There are many frameworks for developing and evaluating company strategy. Perhaps the best known, however, is Porter’s Five Forces. This looks at five areas, supplier power, customer power, competitive rivalry, threat of substitutes and threat of new entrants. Companies using this approach consider the opportunities and threats across the five forces to give them a picture of their market, and help them to identify their own strengths and weaknesses.
To my mind, the competitive pressure from suppliers and buyers are especially important in analysing a company’s strengths and weaknesses. The idea is to position the company correctly in its industry by clarifying the areas where, as Porter himself put it, strategic changes may yield the greatest payoff, and industry trends show the greatest promise.
It is vital for companies to understand how their value proposition helps them to deal with these five forces of micro-economic pressure—and this is only becoming more important in today’s highly networked economy.
Axis of pressure
Let’s look at the supplier–buyer axis of pressures from the supplier point of view, and examine how the value proposition in a B2B marketplace can be articulated for competitive advantage. In particular, let’s look at how it can be translated into business campaigns.
The value proposition components and their related benefits offered to the supplier of a given professional marketplace can be identified and grouped into four categories, based on their openness and transparency. These in turn will provide a structure for developing the deliverables of various campaigns.
The first area is the advertised features. These are completely transparent to all, but also focus on key features and advantages. They include benefits like reducing cash flow, faster payment terms and lowering the cost of sales.
The second area contains the specific value proposition set out by the marketplace owner: the actual and detailed elements of the offer. This could include benefits like backend system integration, lead generation and contract management tools. These are purposefully designed to form a solid set of tested and valued propositions. Beyond the fee, transfer rates and other financial benefits, they also form the core of a supplier’s program.
The third and fourth areas move towards customer engagement, covering the benefits perceived and measured by each individual supplier. These areas therefore include components linked to individual perception or experience, brand recognition and measurable benefits. Practical examples include traceable lead generation, reduction of errors in end-to-end processes and improved cash flow. These areas may not be visible to the marketplace supplier, or others within the marketplace, because they are highly individual. However, they are also key to convincing individual customers of the value of the offer.
Stacking the value proposition
Once identified, created, optimised and documented, these components of the value proposition can be stacked to help the company to leverage its strengths into the B2B marketplace.
However, the process does not simply stop with the articulation of the value proposition.
This stack of layered value proposition components should lead to the organisation of business campaigns, including marketing and communication (advertised), investment domains (program content) and buyer engagement and feedback (perceived and measured). The measured components can also be leveraged into powerful and more relevant tools to deliver return on investment, and analysis that will also improve the balance sheet. Lastly, internal and external training can be structured to improve effectiveness.