In selling food ingredients, companies need to evolve from selling product benefits to selling value.

 

     The term Value Proposition is becoming the most widely used and most misunderstood term in the Sales and Marketing lexicon. In the B2B world, it is the single most important business concept and yet so many businesses have not developed the mindset, the disciplines and the tools to develop and present robust, provable and compelling Value Propositions.

     The heart of a good Value Proposition is based on studying customers and customer types in order to work out where a supplying company can add real value. I use a very simple three-part model to help guide companies to find where their products, services and institutional capabilities could add value to their customers. As with any good model, it starts simple at top but the thinking it demands results in a great deal of effort to understand how and where to generate real and quantifiable value. At their heart, B2B suppliers need to help their customers grow the value of their business and, frequently, they have much more to offer than only a product or advertised service.

     Technical support is very often the basis for what a company calls their Customer Value Proposition. The lazy logic runs along the lines of “our superior technical support team will enable our customers to get the best from our products”. However, from the customer’s point of view, suppliers are expected to have competent technical people and, in any case, all the competitors are likely to have a technical team of some level of capability. It is how technical capability is used to build value that turns a “must have” feature into a value generating force. 

     And this is where we return to how B2B companies use marketing principles to generate value for their customers. The Generic Four Step Marketing Method is remarkably simple to describe but not so easy to implement. It starts by understanding a market in terms of the scale of opportunity and the structure of it in terms of its channels and segments, it goes on to develop Products and Services that will resonate with segment needs, before playing a central role in taking the company’s propositions to market and finally analyses the results to improve future market understanding, product portfolio and implementation.  

     I worked recently with an ingredient company who believed that marketers were there to put together brochures and "do the website". When we started to do some real marketing and analyse their market with a marketers eye, we not only discovered that parts of the market they left uncovered were much larger than they realized, but also the power of proper segmentation identified ways we could engage in a much more meaningful way with some of the most significant customers.

     Proper segmentation means grouping customers according to their needs rather than by the more usual “size-based classification”, which many companies call segmentation. In this exercise, we discovered that large customers who we assumed would have huge market research budgets actually researched on a very narrow horizon. Ironically, the large sums they invest in consumer brand development mean that they have to be sure that what they do meets the approval of their target consumers. Much of what they invest goes on testing the effects of things like merchandising slogans, color schemes and promotional offers. At the same time, their product development teams spend a huge proportion of their time ensuring they adhere to current and future regulations. Put the two things together, and we had the basis for a simple Value Proposition. 

     The marketing group was redirected to build a picture of consumer behavior using evidence and story telling techniques. This was then taken to a creative element of the technical team who were tasked to create product ideas that would resonate with the consumer picture we had drawn. These ideas, a blend of the practical and frankly outlandish, were translated into recipe formulations that could be produced on the customer’s production lines then roughly costed before being given a suggested retail selling price and consequential estimated margin. The whole story was put together in a simple but compelling presentation day which brought together marketers, product developers and production technicians from both companies leading to a much more networked set of contacts between supplier and customer. Crucially, this led to a much more effective product launch program for the customer and integrated the supplier into the customer’s NPD way of working – a simple Value Proposition had re-positioned them as a critical supplier to a customer who commanded a leading market share.

     It would be fair to say that many suppliers run product idea days and talk about market research but it is unusual for a B2B supplier to tie market, product, regulatory and financial modelling together in a cohesive and repeatable way that is designed to sell value first and product second.

 

Andrew Adam - A B2B Strategic Sales & Marketing leader


 

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