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Writer's pictureDr. Marvilano

Overview of Strategy Tools: Delta Model


Many businesses today make the almost inevitable mistake of focusing on the product rather than the consumer. And although the lines between these two contexts could be blurry, there's always a better way to look at it.


The Delta model presents us with this viewpoint: the customer's perspective. It is the big-picture approach to value creation and enterprise management.


Focus on your customers, not your products.
Focus on your customers, not your products.


What is it?

Delta's model places the consumer (or the customer) as the focal point of any enterprise. Its premise is simple: customer satisfaction is the heart and soul of any business and the key to its sustenance. And so business leaders must always seek means to provide the right type of value, and at the right price, to their customers.


The model is built around a triangle of strategic measures, each one designed to provide customer appeal and capture market share. These measures provide a different route to implementing the model itself. They are as follows.


Best product positioning

Best product positioning refers to the most strategic positioning of a product to give it market appeal. It is premised on product development as a means to achieving customer satisfaction. And it is best achieved by cost leadership or product differentiation.


Cost leadership involves the management of a product's value chain and development cycle to reduce its production and purchase cost (by extension). On the other hand, product differentiation looks at ways to provide value in unique and innovative ways.


Total customer solutions

Total customer solution revolves around providing the ultimate customer experience or something similar to it. This strategy seeks maximum customer satisfaction by offering value according to customer tastes and needs. For example, offering a one-stop solution, system integration with customers to make their life easier, or simply offering something unique that no one else offers.


System lock-in

This is a two-part strategy that seeks to lock in the customer and lock out the competition. It establishes a path to market capture and eventual dominance by creating value through various means. The means could be creating entry barriers around its product space, providing proprietary standards (think Microsoft) or exclusive channel (e.g., Netflix originals), or simply offering low prices (squeezing competitors out).



When do we use it?

Business leaders use the delta model to achieve the following objectives.


To create unique value propositions

The model encourages businesses to provide value to their customers in the most unique and strategic ways possible. It explores the most viable routes to satisfying customers and meeting their needs.


To achieve customer bonding

Every business strives to satisfy its customers, or even better—as per the Delta model. Delta's model goes a step further to reinforce the customer's pivotal role in the growth of any business. It helps us build relationships (with our customers) that stretch beyond the marketplace.


To manage in a competitive business environment

Delta model provides tools that a business may use to edge the competition. Its strategy chart courses of product-centric, customer-centric, or barrier-defining strategy directions. These strategies can help you close in on the competition or break away from them.


To create new businesses or enter new markets

The model can help you navigate the uncertainties associated with any new business prospect. Its formula is simple. In everything you do, consider the customer first.



What business questions is it helping us to answer?

The Delta model is designed to answer the following questions that business leaders encounter.


What is my most strategic and competitive position?

This refers to a business's means to achieve a robust market presence. In this context, the model promotes customer bonding as means to draw significant market appeal.


How can I provide value to my customers?

The model affirms that the customer is a crucial asset any company can manage. It also provides the framework (via its strategic triangle) to achieve customer satisfaction.


How can I create sustainable competitive advantages?

The model offers a couple of answers to this question. The options range from delivering the best product, customer solution, or a system lock-in strategy to creating a lasting competitive advantage.


How can I keep my customers?

The major takeaway from the delta model is that you do not take any chances with the customer. So when you get them in your corner, you must lock them in. The model suggests providing a value that fits their taste and pockets.



How do we use it?

We recommend following the "Adaptive Processes" discussed below to use the delta model.


Operational Effectiveness

Start by looking at the most effective ways to manage your supply (and value) chain to support your selected strategy. You must strive to coordinate efforts by your suppliers, key complements, and other resource persons to provide the most value to your customers.


Customer Targeting

Focus on creating those activities and operations that appeal to the customer. Identify your customer's unique needs, collect relevant feedback, and practice customer segmentation. Observe their purchasing habits and use the knowledge to create your products.


Innovation

Innovation helps you attract and retain your customers. So you must find creative and resourceful means to create value for the market. The goal is to provide something exclusive, unique, and efficient in the consumer market.



Practical Example

Microsoft uses an operational strategy that is the closest to what is seen as the delta model. The company does not pride itself as a leader in the cost-friendly class. Neither does it boast heavy-duty features in its operating system. What it has sought to achieve, and to great lengths, is a dominance of its space: a system lock-in.


It has become almost commonplace to find computers built on Windows OS. And so, software manufacturers and other digital support services must build their resources based on this windows architecture. So the average PC user enjoys the ultimate PC experience with the Microsoft Windows OS as a willing tool.



Advantages

It reinforces the customer's importance

The customer is at the heart of Delta's model strategy. It positions businesses to meet their customer's needs and provide value to them in the most effective and unique way.


It provides strategy flexibility

The Delta model provides a selection of strategies for positioning your business. You can opt for the one that best suits your business and presents the most customer appeal.


It is easy to use

The Delta model is an easy-to-use strategy for the most part. It does not need any expert input or heavy resources to be implemented. And the gap between strategy formulation and execution is quickly closed.


It promotes strategic positioning for competitive advantage

The model offers you a choice of three strategic routes to take in achieving competitive advantage. The goal is to present a unique value proposition that can interest and lock-in the customer.



Disadvantages

It promotes isolation

The model's system lock-in strategy, arguably the best strategy, can push businesses away from the competition. This makes it more difficult to share or borrow critical knowledge and industry resources.


It may create unsustainable competitive advantages

The Delta model sees competition as a secondary consideration in strategy planning and execution. It promotes competitive advantage as the means to an end: customer satisfaction and strategic market positioning.


It may make industry domination more difficult to achieve

The model's customer-centric strategy approach may blur the big picture for any company that aims for industry-wide domination.



 

Continue to explore strategy tools here.


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