Choosing Your Path To Mastering One of Three Key Value Dimensions to Achieve Market Leadership
When you think of Apple products, what comes to your mind?
When you think of McDonalds, what stands out for you?
And when it comes to shopping on Amazon, what feelings does it evoke?
In a landmark study in the 1990s, Michael Treacy and Fred Wiersema revealed that market leadership of a product or offering comes from one special offering or value discipline that is a standout characteristic over all the others.
No offering is perfect in all ways. And businesses must also not seek to achieve this. Instead,they must focus on mastering one of three "value disciplines" , say business strategists Michael Treacy and Fred Wiersema.
According to them, value comes from one of these three elements – Operational efficiency, Customer Intimacy and Product Leadership and successful companies follow this and don't attempt to be everything to everyone.
Their proposition stated that successful businesses needed to maintain a threshold or acceptable level of performance across all three dimensions. But in order to become a market leader, they needed to choose one of the three to highlight.
In their book The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market , Michael Treacy and Fred Wiersema elaborate on their framework for creating product value.
They call it Value Discipline; and this has three dimensions - Product Leadership, Operational Efficiency, and Customer Intimacy, from which emerge product value, operating excellence, and customer focus.
Product Leadership
Apple has always been a market leader because of its uniqueness. Always futuristic, advanced, and path-breaking, Apple's USP lies in its innovation. When buying an Apple product, people buy it for the product. People line up for a new release. Conversations around it focus on the product and its latest features and never on the price.
Innovative technology products generate value from the perception they create of offering something unique, unmatched, futuristic, and rare.
Product leadership comes from out-of-the-box thinking. They are creative, bold and ready to break the mold.They are truly leaders which others try to emulate. At the same time, product leaders are always in a competitive mode, working on the next big thing to retain their lead!
Other businesses in this category include J&J with their disposable contact lenses, and Lego!
Operational efficiency
Think McDonald's, and you know you can expect a standardised, reliable, no-surprise product at affordable pricing. McD, therefore, has created value from its no-surprise aspect. This comes from its operational efficiencies. The process—from sourcing of materials, processing, pricing, and delivery—is standardised and the same everywhere. The focus is on operational efficiency in delivering a familiar, standardised product.
The focus is on reliable products created using streamlined processes and delivered at lowest cost. Leadership, direction, teamwork and an organization wide commitment to quality and processes are a hallmark here.
Other businesses in this category include Dell, which offers high-quality products at reasonable pricing by streamlining its process to eliminate dealers, and Ryanair
Customer Intimacy
While online shopping on Amazon, you may not even have noticed, but Amazon is able to offer you most relevant suggestions. This is through their tracking methods, which observe your online behaviour to arrive at highly personalised recommendations to meet your specific needs.
Companies that focus on customer intimacy work are committed to building deep customer relationships. They can be recognised in the way they focus on building personalised connects. The metric of business success is defined by the length, closeness and the trust of the customer in the business and their understanding of their problems and guidance. Most service offerings tend towards creating value through customer service because of its low churn, long lasting relationship nature.
Other businesses include Netflix, with its curated, personalized selections based on user interests, and the Hiton Hotel chain, which is a favorite among travellers for its thoughtfulness and attention to detail.
Customer intimacy as a USP is of special relevance to service providers
In the services business, customer intimacy translates into having deep and insightful knowledge of your customers. Businesses look to understand each customer’s needs by investigating their landscape, background, and unique challenges. It is only then that they can provide personalised solutions. The accuracy, appropriacy, and fit of these solutions influence buyer decisions based on the unmatched value associated with them.
A one-size-fits-all approach to offering services is never a good decision. A company's scale, age, and industry vary, making customer needs very specific.
In marketing, ABM is one approach to nurturing and enhancing customer intimacy. Marketers tailor their content and approach to each account to deliver maximum value, building customer loyalty and returning customers.
Whether a company chooses to excel through customer intimacy, product leadership, or operational efficiencies, the key lies in recognising its core competence. Customer intimacy fosters deep, lasting relationships and loyalty, product leadership drives innovation and differentiation, and operational efficiencies ensure superior performance and cost-effectiveness. Working on honing their greatest strength is a powerful strategy to establish leadership in a crowded market.
To know more about what we do at Think ABM, connect with me at hello@thinkabm.com
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