Value-Marketing Strategy- Valutrics

In the 1990s, value has become the marketer’s watchword. Today, customers are
demanding something different than they did in the past. They want the right
combination of product quality, good service, and timely delivery. These are the
keys to performing well in the next century. It is for this reason that we examine
this new strategic focus.
Value marketing strategy stresses real product performance and delivering
on promises. Value marketing doesn’t mean high quality if it is only available at
ever-higher prices. It doesn’t necessarily mean cheap, if cheap means bare bones
or low-grade. It doesn’t mean high prestige, if the prestige is viewed as snobbish
or self-indulgent. At the same time, value is not about positioning and image
mongering. It simply means providing a product that works as claimed, is accom-
panied by decent service, and is delivered on time.
The emphasis on value is part atmospherics, part economics, and part demo-
graphics. Consumers are repudiating the wretched excesses of the 1980s and are
searching for more traditional rewards of home and family. They are concerned
about the seemingly nonending economic ups and down. The growing focus on
value also stems from profound changes in the American consumer marketplace.
For example, real income growth for families got a boost when women
entered the work force. But now, with many women already working and many
baby boomers assuming new family responsibilities, the growth in disposable
income is scarily slow. Aging baby boomers whose debt burden is already high
realize that they must worry about their children’s college tuitions and their own
retirement. At the same time, the new generation of consumers is both savvier
and more cynical than were its predecessors. Briefly, consumers want products
that perform, sold by advertising that informs. They are concerned about intrin-
sic value, not simply buying to impress others.

Traditionally, quality has been viewed as a manufacturing concern. Strategically,
however, the idea of total quality is perceived in the market; that is, quality must
exude from the offering itself and from all the services that come with it. The important point is that quality perspectives should be based on customer prefer-
ences, not on internal evaluations. The ultimate objective of quality should be to
delight the customer in every way possible, providing levels of service, product
quality, product performance, and support that are beyond his/her expectations.
Ultimately, quality may mean striving for excellence throughout the entire orga-
nization. For assessing perceived quality, the step-by-step procedure used by the
Strategic Planning Institute may be followed:
1. A meeting is held, in which a multifunctional team of managers and staff special-
ists identify the nonprice product and service attributes that affect customer buy-
ing decisions. For an office equipment product, these might include durability,
maintenance costs, flexibility, credit terms, and appearance.
2. The team is then asked to assign “importance weights” for each attribute repre-
senting their relative decisions. These relative importance weights sum to 100.
(For markets in which there are important segments with different importance
weights, separate weights are assigned to each segment.)
3. The management team creates its business unit’s product line, and those of lead-
ing competitors, on each of the performance dimensions identified in Step 1.
From these attribute-by-attribute ratings, each weighted by its respective impor-
tance weight, an overall relative quality score is constructed.
4. The overall relative quality score and other measures of competitive position (rel-
ative price and market share) and financial performance (ROI, ROS, and ROE) are
validated against benchmarks based on the experience of “look-alike” businesses
in similar strategic positions in order to check the internal consistency of strategic
and financial data and confirm the business and market definition.
5. Finally, the management team tests its plans and budgets for reality, develops a
blueprint for improving market perceived quality, relative to competitors’, and
calibrates the financial payoff.
In many cases, the judgmental ratings assigned by the management team are
tested (and, when appropriate, modified) by collecting ratings from customers via
field interviews.46
This approach to assessing relative quality is similar to the multiattribute
methods used in marketing research. These research methods are, however,
employed primarily for evaluating or comparing individual products (actual or
prospective), whereas the scores here apply to a business unit’s entire product
line.
Attaining adequate levels of excellence and customer satisfaction often
requires significant cultural change; that is, change in decision-making processes,
interfunctional relationships, and the attitudes of each member of the company.
In other words, achieving total quality objectives requires teamwork and cooper-
ation. People are encouraged and rewarded for doing their jobs right the first time
rather than for their success in resolving crises. People are empowered to make
decisions and instilled with the feeling that quality is everyone’s responsibility.

The following are the keys to success in achieving world-class total quality.
First, the program requires unequivocal support of top management. The second
key to success is understanding customer need. The third key is to fix the business
process, if there are gaps in meeting customer needs. The fourth key is to compress cycle time to avoid bureaucratic hassles and delays. The next is empowering peo-
ple so that they are able to exert their best talents. Further, measurement and
reward systems must be reassessed and revamped to recognize people. Finally, the
total quality program should be a continuous concern, a constant focus on identi-
fying and eliminating waste and inefficiency throughout the organization.