David W. Crain and Stan Abraham
David Crain, a marketing and strategy consultant, is visiting professor of marketing at Whittier College, CA, and former Director of Marketing at Fluor Corporation (email@example.com). Stan Abraham is professor of strategy and entrepreneurship at Cal Poly Pomona (scabraham@ csupomona.edu) and author of Strategic Planning: A Practical Guide for Competitive Success (Thomson South-Western, 2006).
ere is a ﬁve-step method for discovering a customer’s particular strategic needs based on a unique application of value-chain analysis. Performing this analysis on important customers helps identify high-value new business opportunities. It also can strengthen relationships with customers by clarifying their strategic priorities, regardless of whether their needs are based on a differentiation or low-cost strategy or whether that strategy is implicit or explicit.
Value-chain analysis is used for many purposes, but the process of examining customers’ value chains is relatively new. In our ﬁve-step process, Step 1 explains how internal and external value chains can be used separately and in related ways. Step 2 shows how to construct a customer’s value chain. Step 3 shows how to identify the customer’s business strategy by examining this value chain and using other kinds of information. Step 4 explains how to use additional information and intelligence to leverage that understanding into strategic needs and priorities. Finally, Step 5 explains how a ﬁrm’s marketing function can best use this method of value-chain analysis as a new strategic capability.
Step 1: An overview of value-chain analysis
Value chains may be deﬁned in two ways: (1) within a company they describe the various value-added stages from purchasing materials to distributing, selling, and servicing the ﬁnal product (Porter’s 1985 concept), and (2) they also delineate the value-added