.
• Customer Experience: Crafting a seamless, efficient, and enjoyable buying and utilisation journey for customers, from initial awareness through to post-purchase support; sometimes for life. Think of long lasting assets like a home, or lifetime services of your medical practitioner. Businesses can provide customers with valuable information, tutorials, and insights that help them make informed decisions or get more value from their products, thereby deepening the customer relationship.
• Personalisation: Utilising data analytics to offer personalised experiences, products, and services that cater to individual customer needs and preferences. This experience ideally starts well before customer search and extends well past the buying transaction.Social media platforms offer an excellent avenue for extending personalisation, allowing businesses to not only communicate effectively with their audience but also to listen and respond to their needs and feedback in real time.For instance, supermarkets like Woolworths use customer purchase history to tailor offers and promotions on a weekly basis, making them more relevant and valuable to each shopper.

Bunnings Warehouse, a leading Australian hardware chain, exemplifies value creation for customers through its focus on quality, innovation, and educational content. Bunnings hosts free DIY workshops for adults and children including YouTube instruction videos, helping customers learn new skills and get more value from their purchases. This initiative not only enhances the customer experience but also builds a strong community around the brand. By investing in customer education, Bunnings has positioned itself as more than just a retailer; it's a valuable resource for home improvement enthusiasts across Australia, fostering loyalty and repeat business.

Value Creation for the Company

Marketing's role in creating value starts with the company itself.

For a company, value creation is about developing sustainable competitive advantage, driving financial performance, and building a strong brand.

• Brand Differentiation: Develop a clear and compelling brand proposition that differentiates your company in the marketplace. This can involve sustainability initiatives, technological superiority, efficient production, exceptional customer service, or a unique brand story.
• Operational Efficiency: Streamline operations through technology and process improvements to reduce costs and improve service delivery. Efficiency gains not only boost profitability but also allow for more competitive pricing and faster response times to market changes.
• Employee Engagement and Development: Invest in your workforce through training, development programs, and a positive work culture. Engaged employees are more productive and can be powerful ambassadors for your brand.

Cochlear Limited, a global leader in implantable hearing solutions, demonstrates how focusing on innovation and employee engagement can drive company value. Cochlear invests heavily in research and development to stay at the forefront of medical technology, leading to groundbreaking products that have solidified its market position. Concurrently, Cochlear places a strong emphasis on employee development and engagement, fostering a culture of innovation where employees are encouraged to pursue new ideas. This combination of external innovation and internal talent development has enabled Cochlear to maintain its leadership in a highly competitive industry.

Value Creation for Collaborators

Collaborators—including suppliers, partners, and the broader community—play a crucial role in a company's ecosystem. Creating value for these stakeholders strengthens the supply chain, fosters innovation, and enhances corporate reputation.

• Strategic Partnerships: Develop strategic partnerships that leverage the strengths of each party. For example, collaborations with technology firms can lead to the development of new products or the enhancement of existing ones, providing a competitive edge.
• Sustainable and Ethical Supply Chains: Work with suppliers to ensure that operations are sustainable and ethical. This not only minimises risk and improves supply chain resilience but also meets the increasing consumer demand for responsible business practices.
• Community Engagement: Engage with the communities where you operate through initiatives that support local development, such as educational programs, environmental conservation, and social welfare projects. This enhances your company's social licence to operate and can lead to a more favourable business environment.

Telstra, Australia's largest telecommunications company, illustrates value creation for collaborators through strategic partnerships. Recognising the importance of cybersecurity in the digital age, Telstra formed a partnership with global security firms to offer enhanced cybersecurity solutions to its customers. This collaboration not only strengthened Telstra's product offering but also provided its partners with access to a broader market. By aligning with the expertise of its collaborators, Telstra has been able to deliver superior value to its customers while also fostering mutually beneficial relationships with its partners.

Integrating Value Creation Across All Areas

The integration of value creation efforts across customers, the company, and collaborators requires a holistic approach and a shift in mindset. It's about seeing the company not just as a business entity but as a part of a larger ecosystem that includes various stakeholders. Here are some steps to achieve this integration:

• Align Objectives: Ensure that there's alignment between business objectives and value creation efforts. This alignment should be reflected in the company's mission, vision, and operational strategies.
• Measure and Track Impact: Implement systems to measure and track the impact of value creation initiatives across all areas. This includes customer satisfaction scores, employee engagement levels, and the effectiveness of community engagement efforts.
• Communicate Transparently: Communicate your value creation efforts and their impacts transparently to all stakeholders. This builds trust and strengthens relationships with customers, employees, and the broader community.

Integrating Value Creation: Telstra's Thrive On Strategy

Telstra, Australia's leading telecommunications and technology company, showcases an integrated approach to value creation with its "Thrive On" strategy. This comprehensive plan focuses on delivering superior customer experiences, driving innovation, and being a responsible business that contributes positively to society.

Telstra invests in cutting-edge technology to improve connectivity and services for customers, fosters a culture of innovation and collaboration among employees, and actively participates in community initiatives aimed at digital inclusion. By aligning these efforts, Telstra creates value across the spectrum, reinforcing its market leadership and building a sustainable future.

Conclusion

Marketing, as Alexander Chernev eloquently positions it, transcends traditional boundaries to become a cornerstone of value creation for customers, the company, and its collaborators.

This comprehensive approach underscores the importance of integrating marketing efforts across all levels of the organisation and beyond, highlighting the role of marketing as a vital engine for growth, innovation, and competitive advantage.

In an era where customer expectations are continually evolving, and the business landscape is increasingly complex, embracing marketing as a value creation discipline is not just strategic but essential for sustained success.

Note: Whilst large corporations are featured in the examples above, the principles outlined in this article apply equally well to the SME and family business sectors.

Small businesses are more agile and closer to their communities and customers than large companies. Accordingly, it is often easier for them to create greater value than their larger counterparts.

To your success!

Frank Choy

5 March 2024

Recommended reading:

"Strategic Marketing Management - The Framework", Alexander Chernev, Cerebellum Press, 2019