Creating Market Value

Professor Alexander Chernev

Kellogg School of Management
Northwestern University

Alexander Chernev

Creating Market Value: The Big Picture

A companys success is determined by its ability to

create market value

The way in which a company creates market value

is defined by its business model

The business model involves two key components:

strategy and tactics
Business Model
Strategy

Defining
market
value

Alexander Chernev

Tactics

Designing
market
offerings

Marketing Strategy

Marketing strategy outlines the logic of the valuecreation process

Marketing strategy involves two key components:

the target market and the value proposition

Marketing Strategy
Target market

Defines the
environment in which
the companys offering
aims to create value

Alexander Chernev

Value proposition

Defines the benefits

and costs created by
the offering for the
relevant market
entities

Marketing Strategy

The Target Market

Value
proposition

Collaborators that work with the

company to create customer
value

Competitors that aim to fulfill

the same need of the same target
customers

Alexander Chernev

The company in charge of the

offering
The relevant business, economic,
technological, sociocultural,
regulatory, and physical context

Customers
Competitors
Context

The 5-C market

analysis framework

or
at

Target customers for whom the

company will optimize its offerings

r
bo
lla
Co

ny

The target market is defined by five key factors

Co
m
pa

Target
market

Marketing Strategy

The Value Proposition

Target
market

Value
proposition

The value proposition defines the benefits an

offering aims to create for the company, its
customers, and its collaborators

Company
Value

Customers

Alexander Chernev

Value

Value

Collaborators

Marketing Strategy

The Value Proposition

Target
market

Value
proposition

The development of the value proposition begins

with defining the value exchange depicting the
relationships among the relevant market entities

Company
Value

Value
Value

Customers

Collaborators

Value

Company
value
Customer
value

OVP

Collaborator
value

Value

Value

Competitors

The Optimal
Value Proposition

Context

6-V framework
Alexander Chernev

The 3-V principle

Marketing Tactics

Marketing tactics translate the value-based strategy

into a set of actionable decisions that define the
market offering
Company
value
OVP

Customer
value

Collaborator
value

Marketing Tactics
Product

Service

Brand

Price

Incentives

Communication

Distribution

Marketing tactics are defined by seven key

elements

Alexander Chernev

Marketing Tactics as a Process

Marketing tactics are akin to levers that a manager

can manipulate to implement the desired strategy

Product
Price

Service
Valu
e

Communication

Alexander Chernev

Brand
Incentives

Distribution

Marketing Tactics as a Process

Marketing tactics can be viewed as a process of

designing, communicating, and delivering value

Product
Price

Designing
value
Service
Valu
e

Communication
Communicatin
g
value

Alexander Chernev

Brand
Incentives

Distribution
Delivering
value

Offering
benefits
Offering
costs

Marketing Tactics as a Process

Marketing tactics can be viewed as a process of

designing, communicating, and delivering value
Value-creation process: Company
actions

Key value
drivers

Designing
the offering

Communicating
the offering

Delivering
the offering

Product
Service
Customer
value

Brand
Price
Incentives
Offering
attractiveness

Offering
awareness

Offering
availability

Value-creation process: Customer

impact

Alexander Chernev

Creating Market Value: Overview

The target market defines the

environment in which the company
aims to create value (5-C
framework)
The value proposition defines
the benefits and costs for the
company, its customers, and its
collaborators (3-V principle)

Marketing Strategy
Value
proposition

Target
market

rs
to
ra
bo
lla
Co

Marketing strategy outlines the

logic of the value-creation process

Co
m
pa
ny

Customers

Competitors
Context
Company
value
OVP

Customer
value

Collaborator
value

Company
Value

The value proposition stems from

an analysis of the value
exchange, which outlines the

Alexander Chernev

Value
Value

Collaborators

Customers
Value

Value

Value

Competitors
Context

Creating Market Value: Overview

Marketing tactics translate

the strategy into a set of
actionable decisions that
define the market offering
Marketing tactics involve
seven factors: product,
service, brand, price,
incentives, communication,
and distribution
Marketing tactics can be
viewed as a process of
designing, communicating,
and delivering value

Alexander Chernev

Company
value
OVP

Customer
value

Collaborator
value

Market offering
Product

Brand

Service

Price

Incentives

Communication

Distribution

Designing value
Product

Service

Price

Valu
e

Communication
Communicatin
g
value

Brand
Incentives

Distribution
Delivering
value

G-STIC Action-Planning Framework: The Big

Picture

The G-STIC framework outlines the key aspects of

the action plan
Goal
Focus

Benchmarks

Strategy
Target market
Business model

Value proposition

Tactics
Product

Service

Brand

Price

Incentives

Communication

Distribution

Implementation
Infrastructure

Processes

Schedule

Control
Performance

Alexander Chernev

Environment

Action Plan
(G-STIC Framework)

Marketing Plan as a Business Document

G-STIC is the core of the marketing plan

Executive Summary
Situation Overview
Goal
Focus

Benchmarks

Strategy
Target market
Business model

Value proposition

Tactics
Product

Service

Brand

Price

Incentives

Communication

Distribution

Implementation
Infrastructure

Processes

Schedule

Control
Performance

Alexander Chernev

Exhibits

Environment

Action Plan
(G-STIC Framework)

Creating Market Value: Business Model Workbook

Marketing Strategy
Target
Market

Marketing Tactics
Customers

Competitors

Market
Offering

Product

Service

Collaborators
Brand
Company
Price
Context

Value
Proposition

Incentives
Customer Value
Communication
Collaborator Value

Company Value

Alexander Chernev

Distribution

Creating Market Value

Professor Alexander Chernev

Kellogg School of Management
Northwestern University

Alexander Chernev