Development of a Strategic Value Proposition on Organizational Strategy
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This report discusses the development of a strategic value proposition for organizational strategy, with a focus on Npower. It covers potential market opportunities, market segmentation, competitive strategies, and proposed value propositions. The report also includes a positioning strategy for communicating the value proposition to target customers.
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Consultancy Report Development of a Strategic Value Proposition on Organizational Strategy
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EXECUTIVE SUMMARY It is discussed that an organisational strategic value proposition is helpful to create a series of actions that can be implemented by the organisation for achieving target customer attention, smooth business operations and competitiveness in market positioning to achieve desiredgoalsandobjectives.Inthisregarditpresentsastrategicvaluepropositionon organisational strategy of Npower. Potential market opportunities were identified with the help of market segmentation and targeting that has identified the growing demand for sustainable energy needs that lower down the harmful impact on the environment. An evaluation of two market segmentsiselaboratedto provide understanding of the marketsegmentationand targeting.Moreover, competitivestrategiesfor positioningwere evaluatedthat consist of Bowman's Strategic Clock and Porter's Generic Strategy. Along with this, two value propositions are developed and evaluated with the help of a concept of Jobs, Pains and Gains that can be helpful to achieve the objectives of target market and the organisation. Finally, positioning strategy for Npower is developed to communicate the value proposition to target customers with the help of 7Ps of marketing mix aligned to the positioning strategy for target market.
Table of Contents INTRODUCTION...........................................................................................................................1 2.0 POTENTIAL MARKET OPPORTUNITES.............................................................................2 2.1 SEGMENTING THE MARKET...............................................................................................3 3.0 DEVELOPING THE COMPETITIVE/WINNING STRATEGY.............................................5 4.0 PROPOSED VALUE PROPOSITION.....................................................................................7 5.0 POSITIONING STRATEGY FOR COMMUNICATING THE VALUE PROPOSITION...10 5.1 MARKETING MIX TO SUPPORT THE POSITIONING STANCE....................................11 CONCLUSION..............................................................................................................................13 REFERENCES..............................................................................................................................15 APPENDICES...............................................................................................................................17
INTRODUCTION Organisational strategy can be explained as a long-term plan that shows how a business can grow by properly allocating the resources within the organisation. Strategic value proposition refers to the values that the company promises to sell or deliver to their clients, so they opt to purchase their products and services(Barros and Fischmann, 2020).Effective organisation strategy is integral for an organisation to achieve success. Strategy should not be a lengthy document of planning but it is a combination of integrated and strong choices that can help an enterprise to achieve success. The strategic value proposition helps to create a series of actions thatcanbeimplementedwithinanorganisationtoachievecustomerattraction,smooth operationsandcomparativemarketpositioningfor achievingfavourableoutcomesinthe business.Thefollowingreportwillfocusonelaboratingthedevelopmentofthevalue proposition for The Npower Ltd. The following report will explain various methods by which organisation can develop an effective value proposition for entering the oil and gas industry. The requirement for fuel and energy in coming years is to grow for sure. For this the best option for Npower is to prepare for the production of renewable energy industry too. This report will present strategic options for Npower to achieve success in the business. As per the views of Martin the companies must provide answers to certain strategic choices within the industry in which they want to enter(Carvalho and Madeira, 2020).It includes the answer to winning the aspiration of Npower, place at which the organisation will focus on, winning strategy of the organisation and what are the management efficiencies will require. When these answers are obtained by the organisation and these questions reinforce each other than Npower will definitely achieve success. For identifying these aspects the report will provide an explanation to the market opportunities where the company could enter and the target market segment where the bestopportunitiescanbeobtainedbytheorganisation.Thisreportwillalsoprovidea competitive strategy for the organisation to achieve success. In the end it will propose a value proposition and showcase the marketing positioning strategy of the organisation to achieve desired goals. 1
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2.0 POTENTIAL MARKET OPPORTUNITES The oil and gas companies have witnessed a rise in demands for clarifying the limitations of producing and supplying energy within their organisation to determine the contribution they can maketoreducegreenhousegasesforattainingorganisationalgoalsalongwiththe ParisAgreement. Rising awareness among the society in regard to the environmental impact done by oil and gas companies has intensified the role of organisations to restructure their business model and reduce their negative impact on the society(Martin-Gamboa and et. al., 2020).The Npower is an organisation that deals in the production and supply of gas and electricity to businesses that were established to serve customer energy needs/ demand. The company operated with fuel fired energy power stations, natural gas and coal and now it has moved on supplying gas and electricity to residential and business customers in the UK. The company have capability to serve more than 500,000 customers and has its energy and gas supply outlets at many places across the UK. In the era of renewable energy the use of non- renewable sources of energy is becoming futile due to this the company must move towards other sources of energy creation. The use of renewable energy sources in coming years will be a great deal for organisations to reduce its negative impact on the environment and improve the level of technology advancement. Npower will be a means to provide better understanding about the diversity of its organisation and its strategy to develop such ways to satisfy the demand of customers. The company will focus on expanding its business to provide energy to its clients and customers at reliable and affordable supply of gases(Biazzo and Filippini, 2021).The company has the opportunity to enter into the renewable energy sources for which strategic options can be used by Npower which can be helpful to achieve strategic growth of the business. 2
Figure1:https://www.iea.org/reports/the-oil-and-gas-industry-in-energy-transitions From the above image it can be explained that oil, gas and coal have the greatest contribution in emitting greenhouse gases whereas their contribution to electricity generation is only about 75-80% of their total consumption to produce energy. On the other hand the use of renewable energy requires fewer resources for producing 5 times more the energy than its total energy needs. Therefore, Npower could enter into the production of renewable energy in the organisation that will support technology and environmental growth. There is a lot that the organisation can do to reduce its impact on the environment by considering their choices and minimising emissions from oil and Gas operations as its primary focus for improvement. 2.1 SEGMENTING THE MARKET Market segmentation and targeting can be explained as the procedure to identify the potential clients of the organisation, choosing the suitable clients to attract and creating value for those target customers to attract them towards the products or services provided by the organisation.Withthehelpofsegmenting,targetingandpositioningprocessmarket segmentation and targeting can be done that can help to identify and attract the prospective customers(Andaleeb, 2016). The potential clients or customers of Npower can be segmented on the basis of demographic, lifestyle and geographic positioning where the organisation may use another method of asking why, what and whom questions. Segmenting is the initial step that 3
involves classifying and organising the customers with similar needs and determining their characters. The customers for Npower can be categorised with the help of firmographic segmentation which involves customers who embody the same principles. Segment 1:General Customers The company could focus on customers who desire to have sustainable development of fuel and energy for reducing harmful and environmental impacts. It will include the customers who havethedesireforpromotingtheuseofclean/renewableenergybyusingtechnology advancement and help to improve environmental health too. These market segment customers will be based on those users who use electricity on a daily basis for final consumption purposes (Paruchuri, 2019). It will include customers who are potential users, regular users, first time users, x-users and non-users. It will educate about the products and services to those customers who desire or intend to buy, have informed interest, aware or unaware choices for the products and services offered. The segmentation for the aware customers is around 40% of the total market coverage. Segment 2:Commercial and Residential Buildings The second market customers will consist of providing energy to the commercial and residential buildings. These market segment variables can be considered and evaluated on the basis of geographic segmentation that consists of 100,000s of addresses across many areas including ruler, sub-urban and urban. The customers in this segment are mainly the household and commercial buildings whose emission levels amount to very high levels that will be declined by Npower supply of energy requirements that will amount to very less emissions and fulfil the energy requirements of these areas. Evaluationof Market Segments CriteriaSegment 1Segment 2 Size General Customers including the customers who want to promote clean energy usage and lower the environmental impacts and need technological advancement. CommercialandResidential Buildings that have obligation to use sources of energy to decline theemissionofgreenhouse gases. Growth RateTheexpectedgrowthrateforThe expected growth rate for the 4
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segmenting for these customers is low, nearly 10-15%. organisation for this segment is approx. 40%. Profit Potential Theglobaldemandfor renewableenergyistogrow from 2020-2050 but this segment does not witness higher degree of profits. The investment in this customer segment will be highly profitable due to bulk of operationsand greaterdemandofthe organisations to go green. Degree of Competition The competition will be highly intense in this field due to the presenceofgovernment organisations. The possible competition in this industryisalsohighbutit provideshigherchancesof growth. To analyse the information in data that is elaborated can be measured and evidenced with the help of projected experience growth of the customers and target market that will be helpful in satisfying the objective of organisation to create values for the customers. The normal customers cannotbesuitableforgrowingandpursuingtheorganisationalstatisticsforsustainable developmentandsupplyofrenewableenergy(Schlegelmilch,2022).Butthecustomers including the commercial and residential buildings could be suitable for the organisation to supply renewable energy because the commercial and residential buildings are the highest contributors to the declining health of the environment. In these areas the strategy for value creation for customers can be helpful to achieve success for the organisation. 3.0 DEVELOPING THE COMPETITIVE/WINNING STRATEGY Bowman's Strategy Clock is a strategic tool that is used by an organisation to strategically position itself within a given market according to their perceived value and price. Porter's Generic Strategy is another theory that is used for identifying and evaluating the competitive strategies to advise success within a particular market area with the help of four aspects(Payne and et. al., 2020). The pictorial representation of these two strategies is elaborated. 5
Figure2:https://fourweekmba.com/bowmans-strategy-clock/ Figure3:https://fourweekmba.com/porters-generic-strategies/ It includes differentiation focus, cost focus, cost leadership and differentiation. For this report Porter's Generic Strategy can be selected because Npower has to face intense competition 6
from the external market due to which it can adopt cost focus strategy by which it can target customers from the commercial and residential buildings. With this the company will be able to use resources more effectively and efficiently and create optimum processes to lower down operational cost and achieve cost advantages. Additionally, the company can achieve optimum performance by eliminating wastage which will help it to supply energy to the customers at cheaper rates as compared to competitors(GHICAJANU, 2021). This will also help the organisation to achieve greater competitiveness in the renewable, greener and sustainable energy industry and increase its presence significantly. 4.0 PROPOSED VALUE PROPOSITION Value proposition can be explained as an integral component in the marketing strategy of a company(Payne and et. al., 2020). It mainly provides a declaration of statement or intent that showcases the statement of the organisation to their prospects by what the organisation wants to serve to its customers, its operational standards and what values does the organisation bring. It is important to create the value proposition of a company because it helps to differentiate its products and services from their customers and justify why they are superior as compared to others. The value proposition canvas is a useful tool that can be used by an organisation to ensure that they satisfy their customers’ needs and desires by creating a value proposition for the organisation. The value proposition Canvas is integral because it has to analyse the product in a given market and identify the needs for the organisation to develop or define new offerings for the market(Leroi-Werelds and et. al., 2021). B2B commerce can be explained as the activities of an organisation to sell its products and services to other organisations that will be done by Npower to supply sustainable, renewable and green energy output to the commercial and residential buildings. The initial phase of generating an organisational value proposition is to develop the profile needs of the target market. For doing so, a method can be used to focus on the needs of the target market by applying the concept of jobs, pains and gains of the target market. Value Proposition 1 JobsPainsGains jobsProduct/ services PainsPain Relievers GainsGain Creators SupplyingContinuousAuthenticityFocusingonDecreaseinDecline in the 7
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cleanand greenenergy onconsistent manner production, regular maintenance andno shutdown phaseofthe organisation. and reliabilityof energy production and supply using renewable sourcesof energyand continuous energy backup negative impacton environment emissionof greenhouse gaseslike declineof morethan 20000metric tonsof carbon. Servicesand customer supporton timely basis 24/7customer support and on timeservicing tothe customers Require fixingand restoration after disasters Servicescan beprompt restored Promotethe growthof using bio fuel Upgradation and modernization of technology Increasing the production of renewable andgreen energy Creationof renewableand greenenergy sourceslike solar,hydro etc. Declining energy supply due to unfavourable conditions Using backup supply sourcesin unforeseen circumstances Provide electricity storageand energy supply toremote locations Increasing innovative energy storage units Finding more sustainable andcost effective waysto create energy Investmentin technologyto makecheaper energy sources like biogas and geothermal energy. Requirement of huge costs Innovating in technology advancement forlowcost energy supplies Cheaper facilities Continuous researchand development Value Proposition 2 JobsPainsGains jobsProduct/ services PainsPain Relievers GainsGain Creators 8
proposition 1 is also suitable because it can improve the technological advancement within the organisation to produce renewable and green energy and also provide measures to Npower to continue its operation even in the unforeseen circumstances. The chances of innovation and technological advancement will also be improved for the organisation which will help to decline its costs and achieve greater profits. In context to value proposition 1 it can be said that it is most efficient and effective for the organisation as well as its target customers because it satisfies the requirement of the organisation as well as the target customers (commercial and residential buildings). On the other hand, the value proposition 2, which had identified the jobs that addressed the issues of the environment for creating alternative and renewable sources of energy and declining the negative impact on the environment. But, it does not provide the growth of organisation in terms of technological advancement and expected returns in future(Iyer and et. al., 2019). It does not discuss the advancement of technology for sustainable energy solutions for Npower. Value proposition 2 is not suitable for the organisation because it does not lead to the fulfilment of organisational objectives although it succeeds in satisfying the needs of target customers. 5.0 POSITIONING STRATEGY FOR COMMUNICATING THE VALUE PROPOSITION Market positioning can be referred to as the ability of the organisation to influence the perception of customers for their products, services and brand image in comparison to its competitors. In simple words, positioning in marketing can be explained as a strategic process that involves the creation of positive perception/identity of brands' products and services among the minds of their target customers(Ismail, 2021). The main objective of Market positioning is to develop a positive identity of products and services offered by the brand so that customers are persuaded to buy it. 10
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Figure4:https://laurentbouty.com/2017/what-is-positioning-in-marketing-strategy There are many ways an organisation can position its products or services in the market such as the product characteristics, price of the product, quality, application or use of products or services, and on the basis of competition in the market. For the purpose of positioning the product of service in the market Marketing Mix can be used by the organisation(Kumar and Almoula, 2020). With the help of a marketing mix the company will determine and identify the answers for the questions to establish the company's marketing positioning to achieve success. 5.1 MARKETING MIX TO SUPPORT THE POSITIONING STANCE 7Ps of marketing mix is a strategic marketing framework that is an acronym for product, price, place, promotion, physical evidence, people and process(Batat, 2022). This framework can be used by organisations to identify and develop a competitive positioning stance in the market to communicate the organisational value to the customers in the particular market. 7Ps of Marketing Mix aligned to the target positioning strategy of Npower is given in context to the organisation. 11
Figure5: 7Ps of Marketing Mix ï‚·Product: It can be explained as the tangible goods or assets and intangible services that an organisation produces to offer to the target customers in the market. The organisation is basically the producer of energy and fuel which is focusing on developing cleaner and greener energy towards a sustainable future. The organisation will develop products that can satisfy the energy and power requirements of commercial and residential buildings with renewable, cleaner and cleaner energy with the help of technology advancement for improving environment health. The product of Npower is clean and renewable energy that does not negatively impact the environment health. ï‚·Price: This can be referred to as the monetary amount or value that must be paid by the customers for the products and services provided by the organisation(Leroi-Werelds and et. al., 2021). The company uses a cost focus pricing strategy that will enable the organisation to assure that it develops products and services at cheaper rates so that customers in the B2B insist niche markets can be covered easily. Moreover, it focuses on gaining cost advantages by improving the process within the organisation to achieve higher profits. ï‚·Place: This is mainly described in the terms of geographical location and area where the organisation intends to sell its services and products to the target customers. In order to sell the products and services the company will have its outlets and distribution centres across the European market so that target market can be covered. This will also help Npower to 12
prepare for unforeseen circumstances in the future and adapt their strategies to overcome those challenges in the future. ï‚·Promotion: It can be elaborated as the marketing and advertising strategies that are adopted by the company to create awareness among the customers regarding the products and services offered by the organisation. The organisation will use aggressive marketing, and advertisementcampaignsalongwiththeuseofsocialmediatoachievegreater competitiveness in the market. By this method the organisation will be able to gain trust and loyalty of maximum customers and confer the target market more easily. ï‚·People: Human beings are the most important factors that affect the activities of an organisation(Mintz and et. al., 2021). An organisation has many stakeholders such as investors, suppliers, employees, customers and so on that are important for running the business. The most important part of the organisation will be linking its product with the green campaign and environment health and sustainable growth. ï‚·Process: it can be explained as a series of steps that are undertaken by a company to develop their products and services effectively and efficiently. The company its customers through 24 hours operations all day a week and will fulfil the requirement of customers necessarily in time. The organisation will indulge the innovations and advancement of technology in the business to achieve effective processes. ï‚·Physical evidence: It can be explained as the physical aspects of the product or services that an organisation developed to make it unique and different from their competitors. The servicesandproductsoftheorganisationwilllackdifferentiationbecausetheonly difference in the traditional energy sources and the sources of energy by the organisation is their green, sustainable, renewable and environment friendly methods of producing energy. 7Ps of marketing mix can be used by the organisation to support the positioning strategy in the target market to communicate the values of the organisation to its customers. CONCLUSION Ithasbeenconcludedfromtheabovereportthatanorganisationalstrategicvalue proposition is helpful to create a series of actions that can be implemented by the organisation for achieving target customer attention, smooth business operations and competitiveness in market positioning to achieve desired goals and objectives. In this regard the report has been developing 13
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a strategic value proposition on organisational strategy of a given business. Potential market opportunities have been identified with the help of market segmentation and targeting that has identified the growing demand for sustainable energy needs that lower down the harmful impact on the environment. It has been discussed with the help of evaluation of two market segments amongwhichasuitableoneiselaborated.Moreover,certaincompetitivestrategiesfor positioning have been evaluated that consist of Bowman's Strategic Clock and Porter's Generic Strategy. Along with this, two value propositions have been developed and evaluated with the help of a concept of Jobs, Pains and Gains that can be helpful to achieve the objectives of target marketandtheorganisation.Finally,positioningstrategyfortheorganisationhasbeen developed to communicate the value proposition to target customers with the help of 7Ps of marketing mix aligned to the positioning strategy for target market. 14