Explain what marketing strategists need to take into account when implementing either a high perceived value strategy or a low delivered cost strategy | Example Business Marketing Essay


Marketing has a critical role in ensuring that a target market or general population are made aware of an organisation's products and or services. This position is crucial because if not efficiently carried out, the overall objective of selling to the consumer may not be achieved efficiently. With this understanding, organisations give the marketing department a vital task of formulating appropriate and effective strategies concerning the core activity. These may vary from an institution, products/services, countries or regions among other differentiating criteria. This paper focuses on two major strategies employed by organisations and looks at what key considerations marketers should undertake when engaging either. The two procedures are namely, high perceived value strategy and a low delivered cost strategy. In the subsequent sections, the paper will tackle each separately highlighting the significant factors that need consideration when employing either.

High Perceived Value Strategy

High Perceived Value Strategy revolves around the concept of perceived value, and one should understand this before going ahead to look at how it is incorporated into a strategy. Consumers tend to attach an absolute value on a given commodity or service, and this is dependent on numerous factors (Ravald and Grönroos, 1996). What takes place is that when these factors are identified as beneficial to the consumer they will attach a high perceived value to the commodity and in such cases, the consumers may not be afraid to pay a premium. Alternatively, when the contrary takes place, and they have a diminished view of the benefits associated with the product or service, consumers will go ahead and attach a low perceived value to the good or service. In such cases, it is difficult to convince these individuals to pay a premium and in they may ask for a discount. Hence, the perceived value as pointed out by Bradley (2005), plays a critical role in shaping the subsequent marketing approach an organisation is willing to take up. It is identified as necessary by other sources and is also linked to the process of pricing, which is also crucial for any organisation.

With the above understanding, one can then go ahead and examine how an organisation implements this aspect, which can then constitute a marketing strategy. This is best identified by asking the question if an institution decides to take up a high perceived value strategy, what are the key factors that they should be considered?  These are easily identifiable, especially when an emphasis is placed on the aspect of high perceived value. For instance, the first consideration to make is whether product substitutes are using the same strategy concerning marketing. What this means is that both the nature of the product and the nature of the market determine whether or not a high perceived value strategy can be employed. For instance, take the example of essential commodities, such as table salt; it would be largely ineffective to look towards incorporating this in the marketing strategy considering that market has already attached a particular value to the product. However, when it comes to luxury goods such as cars, or accessories, one can use the high perceived strategy efficiently to market the product or service. Therefore, the nature of the product plays an essential role regarding determining the success of the high perceived strategy, for this reason, it is a significant consideration that needs to be looked into by marketers.

Another factor that can also be considered is that marketing approach taken by competing firms as well as substitute products. If the organisation is in a market where other companies are employing branding as well as different marketing strategies to boost consumer perceived value of their product, then the organisation must also respond similarly (Bradley, 2005). For instance, in the Shoes and Apparel Industry, enhancing consumer perceived value of a given brand is achieved by endorsing brand ambassador in most cases celebrities from sports, music and fashion sectors. This is supported as useful by Seno and Lukas (2007), who identify this as also having a substantial impact on the perceived value of a product. Hence, when organisations are considering a high perceived value strategy, they must put all these aspects into consideration and look at competitor approach, as well as industry trends. These should guide the subsequent marketing approach that is to be taken up.

Low Delivered Cost Strategy (LDCS)

In the above sections, the paper has looked at the considerations made when a marketing strategist is looking to use the High Perceived Value Strategy. However, there is also an alternative strategy to this approach. The Low Delivered Cost Strategy should be understood as broadly price-centric since the primary objective of organisations participating is price leadership, which is providing low priced commodities or high discount rates to their consumers (Vandermerwe, 2000). Numerous sources discuss this subject matter and provide key examples of where this approach can be implemented. For instance, one of the best companies to refer to when looking at this strategy is Wal-Mart as discussed by Stankevičiūtė, Grunda and Bartkus (2012). The authors identify how the organisation makes use of this low pricing/price leadership strategy to effectively compete in the market. Hence, with this understanding of what the low pricing necessitates the Delivered Cost Strategy one can go ahead and look at the factors to be considered when employing it. 

Considering that the strategy is largely centred on cost, numerous considerations are made, and most are largely internal or organisational based (Bradley, 2005). That is when organisations want to achieve price leadership; they will look towards strategies that minimise cost in all possible ways. Hence, those employing the low delivered cost strategy must identify the internal processes of the organisation to determine whether internal considerations support the procedure to be pursued. In the case of Wal-Mart, one can go ahead and look at the issue of how costs can be lowered when it comes to distribution, packaging, branding among other factors. These are essential examples of how these organisations make the use of the LDSC, must look towards the overall objective of lowering costs. Other examples can also be identified by looking at other major strategies employed by price leadership companies. For instance, increasing control from production to distribution is another way in which cost can be best managed and then lowered to meet LDSC standards (Vandermerwe, 2000). Hence, it is vital to note that looking at the internal processes of the organisation is crucial when one is utilising such a strategy.

It would also be imperative to analyse whether external considerations need to be made with respect to the LDSC approach. Several critical considerations can actually be employed to aid in effectively implementing this marketing strategy. For instance, it is also important to consider competitor price whenever looking to apply a Low Delivery Cost Strategy since an understanding of market rates will inform the organisation and help it select the appropriate price for the product or service (Vandermerwe, 2000). Correspondingly, a market, as well as competitor analysis, is also an important process. For instance, if an organisation is able to offer a lower price than what the competitors are offering, there should be a need to enquire why this is possible. For instance, referring back to the selected example of Wal-Mart, recent literature has revealed that it is receiving string competition from ALDI a German-based retailor (Pelham and Wilson, 2016). Further analysis shows that ALDI'S use of private labelling is one of the major drivers of this fact (Kumar, 2007). Hence, this is a perfect example of how an analysis of a company's competitors and their respective approaches are also important when looking to employ LDSC. Therefore, all the stated considerations must be looked into for the success of the strategy.

Summary and Conclusion

When the two strategies and their considerations are compared, one can identify a divergence and convergence in both. For instance, with LDSC a lot of emphases has been placed on the internal processes to achieve a low price. Alternatively, the High perceived Value Strategy focuses on the external aspects, such as the use of brand ambassadors and additional factors that can raise consumer perceived value for the product or services. However, both require the understanding of market trends, competitor approaches among other key elements that can be used to influence their marketing approaches. Hence, this demonstrates the convergence and divergence regarding the considerations to be made when employing either strategy. Besides, the examples provided have gone ahead to show how product influences what marketing strategy to use. In the case of High Consumer perceived Value, the procedure applies in most cases to Tertiary goods or goods classified as luxury items. However, for the LDSC approach, basic goods and the producing organisations may find the approach highly appropriate. Thus, in general, numerous factors should be considered when looking to employ either strategy, and these differ depending on the various factors discussed in the paper. 

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Bradley, F. (2005). International Marketing Strategy. Harlow: Financial Times/Prentice Hall. Pearson Education ISBN: 0-273- 68688-7

Kumar, N., 2007. Private label strategy: How to meet the store brand challenge. Harvard Business Review Press.

Pelham, A.M. and Wilson, D.T., 2016. A longitudinal study of the impact of market structure, firm structure, strategy, and market orientation culture on dimensions of small-firm performance. Journal of the academy of marketing science, 24(1), pp.27-43.

Ravald, A. and Grönroos, C., 1996. The value concept and relationship marketing. European journal of marketing, 30(2), pp.19-30.

Seno, D. and Lukas, B.A., 2007. The equity effect of product endorsement by celebrities: A conceptual framework from a co-branding perspective. European Journal of Marketing, 41(1/2), pp.121-134.

Stankevičiūtė, E., Grunda, R. and Bartkus, E.V., 2012. Pursuing a cost leadership strategy and business sustainability objectives: Walmart case study. Economics and Management, 17(3), pp.1200-1206.

Vandermerwe, S., 2000. How increasing value to customers improves business results. MIT Sloan Management Review, 42(1), p.27.

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