[Editor’s note: This installment is part of an ongoing series. You can start at the beginning in order to follow its logical sequence.]
by Kenneth Rudich
Let’s look at a core and context example of outsourcing, followed by an example of augmented specialization (You might want to read the previous post, “Value Chain Marketing: Strategic Outsourcing Considerations,” before moving on.).
Core and Context
According to market research firm FactSet StreetAccount, revenue from its cloud services business, Amazon Web Services, surged 58.2 percent to $2.89 billion in the first quarter of 2016.
The fulfillment program, meanwhile, has become a popular platform for an assortment of businesses, both large and small, to inventory and distribute their products on Amazon.com. Many of them would have been incapable of doing it as well on their own or at a comparable business cost.
These Amazon services fit the core and context analysis profile. They are core for the provider, and they are context for the user.
From a client/user perspective, the first example impacts the cost and serviceability of their value chain’s transactions/operations component.
The second involves the cost and serviceability of their distribution channels component.
Alma DBB, an advertising agency that specializes in bridging the gap between the Hispanic market and the general market, has acquired a long list of big name clients like McDonalds, Sprint, Clorox, Kingsford and more.
The agency refers to this group as “fusionistas” because they often are bicultural and bilingual, they make up 21% of America’s millennial generation, and they are comfortable navigating both worlds.
The reason for seeking help from Alma DBB stems from a desire to be received as genuinely customer-centric.
Though the award-winning ad agency has a reputation for creative excellence, so do many of its award-winning counterparts. This aspect of their value proposition, as nice as it is, wasn’t enough by itself to really set them apart.
The differentiating factor for Alma DBB is that they pioneered a change in Hispanic advertising by focusing the work on a deeper cultural knowledge, to elevate the communication beyond the “clichés.”
A key facet of their appeal as a specialized service provider is to steer clear of what might be harshly perceived as tokenism in their clients’ advertising and marketing.
Alma DBB acts as a bridge between the Hispanic market and the general market by conveying the same message in both English and Spanish, so that it’s consistent, authentic and relatable to the intended audience as they routinely weave back and forth between the two cultural worlds in which they reside.
Notice how this outsourcing involves a connection between the market characteristics component of the value chain (specifically, a certain market segment) and the communications component.
These two examples illustrate the strategic application of outsourcing to enhance the structural design of a value chain — from the outsource provider perspective, the outsource user perspective and the consumer perspective.
Think like a strategist, act like a marketer.
The next installment will look at a newer and sometimes controversial outsourcing initiative.
To be continued: Value Chain Marketing — Is Gig Outsourcing Gambit Sustainable?